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Freeport-McMoRan Outlook Raised to Positive by S&P on Indonesia Mine Agreement
Summary
S&P Global Ratings has revised its outlook on Freeport-McMoRan to positive from stable, citing a new agreement with the Indonesian government that extends mining rights at the pivotal Grasberg mine.
S&P Global Ratings has revised its outlook on Freeport-McMoRan Inc. (NYSE:FCX) to positive from stable, citing a memorandum of understanding with the Indonesian government that secures the long-term future of the Grasberg mine. The ratings agency affirmed its 'BBB-' issuer credit and issue-level ratings on the copper and gold producer.
The Grasberg Agreement
The outlook change is primarily driven by an agreement to extend mining rights for Freeport's subsidiary, PT Freeport Indonesia. Under the MOU, the Indonesian government will extend the special mining license to cover the life of the resource at the massive Grasberg complex.
In exchange, Freeport has agreed to cede an additional 12% ownership interest in PT Freeport Indonesia to the government. This will reduce Freeport’s stake to approximately 37% from its current 48.76%, with the change taking effect in 2042.
Financial Strength and Outlook
The ratings action follows a period of strong financial performance for Freeport. According to S&P, the company's rolling-12-month revenue increased 12.5% to $22.7 billion in the first quarter of 2026, while EBITDA rose 20.3% to $7.2 billion. This performance was bolstered by high commodity prices, with copper averaging $5.78 per pound and gold averaging $4,889 per ounce in the quarter.
AdLooking ahead, S&P Global Ratings forecasts Freeport’s EBITDA could increase by at least 20% in 2027 and a further 10%-15% in 2028 as the company benefits from higher prices and a return to full production. The agency expects the company's consolidated leverage to remain between 1x and 2x over its forecast period.
Operational Challenges
While the long-term outlook has improved, Freeport faces near-term operational hurdles at Grasberg. The restart of the Grasberg Block Cave was ahead of schedule, but unexpected wet material created downstream handling bottlenecks.
This issue has required the installation of specialized equipment and will limit production to approximately 60,000 tonnes per day in the second half of 2026. Consequently, the full ramp-up of these areas has been delayed to the end of 2027, according to the S&P report.
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