A Member of Pat McKeough’s Inner Circle recently asked for his advice on Freeport McMoRan, a leading international mining company which happens to be the world’s largest producer of molybdenum, a major copper producer, and operator of the world’s largest gold mine.
Pat likes the firm’s compelling exposure to copper because the red metal is essential for global electrification and decarbonization trends. The company’s innovative approach to resource development further strengthens its long-term prospects across all its international operations. However, Pat notes the firm’s high sensitivity to metals prices, operational and geopolitical challenges, and regulatory uncertainty.
Freeport McMoRan Inc. (Symbol FCX on New York; www.fcx.com), is one of the world’s largest publicly traded copper producers with operations in Indonesia, North America and South America. The company has significant reserves of copper, gold and molybdenum.
In Indonesia, Freeport’s assets include the Grasberg minerals district in Papua. Grasberg is one of the world’s largest copper and gold deposits.
In North America, Freeport operates seven open-pit copper mines in Arizona and two in New Mexico. Also, the company has two molybdenum mines in Colorado.
One of its most important North American mines is in the 72%-owned Morenci minerals district in Arizona. Morenci is an open pit mine that has produced copper since 1939.
In South America, Freeport operates two copper mines—Cerro Verde in Peru and El Abra in Chile. The company owns 53.6% of Cerro Verde, an open pit copper and molybdenum mining complex. It also owns 51% of El Abra, an open pit copper mining complex.
Through its 48.8%-owned PT Freeport Indonesia (PT-FI) subsidiary, the company mines for copper, gold, and silver at Grasberg. Its operations include four underground mines, one open pit mine and a block cave mine.
The company completed the construction of its new Manyar smelter in Indonesia in June 2024. The smelter is now producing copper cathodes. These are used to make copper rod for the wire and cable industry. Freeport expects to reach full production by the end of this year.
The completion of the smelter makes the company a fully integrated copper producer in Indonesia because it combines the extraction process with the refining process. This provides support for Freeport’s operations in the Grasberg minerals district. The jobs created by the new smelter should also help the company extend its long-term operating rights in Indonesia, as it needs the government’s approval to do business in the country and export copper concentrates.
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Longer-term outlook for copper is big plus for Freeport McMoRan
In the three months ended March 31, 2025, Freeport’s revenue fell 9.4%, to $5.73 billion from $6.32 billion a year earlier. Consistent with expectations, first-quarter 2025 copper production of 868 million pounds was 20.0% lower than first-quarter 2024 sales of 1.09 billion pounds, primarily reflecting a planned major maintenance project in Indonesia.
Excluding one-time items, Freeport earned $358 million, or $0.24 a share. That was down 24.5% from $474 million, or $0.32 a share. The decreased earnings reflect the lower revenue as well as higher operating costs.
After dropping to as low as $2.17 U.S. per pound in mid-March 2020, copper rose steadily to a record price of $5.03 in March 2022. Fears of supply chain disruptions and historically low stockpiles amid rising copper demand drove prices higher.
However, copper prices then dropped—before climbing to a new high of $5.32 on March 3, 2025. Copper has since moved down to today’s price of $4.30. That’s due to concerns that still-high interest rates will continue to slow global economies. As well, investors worry about the pace of China’s economic recovery.
Longer term, the outlook for copper looks positive. From a supply standpoint, due to a lack of new mines, long-term copper shortages could result. Recovering economies should also push up demand—and that includes demand from segments such as electric vehicles (EVs) and green-energy related operations.
All these factors bode well for Freeport and its share price.
Recommendation in Pat’s Inner Circle: Freeport McMoRan Inc. is a buy for aggressive investors.
