Why Newmont Mining Corp. Is Taking a Harder Stance Than Freeport-McMoRan Inc.http://www.fool.com/investing/general/2014/06/18/why-newmont-mining-corp-is-taking-a-harder-stance.aspx Vladimir Zernov
June 18, 2014
Both Freeport-McMoRan (NYSE: FCX) and Newmont Mining (NYSE: NEM) face the problem with exporting copper concentrate from Indonesia after the country imposed a controversial 25% tax on exports back in January. While the problem is the same, the approach to the solution differs dramatically. Newmont Mining has chosen the hard approach by suspending copper concentrate production at Batu Hijau and declaring force majeure.
In turn, Freeport-McMoRan has been very gentle in rhetoric about the crisis and stated multiple times that it hopes the solution will be found soon. Why do the tactics of two companies differ so much?
There's more risk for Freeport-McMoRan than for Newmont Mining
Thus, Indonesian assets are extremely valuable for Freeport-McMoRan. For Newmont Mining, the country is less important. Newmont Mining gets the majority of its revenue from Australia and the U.S. The share of Indonesia in Newmont's revenue mix declined from 15% in 2011 to just 6% in 2013. That's why Newmont Mining could afford a harder approach in the Indonesian crisis – the company has less to lose than Freeport-McMoRan.
Freeport-McMoRan has big plans for the Grasberg mine