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Freeport edges higher on deal giving Indonesia controlling stake in Grasberg

Stock MarketsJul 12, 2018 10:15AM ET
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© Reuters. Freeport edges higher on deal giving Indonesia controlling stake in Grasberg
  • Freeport McMoRan (FCX +0.5%) opens modestly higher in reaction to the expected agreement giving Indonesia a controlling stake in the Grasberg mine, the world's second largest copper mine, for $3.85B.
  • Following completion of the complex deal, Indonesia's stake in the mine would rise to ~51% from less than 10% currently, while FCX would own 49%.
  • At closing, Rio Tinto (LON:RIO) (RIO +0.7%) would receive $3.5B for its complete stake in the project and FCX would get $350M in cash; FCX, which will remain operator of the mine, expects its share of future cash flows of the expanded asset base, combined with the cash received in the sale of its stake, to be "comparable to its existing share of future cash flows under the current joint venture."
  • The signing is partly an "interim face-saving strategy” for Indonesia's Pres. Widodo ahead of national elections next year, showing a sign of progress in a long-running dispute with one of Indonesia’s largest foreign investors, Jakarta-based mining advisor Bill Sullivan tells WSJ.
  • Analysts say the deal could also could give the government a basis for extending FCX’s current mining license as the talks continue; the government last week extended FCX’s expiring license but only through the end of July.
  • Now read: PepsiCo (NASDAQ:PEP): Buy This Dividend Aristocrat For Income With Earnings Beat Of 6% This Quarter


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Freeport edges higher on deal giving Indonesia controlling stake in Grasberg
 

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