Grasberg mine. Credit: Alfindra Primaldhi.

Indonesia’s state-owned mining holding company PT Indonesia Asahan Aluminium (Persero), also known as Inalum, is reportedly set to finalise a deal this month to acquire a major stake in Grasberg copper mine.

The government is negotiating a price in the range of $3.5bn-$4bn for the acquisition, Reuters reported, citing Indonesia State-Owned Enterprises Minister Rini Soemarno.

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Reported to be the world’s second-largest copper mine, Grasberg is owned and operated by US-based Freeport McMoRan Copper & Gold’s (FCX) Indonesian subsidiary (PTFI).

“Now we are preparing contracts. You could say it’s already completed – all that’s left is the finalisation of documents that need to be signed.”

Freeport operates the mine in a joint venture with Rio Tinto, with the latter having a 40% share of the production above specific levels until 2021, and 40% of all production thereafter.

In May this year, Rio Tinto confirmed media reports that the company is engaged in negotiations with Inalum for the sale of its stake in Grasberg.

The impending deal comes after FCX entered an agreement to give 51% interest in the mine to the Indonesian Government in exchange for long-term operating rights through 2041.

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Indonesia Deputy State-Owned Enterprises Minister Fajar Harry Sampurno said: “Now we are preparing contracts. You could say it’s already completed – all that’s left is the finalisation of documents that need to be signed.”

The project needs investment to move into its next phase of underground, as part of plans to transition the mine from an open pit to a fully-underground operation.

This will allow production at the mine to reach full capacity by 2022, at which point it will produce 160,000 tonnes per day of ore.