Vale Indonesia Secures License Extension Without Reduction in Mining Area

Vale Indonesia Secures License Extension Without Reduction in Mining Area

Government Approval Paves Way for Share Divestment

In a recent development, the Indonesian government is set to approve the extension of Vale Indonesia’s mining license with no reduction in the size of its mining area. This move aligns with the company’s plan to divest 14% of its shares to the state in exchange for extending its mining contract beyond the December 2025 expiration date, transitioning from the Contract of Work (CoW) to a Special Mining Business License (IUPK).

Regulatory Milestones Achieved

Arifin Tasrif, Indonesia’s Minister of Energy and Mineral Resources, confirmed that the permit extension would be granted once all prerequisites are fulfilled. The ministry has indicated its support by approving the company’s comprehensive regional development plan, signifying a pivotal step in the continuation of Vale Indonesia’s operations.

Impact on Operations and Stakeholders

The decision to maintain the current mining area was partly driven by the objective to sustain long-term operational viability and the aim to deter the risk of illegal mining activities. It also holds implications for post-divestment shareholders, including the Indonesian government’s investment arm, MIND ID, which will subsequently increase its stake in the company.

Strategic Investments on the Horizon

Vale Indonesia has been focusing on a series of significant investments approved by its shareholders, targeting development in the Pomalaa, Bahodopi, and Sorowako Blocks. These projects, which are set to be funded through internal cash flow and potential debt or bond financing, include major smelter initiatives with a combined valuation of up to US$ 9 billion.

Key Project Highlights

One notable project is the High Pressure Acid Leaching (HPAL) Smelter in Pomalaa, Southeast Sulawesi. In collaboration with Zhejiang Huayou Cobalt Co Ltd, Vale Indonesia is constructing a facility and mine with the capacity to produce 120,000 tons of nickel in Mix Sulphide Precipitate annually. This undertaking has been designated as a National Strategic Project and represents one of the largest of its kind.

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