JAKARTA, Feb 26 (Reuters) - Indonesia's state holding company for mining, MIND ID, Vale Canada and Japan's Sumitomo Metal Mining signed an agreement on Monday for the sale of a 14% stake in nickel miner Vale Indonesia.

The divestment is a key condition for the extension of Vale Indonesia's mining permit beyond 2025, with foreign investors required to transfer 51% of their combined stakes to local buyers after a certain period of operation.

Vale Canada and Sumitomo in November signed an initial agreement to sell the shares to MIND ID.

Upon completion, MIND ID will become the largest shareholder of Vale Indonesia with its stake rising from 20% to 34%.

Vale Canada will hold 33.9% and Sumitomo 11.5%, down from 43.79% and 15.03%, respectively.

About 20% of Vale Indonesia's shares are publicly traded and they lost 3% on Monday to close at 3,830 rupiah a piece. (Reporting by Fransiska Nangoy, Bernadette Christina Munthe; Editing by Martin Petty)