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Freeport-McMoRan Inc. Message Board

  • typea1949 typea1949 Dec 27, 2013 9:11 AM Flag

    Indonesian Govt affect on FCX

    FCX seems to have a lot of political clout with the Indonesian government. I keep reading that Indonesia is going to curb "non-smelted ore", FCX's share price is climbing despite this news. Is FCX exempt?

    Sentiment: Hold

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    • That would be E F F E CT not A F F EC T

    • FCX is the best place to park your money if you like copper. That being said what will drive copper and FCX
      stock price going forward IMO.
      Stable or higher copper prices.
      Better US and other world economys.
      I feel its catch up time for FCX in 2014 on the stock price should out perform the s&p IMO.

      Good luck to all in 2014.
      LAD

      Sentiment: Strong Buy

    • regulatory environment is not the issue. There is oversupply of copper. Nobody is bullish on gold and Iran may flood the crude market. FCX should trade at 8-9x EPS. It is trading at 13x.

    • Typea, FCX previously constructed and currently operates one smelter in Indonesia. So the govt. is excepting companies who refine product in Indonesia from their new guidelines, or at least will subtract the output from the smelter from the export limits. And you're right about the political clout. It comes from two things, one, the huge amount of tax revenue that FCX provides to the (and Congo, and S. American) governments, and two, the contributions FCX makes to the infrastructure (schools, roads, playgrounds, home and business loans) in the areas where their mines are located. Another technique they use is they almost always have a local minority interest partner in their projects. Go on the FCX website and go through all their properties around the world. With possible exception of US properties, you will see that the local government and usually a local mining company have 10 - 20% interests. They are smart. They also are not misers during union negotiation time. The Grasberg strike last year was the only strike I've seen happen to the company since I've been a shareholder, and that one only happened because the union was being piggish (relatively).

      • 1 Reply to braindamagedbaby
      • Go on to yahoo finance, FCX, Headlines and look at yesterday. there are Reuters articles indicating the Indonesian govt is working out a deal with the parliament that companies who refine materials in Indonesia (Freeport and Newmont) will have exemption form the export ban in some way.
        And as for the continued rise in share price, look at the warehouse levels and the spot price of copper. SHFE warehouse levels dropped another 5000 plus tons this week, down from 220K tons four months ago to under 130K tons today, and with the continued spot price of copper being over $1,000/ton higher in China than in London, copper is continuing to be withdrawn from the LME warehouses, shipped and sold in China for the arbitrage difference in prices. And the fact that the warehouse levels are going down means that the copper in China is being used, not stored. Go on kitcometals and see the six month chart for the LME warehouse levels. they've dropped from 660s K tons six months ago to 370s K tons today. And a lot of the LME copper is being held and is not for sale. So the spot price is starting to rise, up about 20 cents in the past 30 days. I don't know if you saw that blip in the spot price of copper where it briefly shot up over 15 cents in 5 minutes the other day, it was attributed to a computer glitch, but I'm not so sure. Keep watching the spot price and the warehouse levels. Even if one is a short term trader (which I am not), I think it is very smart to stay with a long position on FCX as long as the LME warehouse levels continue to decrease and the spot copper price continues to trend upwards. There is also a good chance that the copper spot stays above 3.35/lb., which would be another reason to hold onto a long position. FCX will produce roughly one billion lbs. of copper, and their estimates are based on a 3.25/share copper price, Every 10 cents the copper selling price is above 3.25, that adds one hundred million to the FCX net income.

 
FCX
38.72+0.05(+0.13%)Jul 22 4:02 PMEDT

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