Freeport to cut capital spending; shares rise
By Julie Gordon
(Reuters) - Freeport-McMoRan Copper & Gold Inc (FCX.N: Quote) reported a sharp drop in second-quarter profit on Tuesday and laid out a plan to cut medium-term spending in light of declining metal prices and global economic uncertainty.
The Arizona-based miner said it is clamping down on spending and has cut $1.9 billion in planned capital expenditures and other costs through 2014.
The news pushed the company's shares up 2.2 percent to $29.79 around midday.
"I think the stock is reacting positively because of the capex deferrals and exploration expense cuts - that's what the market wanted to see," said Garrett Nelson, an analyst with BB&T Capital Markets. "Investors want to see measured growth."
Nelson said plans to divest some recently acquired oil and gas projects in the Gulf of Mexico - the company closed a $19 billion takeover of two U.S. energy companies in the second quarter - was a positive, as asset sales could help reduce Freeport's high debt burden.
The company has committed to lowering its total debt load to $12 billion from $21 billion over the next three years.
The world's No. 1 publicly listed copper producer cut its full-year outlook for copper and gold sales after production was halted for nearly two months at its Grasberg complex in Indonesia following a fatal tunnel collapse.
Freeport now expects to sell 4.1 billion pounds of copper this year, down 5 percent from its previous forecast, and 1.1 million ounces of gold, down 21 percent. Continued...