Vale Indonesia's Nickel Business Booms: Who Are Its Shareholders?

Nickel mining company PT Vale Indonesia Tbk (INCO) reported positive financial performance in the first half of 2023.

In the first six months of this year, they recorded revenue of USD 658.9 million, or approximately Rp 9.9 trillion (at an exchange rate of Rp 15,112 per USD), a 16.7% increase year-on-year (yoy) compared to the first half of 2022.

INCO's profit attributable to the parent entity also grew by 12% (yoy) to USD 168.5 million, or approximately Rp 2.5 trillion.

However, INCO's largest parent entity is not Indonesian, but a Canadian company.

According to information on its official website, as of July 28, 2023, the majority of INCO's shares are held by Vale Canada Limited (VCL), with a 43.79% ownership stake.

VCL itself is a subsidiary of Vale S.A., one of the world's largest nickel and metal mining companies headquartered in Brazil.

"The Company's direct parent entity is Vale Canada Limited (VCL), and the ultimate controlling entity is Vale S.A.," stated INCO management in its financial report.

Below VCL is PT Indonesia Asahan Aluminium (Inalum). This state-owned enterprise (SOE) holds 20.00% of INCO's shares.

Then there is Sumitomo Metal Mining (SMM), a Japanese company that holds 15.03% of INCO's shares, followed by Vale Japan Limited with a 0.54% ownership stake.

Meanwhile, the total proportion of INCO shares held by the public amounts to 20.64%.

"There are no public shareholders who own more than 5% of the issued and fully paid-up share capital as of June 30, 2023," said INCO management in its financial report.

The proportion of INCO share ownership is currently a hot topic of discussion in the House of Representatives (DPR).

Currently, Commission VII of the DPR is urging the Indonesian government to acquire a majority stake in INCO, so that the nickel resources they manage are under Indonesian control.

"Commission VII of the DPR urges the Ministry of Energy and Mineral Resources in the process of divesting shares of PT Vale Indonesia Tbk to support MIND ID in becoming the controlling shareholder, in order to obtain operational control rights and financial consolidation as a form of state control through SOEs," said Deputy Chairman of Commission VII of the DPR RI, Maman Abdurrahman, in his press release on Wednesday (June 14, 2023).

Similar sentiments were expressed by Member of Commission VII of the DPR, Ramson Siagian. He requested that the assets and nickel mining reserves of PT Vale Indonesia Tbk be consolidated into the Indonesian national wealth books, considering that these resources are currently recorded in Canada.

"This mine is different from manufacturing. If manufacturing, the assets are only land and industry, but this (mine) has something stored inside, namely resources and reserves. And this is recorded in Canada," said Ramson.