Phelps Dodge sees higher 1st-qtr copper production
Phelps Dodge Corp., world’s No. 2 copper producer, sees increased copper production and sales in the first quarter over fourth quarter 2006.
The Phoenix, Arizona-based mining giant expects to produce between 625 million and 655 million lbs of copper in the first quarter of 2007 and about 2.9 billion lbs for the year, said Phelps Dodge Chairman and Chief Executive Steven Whisler.
Whisler spoke to analysts on a conference call on Monday following the company’s fourth-quarter earnings report.
Though first-quarter 2007 will likely be the last for the mining giant to operate independently after 173 years, Whisler said he wanted to provide forecasters with some guidance on Phelps Dodge’s projected performance.
In November, Freeport McMoRan Copper & Gold Inc. said it would buy much larger Phelps Dodge for $26 billion in cash and stock to create the world’s largest publicly traded copper company.
Whisler said on the call he foresaw no problems completing the deal by March as planned.
He also said first-quarter copper sales should rise to somewhere between 615 million and 645 million lbs, with 2007 sales estimated at 2.9 billion lbs.
In the fourth quarter, Phelps Dodge mines produced 609 million lbs of copper, below its previously forecast range, the CEO said.
He cited lower-than-planned production from the Cerro Verde mine expansion in Peru and small shortfalls at several North American operations for lower output than projected.
“As a result of our lower production, (fourth quarter) sales of PD mined copper were 599 million lbs. Again, slightly below the lower end of our guidance range,” Whisler said.
While mining of the sulfide ore body at Cerro Verde began in late 2006, Whisler said the second half of the mine expansion should be up and running by June 2007.
Current copper production at Cerro Verde is about 100,000 tons per year. Once complete, the company’s Web site said copper production will grow to about 300,000 tons per year.
“Construction of the project has in fact gone very well and we believed that we could pull the second half of the plant (expansion) forward quite a bit. That was the basis for our fourth-quarter guidance,” said Whisler.
He added that Cerro Verde is currently running at about 75 percent of designed capacity, as the company continues to work out kinks at the operation.
“We are well ahead of our original schedule. But we came up a little short on our admittedly very optimistic commissioning plan,” said Whisler of the slower production rate.
Whisler also said Phelps Dodge appears to be over its original $850 million capital budget by less than 5 percent.
“Given the high double-digit, and sometimes triple-digit, increases in many other large capital projects of experience, I think this is an impressive outcome,” he said.