Reports Rio Tinto is considering ending its investment in the controversial Grasberg copper mine in Indonesia have been confirmed, after the company said it was in talks with a state-owned enterprise over a potential sale.
Rio is a partner in the Grasberg copper mine in Indonesia’s Papuan province, and holds a complex stake in the mine which grants it 40% of copper production after 2023. It was reported recently that Deutsche Bank had valued Rio’s share of Grasberg at US$3.5 billion.
The Indonesian Government wants to acquire a 51% stake in Grasberg, and has recently placed significant pressure on the operation, saying it wants no more than 5% of tailings deposited in local rivers, as opposed to the existing 50% allowance.
Primary Grasberg partner Freeport-McMoRan has said it isn’t feasible to operate the mine under the tailings conditions desired by the government.
But if the Indonesian Government were to become a 51%-owner of Grasberg, it would surely expedite negotiations towards a tailings deal that works for all parties.
Rio said on May 23 it had been in talks over selling its stake with Indonesian state-owned group 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.”