Recently, Freeport-McMoRan (FCX) filed for an IPO (initial public offering) of its energy business. In our previous series, we analyzed the key features of Freeport’s energy IPO. After the divestiture of its energy assets, Freeport-McMoRan would be mainly producing copper, molybdenum, and gold.
Copper is still the most important part of Freeport-McMoRan’s portfolio. The previous chart shows the breakup of Freeport’s 2014 revenue. As you can see, Freeport gets almost 60% of its revenue from copper. It’s among the top three copper producers globally. Rio Tinto (RIO) and BHP Billiton (BHP) are the other major copper producers.
Freeport gets more than 7% of its revenue from gold. It produces gold from its mine in Indonesia. Freeport also produces silver from its Indonesian operations. Currently, Freeport forms 4.2% of the SPDR S&P Metals and Mining ETF (XME) and 3.56% of the Materials Select Sector SPDR ETF (XLB). ETFs are an alternate investment vehicle for investors who wish to avoid the hassles of picking individual stocks.
Although Freeport’s share price has shown a strong correlation with energy prices over the last few quarters, it’s predominantly a copper producer. In this series, we’ll analyze the key macro factors that impact the copper industry.
The International Copper Study Group is a leading provider of copper industry statistics. Recently, it released its monthly report. We’ll discuss the key features of this report in the coming parts of this series.
Next, we’ll take a look at the recent movement in copper prices.