The Indonesian unit of Freeport McMoran Copper & Gold Inc. (FCX), the world’s largest publicly traded copper miner, announced recently that it expects its copper production to remain unchanged in 2010. However, the company cited that gold output may fall by about 20% year over year on lower ore grades.
PT Freeport Indonesia, which operates the Grasberg copper and gold mine in Papua, expects to produce 1.4 billion pounds of copper in 2010, unchanged from 2009.Grasberg, which has the world’s largest recoverable reserve of copper and the largest reserve of gold, accounts for nearly 40% of Freeport’s total copper reserves of 93 billion pounds. Gold production is seen at 1.9 million ounces in 2010, down about 21% from 2.4 million ounces in 2009.
Freeport’s daily ore production from Grasberg next year is expected to be 235,000 tons per day of copper ore, slightly lower than 236,000 tons per day in 2009.
Freeport Indonesia plans to invest $292 million in 2009, compare to $459.5 million in 2008. It has proven reserves of 2.66 billion tons of ore containing an average 1.01 in grams of copper, 0.89 grams per ton of gold and 4.26 gram per ton of silver. Freeport Indonesia also plans to develop underground mining at Grasberg.
The recent upward movement in copper prices, driven by the Chinese stockpiling, bodes well for Freeport. We believe market conditions would remain favorable for copper for the next couple of years due to higher consumption of metals in the developing economies.
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