[miningmx.com] — Freeport-McMoRan Copper & Gold Inc said on Monday copper market’s prospects for next year are as yet uncertain and a strong Chinese economy will be key to demand. “There are a lot of uncertainties…next year depends on China and how its economy performs,” Chief Executive Richard Adkerson told Reuters in an interview.
“China currently appears strong. There are a lot of stimulus activities in place to help economies recover. If they are effective we could see a strong situation…”
For much of this year copper prices have been underpinned by strong Chinese buying, some of which went into stockpiles.
Freeport, the world’s second largest copper producer, remains cautious on the 2010 outlook for now though and Adkerson said it needed to be prepared for different scenarios next year.
“We have a number of large scale investments available to us, but we’re being very cautious about increases in capital spending or production that was curtailed last year.”
Last week, Freeport said it had revived its plan to extend the life of its El Abra mine in Chile, taken as a sign of the industry’s growing optimism on the global economy.
In September, the company said it would reopen the molybdenum plant at its Cerro Verde copper pit in Peru.
Freeport is the world’s top producer of molybdenum.
Adkerson said Freeport’s copper production was currently running at about 4 bln lbs this year, or around 20 percent below anticipated levels.
In response to the global economic crisis, the company took several measures, including deferring capital spending and scaling back production.
The bulk of the capacity idled was at its higher cost facilities in the United States.
But Adkerson said the company would be quick to restart mothballed capacity if market conditions warranted such a move.
“When the market requires incremental copper and molybdenum production, we’re going be there ready to go forward with it,” he said.
He said copper prices had strong prospects further ahead.
“Over a longer time frame the dynamics of supply and demand are very supportive for prices,” Adkerson said.
In July 2008, world copper prices reached an all-time high of $8,940 a tonne. Despite falling sharply during the remainder of last year, they are now more than double their end-2008 levels.
At 1318 GMT the London Metal Exchange (LME) three months price was indicated at $6,282/92 a tonne.
WAITING ON TENKE
Freeport was waiting to hear the latest developments surrounding its large Tenke Fungurume copper-cobalt project in the Democratic Republic of Congo.
The company and Lundin Mining, its partner in the giant project in the Democratic Republic of Congo (DRC), have been given until Monday to complete negotiations with the DRC government or risk losing their mining permit.
At the time of the interview there had been no fresh news.
“We’re continuing to engage in talks and hope to work co-operatively with the government and Gecamines to get this resolved,” Adkerson said.
“We want to be responsive but in the context of having a legally binding contract that is fair to the government.
At full capacity the mine will produce around 115,000 tonnes a year of copper and 8,000 tonnes of cobalt.
Adkerson said the company was always alert to opportunities with regards to buying into other projects or companies.
“But because we have a series of projects where we already have rights that’s a real impediment to financing something that makes sense,” he added.
Nor does the company see any great need to diversify.
“Copper predominates our revenue and we’re not troubled by that at all.”
