UBS’ Best Stocks In The AI, Growth & Low Rates Era: Top 29 US Stocks

13. Freeport-McMoRan Inc. (NYSE:FCX)

Number of Hedge Fund Investors In Q2 2024: 79

UBS’ Sector Rating: Neutral

Sector: Materials

Freeport-McMoRan Inc. (NYSE:FCX) is a mining company that sits right at the heart of the global copper supply chain. The firm sold a whopping 1.1 billion pounds of copper in Q1, which indicates the vast economies of scale that it enjoys in an industry that is typically quite capitally intensive. However, the reliance on copper also means that Freeport-McMoRan Inc. (NYSE:FCX) is left at the mercy of global industrial and electrification trends – particularly the slowdown in China. These have led to muted share price performance in 2024, as the shares are up by a modest 9.2% year to date. On the flip side, a pickup in Chinese economic activity and further government stimulus could translate into tailwinds. Another potential catalyst could be significant cost improvements through new technology. Through this Freeport-McMoRan Inc. (NYSE:FCX) is aiming to extract copper by leaching it from waste rocks through a process that could cut production costs by half.

Freeport-McMoRan Inc.’s (NYSE:FCX) management shared key details about the leaching initiative during the Q3 2024 earnings call:

“On Slide 7, you can see that early results continue to indicate significant value potential. Just a reminder, we achieved our initial targeted run rate of 200 million pounds per annum of copper per annum at the end of last year and are now driving initiatives to scale this initiative to 300 million to 400 million pounds per annum in the next couple of years. Ultimately, our goal was to achieve 800 million pounds per annum from this value enhancing growth initiative. This is the size of a major new mine with low capital investment required, low incremental operating costs and that will significantly enhance the value and competitive position of our Americas production.

You can see on the slide, the significant growth in incremental volumes from these initiatives over the last several quarters, our results have been achieved by enhancing heat retention in the leach stockpiles using data from sensors and analytics to identify targets and through deploying new operational tactics to direct solution injection to areas that were previously inaccessible. We continue to build confidence in boosting the run rate to 300 million to 400 million pounds per year during 2026. Some of the examples of the initiatives that are now underway that will add volumes in the future include expanding our surface area under leach by using helicopters to install irrigation in areas previously inaccessible under conventional techniques and by scaling our targeted solution injection wells.”