Freeport-McMoRan Poised to Become World's Biggest Copper Producer
Codelco's reign as the number one copper producer appears to be coming to an end.
U.S. based mining company Freeport-McMoRan, which currently owns the largest gold mine in the world, is forging ahead with plans to ramp up production with a $4.6 billion expansion at the Cerro Verde mine in Peru next year.
According to Bloomberg, the move will solidify Freeport in closing the gap with current world number one Codelco as well as place the company in a position for future dominance.
“They are making the right bet,” said Christopher LaFemina, an analyst at Jefferies LLC, who recommends buying Freeport stock. “If you are going to be leveraged to a commodity price, this is the right one. If you compare to iron ore or coal, copper is better.”
The timing of the expansion is rather surprising.
Anglo American and Teck Resources have postponed future investments as prices for copper continue to decline and Codelco is in the midst of executing its own expansion project, a $25 billion investment to expand its aging mines and search for new high-grade deposits.
The timing for the Chilean company may be a little too late. Freeport is expected to sell roughly 1.95 million tons of copper next year, compared to Codelco’s output of about 1.85 million. Even with Codelco’s record planned investment, the company’s production will only rise 10 percent as most of the spending will replace lost output, reports Bloomberg.
Freeport shares have lost 40 percent in the past six months and the company is one of the worst performing global mining companies tracked by Bloomberg.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.