The Bad News That Drove Freeport-McMoRan Inc's Stock Lower in September
Shares of copper and gold miner Freeport-McMoRan Inc (NYSE: FCX) fell around 5% in September. The slump was driven in part by weak copper and gold prices, but it's worth noting that competitor Southern Copper was only down about half as much.
In fact, Freeport's decline might even seem a little surprising in light of the company's August 29 announcement that it had made important progress in its dispute with the Indonesian government over the Grasberg mine. To sum that problem up quickly, Indonesia wants to benefit more from that giant mine than it is today, and is looking to change Grasberg's ownership structure. The late-August understanding was a key step toward a resolution, which is good news.
Grasberg holds virtually all of Freeport's gold reserves and about 30% of its copper reserves. It's an important asset for the company. In fact, Freeport has major plans to expand its mining efforts there, including shifting from open-pit mining to underground mining. Underground mines are much more expensive to build and operate than open-pit mines. Clearly, Freeport believes there's a lot of value yet to be found in the Grasberg mine.
Source: Fool.com
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