Rio Tinto edges closer to Grasberg sale, reportedly open to $US3.5bn offer

Rio Tinto appears to be edging closer to a sale of its stake in the Grasberg copper and gold mine in Indonesia.

Trucks parked at the Grasberg copper and gold mine complex in Indonesia. Picture: Reuters

Rio Tinto appears to be edging closer to a sale of its stake in the controversial Grasberg copper and gold mine in Indonesia, with the miner saying talks over price are ongoing but not ruling out reports it could get $US3.5 billion from the government for the stake.

The value of the stake, which is currently a share of production that will turn into a 40 per cent stake in the 2020s, has been hard to value.

But it is safe to say that a sale of that magnitude would be seen as a win for Rio (RIO) chief Jean-Sebastien Jacques and that with Rio’s net debt where the company wants it, funds could be expected to go back to shareholders.

“Rio Tinto notes reports of the potential purchase by PT Indonesia Asahan Aluminium (or Inalum) of Rio Tinto’s entire interest in the Grasberg mine in Indonesia for $US3.5bn,” Rio said.

“Rio Tinto confirms that discussions between Rio Tinto, Inalum and Freeport are ongoing, including as to price. No agreement has been reached, and there is no certainty that binding agreements will be signed.”

Bloomberg reported today that Rio was ready to accept a $US3.5bn offer for the mine, without citing sources. It said a deal still required Grasberg operator Freeport-McMoRan to strike an agreement to transfer some of its stake to a local firm.