Indonesia, Vale agree price for divestment, minister says

Vale Canada, a unit of Vale Base Metals, and Japan’s Sumitomo Metal Mining signed an initial agreement to sell a 14% stake in their Indonesian nickel mining unit to Indonesia’s state mining holding company, MIND ID last November.

Minister Arifin Tasrif did not disclose the price, but he said it would be below the current market price. About 20% of Vale Indonesia’s shares are publicly traded and were fetching around 3,860 rupiah ($0.2470) per share at 0730 GMT.

Vale was not immediately available to comment.

Share divestment is a condition required by authorities to extend Vale Indonesia’s mining permit, which will otherwise end in 2025. Foreign investors are required to divest 51% of their stakes to local buyers after a certain period of operation.

Arifin said the deal is expected to be signed soon, including approval for Vale Indonesia’s mining permit extension.

“This will provide clarity for their investment plans and programs,” he told reporters.

Vale Base Metals said it is committing $10 billion for investment in Indonesia over the next decade.

Upon completion, MIND ID will become the largest shareholder of Vale Indonesia with its stake rising to 34% from 20%. Vale Canada will hold 33.9%, down from 43.79%, and Sumitomo 11.5%, down from 15.03%, according to a statement in November.