Freeport closes sale of its stake in Tenke mine
While cautioning that it is still too early to start thinking about expansions, Freeport-McMoRan president and CEO Richard Adkerson was optimistic about copper in an interview with Reuters.
Freeport-McMoRan has wrapped up the $2.65 billion sale of its stake in the Democratic Republic of Congo's Tenke Mine, and the company's chief executive said he hopes negotiations will ease objections of Congo's state miner to the deal.
Speaking of domestic issues, Adkerson said the surprise victory of Donald Trump in the U.S. presidential election had triggered "fund buying" of copper, bringing the metal's price closer to fundamentals in a market that he said was now "essentially balanced."
Benchmark copper prices recorded their biggest weekly gain since 2011, fueled largely by Trump's promises of infrastructure spending.
Adkerson called the rally a "pleasant surprise" that could help the Arizona-based company - the world's largest publicly listed copper producer - pay off its bloated debt sooner. A 10-cent rise in the price of copper in 2017 would translate into $300 million to $350 million in extra cash, he said.
“It’s too early, way too early” to consider any new expansions, Adkerson told Reuters.
“There’s a lot of uncertainty about this near-term movement and where things are going,” Adkerson said.
It was also too early to say what Trump would mean for mining companies after taking office, Adkerson said.
“We're going to be very interested in who the secretary of state is. We’re going to be working with them to help support our business in places...around the world.”
As part of its efforts to lower its debt, Freeport announced in May that it was selling its 56 percent stake in Tenke to China Molybdenum.
But state miner Gecamines, which owns 20 percent of the mine, has opposed the sale, saying it was not informed beforehand of the plans and had the right to make the first offer on any sale.
Freeport's deal had been delayed for months by minority mine owner Lundin Mining Corp which had the right to supplant China Molybdenum's offer, sell its stake, or do nothing.
That barrier was eliminated when Lundin said it would sell its 24 percent stake to Chinese private equity firm BHR Partners for about $1.14 billion in cash.
Freeport was working with Gecamines to resolve their dispute and would prevail in arbitration if talks fail, Adkerson said.
Adkerson also said he was confident Indonesia would modify its planned ban on unfinished metals exports.