Freeport finally free to focus on copper

By Frik Els / September 13, 2016 / www.mining.com / Article Link

Shares in Freeport-McMoRan Copper & Gold (NYSE:FCX) reacted positively to news the number one publicly-held copper producer managed to offload oil and gas assets it put up for sale more than a year ago. Year to date the $14 billion company's stock is now up 64%.

Anadarko Petroleum said Monday after market close that it would buy deepwater Gulf of Mexico assets from Freeport for a total of $2 billion. Phoenix-based Freeport abandoned plans to spin off its oil and gas operations earlier this year.

Richard C. Adkerson, Freeport's President and CEO, said since the start of 2016 the company has announced over $6 billion in asset sale transactions reflecting the company's "commitment to debt reduction and our focus on dedicating our capital and management resources to our global leading copper business."

In May announced the sale of its largest African copper mine to China Molybdenum (CMOC) for up to $2.65 billion

Like many of its peers Freeport has been struggling to get its debt load under control which ballooned to $20 billion following the ill-timed acquisition of the oil and gas assets three years ago not long before the price of crude started its descent from $100+ a barrel levels.

In May announced the sale of its largest African copper mine to China Molybdenum (CMOC) for up to $2.65 billion, but last week Reuters reported that the Democratic Republic of Congo's state-owned Gecamines has submitted its own bid for Freeport's 56% stake in the high-grade Tenke Fungurume mine.

Gecamines already owns 20% of the operation while Toronto-based Lundin Mining controls 24% which includes a first right of refusal to pick up Freeport's stake. Freeport reported consolidated Tenke sales for the year 2015 totaling 467 million pounds of copper (215,000 tonnes) and 35 million pounds of cobalt (16,000 tonnes) at a net unit cash cost of $1.21 per pound of copper.

In February Freeport sold a 13% stake in its US Morenci mine, the world's fifth largest, for $1 billion to Japan's Sumitomo. The company is also locked in negotiations with the Indonesian government to sell an additional 10% in the iconic Grasberg mine, but the company hasn't been able to narrow the gap with the Asian nation on a price.

While other industrial metals and steelmaking raw materials have jumped in value this year, the bellwether metal is trading down 3% year to date following a 26% decline in 2015, exchanging hands for around $2.10 a pound on Tuesday.

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