Workers at Freeport-McMoRan Copper & Gold (FCX) decided to end a strike at Peruvian copper mine Cerro Verde that began almost two months ago.
Union workers discontinued their work in September 2011 to back demands for higher pay. Cerro Verde has been operating the mine at two-thirds of the normal daily rate with supervisors and volunteer personnel.
As per the union, no agreement was reached with the company. However, workers expect authorities from Arequipa region, where the mine is located, to issue a resolution in the coming days in order to resolve the dispute.
However, the country's longest-running mining dispute still continues at Freeport’s Grasberg mine in Indonesia. Miners at Grasberg, the world's second-biggest copper mine, have been on strike since mid-September 2011, leading Freeport to declare a force majeure on concentrate shipments last month. This decision frees Freeport from some of its contractual obligations to supply buyers metals produced at Grasberg.
Revenues in the quarter were $5.20 billion versus $5.15 billion in the prior-year quarter, surpassing the Zacks Consensus Estimate of $5.01 billion. Consolidated sales from mines totaled 947 million pounds of copper, 409,000 ounces of gold and 19 million pounds of molybdenum compared with 1.1 billion pounds of copper, 497,000 ounces of gold and 17 million pounds of molybdenum in the third quarter of 2010.
Consolidated unit net cash costs (net of by-product credits) averaged 80 cents per pound of copper compared with 82 cents per pound in the third quarter of 2010. Operating income slumped to $2.1 billion from $2.5 billion in the year-ago quarter.
Freeport-McMoRan’s consolidated sales from mines for the year 2011 are expected to approximate 3.8 billion pounds of copper, 1.6 million ounces of gold and 78 million pounds of molybdenum, including 915 million pounds of copper, 305 thousand ounces of gold and 18 million pounds of molybdenum for fourth-quarter 2011.
Based on current 2011 sales volume and cost estimates and assuming average prices of $1,600 per ounce for gold and $14 per pound for molybdenum for fourth-quarter 2011, consolidated unit net cash costs (net of by-product credits) are estimated to average $0.95 per pound of copper for the year 2011.
Based on current 2011 sales volume and cost estimates and assuming average prices of $3.25 per pound for copper, $1,600 per ounce for gold and $14 per pound for molybdenum for fourth-quarter 2011, operating cash flows are estimated to approximate $7 billion for the year 2011. Capital expenditures are expected to approximate $2.6 billion for the year 2011, including $1.4 billion for major projects and $1.2 billion for sustaining capital.
Headquartered in Phoenix, Arizona, Freeport-McMoRan Copper & Gold Inc. is engaged in mineral exploration and development; mining and milling of copper, gold, molybdenum and silver; as well as the smelting and refining of copper concentrates.
The company conducts its operations primarily through its principal operating subsidiaries, PT Freeport Indonesia, Freeport-McMoRan Corporation (formerly Phelps Dodge) and Atlantic Copper. Its major competitors include Newmont Mining Corp. (NEM) and Southern Copper Corp. (SCCO). It currently retains Zacks #5 Rank on its stock, which translates to a short-term rating of Strong Sell.
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