| Freeport-McMoRan’s Woes Extend beyond Falling Copper Prices | |
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Freeport-McMoRan Nears 52-Week Lows on November 13, Commodities Crash (Continued from Prior Part) Falling copper prices
As seen in the previous part of this series, copper prices have crashed to a fresh six-and-a-half-year low on concerns over the Chinese economy and a stronger US dollar. However, unlike other pure-play copper producers like Turquoise Hill Resources (TRQ) and Southern Copper (SCCO), Freeport-McMoRan’s (FCX) worries extend beyond falling copper prices. Together, Freeport and Newmont Mining (NEM) form ~4.1% of the Materials Select Sector SPDR ETF (XLB).
Lower energy prices
Freeport-McMoRan is also involved in the energy exploration business. In 3Q15, the company sold 1.0 billion pounds of copper, 23 million pounds of molybdenum, 13.8 MMBOE (or million barrels of oil equivalent), and 294,000 ounces of gold. Freeport has given a guidance of 13.3 MMBOE for 4Q15.
Energy exposure makes Freeport’s earnings sensitive to falling crude oil prices as well. The company’s energy operations generated an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $0.3 billion in 3Q15. This is roughly one-third of Freeport’s 3Q15 consolidated EBITDA.
Sensitivity
According to Freeport-McMoRan, the company expects its 2016 EBITDA to fall by $215 million for every $5 per barrel fall in Brent oil prices. The company also expects its operating cash flows to be lower by $170 million for every $5 per barrel fall in Brent. Please note that the sensitivity is based only on the energy operations and does not account for diesel costs in Freeport’s copper operations.
Brent oil prices have fallen in the last couple of weeks, as can be seen in the graph above. Falling energy prices could weigh heavily on Freeport’s 4Q15 earnings.
Freeport noted that it is looking at “strategic alternatives” for its energy business. However, falling crude oil prices have only made things worse for Freeport’s plans. In the final part of this series, we’ll discuss what other factors could drive Freeport’s stock in the coming weeks.
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Freeport McMoRan Copper and Gold Inc.
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PRODUCTEUR |
CODE : FCX |
ISIN : US35671D8570 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Freeport McMoran est une société de production minière d'or et de cuivre basée aux Etats-Unis D'Amerique. Freeport McMoran est productrice d'or, de cuivre, d'argent, de cobalt et de molybdène au Chili, au Perou, en Indonesie et en Republique Democratique Du Congo, en développement de projets de cuivre au Perou, et détient divers projets d'exploration au Chili. Ses principaux projets en production sont CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI et MORENCI - ROM LEACH au Chili, GRASBERG, SIERRITA et BAGDAD en Indonesie, TENKE FUNGURUME et TYRONE en Republique Democratique Du Congo et CERRO VERDE au Perou, son principal projet en développement est SAFFORD au Perou et ses principaux projets en exploration sont BAGDAD - ROM LEACH et CHINO - ROM LEACH au Perou et CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH et CLIMAX au Chili. Freeport McMoran est cotée aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 68,1 milliards US$ (59,6 milliards €). La valeur de son action a atteint son plus bas niveau récent le 06 mars 2020 à 10,00 US$, et son plus haut niveau récent le 28 mars 2024 à 47,02 US$. Freeport McMoran possède 1 448 000 000 actions en circulation. |