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Jakarta Post

Ministry gives green light for Inalum to acquire Vale Indonesia’s stocks

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Tue, October 8, 2019   /   04:38 pm
Ministry gives green light for Inalum to acquire Vale Indonesia’s stocks Energy and Mineral Resources deputy minister Archandra Tahar. ( JP/Dhoni Setiawan)

The Energy and Mineral Resources Ministry has given its blessing to state-owned mining holding company Indonesia Asahan Aluminium (Inalum), which recently has rebranded itself as MIND ID, to acquire one-fifth of publicly-listed nickel miner Vale Indonesia stocks.

“Inalum has been appointed. It’s done,” the ministry’s coal and mineral mining director general, Bambang Gatot Ariyono, told reporters in Jakarta on Monday.

He added that his office, represented by deputy minister Arcandra Tahar, had sent a letter on the matter to Finance Minister Sri Mulyani Indrawati. Approval from the State-Owned Enterprises Ministry is also needed to commence the acquisition.

Once completed, the acquisition would further fatten the operations of Inalum which, aside from its own aluminum mining activity, also owns gold and copper miner Freeport Indonesia (51.2 percent share), diversified miner Aneka Tambang (65 percent), coal miner Bukit Asam (65.2 percent) and tin miner Timah (65 percent).

Bambang added that the government would let Inalum and Vale determine the value of the 20 percent share on a business-to-business basis.

Inalum and Vale representatives were not immediately available for comment but it was Inalum president director Budi Gunadi Sadikin who first mentioned the acquisition plan in July.

Read also: Inalum eyes 20 percent stake in Vale Indonesia

Budi said at a hearing with the House of Representatives that the holding company was interested and ready to acquire a 20 percent stake in Vale, which would be worth an estimated US$1.5 billion.

“We want [a 20 percent stake in Vale], but only if we are appointed by the government. If we already have the assignment, then we are more than ready [to take it],” he said.

Budi added that Inalum would prioritize using internal funds to acquire Vale, but if such funds were insufficient, the holding company would use either bond issuances or bank loans to support funding.

Under Vale’s contract of work updated in 2014, the nickel miner is obligated to divest 40 percent to shareholders in Indonesia, 20 percent of which has been done through the Indonesia Stock Exchange (IDX).

The divestment is mandated under Government Regulation No. 77/2014 on coal mineral mining operations.

Vale has until October this year to divest the remaining 20 percent, but Vale Indonesia president director Nicolas Kanter said the company wanted to settle the matter earlier than the deadline as a gesture of goodwill to the government.

According to its quarterly financial report, Vale Indonesia booked a first half net loss of $22.77 million, reversing a net profit of $53.54 million booked in the same period last year.

Losses were due to a 22 percent year-on-year (yoy) decrease in first half sales to $292.25 million, mainly from decreased sales to Vale Canada and Sumitomo Metal Mining.