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Jakarta, CNBC Indonesia – PT Vale Indonesia Tbk (INCO) acknowledges that the company pays special management and technical fees to Vale Base Metals as a major shareholder based in Canada.

PT Vale Indonesia’s legal director, Anggun Kara Nataya, said the fees paid for Vale Base Metals were in the form of technical assistance or technical assistant fees the management support costs listed in the Technical Assistant Agreement and the management support costs listed in the Management Assistant Agreement.

“Maybe I can convey that the management agreement is true and that PT Vale Indonesia formalized it with Vale (Base Metals). Nothing is hidden regarding payments, we always disclose financial reports to the public and we always report them to the OJK. , the stock exchange and the public,” Anggun said during a hearing meeting (RDP) with Commission VII DPR RI, Jakarta, Tuesday (29/8/2023).

He explained that the filing was used to get help from a technology standpoint, as the technology used by INCO so far came from parent company Vale. Thus, the services of Vale Canada are necessary to maintain the technology owned by Vale Indonesia.

“Help on the technology side, so when the plant was built in 1970 using Canadian technology from Vale. For the technology process, they had help,” he added.

He also said that fees paid to the parent company were funded through company revenue, which is 1% per annum.

“The service fee is generally year on year, the amount paid continues to decrease until today in 2022 yesterday 1% of our net profit, and it is not a fixed fee that we pay Vale ( Canada),” he explained.

The company’s management fee for Vale Base Metals was revealed during a presentation by MIND ID Senior Director Hendi Prio Santoso.

Hendi said: Vale Base Metals has a technical assistance agreement or technical assistance agreement and management assistance or management assistant agreement with PT Vale Indonesia Tbk (INCO).

According to him, this agreement allows Vale Base Metals to obtain revenue from technical assistance and management costs.

This contradicts what MIND ID has gained from being a shareholder of PT Vale Indonesia over the past three years. Hendi said MIND ID only received one dividend despite being a shareholder since 2020.

Therefore, if MIND ID sells its shares and becomes the majority shareholder of PT Vale Indonesia, it will terminate the support and management agreement with Vale Base Metals.

“And we are committed to ensuring a more consistent distribution of dividends and eliminating the management and technical assistant fees that arise from executive assistant agreements and technical assistant agreements that Vale Base Metal takes from income, on turnover. During this time, we only receive dividends once. “We want to make sure that this is eliminated in the event of further divestments in the future,” Hendi said at the same time.

As is known, Vale Canada Limitée and Sumitomo Metal Mining Co. Ltd. agreed to offer a 14% stake to MIND ID Mining SOE Holding. This is part of a series of plans to divest Vale shares to Indonesia.

If the divestment is 14%, it means that MIND ID will hold a 34% stake in PT Vale Indonesia Tbk (INCO). Currently, MIND ID only has a 20% stake in PT Vale Indonesia.

With the 14% share tender offer, the shareholding composition of PT Vale Indonesia Tbk will change as follows:

– Vale Canada Limitée, from 43.79% currently, will drop to 33.29%.
– Mind ID of the current 20% will increase to 34%.
– Sumitomo Metal Mining from 15.03% currently will increase to 11.53%.
– Vale Japan Ltd at 0.54%.
– Public at 20.64%.

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