Rio Tinto sells off Grasberg mine to Indonesian state-run mining outfit

Rio Tinto has signed a binding agreement for the sale of its interest in Indonesia's Grasberg mine.

The Australian commodities giant will sell its entire interest in the Grasberg mine PT Indonesia Asahan Aluminium, the nation's state-run mining company, for $3.5bn in cash.

Rio Tinto chief executive J-S Jacques said: "This agreement is a significant step towards the sale of our interest in Grasberg and provides further evidence of our commitment to strengthening the portfolio by selling non-core assets and driving higher returns across the business.

"We will continue to shape the portfolio, maintain a strong balance sheet and allocate capital to the highest value opportunities in order to ensure that Rio Tinto continues to deliver sector-leading returns to shareholders".

Separately, PT Indonesia inked a deal with Freeport McMoRan in relation to the future ownership and operation of the Grasberg mine.

Rio stated the transaction were subject to a number of conditions but, subject to these undefined conditions being met, completion of the transaction was expected to take place throughout the first half of 2019.

Rio Tinto also revealed the proceeds of the sale would be used for "general corporate purposes".

As of 1200 BST, Rio Tinto shares had dipped 0.48% to 3,859p.