Freeport, Rio Tinto Agree to Prelim $3.85 Billion Deal to Transfer Majority Control of Mine to Indonesia
July 12 2018 - 8:03AM
Dow Jones News
By Ben Otto and Anita Rachman
JAKARTA, Indonesia--Freeport-McMoRan Inc., Rio Tinto and
Indonesia unveiled a tentative $3.85 billion deal that would give
Jakarta majority control of the world's second-biggest copper
mine.
The preliminary agreement signed Thursday comes after a
yearslong conflict that has spooked mining investors and threatened
metal supplies.
Under the tentative deal, Indonesia agreed to pay a combined
$3.85 billion to mining giants Freeport and Rio Tinto for a
controlling stake in Grasberg, a massive copper-and-gold mine that
has been run by Freeport in the country's remote east since the
early 1990s.
The deal would raise Indonesia's stake in the lucrative mine to
about 51% from less than 10% currently.
In a two-step deal, state-owned mining holding company PT
Indonesia Asahan Aluminium, or Inalum, would pay Rio Tinto $3.5
billion for a production interest the mining major holds in
Grasberg, Inalum head Budi Gunadi Sadikin told reporters. Freeport
would then convert that interest into an equity stake and sell
Inalum an additional stake of approximately 9% for $350 million,
giving Indonesia a controlling stake, Mr. Sadikin said.
Rio Tinto in a news release confirmed the deal's proposed price
for its production interest in Grasberg and said the agreement was
nonbinding. It said all parties would seek to sign a binding deal
by the end of the year.
Reza Pratama, a Freeport spokesman, confirmed the proposed $3.85
billion of payments.
Rio Tinto's U.S.-listed shares rose 1.2% in premarket trade and
Freeport's stock rallied 1.8%.
--Deden Sudrajat contributed to this article
Write to Ben Otto at ben.otto@wsj.com and Anita Rachman at
anita.rachman@wsj.com
(END) Dow Jones Newswires
July 12, 2018 07:48 ET (11:48 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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