Freeport CEO Doesn’t See Evidence of China Copper Demand Easing

Freeport-McMoRan Copper & Gold Inc. (FCX), the biggest publicly traded copper producer, said demand in China is being sustained even amid concerns that purchases by the second-largest economy may be slowing.

“Presently we’re not seeing physical evidence of a significant change,” Chief Executive Officer Richard Adkerson, 65, said yesterday in an interview in London. “Sentiment has certainly changed and the concerns about China both within the country and from outside observers are changing but China continues to consume significant copper.”

Goldman Sachs Group Inc. yesterday cut its 12-month estimate for the metal used in homes, cars and power grids by 11 percent on concern demand from the biggest user will weaken. Freeport, which runs mines in Indonesia, Africa and the Americas, has said it plans to boost output more than 25 percent in three years.

“There are questions about the Chinese economy but the continued investment into infrastructure projects is very positive for copper demand,” said Adkerson, who’s worked with the Phoenix-based company since 1989, adding it’s “inevitable” the country will announce additional stimulus boosting demand.

At an International Monetary Fund meeting in Tokyo on Oct. 13 and 14, People’s Bank of China Deputy Governor Yi Gang said that while policy makers will provide “appropriate” stimulus to stabilize growth, the central bank’s main task is price stability. He warned that bubble risks remain in housing.

Political Imperatives

“There’s political imperatives about continuing to make investments because of the disparity in growth rates within the country and they’ve been clear in their five-year plan that that’s what they intend to do, so I’m very confident,” Adkerson said.

Copper has pared gains this year to about 6.5 percent after a 21 percent drop in 2011 as Chinese growth slowed. Weaker demand in Europe, Brazil and India, and more mine supply may see a surplus building from the second half of 2013, Goldman said yesterday.

“Our framework for forecasting Chinese construction, consumer appliance and auto-related copper demand points to substantial downside risks” after late next year, the bank said.

Copper will be $8,000 a metric ton in a year, down from a prior forecast of $9,000, the bank said. It kept three-month and six-month targets at $8,000 and $9,000. Three-month metal traded at $8,094.50 by 8:15 p.m. yesterday on the London Metal Exchange.

Second Quarter

Freeport rose 0.4 percent to $40.29 at the close yesterday in New York.

Freeport’s second-quarter net income fell 48 percent to $710 million, or 74 cents a share, from $1.37 billion, or $1.43, a year earlier, it said July 19. Revenue dropped 23 percent to $4.48 billion, beating the $4.43 billion average of 13 estimates compiled by Bloomberg. Copper sales slid to 927 million pounds from 1 billion pounds.

Freeport, due to announce third-quarter results on Oct. 22, will post earnings per share excluding one-time items of 72 cents, according to the average of 21 analysts’ estimates compiled by Bloomberg.

To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Oliva Sterns in London at osterns1@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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