Before Extending Vale's (INCO) Contract, Government Discusses Taxation Terms

CORPORATE STRATEGIC - JAKARTA. The government has confirmed that the extension of the contract permit for PT Vale Indonesia Tbk (INCO) is currently under discussion.

The Minister of Energy and Mineral Resources (ESDM), Arifin Tasrif, said that several points are still being discussed by the government.

"There are tax calculations, and there are (also) new production plans," said Arifin at the Ministry of ESDM, on Friday (8/3).

However, Arifin did not detail what tax provisions are currently being discussed. What is certain is that the duration of the contract extension for INCO will follow the applicable laws and regulations.

Just so you know, INCO has four Contract of Work (KK) permits with production operation stages that will end on December 27-28, 2025.
After divesting 14% of INCO shares to the mining industry holding, MIND ID, the government intends to extend the operation permit from KK to Special Mining Business Permit (IUPK) for INCO.

Meanwhile, the divestment process of 14% of shares previously carried out by INCO to the mining industry holding, MIND ID is a requirement for the extension of IUPK for INCO.

On the other hand, the Pomalaa Smelter Project worth US$ 4.5 billion is confirmed to be included in the INCO IUPK document later.

Arifin Tasrif revealed the High-Pressure Acid Leach (HPAL) Pomalaa Block project will be a requirement stipulated for the extension of INCO's operating permit.

"Now we give the mining business extension, with the note that he must build a smelter with Ford, if he doesn't build it, it's canceled (his IUPK)," said Arifin in Gresik, quoted Sunday (3/3).

Arifin added the government will regularly evaluate the development of INCO's downstream projects after the extension of the permit.

"It's in the agreement, later we will know every year we check, don't be like bauxite," Arifin emphasized.

Just so you know, INCO and Zhejiang Huayou Cobalt Co. (Huayou) China have reached an agreement with global car manufacturer Ford Motor Co to create a three-party collaboration.

This effort is made to advance sustainable nickel production and help make electric vehicle (EV) batteries more affordable.

Meanwhile, the government plans to evaluate the construction of one of INCO's smelters.

Arifin explained this step is in line with the government's commitment to increase the added value of nickel products.

The government itself has decided to impose a moratorium on class II nickel smelters that produce Nickel Pig Iron (NPI) and Ferronickel (FeNi) products. Restrictions on the construction of class II nickel smelters are deemed necessary to maintain the supply level in the market. The moratorium is aimed at projects that have not yet started or are still in the submission stage.

Arifin confirmed that the Rotary Kiln Electric Furnace (RKEF) Project owned by Vale Indonesia has the potential to be evaluated.

"Definitely (evaluated), but it doesn't mean stopping its downstream program but it has to enter a segment (further) where its product is still growing its market," Arifin explained.

Just so you know, Vale Indonesia has a smelter program in Bahodopi which is planned to consist of eight RKEF lines with an estimated production of 73,000 metric tons of nickel per year along with its supporting facilities.