(Recasts with analyst comment, supply cuts, context, stock price)
Dec 9 (Reuters) - Freeport-McMoRan Inc on Wednesday suspended its annual dividend and made deeper cuts in capital spending and copper production, the latest mining company to act to preserve cash as a commodities’ price downturn enters its fifth year.
Shares in the U.S. diversified miner and oil producer jumped 9.9 percent to $7.41 a share on Wednesday morning, getting help from a stronger copper price, after Freeport said it would suspend its annual dividend of 20 cents per share, a move that will help it save $240 million a year.
Freeport said it will cut its annual copper output by a further 100 million pounds as it shuts down its Sierrita mine in Arizona. Molybdenum output will be reduced by another 14 million pounds. This brings total annual reductions to 350 million pounds of copper and 34 million pounds of molybdenum.
The moves come a day after global mining group Anglo American Plc said it would slash 85,000 jobs and sell 60 percent of its assets while also suspending its dividend as it tries to cope with weak commodity prices.
Freeport’s actions are “a necessary evil in the current environment”, Cowen and Co analyst Anthony Rizzuto said in a note to clients.
Phoenix, Arizona-based Freeport - under pressure from activist investor Carl Icahn who bought an 8.5 percent stake in the miner in August - also said it was looking at the potential sale of minority interests in certain mining assets to provide funds to reduce debt.
The company, whose operations include the massive Grasberg copper and gold mine in Indonesia, the Cerro Verde copper mine in Peru and seven copper mines in North America, did not immediately respond to a request for comment on which assets could be up for sale.
While declining to speculate on which assets could be on the block, Clarksons Platou Securities analyst Jeremy Sussman said there is still appetite among the world’s biggest miners for expanding their copper operations.
“Most of the larger companies prefer large, low-cost, Tier 1, maybe Tier 2 assets in safer jurisdictions. There is not a lot of that around,” Sussman said.
Freeport also announced further capital spending cuts. It will reduce its 2016 capital expenditure budget for its oil and gas operations by 10 percent to $1.8 billion, and slashed its 2017 budget by 40 percent to $1.2 billion.
The company said it reached agreement with lenders on easing the conditions around its bank credit facility. (Reporting by Nicole Mordant in Vancouver; Additional reporting by Sneha Banerjee and Darshana Sankararaman in Bengaluru; Editing by Shounak Dasgupta and Jonathan Oatis)
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