Freeport-McMoRan Copper & Gold: 2 Reasons Not to Fret Over Indonesia
With news breaking that the CEO of Freeport-McMoRan Copper & Gold (NYSE: FCX ) is heading to Indonesia next week to discuss the ongoing tax issue, investors have a couple of reasons not to fret over the outcome. The issue is entering the sixth month of dispute and has forced the company to cut production in the country by 60%. Even Newmont Mining (NYSE: NEM ) is reaching a copper stockpile capacity that would force it to cut production as well.
According to Reuters, the country claims that the escalating tax on miners has led to plans for 66 smelter projects to improve the economy and help the country move up the value chain versus only exporting minerals. It's possible the meetings could involve finalization of the talks between Freeport-McMoRan and Newmont with Indonesia's state-owned PT Aneka Tambang to build a $2.2 billion copper smelter; this could lead to a quick removal of the export ban and punitive tax. If not, investors don't need to fret over the lingering issue.
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