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VALE INDONESIA TBK-JAKARTA. The divestment of shares in PT Vale Indonesia Tbk (INCO) to the Indonesian government through the state-owned mining holding, Mining Industry Indonesia (MIND ID), is just waiting for a price agreement. Special Staff of the Minister of State-Owned Enterprises, Arya Sinulingga, said that the government wants to get the best price in this transaction.
“What we are waiting for is just the price. Yes, we want the best price. This is in Indonesia, we want the best price,” Arya told Kontan.co.id, Tuesday (9/1).
Meanwhile, other aspects of the divestment transaction plan have been agreed upon. “The rest is already settled. It's good, how the legal issues will be, what position we will be in if we are the majority, there is already an understanding with Vale,” explained Arya without detailing the understandings mentioned.
In line with this, the Secretary of the State-Owned Mining Industry Holding Company MIND ID, Heri Yusuf, said that his party and the shareholders of Vale Indonesia have agreed in principle. However, the process of negotiating a definitive agreement is still ongoing.
“There is already an agreement in principle, as has been covered by the media previously. But currently, we are still negotiating a definitive agreement, including the necessary legal agreements,” said Heri when contacted by Kontan.co.id, Tuesday (9/1).
As known, the further divestment of Vale Indonesia shares is a requirement that needs to be fulfilled so that Vale Indonesia can continue the contract extension
Based on the latest securities holder registration monthly report submitted by Arifin in a Work Meeting with the VII Commission of the Indonesian House of Representatives (13/6), the majority of Vale Indonesia shares are still held by Vale Canada Limited (VCL) with a share ownership portion of 43.79%.
With that ownership portion, VCL is currently still the controlling entity over Vale Indonesia. Meanwhile, MIND ID currently owns 20%, the rest is owned by Sumitomo Metal Mining at 15.03%, and public ownership of 21.18%.
To get a concession extension and obtain a Special Mining Business License (IUPK), Vale Indonesia, whose Work Contract concession will expire on December 28, 2025, must fulfill a 51% share divestment gradually to the Central Government, Regional Government, State-Owned Enterprises, regional-owned enterprises, and/or national private enterprises.
This is regulated in Law Number 3 of 2020 concerning Amendments to Law Number 4 of 2009 concerning Mineral and Coal Mining (Minerba).
However, the realization of the implementation of further divestment of Vale Indonesia shares is still hampered by price negotiations, at least in the past few months. News reaching Kontan.co.id, Vale Canada Limited (VCL) asks for a divestment of 14% of INCO shares to be valued at 1.5 times the book value or price to book value (PBV) of INCO.
Meanwhile, Mind Id, which is planning to take 14% of INCO shares, reportedly asked for a price equivalent to 1.3 times the PBV of Vale Indonesia. However, Kontan.co.id has not yet received official confirmation from the Ministry of State-Owned Enterprises, Mind Id, or Vale about this news.
Executive Director of the Center for Mining Energy Law Studies (Pushep), Bisman Bakhtiar, said that divestment negotiations are business-to-business (B2B). Therefore, it is natural if the process is prolonged.
However, Bisman reminded us that one of the purposes of this divestment is to provide greater results/income for the country. Therefore, according to Bisman, the government needs to review and reconsider the Vale Indonesia divestment plan if it is not resolved.
“That is, by not extending its Work Contract (KK) to IUPK, so it returns to the state and can be managed by a state-owned enterprise. In certain conditions, state-owned enterprises can also partner or collaborate with other investors, so this policy will be much more beneficial and provide greater income for the country,” explained Bisman.
