FCX Freeport McMoRan Inc

By Chelsey Dulaney 

Freeport-McMoRan Inc. on Thursday cut its capital spending plans for 2016 by 29% and said it would reduce head count at U.S. mining operations as copper prices near six-year lows.

Shares, down 66% this year, rallied 4% in premarket trading.

The reductions come after the Phoenix-based miner cut its oil-and-gas spending plans earlier this month and said it would review its mining operations.

Freeport, which has been struggling with the impact of weak commodity prices, said it now expects capital spending of $4 billion next year, down from its July estimate of $5.6 billion.

At that level, spending would come in far below the $6.3 billion in expenditures Freeport is estimating for this year. Freeport has already pared its 2015 capital budget by about 16% since late 2014.

The 2016 forecasts include a 25% cut to mining spending and reductions in copper sales and site production, including a suspension of operations at its Miami mine and reductions at its Tyrone mine.

Freeport said it expects a 10% reduction in employees and contractors at U.S. mining operations.

The company cited recent declines in copper prices, which are nearing six-year lows, for the reductions. Freeport said it still has a positive outlook on its business, helped by limitations on copper supply.

The comments come after Freeport earlier this month cut its oil-and-gas capital spending views for 2016 and 2017 by $900 million to $2 billion a year. The company maintained its expectation for $2.8 billion in spending for this year.

Freeport said it also would look for strategic investors to help fund development at oil-and-gas and mining properties.

The company had said in July that it was prepared to scale back operations if commodity prices didn't recover after reporting its second straight quarterly loss.

A downturn in commodity prices has hit miners across the board. But Freeport is relatively fortunate to be mining copper and not iron ore. Copper, which is used to make wiring for cars and computers, and pipes for building, is scarcer than iron ore, a key ingredient in steelmaking. And Freeport has managed to keep costs at most of its mines far below current copper prices, helped by lower oil prices, the strong dollar and mining in developing countries.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

August 27, 2015 09:08 ET (13:08 GMT)

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