Reuters Summit-Freeport cautious,while Goldcorp bullish

25 March 2009 | 05:40 Code : 18881 Geoscience events
Freeport-McMoRan Copper and Gold’s chief executive is making no promises...

Freeport-McMoRan Copper and Gold’s chief executive is making no promises on restarting the company’s dividend and warned Monday a further drop in copper prices could force more output cuts.Freeport CEO Richard Adkerson’s comments came at the Reuters Global Mining and Steel Summit. Asked if he could tell shareholders a dividend, Adkerson said: "In the near future, no, I can’t assure them that."Also at the summit, a top official for the United Steelworkers predicted more job losses among North American unionized workers, but Goldcorp forecast heady days for precious metals miners.In December, Freeport, the world’s No. 2 copper producer, suspended its dividend, slashed capital spending by more than half and lowered copper output, due to metal prices that have fallen by more than half on the year.Adkerson also declined to speculate whether copper prices as a whole might turn higher or fall further."I feel very good about what we’re doing right now," he said of the company’s output cuts. "But those plans were developed with the scenario of $1.40 copper and if the price were to go below $1.25 copper we’d have to do other things."Copper was trading around $1.65 a pound Monday, after rebounding from below $1.30 a pound as recently as December.Adkerson said he believes a near-term change in the copper price depends on China, which had fueled a run-up in the prices over the last few years as it built up its infrastructure.The global recession and financial crisis have slammed copper, as well as other industrial metals such as nickel, zinc, and aluminum, resulting in job losses across the mining sector.In a separate discussion, Ken Neumann, the head of the Canadian branch of the United Steelworkers union, predicted more layoffs across several sectors before a bottom is seen."We’ll probably see a reduction of 10-15 percent of our workers globally (from the beginning of the crisis)," he said, referring to layoffs across the full spectrum of North American workers represented by the union.One of the few sectors barely touched by the crisis has been the gold industry. A top executive from large-cap producer Goldcorp predicted stronger gold prices and below-estimate costs would pad the company’s bottom line going forward.Goldcorp CEO Chuck Jeannes said the precious metal could see volatility, but should soon push back above $1,000 an ounce due to safe-haven demand, fears of long-term inflation and a 1684366188"I’ve been saying that I see it trading over $1,000 and I see it staying there," he said.Spot bullion was at $920 an ounce Monday, and has been all over the board in recent months, dropping to around $700 an ounce in November and pushing above $1,000 last month.While the metal’s rise in recent years was obscured by soaring costs among miners, that trend appears to be reversing, said Jeannes, pointing to costs in the fourth quarter that declined due to falling prices for oil, steel, equipment and reactants.Jeannes expected this to continue, and the company has added currency hedges in its prime mining areas of Mexico and Canada to lock in the benefits of the recent decline in those countries’ currencies."We’re locking in the opportunity, all other things being equal, to better (our) cost guidance for the year," he said.Goldcorp fell 3.3 percent to C$36.50 on the Toronto Stock Exchange, while Freeport dropped 4.6 percent to $32.32 in New York.(For summit blog: (Additional reporting by Matt Daily, Steve James, Pat Fitzgibbons, Frank Tang, Carole Vaporean, Alden Bentley, Chris Kelly and Nicole Volpe; Editing by David Gregorio)

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