Freeport Workers Halt Return to Work - Analyst Blog
28 Dezember 2011 - 9:30AM
Zacks
Workers at Freeport McMoran
Copper & Gold Inc.’s (FCX) mine in Indonesia may delay
returning to work due to the pending decision on the removal of
about 100 workers at a local unit. Earlier, the workers entered a
deal with management to end this three-month strike.
The workers at Freeport Indonesia’s
Grasberg mine in the eastern province of Papua were supposed to
gradually return to work. The strike has crippled output and
exports of the world’s second-biggest copper mine.
Earlier this month, the workers had
entered into a deal that they will end the three-month strike
provided they were given a pay rise of 40%.
However, the agreement is at risk
as the local unit, Kuala Pelabuhan Indonesia (KPI), had failed to
guarantee that they will rehire the suspended workers.
According to Juarsa Oemardikarta, a
senior manager corporate and administrative support at KPI, 18
workers had been sacked and another 101 temporarily suspended in
September-October 2011 until further evaluation.
Grasberg workers may also stay away
from the mine until there is a decision on another 473 KPI workers,
who had to sign a disciplinary statement before resuming work.
The union had asked KPI to scrap the dismissal and start afresh
following the recent deal to end the strike.
The strike at Grasberg mine harmed
Freeport’s total production and led the firm to declare force
majeure on exports in October, and thereby boosting global
prices.
In October 2011, Freeport released
its third-quarter earnings. The company reported a profit of $1.1
billion or $1.10 per share in the third quarter of 2011 versus $1.2
billion or $1.24 per share in the prior-year quarter. The profit
missed the Zacks Consensus Estimate by 2 cents per share.
Revenues in the quarter were $5.20
billion versus $5.15 billion in the prior-year quarter, surpassing
the Zacks Consensus Estimate of $5.01 billion. Consolidated sales
from mines totaled 947 million pounds of copper, 409,000 ounces of
gold and 19 million pounds of molybdenum compared with 1.1 billion
pounds of copper, 497,000 ounces of gold and 17 million pounds of
molybdenum in the third quarter of 2010.
Consolidated unit net cash costs
(net of by-product credits) averaged 80 cents per pound of copper
compared with 82 cents per pound in the third quarter of 2010.
Operating income slumped to $2.1 billion from $2.5 billion in the
year-ago quarter.
Freeport-McMoRan’s consolidated
sales from mines for the year 2011 are expected to approximate 3.8
billion pounds of copper, 1.6 million ounces of gold and 78 million
pounds of molybdenum, including 915 million pounds of copper, 305
thousand ounces of gold and 18 million pounds of molybdenum for
fourth-quarter 2011.
Based on current 2011 sales volume
and cost estimates and assuming average prices of $1,600 per ounce
for gold and $14 per pound for molybdenum for fourth-quarter 2011,
consolidated unit net cash costs (net of by-product credits) are
estimated to average $0.95 per pound of copper for the year
2011.
Based on current 2011 sales volume
and cost estimates and assuming average prices of $3.25 per pound
for copper, $1,600 per ounce for gold and $14 per pound for
molybdenum for fourth-quarter 2011, operating cash flows are
estimated to approximate $7 billion for the year 2011. Capital
expenditures are expected to approximate $2.6 billion for the year
2011, including $1.4 billion for major projects and $1.2 billion
for sustaining capital.
Headquartered in Phoenix, Arizona,
Freeport-McMoRan Copper & Gold Inc. is engaged in mineral
exploration and development; mining and milling of copper, gold,
molybdenum and silver; as well as the smelting and refining of
copper concentrates.
The company conducts its operations
primarily through its principal operating subsidiaries, PT Freeport
Indonesia, Freeport-McMoRan Corporation (formerly Phelps Dodge) and
Atlantic Copper. Its major competitors include Newmont
Mining Corp. (NEM) and Southern Copper
Corp. (SCCO). It currently retains Zacks #4 Rank on its
stock, which translates to a short-term Sell rating.
FREEPT MC COP-B (FCX): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
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