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    ABX   CA0679011084

BARRICK GOLD CORPORATION

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Freeport eyes U.S. expansions as Biden's EV plan boosts copper demand

02/25/2021 | 08:26pm EDT
Freeport-McMoran CEO, Richard Adkerson poses for a picture during an interview with Reuters at the CRU's World Copper Conference in Santiago

(Reuters) - Freeport-McMoRan Inc is set to approve expansions at several of its U.S. copper mines to capitalize on surging demand for the red metal as President Joe Biden moves to electrify the nation's automobiles and combat climate change, Chief Executive Richard Adkerson told Reuters.

The expansions would be a major bet on the U.S. economy - one of the company's largest markets - and also on the rising demand for electric vehicles (EVs), which use twice as much copper as internal combustion engines.

Adkerson also said he has no desire to combine Freeport with Barrick Gold Corp or another gold producer and is working to give COVID-19 vaccines to about 25,000 workers at the Grasberg copper mine in Indonesia, which Freeport owns with that country's government. He also is aiming to double the size of the company's board of directors.

Phoenix-based Freeport already produces more than 1 billion pounds of copper each year in the United States, little of which is exported. While the company opened a new U.S. mine last year in Arizona, it could soon greenlight expansions at three mines in the U.S. Southwest, Adkerson said, adding more than 250 million pounds of copper each year to U.S. output.

"President Biden clearly has a commitment to addressing climate change, and any climate change initiative creates demand for copper," Adkerson, who became Freeport's chairman on Feb. 2, said in an interview this week. "We're very well-situated to address that with the assets we have."

Biden met with lawmakers on Wednesday to discuss how to secure supplies of electric vehicles and the minerals used to make them.

Just a year ago, Freeport worried about "our ability to continue operating" due to the coronavirus pandemic, Adkerson said. With copper prices hovering near $2 a pound last April, the company was forced to make budget and dividend cuts.

Copper is a key barometer of economic health due to its use in manufacturing. In the last six months, copper prices have slowly rebounded to just above $4 a pound and Freeport's stock has more than doubled.

"Now we can turn our attention to focusing on these growth opportunities," Adkerson said, adding that any expansions would take several years to bring online. That timeline implies the company remains bullish on copper for the long run.

The option to expand existing mines, rather than building new ones, gives Freeport an advantage over its rivals, Adkerson said. Rio Tinto Plc, for instance, is trying to build the Resolution Copper mine in Arizona, a project that Native Americans oppose on religious grounds. Adkerson declined to comment on that dispute.

NO TIE-UP

The combination of Freeport's improving sales and stock price has seemingly shooed away potential bidders, including Barrick. Last year, Barrick CEO Mark Bristow expressed interest in Freeport.

At the time, Barrick's market value was twice that of Freeport. Now, given its stock surge, Freeport is worth $20 billion more than Barrick. Bristow told investors last week his first priority now is to expand the assets Barrick already owns.

"I don't believe it makes sense to combine a company like ours with a gold company," Adkerson said. "But I don't criticize Mark (Bristow) for thinking we have good assets."

Freeport's commitment to copper, Adkerson said, will remain and the company will avoid lithium, rare earths and some other EV metals that are getting more attention on Wall Street. The company is the world's largest producer of molybdenum, a metal often found with copper and that can be used to make some types of EV batteries and airbags.

Adkerson, who has been CEO since 2003 and is now 74, said he has no plans to retire.

"We're on the verge of really great success, and thank God I've got the health and energy to be a part of it," he said.

(Reporting by Ernest Scheyder; Editing by Amran Abocar and Paul Simao)

By Ernest Scheyder


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BARRICK GOLD CORPORATION 0.91% 27.81 Delayed Quote.-4.10%
FREEPORT-MCMORAN INC. 0.82% 38.14 Delayed Quote.46.58%
GOLD 0.68% 1775.85 Delayed Quote.-7.07%
RIO TINTO PLC 1.17% 6054 Delayed Quote.10.68%
SILVER 0.41% 25.94 Delayed Quote.-1.91%
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Financials (USD)
Sales 2021 12 511 M - -
Net income 2021 2 223 M - -
Net cash 2021 788 M - -
P/E ratio 2021 17,9x
Yield 2021 1,62%
Capitalization 39 531 M 39 564 M -
EV / Sales 2021 3,10x
EV / Sales 2022 2,94x
Nbr of Employees 17 500
Free-Float 99,4%
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Mean consensus BUY
Number of Analysts 25
Average target price 29,22 $
Last Close Price 22,23 $
Spread / Highest target 71,1%
Spread / Average Target 31,4%
Spread / Lowest Target -27,9%
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Managers and Directors
NameTitle
Dennis Mark Bristow President, CEO & Non-Independent Director
Graham Patrick Shuttleworth Chief Financial Officer & Senior Executive VP
John Lawson Thornton Non-Independent Executive Chairman
Gustavo A. Cisneros Independent Director
Joseph Brett Harvey Lead Independent Director
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