Walsh rejects talk of Grasberg exit

Rio Tinto chief executive Sam Walsh has dismissed speculation that the group will look to quit its interest in Grasberg.

RioTinto chief executive Sam Walsh has dismissed speculation that the group will look to quit its interest in the controversial giant Grasberg copper/gold mine in the Indonesian province of Papua.

Operated by Freeport-McMoRan, the mine’s safety record came into focus last year after 28 workers were killed when a training facility collapsed. The operation’s riverine tailings disposals practices and alleged human rights abuses by authorities in the remote region have long made the project the subject of attacks from non-government organisations.

Rio has a 40 per cent interest in certain assets and future production at Grasberg until 2021, and a 40 per cent interest in all production post-2021. The interest has a book value of more than $US700 million ($747m).

The interest is not currently generating any metal entitlements for Rio. And because of the safety, environmental and social issues, there has been talk that Rio could look to quit the interest as part of its broader divestment on non-core assets, even if Grasberg is one of the world’s great ore bodies.

Mr Walsh said while there had been pushback on Grasberg from special interest groups, he had not detected any from Rio’s shareholders.

“In fact, investors can see the value associated with Grasberg,’’ he said. “I was physically there last week. On the safety front, I went through with them in great detail how they are aiming to improve safety. Yes they had a dreadful year last year ... they are focused on improving safety.”