Freeport-McMoRan Inc. FCX said that its Chairman, co-founder and long-time executive, James R. (“Jim Bob”) Moffett, is stepping down from the company’s board and as Executive Chairman.
Moffett has been appointed as Chairman Emeritus and will become a consultant to the Freeport board, which involves providing advisory services in support of the company’s ongoing talks with the Indonesian government regarding its Contract of Work. Gerald J. Ford has been selected as the Non-Executive Chairman by the board. Ford has served as Lead Independent Director at Freeport since 2013. Richard C. Adkerson, Vice Chairman, will continue to serve as President and Chief Executive Officer.
Freeport was served by Jim Bob, an explorationist who spent 50 years of his life in the natural resource industry. He was instrumental in the discovery and development of Freeport’s Grasberg deposit in Indonesia, which has grown to become one of the biggest copper and gold deposits in the world.
Freeport’s shares slid around 9.5% to close at $6.85 yesterday.
Freeport, like other miners, has been reeling under the effects of the commodity rout. Commodities faced a challenging year due to concerns that a slowdown in the Chinese economy would curb the country’s appetite for raw materials ranging from oil to metals.
In particular, sluggishness in China (a major market for copper) and difficult market conditions in Europe are affecting copper markets, thereby hurting Freeport’s core copper mining business. The depressed copper and gold pricing environment also remains a major headwind for the company.
Copper prices are down more than 25% this year on dismal Chinese demand, supply glut, apprehensions surrounding Europe, and continued strength in the U.S. dollar. Weak demand in China is also weighing on copper prices. The world’s second-largest economy holds the largest share by far of the global copper consumption (roughly 46%), and also has a significant share in the total production of pure copper.
Freeport’s board is currently undertaking a strategic review of its oil and gas business to assess alternatives that can increase value to the company’s shareholders.
Freeport swung to a loss in the third quarter of 2015, hurt by hefty charges of $3.7 billion mostly related to its oil and gas properties. The company may see further impairment charges related to its oil and gas business, thereby affecting its future profitability.
Nevertheless, Freeport is taking aggressive actions to manage costs and capital expenditure amid a difficult pricing backdrop in a bid to strengthen its balance sheet.
Freeport currently has a Zacks Rank #3 (Hold).
Some better-ranked companies in the mining space include Coeur Mining, Inc. CDE, Nevsun Resources Ltd. NSU and Harmony Gold Mining Company Limited HMY, all carrying a Zacks Rank #2 (Buy).
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