NEW YORK - Freeport-McMoRan Copper & Gold Inc said Wednesday it has decided to move forward on three deferred copper mining projects, citing a positive outlook for its metal markets and its ability to manage costs during the global economic downturn.
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, Chief Executive Richard Adkerson said on a conference call.
Speaking to analysts after the mining giant reported surprisingly strong third quarter earnings, the CEO said Freeport's capital expenditure budget for 2009 remained at $1.4 billion as it has all year, down from $2.7 billion in 2008.
He added 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 $1.4 billion, subject to continuing analysis of where we're going, he said.
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 $100 million, but it will move some excess equipment from its scaled back Arizona operations, lowering the cost to $40 million.
It will give us some copper while we advance our reclamation activities, said Adkerson.
In Peru, Freeport's will spend $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.
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, Akerson said, adding that both projects have extraordinarily high rates of return.
Freeport has decided to go ahead with a brownfield expansion at the El Abra mine project in Chile, that would extend the mine life by 10 years. the project had been deferred at the end of 2008 as a result of deteriorating market conditions.
Adkerson also said El Abra would provide significant copper production of around 300 million lbs of copper per year with a total project cost of $600 million through 2015.
The initial phase will $450 million over the next three years, with about $350 million of that cost remaining.
He said, drilling data for El Abra look very encouraging, and beyond the current project are other possible expansions or possible partnerships at other nearby mines.
In terms of demand for its metal output, Adkerson said 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.
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 U.S. and Europe. And we haven't see that yet, said Adkerson. (Reporting by Carole Vaporean; Editing by Marguerita Choy)