2017-03-30 12:54:54 | Freeport McMoRan jumps after Grasberg hopes rekindledShares of copper miner Freeport McMoRan are moving higher after Indonesia appears to be closer to allowing the company to resume exports of copper concentrate from its Grasberg mine in Papua, Indonesia, according to an earlier report from Reuters. BACK STORY: Three years ago, Indonesia imposed a bid to bolster spending in the country by banning unprocessed ore. Freeport would have faced prohibitive taxes if it ignored the ban. However, the miner was granted an extension to operate beyond 2021 if it made concessions. REDUCES INDONESIA INVESTMENT: According to a report from Reuters on March 1, Freeport-McMoRan had shelved plans to invest $1B a year in long-term underground expansions at its giant Grasberg copper mine in the country due to an ongoing struggle with Indonesian regulators. According to the report, Freeport said it sees "no returning to business as usual." ANALYST VIEWS: Early last week, research firm Deutsche Bank upgraded Freeport McMoRan to Hold citing a more positive Industrials commodity view. Upstream mining equities "continue to make strong free cash flow with commodity price momentum," Deutsche Bank analyst Chris Terry told investors. The analyst remained cautious on Grasberg, however. He raised his price target for Freeport shares to $14 from $12.50 at the time. This past Tuesday, Jefferies analyst Christopher LaFemina concludes that a sale of the company's stake in Grasberg may be best. While admitting that Freeport and Indonesia "will undoubtedly attempt to come to a resolution prior to going to arbitration," the analyst said he's not optimistic about the prospects given the lack of progress so far. LaFemina lowered his price target for Freeport shares to $16 from $18.50 and kept a Buy rating on the shares.PRICE ACTION: Shares of Freeport are off their early session high of $13.53, but still up over 5% at $13.40 per share in afternoon trading. |
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