Boston, MA 10/14/2013 (wallstreetpr) – Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) is an international mining company that has a presence in copper, gold, and molybdenum. It is located in several areas including the copper mine in Indonesia, the Grasberg minerals, mining operations in America, and the Tenke Fungurume (Tenke) minerals Tenements in the Democratic Republic of Congo (DRC).
In the last couple of months, there has been a lot of insecurity over the contract with union workers in Indonesia pertaining to the workers benefits in terms of wages and pensions and a fear of a strike if the agreement gets called off. , Management has gone through the media saying, “We believe that the issues are behind us and we expect management to sign a new contract in next couple of weeks after negotiating / finalizing an agreement over wages and pensions.”
The company operates the world’s second largest copper mines in Indonesia, and if an agreement is not reached, a strike would impact the company’s annual cash flow. Management has indicated that this is a minor issue and does not foresee a strike to take place and sees their operation running smoothly in times to come.
The negotiation between 24,000 workers is on since the agreements on worker’s benefits were suspended temporarily in May, and due to an accident which took the lives of 28 people, halting operations for some time, thereby impacting its overall revenue growth and profitability.
To date, we have not seen any major impact in terms of production, as currently the company is operating at 85% of its capacity utilization. However, rather than agreeing with union workers over their benefits, management has indicated that if the Indonesian government does not ease the ban on mineral exports, the company could be forced to halt operations at its second largest copper mine.
Given the issues revolving around the company, FCX still has significant growth potential given its huge reserves across the minerals in which they have a presence. Besides resolving issues with union workers, the company is also focusing on the selling of undervalued assets, thereby reducing capital expenditure to pay some of its high cost debt.
