State-owned PT Indonesia Asahan Aluminium (Persero), also known as Inalum, closed a US$3.85 billion deal to secure a 51.2% stake in Freeport-McMoRan Inc. subsidiary PT Freeport Indonesia, which operates the giant Grasberg copper-gold mine in the country.

Inalum struck a deal in July to take its interest in the mine to 51% from 9%. Freeport was to receive US$350 million for its 100% interest in PT Indocopper Investama, which owns 9.36% of project owner Freeport Indonesia, while Rio Tinto would cash out its 40% participating interest in Grasberg for US$3.5 billion.

Freeport-McMoRan will own the remaining 48.8% stake in Freeport Indonesia, according to a Dec. 21 news release.

The Indonesian government also granted the subsidiary a special mining license to conduct operations until 2031, extendable to 2041, if the company finishes building a new smelter, which it committed to complete within five years. Freeport Indonesia's shareholders will finance the construction on a pro rata basis.

For the duration of the special mining permit, Freeport Indonesia's corporate income tax was set at 25% along with a 10% profits tax on net income and royalties of 4% for copper and 3.75% for gold. The company also struck a deal with the Indonesian environment and forestry ministry to retain more tailings and assess large-scale beneficial uses of the waste material in the country.

Freeport Indonesia CEO Tony Wenas said open pit production at Grasberg would end in 2018, leading to a temporary drop in production as operations transition underground, with output to rise again in 2020, Reuters wrote. Freeport is expected to invest about US$14 billion in the mine.