TORONTO (miningweekly.com) – Freeport-McMoRan Copper & Gold said on Thursday it made a $640-million profit in the fourth quarter of 2011, a 57% drop from the same period last year as strikes and lower copper prices hit earnings.

While industrial action at its Peru and Indonesian operations led to a 13% drop in copper output for the quarter, the 823-million pounds the Phoenix, Arizona-based company produced for the three months was higher than the 800-million pounds the company guided in December.

Despite the production impact of strikes at the giant Grasberg mine in Indonesia and Cerro Verde in Peru, Freeport-McMoRan still achieved a record $4.6-billion in earnings for the year, 7% higher than the figure for 2010.

For the full year, copper sales came in at 3.7-billion pounds and the company sold 1.4-million ounces of gold, New York-listed Freeport-McMoRan said.

The company also sold 79-million pounds of molybdenum for 2011.

Capital spending was $785-million for the fourth quarter and $2.5-billion for the year, and the miner said it expected to spend $4-billion in capital during 2012.

CEO Richard Adkerson said he was upbeat about copper's prospects, provided the European debt problems did not spark another full-blown global financial crisis.

"China continues to be strong, despite concerns going into this year and throughout last year [about] credit tightening and inflation issues there," he said.

"We’re seeing a fairly positive outlook actually from our downstream customers in the US. Certain sectors are strong – automobiles and export-related sectors – there’s even some improvement in the construction business."

The estimated impact of the labor and pipeline disruptions, net to Freeport-McMoRan's Indonesian operations, totalled 165-million pounds of copper and 170 000 oz of gold for the fourth quarter, the company said.

The firm reached a new two-year labor agreement with Grasberg workers in December, and the operation should reach full output again during the first quarter of 2012.

Freeport-McMoRan received an average $3.44/lb of copper in the last quarter, compared with $3.93/lb in the same period in 2010, while the average price for the whole of 2011 was $3.99/lb – 17% higher than 2010's average.

Jeffries analyst Peter Ward said copper prices should improve this year, providing a boost to Freeport, which traditionally gave conservative production forecasts.

"Freeport is doing a better job of maintaining copper production than most other major copper producers," he added, singling out Rio Tinto and BHP Billiton.

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