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Vale Canada urged to adjust valuation in divestment to Indonesia
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A worker mans a furnace as part of the nickel smelting process at mining company PT Vale's smelting plant in Soroako, South Sulawesi, on March 30, 2019. (AFP/Bannu Mazandra)
S
tate-owned Enterprises (SOEs) Minister Erick Thohir has said he considers Vale Canada Ltd.’s (VCL) valuation of nickel miner PT Vale Indonesia (INCO) too high.
“The obstacle is that we think the valuation is too high,” Erick said on Thursday, as quoted by Tempo.co. He did not reveal the figure in dispute.
To reduce the valuation, Erick suggested Vale relinquish some of its areas.
“If they do not want to do it, then we must find a proper valuation.,” he said.
The divestment is one of the requirements for INCO to obtain a special mining permit (IUPK), which will allow it to extend its mining contract. INCO’s current contract will end in December 2025. To earn a new IUPK, the subsidiary must divest a portion of its shares to state-owned mining holding company MIND ID.
As the interim coordinating maritime affairs and investment minister, Erick regarded the high valuation as an obstacle in the ongoing negotiation process. He also noted that the negotiation was still ongoing, despite the differences on price.
“It is a tight negotiation, but it doesn’t mean we will cancel [the divestment]. We have implemented the [memorandum of understanding] and have agreed on 14 percent. However, the valuation must be good. This is our responsibility,” the minister added.
