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After Grasberg deal, Freeport CEO says it is open to mergers, sales

Freeport-McMoRan Inc. is considering its options, which include strategic partnerships, acquisitions, or even a merger, after the miner agreed to cede majority control of its Grasberg copper-gold mine in Indonesia, Bloomberg News reported Oct. 7, citing an interview with Freeport CEO Richard Adkerson.

"If an opportunity for us to sell to another company would arise, and that would be good for our shareholders, you would see us trying to get the best deal we can get as opposed to being a company where management is trying to protect itself," Adkerson said.

In September, Freeport signed an agreement with PT Indonesia Asahan Aluminium (Persero), or Inalum, to sell its stake in the Grasberg mine, increasing the Indonesian state-owned entity's interest from 9% to 51%.

Adkerson said the miner may opt to acquire new projects or expand its existing portfolio, but it is harder to make a case for acquisitions compared to expanding existing operations.

According to the report, Adkerson previously pointed to the potential to expand its Lone Star mine in eastern Arizona as well as further resource development in South America. Lone Star is part of its Safford operation.

For the industry to invest in brownfield development, copper prices must be above US$3 per pound as global trade tensions are weighing on commodity prices despite strong fundamentals for copper, the report said.

Responding to a question about a potential takeover by Chinese companies, Adkerson said, "We supply a third to 40% of the copper to U.S. industry, and so I don't think it would be in the cards, politically in the United States, for a Chinese company to buy Freeport as a corporation, and they all recognize that."

S&P Global Ratings in September raised its issuer credit rating on Freeport to BB from BB-, with a stable outlook, and raised the issue-level rating on the company's senior unsecured debt to BB from BB-.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.