PT Freeport Indonesia (PTFI) prepared an initial investment US$3 billion to build smelter in the country, said its holding today (10/23) - Photo by Freeport Mcmoran

JAKARTA (TheInsiderStories) PT Freeport Indonesia (PTFI) prepared an initial investment US$3 billion to build smelter in the country, said its holding today (10/23). The construction of the smelter its expected begin in 2020 and ready to operate in Dec. 21, 2023

“In connection with the extension of PTFI’ mining rights from 2031 to 2041, we committed to construct a new smelter in Indonesia. A site for the new smelter has been selected and ground preparation is in progress,” said Freeport – McMoran Copper & Gold Inc. (FCX) in an official statement.

Currently, the Arizona’ miner has a 48.76 percent ownership interest in PTFI and manages its mining operations while PT Indonesia Asahan Aluminium (MIND ID). As a result of the December 2018 transaction regarding PTFI’ long-term mining rights and share ownership, FCX’ economic interest in its unit is expected to around 81 percent through 2022.

Currently, PTFI continues to mine the final stages of the Grasberg open pit and expects to complete mining in the open pit in fourth quarter (4Q) 2019, subject to geotechnical conditions. Unit of MIND ID has commenced production from its significant underground ore bodies and continues to achieve important milestones to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit.

The company’ estimated annual capital spending on underground mine development projects is expected to average $800 million per year starting 2019 to 2022. PTFI has commenced extraction of ore from the Grasberg Block Cave underground mine, which is the same ore body historically mined from the surface in the Grasberg open pit.

Ore extraction from the Grasberg underground mine averaged 10,600 metric tons of ore per day in 3Q of 2019 and is expected to ramp up to 16,000 metric tons of ore per day by the end of 2019. Cave expansion is expected to accelerate production rates from an average of 30,000 metric tons of ore per day in 2020 to 130,000 metric tons of ore per day in 2023. from five production blocks spanning 335,000 square meters.

During 3Q of 2019, ore extraction continues to exceed expectations, averaging 9,800 metric tons of ore per day and is expected to ramp up to 11,000 metric tons of ore per day by the end of 2019.

Freeport – Mcmoran reported until september posted a net loss attributable to common stock totaled $131 million or $0.09 per share. Consolidated sales totaled 795 million pounds of copper, 243 thousand ounces of gold and 22 million pounds of molybdenum in third-quarter 2019.

While, the consolidated production totaled 864 million pounds of copper and 333 thousand ounces of gold in third-quarter 2019. Full year, said the miner, the consolidated sales guidance is similar to prior estimates, with consolidated sales expected to approximate 3.3 billion pounds of copper, 874 thousand ounces of gold and 92 million pounds of molybdenum for the year 2019, including 870 million pounds of copper, 200 thousand ounces of gold and 24 million pounds of molybdenum in fourth-quarter 2019.

Average realized prices in third-quarter 2019 were $2.62 per pound for copper, $1,487 per ounce for gold and $12.89 per pound for molybdenum. Then, the average unit net cash costs in third-quarter 2019 were $1.59 per pound of copper and are expected to approximate $1.76 per pound of copper for the year 2019.

Operating cash flows totaled $224 million (net of $146 million of working capital uses and timing of other tax payments) in third-quarter 2019 and $1.3 billion (including $135 million of working capital sources and timing of other tax payments) for the first nine months of 2019.

Based on current sales volume and cost estimates, and assuming average prices of $2.60 per pound for copper, $1,500 per ounce for gold and $12.00 per pound for molybdenum for fourth-quarter 2019, operating cash flows are expected to approximate $1.6 billion (including $0.2 billion of working capital sources and timing of other tax payments) for the year 2019.

Capital expenditures totaled $700 million (including approximately $300 million for major mining projects) in 3Q of 2019 and $1.9 billion (including approximately $1.1 billion for major mining projects) for the 9M of 2019.

Capital expenditures for the year 2019 are expected to approximate $2.6 billion, including $1.6 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district in Indonesia and development of the Lone Star copper leach project in Arizona.

At Sept. 30, consolidated debt totaled $9.9 billionand consolidated cash totaled $2.2 billion. FCX had no borrowings and $3.5 billion available under its revolving credit facility at September 30, 2019.

Furtermore, on Sept. 25, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which will be paid on Nov. 1, 2019.

Richard C. Adkerson, president and CEO, said, “We are effectively executing our plans to establish large-scale production from our significant high-grade, low-cost and long-lived underground ore bodies at Grasberg and advance the Lone Star project in Arizona as a new cornerstone asset in the U.S.”

He continued, “We remain focused on successful execution of our plans, which would enable us to increase copper production by 30 percent, gold production by 70 percent, reduce unit net cash costs by 25 percent and more than double operating cash flows in 2021 from 2019 levels.”

by Linda Silaen, Email: linda.silaen@theinsiderstories.com