Freeport said during its annual LME week in London last week that it was in no rush to move ahead with a project to double the capacity of the concentrator. Company representative Quirk said the feasibility work on the Bagdad project is nearing completion and will be the basis for the company to decide when to proceed with the project. She added that copper prices of $3.50 per pound could not support the project.
Quirk said the project could be approved if copper prices stabilize around $5 a pound, but the company is in no rush to expand given current levels of copper prices, capital costs and tight labor supplies. She noted that while there was weakness in some U.S. market segments, there was growth in areas such as data center wiring, offsetting weak manufacturing data.
Freeport is moving forward with plans to expand tailings infrastructure projects to support Bagdad's long-term strategy. The company has previously said that the timing of future development will depend on market conditions, labor and supply chain considerations, and other economic factors. In the meantime, Freeport is using new technologies to improve the recycling of materials from existing leaching operations.
Quirk said about half of the company's leach inventory is located at its open pit copper mine in Morency, Arizona, with about 16 percent at its South American plant and the rest at its other operations in the United States. "What's exciting about this leaching technology is that in a world where the cost of capital is so high and labor supply is so difficult, we can create value through this technology without having to write big checks for capital projects and try to find workers that aren't available," she said.
The supply gap comes as demand for copper is expected to be strong in the future due to a lack of new projects and its use in commodities critical to the energy transition, such as electric vehicles. Quirk said: "Right now, we are seeing a number of positive and negative factors affecting project decisions that are unpredictable in the short term. But in our view, it's not the next three months, it's not even the next 18 months, it's the long term because we're in the business for the long term."
