Freeport-McMoRan Inc (NYSE:FCX) and Indonesia may finalize a new deal in the coming period that will lay out an entire road-map for the transfer of key ownership of the Grasberg mine to a local company. The country’s government, state owned PT Indonesia Asahan Aluminium termed as Inalum, and Freeport are prepared to support a so-called deal completion deal.
The details
As per the new deal, Inalum will look to buy Rio Tinto Group’s joint venture stake in Grasberg by March, and later intend to convert this interest into an equity stake. Indonesia, Freeport and other firms will soon finalize a deal that will comprise a target to finalize the intended transfer of control of Grasberg in the initial three months of coming year.
Local stake of Grasberg will surge to 51% under a framework contract agreed in August that will find the U.S. miner divest a key stake in local segment PT Freeport Indonesia, of which Freeport presently owns 91%. In return, Freeport would be approved to continue to run the assignment through 2041. That pact also establishes plans for investment of $20 billion through 2031 to further advance the mine. The new program will comprise a schedule to settle concerns on a mining license and the intended construction of a smelter.
A fresh deal comes amid simplifying of tensions between major parties after Freeport turned down Indonesia’s offers on the valuation and intended process of divestment of the company’s local unit. Since then, discussions involving the two sides, and Rio, have demonstrated progress.
Rio has planned direct discussions with Inalum about a prospective exit from Grasberg. Under a joint venture deal, the world’s number two miner is eligible to cash flows on a 40% share of production beyond specific levels until around 2021, though that date is contingent to prospective delays, and on 40% of all production thereafter.
