In last few days, the mining sector has seen some significant developments affecting mining companies across the globe. We summarize a few such developments related to major miners like Freeport McMoran (NYSE:FCX), Newmont Mining (NYSE:NEM) and Cliffs Natural Resource (NYSE:CLF), which could impact their value going forward.
Freeport was in the news for a variety of reasons. It slashed the gold and copper sales volume outlook due to labor disruptions in Indonesia mine. The company has suffered major production losses since last October due to work related interruptions. Also, the Indonesian government decided to ask foreign companies to reduce their stake in Indonesian mines by the 10th year of production. The company is relying on its existing contract to save it from the trouble. But, the Indonesian government is considering revisiting the contract.
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Newmont is undeterred by the change in regulations in Indonesia and is expecting minimal impact. The company said its existing contract covers similar clauses and may be contemplating further investment in the country.
In the meantime, Newmont’s $4.8 billion investment plan at Conga in Peru is still stalled due to environmental concerns raised by local residents. Following which, the Peru government hired three consultants to complete a technical study of the project. The review is expected to be completed next month. The company is in process of terminating contracts with some 6,000 people in order to reduce running cost, which topped $2 million per day.
Cliffs Natural Resource
Cliffs’s stock shined as it increased its quarterly dividend by more than 100%. Further, the company has announced to focus on organic growth while reducing debt. Expecting that interest rates are only going up from current low levels, debt reduction will place the company in better position than its competitors. See our note Cliffs Natural Resources: Doubles Dividend, Focus on Organic Growth.