Freeport-McMoRan cuts spending, production and jobs: shares soar
Shares in Freeport-McMoRan (NYSE:FCX) soared Thursday morning after the copper and gold miner said it would capital spending plans for 2016 by 29%, and reduce its U.S.-based workforce by about 10%.
The world's largest publicly traded copper producer’s stock was trading 23% higher at $9.79 at 9:40 am ET after the announcement, triggered by the company’s ongoing struggles caused by declining metal prices and weak economic conditions worldwide.
Freeport revealed it now expects capital spending of $4 billion next year, down from its July estimate of $5.6 billion. The Phoenix-based company also announced it will slash 2016 minerals exploration costs from $100 million to $50 million.
The company added it plans to cut copper sales by about 150 million pounds per year in 2016 and 2017, as well as lower unit site production next year by 20%
Freeport had warned in July that it was prepared to scale back operations if commodity prices didn’t recover after reporting its second straight quarterly loss.
And they didn’t, so the miner is now ready to suspend operations at its Miami mine in Arizona, halve production at its Tyrone mine in New Mexico and "adjust" rates at other of its seven copper mines in North America.
The company also operates two copper mines in South America — Peru’s Cerro Verde and Chile’s El Abra — and the vast Grasberg gold and copper mine in Indonesia, which is the world’s second-largest for the red metal by capacity.
The company’s revised outlook 2016 for Grasberg expects higher ore grades in the next two years, resulting in higher production and lower unit costs. Freeport also said concentrate shipments were back to normally, following the recent receipt of an export license from the Indonesian government.