Freeport to cut dividend and slash costs as coronavirus spreads
Freeport-McMoRan Inc, the world’s largest publicly traded copper producer, said on Monday it will stop dividend payouts and slash costs and output due to the rapid worldwide spread of the coronavirus pandemic.
The drastic move underscores how fast the virus, which causes a sometimes deadly respiratory illness known as COVID-19, has torn through the global economy and affected demand for the key metals that underpin it.
Prices for copper, widely used in construction and manufacturing, are down more than 22% since January.
Phoenix-based Freeport said it will cut its 5-cent dividend, saving about $291 million annually. The company also is looking to slash costs and production at its mines across the world, including the world’s largest gold mine and second-largest copper mine at Grasberg, Indonesia.
It was the company’s first dividend cut since 2015.
“The COVID-19 pandemic has drastically altered our world, bringing swift and significant disruption to all aspects of our society,” Freeport Chief Executive Richard Adkerson said in a public letter posted on the company’s website.
Freeport shares closed down 2.3% at $5.39 on Monday.
It was not clear if any of the company’s 27,500 employees had tested positive for the virus that has killed more than 16,000 people worldwide.
“We have experienced limited isolated situations that did not come in contact with operations,” Freeport spokeswoman Linda Hayes said. Asked if that meant some employees had been infected, Hayes referred back to the company statement.
Freeport executives have started an internal review of potential cost and production cuts. Any decisions should be completed as first-quarter earnings are reported next month, the company said.
In the public letter, Adkerson said Freeport is working with vendors “to stay ahead of any disruptions to our supply chain.”
The company has formed a global task force to make business continuity plans. At mines, where social distancing is often impossible, Freeport has instituted “rigorous cleaning and sanitation protocols,” Adkerson said.
Rival miner Barrick Gold Corp, among other miners, has said it has been stockpiling cyanide and other necessary materials.
Freeport earlier this month said it had a “strong” liquidity position and forecast a significant jump in cash flow starting in 2021. It has also shuttered some operations in Peru due to the virus.
Newmont Corp, the world’s largest gold producer, on Monday pulled its 2020 outlook, saying some production could be deferred to 2021 due to coronavirus.
And lithium producer Livent Corp suspended operations in Argentina after a countrywide government order.
(By Ernest Scheyder and Arundhati Sarkar; Editing by Marguerita Choy, Nick Zieminski and Bill Berkrot)