Vale won?t covert COW to IUPK

Petromindo|Lucky

IDX-listed integrated nickel mining company PT Vale Indonesia Tbk will not convert its current mining permit status to special mining business license (IUPK), opting to maintain the current mining contract of work (COW) until it expires in 2025, Kontan reported on Friday.

The company, which is controlled by Brazil?s Vale S.A., will only covert the mining permit status to IUPK when it seeks for extension of the current contract, the paper said.

As such, PT Vale will only be required to divest up to 40 percent shares to Indonesian investors, instead of up to 51 percent required by existing regulation for mining firms holding the IUPK or IUP mining business license. The paper said that this also means that PT Vale, in which public investors have already owned 20 percent of its shares, will not have to immediately divest the remaining 20 percent shares to local investors. ?That (the divestment of the remaining 20 percent shares) will be discussed later on when we enter (convert) into IUPK,? said PT Vale President Director Nico Kanter on Thursday.

He pointed out that according to its current mining contract, which was amended by the government in 2014, the company as an integrated mining operation, is allowed to divest only up to 40 percent stake instead of 51 percent.

The current regulation stipulates that IUP and IUPK mining companies are required to gradually divest up to 51 percent shares to Indonesian investors starting five years after operation, in the hope that after 10 years, the entire 51 percent stake has already been divested.

The government recently introduced a new regulation allowing mining firms to continue export of mineral concentrates for the next five years under certain conditions including converting their COW into IUPK and commitment to develop domestic smelters within five years. PT Vale does not need to convert into IUPK to be allowed to export as it has operated processing facilities and does no longer export mineral ores. (*)