Rio Tinto is selling its stake in the world’s second-biggest copper mine for $4.7 billion

Jakarta. Ed Wray/Getty Images

Rio Tinto is selling its stake in the Grasberg mine, the world’s second-biggest copper project, for $US3.5 ($AU4.7 billion) following years of negotiations by Indonesia for more local control.

PT Inalum, Indonesia’s state mining company, Rio Tinto and Freeport McMoran currently jointly own 90.64% of mine in the eastern province of Papua.

The Indonesian government will end up with about 51% of the mine which would then be operated by Freeport, which will get about $US350 million cash from the new deal.

“All parties have committed to work towards agreeing and signing binding agreements before the end of the second half of 2018,” says Rio.

The government of Indonesia has been pushing to have local interest hold majority stakes in resource projects.

Rio Tinto currently has a right to 40% of production above a pre-agreed level and 40% of all production after 2022.

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