Rio Tinto has confirmed that PT Indonesia Asahan Aluminium (Inalum) is interested in purchasing Rio Tintos entire interest in the Grasberg mine in Indonesia for $3.5 billion.
Discussions between Rio Tinto, Inalum and owner-operator Freeport are currently ongoing, including the price of the agreement. To date, no arrangement has been reached, with no certainty that binding agreements will be signed.
Grasberg, located in the province of Papua in Indonesia, is one of the worlds largest copper and gold mines. It is owned and operated by Freeport Indonesia, a subsidiary of US-based Freeport-McMoRan Copper & Gold Inc. (FCX). Rio Tinto has a joint venture with FCX for a 40 per cent share of production above specific levels until 2021, and 40 per cent of all production after 2021.
The Grasberg underground block cave project will come online in 2017 when the current open pit mine is expected to be depleted. This will transition the mine from primarily an open pit to a fully-underground operation. It is expected to ramp up to full capacity by 2022, reaching 160,000 tonnes per day of ore.
In addition, Grasberg has begun construction on the Deep Mill Level Zone block cave mine, which will produce an additional 80,000 tonnes of ore per day at full capacity, expected in 2021. Together, these two projects will supply ore to the mill at 240,000 tonnes per day by 2022.