Rio Tinto mulls exit from Grasberg mine

Courtesy of Freeport

Rio Tinto chief Jean-Sebastien Jacques said the global miner could sell out or walk away from its interest in the controversial Grasberg copper and gold mine in Papua Province, Indonesia, where the government has stopped concentrate exports and wants to take a stake in the mine, according to report on Wednesday.

The current woes come on top of longstanding issues at the Freeport McMoRan-run mine, including a poor safety record and the disposal of tailings into a river, which is against Rio policy.

Jacques was quoted by theaustralian.com.au as saying that Indonesia?s surprise export ban on Grasberg might mean Rio would not take up its rights under a deal where it is supposed to take an effective 40 percent stake in 2021.

He said the concentrate ban was not in the spirit of discussions over the joint venture, where Rio currently receives a share of production once certain levels are reached, over the past three years.

?Grasberg is an option for us,? Jacques told The Australian. ?There is no doubt it is a world-class resource but I?m not sure Grasberg is a world-class business for us.?

He said that Rio could sell the option or walk away.

?What may happen in the coming weeks and months will be very important because in that time we have to decide whether we convert that option into an asset or not,? he said.

Freeport has said the export ban could mean mass lay-offs and the loss of 70 percent of the mine?s production.

Last month, Adkerson said Rio?s entry into Grasberg was likely to be delayed until 2023 or so.

?Rio Tinto?s participation beyond 2021 may also be affected due to the application of force majeure provisions in the joint venture agreement between Rio Tinto and Freeport,? Rio said. (*)