Rio Tinto’s Jacques mulls exit from Indonesian Grasberg mine

CEO Jean-Sebastien Jacques says Rio Tinto could walk away from its interest in the controversial Grasberg mine.

The Grasberg mine in Indonesia. Picture: Reuters.

Rio Tinto chief Jean-Sebastien Jacques says the global miner could sell out or walk away from its interest in the controversial Grasberg copper and gold mine in Indonesia, where the government has stopped concentrate exports and wants to take a stake in the mine.

The current woes come on top of longstanding issues at the Freeport McMoRan-run mine, including a poor safety record and the disposal of tailings into a river, which is against Rio policy.

Yesterday Mr Jacques said ­Indonesia’s surprise export ban on Grasberg might mean Rio would not take up its rights under a deal where it is supposed to take an effective 40 per cent stake in 2021.

He said the concentrate ban was not in the spirit of discussions over the joint venture, where Rio currently receives a share of production once certain levels are reached, over the past three years.

“Grasberg is an option for us,” Mr Jacques told The Australian. “There is no doubt it is a world-class resource but I’m not sure Grasberg is a world-class business for us.”

He said that Rio could sell the option or walk away.

“What may happen in the coming weeks and months will be very important because in that time we have to decide whether we convert that option into an asset or not,” he said.

He said Freeport chief executive Richard Adkerson was on his way to Jakarta last night to attempt to resolve the issue.

Freeport has said the export ban could mean mass lay-offs and the loss of 70 per cent of the mine’s production.

Last month, Mr Adkerson said Rio’s entry into Grasberg was likely to be delayed until 2023 or so.

“Rio Tinto’s participation beyond 2021 may also be affected due to the application of force majeure provisions in the joint venture agreement between Rio Tinto and Freeport,” Rio said.