Freeport increases 2002 copper output
Freeport increases 2002 copper output
Dow Jones, Singapore
Despite a more than 20 percent slump in global benchmark
copper prices since beginning of the year, PT Freeport Indonesia
will go ahead with plans to increase copper production next year,
the company's president director said Monday.
PT Freeport, which owns the world's largest copper and gold
reserves at its Grasberg Mine in Indonesia's Irian Jaya, expects
to boost output to 1.5 billion pounds of copper in concentrate in
2002 from 1.4 billion pounds this year, Adrianto Machribie told
Dow Jones Newswires in an interview.
Machribie's comments come at a time when most producers are
considering supply cuts as prices remain weighed down by sagging
demand in a global economic slump exacerbated by the Sept. 11
attacks on the U.S.
"The events beginning Sept. 11 have obviously had a
significant impact on the world economy," Machribie said. "(But)
we believe the fundamentals for the long-term copper market still
look good."
He didn't provide any forecasts for global copper demand or
prices. But analysts predict a supply overhang of about 500,000
metric tons for this year alone and that worse is still to come.
Friday, the London Metal Exchange three-month copper price hit
a fresh 33-month low at US$1,352 a metric ton, down from an
August average of $1,488/ton. The contract's January average
price was $1,794/ton.
Price weakness in recent months has prompted major copper
producers to cut output in an effort to prop up prices. Last
month, for instance, U.S.-based Phelps Dodge Corp. (PD) announced
plans to cut 220,000 tons of output this year.
A rally on the LME followed Phelps Dodge's announcement but
was short-lived. Phelps Dodge called on other major producers to
follow its example, as its planned reduction is less than half of
the current surplus.
"Of course our bottom line is impacted by lower copper prices,
but because of our high-production, low-cost structure, we're
able to generate significant operating cash flows despite
currently low commodity prices," Machribie said. PT Freeport's
net cast production costs in 2001 are expected to average less
than 10 U.S. cents a pound, he added.
In the first nine months of this year, U.S.-based Freeport-
McMoran Copper & Gold Inc., the parent company of PT Freeport,
recorded operating cash flow of $475.1 million, up from $304.9
million in the same period last year.