Govt, Vale sign Contract of Work amendment
Friday, October 17 2014 - 08:49 AM WIB
The Government of Indonesia (Gol) and PT Vale Indonesia Tbk signed on Friday an amendment of the Contract of Work (CoW) marking the conclusion of the renegotiation process, as required by the 2009 Mining Law.
The government was represented by Coordinating Minister of Economy and acting Minister of Energy and Mineral Resources (EMR), Chairul Tanjung, while PT Vale was represented by the company?s President Director and CEO, Nico Kanter, and CFO Febriany Eddy. The signing was witnessed by Vice Minister of EMR, Susilo Siswoutomo, Director General of Mineral and Coal, R. Sukhyar, and Executive Director of Vale, Base Metals, Peter Poppinga, Vale said in a statement.
The amendment of the CoW between the Gol and PT Vale includes the following:
? An immediate reduction in the size of the company?s total CoW area from the current 190,510 hectares to 118,435 hectares. At the expiry of the CoW on December 28, 2025, the company will maintaip 25,000 hectares as ore zones that the Company proposes to exploit. In addition to the ore zones, the Company can retain areas required to support its operations and other needs. This represents renegotiated land package that is sufficient to support PT Vale?s investments and long term growth plans.
? An agreed royalty rate of 2% of sales (escalating to 3% at increased nickel prices) that is aligned with the royalty structure of the government regulation and reflects the evolution of market dynamics.
? A requirement for PT Vale to divest a further 20% of the company?s shares to Indonesian participants. This is consistent with the Gol requirement for integrated mining and processing companies that 40% of shares be held by Indonesian participants and recognizes 20% of PT Vale shares are currently owned by public floating shareholders through the Indonesia Stock Exchange. Process of divestment will be conducted within five years.
? PT Vale can submit a request to continue its operations beyond CoW expiry for a 2 x 10-year period, in the form of an operating license, subject to government approval. The government approval shall consider the gompany?s fulfillment of its requirements under the CoW amendment.
PT Vale believes that with this amendment, the company is well-positioned to contribute to the development of Indonesia and continue to create shareholder value. The company extends its appreciation to GoI for its valuable support and trust.
Editing by Johannes Simbolon