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Freeport-McMoRan is looking for ways to expand copper production, CEO says

12th June 2024

By: Bloomberg

  

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US copper giant Freeport-McMoRan believes it can unlock the equivalent of a large new mine by applying new processing technology at its existing assets, according to new CEO Kathleen Quirk.

Quirk, who steps into the role on Tuesday to become the only female CEO of a major listed mining company, said in an interview that Freeport isn’t under pressure to follow rivals like BHP Group in seeking acquisitions, and will instead focus on innovation to grow production and lower costs.

The new CEO takes the helm of a company that is riding high. Freeport is one of the largest producers of copper at a time when investors are piling into the market to position for future shortages — helping to drive prices to a record in recent weeks — while western governments are focused on securing supply of critical metals. The company’s shares have risen 30% over the past year, outpacing a 17% increase in copper futures.

Freeport is targeting annual production of as much as 800-million pounds of copper — equal to about a fifth of its current total — from technology that will enable it to extract metal it already owns but couldn’t previously access.

“I’m really focused on this issue, because when we look around, we know how hard it is to develop new supply,” said Quirk in an interview in New York, referring to the company’s copper leaching program. “You think about 800-million pounds of copper a year — that’s the size of a big mine. That’s meaningful. Our team is working very aggressively to get that done.”

Freeport’s targets are part of a wider race among the world’s biggest miners to solve a puzzle that has frustrated the industry for years: a common type of ore that is too difficult and expensive to extract copper from, and has typically either been left in the ground or piled up on waste dumps. BHP, Rio Tinto Group and Antofagasta are all either developing their own technologies or working with third parties to find solutions.

The effort has gained impetus as the industry faces a looming shortfall of copper. The metal is key to the energy transition, and annual demand is likely to double by 2035, according to some estimates. But metals producers have been hesitant to spend money on new mines, which are hard to find and increasingly expensive to build.

Last month, BHP abandoned a $49-billion bid for Anglo American Plc that would have been the biggest mining deal in over a decade, and was viewed as a sign that the biggest miners may find it more attractive to buy existing copper mines than build new ones.

“You’re looking at this situation with the market being so tight, and there are not obvious actionable projects that can fill that gap,” Quirk said. “That situation is causing us to be more innovative — to figure out how to help fill this gap.”

Freeport is already extracting an additional 200-million pounds of copper through the recovery process, and is targeting another 200-million pounds in the next two years. Over the next three to five years, it aims to develop the technology to extract 800-million pounds annually.

“We think we’re going to get there — it’s just a matter of time,” Quirk said.

The new CEO has worked at Freeport since 1989 and became chief financial officer in 2003 — the same year when outgoing CEO Richard Adkerson stepped into the top job. The two have worked closely together since then, and spent the last decade paying down debt and resolving a years-long ownership dispute with the Indonesian government.

Edited by Bloomberg

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