UPDATE 2-Indonesia raises Vale nickel royalty, forces share sale
* New nickel contract to raise costs, Vale executive says
* Vale must sell 20 percent of Indonesia unit within 5 years
* Accord with government cuts landholdings by 38 percent (Adds Vale comment, additional Indonesia smelter plans, updates prices)
By Wilda Asmarini and Jeb Blount
JAKARTA/RIO DE JANEIRO, Oct 17 (Reuters) - Brazil's Vale SA said on Friday that a revised nickel-mining contract with Indonesia will raise maximum royalties, cut land holdings and require its Indonesian unit to sell another 20 percent of its shares to local investors.
Royalties were set at 2 percent in the deal and could rise to as high as 3 percent, more than double the previous 0.6 percent and 0.7 percent, said Nico Kanter, chief executive of Vale's Indonesian subsidiary PT Vale Indonesia TBK.
The royalty hike will "definitely affect our bottom line," Kanter told reporters in Indonesia. He didn't elaborate on the impact. Vale officials in Rio de Janeiro were not immediately available for comment.
Vale preferred shares, the company's most-traded class of stock, have lost about 20 percent in Sao Paulo in the last 12 months. The shares rose 0.3 percent to 23.08 reais in Sao Paulo on Friday.
Vale, which owns 59.2 percent of Vale Indonesia, controls the subsidiary in partnership with Japan's Sumitomo Corp. , which owns 20.1 percent, Vale's press office in Rio de Janeiro said. Indonesian investors have already purchased 20 percent of Vale Indonesia. Continuación...