Thousands of workers kicked off a weeklong strike at Freeport-McMoRan Copper & Gold Inc.'s (FCX) gold and copper mine in eastern Indonesia, demanding higher wages and protesting the dismissal of their union leaders.
The US mining giant insists that the work stoppage at the Grasberg mine in the remote province of Papua will not affect production. As per the company’s website Grasberg mine contains the world’s largest recoverable reserves of copper and the biggest single gold reserve.
The workers called for a re-negotiating contract and management failed to re-negotiate contracts seeking wage increases from $1.8 to $15 per hour as the workers argue that other Freeport workers around the world are paid at least $15-30 per hour.
Thousands of other striking workers, marching from the company's mine area Tembagapura, were expected to join the strikers, though union officials said some roads were being blocked by police, slowing their journey.
The company is working diligently with the union and employee leadership to resolve this work stoppage and has requested that employees return to work while this issue is being resolved.
In April 2011, the company released its first quarter 2011 earnings. It posted a net income of $1.5 billion or $1.57 per share in the first quarter of 2011, outshining the Zacks Consensus Estimate of $1.26 per share and the year ago net income of $897 million, $1.00 per share.
Quarterly revenues of $5.7 million surpassed the Zacks Consensus Estimate of $5.39 million and were up 30.9% year over year.
At the Indonesia Mining copper sales were lower at 278 million pounds in the first quarter of 2011 versus sales of 296 million pounds in the prior year quarter primarily because of timing of shipments. Gold sales however approximated first-quarter 2010 sales.
In 2011, Freeport expects to sell 3.9 billion pounds of copper, 1.6 million ounces of gold and 73 million pounds of molybdenum. For the upcoming quarter, the company projects sales of 965 million pounds of copper, 365 thousand ounces of gold and 17 million pounds of molybdenum.
The company expects average copper prices of $4.25 per pound, $1,400 per ounce of gold and $15 per pound of molybdenum for fiscal year 2011.
Operating cash flows are estimated to be $8.3 billion in 2011.
Freeport expects capital expenditures of $2.5 billion in 2011, of which $1.3 billion is expected to be spent on major projects which include underground development activities at Grasberg, construction activities at the Climax molybdenum mine and completion of the initial phase of the sulfide ore project at El Abra. In addition, FCX is considering additional investments at several of its sites.
Freeport has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term Neutral recommendation.
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