Mon, Feb. 23, 3:59 PM
- Freeport McMoRan (FCX -3.4%) is unlikely to sell oil, gas and copper assets in the current market, as buyers are unwilling to pay good prices for quality assets due to weak commodities prices, CEO Richard Adkerson says.
- FCX has been trying to reduce its debt, which ballooned in 2013 after it acquired two oil and gas companies, but any help from asset sales appears to be off the table for now.
Fri, Feb. 20, 2:39 PM
- Freeport McMoRan (FCX +0.2%) says it will immediately establish commercial production from its Highlander oil and gas discovery in Louisiana after obtaining "highly favorable" reservoir characteristics from a production test.
- FCX says the production test utilized expanded testing equipment and indicated a flow rate of ~75M cf/day of natural gas; in December, a test of the well reported a rate of ~43.5M cf/day.
- FCX says it has identified multiple prospects in the Highlander area, where it controls rights to 50K-plus gross acres.
Fri, Feb. 20, 9:58 AM
- Indonesia's government will start allowing miners to renew contracts earlier than two years before they expire, a move that would favor Freeport McMoran (FCX -0.6%) and its expansion plans in the country.
- FCX, which runs the Grasberg copper and gold mining complex, has for years been seeking contract certainty before investing the $15B-plus needed to turn its Indonesia asset into the world's biggest underground mine after 2016.
- FCX's current deal is due to expire in 2021 but Indonesia's energy and mineral resources minister says a government decision on an extension would be reached before by this July.
- Rio Tinto (NYSE:RIO) has a joint venture with FCX for a 40% share of Grasberg's production above specific levels until 2021, and 40% of all production after 2021.
Thu, Feb. 12, 11:59 AM
- Rio Tinto (RIO +2.3%) has no major M&A plans in the works, preferring to focus on building new mines rather than buying low-quality assets in the current market environment, CEO Sam Walsh says.
- The CEO says shareholders have asked whether Rio had any interest in deals, with some wondering whether the company might consider approaching Freeport McMoRan (NYSE:FCX) or Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), but "we are not doing that," adding that shareholders had dismissed the idea that Rio would give Glencore (OTCPK:GLCNF, OTCPK:GLNCY) "any air at all" to consider a tie-up.
- Talks are still ongoing with the Mongolian government to settle all outstanding concerns about the development of the underground Oyu Tolgoi mine, Walsh says while indicating that Rio has not offered to increase its stake in the mine.
- Walsh also says Rio will not take part in any upcoming tender process for two blocks of the massive Simandou iron ore deposit in Guinea.
- Earlier: Rio Tinto's $2B buyback signals shift in strategy
Tue, Feb. 3, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
Mon, Feb. 2, 3:22 PM
- Freeport McMoRan (FCX +3.3%) may combine a dividend cut announcement with some incremental cost-cutting through an energy joint venture, lower capex or idling of high-cost production sometime during Q1, Morgan Stanley says as it cuts its FCX price target to $25 from $30 and 2015 EPS by 26%.
- Stanley still sees near-term risks for FCX despite the 57% decline in shares since Q3 and management actions to boost free cash flow, citing continuing low visibility in Indonesia, vulnerability of further declines in copper prices and the potential dividend cut.
- At spot commodity prices, the firm forecasts FCX 2015 EBITDA could be near $4.7B vs. consensus for $7.1B, with cash burn near $1.5B before dividend.
Tue, Jan. 27, 3:49 PM
- This will be a year of adjustments amid uncertain commodity markets, but "we're not backing away from our objectives of reducing leverage, and going forward we're going to continue to prioritize debt reduction," Freeport McMoRan (FCX -5.9%) CEO Richard Adkerson says in today's earnings conference call.
- Copper's long-term fundamentals are strong, the CEO says, adding that FCX’s strength is its long-term reserves, and these will kick into high gear as prices rise, generating cash flows; FCX expects to produce 5.4B lbs. of copper in 2016, up from 4.3B lbs. this year.
- The company's expansion into energy exploration inflated FCX's debt to $19B at year-end 2014; with commodity prices at current levels, its debt target of $12B by year-end 2016 target is now unrealistic, Adkerson says.
- FCX is counting on Chinese demand for copper to grow ~5%/year while it could be only in the low single digits, Morningstar's Dan Rohr says; another risk for the company is that its two lowest cash-cost mines are in politically volatile Indonesia and the Democratic Republic of Congo.
- Citigroup's Brian Yu kept his Hold rating on the stock, saying Q4 copper results and oil and gas margins came in weaker than expectations and 2015 guidance for both was reduced.
- Earlier: Freeport McMoRan cuts 2015 capital budget by $2B
Tue, Jan. 27, 9:17 AM
- Freeport McMoRan (NYSE:FCX) -5.5% premarket after missing expectations for Q4 earnings and saying that it has cut 2015 capital spending by $2B with the possibility of further cuts ahead.
- Says it is taking "aggressive actions" to defer or reduce capital spending, and is seeking third-party funding for much of its oil and gas expenditures "to maintain financial strength and flexibility" in response to the drop in oil prices.
- FCX says its Q4 copper sales fell to 972M lbs. from 1.14B lbs. in the year-ago quarter, primarily reflecting the sale of Candelaria in Nov. 2014 and lower sales from Cerro Verde and Indonesia, while gold sales fell to 377K oz. from 512K oz.
- Q4 average realized prices for copper fell 10.9% Y/Y, gold prices fell 2.2%, and oil prices declined 15.8% from a year earlier.
Tue, Jan. 27, 9:10 AM
Tue, Jan. 27, 8:03 AM| 1 Comment
Mon, Jan. 26, 5:30 PM
Mon, Jan. 26, 10:59 AM
- Freeport McMoran (FCX +0.5%) will start divesting its stake in its Freeport Indonesia subsidiary in two stages; the first will be a 10.6% stake this October followed by the remaining 10% next year.
- The update on divestment came as FCX and the government extended a six-month MoU which expired over the weekend that will allow for the resumption of copper exports despite a lack of progress in the construction of a required smelting plant.
- FCX now says it expects to export 500K metric tons of copper concentrate over the next six months from its Grasberg mining complex in Papua.
Fri, Jan. 23, 5:58 PM
- Freeport McMoRan (NYSE:FCX) and Teck Resources (NYSE:TCK) may announce dividend cuts with their upcoming quarterly reports, Morgan Stanley says, as the firm thinks it is too early to get bullish on copper equities while it remains unclear if pricing has troughed.
- Stanley estimates FCX’s 2015 free cash flow (excluding $1.3B in dividends) at a loss of $2.5B-$3B, and expects capex cuts to reduce cash burn; it also anticipates a cut in dividends, currently $1.25/share and more than 100% payout ratio on 2015 estimated EPS at spot.
- The firm foresees large upside in TCK shares if Fort Hills is suspended, but recent comments suggest work on the project will continue for now; it estimates TCK’s 2015 free cash flow (excluding C$500M in dividends) at a loss of ~C$500M, suggesting risk to the dividend.
Fri, Jan. 23, 12:37 PM
- Copper puts are Goldman Sachs' favorite global macro hedge, as derivatives strategist John Marshall notes that options prices on copper remain at long-term average levels even as the 12-month copper price has declined 12% over the past month.
- Freeport McMoRan (NYSE:FCX) provides the opportunity for a single-stock trade, as its options are 94% correlated with options on the underlying commodity; Goldman suggests buying FCX March $20 straddles for $2.79 when the stock was at $19.70.
- The firm estimates three-month implied volatlity for FCX is 43%, below the 45% implied by oil, copper and gold options, and FCX volatility would surge to 65% if copper volatility surges as expected.
- Earlier: Goldman gives in on mined commodities
Fri, Jan. 23, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Fri, Jan. 23, 8:58 AM
- Indonesia likely will allow Freeport McMoRan's (NYSE:FCX) local unit to continue exporting copper concentrate, citing the company's progress in its effort to refine copper in the country, says the government's director of coal and minerals.
- Freeport Indonesia and Petrokimia Gresik yesterday signed a preliminary deal to build a $2.3B copper smelter in East Java.
- The minister for energy and mineral resources on Tuesday said the government would ban FCX's Indonesia subsidiary from shipping copper concentrate outside the country.
FCX vs. ETF Alternatives
Other News & PR