Freeport, Rio sell majority stake in Grasberg mine to Indonesia for $3.85b

FILE PHOTO: Vehicles used for transporting workers to the Grasberg copper mine operated by Freeport McMoRan Inc are seen at the Gorong-Gorong terminal in Timika, Mimika, Papua province, Indonesia on November 16, 2017. REUTERS/Muhammad Yamin/File Photo

Global mining giants Freeport McMoRan Inc and Rio Tinto have struck a binding accord to sell a majority stake in the world’s second-biggest copper mine, Grasberg, to Indonesia’s state mining company, Inalum for $3.85 billion.

The sale brings Freeport close to ending more than nine years of often fractious negotiations with Indonesia over ownership rights to Grasberg.

The agreement gives the parties six months to close the deal and process several permits including those related to antitrust laws in China.

Inalum Chief Executive Budi Gunadi Sadikin said at a press conference his company would be ready to complete the transaction in November.

Several matters must still be resolved before the share transfer, he said. “There are documents, administrative permits and there is the money,” Sadikin added.

After the transfer Inalum will hold a 51.23 percent stake in PT Freeport Indonesia, which will then be issued with a special mining permit for Grasberg, ending its existing operating contract for the mine.

Inalum has the option of financing the transaction using a combination of bank loans, bonds and internal cash reserves, Sadikin said, noting that the composition would depend on interest rates at the time of the deal.

Freeport McMoRan Chief Executive Richard Adkerson told reporters the deal signed on Thursday is a “definitive sales and purchase agreement”, which he hoped would end controversy surrounding Freeport‘s business in Indonesia.

“This completes the negotiations and fixes and binds issues that were not dealt with,” he added. “Now the next step is to go to closing.”

“We’ve responded to the government’s ambitions, so our hope is that this allows us to stabilize our operations,” Adkerson said.

Rio holds a 40 percent participating interest in the Grasberg mine, which will be converted to an equity stake that will be transferred to Inalum, as part of the transactions.

Freeport Indonesia Executive Vice President Tony Wenas earlier said he hoped the deal would be closed “this year.”

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.