Freeport McMoRan and RTZ Corp. enter tieup

Freeport McMoRan and RTZ Corp. enter tieup

JAKARTA (JP): RTZ America Inc. of the United States has given
preliminary commitments to investing around US$1.72 billion in
the U.S. Freeport McMoRan Cooper & Gold Inc. for the development
of the latter's mining activities in Indonesia.

Paul S. Murphy, the executive vice president of PT Freeport
Indonesia, an affiliate of the New Orleans-based Freeport McMoRan
Copper & Gold Inc. told reporters here yesterday that of the
total $1.7 billion fund, some $875 million will be used to
acquire over 18 percent of the outstanding common equity owned by
Freeport-McMoRan Inc. (FTX) in McMoRan Copper and Gold Inc.

"As you know, around 70 percent of the McMoRan Copper and Gold
Inc. total equity is owned by FTX and the remaining 30 percent by
the investing public," he said.

In addition to the acquisition, RTZ America has also been
committed to providing some $850 million for the establishment of
a new joint venture involving RTZ America, the RTZ Corporation
PLC and McMoRan Copper and Gold Inc.for the development of the
McMoRan gold and copper mining in Irian Jaya, he said.

Within 30 days from now all things related to the cooperation
will be finalized, Murphy added.

"RTZ Corporation PLC and RTZ America today signed letters of
intent for the acquisition," he said

Under the acquisition scheme, RTZ America will acquire from
FTX some 21.5 million shares of McMoRan Copper and Gold Inc.'s
Class A common stock, or 10.4 percent of its outstanding common
equity, amounting to $450 million, he said.

McMoRan Copper and Gold Inc. said in a report made available
at The Jakarta Post yesterday that FTX will call its 6.55 percent
convertible subordinated notes, the outstanding principal amount
of which is around $373 million. "If requested by FTX, RTZ
America will make a cash tender offer for the notes," the report
quoted RTZ's chief executive Robert Wilson as saying.

Joint venture

Murphy said that under the deal on the establishment of a
joint venture, RTZ America through its existing subsidiaries will
acquire a 40 percent beneficial interest in the contract of work
(COW) held by McMoRan Copper and Gold Inc.'s subsidiaries,
including Freeport Indonesia and Eastern Mining Company, in Irian
Jaya as well as another 40 percent beneficial interest in the
portion of Freeport Indonesia's COW in Block B in Irian Jaya.

"The remaining 60 percent of the beneficial interests will be
controlled by McMoRan Copper and Gold Inc.," he said.

Freeport Indonesia now holds a mining concession, called Block
A in a 10,000 hectare area and Block B at some 2.6 million
hectares in size, all located in Irian Jaya.

From its Block A area, it has been capable of producing 70,000
tons of ore per day with a metal equivalent to 750,000 pounds of
copper and 650,000 ounces of gold.

He said that for future expansion projects in Block A, RTZ's
subsidiaries will provide up to $750 million for 100 percent of
defined costs to help develop such projects.

"It is also possible for the local companies in Indonesia to
join the venture in the future," he told the Post.

Smelter

Earlier on Monday, James R. Moffett, Chairman and Chief
Executive Officer of Freeport MacMoRan Copper and Gold Inc.,
together with two other equity partners, signed a joint statement
which confirmed their respective role in the Gresik copper
smelter project.

Freeport owns 20 percent, Fluor Daniel Inc. 10 percent and
Mitsubishi Materials Corp. 70 percent of the copper smelter
project in East Java which will begin construction later this
year.

The plant will have an annual capacity of 200,000 tons of
copper cathode which at present has to be imported to meet
domestic consumption.

In addition, the smelter will also make 600,000 tons of
sulphuric acid as a byproduct which will be supplied to the
nearby state-owned Petrokimia Gresik plant. (fhp/vin)