The process of issuing a special mining business license (IUPK) for PT Vale Indonesia (INCO) is nearing completion. The document for the 20-year contract extension will be processed by the Ministry of Investment.
Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said the issuance of the IUPK is expected to be completed next week after the Ministry of Energy and Mineral Resources (ESDM) provides a recommendation for the conversion of Vale’s work contract (KK) into IUPK.
“Vale is almost done. If I’m not mistaken, maybe in the next few weeks, the extension will be completed,” Bahlil said at the Houseof Representatives compound on Monday, April 1, 2024.
Meanwhile, the divestment of 14 percent of INCO shares to the government as a condition for transitioning KK into IUPK is also being finalized by the mining SOE holding, MIND ID. Funding of around USD 300 million or equivalent to IDR 4.69 trillion (assuming an exchange rate of IDR 15,635 per USD) has been prepared to acquire a 14 percent stake in INCO’s foreign ownership.
After over a year of negotiations, MIND ID, along with foreign shareholders of INCO, Vale Canada Limited (VCL), and Sumitomo Metal Mining Co. Ltd. (SMM), agreed on the acquisition price of 14 percent of INCO shares at IDR 3,050 per share. “Adding 14 percent for SOEs [through] rights issues is a corporate action. So, it depends on them; they should ask the SOE,” said Bahlil.
INCO holds concessions based on the 2014 KK amendment covering 118,435 hectares distributed in South Sulawesi (70,566 hectares), Central Sulawesi (22,699 hectares), and Southeast Sulawesi (24,752 hectares). However, the concession period for INCO’s KK will expire in December 2025. The conversion process from KK to IUPK with a 20-year contract is awaiting approval from the Minister of Investment.
Minister of ESDM, Arifin Tasrif, previously stated that the government gives a five-year deadline for INCO to complete all investment plans for smelter construction after the permit is granted. “We give them time according to this IUPK, five years after all permits are completed, it should have been built,” he said.
