JAKARTA — Indonesia’s state-owned mining holding company will acquire a 20% stake in the local subsidiary of Brazilian mining giant Vale, operator of the world’s largest nickel mine on the island of Sulawesi.
Indonesia is keen to expand control over nickel production as global demand for the commodity, used as batteries in electric vehicles, rises.
In a deal signed last week, Mind Id, the holding company, agreed to pay a combined $390 million or so to Vale and Japan’s Sumitomo Metal Mining for the Vale Indonesia stake. The transaction is to be completed by the end of the year. Afterward, Vale will have a stake of 44.3% and Sumitomo 15%; the rest of the shares will be traded publicly.
The deal is part of a 2014 agreement between Vale Indonesia and the government that stipulates Vale needs to divest 20% of its shares to Indonesian entities to be entitled to continue operating beyond 2025, when its mining contract with the government expires.
Nickel has always been important to Indonesia’s economy — the country is the world’s largest producer of nickel ore. In recent years, however, it has become an even more strategic commodity.
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