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Released October 26, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Miner Freeport-McMoRan Incorporated (NYSE:FCX) (Phoenix, Arizona) says the international copper market will remain strong and deserves continued investment in both the U.S. and abroad. The company sold 932 million pounds of copper in third-quarter 2017. Industrial Info is tracking $2.65 billion in Freeport-McMoRan projects.
In the company's conference call, Chief Executive Officer Richard Adkerson said, "We are benefitting from the positive copper market that has resulted in higher prices than many expected." After discounting analysts who had previously forecast "a wall of copper" due to oversupply, Adkerson said: "There are underlying factors in the industry that continue to constrain supplies. There's continued absence of major new projects, declining production from existing mines, exchange stocks remain historically low, and as we look forward into the future, there are looming significant deficits that will require significant investments to meet and fulfill the global demand for copper ... What's been a feature of the recent copper market has been positive copper demand globally."
Adkerson continued: "Wood Mackenzie [Edinburgh, Scotland], one of the industry's analysts, estimates 5 million tons of new copper projects are required over the next decade. The top 10 mines in the world today produce less than 5 million tons a year, so that shows the extent of the amount of copper projects that will be required to be developed."
One of the sectors requiring increased copper use is electric vehicles (EVs), which are expected to have a substantially increased share of the automobile market in coming years. "EVs are copper-intensive," said Adkerson. "They consume three times more copper than traditional petroleum-powered automobiles, and there's very strong potential for this marketplace. The world is really looking for expanded growth over the next decade. This will translate into significant incremental copper demand."
Adkerson noted that major new copper finds are virtually non-existent, warranting the further development of existing sites. "There simply has not been the discovery of world-class mines, and when we look at the opportunities today, they're in the nature of brownfield expansions of existing resources, as opposed to looming major new world-class mines being available to the industry."
Because of this situation, Freeport-McMoRan continues its major investments in assets already owned by the company. Among these is a sulfuric acid plant at the company's copper mine in Safford, Arizona. At the existing 103,000-ton-per-day mine, Freeport-McMoRan is conducting economic evaluation for a second 1,300-ton-per-day sulfuric acid plant to provide acid for leaching pads. The $150 million project could begin late next year, and be completed in summer 2019. For more information, see Industrial Info's project report. Also near the Safford mine, Freeport-McMoRan has found the Lone Star deposit, which it intends on developing in the future, although development of the resource is not included in the company's current capital expenditures. The company estimates Lone Star will be able to produce 200 million pounds of copper per year over a 20-year mine life.
Among the company's major copper developments is that of the Grasberg copper mine in Indonesia, where Freeport-Mc-Mo-Ran is facing issues regarding nationalization of its assets. The company is planning on selling a 51% stake in its Indonesian subsidiary, PT Freeport Indonesia (Jakarta, Indonesia), at a fair market value. Adkerson said, "We've been engaged in discussions of progressing this framework agreement. Both the government and our company are highly motivated to resolve this to eliminate the uncertainty and bring long-term stability of operations, which is in both parties' interest." Freeport-McMoRan is aiming to retain long-term operating rights of the company's operations in the country through 2041. The company hopes to have these issues resolved by the end of this year in order to focus on construction of a grassroot copper smelter in the area, which the government of Indonesia wants in order to have more copper processing nationally. The smelter would produce 400,000 tons per year of copper cathodes, obtaining copper ore from the Grasberg mine. The project has an estimated total investment of $2.3 billion. For more information, see Industrial Info's project report.
Outside of the copper sector, in the third quarter, Freeport-McMoRan's sales of gold were 355,000 ounces and sales of molybdenum were 22 million pounds. Freeport-McMoRan is expanding its Henderson molybdenum mine near Empire, Colorado. The mine currently produces 21,00 tons per day or raw ore. The project, which is set to kick off before the end of this year, will expand into a new development area to maintain current production and extend the life of the mine. The project is expected to take about a year to complete. For more information, see Industrial Info's project report.
Freeport-McMoRan reported third-quarter 2017 net income of $280 million, compared with $217 million in third-quarter 2016. The company expects $1.5 billion in capital expenditures in 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In the company's conference call, Chief Executive Officer Richard Adkerson said, "We are benefitting from the positive copper market that has resulted in higher prices than many expected." After discounting analysts who had previously forecast "a wall of copper" due to oversupply, Adkerson said: "There are underlying factors in the industry that continue to constrain supplies. There's continued absence of major new projects, declining production from existing mines, exchange stocks remain historically low, and as we look forward into the future, there are looming significant deficits that will require significant investments to meet and fulfill the global demand for copper ... What's been a feature of the recent copper market has been positive copper demand globally."
Adkerson continued: "Wood Mackenzie [Edinburgh, Scotland], one of the industry's analysts, estimates 5 million tons of new copper projects are required over the next decade. The top 10 mines in the world today produce less than 5 million tons a year, so that shows the extent of the amount of copper projects that will be required to be developed."
One of the sectors requiring increased copper use is electric vehicles (EVs), which are expected to have a substantially increased share of the automobile market in coming years. "EVs are copper-intensive," said Adkerson. "They consume three times more copper than traditional petroleum-powered automobiles, and there's very strong potential for this marketplace. The world is really looking for expanded growth over the next decade. This will translate into significant incremental copper demand."
Adkerson noted that major new copper finds are virtually non-existent, warranting the further development of existing sites. "There simply has not been the discovery of world-class mines, and when we look at the opportunities today, they're in the nature of brownfield expansions of existing resources, as opposed to looming major new world-class mines being available to the industry."
Because of this situation, Freeport-McMoRan continues its major investments in assets already owned by the company. Among these is a sulfuric acid plant at the company's copper mine in Safford, Arizona. At the existing 103,000-ton-per-day mine, Freeport-McMoRan is conducting economic evaluation for a second 1,300-ton-per-day sulfuric acid plant to provide acid for leaching pads. The $150 million project could begin late next year, and be completed in summer 2019. For more information, see Industrial Info's project report. Also near the Safford mine, Freeport-McMoRan has found the Lone Star deposit, which it intends on developing in the future, although development of the resource is not included in the company's current capital expenditures. The company estimates Lone Star will be able to produce 200 million pounds of copper per year over a 20-year mine life.
Among the company's major copper developments is that of the Grasberg copper mine in Indonesia, where Freeport-Mc-Mo-Ran is facing issues regarding nationalization of its assets. The company is planning on selling a 51% stake in its Indonesian subsidiary, PT Freeport Indonesia (Jakarta, Indonesia), at a fair market value. Adkerson said, "We've been engaged in discussions of progressing this framework agreement. Both the government and our company are highly motivated to resolve this to eliminate the uncertainty and bring long-term stability of operations, which is in both parties' interest." Freeport-McMoRan is aiming to retain long-term operating rights of the company's operations in the country through 2041. The company hopes to have these issues resolved by the end of this year in order to focus on construction of a grassroot copper smelter in the area, which the government of Indonesia wants in order to have more copper processing nationally. The smelter would produce 400,000 tons per year of copper cathodes, obtaining copper ore from the Grasberg mine. The project has an estimated total investment of $2.3 billion. For more information, see Industrial Info's project report.
Outside of the copper sector, in the third quarter, Freeport-McMoRan's sales of gold were 355,000 ounces and sales of molybdenum were 22 million pounds. Freeport-McMoRan is expanding its Henderson molybdenum mine near Empire, Colorado. The mine currently produces 21,00 tons per day or raw ore. The project, which is set to kick off before the end of this year, will expand into a new development area to maintain current production and extend the life of the mine. The project is expected to take about a year to complete. For more information, see Industrial Info's project report.
Freeport-McMoRan reported third-quarter 2017 net income of $280 million, compared with $217 million in third-quarter 2016. The company expects $1.5 billion in capital expenditures in 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
