Reuters reported that Freeport McMoRan Copper & Gold Inc has decided to move forward on 3 deferred copper mining projects, citing a positive outlook for its metal markets and its ability to manage costs during the global economic downturn.
Mr Richard Adkerson CEO of Freeport said on a conference call said that "We're taking some steps today to invest in some projects that we had deferred, but we're not taking a large scale change to the strategy we had put in place at the outset of 2009."
Mr Adkerson said that Freeport's capital expenditure budget for 2009 remained at USD 1.4 billion as it has all year down from USD 2.7 billion in 2008.
He said that the world's second largest copper miner was currently developing capital spending plans for 2010. We have added a couple of projects that would increase the current outlook for 2010 to USD 1.4 billion subject to continuing analysis of where we're going. It plans to reinstitute a reclamation project of its old Miami copper mine in Arizona, east of Phoenix. The project's costs were originally set at USD 100 million but it will move some excess equipment from its scaled back Arizona operations, lowering the cost to USD 40 million.
Mr Adkerson said that it will give us some copper while we advance our reclamation activities. He said that In Peru, Freeport's will spend USD 50 million at its Cerro Verde mine to increase the mill rate from 108,000 tonnes per day to 120,000 tonnes as part of a long term, major expansion. He said that we are going to drill the resource there, to increase the mill rate and add 30 million lbs of incremental copper per year at a very low cash cost. Both projects have extraordinarily high rates of return.
He said that El Abra would provide significant copper production of around 300 million lbs of copper per year with a total project cost of USD 600 million through 2015. The initial phases will USD 450 million over the next 3 years with about USD 350 million of that cost remaining. Drilling data for El Abra look very encouraging and beyond the current project are other possible expansions or possible partnerships at other nearby mines.
Mr Adkerson said that he sees those markets being driven by China, citing record copper imports, a strong economy with consumer spending and infrastructure spending on items that use commodities. For now, the Phoenix based miner does not plan to restart idled North American copper and molybdenum operations.
He said that "But to have a full scale return to maximum production is going to be contingent on our seeing clear evidence of recovery of copper demand in the US and Europe. And we haven't see that yet."
