Caption: image: Richard Jones.
BY REUBEN ADAMS
RIO Tinto is looking to offload its interest in the troubled Grasberg copper-gold operations for $US3.5 billion to an Indonesian State-owned entity.
Rio confirmed ongoing discussions between the company, partner and mine operator Freeport McMoran, and potential State-owned buyer PT Indonesia Asahan Aluminium in May, but said no agreement over the sale had been reached, and there was “no certainty that binding agreements will be signed”.
The Indonesian Government has been ramping up pressure on US-based Freeport to sell its majority stake in its Grasberg operations, which is expected to produce about 1.15 billion pounds of copper and 2.4 million ounces of gold for the 2018 calendar year.
“We continue to engage in negotiations with the Indonesian government to restore long-term stability for our Grasberg operations and look forward to reaching a mutually positive resolution,” Freeport chief Richard Adkerson said in the miner’s March quarter report.
If it is unable to reach a definitive agreement with the Indonesian Government on its long-term mining rights, Freeport has threatened to reduce or defer investments “significantly” in its underground development projects.
Through the JV with Freeport signed in 1995, Rio was entitled to a 40 per cent share of production from Grasberg operations above an agreed threshold until the end of 2023, and 40 per cent of all production thereafter.
However, Rio has received no income from the mammoth copper-gold mine in recent years because this production threshold had not been reached.
