PT Freeport Indonesia eyes century of mining<\/p>\n
TIMIKA, Irian Jaya (Reuters): A slump in world prices of
\ncopper and gold will hit PT Freeport Indonesia's bottom line this
\nyear but the firm still hopes to be mining in New Guinea when the
\nnew century dawns.<\/p>\n
In plush offices a stone's throw from virgin jungle, chief
\nfinancial officer Steve Jones says Freeport should still be
\ndigging for metal in Indonesia's Irian Jaya province in 2050,
\nbased on ore reserves so far discovered.<\/p>\n
The chances are there is a lot more ore out there in the
\nhighest mountains between the Himalayas and the Andes.<\/p>\n
\"I think somebody will be mining from here 50 years from now.
\nIn 100 years, I think it is quite possible,\" Jones told Reuters
\nin an interview.<\/p>\n
Asia's economic crisis in the last two years has hit demand
\nfor copper in the last two years. At the same time new sources
\ncame on stream in Chile.<\/p>\n
Copper prices slumped to 60 cents per pound this year, while
\ngold prices also went down to as low as $2.60 per ounce. Both
\nhave recovered, but Freeport's bottom line was not spared, nor
\nthat of its parent, Freeport McMoRan Copper & Gold Inc.<\/p>\n
\"We don't hedge either of our commodities so we are subject to
\nthe cyclicality of the commodity cycle. In '99 both of them hit
\nall-time lows,\" said Jones. \"Copper will be down slightly. Gold
\nwill be down significantly.<\/p>\n
As the slump hit in 1998, New Orleans-based Freeport McMoRan
\nreported net income of $118 million, down $90 million on the
\nprevious year. Freeport McMoRan owns 81 percent of Freeport
\nIndonesia and is overwhelmingly dependent on income from its
\noperation in Irian Jaya.<\/p>\n
Bad sentiment on Indonesia also hit the company's share price
\nin the United States. Attracting funds into Indonesia has been
\ndifficult even for a massively profitable venture like Freeport,
\nJones said.<\/p>\n
Exploration and some other budgets have been cut back, but
\nFreeport will still repay $270 million in debt in 1999.<\/p>\n
Even at record low prices, Freeport's surreal operation at an
\nelevation of over 4,000 meters (13,120 ft) was still yielding
\noperating profits of well over 200 percent.<\/p>\n
\"Given what commodity prices have been I think our results
\nthis year will be quite good compared to last year,\" Jones said.
\n\"In terms of net income they will be down slightly. In terms of
\noperating cash flow they will be up.\"<\/p>\n
The mine currently yields more than two million tons of
\nconcentrate per year, which yields around 800,000 tons of copper
\nmetal. Gold production in 1999 will be around 2.3 million ounces,
\nJones said. It also produces a small amount of silver.<\/p>\n
Next year's copper production will be around the same, he
\nsaid. Gold will be down slightly due to a lower gold content in
\nthe next layers of ore.<\/p>\n
Current prices have been fluctuating around 80 cents per pound
\nfor copper and $2.80 an ounce for gold and predictions are both
\nwill go up, but Freeport will not be banking on that.<\/p>\n
\"We are not going to do an exploration that will require
\nprices any higher than that. The pessimism about the prices has
\nchanged. But we would not plan on prices for our commodities
\ngoing back to $1.30 for copper or $3.50 for gold.\"<\/p>\n
What may change is the amount of ore processed. Current
\ncapacity is around 200,000 to 220,000 tons a day. Production is
\n90 percent from the massive Grasberg pit, where ore is stripped
\noff, sent to a mill where it is crushed and treated, then piped
\nto the coast as a concentrate which is shipped to smelters.<\/p>\n
Jones says the firm is looking at adding additional capacity
\nfor another 50,000 to 60,000 tons of ore a day, but no firm plans
\nhave been set.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pt-freeport-indonesia-eyes-century-of-mining-1447893297",
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