Global Copper Woes Pull Down Freeport Stock

Core Viewpoint - Freeport-McMoRan (FCX) is facing significant operational challenges due to a mud rush incident at its Grasberg mine in Indonesia, leading to a force majeure declaration and a sharp decline in its stock price [2][6] Group 1: Operational Impact - The Grasberg mine is critical, contributing over 1.5 billion pounds of copper and approximately 1.5 million ounces of gold annually [2] - The incident has led Goldman Sachs to revise its global copper supply forecast from a surplus to a deficit for 2025, indicating a serious disruption in the market [3] - Freeport's Grasberg mine accounted for nearly one-third of its total copper sales in 2024, creating a significant gap in its short-term production outlook [3] Group 2: Financial Outlook - Freeport anticipates third-quarter 2025 copper sales to be approximately 4% lower and gold sales to decrease by 6% compared to earlier estimates, resulting in substantial lost revenue [4] - In 2024, copper sales contributed 3.5 billion pounds, generating billions in revenue at an average price of $4.18 per pound, with current prices exceeding $4.50 per pound [4] - FCX shares dropped over 13% on September 24, falling below $38 from earlier peaks of $45.74, erasing billions in market capitalization [6] Group 3: Long-term Prospects - Despite current challenges, the long-term outlook for copper remains strong, with demand expected to increase by 30% over the next decade due to the energy transition [5] - Freeport is well-positioned to capitalize on this growth once operations at Grasberg are restored [5]