The Rating Outlook is Stable.
KEY RATING DRIVERS
The ratings reflect FCX's leading position in the mining industry, strong liquidity, and sound operational and financial management. Operations benefit from low average costs, large scale and long lived copper reserves. Long-term copper fundamentals benefit from limited new supply, modest inventories, strong demand from
The ratings contemplate a successful resolution, in the near term, of the conflict between the company's Contract of Work with the Indonesian government and the government's desire to restrict copper concentrate exports. Should the conflict drag on or place undue pressure on earnings, Fitch would expect the operation to optimize its cost structure, production and capital spending.
The Stable Outlook reflects FCX's intent to reduce debt and Fitch's expectation that they will manage with FFO adjusted leverage at or below 2.5x on average and be free cash flow positive. FFO adjusted leverage was 2.9x at
Guidance for 2014 operating cash flow is about
Fitch expects that operating cash flows could fall to between
Guidance for capital expenditures is
Fitch expects free cash flow to be neutral to positive. Fitch expects FFO adjusted leverage to be under 2.5x on average over the next 24 months.
Fitch notes that earnings and cash flows are highly leveraged to commodity prices and a
Operating cash flows will be sensitive to oil sales prices even after accounting for hedges. Using a base Brent price of
Negative: Future developments that may, individually or collectively, lead to negative rating action include:
--Expectations that FFO adjusted leverage remains above 2.5x and free cash flow is negative in a normalized price environment after 2014.
Positive: Not anticipated over the next 12 months given the PXP and MMR transaction:
--Repayment of debt ahead of expectations.
Fitch affirms the following ratings:
--IDR at 'BBB';
--7.125% senior unsecured debentures due 2027 at 'BBB';
--9.50% senior unsecured notes due 2031 at 'BBB'; and
--6.125% senior unsecured notes due 2034 at 'BBB'.
--IDR at 'BBB';
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
Source: Fitch Ratings
Most Popular Stories
- Dmytro Firtash, Ukrainian Billionaire, Arrested in Vienna
- Obama, Ukraine Discuss Russian Incursion in Crimea
- Federal Gov't Deficit Continues to Decline
- Russia Holds Large Military Drills in South
- Calumet Photo Files for Bankruptcy
- Venezuela Death Toll Reaches 28
- Ukraine Moves Closer to Joining E.U.
- Ukraine Loan Delayed While Congress Goes on Vacation
- Herbalife Puts Off Meeting for Icahn Talks
- Navarro Celebrates 2 Years of Vida Mia