Minister of Investment and Head of Investment Coordinating Board (BKPM), Bahlil Lahadalia, revealed the outcome of PT Vale Indonesia’s 14 percent share divestment to Indonesia via the mining industry holding MIND ID. Bahlil asserted that the primary obstacle for accomplishing Vale’s shares divestment is due to an unestablished agreement on price.
“I have not yet been presented with the precise figure. However, at the Ministry of State-owned Enterprises, there exists a significant predicament concerning pricing while other concerns remain relatively minor,” Bahlil said as quoted by CNBC Indonesia on Wednesday.
Divestment of Vale Indonesia’s shares is required as one of the conditions so that the extension of its mining contract to a Special Mining Business Licence (IUPK) can be carried out. PT Vale Indonesia’s Contract of Work will expire in December 2025.
Currently, Indonesia’s ownership in PT Vale Indonesia (INCO), among others through MIND ID, is 20 percent and around 21.18 percent is spread across the Indonesian stock market.
This implies that in the case where the supplementary shares amount to only 14 percent, MIND ID will possess a 34 percent stake in Vale’s shares.
Currently, Vale Canada Limited (VCL) retains the majority stake in INCO with 43.79 percent of shares, followed by Sumitomo Metal Mining Co. Ltd (SMM) holding a significant portion at 15.03 percent.
Aside from divesting shares, a shift in the working contract to IUPK may result in reductions of land. Bahlil acknowledged that prospects for such cuts are present, but the government remains committed to seeking mutually beneficial outcomes for investors.
“We must prioritize the needs of our investors. In cases where there is mutual benefit, we can proceed accordingly. However, in instances where a win-win situation cannot be achieved, we will handle matters with utmost professionalism.,” said Bahlil.
Previously, Minister of State-Owned Enterprises, Erick Thohir, conveyed a resolute message to PT Vale Indonesia’s shareholders urging them to offer the most economical share divestment price possible. Despite reaching an agreement on divesting Vale’s 14 percent stake to state-owned mining holding MIND ID, negotiations are still ongoing regarding the price.
“We are currently engaged in negotiations with the aim of securing the most economical price feasible.,” Erick said last November.
If Vale is unwilling to offer a competitive price, Erick has warned of the possibility of relinquishing or reducing the size of Vale Indonesia’s mining operations.
