Freeport-McMoRan Inc (NYSE:FCX)’s Highlander Discovery and Indonesian Copper Smelters

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Dallas, Texas 12/29/2014 (FINANCIALSTRENDS) – Freeport-McMoRan Inc (NYSE:FCX) has delivered 38% negative returns year-to-date amid tax disputes in Indonesia and ban on copper exports. In mid-2014, the company signed a Memorandum of Understanding with the Indonesian government, which allowed resuming copper exports under certain conditions.

More recently, the company also announced a successful production test from its South Louisiana-based onshore Highlander discovery.

Currently, the company’s stock is trading 39% below its 52-week high of $38.65. On Friday, it gained 2.62% and closed at $23.51.

Highlander Discovery

Production test in the Freeport-McMoRan Oil & Gas’s Highlander discovery indicated a flow rate of approximately 43.5 MMcf of natural gas per day with flowing tubing pressure of 11,880 psi. The operators expect to begin production in 2015.

Freeport-McMoRan Inc (NYSE:FCX)’s Oil & Gas division holds 72% working interest and about 49% net revenue interest in the Highlander well. It controls rights to more than 60,000 gross acres and has identified multiple prospects in the discovery. The Wilcox and Cretaceous sand packages has demonstrated favorable reservoir characteristics.

Indonesian Copper Smelters

Freeport-McMoRan Inc (NYSE:FCX) agreed to develop a $2.3 billion copper smelter by 2017 as part of MoU signed with the Indonesian government earlier this year. Now, the government wants Indonesia’s largest copper producer to build a second smelter by 2020. The building cost of another smelter is estimated to be around $1.5 billion.

Rozik Soetjipto, Freeport Indonesia’s CEO, said that the negotiations are underway on the Papua smelter proposal and hence declined to comment on the matter. The company wants assurances that its contract would be extended beyond 2021 before agreeing to make significant investment.

Sukhyar, Coal and Minerals Director General, said that the government has asked the U.S. company to build a smelter in Papua having annual processing capacity of 600,000 tons of copper concentrate.

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