3 Things to Watch With Freeport-McMoRan Copper & Goldhttp://www.fool.com/investing/general/2012/09/11/3-things-to-watch-with-freeport-mcmoran-copper--g.aspx Sean Williams
September 11, 2012
Freeport-McMoRan Copper & Gold (NYSE: FCX ) is a global explorer and miner of mineral resources including copper, gold, molybdenum, silver, and various other metals. According to its website, Freeport currently possesses 102 billion pounds of copper, 40 million ounces of gold, 2.48 billion pounds of molybdenum, 266.6 million ounces of silver, and 700 million pounds of cobalt.
Today, let's look at three things investors should be watching regarding Freeport-McMoRan, as they will provide us with better insight into the company.
1. China, China, China!
Details about copper's health have been relatively mixed in recent months. On one hand, China's GDP growth has been steadily reversing and is at multiyear lows -- although 7.5% growth is still pretty darn good if you ask me! Last week, however, we received positive news from China that it was planning to implement a $156 billion infrastructure project to stimulate its economy which, in turn, should call for a rise in imports of multiple metals from Freeport-McMoRan, including copper -- which is a commonly used metal in construction. This news has lit a temporary fire under both Freeport and Southern Copper (Nasdaq: SCCO ) , which holds the largest supply of copper reserves at 146 billion pounds. It's therefore imperative that Freeport investors keep a close eye on China.
2. Operating costs and efficiencies
Freeport shareholders shouldn't feel too bad, as they aren't alone. The cost to build Thompson Creek Metals' (NYSE: TC ) copper and gold mine, Mt. Milligan, has doubled since it purchased Terrane Metals. Thompson Creek has needed to divest part of its gold assets in Mt. Milligan to Royal Gold (Nasdaq: RGLD ) twice now to generate cash for the project.
With that being said, operational efficiency and cost-saving initiatives are musts for the mining sector. Freeport handles its costs by internalizing as much as it can and utilizing the hourglass approach to work with its suppliers to eliminate waste on both it and its sup