After a spate of tragic accidents claimed the lives of dozens of workers at its huge Grasberg gold and copper mine in Indonesia, Freeport-McMoRan (NYSE:FCX) was given the go-ahead by the government to reopen the mine despite that its investigations into the accidents is not yet completed.
Just last month the government had ordered the mine shut and said it would stay shut until it finished looking into what happened. Earlier this month, Freeport was forced to declare force majeure in a bid to extricate itself from its obligations to deliver gold and copper to customers. But Grasberg is a huge employer, with more than 8,700 workers, and 70 of them rioted and attacked the site last week saying they were starving because they had no food as a result of the work stoppage.
That was apparently enough to soften the government's stance and allow Freeport to begin milling operations and open pit work, though underground operations remain closed.
While the force majeure declaration was not unexpected, it does raise the specter of a more fragile business than what investors might typically assume for the miner. As I've pointed out before, miners don't live off their immediate output and usually have several weeks worth of inventory to get over short-term humps. Freeport, though, had been coy about how much of a stockpile it had; the fact that it notified its customers of a force majeure event less than two weeks after the closure suggests its inventories might be lower than otherwise expected.
Of course, it's why I thought Freeport's purchase of oil and gas drillers Plains Exploration and McMoRan Exploration was a timely one, and may ultimately prove to be specially beneficial in the long run.
Rival RioTinto (NYSE:RIO), for example, also suffered a mine collapse at its Bingham Canyon copper mine in Utah in April and it might not be back in operation till next year. Barrick Gold (NYSE:ABX) says its shuttered Pascua Lama gold mine in Chile won't get back on track until the end of 2014 at the earliest even if environmental regulators there approve its plan to fix the project's water management infrastructure.
Getting up and running, plus having diversified assets to turn to during these difficult times, means that even after losing more than 30% of its value over the past year, Freeport-McMoRan is an attractive investment you just might want to dig into.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.