PERTH (miningweekly.com) – Mining major Rio Tinto has confirmed that it has signed a binding agreement to divest of its interest in the Grasberg mine, in Indonesia.
In terms of the divestment agreement announced last week, State-owned enterprise PT Indonesia Asahan Aluminium (Inalum) will acquire all of Rio Tinto’s interest in the Grasberg joint venture (JV) company PT Freeport Indonesia (PT-FI) and 100% of Arizona-based Freeport-McMoRan’s interest in PT Indocopper Investama, which owns 9.36% of PT-FI.
Following the divestment, Inalum’s share ownership in the JV will be 51.2% and Freeport McMoRan's will be 48.8%.
“This agreement is a significant step towards the sale of our interest in Grasberg and provides further evidence of our commitment to strengthening the portfolio by selling noncore assets and driving higher returns across the business,” commented Rio CEO Jean-Sebastian Jacques on Friday.
In line with a 1996 participation agreement, Rio Tinto had a right to 40% of production from Grasberg above a pre-agreed level, and 40% of all production after 2022.
In 2017, the operation produced 468 000 t of copper, with Rio’s share amounting to 5 700 t. At the end of December, losses attributable to Rio’s share in the Grasberg mine were $169-million, and the gross assets of the company which holds the interest, which is subject to the transaction, was $1.49-billion.
The transaction, which is expected to close by the first quarter of 2019, is subject to a number of conditions, including regulatory approvals.
At closing, Rio Tinto will receive $3.5-billion, and Freeport-McMoRan will receive $350-million, in cash proceeds.