$Freeport-McMoRan(FCX)$ $Invesco NASDAQ 100 ETF(QQQM)$ $NASDAQ(.IXIC)$
Freeport McMoran is a leading global mining company, with 12 mines across North America, South America, and Indonesia. The company was the 2nd and 9th largest global producer for copper and gold, respectively, in 2022 and ranked the global #1 molybdenum producer since 2013. The company has ample reserves across the globe, holding 111bn lbs of copper and 26.9m oz of gold as of end-2022. The company has the second-largest copper mine in Grasberg, Indonesia, the fourth-largest copper mine in Morenci, North America, and the seventh-largest copper mine in Cerro Verde, South America. The company sold 4.2bn lbs of copper and 1.8m oz of gold in 2022.
Investment Overview
Earnings growth expected in 2024 via metals’ sales volume growth. Top and bottom lines are projected to register 5.9% and 18.3% y-o-y growths in 2024, respectively, driven by the sales volume growth and the commercialisation of smelting projects in Indonesia. The company expects 3.4% y-o-y increases in sales volume for both copper and gold and 6.3% y-o-y growth for molybdenum in 2024 to 4.2bn Ibs, 1.8m ozs, and 85m Ibs, respectively. This will be supported by organic development – including a 400m lbs/2bn lbs copper production capacity expansion in the near/mid-term – which is 10%/48% compared to production volume in 2022.
Commercialisation of smelting projects in Indonesia to support earnings growth in 2024. Freeport’s subsidiary, PT-FI (PT Freeport Indonesia, 48.76% stake), will boost an additional smelting capacity of 2m tonnes p.a. by the end of 2024 with a total investment of US$3.3bn. Construction of the Manyar smelter (1.7m tonnes p.a.of copper concentrate) and expansion of PT Smelter capacity (300k tonnes p.a. of copper concentrate) are expected to be completed by 2023 and 2024, respectively. The Previous Metal Refinery (PMR) aims to commercialise in 2024 to process gold and silver from two smelters. These smelting projects in Indonesia will support earnings growths going forward.
PT-FI securing export permits until May 2024 is positive, but it may face higher export duties. PT-FI was granted a new export license on 24 Jul for 1.7m tonnes of copper concentrate until May 2024 after its old license expiration on 30 Jun 2023. It will work to extend export permit until the end of 2024 when the smelter will be fully operational. Under the new regulations, the company could potentially be required to pay export duty in 2024 depending on the progress of smelting construction, although under FCX’s 2018 agreement duties are eliminated after smelter construction progress reaches 50%.
Risks
i) volatility in metal prices, ii) project execution risks, iii) concentrate export permit delays in Indonesia, and being forced to pay fines for smelter days in Indonesia.
I am a little hesitant about commodities at this stage due to the economic slowdown.
@TigerEvents @Daily_Discussion @TigerStars @MillionaireTiger
DYODD
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