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Freeport Lifts Force Majeure in Papua

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According to Reuters, Freeport Mc-Moran Copper & Gold Inc. (FCX) has lifted the force majeure that it declared in Jun 2013 on shipments from PT Freeport Indonesia’s (PT-FI) Grasberg mine in Papua. The force majeure came after an accident due to the collapse of a tunnel at the mine that took 28 lives.

While the accident occurred outside the area of mining operations, Freeport temporarily suspended mining and processing activities at the Grasberg complex as a part of the rescue and recovery operation.

The closure of operations at the world’s second largest copper mine affected production. The Indonesian operation lost about 125 million pounds of copper and 125,000 ounces of gold in the second quarter of 2013.

Freeport, which is among the prominent players in the mining industry along with Newmont Mining Corp. (NEM), Barrick Gold Corp. (ABX) and Kinross Gold Corp. (KGC), released second-quarter results in Jul 2013. The company reported earnings of 49 cents per share for second-quarter 2013, a decline of 33.8% from the year ago earnings of 74 cents. But it beat the Zacks Consensus Estimate of 41 cents. Profit slid 32% year over year to $482 million, hurt by lower price.

The results include net income of 27 cents per share related to the acquisition of Plains Exploration & Production Company and also McMoRan Exploration Co., both of which were completed during the second quarter.

Revenues fell roughly 4.2% year over year to $4.29 billion in the second quarter, missing the Zacks Consensus Estimate of $4.45 billion.
Copper sales from Indonesian mining operations fell around 14% year over year to 158 million pounds while production declined roughly 20% to 139 million pounds in the quarter, resulting from the accident at PT Freeport.

Freeport currently retains a short-term Zacks Rank #4 (Sell).

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