The FTSE 100-listed mining giant - which will issue a second-quarter production update next Monday - has a joint venture with Freeport-McMoRan Inc. (NYSE:FCX), owner and operator of Grasberg, for a 40% share of the mine’s production above specific levels until 2021 and 40% of all production after 2021.
READ: Rio Tinto posts 5% rise in first-quarter iron ore shipments, keeps aluminium production forecast steady
Rio said that, separately, the agreement sets out a proposed transaction between Freeport and Inalum for the latter to buy an additional stake in Grasberg, as well as additional terms relating to the future ownership and operation of the mine.
It added that all parties have committed to work towards agreeing and signing binding agreements before the end of the second half of 2018 although, given the terms that remain to be agreed, there is no certainty that a transaction will be completed.
The Grasberg mine in Indonesia is currently owned by Freeport, who hold a 90.64% interest, and the Government of Indonesia, which owns the remaining 9.36%.
In 2017, the Grasberg mine produced 468 kilotonnes (kt) of mined copper, with Rio Tinto's share at 5.7kt.
In early afternoon trading in London, Rio Tinto shares were 0.6% firmer at 4,044p.
In pre-market New York trading, Freeport shares were up 2% at US$17.75.