Singapore 15/02/2016 - Freeport-McMoRan said on Monday that that it has entered into an agreement to sell a 13 percent ownership interest in its Morenci copper joint venture in Arizona to Japan’s Sumitomo Metal Mining Co (SMM) for $1 billion in cash.
The proceeds will be used to repay borrowings under its bank term loan and revolving credit facility.
“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,” Richard C. Adkerson, Freeport’s president and CEO said in a statement.
The Morenci unincorporated joint venture is currently 85 percent owned by Freeport and 15 percent by Sumitomo Metal Mining Arizona (SMMA), a SMM subsidiary.
On completion of the transaction, the joint venture will be 72 percent owned by Freeport, 15 percent by SMMA, and 13 percent by an affiliate that is fully-owned by SMM.
The transaction is expected to close in mid-2016, subject to regulatory approvals and customary closing conditions.
Freeport’s 85 percent share of consolidated recoverable reserves in Morenci totalled 12 billion pounds of copper, while its share of 2015 production from the mine approximated 900 million pounds of copper as at end-December 2015.
In 2015, Freeport’s 85 percent share of Morenci revenues totalled $2.2 billion.
Freeport had said in January that it was actively engaged in discussions with third parties regarding potential asset sales as part of plans to accelerate its debt reduction plan.