Copper miners squeezed by lower prices, higher labour costs
Major North American copper miners are likely to report a fall in second-quarter profits, as global growth concerns dented realised prices for the red metal and labour costs remained high.
Freeport-McMoRan, Southern Copper and Teck Resources are estimated to post a combined adjusted profit of $1.53-billion for the April-June quarter, according to data from Refinitiv, compared with $2.63-billion a year earlier.
The average copper price fell about 11% to $3.85/lb during the period, as per CFRA Research.
"Copper prices fell considerably in the first part of second-quarter before finding a bottom in late May, at which point it was able to regain some lost ground," said Steve Schoffstall of Sprott Asset Management.
He blamed fears of slowing global growth, particularly in top consumer China, for the decline in prices.
The drop knocked Freeport-McMoRan's earnings before interest, taxes, depreciation, and amortisation (EBITDA) by about $110-million, Wolfe Research said in a research note.
Freeport, which operates the low-cost, high-grade Grasberg mine in Indonesia, is also awaiting an export permit after the Southeast Asian nation banned raw mineral exports. The company has not shipped its materials since June 10 following the expiry of its export permit.
Bernstein sees labor costs, which account for 28% of site production costs, further decreasing margins for Freeport.
Southern Copper, on the other hand, may have the best chance to post a year-on-year rise in adjusted earnings, said Matthew Miller, analyst at CFRA Research, on higher production.
Freeport-McMoRan is set to launch the second-quarter earnings season for miners on Thursday, with Southern Copper, First Quantum and Teck scheduled to report next week
Comments
Projects
Latest Multimedia
Latest News
Showroom
We engineer an extensive range of underground drill rigs for mining development and production. Available in a variety of feed lengths, boom...
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
