Freeport-McMoRan Copper & Gold (FCX -1.96%) has increasingly become a cause for head-scratching. There are, however, lots of reasons to believe that the big mining -- and now oil and gas -- company can be compelling for investors willing to exhibit patience.

But for now, there clearly are questions surrounding the company. And while a presentation by CEO Richard Adkerson at last week's Sanford C. Bernstein's Annual Strategic Decision Conference was quite informative, it failed to address some of the uncertainties currently swirling around Freeport. Unbeknownst to most investors, the major uncertainty has Russian tracks on it.

Freeport's big -- and expanding -- Cerro Verde copper mine in Peru.

As you likely know, Freeport and Newmont Mining Corporation (NEM 0.67%) are endeavoring to deal with apparent economic confusion on the part of the government of Indonesia. Freeport operates the massive Grasberg copper and gold complex in Papua, Indonesia. Similarly, Colorado-based Newmont is the proprietor of the country's Batu Hijau mine in southern Taliwang Regency. Together, the two companies are responsible for 97% of Indonesia's copper production.

Putinesque prodding
But since January, both have been attempting to inject sense into Indonesia's powers that be regarding a new prohibition against unprocessed minerals being exported from the country -- that, despite a dramatic shortage of processing facilities in the country. It's also worth knowing that Freeport shares more than 50% of its Grasberg profits with the government and employs more than 30,000 Indonesians. According to Adkerson, Vladimir Putin and his minions are encouraging the government's senselessness.

How that situation eventuates -- and how rapidly it does so -- are clearly key concerns regarding Freeport. But I'm hit by other uncertainties about the company:

  • Like all who follow Freeport, I wonder where copper demand and prices may be headed. You see, I'm somewhat less sanguine about the economy of China -- which uses 40% of the world's output of the red metal -- than most other observers. 
  • Early in May, Freeport-McMoRan unloaded its Eagle Ford oil and gas interests to Encana for $3.1 billion. It then acquired deepwater Gulf of Mexico assets from Apache Corporation for $1.4 billion. The company was already active in the Gulf. Indeed, in March, it was the high bidder on 20 tracts in a Central Gulf lease sale. My perhaps ill-founded concern is that it's proverbially placing too many of its energy eggs in one high-cost and somewhat chancy basket.

Indonesian talks this week
As to the likely timing for a resumption of full production at Grasberg, which would obviously require an agreement between Freeport and the Indonesian government, Adkerson told those at the Bernstein conference that, "solidly, Indonesia is (for him) priority number one." He is reportedly in Jakarta this week for talks with Indonesia's newly appointed economic minister.

As to copper demand, Adkerson pointed to a study done by the respected natural resources consultant Wood Mackenzie, which forecasts a need for almost 7.5 million tons of new copper over the next decade. However, the output from existing mines is expected drop by 20% during the same period. The obvious shortfall will need to be met largely by the expansion of existing facilities.

With its long-lived assets, this projection is right in Freeport's sweet spot. In addition to moving underground at Grasberg, which has previously been solely a surface mine, the company is expanding its Cerro Verde mine in Peru. It also has a number of projects on the drawing board in the U.S. and likely will further increase the capacity of its Tenke Fungurume copper and cobalt operation in the Democratic Republic of Congo.

Long-term optimism
Adkerson said Freeport isn't in the business of predicting near-term copper prices. But he noted that, "We feel positive about long-term markets and the structure of our business to operate effectively at various prices."

The closest he came to responding to my (unexpressed) question about the wisdom of the Eagle Ford sales and Gulf asset purchases was to say, "The big challenge in the deepwater is to have discoveries that are large enough to support the major development of new facilities."

Foolish conclusion
We'll apparently have to let the company's oil and gas strategy play out before we can judge whether jumping almost exclusively into the deepwater Gulf makes sense. Having said that, I see Freeport-McMoRan (whose shares I own) as a company whose positive surprises are likely to outnumber the negatives in the years ahead.