Rio Tinto is ready to sell its stake in the Grasberg copper-gold mine to the Indonesian government for US$3.5 billion, Bloomberg News reported May 22, citing anonymous sources.
Responding to the news reports, Rio Tinto confirmed May 23 that discussions between the company, Freeport-McMoRan Inc. and Indonesia are ongoing, including the price. The company added that no deal has been agreed to, and there is no certainty that binding agreements will be signed.
Freeport President and CEO Richard Adkerson had said the miner was facilitating the process but talks remained between Rio Tinto and Indonesia.
The mining major is entitled to 40% of Grasberg's copper production above specific levels until 2021 and 40% of all production after 2023.
Rio Tinto's exit from the mine, which is in the Indonesian province of Papua, depends on Freeport reaching a deal to transfer some of its stake to state-owned PT Indonesia Asahan Aluminium (Persero), the unnamed sources added.
Freeport in August 2017 agreed to divest a 51% interest in its local unit to extend Grasberg's operating permit beyond 2021.
Inalum's head, Budi Gunadi Sadikin, said recently that the company has a "committed" loan to acquire the stake from Freeport and Rio Tinto's 40% participating stake in the asset, though funding for the deal is still in the works.
Sadikin said the parties were inching closer to a deal and the transaction could still be concluded within the year, noting that certain terms of the transaction were yet to be finalized, including the price.
Inalum declined the publication's request for comment, while a Freeport spokesperson did not respond to a request for comment.
Meanwhile, spokesperson for Freeport's PT Freeport Indonesia unit, Riza Pratama said the company is targeting to conclude the negotiations by the end of June.
