| Freeport-McMoRan Looks to Control Costs amid Copper Price Slump | |
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Why Is Copper Falling to New 2015 Lows? (Continued from Prior Part) Costs
Commodity producers including BHP Billiton (BHP) don’t have much control over commodity (DBC) prices. When commodity prices start falling, high-cost producers become unprofitable much sooner than their peers that are placed better on the cost curve. Low-cost producers are able to tide over economic cycles better. It becomes prudent for commodity producers to control their unit production costs. Copper companies have been working to reduce their unit production costs to survive the current slump in copper prices.
Freeport-McMoRan
Freeport-McMoRan’s (FCX) unit copper cash costs after by-product credits were $1.52 per pound in 3Q15. Freeport-McMoRan expects its unit cash costs to fall to $1.15 per pound in 2016. Richard Adkerson, the company’s CEO, said during the company’s 3Q15 earnings call, “We’ve deferred projects. We reduced our workforce in connection with this cutback. We’re aggressively managing capital, operating and administrating costs. And we’re keeping our finger on the market, and in each of our operations, and we’re prepared to do whatever it takes, whatever it takes, to keep our operations generating positive cash flows to protect our liquidity, hold onto these assets for a better day.”
Lower crude prices
Codelco—the world’s largest copper producer—is also looking to control costs rather than cut production to survive in the current low price environment. As we discussed previously in this series, a stronger US dollar has helped producers outside the United States bring down their unit production costs. Lower energy prices have also helped copper producers lower their unit production costs. Diesel can make up almost 20% of copper’s production costs. Diesel prices have fallen as crude oil prices have corrected steeply.
Lower diesel costs have helped other copper producers, including Teck Resources (TCK) and Southern Copper (SCCO), lower their unit production costs. Also, curtailments of high-cost mines would help miners improve their cost positioning.
However, if miners increase production from their low-cost mines to compensate for the loss in production from the curtailment of their high-cost mines, the desired supply balance wouldn’t return to the market.
You can visit Market Realist’s Copper page for the other recent developments in this industry.
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Freeport McMoRan Copper and Gold Inc.
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PRODUCER |
CODE : FCX |
ISIN : US35671D8570 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Freeport McMoran is a gold and copper producing company based in United states of america. Freeport McMoran produces gold, copper, cobalt, molybdenum and silver in Chile, in Congo Dem. Rep. of, in Indonesia and in Peru, develops copper in Peru, and holds various exploration projects in Chile. Its main assets in production are CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI and MORENCI - ROM LEACH in Chile, GRASBERG, SIERRITA and BAGDAD in Indonesia, TENKE FUNGURUME and TYRONE in Congo Dem. Rep. of and CERRO VERDE in Peru, its main asset in development is SAFFORD in Peru and its main exploration properties are BAGDAD - ROM LEACH and CHINO - ROM LEACH in Peru and CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH and CLIMAX in Chile. Freeport McMoran is listed in Germany and in United States of America. Its market capitalisation is US$ 73.1 billions as of today (€ 68.3 billions). Its stock quote reached its lowest recent point on March 06, 2020 at US$ 10.00, and its highest recent level on April 26, 2024 at US$ 50.50. Freeport McMoran has 1 448 000 000 shares outstanding. |