ASIATODAY.ID, JAKARTA – Minister of Energy and Mineral Resources of the Republic of Indonesia, Arifin Tasrif confirmed the nickel mining concession of PT Vale Indonesia Tbk. (INCO) will be extended for the next 20 years, after the company’s work contract ends in December 2025.
The extension of the concession is a consequence of the conversion of INCO’s work contract into a special mining business permit (IUPK) after the INCO share divestment process was completed.
The Indonesian State-Owned Enterprise Holding Mining Industry MIND ID has signed a preliminary agreement or head of agreement (HoA) with INCO’s foreign shareholders regarding the remaining 14% divestment obligation. The signing of the HoA was carried out on the sidelines of the 2023 Asia Pacific Economic Cooperation (APEC) High Level Conference in San Francisco, United States, this week.
Arifin said, through the signing of the HoA, several things were agreed regarding the certainty of converting INCO’s work contract to IUPK.
“Vale’s permit has been extended for 20 years,” said Arifin when confirmed, Friday (17/11/2023).
MIND ID will certainly receive controlling rights regarding the company’s future strategic decisions. The reason is, MIND ID has the right to appoint two representatives each to occupy the positions of main director and main commissioner.
However, Arifin has not been able to detail the contents of the HoA signed regarding the acquisition price of 14% of INCO’s foreign shares. He said that two foreign shareholders of INCO, namely Vale Canada Limited and Sumitomo Metal Mining, were committed to giving a discount to some of the shares.
“The important thing is that it must be cheaper than the market price,” he said.
Meanwhile, INCO’s current share ownership structure is still largely controlled by Vale Canada Limited at 43.79%, MIND ID at 20%, and Sumitomo Metal Mining at 15.03%, while public ownership is 20.38%.
With the agreement to divest 14% of shares, MIND ID has the potential to control 34% of INCO shares. The concession held by INCO based on the 2014 amendment to the work contract reached 118,435 hectares spread across South Sulawesi (70,566 hectares), Central Sulawesi (22,699 hectares) and Southeast Sulawesi (24,752 hectares).
In 2017, INCO’s work contract area was returned to the government covering 418 hectares for the needs of the transmigration project at that time. Thus, since 2017 the area of the work contract has become 118,017 hectares.
Nevertheless, the area that has been utilized, since the smelter in Sorowako, South Sulawesi began commercial operations in 1978, has only reached around 7,000 hectares to 8,000 hectares or around 6 percent to 7 percent of the total area of the 2014 work contract amendment.
As of December 2021, INCO’s estimated nickel ore resources are 300 million tonnes with reserves of 60 million tonnes. Meanwhile, Vale’s average production capacity is 70,000 tons to 80,000 tons each year currently. (AT Network)
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