Jokowi holds key to Vale Indonesia's divestment to switch its license from a work contract to a mining business permit. (GA Photo/Mohammad Defrizal)
Vale Keen to Meet Jokowi to Push for Divestment Decision
BY :NUR YASMIN
AUGUST 27, 2019
Jakarta. Vale Indonesia, the country's largest nickel producer, said they were looking forward to a meeting between President Joko "Jokowi" Widodo and the top executive from its Brazilian parent company Vale to discuss the divestment of the company's shares to a local entity.
"I will ask the bosses to come [to Indonesia] to meet with the president. Hopefully, we can schedule a meeting with him. If not, who will help us," Nico Kanter, Vale Indonesia's president director, said on Tuesday.
The government has demanded that Vale's foreign owners divest at least 40 percent of their shares to local entities, including the government, state-owned enterprises and local companies.
The company has so far sold 20.5 percent of the shares to the public and is required to sell the remaining 20 percent by October.
The divestment was part of the requirements for the company to switch its license from a work contract to a mining business permit five years ago.
Indonesia Asahan Aluminum (Inalum), a state-owned holding for mining companies, has said it was ready to buy Vale Indonesia's remaining shares but needs a green light from the government to do it.
Inalum's subsidiary Aneka Tambang has also expressed an interest to buy the shares.
Nico said he was a little concerned with the long wait for the government's decision on the divestment since the October deadline is approaching.
"But we fully trust that the government sees Vale as a strategic partner," Nico said.
There has been no valuation or offer for Vale Indonesia's divestment, but the company commanded a market capitalization of Rp 31 trillion ($2.2 billion) at the Indonesia Stock Exchange on Tuesday.
The company is currently controlled by Vale Canada, which owns 58.73 percent of its shares. Sumitomo Metal Mining (20.1 percent), Vale Japan (0.55 percent) and Sumitomo Corporation (0.14 percent) are the foreign investors in the company. The Indonesian public owns 20.5 percent of the company's shares.
Vale Indonesia is currently in the final stage of talks with an undisclosed Chinese company for the construction of a ferronickel smelter near its Bahadopi mine in Central Sulawesi.
"We hope the project can be completed soon. The negotiation has taken longer than we expected," Vale Indonesia director Febriani Eddy said on Tuesday.
The refining plant will have the capacity to produce 70,000 ferronickel per year and will cost somewhere between $1.6 billion and $1.8 billion.
Vale will also need $300 million to develop the mine. Febriani said Vale Indonesia will bear all the investment costs.
Vale Indonesia is also in negotiations with Japanese mining company Sumitomo to build a nickel smelter near its mine in Pomalaa in Southeast Sulawesi.
Under the plan, Sumitomo will have a 51 percent stake in the smelter, with the rest controlled by Vale.
Febriani said the smelter will require an investment of $2.5 billion and the company will need another $300 million to develop the mine.
Vale has already applied for permits for the plant and the mine, a process expected to be completed by 2021.
After that, Vale will begin construction on the Pomalaa smelter, which could take up to five years.