The government has decided to task state mining holding company Indonesia Asahan Aluminium, or Inalum, with buying a 20 percent stake in Vale Indonesia, paving the way for government ownership of a substantial piece of the largest nickel producer in the country.
Vale Indonesia operates an integrated nickel mining and processing factory in Sorowako, South Sulawesi.
Its mining permit requires the company to relinquish at least 40 percent of its shares to a local entity, government or private, by October.
Vale has already floated 20.5 percent of its shares at the Indonesia Stock Exchange.
"The Deputy Minister [of Energy and Mineral Resources, Arcandra Tahar] has written a letter the Finance Minister to appoint Inalum [as the taker of the Vale divestment]," Bambang Gatot, the mineral and coal director general at the Energy and Mineral Resources Ministry, said on Monday.
Inalum is fresh from another high-profile divestment, where it acquired a 51 percent stake in Freeport Indonesia, the largest gold and copper miner in the country, for $3.9 billion last year.
Bambang said a team comprising several ministries' staff have been working on a valuation of Vale's shares, but he refused to disclose any details.
Vale Indonesia's market capitalization was Rp 36 trillion ($2.5 billion) on Monday.
Vale Canada still owns 58.73 percent of Vale Indonesia. Sumitomo Metal Mining owns 20.1 percent, Vale Japan 0.55 percent, Sumitomo Corporation 0.14 percent, and Indonesian investors the remaining 20.5 percent.
8 October 2019