Markets Give Thumbs-Up to Freeport and Glencore’s Survival Plans



New operating plans

As discussed in the previous part, three of the big mining companies—Freeport-McMoRan (FCX), Glencore (GLNCY), and Anglo American (AAUKY)—recently announced their new 2016 operating plans.

Anglo American announced its plans at the company’s investor day, which was held on December 8, 2015. Glencore scheduled its investor update call on December 10. Freeport announced its plans in an ad-hoc news release on December 9.

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Market reaction

The market reacted differently to these companies’ announcements. Anglo American’s announcement met with a strong negative reaction from the market. Within two days of its investor day, the company’s stock fell by ~14%.

The company has announced a radical transformation strategy. Read Anglo American’s New Survival Strategy: What Do Investors Think? to find out how Anglo American would look after these measures.

Freeport-McMoRan’s announcements were received well on Wall Street. The stock rose more than 10% in the day, but lost most of its gains and closed at $6.99, a 3.7% rise from its previous day’s close.

However, market response was much more circumspect this time compared to Freeport-McMoRan’s previous strategic moves. When the company announced spending cuts in August 2015, its stock soared more than 28%.


Glencore’s stock also saw upward price movement after it announced its new operating plans. Nonetheless, Glencore has been among the worst-performing mining companies (XME) this year. Though it has managed to hold its 2015 lows, the stock is still down more than 70% year-to-date. The graph above shows Glencore’s price movement versus copper prices.

Investors looking at diversified exposure to the international natural resources sector can consider the SPDR S&P Global Natural Resources ETF (GNR). Together, BHP Billiton (BHP) and Rio Tinto (RIO) form ~6.2% of GNR’s portfolio.

In the next part of the series, we’ll see how the survival plans of Glencore and Freeport stack against each other.


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