* Q3 profit $1.10/shr vs $1.02/shr Wall St estimate
* Says near-term economic outlook “uncertain”
* Says hopes to resolve strikes soon
* Stock drops slightly
By Steve James and Krishna Das
Oct 19 (Reuters) - Freeport-McMoRan Copper & Gold Inc posted better-than-expected quarterly profit on Wednesday as weak copper prices were offset by soaring gold and it was able to hold down mining costs
But the world’s largest publicly traded copper producer lowered its sales forecasts for next year, citing an “uncertain” near-term global economic outlook.
The company said production at its vast Grasberg mine in Indonesia was hurt by a continuing strike, but another work stoppage at its Cerrro Verde mine in Peru has not materially affected copper production.
Morgan Stanley analyst Paretosh Misra said the impact from the strikes was “less than feared.”
“The (earnings) beat was primarily driven by 4 percent higher copper sales, 10 percent higher gold sales, resulting in a cash cost 23 percent below our estimate.”
Chief Executive Officer Richard Adkerson told analysts that the eight-day strike in July and a second, continuing strike at Grasberg led to a loss of about 70 million pounds of copper and 100,000 ounces of gold in the third quarter.
Management at Peru’s Cerro Verde mine, which produces 2 percent of the world’s copper, was scheduled to talk with union leaders on Thursday to resolve the 20-day-old strike over pay.
“Production has not been materially affected at Cerro Verde because of our use of existing management group and contractors that work with us to continue operations there,” Adkerson said on a conference call. “We’re hopeful for a near-term solution there.”
The Phoenix, Arizona-based company said the Grasberg mine -- the world’s second-largest copper mine -- is operating at around two-thirds of capacity with a reduced workforce.
Adkerson did not say whether the company was scheduled to meet again with Grasberg unions or a mediator, but said the company has filed its position with the country’s labor court.
“Our hope is ... to get this strike resolved on a mutually satisfactory basis with all parties so that we can go back to totally normal operations.”
Until then, Adkerson said, the labor dispute “does create a degree of uncertainty about what will transpire in the fourth quarter.”
Without the impacts of the strike, third-quarter sales from Grasberg would have exceeded forecast production and sales because of access to higher grade ores, Freeport said.
The company said it produced and sold less in the third quarter than a year earlier. Consolidated sales from mines totaled 947 million pounds of copper, 409,000 ounces of gold and 19 million pounds of molybdenum. That compared with 1.1 billion pounds of copper, 497,000 ounces of gold and 17 million pounds of molybdenum for the third quarter of 2010.
It lowered its target for 2011 copper sales to 3.89 billion pounds from 3.9 billion pounds. It still expects gold sales of 1.6 million ounces.
The company also cut its 2012 copper sales estimate to 3.9 billion pounds from its previous estimate of 4.0 billion pounds and now expects gold sales of 1.1 million ounces, down from 1.2 million ounces.
“While the near-term economic outlook is uncertain and has resulted in a decline in copper prices over the last several weeks, the fundamentals of our business are strong and we have a positive view of the long-term market fundamentals,” Chairman James Moffett and Adkerson said in a joint statement.
In its earnings release, Freeport said net profit fell to $1.1 billion, or $1.10 per share, from $1.2 billion, or $1.24 per share, a year earlier. Revenue of $5.2 billion was flat, but still beat Wall Street estimates.
Analysts on average were expecting $1.02 per share in earnings and $4.8 billion in revenue, according to Thomson Reuters I/B/E/S. The estimates were lowered in recent weeks as production was hit by the Indonesian strike.
Freeport said its average selling price for copper was $3.60 per pound in the quarter, up from $3.50 a year earlier, while it sold gold for an average of $1,693 per ounce, up from $1,266 in the 2010 quarter.
Freeport’s stock fell after the results were announced and in afternoon trading on the New York Stock Exchange, the shares were 30 cents lower at $35.08.