Freeport-McMoRan (FCX) plans to sell its interests in TF Holdings Ltd. to China Molybdenum Co. Ltd. (CMOC) for $2.65 billion in cash and contingent consideration of up to $120 million, consisting of $60 million if the average copper price exceeds $3.50/lb and $60 million if the average cobalt price exceeds $20/lb, both during the 24-month period between 2018 and 2019.

TF Holdings is a holding company that indirectly owns an 80% interest in Tenke Fungurume Mining S.A. (Tenke). FCX has a 70% interest in TF Holdings and an effective 56% interest in Tenke.

In addition, FCX is negotiating exclusively with CMOC to sell its interest in Freeport Cobalt, including the Kokkola cobalt refinery in Finland for $100 million and the Kisanfu exploration project in the Democratic Republic of Congo (DRC) for $50 million. The company holds a 56% interest in Freeport Cobalt and 100% interest in Kisanfu, a copper and cobalt exploration project located near Tenke.

Freeport does not expect the transaction to impact Tenke’s operations, employment, taxes and benefits provided to the DRC. Since the project’s inception, Tenke has paid approximately $1.5 billion in taxes and related payments to the public treasury and other public administration services of the DRC. The current operation provides employment to approximately 3,400 full-time operational workers and 4,200 contractors, most of who are DRC citizens.

As of December 31, 2015, Tenke had consolidated recoverable reserves totaling 7.2 billion lb of copper and 874 million lb of cobalt. FCX reported consolidated Tenke sales for 2015 totaling 467 million lb of copper and 35 million lb of cobalt at a net unit cash cost of $1.21/lb of copper.

The transactions are expected to close in the fourth quarter of 2016, subject to regulatory approvals, CMOC shareholder approval and other customary closing conditions. The shareholders of CMOC holding approximately 63% of the outstanding shares have undertaken to vote in favor of the resolutions to approve the transaction. The transaction is subject to Lundin Mining Corp.’s right of first offer, which will be open for 90 days from receipt of the ROFO notice.