Sometimes results depend on how you look at them. For mining company Freeport-McMoRan Copper & Gold Inc., posting a 14% drop in net income for the second quarter compared to the same time last year doesn't look especially promising. However, if you look at the first six months of the year compared to 2007, you find that net income for that period actually rose by over 30%.
At least in that light, the IW 50 Best Manufacturer for 2008 seems to be progressing in the right direction. But in order to keep it going, Freeport's chairman of the board James Moffett and president and CEO Richard Adkerson explained that efforts are being made to further develop its large mineral positions in the Americas, Africa and Indonesia to their full potential.
"The results of our efforts are encouraging and we expect success in expanding our reserves and adding to our growth pipeline," Moffett and Adkerson said in a prepared statement. "We continue to focus on maximizing current production volumes which is enabling us to generate significant cash flows to invest in attractive organic growth projects and provide cash returns to shareholders."
Consolidated sales from Freeport's mines for the quarter totaled 942 million pounds of copper, 265 thousand ounces of gold and 20 million pounds of molybdenum. Copper and gold volumes were lower compared to the same quarter last year due to mine sequencing issues at the company's Grasberg mine in Papua, Indonesia, which accounts for 40% of the company's total copper reserves.
For the second half of the year, Freeport expected copper and gold sales to be approximately 400 million pounds and 350 thousand ounces higher, respectively, than the first half of 2008. However, those estimates changed slightly last week when the Grasberg mine had what the company called a "small-scale failure" that encompassed approximately 75,000 tons of material occurred at the mine.
At A Glance
Freeport-McMoRan Copper & Gold Inc.
Primary Industry: Primary Metals
Number of Employees: 25,400
2007 In Review
Revenue: $16.9 billion
Profit Margin: 17.57%
Sales Turnover: 0.42
Inventory Turnover: 4.73
Revenue Growth: 192.53%
Return On Assets: 55.23%
Return On Equity: 121.75%
There were no injuries or property damage and mining and milling activities are continuing normally, but access to certain sections will be restricted until remediation activities are completed and safe access to this mining area can be assured. However, that isn't expected to take place until October.
Initial estimates indicate approximately 150 million pounds of copper and 200,000 ounces of gold previously expected to be mined in 2008 will be deferred to future periods, but the incident is not expected to significantly affect long-term plans for PT Freeport Indonesia, the subsidiary who owns the mine.
On the morning of Sept. 12, just two days after the failure, Reuters reported that two small bombs exploded in Papua near the Grasberg mine. There were no casualties and Freeport Indonesia spokesman Mindo Pangaribuan told the news service that operations at the mine were not affected by the explosion.
"There are no victims and Freeport operations are running normally," Pangaribuan said. "Police are investigating the cause of the explosions."
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