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PT Vale Indonesia

A nickel mine located in the remote Indonesian mountains needs a property insurance appraisal. American Appraisal is there.

Located in the Verbeek Mountains on the Indonesian island of Sulawesi, the Sorowako nickel mine began producing nickel in the 1970s for Canadian mining company Inco Ltd. Today, it is operated by PT Vale Indonesia Tbk and is the largest surface mine in Indonesia, consisting of nearly 200,000 hectares spread across remote sections of three Sulawesi provinces. Because of its remote location, the mine is nearly a city unto itself, populated by more than 7,000 mine employees and their families.

Vale Canada Ltd., parent company of PT Vale Indonesia Tbk, engaged American Appraisal to value the Sorowako mine for purposes of property insurance placement. The nature of the valuation project was vast, encompassing the insurable real and personal property of the mine site and processing assets as well as the total mine infrastructure and welfare assets. Given the mine’s remote location and the amount of associated assets, challenges were anticipated. An intensive planning phase, during which American Appraisal worked closely with PT Vale Indonesia Tbk and Vale Canada Ltd., helped to overcome these challenges. Collaboration between our global community of valuation consultants, representing many nationalities, also facilitated the process. For this engagement, our team included North American and Indonesian project managers.

The mine site assets consisted of mining equipment, initial screening stations, field maintenance shops and transportation equipment. The processing assets included ore drying kilns, calcining kilns, electric arc furnaces, converters and supporting equipment, buildings, shops and infrastructure.

The total mine infrastructure assets included a port facility to supply the mine and export the nickel; power generation assets including three hydroelectric dams with a combined 350-megawatt capacity and a fossil fuel power plant; a marine fuel terminal and fuel pipeline; mountain roads and bridges; and an airport. Welfare assets included more than 700 units of family housing, three schools, a hospital, three medical clinics, dormitories, commissaries, and dining and religious facilities. Many of the public buildings and infrastructure in the Town of Sorowako are owned by Vale and were also included in the property insurance appraisal.

In addition, the valuation was part of a larger engagement, with American Appraisal simultaneously providing property insurance values for other mines and facilities of Vale Canada Ltd. including the famed Sudbury Mining Complex in Ontario, Canada; the Thompson Mine in Manitoba, Canada; and the Acton Refinery in Acton, United Kingdom.

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