Freeport-McMoRan 2Q Profit More than Doubles

PHOENIX, KOMPAS.com — Freeport-McMoRan Copper & Gold Inc. said Thursday that second-quarter earnings more than doubled as it produced and sold more copper and gold to take advantage of higher prices.

The Phoenix-based mining giant also said it is stepping up plans to expand or restart operations in the next few years at some existing mines to meet stronger global demand for its materials, particularly in China.

Freeport-McMoRan reported net income of $1.37 billion, or $1.43 per share, for the three months ended June 30. That compared with $649 million, or 70 cents per share, for the same period last year.

Excluding losses extinguishing debt early, Freeport-McMoRan earned $1.49 per share. Revenue increased 50.5 percent to $5.81 billion from $3.86 billion a year ago.

The results beat Wall Street estimates of $1.33 per share on sales of $5.69 billion, according to a survey by FactSet. Freeport-McMoRan mines ores that are used in basic construction and manufacturing. Copper is found in wiring, cables and pipes while molybdenum is used to strengthen steel. Gold largely is sold to investors and jewelry makers.

During the second quarter, the global economy showed signs of slowing. China has implemented measures to curb inflation and slow its robust growth. National debt worries hit the U.S. and Europe, and Japan has been dealing with the aftermath of a devastating earthquake and tsunami.

China, the world's biggest user of copper, reported slower industrial production in recent months but demand is expected to remain strong as the country continues to spend "tremendous amounts" on infrastructure and housing, Freeport-McMoRan president and CEO Richard Adkerson told analysts on a conference call.

"It is supported by the fact that there's clearly a de-stocking of inventories in China, even though they're taking efforts to slow the economy down," he said.

Argus Research analyst Bill Selesky said China and the Asia-Pacific region will remain key drivers for the mining company. However, he anticipates that China will continue efforts to lower inflation, which could affect near-term demand for copper.

During the second quarter, Freeport-McMoRan recorded a 38 percent increase in copper prices to $4.22 per pound and a 22 percent increase in gold prices to $1,509 an ounce. Molybdenum prices slipped by 2 cents to $18.16 per pound. Freeport-McMoRan capitalized on the price increases by increasing production by 4 percent for copper and 11 percent for gold.