Growth drivers

As we noted previously in this series, 2016 was a remarkable year for Freeport-McMoRan (FCX) and other miners like Teck Resources (TCK) and Glencore (GLNCY). In this article, we’ll look at Freeport’s 2017 growth drivers.

How Freeport-McMoRan’s Growth Drivers Could Change in 2017

2017 drivers

In our view, the three key factors that could drive Freeport-McMoRan’s (FCX) 2017 performance are shown in the chart above and discussed below.

Movement in copper prices

Although copper prices are comfortably off their six-year lows that they hit in January 2016, there are still lingering concerns over the sustainability of the rally. We should remember that Freeport’s earnings are sensitive to copper prices.

Movement in copper prices influences the price action of copper miners like Southern Copper (SCCO) and Turquoise Hill Resources (TRQ). Copper prices could depend on several variables that we’ll explore in the coming parts of this series.

Agreement with the Indonesian government

Freeport-McMoRan needs to sign a fresh contract with the Indonesian government regarding its Grasberg mine. The current permit allows Freeport to export concentrate only until January 11, 2017.

Gold prices

Freeport-McMoRan’s (FCX) gold volumes in fiscal 2017 are expected to rise to ~2.8 million ounces, compared to its expected volume of ~1.3 million ounces in fiscal 2016. Gold prices could be another key driver for Freeport in 2017.

One notable exception in Freeport’s 2017 growth drivers as compared to 2016 is the absence of asset sales. The company already raised cash in 2016 by selling assets and raising fresh equity. As Freeport’s leverage ratios look much more comfortable now, the company might not look at further asset sales in 2017.

In the next article, we’ll analyze the various factors that could impact copper prices in 2017.

Latest articles

Apple stock fell 4.6% as the US-China trade war intensified today. China warned of tariffs on more US goods, followed by Trump's tweeted response.

In response to new tariffs from China and President Trump's tweets, the market tanked to session lows on Friday. The DJIA nosedived more than 600 points.

Coverage on Cresco Labs has increased from seven analysts in July to nine in August. Six analysts favor a “strong buy,” and three recommend a “buy.”

AMD stock hit a new 13-year high after the EPYC Rome server CPU launched. How can AMD outperform Intel CPUs at such low prices and still profit?

VMware (VMW) lost about 9% in early hours trading today. VMW released its Q2 of fiscal 2020 results on August 22 after the market closed.

Since Netflix posted its Q2 results, its stock has fallen 18%. Could the streaming giant lose its disruptor position as new players enter the market?