Freeport McMoRan (NYSE:FCX) and Rio Tinto (LON:RIO) signed Thursday a final $3.9 billion agreement that gives Indonesia a majority stake in their Grasberg copper mine, the world’s second-largest, and which would be transferred to the state-owned mining company PT Indonesia Asahan Aluminium (Inalum).
The “definitive” and “binding” agreement ends a long-drawn-out, three-way dispute over the mine, centred on bringing Indonesian ownership up to 51%, a main requisite set by the government to allow Freeport-McMoRan (NYSE:FCX), operator of Grasberg, to keep doing so.
It could also bring closure to years of disagreements between the Phoenix, Arizona-based copper miner and the country’s government, which last year curbed output at the mine, impacting metals prices worldwide.
As announced in August, the deal sees Indonesia — through Inalum — becoming the majority stakeholder at 51%. The government, in turn, will issue a special mining license to allow ore extraction until 2041.
The deal is considered a victory for President Joko Widodo, who faces re-election in 2019 and who has insisted that mining companies must divest majority stakes in order to continue operating in the country.
Grasberg, the world’s second-largest copper mine and fourth largest gold operation, is transitioning to an underground operation, set to reach full capacity by 2022, when it will produce 160,000 tonnes per day of ore.
The additional Deep Mill Level Zone block cave mine, currently under construction, is projected to contribute an additional 80,000 tonnes per day of ore once at full capacity, expected in 2021.
More to come…
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From:: Mining.com