Indonesia and Vale Reach Agreement on Share Divestment Terms

Indonesia and Vale Base Metals have finalized their negotiations, reaching a preliminary agreement on the pricing for a share divestment plan involving Vale's Indonesian unit. This development, confirmed by the Indonesian mining minister on Friday, marks a significant step towards fulfilling the regulatory requirements for extending Vale Indonesia's mining operations beyond 2025.

Under the terms of the agreement, Vale Canada, part of Vale Base Metals, along with Japan's Sumitomo Metal Mining, will sell a 14% stake in their Indonesian nickel mining operation to Indonesia's state mining holding company, MIND ID. Although the specific price has not been disclosed, it was noted to be under the current market value.

This divestment is crucial for Vale Indonesia as it seeks to extend its mining permit beyond its current 2025 expiration. Indonesian regulations mandate foreign investors to divest 51% of their holdings to local entities after a certain operational period, emphasizing the importance of local ownership in foreign mining ventures within the country.

The completion of this transaction will elevate MIND ID to the position of the largest shareholder in Vale Indonesia, increasing its stake from 20% to 34%. Consequently, Vale Canada's ownership will decrease to 33.9%, and Sumitomo's to 11.5%. This rearrangement not only aligns with regulatory mandates but also reinforces Indonesia's commitment to having significant local stakes in key mining operations.

Approximately 20% of Vale Indonesia's shares are currently traded publicly, underscoring the company's significant role in the global nickel market and the importance of these negotiations for the future of Indonesia's mining industry.