Freeport-McMoRan braces for potential copper tariffs, meets Q1 expectations
Company braces for potential impacts from copper tariffs
Copper prices reached new U.S. high of $5.22 per pound in March
A robust global copper market helped Freeport-McMoRan Inc. meet Wall Street's expectations in its first-quarter earnings report on Thursday, but the Phoenix-based mining giant is bracing for impacts from tariffs that could be on the way.
Freeport-McMoRan (NTSE: FCX) reported net income of $352 million, or 24 cents per share, which matched the Zacks Consensus estimate. That per-share figure is 9.4% down down from 32 cents a year earlier and also down from 31 cents in Q4 2024, but the company's $5.728 billion in revenue for the most recent quarter beat the Zacks Consensus
The news gave Freeport, which is Arizona's second-largest public company, a bump on Wall Street Thursday, with the company's share price rising $2.44, or 7%, to close at $37.63.
The mining company said it is benefiting from positive market fundamentals based on increasing use of copper in the global economy as part of electrification as well as investments in infrastructure, technology, decarbonization and transportation. The company said copper prices reached a new high of $5.22 per pound on the U.S. COMEX exchange in March.
Freeport acknowledged that short-term pricing is affected by wider sentiment in the market and that President Donald Trump's tariff policy has influenced that sentiment during the first quarter. While still anticipating strong growth in demand in a tight market this year, the company's executives said the future could bring headwinds in the form of tariffs.
Right now, copper is exempt from Trump's most recent tariffs while the U.S. conducts a Trump-ordered investigation into the copper market in consideration of a potential tariff, the company said. Even though that investigation could last into the fall, U.S. market pricing is already reflecting expectations that tariffs will be enacted, Freeport said.
Freeport CEO: Amid tariff talk, plans to diversify supply chain
David Joint, Freeport's vice president of investor relations, said during his presentation the company has not taken a position on whether copper tariffs should be imposed, but it has made public comment on the potential effects of such a tariff on the economy, inflation and more. The company noted that it supplies 70% of the nation's domestically sourced refined copper.
Kathleen Quirk, Freeport's president and CEO, said during the company's earnings call with investors that when Trump's tariffs first came out, the company began talking with suppliers and working to diversify its supply chain.
'The bigger impact as we're working with our suppliers is potentially the cost that they that they incur on the various components that they purchase,' Quick said. 'And as you can imagine, it gets complicated because it's just not one supply chain.'
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Freeport said it estimates that the proposed tariffs announced to date could increase the costs of goods it purchases in the U.S. by approximately 5%, 'primarily reflecting the potential pass-through of tariffs incurred by suppliers.'
The Phoenix company operates mines both in the U.S. and abroad, most notably at its massive Grasberg mine in Indonesia, where a fire caused suspension of operations last year. During Q4 2024, Freeport was able to secure permission from the Indonesian government to keep exporting copper concentrate into this year until repairs and full ramp-up of the smelter is complete. The company said repairs are nearing completion, with startup activities expected in the second quarter and full ramp-up expected by year's end.
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