Erick Thohir’s Big Plan After BUMN Caplok Vale Shares

Jakarta, CNBC Indonesia – Minister of State-Owned Enterprises (BUMN) Erick Thohir conveyed the plan after SOEs control 20% of the shares of PT Vale Indonesia Tbk (INCO), through PT Inalum (Persero) or MIND ID. Vale Indonesia is prepared to support the downstream plan for the nickel industry in Indonesia.

In his statement, Erick said that this would allow MIND ID to have strategic access to secure the supply of raw materials for Indonesia’s downstream nickel industry. Both for downstreaming the nickel industry into stainless steel, as well as into electric vehicle batteries.

“The purchase of Vale Indonesia shares by MIND ID is in accordance with the BUMN mandate to manage Indonesia’s strategic mineral reserves as well as the downstreaming of the national mining industry, especially domestic nickel so that it will produce domestic products with economic value up to 4-5 times higher than upstream products,” he said. Erick in his press release, Thursday (8/10/2020).


He revealed, since the government banned nickel exports as of January 1, 2020 MIND ID or PT Inalum (Persero) has been faced with challenges to innovate and restructure business models.

One of the reasons for this is to prepare this company to enter the EV Battery industry, which currently has 27.9% of its market share in the world still controlled by China, while Indonesia only takes part as a producer and exporter of raw goods with a 27% share in the global market.

The plan will be executed with the construction of a lithium-ion factory which is planned to be near two nickel mines owned by PT Aneka Tambang Tbk (ANTM) in Tanjung Buli, East Halmahera and in Konawe Utara, Southeast Sulawesi.

“MIND ID will also focus on nickel as core business by building an industrial development ecosystem for this type of mineral for the sake of downstreaming domestic products and opening up opportunities for cooperation, “he said.

The transaction of transferring INCO shares to MIND ID was carried out on Wednesday (7/10/2020) with a total transaction of IDR 5.52 trillion. VCL divested 14.9% of its shares and SMM’s 5.1% at Rp 2,780 per share.

With the completion of this transaction, share ownership in Vale Indonesia changed to Vale Group 44.34%, MIND ID 20.00%, SMM 15.03%, Sumitomo Corporation 0.14%, and the public 20.49%.

This transaction was broken down into two transactions from foreign investors using the broker PT Citigroup Sekuritas (CG).

MIND ID officially signed a share sale and purchase agreement on June 19, 2020 for the divestment of 20% of Vale shares (equivalent to 2 billion shares) with other majority shareholders of Vale Indonesia, namely VCL and SMM.

Erick said this transaction was a step to strengthen the domestic value chain and strengthen Indonesia’s capability to produce EV batteries.

“With this transaction, we have succeeded in adding more state ownership in the mining sector. Indonesia is one of the largest nickel producers in the world so that the Vale Indonesia share transaction is an important part in the downstreaming of the national mining industry which has a strategic role in the global nickel industry,” said Erick. press release, Thursday (8/10/2020).

He revealed, MIND ID’s ownership of Vale’s shares will give the company strategic access to secure the supply of raw materials for Indonesia’s downstream nickel industry. Both for downstreaming the nickel industry into stainless steel, as well as into electric vehicle batteries.

To support this nickel downstream plan, MIND ID is also conducting innovation and restructuring the business model in this industry. This was done after the nickel export policy was banned as of January 1, 2020.

In addition, the construction of a lithium-ion factory is also planned to be carried out near two nickel mines owned by PT Aneka Tambang Tbk (ANTM) in Tanjung Buli, East Halmahera and in Konawe Utara, Southeast Sulawesi.

The goal is that the company can compete in the world EV Battery market, which is 27.9% controlled by China.

MIND ID will also focus on nickel as a core business by building an ecosystem for the development of this type of mineral industry for the sake of downstreaming domestic products and opening up opportunities for collaboration.

The mandate to divest shares is an obligation to amend the Contract of Work (COW) in 2014 between the government and Vale Indonesia which must be implemented five years after the amendment.

KK Vale will expire in 2025 and can be changed or extended into a special mining business license (IUPK) in accordance with statutory regulations.

Trading data from the Indonesia Stock Exchange (IDX) noted that the divestment transaction was carried out last Wednesday. Local investors through the broker PT Danareksa Sekuritas (OD) owned by PT Danareksa, which is actually a state-owned company, purchased 19,872,677 lots of INCO shares at a price of Rp 2,780 / unit

[Gambas:Video CNBC]

(hps / hps)


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