Freeport-McMoRan Announces Terms of PT Freeport Indonesia Divestment and New Long-Term Partnership with PT Inalum
12 Juli 2018 - 1:46PM
Business Wire
Establishes Path Forward to Long-Term Stability
in Indonesia
Freeport-McMoRan Inc. (NYSE: FCX) announced today that it has
entered into a Heads of Agreement with the Indonesian state-owned
enterprise PT Indonesia Asahan Aluminium (Inalum) and PT Freeport
Indonesia's (PT-FI) joint venture partner Rio Tinto. Under the
terms of the non-binding Heads of Agreement, Inalum will acquire
for cash consideration of $3.85 billion all of Rio Tinto's
interests associated with its Joint Venture with PT-FI (the “Joint
Venture”), and 100 percent of FCX's interests in PT Indocopper
Investama (PT-II), which owns 9.36 percent of PT-FI.
Inalum will contribute the Rio Tinto interests to PT-FI, which
will expand PT-FI’s asset base, in exchange for a 40 percent share
ownership in PT-FI, pursuant to arrangements that will enable FCX
and existing PT-FI shareholders to retain the economics of the
revenue and cost sharing arrangements under the Joint Venture.
Following completion of the transaction, Inalum's share ownership
will approximate 51 percent of PT-FI (subject to an agreement
between shareholders to replicate the Joint Venture economics), and
FCX's ownership will approximate 49 percent.
Richard C. Adkerson, Vice Chairman of the Board, President
and Chief Executive Officer, said, “This agreement marks a
significant milestone toward establishing a new long-term
partnership with the Republic of Indonesia to provide long-term
stability for PT Freeport Indonesia's operations. Through
this transaction, the Government will achieve its ownership
objectives in a manner that preserves the long-term value for FCX
shareholders and the people of Indonesia through 2041. We
thank Rio Tinto for their support over our more than 20-year
successful partnership. We look forward to a mutually
positive and beneficial partnership with Inalum that will continue
to provide substantial benefits to the people of Papua; the
Republic of Indonesia; and to our local employees, suppliers and
contractors while generating attractive returns for our
shareholders.”
At closing, Rio Tinto will receive $3.5 billion, and FCX will
receive $350 million, in cash proceeds from Inalum. In addition,
Rio Tinto will forego in favor of FCX an amount equivalent to Rio
Tinto's share of Joint Venture cash flows received since January 1,
2018 through closing.
Following completion of the transaction, FCX expects its share
of future cash flows of the expanded PT-FI asset base, combined
with the cash proceeds received in the transaction, to be
comparable to its existing share of future cash flows under the
current Joint Venture arrangements. FCX will continue to manage the
operations of PT-FI.
The transaction, which is expected to close during the second
half of 2018, is subject to the negotiation and documentation of
definitive agreements, including purchase and sale agreements, the
extension and stability of PT-FI's long-term mining rights through
2041 in a form acceptable to FCX and Inalum, a shareholders’
agreement between FCX and Inalum providing for continuity of FCX’s
management of PT-FI’s operations, and resolution of environmental
regulatory matters satisfactory to the Indonesian Government, FCX
and Inalum. The terms of these agreements will be subject to FCX
Board approval.
Management will host a webcast for investors at 11:00 a.m.
Eastern Time, Thursday, July 12, 2018, to discuss the details of
the transaction. The conference call will be broadcast on the
Internet along with slides. Interested parties may listen to the
conference call live and view the slides by accessing
“www.fcx.com.” A replay of the webcast will be available through
Friday, August 10, 2018.
FCX is a leading international mining company with headquarters
in Phoenix, Arizona. FCX operates large, long-lived, geographically
diverse assets with significant proven and probable reserves of
copper, gold and molybdenum. FCX is the world's largest publicly
traded copper producer. FCX’s portfolio of assets includes the
Grasberg minerals district in Indonesia, one of the world's largest
copper and gold deposits; and significant mining operations in the
Americas, including the large-scale Morenci minerals district in
North America and the Cerro Verde operation in South America.
Additional information about FCX is available on FCX's website at
"fcx.com."
Cautionary Statement Regarding Forward-Looking
Statements: This press release contains forward-looking
statements, which are all statements other than statements of
historical facts such as expectations related to the pending
transaction. The words “anticipates,” “may,” “can,” “plans,”
“believes,” “estimates,” “expects,” “projects,” “targets,”
“intends,” “likely,” “will,” “should,” “to be,” “potential” and any
similar expressions are intended to identify those assertions as
forward-looking statements. FCX cautions readers that
forward-looking statements are not guarantees of future performance
and actual results may differ materially from those anticipated,
projected or assumed in the forward-looking statements. Important
factors that can cause FCX’s actual results to differ materially
from those anticipated in the forward-looking statements include
the outcome of the negotiation and documentation of definitive
agreements, including the purchase and sale agreements, the
extension and stability of PT-FI's long-term mining rights through
2041 in a form acceptable to FCX and Inalum, a shareholders’
agreement between FCX and Inalum providing for continuity of FCX’s
management of PT-FI’s operations and addressing governance
arrangements, resolution of environmental regulatory matters
pending before Indonesia’s Ministry of Environment and Forestry
satisfactory to the Indonesian Government, FCX and Inalum,
obtaining an extension of PT-FI’s temporary IUPK after July 31,
2018, and other factors described in more detail under the heading
“Risk Factors” in FCX's Annual Report on Form 10-K for the year
ended December 31, 2017, filed with the U.S. Securities
and Exchange Commission (SEC).
Investors are cautioned that many of the assumptions upon which
FCX's forward-looking statements are based are likely to change
after the forward-looking statements are made, including for
example commodity prices, which FCX cannot control, production
volumes and costs, some aspects of which FCX may not be able to
control. Further, FCX may make changes to its business plans that
could affect its results. FCX cautions investors that it does not
intend to update forward-looking statements more frequently than
quarterly notwithstanding any changes in its assumptions, changes
in business plans, actual experience or other changes, and FCX
undertakes no obligation to update any forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20180712005391/en/
Freeport-McMoRan Inc.Financial Contacts:Kathleen L. Quirk,
602-366-8016orDavid P. Joint, 504-582-4203orMedia Contact:Eric E.
Kinneberg, 602-366-7994
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