History
Freeport-McMoRan bet about $9 billion on oil and gas in 2013, then sold assets to repay the debt, and by 2022 was a copper, gold and molybdenum miner with Grasberg as a core asset.
2013-2014: The oil and gas pivot
Freeport-McMoRan (FCX), a copper, gold and molybdenum miner, changed direction in mid-2013. The Plains Exploration & Production merger closed on 31 May and the McMoRan Exploration merger on 3 June, a pivot of roughly $9 billion. It was funded partly by a new $4.0 billion term loan. The board grew from 12 to 15 seats, and PXP's former chief executive, James Flores, became Vice Chairman and head of the new oil and gas business. The share count rose from about 949 million at the end of 2012 to about 1.04 billion at the end of 2013, though the record here does not explain that rise.
In Indonesia, an export ban had halted copper concentrate shipments from PT Freeport Indonesia (PT-FI). In July 2014 it signed a memorandum of understanding to resume exports. It agreed to higher royalties (4.0% on copper and 3.75% on gold) and a $115 million assurance bond, while negotiating a long-term contract covering a possible divestment of up to 30% and mining through 2041. In October 2014 FCX agreed to sell its 80% of the Candelaria and Ojos del Salado copper mines in Chile to Lundin Mining for about $1.8 billion in cash plus up to $0.2 billion contingent.
2015-2016: Selling to cut debt
In August 2015, during a commodity-price crash, FCX set up a $1.0 billion at-the-market equity program with J.P. Morgan. The program was later expanded to $1.5 billion. It was a sign of strain after the debt-funded expansion.
Asset sales followed. In February 2016 FCX agreed to sell a 13% interest in its Morenci, Arizona mine to Sumitomo Metal Mining for $1.0 billion. In May it agreed to sell its 56%-effective interest in Tenke Fungurume in the Democratic Republic of Congo to China Molybdenum for $2.65 billion plus up to $120 million contingent. In June it swapped $268.5 million of senior notes for 19.9 million new shares, about 1.59% of those outstanding. In September it agreed to sell its Deepwater Gulf of Mexico oil and gas properties to Anadarko Petroleum for $2.0 billion plus up to $150 million contingent, effectively exiting offshore oil and gas. The Tenke sale closed in November, and the proceeds repaid debt including the term loan. Shares on issue rose from about 1.16 billion at the end of 2015 to about 1.36 billion at the end of 2016.
2017-2019: Resolving Indonesia
The record is quiet for 2017. In September 2018 FCX agreed terms for Indonesian state enterprise Inalum to buy Rio Tinto's Grasberg joint-venture interest and FCX's indirect 9.36% stake in PT-FI for $3.85 billion, with FCX receiving $350 million. The deal ended years of negotiation over PT-FI's contract. It lifted Indonesian ownership to 51.2% and extended mining rights through 2041. It closed in December 2018. FCX kept about 81.28% of the economics through 2022 under revenue and cost-sharing arrangements, and continued to manage day-to-day operations.
2020-2022: Debt markets and smelters
As COVID-19 spread in March 2020, FCX told investors that its Grasberg underground transition was on track and that liquidity was strong. In July 2020 it closed $1.5 billion of new notes: $650 million at 4.375% due 2028 and $850 million at 4.625% due 2030. It also reported early results on buy-back offers for its 2022-2024 notes and extended the early-tender premium to 7 August.
On 14 April 2022, PT-FI, described as 48.76% owned by FCX, completed a $3.0 billion note offering: $750 million at 4.763% due 2027, $1.5 billion at 5.315% due 2032 and $750 million at 6.200% due 2052. The proceeds are for smelter projects, refinancing and general purposes, and the debt counts in FCX's consolidated debt. At that date, PT-FI's export license after March 2023 and the extension of its mining rights from 2031 to 2041 remained open matters.
Written from the 15 story beats below (2013 to 14 Apr 2022), which come from the company's own announcements and filings.