FCX eliminates another 600 U.S. copper and moly mining jobs, 2009 capex halved

Former Phelps Dodge copper and moly operations in the United States continue to feel the budget axe as the latest round of Freeport-McMoRan Copper & Gold cutbacks are announced.

RENO, NV - 

Freeport-McMoRan Copper & Gold has eliminated another 600 jobs at the Chino mine in New Mexico on top of the 600 U.S. copper and molybdenum positions eliminated by the company last month.

The company also announced a 50% or $1.2 billion reduction in its 2009 capital expenditures program. However, those cuts do not include a halt or slowdown in the completion of construction at the massive Tenke Fungurume project in the Democratic Republic of the Congo.

Project deferrals include the Climax molybdenum restart in Colorado, development of a large sulfide deposit at El Abra, an expansion of the Cerro Verde concentrator, and reducing exploration from $275 million this year to $100 million in 2009.

Freeport will reduce mining and milling at Morenci by 25% and will consider further reductions if copper costs dip lower. A 50% reduction in the mining and sticking rates at the Safford mine is planned, along with a 50% reduction in mining at the Tyrone Mine. Mining and milling activities at Chino have been suspended.

As a result, FCX will reduce its North American copper production from 1.4 billion pounds of copper this year to 1.3 billion pounds in 2009. By-product moly production is expected to total 32 million pounds this year and 34 million pounds next year.

The company did not announce layoffs at its South American copper mines. For 2008 South American operations are expected to generate 1.5 billion pounds of copper and 110,000 ounces of gold, compared to 1.4 billion pounds of copper and 100,000 ounces of gold planned for next year. Freeport expects to produce 4 million pounds of moly at Cerro Verde for 2009, up from 3 million pounds this year.

No layoffs have been announced at Freeport's Grasberg operations in Indonesia where the company anticipates 1.1 billion pounds of copper and 1.1 million ounces of gold this year. In 2009, Indonesia sales are expected to increase to 1.3 billion pounds of copper and 2.1 million ounces of gold.

Currently the world's largest molybdenum producer, Freeport expects 72 million pounds of  moly sales this year, and plans to reduce output to 70 million pounds next year. The company also will suspend its annual common stock dividend of $2 per share.

CEO Richard Adkerson blamed continued financial market turbulence, credit issues, and the global economic outlook as major factors in the collapse of the copper price. Nevertheless, he insisted the "underlying fundamentals of the copper business remain positive."

As proof, Adkerson cited the low exchange inventories, which currently contain only six days of global copper consumpttion. He also referred to supply constraints and shortfalls, the absence of new projects, and the further delay of current projects as positive developments for copper prices. FCX said 60% of today's copper mines will be depleted or go underground by 2021.

Although most analysts forecast that the gold price would do better in the current environment, Adkerson asserted that gold prices are strong by historic standards. He noted that the increased gold production from Grasberg planned for next year will be important to the company.

Adkerson declined comment as to whether it would consider buying its Tenke Fungurume partner Lundin Mining which is the subject of a friendly takeover bid by HudBay Minerals.

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FCX NA Mining reductions According to the news release on Freeport-McMoRan's website dated 03/12/2008, their revised plans include a 25% reduction in mining and milling at the Morenci operation; not the 50% stated in this article. by Greg Baker on December 05 2008, 10:09 Find this comment inappropriate? Report it

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