Vancouver — Lower copper prices and higher energy costs took their toll on Phelps Dodge (PD-N) during the second quarter of 2001.
The world’s second-largest copper producer lost US$103 million, or US$1.31 a share, excluding one-time charges. This marks a reversal of fortune for the company, which posted a profit of US$4.5 million, or US6 per share, in the second quarter of 2000.
When including US$7.5 million in restructuring charges and nonrecurring items, the Phoenix-based company, which trails only Chile’s Codleco in world copper production, lost US$110.5 million, or US$1.41 per share. Sales fell to US$1.06 billion from US$1.11 billion a year earlier.
Despite the shortfall, Phelps Dodge says it will not extend Worker Adjustment and Retraining Notification (WARN) act notices, which expire next month, to 1,065 workers at its Chino and Tyrone operations in New Mexico. The act, which went into effect in 1989, requires employers to provide 60 days of advance notice of closings of plants with more than 100 workers.
On May 29, Phelps Dodge cut 15% of its workforce at Tyrone and extended WARN notices to about 480 Tyrone employees and 130 Chino workers.
“Our operations have not experienced the magnitude of power-related disruptions this summer we previously believed were likely,” says J. Steven Whisler, the company’s CEO. “With a current copper price of less than US70 per lb. and generally weak economic conditions, it is imperative we remain positioned to act quickly in the event further weakening in the economy negatively affects copper prices.”
The major saw its copper production drop to 293,800 tons during the quarter from 302,500 tons a year earlier. The drop is attributed to lower production from the Chino operations in New Mexico and operational changes at its Morenci operations in Arizona.
Copper prices averaged US75 per lb. in the quarter, down from the US80 per lb. in 2000.
Along with extensive copper operations, the major is the world’s largest producer of continuous-cast copper rod and molybdenum, as well as one of the largest producers of carbon black and magnet wire.
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