Vale Canada, Sumitomo Metal sign initial agreement to sell 14% stake in Indonesia nickel miner (updated)

Sumitomo Metal Mining

18/11/2023 03:45

(Updates Friday story with comments Saturday from Indonesia's
deputy minister in paragraphs 4-5, president's statement in
paragraphs 10-12)
       JAKARTA, Nov 18 (Reuters) - Vale Base Metals said its
Vale Canada unit and Japan's Sumitomo Metal Mining signed an
initial agreement on Friday to sell a 14% stake in their
Indonesian nickel mining unit to Indonesia's state miner.
    Vale Canada and Sumitomo  5713.T  signed the so-called heads
of 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.
    Share divestment is a condition required by Indonesia to
extend Vale Indonesia's mining permit, which will otherwise end
in 2025. Foreign investors are required to divest 51% of their
stakes to local buyers after a certain period of operation.
    The sales and purchase agreement is expected to conclude at
the end of January, the deputy minister for state-owned
enterprises, Kartika Wirjoatmodjo, told Reuters on Saturday. 
    "MIND ID is currently conducting a due diligence and will
soon submit its price offer," he said. 
    Upon completion, MIND ID will become the largest shareholder
of Vale Indonesia with its stake rising to 34% from 20%. Vale
Canada will hold 33.9%, down from 43.79%, and Sumitomo 11.5%,
down from 15.03%, according to the statement.
    Around 20% of Vale Indonesia's shares are publicly traded.
    A "balanced" management structure will be set up to maintain
operational stability at the Indonesian unit, the statement
said.
    "We look forward to working within the new shareholding
structure with our partners to support the country's
downstreaming ambitions and deliver strong economic value to our
stakeholders and communities over the long run," said Deshnee
Naidoo, chief executive of Vale Base Metals.
    Indonesian President Joko Widodo, who watched the signing,
said the country welcomed the agreement and appreciated Vale's
commitment to partner with Indonesia.
    "The divestment will make MIND ID as the biggest shareholder
of Vale (Indonesia), so MIND ID and Vale Canada can exercise a
joint control over Vale (Indonesia)," he said in a statement on
Friday. 
    Widodo expressed hope that Vale would increase its support
for Indonesia's efforts to shift to cleaner energy. 
    Indonesia is keen to develop batteries and electric vehicles
to take advantage of its rich nickel reserves.
    Vale Base Metals is committing around $10 billion of
investment in Indonesia over the next decade.

 (Reporting by Fransiska Nangoy; Additional reporting by
Stefanno Sulaiman; Editing by Kirsten Donovan and William
Mallard)
 ((fransiska.nangoy@tr.com;))