Last November, the copper and gold mining giant Freeport-McMoRan announced it would be acquiring its copper mining competitor, Phelps Dodge , for $25.9 billion in cash and stock. But since the announcement, Freeport’s earnings have come in 13 cents lower than estimates and its takeover is now facing resistance from a hedge fund with a stake in Phelps Dodge. Richard Adkerson, CEO of Freeport, was on “Power Lunch” to discuss his company’s earnings – and the future of the impending merger.
Adkerson says the dip in copper prices that occurred in December was a main reason for the company’s poor earnings performance. Freeport’s financial statements indicated problems in the company’s Indonesian operation, which was also reflected in the earnings. “The Indonesian operation is our operation,” Adkerson said. Freeport owns the Grasberg mine in West Papua, Indonesia – it is the world’s largest gold mine and third-largest copper mine.
Although Adkerson says he doesn’t predict prices, he expects the copper market to remain strong from a supply-and-demand standpoint, despite the all-around volatility in commodities.