Written by Ernest Scheider
(Reuters) – Freeport-McMoRan (NYSE:) is ramping up production across three continents with no plans to join the takeover frenzy sweeping the mining industry, a strategy analysts say puts the company in a good position to benefit from growing clean energy demand. On red metal.
Widely used in the global economy, copper is an ideal conductor of electricity and malleable, qualities that have made it widely popular for use in wiring, motors, construction equipment, electronics and other devices.
Global demand is expected to jump by at least 60% by 2050, according to the International Energy Agency. Analysts at Jefferies expect prices of the red metal to rise by more than 40% over the next two years.
However, new copper mines have proven difficult to develop, partly due to opposition from indigenous groups, environmentalists, local communities and others.
The difficult backdrop has prompted BHP, Rio Tinto (NYSE:), Glencore (OTC:) and other diversified miners of iron ore, nickel and other important metals to look for deals to boost their copper production even as they offset shareholder expectations for payouts.
Phoenix-based Freeport has long focused primarily on copper — it produces 9% of global supplies, more than any other company — and now finds itself in the rare position of being able to focus on expanding the mines it already owns and avoid distractions. Company. Acquisition.
“We are really focused on creating value from the assets we have,” Kathleen Quirk, who became Freeport’s chief executive in June, told Reuters ahead of the LME Week conference in London, one of the world’s largest annual gatherings of mining executives. . “I don’t see Freeport having to go out on a limb and having to overpay for things.”
Freeport expects to produce 800 million pounds (362,874 metric tons) of copper annually by 2027 by leaching the metal from piles of old waste rock at its U.S. mines that were previously thought to be worthless.
Drones and helicopters install irrigation lines over miles-long piles of waste that release an acidic solution to extract low concentrations of copper.
The cost of producing the leaky copper would be a third lower than that of Freeport’s hard rock mines — already some of the cheapest in the industry, according to analysts — and would not require a smelter for processing. Freeport estimates it would need to spend at least $10 billion on a new mine to mimic production from leach.
“This is a huge opportunity for us, and one we are actively pursuing,” Quirk said.
This leaching plan alone will produce nearly half of the copper mined by Anglo American (JO:) – which BHP unsuccessfully tried to buy earlier this year – mined worldwide in 2023.
“Hold on to their knitting”
Freeport has four other expansion projects underway that could add more than 1 billion pounds (453,592 metric tons) of copper annually to its production in the coming years, including more than 500 million pounds (226,796 metric tons) annually by 2025 in the U.S. .
Another project is in Indonesia, where it is expanding Grasberg, the world’s second-largest copper mine. Freeport also hopes to negotiate an extension of its mining rights beyond 2041 with Indonesia’s new president, who takes office next month.
The company is now preparing its application for a license extension, and Chairman Richard Adkerson — who led the last round of negotiations when he was CEO — plans to join the discussions, Quirk said.
“Indonesia is part of the fabric of our company as we work hard to improve people’s lives, provide benefits to the government, all while providing returns on investments for our shareholders,” she said. “I want to continue this positive relationship.”
In Chile, Quirk said the regulatory climate had improved under President Gabriel Buric after a period of uncertainty fueled by a failed attempt to change the country’s constitution last year.
“Chile is a more stable environment for investors now,” Quirk said. An application to expand the Abra mine, in which state-owned Codelco is a minority partner, is due to be submitted next year, she said.
Freeport’s stock rose 30% last year as investors embraced the company’s plans to expand existing operations. Seventeen of the 24 analysts tracking Freeport stock recommend buying it and none recommend selling, according to LSEG Workspace.
“Freeport is the backbone of my portfolio,” said Derek Boone of the Optica Rare Earths & Critical Materials ETF, which owns shares in Freeport. “I want them to stick with their knitting.”
Quirk, who has been Adkerson’s deputy for more than 20 years, faces a challenge recruiting workers in the United States, where the company has moved to deploy self-driving trucks as a result.
“I hope that as everyone focuses on our future economy and how it will require more use of metals, we will get the best and brightest in our industry to help us,” Quirk said.
This is crucial for Freeport customers, who are gobbling up more copper.
For example, Nvidia (NASDAQ:) said in March that it would use copper cables for its AI data centers — instead of fiber-optic cables.
“This bodes well for long-term copper demand,” said Steve Schoffstall of the Sprott Energy Transition Materials ETF, which owns Freeport shares. “Companies like Freeport are in a good position.”
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