Vale Indonesia Share Divestment Negotiations: A Balancing Act

Ongoing Negotiations for Vale Share Divestment

The Indonesian Government, through Minister of State-Owned Enterprises (SOEs) Erick Thohir, has revealed ongoing negotiations regarding the divestment of a 14 percent stake in PT Vale Indonesia Tbk. This divestment, crucial for the extension of Vale Indonesia's contract expiring on December 28, 2025, is in the hands of mining SOE holding MIND ID.

Target and Government Stance

Erick Thohir has indicated that the government aims to secure what it deems a fair deal in this divestment process, without setting a specific deadline. The government's approach prioritizes a fair valuation for the shares, emphasizing Indonesia's openness to foreign investment while safeguarding national interests.

Government's Share Acquisition Strategy

Initially aiming for a 51 percent share, the government has adjusted its target to a total of 34 percent, including previously divested shares to the public. This revision reflects a balance between maintaining significant control and being accommodating to foreign investors.

Valuation and Price Considerations

Deputy SOE Minister Kartika Wirjoatmodjo (Tiko) highlighted the complex factors in determining the share price for Vale Indonesia. These include the market price of public shares, reserve values, and future cash flow projections. The ministry seeks a purchase price for MIND ID below the market value, yet negotiations are still underway as Vale has not proposed an offer price.