Mining giant Freeport-McMoRan Copper & Gold
Inc. ( FCX
) together with its joint venture partners have wrapped up its
earlier announced acquisition of a cobalt chemical refinery based
in Kokkola, Finland, from specialty chemicals and materials company
OM Group, Inc ( OMG ). ATLATSA RESRCS (ATL): Free Stock Analysis
ReportFREEPT MC COP-B (FCX): Free Stock Analysis
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The joint venture will be operated by Freeport-McMoRan under the
name "Freeport Cobalt". Freeport-McMoRan will hold a 56% stake in
the joint venture with its partners Lundin Mining Corporation and
La Generale des Carrieres et des Mines retaining 24% and 20%
The aggregate consideration for the acquisition was roughly $355
million. Freeport-McMoRan funded 70% of the consideration while
Lundin Mining financed the balance. Under the deal terms, OM Group
is eligible to receive additional consideration of up to $110
million over a period of three years, subject to the attainment of
specific sales-based milestones.
The acquisition of the Kokkola cobalt refinery reinforces
Freeport-McMoRan's cobalt marketing position, product portfolio and
product development capabilities. In addition, it offers direct
end-market access for the cobalt hydroxide production at the Tenke
Fungurume mine in the Democratic Republic of Congo.
Freeport-McMoRan is conducting explorations close to its existing
mines with a goal to boost reserves, which will facilitate the
development of additional future production capacity across the
large minerals districts where it operates.
As per the company's exploration data, there are opportunities for
meaningful future reserve additions in North and South America as
well as in the Tenke Fungurume minerals district.
Freeport-McMoRan is optimistic about its African operations
considering the potential at Tenke. Moreover, the acquisitions of
Plains and McMoRan Exploration will usher in new opportunities.
However, a weak global economy is still affecting demand for copper
and production costs remain a concern.
Freeport-McMoRan currently retains a Zacks Rank #3 (Hold).
Other companies in the mining industry worth considering are
Atlatsa Resources Corporation ( ATL ) and
Paramount Gold and Silver Corp. ( PZG ). Both hold a
Zacks Rank #2 (Buy).