Is Freeport-McMoRan Stock Looking Like a Sell on its Risky Indonesian Deal?
Freeport-McMoran (NYSE: FCX) has finally reached an agreement with the Indonesian government for the continuation of its lease on the giant Grasberg mine. The deal, formally announced on August 29, follows months of tense negotiations and public outcries by Indonesia's citizens to have more of a say in how their natural resources are used. The Grasberg mine, one of the largest sources of copper and gold in the world, has been operated by Freeport-McMoRan since the early 1970s. And while the company has spent billions upon billions to develop the mine and the surrounding area, locals claim the wealth has not been shared.
Finally, a conclusion that seems to meet the parties' wishes has been reached. This is a big deal. Grasberg is the source of 25% of Freeport's entire copper production and a staggering 98% of its gold production. And while Freeport's operation may very well be a fruitful one until 2041 (when the new agreement expires), I am less optimistic.
Image source: Freeport-McMoRan.
Source: Fool.com
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