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The complex negotiations for the acquisition of Vale nickel company
The primary motive for the PT Vale change of hands is stronger government policies calling for it to take control of the management of critical minerals.
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The government must tread carefully in completing its acquisition of a controlling ownership of PT Vale Indonesia, the largest and oldest nickel company in Indonesia, which is listed on the Indonesia Stock Exchange (IDX) under the name INCO and is considered by many analysts and even several cabinet ministers to be a well-managed mining company socially and environmentally.
(JP/Ruslan Sangadji)
T
he government must tread carefully in completing its acquisition of a controlling ownership of PT Vale Indonesia, the largest and oldest nickel company in Indonesia, which is listed on the Indonesia Stock Exchange (IDX) under the name INCO and is considered by many analysts and even several cabinet ministers to be a well-managed mining company socially and environmentally.
It’s difficult to comprehend what Energy and Mineral Resources Minister Arifin Tasrif really meant when he said that a “final agreement has been reached and the acquisition of Vale Indonesia’s control is now only a business-to-business matter” for state-owned Mind Id mining holding company to acquire an additional 14 percent of Vale to make it the controlling shareholder with 34 percent of the firm.
What is at risk for Indonesia is the credibility of its policy regarding foreign investors in natural resources, especially critical minerals such as nickel, the prospect of its ambition to become a major production base for electric vehicles and batteries and the trust of the investing public in the stock exchange.
But Brazilian global mining company Vale SA, currently the controlling shareholder, will suffer a very big loss of income if Vale Indonesia’s 118,000-hectare mining concession, which is spread across three provinces in Sulawesi, is not extended. Vale’s three nickel smelting projects with Chinese investors in South and Central Sulawesi, worth over US$8 billion, would also be jeopardized.
The negotiations for the share acquisition are now politically more sensitive because natural resource nationalism usually raises its ugly head in the runup to the presidential and legislative elections, which will take place in February, and the election of provincial, regency and city heads of government later in November. Mind Id also has to negotiate how much of the newly acquired shares should be given to the administrations of South, Southeast and Central Sulawesi and how these regional governments will pay for the shares.
Therefore, both parties – Vale and Sumitomo Metal Mining on one side and the government and Mind Id on the other – should be willing to give and take in the divestment negotiation process.
The negotiations for the divestment by the foreign investors to minority shareholders at Vale Indonesia, which is a prerequisite for the extension of its contract of work that will end in December 2025, should be a good opportunity for both sides to reflect on what has so far been amiss within Vale Indonesia’s management.
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