Saturday, April 11, 2009

Freeport sees 'substantial' progress at Tenke Fungurume project in DRC

Progress at the Tenke Fungurume copper/cobalt project, in the Democratic Republic of Congo has been “substantial”, Freeport McMoRan Copper & Gold communications vice president Bill Collier said on Thursday.

Freeport operates the project and owns an effective 57,75% stake, while Toronto-based Lundin holds 24,75% and DRC State-owned miner Gecamines owns the balance.

The company has begun commissioning activities on schedule, and has produced the first copper cathodes at the mine, Collier confirmed.

The project remains on track to ramp up to design capacity in the second half of the year.

Collier declined to provide details regarding ongoing talks with the government of the DRC, in connection with the mining contract review in the country.

“With regard to the contract review, we continue to work cooperatively with the government to resolve these matters promptly while project activities are progressing.”

Senior DRC officials have been quoted in the last few weeks as saying that the review was nearing completion and the Tenke Fungurume contract would not be "significantly altered".

The DRC began the review in 2007, focusing on contracts which were entered into during the country's 1998 to 2003 civil war and the subsequent transition period.

Both Freeport and Lundin have maintained throughout the process that their contract was negotiated transparently and legitimately, and would hold up to legal scrutiny.

Freeport CEO Richard Adkerson also suggested in January that low metals prices, and recent mine closures and curtailments in the DRC, may provide added impetus to reaching an agreement.

The $1,9-billion Tenke Fungurume mine will initially produce an average of 250-million pounds of copper and 18-million pounds of cobalt, but its owners have high hopes for significant expansions and even additional projects at the site.

Freeport, the world's biggest publicly-traded copper producer, has chopped copper and molybdenum production, deferred projects and suspended its dividend, in response to slumping prices and demand for the metals, but spending on Tenke Fungurume has continued uninterrupted.

Shares in the company rose 6,9% on Thursday morning, to $43,44 apiece by 11:48 in New York.

Copper prices have rallied this week, as inventories decline and on speculation that Chinese demand for the metal may increase. Copper for May delivery gained nearly 2,9% on Thursday morning, to $2,0560 /lb by 10:29 on the New York Mercantile Exchange's Comex division.