BHP Billiton is focusing on its larger, majority-owned assets to provide greater return for the company and shareholders. It is selling its Point Valley copper mine/railway in Arizona to Capstone Mining. It will realize $650 million from this sale. The company is realizing significant transaction value from divestitures. From April 2012 to this past April, it realized $5.0 billion.
Investors should note the company’s commitment to major operations and the additions to its treasury from selling off projects no longer part of its overall corporate strategy. Investors can take away that management has a strategic plan for their copper portfolio and how it can best move BHP Billiton forward.
Joint ventures (JVs) can portend further growth for entities involved. The aforementioned Grasberg mine in Indonesia is a JV project.
Rio Tinto has a joint venture with Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) in Grasberg. This is for a 40% share of production above specific levels until 2021. This JV also involves a 40% share of all production after 2021. Important for investors is the potential for success for these companies at Grasberg because of their combined resources.
Concerning its overall operations,Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has increased its copper production for the three months ended June 30 compared to the same period in 2012. It produced 909 million recoverable pounds of copper versus 887 for the same period last year (six months ended June 30; 1,889 versus 1,720 for the six months ended June 30, 2012).
Rio Tinto, for its operations as a whole, has a program in place to reduce its exploration and evaluation expenditures by $750 million for 2013.
Will I invest in any of the above?
I may; my personal pick is Rio Tinto. I like its focus in allocating capital expenditures to the highest return projects, and its efforts at cost containment. Cost control is vital to sustainable operations. Investors should consider mining companies with a commitment to keeping expenses reined in.
The article Investing in Copper? A Few Things to Consider originally appeared on Fool.com is written by Michael Ugulini.
Michael Ugulini has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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