Freeport-McMoRan has signed an agreement to sell a 13% interest in its Morenci copper mine in Arizona, US, to Japan-based Sumitomo Metal Mining (SMM) for $1bn.
Upon completion of the deal, expected in mid-2016, 72% of the Morenci joint venture (JV) will be owned by Freeport, 15% by SMM, with the remaining 13% by a fully owned affiliate of SMM.
Freeport-McMoRan president and CEO Richard Adkerson said: "This transaction represents an important initial step toward our objective to accelerate debt reduction and restore our balance sheet, while retaining a portfolio of high-quality assets and resources.
"With its long-lived reserves, substantial resource position, attractive cost structure and best-in-class operating team, the Morenci joint venture is positioned to be a continuing strong contributor to the success of FCX and Sumitomo."
Freeport plans to use the sale proceeds to repay borrowings under its bank term loan and revolving credit facility and expects to record a gain of $550m gain on the transaction.
With the acquisition of additional interest in Morenci, SMM expects to increase annual production volume by around 62,000t.
The company said it has been involved in the Morenci mine for 30 years since 1986.
Closing of the transaction is subject to obtaining necessary approvals.
Recently, Freeport secured a copper export permit for six months from Indonesia's Energy and Mineral Resources Ministry to resume shipments from its Grasberg mine in Papua.
The permit ended a two-week stoppage of export following expiry of the previous one on 28 January 2016.
Image: The Morenci copper mine is Arizona, US. Photo: courtesy of Stephanie Salisbury.