Indonesia to grab Rio Tinto stake in Grasberg mine

After pumping billions into Grasberg copper-gold mine in Indonesia for almost 25 years, Rio Tinto (ASX, LON, NYSE: RIO) might finally be about to see a decent return as the country’s government said Tuesday it plans to acquire the miner’s 40% stake in the coveted operation.

The move comes as the Grasberg’s operator, US-based Freeport McMoRan (NYSE:FCX), agreed in August to divest 51% of PT Freeport Indonesia to the country’s government. But until today, it wasn’t clear what would happen to Rio’s interest in the mine.

The Southeast Asian nation, which will complete the acquisition of Freeport’s 51% stake in Grasberg by February 2018, intends to purchase Rio’s stake as well, Energy and Mineral Resources Minister Ignasius Jonan said on Tuesday, according to Reuters.

Rio’s deal with Freeport was struck in 1995 and entitles it to a 40% share of production when certain output levels are hit. But as a result of strikes and other disruptions and as the open pit at Grasberg nears the end of its life, the Melbourne-based miner hasn’t seen any benefit since 2014.

More to come…

 

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