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Rio Tinto to raise US$3.5bn from sale of its production stake in the world's second-biggest copper mine

The UK-listed miner has a joint venture with US giant Freeport-McMoRan Inc., owner and operator of the Grasberg mine, for a 40% share of its production above specific levels until 2021 and 40% of all production after 2021
Mining truck
In 2017, the Grasberg mine produced 468 kilotonnes (kt) of mined copper, with Rio Tinto's share at 5.7kt

Rio Tinto PLC (LON:RIO) is raising US$3.5bn after agreeing the sale of its 40% production stake in Grasberg, the world's second-biggest copper mine, to Indonesia's state mining company PT Inalum.

The FTSE 100-listed mining giant - which will issue a second-quarter production update next Monday - has a joint venture with Freeport-McMoRan Inc. (NYSE:FCX), owner and operator of Grasberg, for a 40% share of the mine’s production above specific levels until 2021 and 40% of all production after 2021.

READ: Rio Tinto posts 5% rise in first-quarter iron ore shipments, keeps aluminium production forecast steady

Rio said that, separately, the agreement sets out a proposed transaction between Freeport and Inalum for the latter to buy an additional stake in Grasberg, as well as additional terms relating to the future ownership and operation of the mine.

It added that all parties have committed to work towards agreeing and signing binding agreements before the end of the second half of 2018 although, given the terms that remain to be agreed, there is no certainty that a transaction will be completed.

The Grasberg mine in Indonesia is currently owned by Freeport, who hold a 90.64% interest, and the Government of Indonesia, which owns the remaining 9.36%.

In 2017, the Grasberg mine produced 468 kilotonnes (kt) of mined copper, with Rio Tinto's share at 5.7kt.

In early afternoon trading in London, Rio Tinto shares were 0.6% firmer at 4,044p.

In pre-market New York trading, Freeport shares were up 2% at US$17.75.

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