(Reuters) - Freeport-McMoRan Inc, the world’s largest publicly traded copper producer, posted a quarterly loss on Wednesday as costs spiked and production of gold and copper plunged at a key Indonesian mine.
While the loss, the company’s first since 2016, wasn’t as steep as analysts had expected, it comes as Freeport is spending billions of dollars to expand Indonesia’s Grasberg copper and gold mine underground, a two-year process that is vital to the company’s future.
Freeport reported a second-quarter net loss of $72 million, or 5 cents a share, after earning a net profit of $869 million, or 59 cents per share, a year earlier.
Excluding one-time items related to a water tax dispute in Indonesia, Freeport lost 4 cents per share. By that measure, analysts expected a loss of 5 cents per share, according to IBES data from Refinitiv.
Shares of the Phoenix-based company rose 2.2% to $11.91 in midday trading, along with a rise in copper prices.
Production of copper sank 24% to 776 million pounds and gold output fell 79% to 160 million pounds. The price Freeport receives for its copper fell 10% during the quarter even as its costs doubled.
Freeport had warned of the quarterly loss at the beginning of the month.
Richard Adkerson, Freeport’s chief executive, said the Grasberg expansion was “advancing according to plan. Copper production from Grasberg is expected to rebound to 200 million pounds per year by 2020 and 900 million pounds per year by 2021.
“We remain very positive about the outlook for copper long term, underpinned by limited supplies, coupled with the important and growing role copper plays in the global economy,” Adkerson told investors on a Wednesday conference call.
Adkerson told Reuters earlier this year that Freeport plans no dividend hikes, acquisitions or debt buybacks over the next two years as it focuses on the Grasberg project.
“The investment case for Freeport really depends on development of the underground project at Grasberg,” said Jefferies mining analyst Christopher LaFemina, who has a “buy” rating on the company and a $15.50 price target.
Reporting by Ernest Scheyder; Editing by Steve Orlofsky and Bernadette Baum