Erick Thohir Gives This Threat If Vale Prices Divestment Shares Too Expensive

Jakarta –

BUMN Minister Erick Thohir spoke about the progress of PT share divestment negotiations Vale Indonesia Tbk (INCO). He said that until now price negotiations were still ongoing and no agreement had been reached.

Erick also gave a firm message to Vale Indonesia shareholders to provide the lowest possible share divestment price.

“We are still negotiating. Yes, we want to negotiate the cheapest possible price,” stressed Erick when met at the Ministry of Energy and Mineral Resources, Central Jakarta, Tuesday (21/11/2023).

So, if Vale is reluctant to provide a low price, Erick threatens to relinquish or shrink Vale Indonesia’s mining land.

“(Vale is asking for a premium price). That’s not possible, then we will relinquish some of the (mining land) owned by those who don’t comply with their commitments,” said Erick.

Erick admitted that Vale’s share price negotiations were a bit tough. But that doesn’t mean negotiations aren’t ongoing. The proof is that the initial agreement to release 14% shares has been signed.

“That’s why I said the negotiations were tough, it doesn’t mean it won’t happen, why did we carry out the MOU with 14% agreement. But the valuation has to be good, this is our responsibility,” said Erick.

So far PT Vale Indonesia has the following share ownership structure: Vale Canada Limited 43.79%, Sumitomo Metal Mining (SMM) 15.03%, BUMN MIND ID mining holding 20%, public share ownership 20.64% and Vale Japan Limited 0.54%. Reportedly the ownership of Vale Canada Limited and also Sumitomo Metal Mining will be divested.

The issue of Vale Indonesia’s land reduction was previously mentioned by the Main Director of MIND ID, Hendi Prio Santoso during a Hearing with Commission VII DPR, Wednesday 30 August 2023.

According to him, Vale failed to fulfill the investment obligations stated in the Contract of Work which will end in December 2025.

Some of these commitments are increasing nickel matte production by 25% at the Sorowako Project from the actual 2009-2013 average production, investment in building dryer & clinic capacity which has turned into high pressure acid leaching (HPAL) smelter investment.

Apart from that, there were two Vale investment commitments in the 2014 Contract of Work amendments which were later changed at the end of the concession period, such as the HPAL facility with Sumitomo and the development of the Bahodopi project in the 2014 CoW which also did not show significant progress in terms of economics and business feasibility.

“We hope that the government can carry out studies and assessments so that if development commitments are not fulfilled, then in accordance with KK regulations it is necessary to carry out relinquishment in areas related to the project,” said Hendi.

(thing/das)