Freeport-McMoran, the world’s largest publicly traded copper producer, has cut its output forecasts following a stand-off when Indonesia stopped exports from its Grasberg mine in remote Papua Province (pictured).
The Phoenix-based mining giant had previously expected to sell 4.1 billion pounds of copper during 2017 but is now estimating the figure will be 3.9 billion after the Indonesian authorities banned exports from Grasberg, the world’s second largest copper mine.
Freeport reported adjusted net income of US$220 million for the three months to the end of March, against a loss of US$196 million a year ago when commodity prices were lower.
Freeport reported first-quarter net income of US$228 million, compared with a US$4.18 billion loss in the same period a year earlier.
“During the first quarter, we continued to strengthen our financial positions despite the production interruptions experienced at our Indonesian operations,” Freeport chief executive Richard Adkerson announced.
Freeport and Jakarta have been locked in a dispute over the contract for the Papuan operation.
When Freeport refused to scrap its existing operating contract to a new mining licence in January, the authorities banned exports.
Shipments resumed last week after the government agreed a permit for Freeport to ship concentrate, which is a feedstock used by smelters to create molten copper, from Grasberg for six months.
“Our team is focused on reaching a positive near-term resolution to protect our past investments and support our long-term investment plans in Indonesia,” Adkerson said.
Jakarta wants to change mining licences, meaning Freeport would also be required to pay new taxes and royalties, off the authorities a 51-per-cent stake in Grasberg and build a smelter. Freeport would also have to abandon international arbitration rights.
On a per-share basis, Freeport said it had net income of 16 cents while earnings, adjusted to account for discontinued operations, came to 15 cents per share.
The results fell short of Wall Street’s expectations for earnings of 17 cents per share.
“Based on our analysis, this short-term agreement at Grasberg is a key step for resolution of the longer term contested issues for the company in Indonesia,” Jefferies analyst Christopher LaFemina reported.
Picture credit: Wikimedia