New Threat Unlock: Vale Confronted by Concession Return Possibility

A call for the withdrawal of mining territories has arisen amid the contentious negotiations over the stake divestment of PT Vale Indonesia Tbk (INCO).

The state-owned mining holding, PT Mineral Industri Indonesia (MIND ID), suggests that the government might ask, or even demand, that Vale Indonesia return the mining territories due to unfulfilled obligations within the Contract of Work (COW), which the nickel mining company operating in Sulawesi could not meet.

MIND ID CEO Hendi Prio Santoso explained that according to the COW's mandate, Vale Indonesia is obligated to develop a smelter using the Rotary Kiln Electric Furnace (RKEF) technology. However, recently, Vale proposed substituting it with a smelter using the High-Pressure Acid Leach (HPAL) technology.

"This is recorded in the COW as a requirement for a 25 percent production capacity development in Sorowako. But, from 2014 until the latest, this has failed twice, and Vale proposed a substitution," Hendi said during the hearing with the House’s Energy Commission and the Ministry of Energy and Mineral Resources, Vale Indonesia, and MIND ID on Tuesday.

Currently, the HPAL smelter project is still in the preparatory study phase. "This needs to be noted as it relates to the conditions in the COW that must be followed by Vale Indonesia," he added.