Contract Extended, ESDM Mandatory Vale Builds Smelter In 3 Years

JAKARTA - The process of divesting shares of PT Vale Indonesia Tbk (INCO) is entering a new stage.

Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif emphasized that Indonesia was determined to extend Vale's contract after the company released 14 percent of its shares to MIND ID.

Arifin said, apart from stock divestment, another requirement that Vale must fulfill so that a contract extension is to build a smelter for the nickel downstream program.

"You have to (build a smelter). You have to go downstream. So, this is a Special Mining Business Permit (IUPK) to be able to leave the exhibition if you have carried out the program," Arifin told the media quoted Monday, November 13.

Arifin said that the obligation to build a smelter must be completed in 3 years.

Otherwise, the government threatens to revoke the IUPK permit that has been granted.

"If three years after the extension is not carried out, then it will fall. We consider it a fall and we will withdraw (the permit)," added Arifin.

Just so you know, Vale is currently working on 3 smelter projects including Smelter Nickel Matte or Sorowako Limontite worth US$2 billion, Smelter Feronike Bahodopi worth US$2.5 billion and Smelter High Pressure Acid Leaching (HPAL) at Pomalaa worth US$4.5 billion.

Arifin continued, the government has agreed to extend Vale's IUPK contract after the divestment process was continued.

He targets the divestment process and contract extension to be carried out this year as this process is considered to have lasted too long.

"This year. It's too late," added Arifin.

Regarding the released share price, Arifin said it was an agreement between shareholders on a business to business (B2B) basis.

Currently, discussions are still being held for pricing.

Even so, Arifin also asked Vale to give the price'special' to the MIND ID Mining BUMN Industry Holding.

"That's talking together (between shareholders), the important thing is that the price must be special price for us," he said

For information, Vale Indonesia's shares are currently held by Vale Canada Limited at 43.79 percent.

While Sumitomo Metal Mining owns 15.03 percent.

Then about 20 percent is held by the public with a list on the Indonesia Stock Exchange (IDX).

Meanwhile, MIND ID itself already owns 20 percent of Vale Indonesia's shares.

With the addition of 14 percent of the shares from the divestment, he said, MIND ID's total share ownership was 34 percent in Vale Indonesia.

This portion also makes MIND ID the majority shareholder of Vale Indonesia.