Investors shrugged off worries about lower copper prices and the effects of two worker strikes on Freeport-McMoRan Copper & Gold Inc. Friday, sending shares of the miner slightly higher while the overall markets were flat.
Last week, thousands of workers at Freeport-McMoran’s gold and copper mine in eastern Indonesia kicked off a month-long strike to protest low wages, bringing production and shipments to a standstill.
It’s the second strike this year and coincides with a work-stoppage by half the 2,150 employees at the Phoenix-based company’s Cerro Verde mine in Peru.
When workers walked off their jobs at Indonesia’s Grasberg mine for eight days in July, it suffered production losses of 4 million pounds of copper and 7.5 ounces of gold daily. During that strike, analysts put the company’s losses at $30 million a day.
Meanwhile, copper prices have tumbled in recent weeks, falling from their peak of $4.48 per pound at the end of July to $3.49 per pound on Thursday.
Jefferies Analyst Peter Ward backed his “Buy” rating for Freeport-McMoRan, but cut his price target for the company by $10 to $55, saying that the strikes will probably have a “modest impact” on the company’s near-term results.
“Clearly, there are pervasive macroeconomic fears in the market,” Ward wrote in a Thursday note to investors. “And, it is certainly not our intent to minimize such fears.”
Citi Investment Research analyst Brian Yu, who rates the company at “Hold” with a $52 price target, estimated the production losses related to the current strike at 3 million pounds of copper and 5,000 ounces of gold per day. Based on current prices, that could reduce the company’s revenue by about $19 million per day, he said.