High copper price31 Jan 2019 06:54
Freeport CEO foresees 'really, really high copper prices'
Jan. 24, 2019 12:59 PM • SA Editor Carl Surran
Freeport McMoRan (FCX -9.7%) plunges nearly 10% after Q4 earnings missed expectations as copper prices dropped, prompting it to forecast a 13% drop in copper production this year.
CEO Richard Adkerson remained upbeat in today's earnings conference call, saying "The fundamentals of the copper market point to a very positive future... Copper prices simply have to rise."
Adkerson predicted the market likely will see "really, really high copper prices... How are you going to replace the top 10 mines in 10 years? It’s not going to come from what’s on the schedule now."
The CEO said he expected "a strong desire for companies to expand their copper business," over the longer term, but opportunities for investment will be limited by geology, politics and the nature of available ore bodies.
Exploration will not be enough to meet future copper demand, which "will add to the value of Freeport’s assets," the CEO said.
It would be an "uphill battle" to see an acquisition that would make sense for FCX right now, Adkerson said, adding that companies get into trouble when try to force M&A into a strategy.
"The market may be focused on the [Q4] miss today, but we do not believe these historic results are very meaningful to the investment case as Freeport is entering a transformational period," Jefferies analyst Christopher LaFemina says.
Source: Bloomberg First Word