Freeport-McMoRan sells 13 pct stake in Morenci Mine to Sumitomo for $1 billion
Freeport-McMoRan (NYSE:FCX) is selling a 13 percent ownership interest in its Morenci Mine to Sumitomo Metal Mining Co., Ltd. (SMM) for $1.0 billion in cash.
Morenci is an open-pit, copper mine located in Arizona.
The Morenci unincorporated joint venture is currently owned 85 percent by FCX and 15 percent by Sumitomo Metal Mining Arizona Inc. (SMMAz is owned 80 percent by SMM and 20 percent by Sumitomo Corporation). Following completion of the transaction, the joint venture will be owned 72 percent by FCX, 15 percent by SMMAz, and 13 percent by an affiliate that is fully owned by SMM.
As of December 31, 2015, FCX’s 85 percent share of consolidated recoverable reserves totaled 12.0 billion pounds of copper and its 85 percent share of 2015 production approximated 900 million pounds of copper. In 2015, FCX’s 85 percent share of Morenci revenues totaled $2.2 billion and production and delivery costs totaled $1.5 billion.
The transaction is expected to close in mid-2016, subject to regulatory approvals and customary closing conditions. FCX expects to use the proceeds to repay borrowings under its bank term loan and revolving credit facility.
“We are pleased to expand our partnership at Morenci with Sumitomo. This transaction represents an important initial step toward our objective to accelerate debt reduction and restore our balance sheet, while retaining a portfolio of high quality assets and resources,” said Richard C. Adkerson, FCX’s President and Chief Executive Officer.
Mr. Adkerson continued: “Our Morenci partnership with Sumitomo was first established 30 years ago and both companies are confident of the operation’s long-term future. With its long-lived reserves, substantial resource position, attractive cost structure and best in class operating team, the Morenci joint venture is positioned to be a continuing strong contributor to the success of FCX and Sumitomo.”
Written with material from FCX's news release.