Freeport-McMoRan Inc, a US-based natural resources company, today struck a deal to sell its majority stake in the Tenke copper project in the Democratic Republic of Congo to China Molybdenum Co Ltd (CMOC) for $2.65 billion in cash, in order to reduce debt.
The deal also includes a contingent consideration of up to $120 million, which includes two additional payments: $60 million if the average copper prices exceed $3.50 per pound, and another $60 million if the average cobalt prices jump above $20 per pound during the 24-month period from 2018 to 2019.
Freeport said it would sell its interests in TF Holdings Limited, a Bermuda holding company that indirectly owns an 80 per cent interest in the Tenke Fungurume mine in the Democratic Republic of the Congo, to China Molybdenum.
Freeport, based in Phoniex, holds a 70 per cent stake in TF Holdings, and an effective 56 per cent interest in Tenke.
Apart from this transaction, Freeport said it would negotiate exclusively with China Molybdenum to sell its interests in joint venture Freeport Cobalt, which includes the Kokkola Cobalt Refinery in Finland, for $100 million.
The company is also planning to sell the Kisanfu Exploration project in the Democratic Republic of Congo for $50 million.
''This transaction is another significant step to strengthen our balance sheet, and enhance value for shareholders. Since the start of 2016, we have announced over $4 billion in asset sale transactions. We are committed to our immediate objective of reducing debt, while retaining a large portfolio of high quality assets and resources, and a leading position in the global copper industry,'' said, Richard Adkerson, president and CEO of Freeport.
Freeport had acquired McMoRan Exploration Co in 2013 for $9 billion, a move that loaded it with debt and compounded the problem when energy prices declined just after the ill-timed purchase.
Last month, it said that it would cut 25 per cent of the oil-and-gas workforce, or 325 jobs, as part of an overall restructuring in that business.