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Indonesia confirmed it’s closer to reaching an almost $4 billion agreement to take control of Freeport-McMoran Inc.’s giant Grasberg copper and gold mine after more than a year of negotiations.
Talks between state-owned PT Indonesia Asahan Aluminium, known as Inalum, Freeport and Rio Tinto Group have been completed and an agreement could be signed as early as this week, Indonesia’s State-Owned Enterprises Minister Rini Soemarno and Deputy Minister Fajar Harry Sampurno said on Saturday.
“We are finalizing the necessary documents,” Soemarno told reporters in Jakarta. “They are asking for stability in investment. They want to have documents that provide clarity in investment calculations, clarity in tax. These are all being processed.”
Their comments came after Inalum Chief Executive Officer Budi Gunadi Sadikin said last week that negotiations were complete and the parties have agreed a price for Rio’s stake. The London-based company is ready to accept a $3.5 billion deal for its interest in Grasberg, people familiar with the discussions said last month.
The three-way deal also includes Freeport striking an agreement to transfer some of its stake to Inalum, according to the people. Freeport didn’t immediately respond to a request for comment, while Rio declined to comment.
Indonesia and Freeport have been locked in talks for more than a year to agree terms for the miner to cede majority ownership in Grasberg, part of a deal that will allow the producer to keep operating in the country. Foreign miners have been given until 2019 to comply with divestment obligations, imposed by President Joko Widodo to exert more local control over the Southeast Asian nation’s resources.
Success in striking the agreement will pave the way for Inalum to control 51 percent of Freeport Indonesia that controls Grasberg, the world’s No. 2 copper mine. Inalum now has 9.56 percent only on behalf of the Indonesian government. For Freeport, finalization of the deal will also ensure the future of its operations as the company has been operating under a temporary mining license, which is due to expire July 4.
— With assistance by Danielle Bochove, and David Stringer