East Luwu Regent Budiman led a preparatory meeting for the upcoming divestment of PT Vale Indonesia Tbk (INCO) shares valued at IDR 5 trillion to the East Luwu regency administration.
The purpose of this meeting was to establish a regional-owned company by the East Luwu regional government, which will actively participate in the divestment process. “This team aims to provide optimal benefits for the East Luwu regency administration on the divestment of mining and non-mining shares,” Budiman said on Tuesday (6/6).
The team will immediately formulate a comprehensive action plan, engage in discussions with the board of directors and commissioners of Vale Indonesia, MIND ID, and the relevant ministries.
Furthermore, they will collaborate with Hasanuddin University (Unhas) to conduct an academic study, ensuring that all procedures remain transparent and in compliance with existing regulations.
Vale Indonesia’s divestment plan to secure mining permit
Vale Indonesia’s nickel mining concessions in Sulawesi are located in Bahodopi (Central Sulawesi), Pomalaa (Southeast Sulawesi), and Sorowako (South Sulawesi). the company’s contract of work will expire on December 27 to December 28, 2025, and is currently waiting for approval of the contract extension.
In order to secure a new form of contract called the Special Mining Business License (IUPK) for the business extension, Vale Indonesia is required to divest its shares to the government, designated state-owned enterprises (BUMN), and regional-owned enterprises (BUMD).
According to Energy and Mineral Resources (ESDM) Minister Arifin Tasrif, Vale Indonesia has already divested approximately 40 percent of its share. This implies that, in accordance with existing regulations, another 11 percent of the shares must be offered to Indonesia.
Currently, Vale Indonesia’s shareholders include Vale Canada Ltd (43.79 percent), Sumitomo Metal Mining (15.3 percent), MIND ID (20 percent), Vale Japan Ltd (0.55 percent), the public (20.49 percent), and Sumitomo Corporation (0.14 percent).
Minister Arifin further disclosed that several undisclosed BUMDs would also participate in the divestment of Vale’s shares. This approach allows regional administrations to benefit from mining operations in their territories.
Concerns over Vale’s minimal contribution to regency
The East Luwu regency has abundant natural resources but cannot profit from them and Vale Indonesia’s operations for approximately 54 years have given the Luwu people nothing.
Last year, three provinces in Sulawesi rejected Vale’s contract extension proposal. One of these provinces, South Sulawesi, voiced concerns about approving the extension as it would further undermine the province’s economic independence, especially considering the minimal contribution Vale has made to South Sulawesi.
“It is apparent from Vale’s revenue realization only 1.98 percent of the locally generated income (PAD). This is very painful for us, considering that Vale has been operating for 54 years in South Sulawesi,” South Sulawesi Governor Andi Sudirman Sulaiman said.
Andi further highlighted the negligible amount of vehicle taxes, water level taxes, and land rents paid by Vale Indonesia. The company’s land lease contribution was only IDR 1.3 billion per year despite operating 70,000 hectares of mining concession areas or only about IDR 60,000 per hectare. Consequently, South Sulawesi only received IDR 41 billion instead of the expected IDR 200 billion in revenue-sharing funds (Dana Bagi Hasil – DBH).
In addition, tens of thousands of hectares within Vale Indonesia’s mining concession areas remain idle due to staged usage. Southeast Sulawesi Governor Ali Mazi and Central Sulawesi Governor Rusdy Mastura rejected Vale Indonesia’s approach so that region-owned enterprises could take over ex-Vale mining areas or get a portion of Vale Indonesia’s shares.
The actions taken by East Luwu to take part in the company’s share will hopefully make up for that. By becoming a shareholder in Vale Indonesia, the regency can utilize the dividends to enhance public welfare.
