Freeport Indonesia, the local unit of the world’s largest copper and gold miner, has revised down its sales targets for this year as the company decided to delay mining a high-value seam at its open-pit mine amid slower overall progress at its underground mine.
The gold miner revised its sales target to 340,000 metric tonnes of copper and 27 metric tonnes of gold, lower than previous estimates reported in April by about 226,000 tonnes of copper and 1.7 metric tonnes of gold, a report from parent company Freeport-McMoRan showed last week. Freeport Indonesia sold 383,000 tonnes of copper and 36 tonnes of gold in 2011.
“Freeport Indonesia’s revised sales… because of a deferral of access to high-grade material in the open pit… and a slower than expected ramp-up of the DOZ [deep ore zone] underground mine,” Freeport said in its report on Thursday.
Freeport Indonesia said it sold 83,000 tonnes of copper and seven tonnes of gold in the second quarter, lower than sales of 120,000 tonnes of copper and 9.3 tonnes of gold in the same period last year, “primarily reflecting anticipated lower ore grades and production rates.”
During the fourth quarter of 2011 through the first quarter of 2012, the firm’s operations were disrupted by a strike of local workers calling for wage increases.
But the company said that from April to June, its operations ran normally. “Freeport Indonesia’s milling rates averaged 179,500 metric tonnes of ore per day in the second quarter of 2012, compared with the first-quarter 2012 average of 114,800 metric tonnes of ore per day,” the company said.
The parent company expects sales from Indonesia to increase in 2013 as Freeport Indonesia gains access to higher ore grades in the Grasberg mine and as its high-grade Big Gossan underground mine is expected to reach capacity of 7,000 tonnes of ore per day in 2013.
“Altogether, these mines are expected to increase production over several years to approximately 240,000 metric tonnes of ore per day following the currently anticipated transition from the Grasberg open pit in 2016,” Freeport said.
Freeport Indonesia is developing large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. It allocated about $700 million a year in investment for those projects over the next five years.
The revised target came after Freeport Indonesia said earlier this month it was considering an initial public offering to abide by government rules on foreign ownership.