Vale (NYSE: VALE) will divest 14% of its stake in Indonesian nickel unit to fulfill the country’s divestment rules, mining minister Arifin Tasrif told reporters on Friday.
The shares will be sold to MIND ID, Indonesia’s state mining holding company, at a price negotiated between the parties, the minister said.
Vale’s current operation permit in Indonesia expires at the end of 2025. Divesting its shares is a necessary move to have its contract renewed.
The Brazilian miner, a major nickel and iron ore miner, will have three years following the permit extension to show progress in the construction of its nickel processing facilities.
“For this extension, they have to carry out all those programmes. If they don’t do them in three years, it (the extension) will be terminated,” Tasrif said.
The minister was referring to projects that include building two high-pressure acid leaching (HPAL) plants with China’s Zhejiang Huayou Cobalt Co and other partners.
The facilities will produce mixed hydroxide precipitate (MHP) from nickel, a material used to make electric vehicle batteries.
Vale is also partnering with China’s Shandong Xinhai Technology Co. Ltd and a unit of China Baowu Steel Group Corp. Ltd to build a ferro-nickel plant.
The projects are expected to take Vale Indonesia’s refining capacity from around 75,000 tonnes per year to nearly 300,000 tonnes once in operations.
Foreign investors in Indonesia are required to divest 51% of their stake to local buyers after a certain period of operation.
Vale Base Metals, which controls the Indonesian unit through Vale Canada, announced in September it would invest $10 billion in Indonesia over the next decade.
Vale Canada currently has about 43.79% of Vale Indonesia and Vale Japan 0.54%. Other foreign investors include Sumitomo Metal Mining, with 15.03%.
(With files from Reuters)
