© Reuters. FILE PHOTO: The logo of Sumitomo Metal Mining Co at the company’s headquarters in Tokyo, Japan, September 13, 2018. REUTERS/Ritsuko Shimizu/File Photo
JAKARTA (Reuters) – Mining company Vale Base Metals said its unit Vale Canada Ltd and Japan’s Sumitomo Metal Mining Co. Ltd signed an initial agreement on Friday to sell a 14% stake in its nickel mining unit in Indonesia to Indonesian state mining company.
Vale Canada and Sumitomo signed an agreement to sell the shares to PT Mineral Industri Indonesia (MIND ID), the country’s state mining holding company, Vale Base Metals said in a statement.
The divestment of shares is a condition required by Indonesia to extend Vale Indonesia’s mining permit, which is currently set to end in 2025. Foreign investors must sell 51% of their stake to local buyers after a certain period of operation.
Upon completion, MIND ID will become Vale Indonesia’s largest shareholder with 34% of the shares, up from 20%. Vale Canada and Sumitomo will own 33.9% and 11.5% respectively, according to the statement, up from 43.79% and 15.03%.
About 20% of Vale Indonesia’s shares are listed on the stock exchange.
A “balanced” management structure will be established to maintain operational stability at the Indonesian unit, according to the statement.
“We look forward to working within the new shareholding structure with our partners to support the country’s downstream ambitions and deliver strong economic value to our stakeholders and communities in the long term,” said Deshnee Naidoo, CEO of Vale Base Metals.
Indonesia, which has significant nickel reserves, is interested in developing batteries and electric vehicles to tap into its rich nickel reserves.
Vale Base Metals is committing around $10 billion of investment to Indonesia over the next decade.
