Rio Tinto is on the cusp of selling its stake in the controversial Grasberg copper mine in Indonesia, after the state-owned venture looking to buy the stake said it had acquired the funding needed.
The president of Inalum, an Indonesian state-owned company, reportedly told a Jakarta press conference on Monday the company had obtained financing needed to acquire Rio’s stake in Grasberg.
Rio’s complex Grasberg deal gives it rights to 40% of copper production after 2023, and 40% until then when annual production passes a certain threshold.
Rio confirmed in May it was looking to sell its interest in the copper mine, which is in Indonesia’s Papuan province.
The Indonesian Government has for some time expressed a desire to own 51% of Grasberg and has indirectly pressured for a sale, reportedly telling the mine’s primary owner, Freeport-McMoRan, it will enforce an incredibly strict tailings policy.
The Government has said it wants no more than 5% of tailings from Grasberg deposited in local rivers, as opposed to the existing 50% allowance. Freeport-McMoRan has said it isn’t feasible to operate the mine under the tailings conditions desired by the government.
Rio said on May 23 it had been in talks over selling its to Inalum, with a prospective $3.5 billion sale price. “Rio Tinto confirms that discussions between Rio Tinto, Inalum and Freeport are ongoing, including as to price,” Rio told the ASX.
“No agreement has been reached, and there is no certainty that binding agreements will be signed.”