(Adds Freeport's statement)
July 12 (Reuters) - Mining company Rio Tinto on Thursday confirmed the sale of its 40 percent stake in the world's second-biggest copper mine, Grasberg, for $3.5 billion to Indonesia's state mining company PT Inalum.
Rio Tinto had a joint venture with Freeport-McMoRan, operator of Grasberg, for a 40 percent share of Grasberg's production above specific levels until 2021 and 40 per cent of all production after 2021.
Freeport-McMoRan separately said it will receive $350 million from PT Inalum after the stake sale.
The agreement will give Indonesia control of the mine and should cap years of wrangling over the mining rights for the site. (Reporting by Susan Mathew and Laharee Chatterjee in Bengaluru Editing by David Goodman)