JAKARTA (TheInsiderStories) – PT Indonesia Asahan Aluminium (MIND ID0 officially hold 20 percent shares of PT Vale Indonesia Tbk (IDX: INCO) after signed a definitive agreement with Vale Canada Ltd., (VCL) and Japan’ Sumitomo Metal Mining Co., Ltd., said state own enterprises (SOE) minister. The transaction process is targeted to be completed by the end of 2020.
“Indonesia is one of the largest nickel producers in the world, so the transaction is an important part in the development of the battery industry for electric cars. Nickel has high potential in the future in line with the rapid trend of electric vehicles in the world,” said the minister, Erick Thohir in an official statement released on Friday (06/19).
MIND ID will pay Rp5.52 trillion (US$394.28 million) to both shareholders, which is Vale Canada will receive Rp4.13 trillion and Sumitomo Rp1.39 trillion. After the share sale, the ownerships of Vale Indonesia will changes to VCL 44.3 percent, MIND ID 20 percent, Sumitomo 15 percent, and public 20.7 percent.
The transaction part of the company’ efforts to extend the operation permit until 2025. Based on contract of work (CoW), all foreign miner in Indonesia should divest 20 percent of shares to the Indonesian government. Vale Indonesia has signed a 1996′ amendment with the government and will expire in December 2025.
Previously, director of MIND ID. Ogi Prastomiyono said, the company prepared funds US$500 million to acquire 20 percent stake of INCO shares. He adds, the company will use internal cash and from bank loans for the acquisition program.
The state mining holding company has secured loans from two Japanese banks, Sumitomo Mitsui Banking Corp., MUFJ Bank and local lender, PT Bank Mandiri Tbk (IDX: BMRI). He explained, there are several steps must be passed by the holding mining before completing the acquisition.
Earlier, President Joko Widodo expressed his readiness to assist Vale Indonesia divestment after met Brazilian Vale SA president and CEO, Eduardo Bartolomeo, at the State Palace on Sept. 23. Beside discussing the divestment, Vale also expressed their commitment to build smelter for ferro-nickel and high pressure acid leaching process.
The miner had talked with potential investor from China to build Bahodopi smelter in Central Sulawesi with costs up to US$2 billion. The output will be 700,000 tons per annum from the new smelter.
“We expect the groundbreaking of the projects starting next year and it can be finished in three years,” vice president director INCO, Febriyani Eddy told media last year.
Inline with the smelter development, Vale also prepared the supporting mining with total costs of $300million. The company has pocketed exploration permit and now waiting for the exploitation permit and the contract extension for the project.
The issuer had announced to invest $5 billion in nickel projects with its partners in the coming years, including $2.5 billion in battery-grade nickel plant projects with Japan’ Sumitomo Metal Mining Co. Ltd and China’ Qingshan Holding Group.
Vale and Qingshan have teamed up to build a battery-grade nickel plant in Indonesia at a cost of $700million with an annual nickel production capacity of 50,000 tons. Construction of the plant began in January and is expected to be completed within 16 to 18 months.
Vale is an integrated nickel mining and processing company operating in the Sorowako Block, East Luwu Regency, South Sulawesi. The multinational company based in Brazil actually has a divestment obligation of 40 percent.
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