(Bloomberg) -- Vale SA signed an initial agreement to sell a 14% stake in its Indonesian nickel subsidiary to the country’s state-owned mining firm in a move to meet ownership requirements imposed on foreign firms. 

The accord announced Friday would make state-owned PT Mineral Industri Indonesia the largest shareholder of the venture with about 34% of shares. Vale would own 33.9%, while Japan’s Sumitomo Metal Mining Co. would hold the remaining 11.5%, Vale said in a statement. 

The proposed divestment is part of efforts to comply with rules for mining ventures to achieve 51% Indonesian ownership as the Asian nation looks to increase local participation in its resources industries. The transaction, which is expected to close next year, is a condition for extending permits for Vale Indonesia that are due to end in 2025.

“Vale Canada Limited continues to have operational oversight and supervisory rights,” the company said.

(Corrects first paragraph to specify Vale signed an agreement to sell)

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