3rd UPDATE:Freeport:Cuts 09 Copper Sales Forecast To 3.9 Billion Lbs
January 26 2009 - 11:07AM
Dow Jones News
U.S. producer Freeport McMoRan Copper and Gold Inc. (FCX) is
taking further steps to cope with the deteriorating economic
backdrop and will reduce output further at its North American
operations, doubling previously announced cuts in 2009 sales, the
company said Monday.
The equivalent of around 180,000 metric tons in 2009 and 363,000
tons in 2010 is now slated to be removed from sales, the largest
amount to be taken offline by any single producer. Previously the
quantity of copper to be removed from sales was 90,000 tons in 2009
and 227,000 tons next year.
Freeport said it is taking "decisive actions to respond to
currently weak global economic conditions so that our company is
positioned to operate on a lean, efficient and low-cost basis while
preserving our valuable resources and growth opportunities in the
future."
The reduction, which will cut mining and crushed leach rates by
a further 25% at its Morenci copper mine in Arizona, will result in
a reduction in the quantity sold in 2009 to 3.9 billion pounds.
This is 9% down from 4.3 billion lbs that had been expected in
October, which was revised in December to 4 billion lbs.
A further reduction in sales is expected in 2010, with Freeport
cutting its forecast by a massive 17% to 3.8 billion lbs from
October expectations of 4.6 billion lbs.
The cuts and revised sales estimates build on plans announced in
several stages during the fourth quarter of 2008, and are expected
to reduce unit site production and delivery costs by 26% compared
with 2008.
The deferral of development projects and cancellation of
equipment orders is expected to reduce or eliminate some $1 billion
of 2009 capital expenditures.
The Tenke Fungurume copper-cobalt mine in Congo has still
escaped a delay to its planned startup in the second half of 2009,
but Freeport said it is continuing to assess capital costs and the
timing of expenditures. Tenke is a joint venture with the Lundin
Mining Corp. (LMC) and the government of Congo, through
Gecamines.
Freeport has already said it is implementing a 50% reduction in
the mining and stacking rates at the newly commissioned Safford
mine in Arizona. The company has also reduced the mining rate at
its Tyrone mine in New Mexico by around 50% and suspended mining
and milling activities at the Chino mine in New Mexico.
In Peru, the company has deferred the planned incremental
expansion at the copper concentrator for its Cerro Verde operation
and will delay the sulfide expansion project at El Abra in Chile.
In Indonesia, Freeport said it will mine high grade ores at its
Grasberg mine and won't make changes to production plans for
2009.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413;
andrea.hotter@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.