Freeport profit jumps, miner flags market jitters over trade rows
TORONTO, July 25 (Reuters) – Freeport-McMoRan Inc, the world's biggest publicly listed copper miner, reported bigger-than-expected earnings on Wednesday, as production and prices soared above last year, but flagged market jitters from global trade disputes.
Uncertainty around the economic impact of a U.S.-China trade war has pushed copper prices lower in recent weeks, but Phoenix-based Freeport has not seen a decline in demand to date, Chief Executive Richard Adkerson said.
Freeport reported a second-quarter adjusted profit of 58 cents per share, up from 17 cents a year earlier.
"We remain positive on the outlook for copper prices given limitations on supply and the important role of copper in the global economy," Adkerson said in a statement. " We will be prepared to adjust our plans if necessary to respond to market conditions."
Freeport reported a second-quarter adjusted profit of 58 cents per share, up from 17 cents a year earlier when results where hurt by a strike and operational issues at its giant Grasberg mine and well ahead of analysts' average expectation for a profit of 52 cents per share. Earlier this month, Freeport said it would sell a majority stake in Grasberg, the world's second-biggest copper mine, to the Indonesian government via a series of complex deals including Rio Tinto worth $3.9 billion.
Separately on Tuesday, Indonesia's parliament asked the government to recalculate Grasberg damages to the environment, estimated in a 2017 report at $13.25 billion, though the rationale was unclear.
Freeport said it is now negotiating with the government on legal and fiscal terms for a new permit that would run through 2041.
Mining at the Grasberg open pit is being extended by six months, Freeport said, and lower copper and gold production is expected as operations transition underground in 2019 and 2020.
Indonesia introduced new rules last year to gain greater control over mineral resources, requiring miners to divest a majority stake in their operations, relinquish arbitration rights and pay new taxes and royalties.
Freeport said second-quarter copper sales grew to 989 million pounds, from 942 million pounds, while gold sales rose to 676,000 ounces from 432,000 ounces.
It had forecast copper sales of 970 million pounds and gold sales at 700,000 ounces in April.
The average copper price rose to $3.08 per pound, from $2.65 a pound in the same period last year, while gold prices rose to $1,274 per ounce from $1,243.
Freeport increased its 2018 copper cash forecast to $1.04 a pound from $1.01 a pound.
(Reporting by Susan Taylor Editing by Chizu Nomiyama, Steve Orlofsky and Susan Thomas)