Sherritt International Corp. (S.T) will acquire a 57.5% equity
stake in the holding company that owns the Sulawesi nickel project
in Indonesia and become the project's operator.
Rio Tinto Ltd. (RIO), Sulawesi's owner, will hold on to the
remaining 42.5% stake. However, in compliance with Indonesia's
Mining Law, local Indonesian interests are expected to acquire a
20% interest in Sulawesi, which will result in Sherritt and Rio
Tinto together owning 80%.
That will give Sherritt a controlling interest and a 46%
economic interest, with Rio Tinto maintaining a 34% economic
interest.
Toronto-based Sherritt, a diversified resource company with
operations in Canada, Cuba and other countries, said it has
executed an earn-in and shareholders agreement in connection with
the deal and has also committed to fund $110 million towards
producing a feasibility study from which a development decision
will be made.
Sulawesi currently ranks as one of the largest known
undeveloped, greenfield lateritic nickel deposits in the world,
Sherritt said.
Back in March, Rio Tinto said it had been given a mining permit
for the $2 billion nickel project, making it the first company to
gain investment approval under Indonesia's new mining law. It said
it would review its options for development of the project.
Wednesday, Sherritt said it will license its
"commercially-proven, proprietary technology to the project."
Sherritt is also a partner in the Ambatovy nickel-cobalt project
in Madagascar.
-By Carolyn King, Dow Jones Newswires; 416-306-2100;
carolyn.m.king@dowjones.com