Freeport-McMoRan has reported a decline in copper production for the fourth quarter, leading to a drop in its shares by more than 4%. Despite this setback, the Phoenix-based miner managed to deliver a better-than-expected quarterly profit, primarily due to rising copper prices that helped offset production challenges in Indonesia.
Key Highlights:
Production and Financial Overview:
Freeport’s copper production fell approximately 5% year-over-year, totaling 1.04 billion pounds.
The company anticipates 4 billion pounds of copper sales for the year, slightly lower than in 2024.
The average realized price for copper increased by 9% to $4.15 per pound during the fourth quarter.
Operational Challenges:
Freeport operates the Grasberg mine in Indonesia, the second-largest copper mine globally, where production has been impacted by operational issues.
A smelter being constructed in Indonesia was damaged by a fire last year, prompting ongoing repairs and negotiations with the Indonesian government regarding an export agreement to smelt copper elsewhere temporarily.
Budget and Cost Increases:
The company raised its budget for the year by about 5% to $4.4 billion, with expectations for further increases in the following year, surprising investors.
CEO Kathleen Quirk emphasized efforts to enhance efficiency while funding growth projects.
Market Outlook:
Despite the production dip, Freeport remains optimistic about long-term copper demand, predicting a market deficit in the coming years.
The company sells all its U.S. copper production domestically, mitigating concerns over potential tariffs on copper imports.
Investor Sentiment:
Shares were down approximately 4.3% in midday trading, influenced by lower copper prices and rising operational costs.
Freeport reported adjusted earnings of 31 cents per share, outperforming analysts’ average estimate of 20 cents.