As Freeport-McMoRan focuses on the $15 billion expansion of the Grasberg copper and gold mine in Indonesia it is facing rising costs, leading the company to report lower-than-expected quarterly profits. The news sent shares in the company down 8 percent.

The expansion project at the Grasberg Mine will convert the openpit mine into an underground operation. It is a complex and time-intensive process that is nevertheless essential to help Freeport-McMoRan stem an erosion in production.

Freeport said its costs would likely rise to $1.75 per pound of copper this year, the second consecutive forecast increase since January, surprising investors. The price Freeport receives for its copper fell 7 percent to $2.90 per pound in the quarter.

Copper production fell 18 percent in the quarter to 750 million pounds, more than many analysts expected, with the largest drop in Indonesia.
Shares of the company fell 8 percent to $12.49 in afternoon trading after the earnings miss on April 25. Broader markets were mixed.

Reuters reported that the stock had gained about 35 percent since January, outpacing copper prices.

Freeport Chief Executive Richard Adkerson said in an interview earlier this month that the Grasberg expansion will be the company’s main focus for the next two years and that Freeport will forgo any dividend raises or large-scale acquisitions in the interim.

The expansion will, Adkerson hopes, mark a pivot to massive growth for the company just as copper demand surges for use in electric cars and other electronics. But the growth comes at a high cost and is testing the patience of Wall Street, where investors often look for quicker paybacks on investment projects.

The Phoenix-based company posted first quarter net income of $31 million, or 2 cents per share, compared with net income of $692 million, or 48 cents per share, in the year-ago quarter.

Grasberg is also a major gold producer and output of gold and molybdenum also slipped during the quarter.

Freeport agreed last December to relinquish majority control of Grasberg under pressure from the Indonesian government, although it will remain the project’s operator.