Phelps Dodge slices dividend

Denver — In an effort to save US$120 million annually, Phelps Dodge (PD-N) has cut its yearly dividend to US50 per share.

Ballooning energy costs in the wake of the California energy crisis have hurt the Phoenix-based copper producer, resulting in an operational loss in the first quarter.

The situation has been dire since the fourth quarter of 2000, when electricity costs at its southwestern U.S. operations increased to US11 per kilowatt-hour, more than three times the average price for the past five years, with no relief in sight.

In January, the company went so far as to warn more than 2,300 employees at copper mines in New Mexico and Arizona of possible shutdowns. The threat of mine closures still hangs over the operations.

“We have elected to reduce our quarterly dividend to US12.5 per share,” said Chairman Steven Whisler. “Our decision was based on a number of factors, including general economic conditions. The reduction will result in net cash savings of approximately US$120 million annually.”

Since 1996, the world’s second-largest producer of copper had paid an annual dividend of US$2 per share. The second-quarter dividend is payable on June 8 to shareholders of record at the close of business on May 18.

Also, Phelps Dodge says it has decided not to sell its Columbian Chemicals and PD Wire & Cable subsidiaries.