Rio nears Grasberg exit deal
RIO Tinto is a step closer to offloading its interest in the troubled Grasberg copper-gold operations after entering a non-binding Heads of Agreement to sell its stake for $US3.5 billion.
For more than two decades, Rio Tinto has had a right to 40 per cent production at the Freeport McMoRan (90.64 per cent) and the Indonesian Government’s (9.36 per cent) owned mine above a pre agreed level.
However lower production in recent years has meant Rio has received little to no income at the project.
In 2017, Grasberg mine produced 468,000 tonnes with Rio’s share amounting to a meagre 5700t.
In a statement to the ASX, Rio Tinto said the agreement between itself, Freeport McMoRan and potential buyer Indonesian State-owned PT Indonesia Asahan Aluminium (Persero) (Inalum), involved the sale of its interest, as well as a separate proposed transaction in which Inalum would pay Freeport $350,000 for an additional stake.
“All parties have committed to work towards agreeing and signing binding agreements before the end of the second half of 2018,” Rio Tinto stated.
“Any final agreements will be subject to approval by the necessary government regulators and authorities.”
Freeport president and chief executive Richard C. Adkerson said the agreement marked a significant milestone toward establishing a new long-term partnership with the Republic of Indonesia.
“Through this transaction, the Government will achieve its ownership objectives in a manner that preserves the long-term value for FCX shareholders and the people of Indonesia through 2041,” Mr Adkerson said.
“We thank Rio Tinto for their support over our more than 20-year successful partnership.
“We look forward to a mutually positive and beneficial partnership with Inalum that will continue to provide substantial benefits to the people of Papua; the Republic of Indonesia; and to our local employees, suppliers and contractors while generating attractive returns for our shareholders.”