Freeport McMoran (FCX) has reduced its copper production guidance for 2020 by 11pc to 3.1bn lb (1.4mn mt) from its initial guidance of 3.5bn lb.
The company said in its Q1 earnings report that the evolving impact of COVID-19’s spread had also caused it to revise its operating plans. Through the rest of 2020, the company will focus on maximizing its cash flow and has adjusted its mine operating plans to cut costs and capital spending, FCX noted in its earnings report.
FCX has suspended plans initially announced in January to inject $150mn into projects that would have added an additional 200mn lb of copper output to its portfolio over the next two years. Moreover, the copper miner will lower mining costs across all seven of its North American copper mines and postpone non-essential projects at these locations.
The results of these revised plans include a 20pc reduction in its 2020 milling and mining rates, which will lead to a 12pc decrease in its North America copper sales this year.
In March, the company had to shut its Chino mine in New Mexico after some employees tested positive for COVID-19. However, FCX indicated it had taken all necessary precautions and that it had contained the outbreak. It is presently assessing a safe restart date.
In South America, FCX intends to limit Cerro Verde’s operations in Peru in Q2 2020, as the mine remains under care and maintenance after the Peruvian government extended its countrywide lockdown to May 10—although the company anticipates the lockdown will extend farther into the month. The project’s mining and milling rates have been reduced by 13pc for the rest of 2020, which will result in a 130mn lb, or 13pc, decrease in Cerro Verde copper sales.
The company’s Indonesian operations, which include the Grasberg mine and an under-construction smelter in Gresik, remain operational, although the pandemic has delayed the smelter’s construction. The Grasberg mine will continue ramping up operations to achieve 1.4bn lb of copper production by next year, FCX said.
In Q1 2020, FCX’s consolidated copper production decreased to 731mn lb from 780mn lb during the same quarter last year. Its sales declined to 729mn lb during the last quarter from 784mn lb in Q1 2019, while its average realized price per pound also decreased to $2.43/lb from $2.90/lb during the same quarter of 2019.
The company’s revenue declined to $.279bn in Q1 2020 from $3.79bn in the same quarter last year, and it reported an operating loss of $473mn compared with a profit of $321bn for the same comparative periods.