Rio Tinto confirms talks of sale of its interest in Grasberg Mine
Rio Tinto Group confirmed that it was in discussions to sell its interest in the Grasberg Mine, the world’s second largest copper mine, to Indonesia’s state mining holding company Inalum for a reported $3.5 billion.
Bloomberg reported that the deal hinges on Freeport-McMoRan striking an agreement to transfer some of its stake to a local firm.
State-owned PT Indonesia Asahan Aluminium, known as Inalum, plans to acquire Rio Titnto’s joint venture interest in the operation under a wider arrangement aimed at taking control of Freeport’s local unit, which owns and operates Grasberg, sources told Bloomberg.
Indonesia and Freeport-McMoRan have been locked in talks for more than a year to agree terms for the miner to cede majority ownership in Grasberg, part of a deal that will allow the producer to keep operating in the country.
Freeport-McMoRan will retain exposure to what chief executive officer Richard Adkerson described as a “remarkable” asset, while Rio Tinto can exit a problematic region and reward shareholders with some of the proceeds, according to Andy Forster, senior investment officer at Argo Investments Ltd., which manages more than A$5 billion ($3.8 billion).
The long-heralded potential sale comes as Rio Tinto warns of resource nationalism, and seeks to divest assets that do not meet its internal return requirements.