The Rio Tinto Group has held talks with Indonesian groups, including state-owned PT Indonesia Asahan Aluminium, about a possible exit from its interest in the giant Grasberg copper and gold operation, according to people with knowledge of the matter.
Executives at Rio have held meetings in recent weeks, including in Indonesia, on a potential sale of its income stream asset that is part of the joint venture agreement with Grasberg’s operator Freeport-McMoRan Inc, said the people, asking not to be identified as the details are private.
Rio is studying a range of options that could enable it to sell on its interest, the people said.
Representatives at the company, Freeport and Indonesia’s Finance Ministry declined to comment.
The talks have taken place while Indonesia is at loggerheads with Freeport over the government’s proposals to increase local ownership in Grasberg to 51 percent.
Freeport in August agreed to a framework to divest its majority stake and commit to the building of a smelter, but has said the process is contingent on several issues, including reaching an agreement on “fair value” for the stake.
Indonesia Asahan Aluminium, known as Inalum, is to be converted into a mining holding company and lead the state’s purchase of the stake in Freeport’s unit, a presentation by the state enterprises ministry showed.
In January last year, Freeport valued its Indonesian operations in a government filing, excluding an interest held by Rio, at US$16 billion, Freeport chief executive officer Richard Adkerson said.
Grasberg is the world’s second-largest copper and biggest gold mine.
Under an agreement struck in the 1990s to help Freeport finance an expansion of Grasberg, Rio is entitled to cash flows on a 40 percent share of production above specific levels until 2021 and on 40 percent of all production after that year, dependent on export disruptions.
Rio last recorded any output from the Grasberg venture in 2014, filings showed.
Stoppages and delays at the giant mine — including a strike this year — mean it could be 2023 before Rio receives its full entitlement share of output, Freeport said in January.
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