Freeport-McMoRan Inc. (FCX 0.32%) really started to get its business moving in the right direction in 2017. But it was still a year that the copper and gold miner, and its investors, would rather forget. Here's an update on the good things that happened, and the one big negative that's still hanging over Freeport's future.

The backstory and the fix

In 2013, Freeport made a very expensive mistake by investing in the oil business during a mining industry downturn. Its debt load went from $3.5 billion to $20.4 billion in a single year. On the surface the idea sounded good, since adding oil to the portfolio would increase diversification. That storyline was backed by the fact that oil was holding up relatively well compared to copper and gold. When oil prices started to tumble just a few months after the company closed on a pair of oil acquisitions, however, the miner's problems began to mount because of the heavy debt load it was carrying on its balance sheet.   

A man writing in a notebook with an oil well in the background

Freeport decided that oil wasn't the way to go, but then it got hit by another trouble. Image source: Getty Images.

Since that point there's been a management shakeup, much of the oil business has been sold, and Freeport has begun to reduce its long-term debt burden. At the end of the third quarter, long-term debt stood at $12.6 billion. That's still a notable level of debt, around 65% of the capital structure (excluding noncontrolling interests), but a huge improvement from where it stood just a short while ago.   

The improvement was more nuanced than just debt reduction, however. First, Freeport largely exited a business that, in hindsight, it probably never should have entered. That alone materially improved the fundamental story here. But the recovering commodity markets, which really started to turn higher in 2016, have been an important tailwind, as well. That helped to improve the top line, which allowed the miner the breathing room to make necessary strategic moves. In fact, if this were all that was going on in 2017, it would have been a pretty good year. But it wasn't all the news.

A troubling mine development

In early 2017, discussions between Freeport and Indonesia over the massive Grasberg Mine complex took a turn for the worse. This is a very important mine for Freeport since it makes up roughly 30% of its copper reserves and essentially its entire gold reserves. Investors have been rightly concerned about the progress here since Indonesia is demanding that Freeport relinquish its controlling interest in the mine -- which means this giant mine could be much less profitable for Freeport in the future.   

A listing of Freeport's key assets, showing that the Grasberg Mine accounts for around 30% of the miner's copper reserves and virtually all of its gold reserves

Grasberg is a hugely important mine for Freeport. Image source: Freeport-McMoRan, Inc.

In late August it looked like things were starting to get better, with Freeport and the Indonesian government agreeing to a broad framework for an eventual solution. But hammering out the fine details has proved to be far more contentious than expected. And while it looks like the two sides are getting close to a final agreement, there's still another problem here. Freeport only has the rights to run the mine until 2041 -- at which point there's probably going to be another contentious fight over this key asset. So a near-term solution is good, but it, in the long run, the overhang isn't going away.   

I'd like to forget that...

You can't call 2017 a good year when 30% of Freeport's copper reserves and virtually all of its gold reserves remain in a state of limbo, which remains true even if the miner works something out with Indonesia before year-end so long as that 2041 date is still in effect. So despite the miner's improving financials, there's a major issue hanging over its shares. I'm sure Freeport and its investors would love to forget about this little headache and, along with it, the year the company has spent dealing with the issue.