Indonesian President Joko Widodo expressed his readiness to assist PT Vale Indonesia Tbk (IDX: INCO) divestment - photo by the Company

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo expressed his readiness to assist PT Vale Indonesia Tbk (IDX: INCO) divestment. This was conveyed by the president when meeting with Brazilian Vale SA President and CEO Eduardo Bartolomeo at the State Palace on Monday (09/23).

After the meeting, INCO’ president director Nicolas Kanter has not been able to ensure that the government or state-owned companies will absorb the 20 percent of the shares. Recently, there are a number of companies have the potential to absorb Vale Indonesia’ shares. The parties are PT Indonesia Asahan Aluminum or PT Aneka Tambang Tbk (IDX: ANTM).

Beside discussing the divestment, Vale also expressed their commitment to build smelter for ferro-nickel and high pressure acid leaching process. Previously, 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’ve already discussed with the potential investor from China but we can’t disclose the company name after the deal close. 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 recently.

She continued, the share composition in Bahodopi projects is 51 percent and 49 percent. But, the two parties are still discussing to decide who will become the controlling shareholder in the joint venture company.

Inline with the smelter development, Vale also prepared the supporting mining with total costs of $300million, joined with Chinese’ company. She added, the company has pocketed exploration permit and now waiting for the exploitation permit and the contract extension.

Kanter 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 Indonesia 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.

At the se second quarter of 2019 (2Q), Vale has produced 17,631 metric tons of nickel in matte, 35 percent higher than production in 1Q, when planned maintenance activities were completed, said Kanter.

On a year-on-year basis, production in the 2Q of 2019 was about 7 percent lower than production in the same period in 2018. And, the production in 1H of 2019 was 15 percent lower than production in 1H of 2018.

Based on the government data, at least five mining companies are mandated to divest shares this year in order to comply with the applicable ruling. Beside Vale, gold producers PT Natarang Mining is required to divest 21 percent shares, PT Ensbury Kalteng Mining 20 percent, PT Kasongan Bumi Kencana 12 percent, PT Galuh Cempaka 17 percent, and PT Nusa Halmahera Minerals to divest 26 percent in 2020.

Under the Indonesia’ mining law, foreign mining companies  are obliged to divest increasing portion of equity in locally domiciled entities to Indonesians in stages. Based on the rule, the foreign mining companies must start to divest from fifth year of production and must divest at least 51 percent by 10 year.

Written by Staff Editor, Email: theinsiderstories@gmail.com