* Freeport sees strong global demand for metals
* CEO says view of copper "remains very positive"
* Freeport to boosts exploration budget for 2011
(Recasts, updates with CEO comment on outlook for metals
By Carole Vaporean
NEW YORK, April 20 Freeport McMoRan Copper &
Gold (FCX.N) gave a positive outlook on Wednesday for global
demand for all of the metals it mines -- gold, copper,
To help meet growing demand for the red metal and
molybdenum, amid increasingly limited sources, Freeport raised
its 2011 exploration budget, as it moves full steam ahead on to
expand or restart mining projects across the regions where it
Chief Executive Officer Richard Adkerson spoke to analysts
on a conference call after the world's second largest copper
miner reported first quarter earnings of $1.5 billion, beating
Wall Street estimates. [ID:nN20133002]
"Our view of copper remains very positive. We are running
our business plan and developing our development plans with an
optimistic view about long-term demand for copper globally."
He said Freeport's optimism was driven by demand from China
and the developing world, as well as improving economies in the
developed world, coupled with industry challenges with
developing new supplies of copper to meet that demand.
"We continue to be extremely positive about the copper
industry and molybdenum business. And of course we benefit from
the record prices we now acheive in the gold markets," he
Phoenix-based Freeport increased its 2011 exploration
budget to $225 million from the $200 million announced in
January, but left capital expenditures (capex) for 2011 at $2.5
billion and for 2012 at $2.1 billion, he said, adding that the
company was looking at increasing capex as well.
"We expect our capital spending beyond 2011 will increase
above our previous guidance as we get board approval for the
Cerro Verde expansion and other projects," Adkerson said.
About $1.3 billion of the capex budget will go primarily to
underground development of the Indonesian Grasberg copper mine,
construction activities at the Climax molybdenum mine in
Colorado and development of the El Abra sulfide deposit in
In North America, its Morenci, Arizona copper mine reached
a target rate of 635,000 tonnes of output per day in March, and
the miner is studying further output rate increases.
Whereas it was evaluating investment in a new mill facility
at Morenci in January, it has now begun a feasibility study to
expand the mill to 115,000 tonnes per day, and is targeting an
increase of 150 to 200 million lbs of incremental copper
production in two to three years.
Also in Arizona, its Safford copper mine, completed in
April a $150 million sulphur burner project. It will cut mining
Adkerson said the mining giant is on schedule with restarts
at its Miami mine in Arizona where it is ramping up to 100
million lbs of copper a year, and milling and mining activities
at its Chino copper mine in New Mexico. Chino's output targets
remain 100 million lbs per year in 2012 and 2013, increasing to
200 millions lbs in 2014.
Its Chilean El Abra project began ore crushing, conveying,
stacking and leaching of a large sulfide mineral deposit in the
first quarter. A development project extends the life of the
mine for 10 years with 300 million lbs of copper a year
At Cerro Verde, in Peru, it is now targeting a new
concentrator facility that would add 240,000 tonnes per day of
mill throughput to the current 120,000 tonnes a day output.
Adkerson said the giant Grasberg mine in Indonesia
continues to expand according to plans, but he added that
Freeport is studying the possibility of extending mining of its
open pit to beyond 2016, before going completely underground.
The CEO also addressed questions about the death of two
workers from a flood that shut part of the underground mine at
Grasberg. The incident is being investigated, he said.
In the Democratic Republic of Congo, 2011 sales estimates
at Tenke Fungurume, the world's largest copper project, were
cut to 285 million lbs from 290 million projected in January,
as it gears up for the second phase of the mine's expansion to
add 150 million lbs of copper per year in two years.
Adkerson added that the DRC's review of its mining assets
was officially completed this week with a presidential decree.
Construction of the Climax molybdenum mine in Colorado is
expected to be complete in 2012, when it will set a start
Freeport is also studying several other projects in North
and South America, as well as Africa, the chief executive
(Additional reporting by Steve James; Editing by David