Phelps Dodge flashes green light for new Arizona mine

Vancouver The board of Phelps Dodge (PD-N) has given conditional approval to develop a new mine in Arizona, at estimated capital costs of about US$550 million. The Stafford mine will be the first major new copper mine to be opened in the United States in more than three decades.

Once state permits are in hand, the company plans to start construction of a mine projected to produce about 240 million lbs. of copper per year. Production is slated to start in the second half of 2008, and continue for at least 18 years.

The mine project will employ up to 1,000 employees during the construction phase, about 400 permanent employees once the mine begins production, while generating spin-off benefits to local communities and businesses in Graham County. The company says the mine is designed to be “a showcase of mining technology,” and will be operated in an efficient and environmentally responsible manner.

The board also approved a two-for-one split of the company’s outstanding stock, along with a special dividend of US$4 per share (pre-split) and a regular dividend of US$0.37.5 per share (pre-split).

Last year, Phelps Dodge announced plans to return US$1.5 billion of its recent profits to shareholders, starting with a special dividend of US$5 per share in late 2005. The remaining US$1 billion will be returned to shareholders in 2006 through share repurchases or additional dividends. The company has been rolling in profits during the past several years, thanks to high copper prices.

The company also plans to use its profits to invest in existing businesses, improve the quality of its asset base, strengthen the balance sheet, and reward shareholders “meaningfully.”