8-KMaterial AgreementsOther EventsExhibits & Filings

FREEPORT-MCMORAN INC 8-K Report, Material Agreement (Sep 28, 2018)

Filed September 28, 2018For Securities:FCX

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.

Frequently Asked Questions

This 8-K filing announces Freeport-McMoRan Inc.'s entry into a definitive Divestment Agreement with PT Indonesia Asahan Aluminium (Inalum), a state-owned Indonesian enterprise. This agreement finalizes the terms for Inalum's acquisition of shares in PT Freeport Indonesia (PT-FI).

FCX will receive $350 million in cash proceeds from the sale of its wholly-owned subsidiary, PT Indocopper Investama (PT-II), to Inalum. Inalum is also acquiring Rio Tinto's interests for $3.5 billion, but these funds are not directly paid to FCX.

FCX's direct and indirect ownership in PT-FI will decrease to 48.8%. However, the agreement is structured to allow FCX and existing PT-FI shareholders to retain the economics of the revenue and cost sharing arrangements under the Joint Venture, meaning their economic benefits are largely preserved despite the reduced equity stake.

Key conditions include the extension and stability of PT-FI's long-term mining rights through 2041, resolution of environmental regulatory matters, various Indonesian regulatory actions and approvals, and customary approvals from international competition authorities. The transaction is expected to close by the first quarter of 2019.