Freeport-McMoRan’s Q4 2016 Earnings Preview: Improved Commodity Prices And Production Levels To Boost Earnings

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We expect Freeport-McMoRan Inc. to report a significant year-over-year improvement in its Q4 2016 results, with higher production levels and improved pricing expected to boost both revenue and earnings. Higher production from the expanded Cerro Verde mine in Peru and the mining of higher grade ores at the Batu Hijau mine in Indonesia are expected to boost Freeport’s Q4 copper shipments, offsetting the loss in production from the sale of the company’s African copper mining operations in November of last year. In addition, the mining of higher grade ores at Batu Hijau is also expected to boost Freeport’s gold production.

The company’s results will benefit from a better pricing environment for copper, gold, and crude oil in Q4 2016, as compared to the corresponding period of 2015. An improved demand outlook for copper in the U.S. post November’s presidential election as a result of President Trump’s plans for a $1 trillion overhaul of U.S. infrastructure has boosted prices of the metal. [1] A production cut by OPEC nations helped boost oil prices over the course of Q4, whereas gold prices benefited from higher investment demand in the first nine months of 2016. [2] The following tables summarize our expectations from Freeport’s Q4 results.

FCX Q4 2016 Pre-earnings

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Have more questions about Freeport-McMoRan? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Freeport-McMoRan

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Notes:

  1. Forget gold price. The real Trump rally is in copper, Mining.com []
  2. OPEC Confounds Skeptics, Agrees to First Oil Cuts in 8 Years, Bloomberg []