Freeport to resume Grasberg output

Freeport to resume Grasberg output

Dow Jones Vancouver

Freeport-McMoRan Copper & Gold Inc. hopes to resume production at its giant Grasberg copper and gold mine in Indonesia by the end of the first quarter, company chairman James R. Moffett said on Thursday.

At an exploration conference, Moffett told reporters the mine is getting cleaned up after a fatal slide in October, which occurred in the south wall of the Grasberg pit, killing eight workers and burying most of the mine's high-grade ore deposits.

In December, days after the company received approval to resume full-scale operations, a second slide occurred in the same section of the mine.

The company declared force majeure on copper conentrate sales in December, but recently indicated it could resume full operations by the end of the second quarter.

"We obviously are anxious to get back into production," Moffett said. "As soon as it's safe, we'll lift force majeure."

The loss of production from the Grasberg mine has tightened the world supply of copper concentrate.

Moffett said he expected the average copper price in 2004 will be more than US$1 a pound.

On Jan. 20, Freeport-McMoRan said lost equipment in the fatal slippage at the Grasberg open pit cut fourth-quarter earnings by $4.3 million, or 2 cents a share. Results for the quarter reflected reduced mill throughput and lower-grade ores following the accident at the site, the company said.

It expects to return to key ore areas of the Grasberg mine in the second quarter of 2004, but said it will defer a portion of the higher-grade ore mining to future periods.

As a result, the company lowered its forecast for 2004 copper sales to 1 billion pounds from a previous estimate of 1.4 billion, and expects 2004 gold sales to drop to 1.5 million ounces from an earlier estimate of 2.2 million ounces.

The Grasberg mine is the world's largest gold producer and the second largest in copper production.