Mitsubishi Materials to Sell 25.5% Stake in PT Smelting to Freeport

Summary

Japan's Mitsubishi Materials Corp said its stake in Indonesia's copper smelter PT Smelting, its joint venture with PT Freeport Indonesia, will fall to 35 percent from 60.5 percent after expanding the smelter's processing capacity. PT Smelting will expand its capacity by borrowing the funds required for the expansion work from PT Freeport. The loan will be converted to newly issued shares of PT Smelting on completion of the expansion work, the Japanese company said as quoted by Reuters.

The expansion is aimed at boosting the smelter's annual copper concentrate processing capacity by 30 percent. PT Smelting needs US$250 million to fund the expansion cost and target completion date at the end of December 2023.

Mitsubishi Materials also planned to sell its aluminum business, used for beverage cans and automotive parts, to US investment fund Apollo Global Management for an undisclosed sum. Although the aluminum market is expected to grow globally, Mitsubishi Materials has decided to divest its aluminum business as it is challenging to find synergies with its other industries such as copper products for electric vehicles and cement, it said in a statement. As a result of the deal, the company will book a 29 billion yen or US$251 million loss as a restructuring charge in the January-March quarter, but the loss has been discounted in its full-year earnings forecast announced earlier this month.

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