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Rio Tinto to sell $3.5b-worth interest in Freeport
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A vehicle drives through an open pit mine at gold and copper miner PT Freeport Indonesia’s open pit facility in Grasberg, Tembagapura, Mimika, Papua. (JP/Nethy Dharma Somba)
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nglo-Australian mining giant Rio Tinto confirmed on Wednesday that it planned to sell its participating interest in Papua’s Grasberg mine -- the world’s largest gold and second-largest copper mine -- for $3.5 billion.
Grasberg mine is currently owned by PT Freeport Indonesia (PTFI), a subsidiary of United States-based gold and copper miner Freeport-McMoRan.
London-based Rio Tinto says it is discussing the sale with state-owned mining holding PT Indonesia Asahan Aluminium (Inalum) and Freeport-McMoran, Rio Tinto says in a statement published in the company website.
Rio Tinto notes reports of the potential purchase by Inalum of Rio Tinto's entire interest in the Grasberg mine in Indonesia for $3.5 billion.
The government has appointed Inalum to buy PTFI’s shares, in line with a law that requires foreign mining companies to divest 51 percent of their shares to Indonesian entities. PTFI has long been in talks with the government on the divestment.
The process been taking place since early 2017, with the government initially aiming to conclude negotiations by the end of 2017. However, the government extended the divestment deadline for Freeport until 2019 with the issuance of Energy and Mineral Resources Ministerial Regulation No. 25/2018 earlier this month.
However, Rio Tinto said a final decision had not been made. "No agreement has been reached and there is no certainty that a binding agreement will be signed," the firm says.
Freeport-McMoRan and Rio Tinto established an unincorporated joint venture in 1995, which gave the latter control of 40 percent interest up to 2022 in certain assets and future production above specific levels in one of the blocks at Grasberg. (bbn)
