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Morenci Mine

Freeport-McMoRan has revised its operating plans in response to the COVID-19 pandemic and while General Manager Jeff Monteith announced Friday that the Safford operation “will not see any significant changes,” other officials said positions will be eliminated in Morenci and furloughs are planned.

In a letter to “community partners” released Friday morning Monteith said the global economy has prompted the company to devise a plan to “reduce capital spending, lower production levels, and lower operating administrative and exploration costs to preserve the company’s financial strength during this period of uncertainty.”

He said, however, that Safford won’t notice any changes.

Company spokeswoman Linda Hayes did not respond to requests for comment on Morenci Friday morning, but on Friday evening, she released the following statement via email:

“Morenci will be reducing mining and milling rates and implementing a new organizational structure during the next few weeks. The reorganization will include the elimination of some positions and a small number of furloughs.”

And in an email to Morenci employees obtained by the Eastern Arizona Courier, Senior Vice President Mike Kridel said the revised operating plan calls for the Morenci mill to be placed on “care and maintenance status.”

“We also are actively looking to replace contractors with Freeport-McMoRan employees to minimize the impact on our workforce,” Kridel wrote.

The new organizational structure will take place over the next few weeks, he said.

“During this time, we will communicate to those employees that will be moving to new roles and/or replacing contractors. This reorganization will include elimination of some positions and a small number of furloughs,” he continued.

According to Monteith’s letter, Freeport is adjusting “mine plans and corresponding mining and milling rates to maximize cash flow at lower copper prices.”

Monteith said the “main priority remains operating safely. However, we will continue cost-cutting and efficiency measures already in progress.”

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“In addition, exploration expenditures are being reduced and activities will focus on analyzing and incorporating data from historical drilling programs,” Monteith wrote.

Monteith’s letter concludes:

“Times are difficult, as the pandemic has left no business or industry unscathed. However, our company has substantial experience in successfully navigating challenging conditions. We are confident we will overcome the near-term challenges and remain confident about the long-term positive future of our business.”

According to a news release, Freeport indicated the revised operating plans for 2020 will result in the following:

• A $1.3 billion reduction in estimated operating costs (roughly 18 percent)

• An $800 million reduction in estimated capital expenditures (around 30 percent)

• A $100 million reduction estimated exploration and administrative costs (around 20 percent)

• An approximate 400 million pound reduction in the Americas 2020 estimated copper sales volumes (roughly 15 percent)

Freeport operates seven open-pit copper mines in North America — Morenci, Bagdad,

Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. The company has a 72 percent interest in Morenci.

Freeport reported a net loss attributable to common stock of $491 million ($0.34 per share) in the first-quarter of this year.

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