27 ASIAN LEGAL BUSINESS – JUNE 2023 WWW.LEGALBUSINESSONLINE.COM INDONESIA “Within this year, two nickel mining Indonesian companies have become listed in the Indonesia Stock Exchange (IDX), and the nickel reserves in Indonesia give significant potential for nickel mining companies to expand in the market, in line with the rapid development of technology in nickel processing,” says Tunggul Purusa Utomo and Intan Paramita, partners at Assegaf Hamzah & Partners. PT Trimegah Bangun Persada (also known as Harita Nickel), and PT Merdeka Battery Materials, are two nickel mining companies from Indonesia that went public in the first half of the year, raising over $1.3 billion. AHP advised the issuer in the latter IPO. “In the IPO of PT Merdeka Battery Materials, we received support and positive responses from the central and regional government; hence its IPO eventually closed in a timely manner, for instance, from the Minister of Energy and Mineral Resources, the Financial Services Authority, as well as the Indonesia Stock Exchange,” say the partners at AHP. “As the global demand for nickel material continues to rise, the opportunity for nickel mining companies to raise funds from the capital markets sector will continue to grow, and we may see other nickel mining companies or nickelrelated industries listing their shares in the Indonesia Stock Exchange,” they add. POSSIBLE PAUSE Although the sector is booming and mining-related IPOs in Indonesia have momentum, a pause is possible during the presidential elections next year. “It remains to be seen if this hot run will continue in the long run – I suspect the momentum will be halted temporarily by the Indonesia elections scheduled to take place in early-2024, with issuers getting preparations underway in the second half of this year but adopting a wait-and-see attitude until after the elections before going to market,” says Wang, from Latham & Watkins. The stability of the legal framework beyond the elections will be key for the sector’s continuous growth and for more nickel ore-related companies to raise funding by going public. Legal struggles, such as the lawsuit introduced by the European Union at the WTO to lift the ban on nickel exports, are just some of the challenges Indonesia is likely to continue facing, and could have an impact on the development of nickel-ore-related companies down the value chain. Meanwhile, a limited free trade agreement on minerals with the U.S. is in the works between Jakarta and Washington, D.C. NICKEL-PLATED FUTURE Despite this, investors and lawyers remain bullish on the prospects of nickel in Indonesia, which is the largest producer of ore in the world. In 2022, the Southeast Asian nation produced 1.6 million tons, and according to the U.S. Geological Survey, the country has 21 million tons of nickel ore reserves. Meanwhile, data from Natural Resources Canada shows that Indonesia was also the largest consumer of nickel ore in the world in 2021, accounting for 37 percent of the global demand for the mineral. Earlier this year, PT Vale Indonesia, China’s Zhejiang Huayou Cobalt and U.S. carmaker Ford unveiled plans to establish a $4.5 billion nickel processing plant in Pomalaa, Southeast Sulawesi, where Vale operates a nickel mine. According to Cullen S. Hendrix, a senior fellow at the Peterson Institute for International Economics (PIIE), Indonesia’s industrial policy and export controls may be expanded deeper down the EV supply chain. “Plans to develop a domestic EV battery industry include taxing ferronickel exports—a refined, higher valueadded nickel product used in EV batteries—as a means of providing lower-cost inputs for Indonesian industry. Unlike outright export bans, such a tax would be WTO-compliant,” wrote Hendrix in an analysis published in late April by the PIIE. According to Tunggul and Intan at Assegaf Hamzah & Partners, as the global demand for nickel material continues to rise, the opportunity for nickel mining companies to raise funds from the capital markets sector will continue to grow. “And we may see other nickel mining companies or nickel-related industries listing their shares in the Indonesia Stock Exchange,” they say. “Being publicly listed will attract public investors to invest in Indonesia, and also potential partners to cooperate with the nickel mining companies, thereby creating a competitive market.” “In addition to financial institutions such as conventional banks, nickel mining companies may also consider seeking funds from other methods in the capital markets sector,” they explain. Tunggul and Intan say nickel mining companies willing to go public must fulfil a pre-requirement of obtaining a mining license. There lies one major difference with non-mining companies going public in Indonesia. “Generally, the capital market regulatory frameworks for nickel mining companies entering the Indonesian capital markets are the same as other industries. Industry-specific requirements for mining companies designed to ensure the sustainability of the business, which include the preparation of industry consultant and technical review reports from independent consultants,” they add. “As the global demand for nickel material continues to rise, the opportunity for nickel mining companies to raise funds from the capital markets sector will continue to grow, and we may see other nickel mining companies or nickel-related industries listing their shares in the Indonesia Stock Exchange.” — Tunggul Purusa Utomo and Intan Paramita, Assegaf Hamzah & Partners
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