Jakarta. The Indonesian government has been advised to persist in its efforts to acquire a controlling stake in nickel mining company Vale Indonesia, which has been operating in the country since 1968.

The government using state-owned mining holdings MIND ID plans to acquire an additional 14 percent stake in Vale Indonesia, a unit of Toronto-based Vale Base Metals. This would increase the government's total ownership to 34 percent.

While the increased stake will allow MIND ID to appoint more commissioners to Vale, it will not grant decision-making power in areas such as project selection, dividend payout, or capital structure, according to Selly Adriatika, MIND ID's institutional relations division head. 

"The additional 14 percent stake in Vale Indonesia … won’t add any strategic value to MIND ID," Selly was quoted by Investor Daily newspaper as saying on Tuesday.

Energy and Mineral Resources Minister Arifin Tasrif said last weekend Vale initially had been asked to divest another 11 percent stake to the government, ensuring majority ownership by local shareholders. However, this was later increased to 14 percent.

The current ownership structure of Vale Indonesia is as follows: Vale Canada Limited holds 43.79 percent, MIND ID holds 20 percent, community members hold 20.49 percent, and Sumitomo Metal Mining Co. Ltd. holds 15.03 percent.

Mining industry analyst Ferdy Hasiman criticized the government's policy of compromise in this matter.

"Raising ownership to 34 percent cannot be regarded as a compromise. [The government] managed to acquire at least 51 percent of the stake in Freeport, it must do the same with Vale. And it’s mandated by the constitution, not by the president," Ferdy told the newspaper. "MIND ID must enter Vale wearing a badge of pride as a state-owned company."

Vale Indonesia operates a significant mining block in East Luwu Regency, South Sulawesi, and was granted a concession extension by the government in January 1996. The concession is set to expire on Dec. 28, 2025.

It reported a net profit of $98.1 million for the first quarter of the year, more than tripled from the previous quarter.