Freeport-McMoRan Inc

Since China (PGJ) is the largest copper consumer, it’s important for investors to keep track of Chinese copper demand indicators.

Rio Tinto’s 2015 results were mostly in line with market expectations. Underlying EBITDA and underlying profits were $12.6 billion and $4.5 billion, respectively.

Rio Tinto’s copper production was a slight miss, falling short ~1% of the fiscal 2015 guidance. This was mainly due to weaker throughput at Escondida.

In the week ended January 9, copper and tin inventories increased. Levels for other base metals fell.

Brazil’s government has announced that it intends to start legal proceedings against Samarco, Vale, and BHP Billiton for Samarco’s tailings dam failure.

Analysis of base metal inventories helps us understand the price and usage trends of the respective base metal, as well the price trends of base metal mining companies.

While major mining companies like Freeport-McMoRan and Glencore are declaring copper production cuts, BHP Billiton says it is reluctant to decrease its copper production.

In this part of ours series, we’ll explore the trend in Freeport-McMoRan’s unit production costs.

In this part of the series, we’ll explore the trend in Freeport-McMoRan’s (FCX) revenues.

Rio Tinto’s (RIO) underlying EBITDA (earnings before interest, taxes, depreciation, and amortization) was $7.3 billion for 1H15.

With the recent news of activist investor Carl Icahn taking an 8.5% stake in the company coupled with Freeport’s lower capital expenditure guidance, the stock has seen a smart up move.

Although copper prices have recovered from sub-$5,000 levels, the worst doesn’t seem to be over for copper or Freeport-McMoRan (FCX).

Any variation in copper demand or supply directly affects the value of the Chilean peso against the US dollar.

BHP Billiton’s (BHP) (BBL) underlying EBITDA was $21.9 billion for fiscal 2015. This is a fall of 28% year-over-year (or YOY). Operating income also fell 46% YoY in fiscal 2015.

Freeport-McMoRan (FCX) released its 2Q15 earnings on July 23. It reported a net loss of $1.85 billion, which was largely attributable to the $2 billion write-down of its oil and gas assets.

Freeport’s average realized copper prices fell 14% in 2Q15 on a year-over-year basis. Lower commodity prices took a toll on Freeport’s 2Q15 profits.

Vale S.A. (VALE) reported revenues of $6.4 billion in 1Q15, a decline of $2.9 billion compared to 4Q14. Most of the decline is due to seasonally lower sales volumes and lower commodity prices.

On April 23, Freeport said it might look at selling a minority stake in its energy business and come out with an IPO of its oil and gas subsidiary later in the year.

On a year-over-year basis, Chilean refined copper production fell by more than 1%. Incessant rains causing flooding are behind the decline in February’s copper production.

Newmont stated during its 4Q14 earnings call that it is analyzing potential opportunities to pay its liabilities in advance.

Copper prices have traded largely sideways in April. Copper prices fell sharply in January but have recovered smartly since then. Year-to-date, copper prices are down ~4%.

In 2014, its zinc operations contributed 31% to revenues and made up 27% of gross profit before depreciation and amortization.

China is the world’s biggest automotive market, where close to 22 million vehicles are sold each year. A mid-sized vehicle has ~50 pounds of copper content.

The trend in copper prices has been clearly uneven this year. Higher copper prices benefit copper producers like Freeport-McMoRan.

Copper is also known as “Dr. Copper,” as analysts see the metal’s prices as a reflection of the global economy’s health.

Freeport has lost almost 20% of its market capitalization so far this year, making 2015 a turbulent period for the company.

Freeport’s global mining portfolio shows that Freeport has major operations in North America, South America, Africa, and Indonesia.

Freeport’s key historical timeline starts more than a century ago when Freeport Sulphur established the city of Freeport, Texas, near its sulphur mine.

Freeport-McMoRan (FCX) is a leading natural resources company. It’s among the top copper producers and holds the position of largest molybdenum producer.

China overtook the US and Japan as the premier manufacturing location. China doesn’t have sufficient copper reserves, leading to the global copper trade.

Cathodes are not used directly by copper consumers. Cathodes are melted and cast into shapes based on end usage, such as cakes, ingots, rods, and billets.

Copper mining is concentrated in Latin America, while the major copper consumers are in Asia. More than 60% of global copper consumption comes from Asia.

Because of its excellent heat transfer capabilities, copper is also widely used in producing heat exchange equipment and other uses in extreme environments.

Mining giants Rio Tinto and BHP Billiton have diversified portfolios of iron ore, aluminum, and copper assets, with most revenues coming from iron ore.