13 Jul 2018

Freeport-McMoRan divests of Papua operation

7:18 pm on 13 July 2018

The mining company Freeport-McMoRan has signed an agreement to proceed with divestment of its lucrative mine operations in Indonesia's Papua province.

Freeport's Grasberg mine in Papua, Indonesia.

Freeport's Grasberg mine in Papua, Indonesia. Photo: AFP

Under the agreement, state-owned company Inalum would pay US$3.85 billion to increase Indonesia's stake in Freeport's mine to 51 percent from just over 9 percent now.

Furthermore, according to the Antara news agency, the provincial government of Papua and the district government of Mimika, would be given a 10 percent share of the ownership of the Grasberg mine.

The deal is part of negotiations that would see Rio Tinto Group cash out on its interest for US$3.5 billion, leaving Freeport's share of the payment at $350 million.

According to Bloomberg, Freeport made it clear that there are still unresolved issues.

They include finalising the company's long-term rights in Indonesia until 2041, negotiating terms that would allow Freeport to maintain operational control once it's no longer the biggest stakeholder.

It also includes coming to an agreement on environment matters, including Freeport's treatment of tailings waste.