A joint venture owner of the world’s second largest copper mine has ceded its majority stake to a state-owned company, following an extended run of concerns and disputes.
Freeport-McMorRan announced in a statement this week that it will sell its majority stake in the Grasberg gold mine to the Indonesian government in a deal worth $3.85 billion.
Freeport has entered into heads of agreement with the Indonesian state-owned enterprise PT Indonesia Asahan Aluminium (Inalum) and JV partner Rio Tinto which will see Inalum take up a 51% ownership in the mine. Freeport will still have a 49% stake.
Richard C. Adkerson, Vice Chairman of the Board, President and Chief Executive Officer, said, “This agreement marks a significant milestone toward establishing a new long-term partnership with the Republic of Indonesia to provide long-term stability for PT Freeport Indonesia's operations. 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,”
“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.”
At closing, Rio Tinto will receive $3.5 billion, and FCX will receive $350 million, in cash proceeds from Inalum.