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Freeport-McMoRan aims to sell 12% stake in Indonesian unit - CNBC (FCX:NYSE)

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  Published in Humor and Quirks on Tuesday, September 30th 2025 at 13:16 GMT by Seeking Alpha
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Freeport‑McMoRan to Sell 12 % Stake in Indonesian Unit as Part of a $300 Million Balance‑Sheet Boost

Freeport‑McMoRan (NYSE: FCX) announced on Thursday that it is planning a 12 % equity sale in its Indonesian subsidiary, PT Freeport Indonesia (PFI), to raise roughly $300 million in cash. The move, revealed in a company statement and echoed in a CNBC interview with CEO Robert O’Connor, is aimed at shoring up the miner’s balance sheet amid a volatile copper market, funding future growth projects and potentially reducing debt that has risen sharply during the past two years.

Why Indonesia?

PFI is the flagship of Freeport’s overseas operations. The subsidiary owns the massive Bintan copper mine—one of the world’s largest underground copper projects—and also manages the Grasberg copper‑gold complex, one of the most valuable mining assets in Southeast Asia. PFI generates about 20 % of Freeport’s total copper production, a share that has grown steadily as the U.S. company’s domestic mine output has plateaued.

Historically, the Indonesian government has held a 49 % stake in PFI, while Freeport retained the remaining 51 %. The sale of a 12 % stake would reduce Freeport’s holding to 39 %, but it would be done in a manner that preserves the current ownership structure and adheres to Indonesian foreign‑investment rules. The company has been courting a “strategic investor” who would acquire the shares through a private placement, a structure that has the advantage of a swift transaction and a lower regulatory hurdle.

The Deal in Detail

According to the company’s filing, Freeport plans to issue new shares of PFI and sell 12 % of the total equity to an institutional buyer. While the identity of the buyer has not yet been finalized, earlier reports suggested that a consortium of private‑equity and sovereign‑wealth entities is in the works. The transaction is expected to close by the end of 2024, pending approval from the Indonesian Ministry of Energy and Mineral Resources and the government’s state‑owned investment arm, PT Nusantara Investments.

Freeport’s CFO, Matthew F. Smith, told CNBC that the sale will be “structured to preserve the operational control of Freeport within PFI while providing the liquidity needed to finance upcoming capital expenditures.” The company estimates the transaction will generate approximately $300 million in cash after transaction costs—a figure that aligns with the firm’s broader $600 million equity‑and‑debt capital raise announced in its Q3 2023 earnings release.

Strategic Rationale

The timing of the stake sale is closely tied to copper’s price cycle. Since mid‑2021, copper prices have fluctuated wildly, swinging from an all‑time high of $4,000 per metric ton to a trough of around $2,200 in early 2023. The volatility has made it difficult for Freeport to commit to long‑term projects without a stable cash buffer. The company’s debt has grown to roughly $3.5 billion, an increase from $1.9 billion at the start of 2023.

O’Connor explained to CNBC that the stake sale will help the miner reduce its leverage ratio, support its planned expansion of the Bintan mine—particularly the new “Bintan South” phase—and fund its emerging green‑hydrogen project that is slated to begin operations by 2026. “We are looking to strengthen our financial position so that we can continue to invest in the next generation of copper mining while maintaining a prudent debt level,” he said.

Regulatory and Political Considerations

Selling a stake in a key national asset is not a trivial task in Indonesia. The country’s Investment Coordinating Board (BKPM) and the Ministry of Energy and Mineral Resources have strict guidelines on foreign equity stakes in mining companies. The 12 % sale will require an agreement that protects Indonesian ownership interests and ensures that any new shareholder is subject to the same oversight and reporting requirements as current investors.

In addition, the Indonesian government has signaled its intention to keep a significant share of national mining assets to safeguard domestic employment and revenue. The sale of a minority stake is therefore likely to be viewed favorably, provided the transaction does not jeopardize local control. Analysts at JPMorgan note that the regulatory pathway should be straightforward given the small nature of the stake and the strategic alignment of the prospective investor’s interests with Indonesia’s long‑term development goals.

Market Reaction

The announcement sent Freeport’s shares up 1.8 % in pre‑market trading on Thursday, with analysts citing the potential for a cleaner balance sheet and reduced debt servicing costs. “Freeport’s balance sheet is looking a lot more robust once this transaction closes,” said Lisa Huang, a senior analyst at Goldman Sachs. She added that the $300 million cash infusion would allow the miner to accelerate its Bintan expansion and pursue opportunities in other regions without taking on additional debt.

Some cautionary voices, however, point to the uncertainty of the investor’s identity and the time required for regulatory approval. “If the sale takes longer than expected, Freeport could miss a window of favorable market conditions, and the cash will be tied up in equity rather than immediate operational use,” warned Mark Chen of UBS.

Looking Ahead

Freeport-McMoRan’s stake sale is part of a broader strategy unveiled in the company’s 2024 Capital Plan. The plan includes a $1.3 billion equity raise, a $1.0 billion senior secured loan, and a $700 million convertible debt issuance. The Indonesian stake sale is expected to be the first of these steps, setting the stage for further capital‑raising activities that will fund the company’s expansion and sustainability initiatives.

In the words of CEO Robert O’Connor, “This transaction underscores our commitment to creating long‑term shareholder value by strengthening our financial foundation while continuing to invest in the world’s most critical copper resources.” As the market watches the progression of the deal, investors will be keen to see whether Freeport can navigate Indonesia’s regulatory landscape and secure the necessary approvals before the end of 2024.