An Indonesian state-owned enterprise has acquired a majority stake in a copper, gold and molybdenum joint venture in a multi-billion-dollar deal.
Inalum will acquire for cash consideration of $3.85bn all of Rio Tinto’s interests associated with its joint venture with PT Freeport Indonesia (PT-FI) and 100% of Freeport McMoRan’s (FCX) interests in Indocopper Investama, which owns 9.36% of PT-FI.
Through the agreement, Rio Tinto’s interests will merge into PT-FI concurrent with Inalum’s acquisition in exchange for a 40% share ownership in PT-FI. PT-FI will have an expanded asset base to include the Rio Tinto interests and Inalum's share ownership will be 51.2% of PT-FI (subject to a dividend assignment mechanism to replicate the Joint Venture economics), and FCX's ownership will be 48.8%
FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits.
Rio Tinto will receive $3.5 billion, and FCX will receive $350 million, in cash proceeds.
Richard C. Adkerson, Vice Chairman of the Board, President and Chief Executive Officer, said, "We are pleased to announce definitive agreements for Inalum’s acquisition of shares in PT Freeport Indonesia. This step marks another 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. 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 local employees, suppliers and contractors while generating attractive returns for our shareholders."