Natural resource comp ay, Freeport-McMoRan Inc. (NYSE:FCX) will purchase a copper smelter along with advancing its gold and copper mines in Indonesia. The smelter will cost about $2 billion and will be provided by Unit PT Freeport Indonesia. The smelter will be built in Indonesia also.
This is part of a $17 billion dollar plan that Freeport-McMoRan will allow the company to pour another $15 billion into the development of underground copper and gold deposits at its Grasberg mine complex in Papua.
The smelter will process 2 million tons of copper concentrate a year.
Recently, Indonesia banned the export of raw minerals and added export duties for many processed minerals. This included copper concentrate. The bans and duties are an effort by the Indonesian government to build processing plants across the country.
The new smelter is a big part of Freeport-McMoRan’s discussions with Indonesia on its Contract of Work amendment.
These efforts assist with the company in compliance with new government rule and mining law. The land where the smelter will be built is included in a memorandum of understanding to be signed along with Petrokimia Gresik, a state-owned petrochemical company.
The country currently only has one smelter, PT Smelting. Freeport Indonesia is on the Grasberg copper and gold mine in Papua province and owns a 25% stake in PT smelting.
Freeport-McMoRan Inc. (NYSE:FCX) has recently been under fire from analysts. Weak EPS growth and drooping net income have analysts worried. The company also faces higher debt management risk issues.
Positives revolve around a strong 38% gross margin rate. Net operating cash flow has increased to $1.9 million, or 2.55% compared to same quarter last year.
Besides the Indonesian operations Freeport-McMoRan Inc. (NYSE:FCX) has several operating mines on four continents. Recent plunges in copper pricing have been a challenge for the company. The average realized price for copper has slipped from $3.14 a pound in the first nine months of 2014 to a current price of about $2.14.
The stock gained 0.86% to close at $20.02 in last trading session.