The revised FCX plan calls for reducing 2020 copper sales 11% to 3.1 billion lb from the 3.5 billion lb originally projected in January. Gold sales will increase slightly (1%) to 780,000 ounces (oz) from 775,000 oz. Molybdenum sales will decrease 9% to 80 million lb from 88 million lb. These projections are based on $2.30/lb copper while the original plan was based on copper at $2.85/lb. Capital expenditures for 2020 will decrease 29% to $2 billion from $2.8 billion projected at the beginning of the year.

FCX President and CEO Richard C. Adkerson said, “The prudent steps we are taking to safeguard our business, address costs and capital spending, and preserve our strong liquidity position are necessary to protect long-term asset values in the current weak and uncertain economic environment and to position us to ramp up and resume normal operations safely and quickly as health and economic conditions improve.” The company has suspended operations at the Chino copper mine in New Mexico because of the spread of COVID-19 among a limited number of employees. They continue to monitor, assess and update its COVID-19 related response, as needed.

Last year, FCX announced Innovation Initiatives at its North and South American operations. Capital projects, which were expected to total $150 million for the year and were projected to add approximately 200 million lb per year (lb/y) of copper beginning in 2022, have been suspended. Freeport operates seven open-pit copper mines in North America. Mining and milling rates for 2020 have been reduced by approximately 20%, resulting in a projected 12% decline in North America copper sales for 2020. The plans take into account the impact of currently suspended operations at the Chino mine.

FCX elected to complete the initial phase of the Lone Star copper leach project with a remaining investment of approximately $100 million in 2020. First production is expected during the second half of 2020. Initial production from the Lone Star copper leach project following a rampup period is expected to average approximately 200 million lb/y of copper, with the potential for future expansion options. In April, FCX entered into forward sales contracts for 150 million lb of copper. The forward sales provide fixed pricing of $2.34/lb of copper on approximately 60% of North America’s projected sales volumes for May and June 2020.

Freeport operates two copper mines in South America, Cerro Verde in Peru (in which FCX owns a 53.56%) and El Abra in Chile (in which FCX owns a 51%). Peru has extended its national emergency declaration through May 10. Cerro Verde has been placed on a care and maintenance. Compared with the January estimates, Cerro Verde’s mining and milling rates have been reduced by 13%, resulting in a decline in projected copper sales of approximately 130 million lb in 2020. Operating plans at El Abra have also been revised to incorporate lower mining rates, operating costs and capital spending.

In Indonesia, FCX has a 48.76% ownership interest in PT-fiand manages its mining operations. PT-fihas been successful in maintaining the health of its underground workforce. During first-quarter 2020, PT-fiachieved additional progress in increasing mining rates by adding a total of 49 new drawbells at the Deep Mill Level Zone (DMLZ) and Grasberg Block Cave underground mines to build scale. Combined average daily production from the DMLZ and Grasberg Block Cave underground mines averaged approximately 37,500 metric tons per day (mt/d) of ore, slightly above forecast and 44% above the fourth-quarter 2019 average. PT-firemains on track to continue to ramp-up production rates and expects 2021 production of 1.4 billion lb of copper (more than 75% above the current April 2020 estimate) and 1.4 million oz of gold (70% above the current April 2020 estimate).

The company is currently discussing with the Indonesian government a deferred schedule for the new Indonesian smelter. FCX intends to reduce production from the Climax open-pit mine in Colorado by approximately 50% for the remainder of 2020. The Climax mine produced 17 million lb of molybdenum in 2019. Exploration expenditures are being reduced by approximately 60% in 2020 (from the January estimate of $70 million to approximately $30 million) and activities will focus on analyzing and incorporating data from historical drilling programs.