Freeport, Rio Tinto Agree to Prelim $3.85 Billion Deal to Transfer Majority Control of Mine to Indonesia -- Update
12 July 2018 - 10:09PM
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 titans 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 $3.5 billion for
an interest Rio Tinto 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, approximately
9% stake 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. The Anglo-Australian company 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
U.S.-based Freeport's stock gained 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 07:54 ET (11:54 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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