Freeport's Copper and Gold Sales Increase 70%
Freeport McMorran noted that sales of copper and gold in the first quarter of 2021 from its affiliate, PT Freeport Indonesia, rose more than 70% compared to the same period last year. This surge in sales reflects the continued increase in ore production from underground mines.
Freeport McMorran's official statement stated that Freeport Indonesia's copper sales as of the end of June reached 568 million pounds, an 89.96% increase compared to the same period last year of 299 million pounds. Furthermore, gold sales were recorded at 558 thousand ounces, up 74.92% from the first half of 2020 which was 319 thousand ounces.
The increase in sales was in line with the surge in production. In January-June 2021, Freeport Indonesia's copper production was recorded at 606 million pounds, an increase of 88.79% from the same period the previous year of 321 million pounds. Meanwhile, gold production reached 597 thousand ounces, up 75.07% from the previous 342 thousand ounces.
Freeport McMoran President and Chief Executive Officer (CEO) Richard Adkerson said the increase in production and sales was in line with the development of the Grasberg Block Cave underground mine and the Deep Mill Level Zone (DMLZ).
“In the second quarter, we managed to achieve just under 80% of our target annual run rates for metals sales. We are on track to achieve full rates for metal production by the end of this year," he said in a conference call for the Performance of Quarter II-2021.
Freeport McMoran's Executive Vice President & Chief Financial Officer Kathleen Quirk admitted that the realization of Freeport Indonesia's metal sales was slightly below the company's forecast for the second quarter. This follows the termination of operations at the port due to maintenance and bad weather at the end of the quarter. So, with high production volume, a lot of it goes into stock.
"This is just a short-term issue and we expect we can lower stock levels in the second half of the year," he said.
This year, Freeport Indonesia's copper sales are targeted to reach 1.33 billion pounds and gold 1.3 million ounces. This target is a significant increase compared to last year's sales of 0.8 billion pounds for copper and 0.8 million ounces for gold. The low sales realization last year was because the contribution from underground mining was not as high as it is today.
In the second quarter of 2021, according to Freeport McMorran's official statement, Freeport Indonesia's unit net cash costs were also recorded lower due to high sales volume. Freeport Indonesia recorded unit net cash costs of only US$ 0.25 per pound of copper compared to US$ 0.56 per pound of copper in the second quarter of 2020. Assuming a gold price of US$ 1,800 per ounce in the second half of 2021, sales volume and estimates At current costs, these unit net cash costs are estimated to be around US$0.19 per pound of copper in 2021.
Full Operation
Meanwhile, efforts to increase production at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines are progressing on schedule. In the second quarter yesterday, Freeport Indonesia managed to add 41 new draw bells at the two mines, bringing the total to more than 460 draw bells from the total target of 517 draw bells. Furthermore, total ore production reached 118,300 metric tons per day, up 20% compared to the first quarter of this year. The production level of this underground mine is around 78% of the annual target level.
“This is more than what was scheduled. We are optimistic that we can reach the 100% level by the end of this year,” said Adkerson.
Kathleen explained, in the second quarter, her company has successfully procured a second crusher at the Grasberg Block Cave mine which will add capacity to increase production to 130 thousand tons per day. It also started the construction of a third copper ore processing machine (semi-autogenous/ SAGmill) to pursue higher production levels.
“We also identified opportunities for investment in new ore processing which could help us to increase copper and gold production in Indonesia, through obtaining a higher percentage of valuable minerals at an early stage and the economics of this project are attractive enough,” said Kathleen.
The completion of this production increase will allow Freeport Indonesia to achieve an average annual production of 1.55 billion pounds of copper and 1.6 million ounces of gold for the next few years. Not only higher production, but Freeport Indonesia will also enjoy competitive unit net cash costs that can generate significant margins and cash flows. Correspondingly, sales of copper and gold will also creep up and reach their highest point in 2023, namely 1.7 billion pounds for copper and 1.8 million ounces for gold.
Investor Daily, Page-10, Monday, July 26, 2021
0 Response to "Freeport's Copper and Gold Sales Increase 70%"
Post a Comment