Friday, April 19, 2024

SOE’s Minister Warned Vale About Divestment: The Price Must be Fair!

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Gusty da Costa




State Owned Enterprise Minister Erick Thohir reminded PT Vale Indonesia Tbk (INCO) on the divestment plan of 14 % of its shares to Indonesia Mining Holding Company MIND ID .

Erick reiterated that the valuation of divestment price that will be offered by Vale should be fair,despite the fact that MIND ID will only have 34% of Vale Indonesia shares and not 51% as expected.

As previously reported,Indonesia has totally 41% of PT Vale Indonesia’s shares. From the 41%, 20 % of the shares is owned by MIND ID and 21.18 % is owned by public through Indonesia Stock Exchange.

Based on the plan, Vale will release additional 14% of its share to MIND ID, so the MIND DID ownership in Vale become 34%.

” We must secure the 34% of the share, But, the price valuation must be fair, because this is our stuff. We are not unfriendly to foreign investment,” he said in Jakarta, December 20 ,2023 as reported by CNBC Indonesia.

“We have to take 34%, we have given up 51%, because after the discussion when the 20% divestment was done, the Indonesian government did not take it. That policy does not mean the government is wrong, no. But it has entered the 51% composition,” he said.

Although he did not mention the value offered by Vale, Erick said that the price was still expensive. Therefore, his party is still negotiating. “Still negotiating. Anyway, forever until we get what we want,” he said.

The preliminary divestment agreement between MIND ID with Vale Canada Ltd and Sumitomo Metal Mining Co. Ltd has been carried out in San Francisco, United States, on November 17, 2023. The signing of the 14% divestment was witnessed by President Joko Widodo.

“This divestment will make MIND ID the largest shareholder of Vale, so that MIND ID and Vale Canada can exercise joint control over Vale,” Mr Widodo said in a statement on Saturday (18/11/2023).

Under the agreement, Vale Canada Limited and Sumitomo Metal Mining Co., Ltd will divest their shareholding in PT Vale Indonesia Tbk to MIND ID, so that Mind ID will become the company’s largest shareholder.

The divestment of Vale shares is required as one of the conditions for the extension of PT Vale Indonesia’s mining contract into a Special Mining Business Licence (IUPK).

PT Vale Indonesia’s Contract of Work will expire in December 2025. In order for the contract to be extended and turned into an IUPK, the company must divest most of its shares to Indonesian ownership.

Currently, Indonesia’s ownership in PT Vale Indonesia Tbk (INCO), among others, through MIND ID is 20% and around 21.18% is spread in the Indonesian stock market. This means that if the additional shares are only 14%, then MIND ID will own 34% of Vale shares.

Meanwhile, the majority shareholder of INCO itself is currently still held by Vale Canada Limited (VCL) with 43.79% of shares, then Sumitomo Metal Mining Co. Ltd (SMM) with 15.03%.

Gusty da Costa






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