Freeport McMoran's South American copper sales slide, but forecast to rise in FY2024

US mining company Freeport-McMoRan, which has operations in Peru and Chile, reported that copper sales from its South American deposits dropped in the first half of the year, but are still projected to increase in full-year 2024, according to its latest results presentation.

The firm's sales volume slipped 0.66% in April-June to 302Mlb (million pounds) or 135,171t, but the company expects Cerro Verde in Peru's Arequipa region and El Abra in Chile's Antofagasta region to contribute 1.165Blb (billion pounds) this 2024, above the estimates of 1.130Blb made at end-2023 and 1.145Mlb made at end-March.

In order to achieve the target of 1.165Mlb in 2024, the South American units will have to produce 579Mlb in the second half of the year.

This was stated by the company in its latest results presentation. According to Freeport, average processing rates at Cerro Verde rose significantly in 2Q24, which meant that the drop in sales volume was not as drastic as in 1Q24.

"Our Cerro Verde team had a solid 2Q24. Mill production exceeded 425,000t/d of ore, a strong recovery compared to 1Q24 – 397,000t/d," Freeport CEO Kathleen L. Quirk said in the results presentation. 

Although copper sales from the firm's South American units were down 3.3% year-on-year to 586Mlb in the first half of the year, the situations in Peru and Chile are somewhat different. In the case of Peru, Cerro Verde's accumulated sales volume for the period decreased 5.0% to 475Mlb. Meanwhile, output from El Abra was up 4.7% to 111Mlb in the period.

Freeport has a 53.6% interest in Cerro Verde and a 51.5% interest in El Abra.

INVESTMENTS

Company executives are optimistic about future investments in the region, particularly after announcing that they are considering spending US$7.5 billion to expand El Abra. They believe that the business climate has improved and there is a strong desire to invest in both El Abra and Cerro Verde.

"Peru is a challenging country, but we benefit from the work we've done with local communities. In Chile, our partner in El Abra is Codelco [which owns 48.5%], and they're very eager for us to move forward and are very supportive of the development of a relationship with President [Gabriel] Boric, who will join us on a panel in Peru this fall at the APEC Summit. His tone has changed significantly since his initial election period," said Richard C. Adkerson, chairman of Freeport's board of directors.

(This story was updated on 7-25-2024 to correct the production figure in the summary)