Global miner Rio Tinto is in talks for potential sale of its entire interest in the Grasberg mine in Indonesia to PT Indonesia Asahan Aluminium (Persero) (Inalum) for $3.5bn.
Image: The Grasberg open pit mine in Indonesia. Photo: courtesy of Alfindra Primaldhi/Wikipedia.
Located in the province of Papua in Indonesia, the Grasberg is claimed to be one of the world’s largest copper and gold mines in terms of ore reserves and production.
The mine is owned and operated by Freeport Indonesia (PTFI), a subsidiary of US-based Freeport-McMoRan Copper & Gold (FCX).
Rio Tinto, though a joint venture with FCX, has 40% share of production from the mine above specific levels until 2021, and 40% of all production after 2021.
Confirming the discussions between the Rio Tinto, Indonesia’s state mining holding company Inalum and miner Freeport, Rio Tinto said that no agreement has been reached so far and ‘there is no certainty that binding agreements will be signed’.
Rio Tinto said in a statement: “Discussions between Rio Tinto, Inalum and Freeport are ongoing, including as to price.”
The Grasberg sale is part of Rio Tinto’s divestment of assets that do not meet its internal return requirements, reported Reuters.
The Grasberg mine is expected to ramp up to full capacity reaching 160,000 tons per day of ore by 2022.
Additionally, the firm has commenced construction on the Deep Mill Level Zone block cave mine at the Grasberg project. This new mine is aimed to produce an additional 80,000 tons of ore per day at full capacity, expected in 2021.
By 2022, the ore supply from the Grasberg mine to the mill will be 240,000 tons per day.
Recently, Rio Tinto secured approval from Australia’s Office of the National Rail Safety Regulator to operate autonomous trains for transportation of iron ore in Western Australia.
Currently, the company operates about 200 locomotives on more than 1,700km of track in the Pilbara, transporting ore from 16 mines to four port terminals.