Friday, April 19, 2024

MIND ID demand Vale Canada and Sumitomo to terminate block voting agreement before proceeding with divestment

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Imanuddin Razak




PT Mineral Industri Indonesia (MIND ID) is urging Vale Canada Limited (VCL) and Sumitomo Metal Mining (SMM) to terminate their block voting agreement before finalizing the continued divestment of PT Vale Indonesia shares.

This ongoing divestment is a prerequisite for the extension of their mining contract of work (CoW), which is set to expire on December 28, 2025.

Hendi Prio Santoso, CEO of MIND ID, explained that the block voting agreement allows VCL to consolidate with SMM. This arrangement makes SMM follow VCL’s decisions in determining Vale’s operational plans.

“The share ownership structure includes another agreement, a block voting agreement, which empowers Sumitomo to adhere to whatever Vale development commitments VCL makes,” Hendi stated during a hearing with the Indonesian House of Representatives Commission VII on Tuesday, August 29.

Hendi added that amending the block voting agreement between VCL and SMM is a condition set by MIND ID to proceed with the additional sale of Vale Indonesia shares to the state-owned Mining Industry Holding.

Vale has agreed to divest an additional 14% of shares to local entities as a requirement for extending the mining CoW, as stipulated in Article 112 of Law No. 3 of 2020 concerning Mineral and Coal Mining.

According to data from Minerba One Data Indonesia (MODI), the current shareholders of Vale Indonesia include Vale Canada Limited (43.79%), Sumitomo Metal Mining (15.03%), MIND ID (20%), Vale Japan Limited (0.55%), Sumitomo Corporation (0.14%), and the public (20.49%).

Preventing combining of shares

The additional 14% stake would elevate MIND ID’s majority ownership of Vale shares to 34%. Meanwhile, VCL’s share would decrease to 33.29%, and SMM’s to 11.53%. Vale Japan Limited’s share would become 0.54%, and the public’s share would be 20.64%.

However, if the block voting agreement between VCL and SMM remains in effect, their combined share consolidation would reach 44.82%, surpassing MIND ID’s ownership of Vale shares.

“The block voting agreement must be dismantled before this divestment process proceeds,” Hendi emphasized.

Furthermore, Hendi noted that President Joko Widodo, during a cabinet limited meeting on February 5, 2023, decreed that MIND ID should increase its ownership of Vale shares to 51%, excluding public shares. This calculation would establish MIND ID as the majority shareholder of Vale, even if VCL and SMM consolidate their shares.

Imanuddin Razak






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