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Can FCX Protect Margins Amid Higher Copper Production Costs in Q2?
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Key Takeaways
FCX sees Q2 unit cash costs rising to $2.24 per pound amid energy and consumable cost and volume pressures.
Freeport's Q1 copper sales fell 25% year over year after the Grasberg mine mud rush disruption.
FCX expects Q2 copper sales of 690 million pounds, improving sequentially but down year over year.
Freeport-McMoRan Inc. (FCX - Free Report) saw a decline in its average unit net cash cost per pound of copper in the first quarter of 2026 to $1.91 from $2.22 in the prior quarter. It also fell from $2.07 a year ago.
Freeport, however, is facing headwinds from higher costs in the second quarter. FCX’s outlook for the second quarter suggests higher costs on a sequential basis. It expects unit net cash costs to rise to $2.24 per pound, while projecting a full-year average of roughly $1.95 (compared with $1.65 in 2025).
The projected second-quarter unit cost reflects a roughly 98% year over year and 17% quarter over quarter increase. The uptick in costs reflects higher costs of energy and other consumables due to the Middle East conflict and persistent pressure on volumes. Higher costs are expected to weigh on the company's margins.
Freeport’s copper sales volumes tumbled approximately 25% year over year in the first quarter to 657 million pounds, and fell from 709 million pounds in the prior quarter. The downside primarily resulted from lower operating rates due to the temporary suspension of operations since the mud rush incident at the Grasberg Block Cave mine. While the company’s outlook for copper sales volumes for the second quarter of 690 million pounds indicates a sequential improvement, it still suggests a 32% year-over-year decline.
Among FCX’s peers, Southern Copper Corporation (SCCO - Free Report) reported lower unit costs in the first quarter. Southern Copper’s operating cash cost per pound of copper, net of by-product revenue credits, fell by roughly 114% decline from the prior-year quarter. SCCO’s operating cash cost per pound of copper declined roughly 34% year over year in 2025.
BHP Group Limited (BHP - Free Report) lowered its unit cost guidance for the Escondida operation to the band of $1-$1.2 per pound for fiscal 2026, reflecting by-product credits and strong operational performance. BHP also projects Copper South Australia’s unit cost between $1 and $1.5 per pound. Unit costs at BHP’s Spence operation are expected to be between $2.1 and $2.4 per pound for fiscal 2026.
The Zacks Rundown for FCX
Shares of Freeport are up 69.5% in the past year against the Zacks Mining - Non Ferrous industry’s rise of 76.6%.
Image Source: Zacks Investment Research
From a valuation standpoint, FCX is currently trading at a forward 12-month earnings multiple of 24.07, a 1.9% discount to the industry average of 24.53X. It carries a Value Score of C.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FCX’s 2026 and 2027 earnings implies a year-over-year rise of 44.6% and 34%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 30 days.
Image Source: Zacks Investment Research
FCX stock currently carries a Zacks Rank #3 (Hold).
View the Zacks #1 Rank List
Image: Bigstock
Can FCX Protect Margins Amid Higher Copper Production Costs in Q2?
Key Takeaways
Freeport-McMoRan Inc. (FCX - Free Report) saw a decline in its average unit net cash cost per pound of copper in the first quarter of 2026 to $1.91 from $2.22 in the prior quarter. It also fell from $2.07 a year ago.
Freeport, however, is facing headwinds from higher costs in the second quarter. FCX’s outlook for the second quarter suggests higher costs on a sequential basis. It expects unit net cash costs to rise to $2.24 per pound, while projecting a full-year average of roughly $1.95 (compared with $1.65 in 2025).
The projected second-quarter unit cost reflects a roughly 98% year over year and 17% quarter over quarter increase. The uptick in costs reflects higher costs of energy and other consumables due to the Middle East conflict and persistent pressure on volumes. Higher costs are expected to weigh on the company's margins.
Freeport’s copper sales volumes tumbled approximately 25% year over year in the first quarter to 657 million pounds, and fell from 709 million pounds in the prior quarter. The downside primarily resulted from lower operating rates due to the temporary suspension of operations since the mud rush incident at the Grasberg Block Cave mine. While the company’s outlook for copper sales volumes for the second quarter of 690 million pounds indicates a sequential improvement, it still suggests a 32% year-over-year decline.
Among FCX’s peers, Southern Copper Corporation (SCCO - Free Report) reported lower unit costs in the first quarter. Southern Copper’s operating cash cost per pound of copper, net of by-product revenue credits, fell by roughly 114% decline from the prior-year quarter. SCCO’s operating cash cost per pound of copper declined roughly 34% year over year in 2025.
BHP Group Limited (BHP - Free Report) lowered its unit cost guidance for the Escondida operation to the band of $1-$1.2 per pound for fiscal 2026, reflecting by-product credits and strong operational performance. BHP also projects Copper South Australia’s unit cost between $1 and $1.5 per pound. Unit costs at BHP’s Spence operation are expected to be between $2.1 and $2.4 per pound for fiscal 2026.
The Zacks Rundown for FCX
Shares of Freeport are up 69.5% in the past year against the Zacks Mining - Non Ferrous industry’s rise of 76.6%.
From a valuation standpoint, FCX is currently trading at a forward 12-month earnings multiple of 24.07, a 1.9% discount to the industry average of 24.53X. It carries a Value Score of C.
The Zacks Consensus Estimate for FCX’s 2026 and 2027 earnings implies a year-over-year rise of 44.6% and 34%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 30 days.
FCX stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.