Despite lower copper prices, Freeport-McMoRan Copper & Gold, Inc., increased copper production 17 percent in the fourth quarter of 2013, as it continues an aggressive ramp-up of copper supply.
The aggressive expansion plans are part of an increase in supply that, along with lower Chinese demand, have deflated copper prices by 10 percent in the past year.
Freeport-McMoRan, the second largest copper producer in the world, posted a quarterly profit of $707 million, or 68 cents a share, down from $743 million, or 78 cents a share, in the fourth quarter of 2012. Overall sales improved 30 percent to $5.89 billion, due in part to the company's $9 billion acquisition of Plains Exploration & Production Co. and McMoRan Exploration Co., two U.S.-focused oil and natural-gas companies with which it already had close ties, The Wall Street Journal reported.
Freeport-McMoRan CEO Richard Adkerson said he wasn't souring on copper but wanted to diversity in "large-scale assets with long lives, low cost and geologic potential to support growth through exploration and development."
Freeport-McMoRan, which has a market cap value of around $36 billion, accounts for roughly 9% of global copper output.
On Jan. 22, Freeport said it planned to increase copper production 7 percent to 4.4 billion lbs in 2014. It plans to nearly double output at its biggest U.S. mine, Morenci, in Arizona to almost 1 billion lbs/year by 2015 from 564 million lbs in 2013.
Freeport remains embroiled in a dispute over licenses with the Indonesian government, which has sought to increase revenue from foreign mining companies.
In a bid to raise revenue and keep production inside the country, Indonesia imposed new rules on copper exports (ME, Jan. 13, 2014) which includes taxes on copper concentrates, a semi-processed ore. The government imposed a 25 percent tax in January and will increase the tax to 60 percent by 2016.
On Wednesday, Freeport said the taxes could be in violation of a previous agreement and that it would suspend exports from the country until it negotiates a deal with the Indonesian government. Freeport said it would defer exports of 40 million lbs of copper a month, equivalent to about 10 percent of its annual production.