From left, State-Owned Enterprises Minister Rini Soemarno, Finance Minister Sri Mulyani Indrawati, Freeport McMoRan chief executive Richard Adkerson, Inalum president director Budi Gunadi Sadikin and Energy and Mineral Resources Minister Ignasius Jonan pose for a photo after the signing of a sales and purchase agreement for the majority shares in miner Freeport Indonesia in Jakarta on Thursday (27/09). (Antara Photo/Galih Pradipta)

Freeport, Rio Sell Majority Stake in Grasberg Mine to Indonesia


SEPTEMBER 28, 2018

Jakarta. Global mining giants Freeport McMoRan and Rio Tinto have struck a binding accord to sell a majority stake in the world's second-biggest copper mine, Grasberg, to Indonesia's state mining company, Inalum for $3.85 billion.

The sale brings Freeport close to ending more than nine years of often fractious negotiations with Indonesia over ownership rights to Grasberg.

The agreement gives the parties six months to close the deal and process several permits including those related to antitrust laws in China.

Inalum chief executive Budi Gunadi Sadikin said at a press conference his company would be ready to complete the transaction in November.

Several matters must still be resolved before the share transfer, he said. "There are documents, administrative permits and there is the money," Budi added.

After the transfer Inalum will hold a 51.23 percent stake in Freeport Indonesia, which will then be issued with a special mining permit for Grasberg, ending its existing operating contract for the mine.

Inalum has the option of financing the transaction using a combination of bank loans, bonds, and internal cash reserves, Budi said, noting that the composition would depend on interest rates at the time of the deal.

Freeport McMoRan chief executive Richard Adkerson told reporters the deal signed on Thursday (27/09) is a "definitive sales and purchase agreement," which he hoped would end the controversy surrounding Freeport's business in Indonesia.

"This completes the negotiations and fixes and binds issues that were not dealt with," he added. "Now the next step is to go to closing."

"We've responded to the government's ambitions, so our hope is that this allows us to stabilize our operations," Adkerson said.

Rio holds a 40 percent participating interest in the Grasberg mine, which will be converted to an equity stake that will be transferred to Inalum, as part of the transactions.

Freeport Indonesia executive vice president Tony Wenas earlier said he hoped the deal would be closed "this year."

Freeport has been at the crossfire of debates on Indonesia's natural resources management for decades and today's deal should give some relief to the country. Inalum's Budi tweeted after the signing: