Mining holding Brain.ID to obtain Vale Indonesia for $392m by year-end
22 June, 2020
State-possessed mining holding company MIND ID plans to get a 20 percent stake of 1 of the country’s best nickel miners, PT Vale Indonesia (INCO), by year-end in a move that's expected to further more strengthen Indonesia’s grip in domestic mineral resources.
Head ID signed on Thursday a deal to pay Rp 5.52 trillion (US$392 million) INCO’s shareholders, Brazil-based Vale and Japan-based Sumitomo Metal Mining Co. Ltd, to obtain the stake. Vale will receive Rp 4.13 trillion and Sumitomo Rp 1.39 trillion.
The deal brings a finish to year-long negotiations between the three companies.
The acquisition has been pushed back for the second time this year because of pandemic-related complications. INCO's shareholders in the beginning scheduled the acquisition for March but postponed it to Might amid market uncertainty
“This transaction demonstrates the confidence of global mining companies at heart ID and Indonesia all together,” said MIND ID president director Orias Petrus Moedak on Saturday.
The deal, which values INCO’s shares at Rp 2,780 each, also grants Vale continued “financial and operational control” of INCO, the Brazil-based company wrote on Fri.
“This transaction represents a significant creation in PT Vale's long occurrence in Indonesia and reinforces its commitment to keep buying the spot,” Vale added.
With the most recent deal, INCO will divest a complete 41 percent of its shares. The nickel miner previously divested a 21 percent stake through the Indonesia STOCK MARKET (IDX).
Vale, meanwhile, will retain a good 44 percent share of INCO. The rest of the 15 percent will be held by Sumitomo.
The Brazil-based company is divesting INCO in exchange for being able to continue its mining functions beyond 2025, which is when INCO’s existing contract will expire. Vale’s Indonesian arm operates among the world’s greatest nickel mining operations in mineral-rich Sulawesi.
Such a divestment, mandated by Government Regulation No. 77/2014, is part of Indonesia’s marketing campaign to tighten control over its mineral prosperity and therefore, boost state revenue.
The Southeast Asian country is among the world’s top producers of nickel, tin and coal.
Brain ID, officially PT Indonesia Asahan Aluminium (Inalum), previously raised $1.5 billion in global bonds to obtain INCO and to pay back its subsidiaries’ debts.
Before INCO, the holding company acquired the local arm of United States-based metal miner PT Freeport Indonesia (PTFI), which operates the world’s greatest gold mine in Indonesia’s most impoverished province, Papua.
Stocks of INCO, traded at the IDX, dropped 1.04 percent as of 11:18 a.m. Jakarta time on Monday as the primary gauge, the Jakarta Composite Index (JCI), slipped 0.03 percent.
Source: www.thejakartapost.com
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