A Canadian unit of Vale Base Metals, Vale’s (NYSE: VALE) copper and nickel spinoff, has agreed to sell a 14% stake in Vale Indonesia (PT Vale) to align with Indonesian ownership rules, it said Friday.
Under the agreement, signed during the Asia-Pacific Economic Cooperation Leaders’ Meeting this week with Indonesian President Joko Widodo in attendance, Vale Canada and Sumitomo Metal Mining agreed to sell their shares in PT Vale to PT Mineral Industri Indonesia.
The deal makes the state-owned miner the largest shareholder of PT Vale with about 34% ownership, while Vale Canada and Sumitomo will hold around 33.9% and 11.5% respectively. The transaction is expected to close in 2024.
This agreement meets obligations under Indonesian laws and regulations to increase domestic Indonesian ownership to a minimum of 51% and paves the way for the 20-year extension of PT Vale’s special mining business licence beyond 2025.
Nothing changes for Vale operations outside Indonesia, a spokesperson told The Northern Miner by email. There is no impact to the size of Vale’s concession in Indonesia and all existing commitments remain unchanged, the spokesperson said.
“The agreement is a milestone in securing the 20-year extension of PT Vale’s mining rights in Indonesia beyond 2025,” they said.
The extension is critical for Vale’s ongoing operations in Indonesia. It leads to a significant US$8.6-billion investment in projects at Bahodopi, Sorowako, and Pomalaa, Vale said. These projects are set to boost PT Vale’s impact on Indonesia’s economy and increase Vale Base Metals’ global nickel production capacity to potentially 300,000 tonnes per year from 175,000 tonne a year previously.
The structure and value of the sale will be finalized in coming months in a final framework agreement, subject to customary closing conditions.
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