FCX is an a great “pure play” copper play through its exposure to Grasberg in Indonesia along with expansions in Peru & Arizona. However, FCX has struggled relative to its peers over the last 12-months due to operational issues, especially at its Indonesian facility. These issues see FCX trading on the cheaper side, in a market where quality copper names are in high demand.
FCX looks like an ideal candidate for BHP except the location of its primary operation, historically Indonesia comes with far more risk than the Americas. We don’t have a seat at the BHP table but we would be leaning towards “paying up” for increased copper exposure in the Americas &/or Australia as opposed to Indonesia, a country where BHP has yet to break ground in any meaningful manner.
- While we doubt BHP would have a crack at FCX, we like the risk/reward towards FCX ~$41 believing the “bad news” should now be in the rear view mirror – MM owns FCX in its International Equities Portfolio.
MM is long and bullish towards FCX
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