Indonesia aiming to grab Rio Tinto’s stake in Grasberg copper-gold mine

Indonesia is planning to purchase Rio Tinto’s 40% participating stake in the Grasberg copper-gold mine as part of the government’s plans to increase its control over national resources.

The vast mine is operated by the local division of US-based Freeport-McMoRan, who formed a joint venture with Rio in 1996, giving the Anglo-Australian miner a 40% cut of production until 2022.

Freeport said in August it would sell 51% of PT Freeport Indonesia (PT-FI) to the national government in order to meet local ownership rules.

However, Indonesia’s energy and resources minister Ignasius Jonan said the government has proposed that this acquisition be largely comprised of Rio’s interest in the mine.

“The government will buy Rio Tinto’s 40% participating interest in PT-FI,” he said. “If this is fully converted to shares, Freeport agrees if Rio Tinto is willing to sell to the government of Indonesia.”

Jonan went on to say that the government aims to have completed the transaction in 2018 along with new fiscal terms in a special mining permit replacing Freeport’s Grasberg contract.

Rio’s has been considering an exit from the JV for some time, citing concerns about the impact of Indonesian rule changes on the Grasberg contract.

Grasberg is the world’s second largest copper mine and the fourth largest gold producing operation.