Wed, 9 Oct 17:20:00 GMT
* Expects to sell 4.5 billion ounces of copper in 2014
* Maintains 5 pct cut in 2013 copper sales forecast
* Expects China copper demand up near 7.5 pct this year
By Maytaal Angel and Harpreet Bhal
LONDON, Oct 9 (Reuters) - Freeport-McMoRan Copper & Gold Inc , the world's No. 1 publicly listed copper producer, said it expects to sell 4.5 billion ounces of copper next year, but maintained its 5 percent cut in expected copper sales this year.
The company reduced its copper sales forecast to 4.1 billion pounds in July this year, following a tunnel collapse at its Grasberg complex in Indonesia, which killed 28 people and halted production for two months. [ID:nL1N0FT0FG]
Union workers at Grasberg, the world's second largest copper mine, are expected to sign a new contract within two weeks after reaching an agreement over wages, and the mine is currently operating at around 85 percent capacity. [ID:nL4N0HT1HF]
Javier Targhetta, Freeport's senior marketing and sales vice president, was optimistic the company's troubles were dissipating and that it would be able to both produce and sell more copper in 2014.
"Asian and U.S copper demand is strong. China will have higher copper consumption this year versus last. GDP growth in China is expected to be 7.5 percent, and copper consumption is not lagging too much behind that," Targhetta told Reuters on the sidelines of the LME Week industry gathering.
Freeport, however, will have to achieve this target with less money at its disposal. The Arizona-based miner is clamping down on spending and has cut $1.9 billion in planned capital expenditures and other costs through 2014. [ID:nL1N0FT0FG]
Mining companies around the world are struggling to eke out a profit, with sagging metal prices like copper - down some 10 percent this year - cutting into margins that have already been hit by soaring capital and operating costs.
In July, Freeport reported second-quarter net income of $482 million, down from $710 million a year earlier, as higher cash costs and a 10 percent drop in the realized copper price outweighed a 3 percent increase in copper sales.
TREATMENT CHARGES TO RISE
On the outlook for annual treatment and refining charges
(TC/RCs), which represent a cost for miners like Freeport, Targhetta said he expects charges to be settled higher this year but not by a large amount.
TC/RCs were settled at $70 a tonne and 70 cents a pound in 2013, and some smelters are expecting charges to rise to as much as $95 a tonne and 9.5 cents per pound for next year, buoyed by fees in the spot market reaching two year highs. [ID:nL5N0HD16I] [ID:nL6N0HX3GN]
"We think we might see a higher number than last year, but not a dramatic change," Targhetta said.
TC/RCs are paid by miners to smelters to refine concentrate into metal. As the supply of concentrate increases, the demand for smelting and the charges also rise.
A Reuters poll in July showed analysts expected the copper market to register a bigger surplus of 153,000 tonnes in 2013, compared to 98,500 predicted in the previous poll, with the oversupply increasing to 368,500 the following year. [MET/POLL]
"Maybe because of production increases in Grasberg, this would be reflected in the availability of more concentrate and we may accept ... that we will find a more balanced marketplace going forward," he said.
While the negotiations for next year's TC/RCs will begin during LME Week, an annual gathering of the global metals industry, miners and smelters are likely to settle the 2014 benchmark charges later in the year.
(Editing by William Hardy)