Financial Crisis Impacts Outlook for Mining Projects
Concerns about a growing global recession have brought down copper prices — and the share price of mining giant Freeport-McMoRan with them. By press time copper had hit a three-year trading low of $1.84 per pound. Shares of Freeport- McMoRan had closed at a four-year low of $32.81 per share, down over 70% from the stock’s 52-week high of $127.24. According to some industry analysts, commodities markets are expected to remain highly volatile and uncertain in the short-term. Freeport-McMoRan reported a 33% drop in profits in its third quarter earnings report and noted that “future capital spending plans are being reviewed in response to the impact of recent changes in global economic conditions on commodities prices.” According to news reports, expansion projects at the company’s Arizona operations in Sierrita, Bagdad, and Miami now will be delayed, saving $370 million in capital costs.
In conversations with company officials in Grant County, GRIP was told that mining projects and reclamation work at Freeport’s Chino-Cobre and Tyrone mines are still moving forward, although at a slower pace and effort is being spent on identifying costcutting measures. Diesel fuel costs have dropped recently, easing some impacts on the cost of mining. Officials stated that the company is still hiring, however it is also assessing probable scenarios for the future that depend on varying market conditions.
As we reported in our summer issue, high copper prices forced a shift from using Chino’s Lee Hill Pit as a leach operation to mining valuable ore. But the current financial crisis has demonstrated that mining operations may change quickly in response to global market shifts. GRIP continues to monitor activities at area mines and will stay on top of changes as they occur.