Tom Stundza -- Purchasing, 10/26/2009 10:11:55 AM
Phoenix-based Freeport-McMoRan Copper & Gold hasn't seen copper demand pick up to a level to justify restoring the idled U.S. production capacity at mines in Morenci, Sierrita, Bagdad and Safford in Arizona and Tyrone in New Mexico.
The latest quarterly report says the company "continues to operate at reduced rates at certain of its North America copper mines in response to reduced demand for copper in the western world." The Safford and Tyrone mills, for example, are operating at 50% capacity.
"To have a full scale return to maximum production (in Arizona) is going to be contingent on our seeing clear evidence of recovery of copper demand in the U.S. and Europe," CEO Richard Adkerson tells analysts in a conference call. "And we haven't seen that yet." He says the same could be said of molybdenum production at its Colorado mine, which had been under construction but was stopped during the economic downturn.
"We will act when the time is right and the market needs those commodities."
For all of 2009, the quarterly report says the firm expects sales from North America copper mines to approximate 1.2 billion lb of copper, compared with 1.4 billion in 2008. By-product molybdenum production is expected to approximate 26 million lb in 2009, compared with 30 million in 2008. Looking ahead, the firm says North America refined copper production in 2010 is currently expected to approximate 1 billion lb, reflecting impacts of reduced 2009 mining activities on 2010 leaching operations.
Still, a Reuters report says the company is developing $1.4 billion capital spending plans for 2010, the same amount as this year, that include plans to reinstitute a reclamation project of its old Miami copper mine in Arizona. The project's costs were originally set at $100 million, but it will move some excess equipment from its other scaled-back Arizona operations, lowering the cost to $40 million.
In Peru, Freeport will spend $50 million at its Cerro Verde mine to increase the mill rate from 108,000 metric tons/day to 120,000 metric tons as part of a long-term, major expansion. In Chile, Freeport has decided to go ahead with a six-year, $600 million expansion at the El Abra mine project that would extend the mine's life.
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