Indonesian mining industry holding MIND ID is ready to acquire shares in PT Vale Indonesia Tbk (INCO) and tap into the company’s enormous potential in nickel reserves.
Progress of divestation and readiness
Hendi Prio Santoso, Main Director of Mind ID, admitted that MIND ID is ready to carry out the directives from the government according to the Limited Meeting to take a portion of shares in the management of Vale.
“[Concerning] Vale, the state’s share portion should be increased through MIND ID so hopefully we can become the party that consolidates Vale Indonesia just like we did with Freeport,” said Santoso, as reported by industri.kontan.co.id, on February 6, 2023.
Meanwhile, Vale Indonesia claimed that it is ready to carry out the 11% share divestment as a requirement and part of the company’s commitment to receive an extension of the Contract of Work (KK) into a Special Mining Business Permit (IUPK). Vale’s contract will expire on December 27, 2025.
Dilo Seno Widagdo, Director of Portfolio and Business Development for MIND ID explained the rough calculation of the acquisition of 11% INCO shares. If MIND ID buys a 20% stake at IDR 6,400, MIND ID will need to spend US$ 1.2 billion (IDR 17.76 trillion).
Heri Yusuf, Corporate Secretary of MIND ID, explained that MIND ID is still waiting for a formal process from Vale to make a share offer and the required funding and discussing it with Vale Indonesia and Sumitomo.
“The company’s financial condition is expected to be ready to support the company’s growth strategy, including if it gets an assignment in the PTVI divestment process where it is hoped that MIND ID can consolidate PT Vale Indonesia,” said Santoso on May 9, 2023.
Previously, MIND ID had acquired 20% of Vale’s shares in Indonesia. With a transaction value as of June 2020 reaching US$ 290 million.
Company information
By acquiring another 11% of Vale’s shares, Indonesia will gain great potential in terms of nickel reserves owned by Vale. According to the 2022 report, the company has:
- Mineral reserves and nickel ore production of 111.55 million tonnes;
- Proven reserves of 65.8 million tons while estimated at 45.74 million;
- Nickel ore reserves (2021) 4.5 billion tons or 2% of Indonesia’s total reserves; Production volume of nickel ore translucent 11.55 million tonnes (2022) down from 12.88 million tonnes (2021);
- Average content 78% nickel, 1-2% cobalt, 20-21% sulfur; And
- Total production of semi-finished matte was 60,900 tonnes down 8.1% from 2021.
Currently, Vale Indonesia’s shareholders consist of Vale Canada Ltd (44.03%), Sumitomo Metal Mining (15%), MIND ID (20%), and the public (20.7%).
The company also has three exploration areas and a smelter with a total investment of US$ 9 billion or IDR 132 trillion in Sorowako, South Sulawesi; Bahodopi, Morowali, Central Sulawesi; and Pomala, Southeast Sulawesi.
