Freeport McMoRan is closing its Sierrita copper mine outside of Tucson, Arizona, and is considering selling minority interests in certain mining assets.
Freeport-McMoRan Inc. (NYSE:FCX), the world’s largest publically traded copper producer, took a page of Anglo American’s books Wednesday and announced it will continue with spending and production cutbacks as it battles to preserve cash in a deepening commodity
The fresh measures include cutting expenditures at its energy operations, additional restrictions in copper and molybdenum output and the suspension of its common stock dividend.
The company, the U.S. largest miner by market value and revenue, said the fresh measures include cutting expenditures at its energy operations, additional restrictions in copper and molybdenum output and the suspension of its common stock dividend.
Investors reacted positively to the news, with the stock jumping almost 10% to $7.41 in New York morning trading. Despite the rally, Freeport shares have fallen almost 70% so far this year.
The Phoenix-based company said scratching its annual dividend of 20 cents a share would save $240 million a year. It also said it will cut capital spending to $1.8 billion in 2016 and $1.2 billion in 2017, from already reduced estimates of $2 billion a year.
100 million pounds less of copper
Another decision unveiled Wednesday, was Freeport’s plan to reduce copper production by 350 million pounds, versus the previously announced 250 million. This, thanks to the closure of its Sierrita mine in Arizona.
Freeport, under pressure from activist investor Carl Icahn who acquired an 8.5% stake in the company last August, also said it was looking at the potential sale of minority interests in certain mining assets to provide funds to reduce debt.
The company is also shouldering a deepening rout in oil prices, which have fallen more than 60% since a 2014 peak. In that area, Freeport is cutting capital expenditures from $2 billion a year in 2016 and 2017 to $1.8 billion in 2016 and $1.2 billion in 2017.
The firm is also lowering rig utilization from three Deepwater Gulf of Mexico drill ships to one and it is in talks with providers to market idled equipment to third parties.
Freeport said it reached agreement with lenders on easing the conditions around its bank credit facility.