Freeport Copper Production Up 15.1%
Freeport McMoran, a shareholder of PT Freeport Indonesia, stated that Freeport Indonesia's copper production by the end of June reached 543 million tons, up 15.1 percent from the same period last year of 461 million tons.
Copper sales also increased to 518 million pounds compared to September-2019 which amounted to 464 million pounds. However, gold production actually decreased, namely to 577 thousand ounces compared to the third quarter of 2019 which reached 645 thousand ounces. Likewise, gold sales were recorded lower at 549 thousand ounces compared to the same period last year which touched 659 thousand ounces.
"Our team has achieved its quarterly sales target and continues to make good progress regarding the ramp-up (increase) of production from our underground mines, namely the Grasberg Block Cave and the Deep Mill Level Zone (MLZ)," President and Chief Executive Officer (CEO) Freeport McMoran Richard Adkerson in a conference call for the third quarter of 2020 performance.
According to him, this year is a challenge for his party after the completion of the mining of ore from open-pit mining at the end of last year. In 2020, Freeport started production of ore from underground mines at a very low volume. Then, the company was also hit by the fall in copper prices due to the Covid-19 pandemic. Operations have also been affected by the pandemic, ranging from handling materials to worker issues.
“This quarter we are facing temporary shutdowns and unscheduled maintenance issues. But we managed to achieve the target as planned, "added Adkerson.
At the end of the third quarter, Freeport managed to add 55 draw bells in Grasberg Block Cave and Deep MLZ, bringing the total to more than 300 draw bells. The average ore production from these two mines was also recorded to have reached around 60 thousand tons per day or 9% higher than the realization in the second quarter of 2020. However, this realization was 15% lower than the projection per July 2020 due to unexpected shutdowns. However, the production volume target can be achieved in the third quarter of 2020 due to the higher grade of ore.
"We will continue to pursue the metal production target which will reach 90% of the ramp-up target in the middle of next year," said Adkerson.
At the end of September 2020, ore production from Grasberg Block Cave and Deep MLZ reached around 94 thousand tons per day. This realization exceeds the estimated level of ore production at the end of this year of 88 thousand tons per day. Furthermore, the two underground mines are projected to produce as much as 1.4 copper billion pounds and 1.4 million ounces of gold in 2021, double the 2020 projection. Freeport Indonesia's CAPEX for underground mining projects
this is estimated at the US $ 900 million per year for the period 2020-2022.
Freeport's sales also increased in line with this increase in production. By 2021, gold sales from DMLZ and GBC are planned to increase to 1.4 million ounces and copper 1.4 billion pounds. Next, gold sales rose to 1.6 million ounces and copper 1.6 billion pounds in 2022. Gold sales peaked at 1.8 million ounces and copper 1.7 billion pounds in 2023. In 2024, gold sales fell slightly to 1,7 million ounces, and 1.6 billion pounds of copper. In 2020-2024, the average sales of gold are estimated at 1.6 million ounces per year and copper 1.55 billion pounds per year.
From these two underground mines, Freeport McMoran once projected a gross income of up to the US $ 150 billion. This figure is about 50% higher than those obtained over the past 30 years. This calculation assumes a production period of 20 years and a copper price of US $ 3 per pound and the US $ gold
1,500 per ounces. Adkerson said that the projected gross revenue calculation only counts during the Freeport contract period. However, the reserves in the mine can be produced until more than 2041, when Freeport's contract with the Indonesian Government ends.
"And I hope Freeport will continue to be involved [managing the mine] after 2041," he said.
Investor Daily, Page-10, Tuesday, Oct 27, 2020
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