Turbulence In Indonesia Is Manageable For Freeport-McMoRan
Stephen Simpson, CFA
Stephen Simpson, CFA
Oct. 6, 2015, 8:23 AM
- Freeport McMoRan (NYSE:FCX) +3.5% premarket after announcing plans to shrink its board and start a review of its oil and gas business.
- FCX says it is reducing the size of its board to nine members from 16, comprising seven independent directors plus two executive directors.
- FCX also will undertake a strategic review its oil and gas business to evaluate potential steps including the previously announced potential public offering of a minority interest, a spinoff of the business to its shareholders, joint venture arrangements or further spending cuts.
- The company says it aims to focus on its core copper mining business and believes copper prices will hold up given global demand and supply fundamentals.
Oct. 5, 2015, 3:42 PM
- Consol Energy (CNX +9.1%) is upgraded to Hold from Sell with a $13 price target at Deutsche Bank, which says the company's risk-reward position has become more balanced after shares sank 55% in Q3.
- Concerns related to CNX's balance sheet remain, however, and the company depends largely on successful asset sales in a crowded market, the firm says.
- At the same time, Deutsche Bank downgrades Freeport McMoRan (FCX +5.1%) to Hold from Buy with an $11 price target, cut from $17, saying the ongoing strain on FCX's balance sheet indicates the likelihood of further share issuances and diminished likelihood of the widely anticipated $2B-$3B E&P IPO.
Sep. 30, 2015, 11:48 AM
- Copper prices surge as mine disruptions in Latin America and optimism for demand from China bring buyers into the market.
- In Chile, output at the world’s biggest copper mine, Collahuasi, was cut by 30K metric tons/year due to low prices; the mine, owned by Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY), accounted for 6% of global production in 2014.
- Meanwhile, Peru declared a state of emergency in the area around the Las Bambas mine after clashes between police and protesters left three people dead.
- But while copper prices tend to rally “any time you hear about disruptions to supply out of a country like Chile, the threat has been very short lived," says a commodities broker with RJO Futures, adding that concerns about the health of the global economy continue to keep a lid on the copper market.
- Relevant tickers: FCX, JJC, CPER, CUPM
Sep. 30, 2015, 10:37 AM
- Freeport-McMoRan (NYSE:FCX) declares $0.05/share quarterly dividend, in line with previous.
- Forward yield 2.06%
- Payable Nov. 2; for shareholders of record Oct. 15; ex-div Oct. 13.
Sep. 28, 2015, 5:20 PM
- Freeport McMoRan (NYSE:FCX) shares were not helped by today's news that it had found more oil at one of its Gulf of Mexico properties, which the company believes could eventually pump 30K boe/day from its deepwater facilities there.
- FCX says it expects to start bringing up oil and gas from three development wells it drilled at its Horn Mountain Deep field by H1 2017.
- FCX began drilling at three production platforms in the deep Gulf last year and so far has drilled a dozen wells, three of which are producing oil and gas; the company expects the rest to come online over the next two years.
- Earlier: Glencore leads broad selloff in commodities firms, miners, even banks
Sep. 28, 2015, 2:48 PM
- It isn't just Glencore (OTCPK:GLCNF, OTCPK:GLNCY) who is tanking, as at least one measure of raw materials producers plunges to seven-year lows following the company's woes and data that showed weakening Chinese industrial profits.
- Shares of Glencore plunged 29% to close at just 69 pence, an all-time low, exaggerated by a damning report that said future earnings are so uncertain that the company may need to direct all of its efforts to repay debt.
- Freeport McMoRan (FCX -10.2%) is hit hard after breaking below support at $10/share, and global mining peers Rio Tinto (RIO -4.1%), BHP Billiton (BHP -4.5%) and Vale (VALE -9.4%) also are smacked down.
- A number of other firms also are in situations not that much different from Glencore, says DTN analyst Darin Newsom, noting that Caterpillar (CAT -2.2%) and Deere (DE -1.6%) have been struggling and adding that pressure on Glencore may “create a vacuum those other struggling companies could get sucked into."
- Along with oil and gas producers and precious metals miners, even financial stocks are affected, with Morgan Stanley (MS -3.6%) and Goldman Sachs (GS -3.4%) underperforming their banking peers, perhaps as investors grow nervous about the potential for any of Glencore's problems possibly blowing back on other commodity trading operations.
Sep. 22, 2015, 9:21 AM
Sep. 22, 2015, 9:07 AM
- Mining shares are leading a big slide in European equities as metals prices tumble on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) fell to a new intraday low of 107 pence/share, down more than 9% for the worst performance on the U.K.’s FTSE 100 index; Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), ArcelorMittal (NYSE:MT) and Antofagasta (OTC:ANFGF) each fall more than 6%, while BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) rank among the 10 biggest decliners, down ~4.3% each.
- Credit Suisse cuts its earnings estimates across the mining sector, saying “Until China demand and emerging market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices."
- The firm cuts its stock price targets for diversified miners including BHP, which also says it is planning to sell hybrid securities to help refinance near-term liabilities.
- Moody's says miners likely will be the hardest hit of any sector in Europe, the Middle East and Africa as a result of China’s economic slowdown.
- Also: FCX -4.5%, VALE -4.1%, X -2.8%, AA -1.7% premarket.
Sep. 19, 2015, 8:25 AM
- Metal and mining stocks have been hit hard in recent months, but analysts at FBR Capital argue that there are still attractive names to own in the sector.
- Companies with exposure to the zinc and met coal markets look appealing, FBR says, as supply reductions could act as a positive catalyst for prices; Teck Resources (NYSE:TCK) is the firm's top pick there, with Horsehead Holding (NASDAQ:ZINC) the favorite small-cap idea.
- The firm sees "no structural turnaround for domestic thermal coal," but thinks the rate of decline will begin to slow next year, justifying Outperform ratings on Alliance Resource Partners (NASDAQ:ARLP) and Westmoreland Coal (NASDAQ:WLB); Cloud Peak Energy (NYSE:CLD) and Joy Global (NYSE:JOY) are rated Underperform.
- FBR is fairly upbeat on steel names, initiating SunCoke Energy (NYSE:SXC) and SunCoke Partners (NYSE:SXCP) at Outperform, as SunCoke’s long-lived coke assets are able to generate strong margins “in almost any U.S. steel environment"; Cliffs Natural Resources (NYSE:CLF) is rated Market Perform.
- The copper market will remain in surplus through 2017, FBR says, but it rates Southern Copper (NYSE:SCCO) at Outperform; Freeport McMoRan (NYSE:FCX) is rated Market Perform.
- Among precious metals miners, the firm prefers Pan American Silver (NASDAQ:PAAS) and Royal Gold (NASDAQ:RGLD), the latter "a diversified company with a solid balance sheet and attractive acquisition opportunities."
Sep. 18, 2015, 2:37 PM
- Freeport McMoRan (FCX -12.2%) slumps to its lows of the day following news it may sell another $1B of its shares after just completing a similar $1B sale.
- Analysts see the plan as the lesser of three evils against "weak and uncertain market conditions," given FCX's ~$21B in total debt, with equity issuance less onerous than asset sales in a distressed environment or increasing leverage and losing its investment grade status.
- FCX also may face significant risks at its Indonesian copper and gold mine at Grasberg, which will require massive capital spending in coming years; FCX generated 8.4% of its 2014 revenues from Indonesia.
- As for Carl Icahn, who disclosed a ~8.5% stake in the company last month, "It’s not really clear what [he] can do,” BB&T analyst Garrett Nelson says. “He’ll probably try to get a couple of board seats, but the problems Freeport faces are structural and it mainly relates to their Indonesian exposure."
Sep. 18, 2015, 9:15 AM
Sep. 18, 2015, 8:02 AM
- Freeport McMoRan (NYSE:FCX) -2.7% premarket after saying it completed its $1B at-the-market common stock offering and saying it has filed to sell an additional $1B in at-the-market stock.
- FCX says it plans to use the proceeds for general corporate purposes, including repayment of debt and financing of working capital and capex.
- FCX also says it is still talking to investors on investing in its oil and gas properties and the possible IPO of a minority stake in the business.
- "The actions we have taken to cut costs, significantly reduce capital expenditures in our mining and oil and gas businesses and raise equity proceeds are necessary in the current period of weak and uncertain market conditions," FCX says.
Sep. 16, 2015, 7:03 PM
- J.P. Morgan analysts warn that companies with large amounts of floating-rate debt - including Chesapeake Energy, Freeport McMoRan, Ford and GE - could be at risk if the Fed decides to raise interest rates.
- Companies with variable/floating-rate debt suffer a more immediate impact by a rate hike than companies with fixed-rate debt, the analysts say; variable-rate coupons typically reset quarterly, meaning that changes in the base rate flow through almost immediately to variable-rate borrowers, while fixed-rate borrowers do not see such an impact until they refinance or issue new debt.
- JPM lists 25 companies - not including financials - that have the “highest variable-rate debt as a percentage of market cap": FMC, NRG, FCX, AES, CVC, LVLT, PVH, CHK, FE, DVA, THC, OI, CNX, F, HCA, FOSL, RCL, JOY, GE, ADS, ALLE, HBI, GT, DNB, AN
Sep. 15, 2015, 5:57 PM
- Copper bulls hurt by slowing Chinese demand have reason for hope as Citigroup predicts mine disruptions will send the oversupplied market back into deficit next year.
- More than 1.5M metric tons of planned output this year has been lost for reasons ranging from rains and riots in Chile to lack of precipitation in Zambia and Papua New Guinea, Citigroup analysts say.
- Copper mine output this year will total 18.9M tons, with production exceeding demand by 61K tons, in 2015 and a deficit of 284K tons next year, with refined output estimated to rise 1.3%, or less than half the rate in 2015.
- Goldman Sachs, however, projects surpluses through 2019, including a 506K-ton surplus this year and 673K in 2016 amid supply growth and weak Chinese demand.
- Relevant tickers: FCX, OTCPK:GLCNF, OTCPK:GLNCY, JJC, CPER, CUPM
Sep. 10, 2015, 2:32 PM
- It doesn't get as much attention as oil, but copper has quietly rallied 9% off recent lows and broken its downtrend; as an example of copper's strength, Freeport McMoRan (FCX +4.9%) is up 39% since its low close on Aug. 26.
- Copper futures are slightly above yesterday’s seven-week high, as weak China inflation data reinforced views that the government will roll out fresh support measures.
- Copper could be in the midst of a significant upside reversal that is destined to test the upper channel boundary, after traversed from the top of its downward-sloping channel to the bottom before bouncing, MarketWatch's Mike Paulenoff writes.
- Copper has been lifted this week amid news of global production cuts, including Glencore's suspension of operations at two copper mines in a bid to lower operating costs.
- ETFs: JJC, CPER, CUPM
Sep. 10, 2015, 10:35 AM
- Freeport McMoRan (FCX +3.1%) lowers guidance for 2015 copper concentrate sales from its Indonesian unit by 3% after milling operations were hurt by the El Nino dry weather pattern.
- FCX, which runs one of the world's largest copper mines in Papua in eastern Indonesia, says a lack of water supply will cut 2015 sales by 25M lbs. from an earlier sales estimate of 860M lbs.
- Exports from the Grasberg mine complex already have been slowed this quarter by new payment rules for buyers and the closure of FCX's domestic smelter.
Freeport-McMoRan, Inc. engages as copper, gold and molybdenum mining company. The company operates through five segments: North America Copper Mines, South America Copper Mines, Africa Mining, Indonesia Mining, and Molybdenum Mining. The North America Copper Mines segment operates seven open-pit... More
Sector: Basic Materials
Country: United States
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