Why most US copper comes from Southwest | 6
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Freeport CEO urges US aid to boost copper output US SOUTHWEST
| Incentives needed to offset low domestic grades
BY FRÉDÉRIC TOMESCO
U
nited States mining giant Freeport-McMoRan (NYSE: FCX) is calling on the Trump administration to sweeten incentives for domestic copper producers and cut permitting times to help offset weak metal grades, CEO Kathleen Quirk says. While U.S.-based miners enjoy lower tax rates compared with other jurisdictions, copper grades in the U.S. make investing in new domestic operations less attractive, Quirk said in an interview. Copper mines in the U.S. often have grades of about 0.3%, compared with 1% or more elsewhere, she said. “We have a challenge in the U.S. because the ore grades that we mine here are very low relative to what we mine internationally,” Quirk told The Northern Miner by videoconference in August. “Companies want to go where the higher grades are. If there are things in place that can help incentivize the production in the U.S., that would be an advance.” With annual output of about 4 billion lb. of copper and operations in countries such as the U.S., Indonesia, Chile and Peru, Phoenix-based Freeport is the world’s largest publicly-listed producer of the red metal. Its U.S. output,
The Bagdad mine in Arizona is undergoing a $3.5-billion expansion. FREEPORT-MCMORAN
which averages about 1.4 billion lb. a year, accounts for about 70% of the refined copper that’s produced in the country.
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“What we’re hoping to see more of in the future are incentives for upstream development.” KATHLEEN QUIRK CEO, FREEPORT-MCMORAN
Unit costs Operating costs vary greatly from country to country. While its unit costs in Indonesia are “close to zero” because the presence of a gold by-product generates substantial income, Freeport spends about $3 per lb. to produce copper in the U.S., Quirk says. And that doesn’t include the capital investments needed to start up a mine. A recent so-called Section 232 review into copper imports, which resulted in some foreign-produced goods being taxed 50%, did provide relief for U.S.-based miners, Quirk said. U.S. President Donald Trump ended up excluding refined copper
– the most widely imported form of the metal – from his planned import tariffs, surprising market participants and analysts alike. “When you look at our mining in the U.S., there are structural aspects that make it less economic than mining internationally,” the executive said. “So one of the things we are hoping for is for the U.S. to continue to look at policies that would help the domestic mining industry. The Section 232 investigation provided some tariffs and incentives for the U.S. manufacturing of copper, and what we’re hoping to see more of in the future are incentives for upstream development.” Favourable environment Other helpful steps would include permitting reform and production tax credits, Quirk said without elaborating. “Freeport in our view remains best positioned to benefit from 50% copper tariffs,” BMO Capital Markets mining analyst Katja Jancic said in a note following the release of the company’s second-quarter results in July. “Freeport’s U.S. operations have tailwinds that in Freeport 30 >
Colorado uranium | 12
Kathleen Quirk.
CEO, FREEPORT-MCMORAN PM44082538
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