Vale Canada (VCL) and Sumitomo Metal Mining (SMM) have agreed to sell a 14% stake in Vale Indonesia to Indonesia’s state-owned company Mineral Industri Indonesia (MIND ID).

The agreement represents an important step towards fulfilling Vale Indonesia’s divestment obligations under Indonesian mining law.

Under the terms of the agreement, VCL and SMM will divest their 14% stake in Vale Indonesia to MIND ID, which enables MIND ID as the largest shareholder of Vale Indonesia.

All the partners will finalise a detailed transaction mechanism through definitive agreements.

The transaction is expected to be completed in 2024, subject to customary closing conditions.

Vale Indonesia CEO Febriany Eddy said: “With the signing of this Agreement, PT VaIe is advancing steadfastly towards meeting its divestment obligations, which is a pre-requisite to obtain an extension of our mining license in the form of a Special Mining Business License (IUPK).

“The issuance of the IUPK will give certainty to our business, particularly our major investment agenda.”

Previously, VCL owned a 44.3% stake in Vale Indonesia, while SMM held 15% and MIND ID owned a 20% stake in Vale Indonesia.

Upon closing of the transaction, the stakes of VCL and SNM will be down to 33.9% and 11.5%, respectively, while MIND ID’s stake will increase to 34%.

The agreement indicates that the government promotes cooperation and leverages the combined strength of the three shareholders to support Vale Indonesia’s growth plan.

Also, its growth strategy aligns with the Indonesian government’s ambition for mineral down streaming backed with sustainable mining practices, said Vale Indonesia.

In September this year, Vale Indonesia signed a cooperation agreement with Zhejiang Huayou Cobalt (Huayou) and Huali Nickel Indonesia (Huali) to build High-Pressure Acid Leaching (HPAL) facilities in Malili, East Luwu, South Sulawesi.

The facilities will process 60,000 tons of nickel and around 5,000 tons of cobalt per annum in Mixed Hydroxide Precipitate (MHP) products, further processed into electric vehicle batteries.