Home Business FCX 3Q Earnings Decline; Considers Listing of Indonesian Unit

FCX 3Q Earnings Decline; Considers Listing of Indonesian Unit

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) third quarter earnings declined to $824 million, or $0.86 cents per share, from its previous earnings of $1.1 billion, or $1.10 per share during the same period last year.

According to the company, its third quarter earnings include a total of $168 million net credits, or $0.18 per share adjustments to Cerro Verde’s deferred income taxes, environmental responsibilities, and related litigation reserves.

FCX 3Q Earnings Decline; Considers Listing of Indonesian Unit

The company said its consolidated sales for the third quarter were 922 million pounds of copper, 202 thousand ounces of gold, and 21 million pounds of molybdenum.

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) reported $526 million in operating cash flows, while its capital expenditure was $971 million during the third quarter. The company ended the period with $3.7 billion in consolidated cash and $3.5 billion of total debt.

Oscar Cabrera and David Forster, analysts at Bank of America Corp (NYSE:BAC) Merrill Lynch, commented that FCX realized metal prices are better than expected. According to them, “We believe the cost creep has been primarily driven by a lower copper and gold sales outlook, rather than increasing input costs.”

In a press statement, Richard Adkerson, president and chief executive officer of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) said “Our third quarter results reflect production growth in North America and Africa, offset by anticipated lower ore grades in Indonesia. As we look forward, we are on track to achieve meaningful increases in our production of copper, as we return to higher-grade ores at Grasberg, and through the execution of brownfield expansions in the Americas and Africa.”

In addition, he said the company expects to add one billion pounds of copper ever year, within the next three years. Furthermore, he expressed confidence in the long-term fundamentals of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) metal production.

During the company’s earnings conference call, Adkerson told analysts that FCX is considering the idea of listing a part of its PT Freeport Indonesia (PTFI), but he denied rumors that the company wants to avoid government regulations.

Adkerson said, “It’s not to avoid government regulations. We’re subject to our contract of work, which sets the basic parameters of how we operate, and what our rights and obligations are, and that the contract itself has a status of law.” He added, “We’ve seen the benefits to having PTFI listed in the Indonesian Exchange.” According to him, the company would list a small portion of PTFI assets, which would be a large transaction for Indonesia.

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) is the world’s largest copper mining company. It operates Grasberg, the third biggest copper mine worldwide. It is discussing the renewal of its contract of work with the Indonesian government, which is set to expire in 2021. Adkerson said, “The government is very positive about our investing now for volumes to produce beyond 2021.”