Summary
Freeport-McMoRan Inc. (FCX) announced a significant divestment agreement with PT Indonesia Asahan Aluminium (Persero) (Inalum), a state-owned enterprise of the Indonesian government, on September 27, 2018. This agreement finalizes terms for Inalum's acquisition of shares in PT Freeport Indonesia (PT-FI), a key operating subsidiary. Under the terms, Inalum will acquire Rio Tinto's interests in the PT-FI Joint Venture for $3.5 billion and FCX's 100% interest in PT Indocopper Investama (PT-II), which holds a 9.36% stake in PT-FI, for $350 million. While FCX will receive a total of $350 million in cash proceeds from the sale of PT-II, the economic benefits of the revenue and cost-sharing arrangements under the Joint Venture are intended to be preserved for FCX and existing PT-FI shareholders. Following the transaction, FCX's ownership in PT-FI will be reduced to 48.8%, with Inalum holding 51.2% ownership, subject to certain mechanisms to replicate joint venture economics.
Key Highlights
- 1FCX has entered into a definitive Divestment Agreement with Indonesia's state-owned enterprise, Inalum, regarding PT Freeport Indonesia (PT-FI).
- 2Inalum will acquire Rio Tinto's interests in PT-FI's Joint Venture for $3.5 billion.
- 3FCX will sell its wholly-owned subsidiary, PT Indocopper Investama (PT-II), which holds a 9.36% stake in PT-FI, to Inalum for $350 million.
- 4FCX will receive $350 million in cash proceeds from the sale of PT-II.
- 5The agreement aims to preserve the economic benefits of revenue and cost sharing for FCX and existing PT-FI shareholders.
- 6Post-transaction, FCX's ownership in PT-FI will decrease to 48.8%, with Inalum owning 51.2%.
- 7The transaction is expected to close by the first quarter of 2019, subject to several conditions including the extension of PT-FI's mining rights through 2041 and regulatory approvals.