Freeport approves $4.5 billion mine expansion to boost US copper and molybdenum capacity

Freeport-McMoRan (NYSE: FCX) announced on November 4 that its board approved a $4.5 billion expansion and modernization of its wholly owned Bagdad copper and molybdenum operation in northwest Arizona. The project expands an existing mine site.^[1]

The company expects to more than double mining and milling rates—the amount of ore mined and ground for metal extraction. It expects Bagdad's total long-term annual copper production to exceed 400 million pounds after the expansion.^[1]

Board approval allows Freeport to move toward equipment purchases and construction. As the $4.5 billion program proceeds, mining equipment suppliers and engineering contractors could gain orders, while Freeport must spend capital before receiving revenue from the added output.^[1]

If the project reaches its production target, Freeport will have more copper to sell and US copper supply will grow. That would help meet buyers' needs, while the effect on copper prices and miners' profits will depend on demand, supply from other mines and project costs.^[1]

Impact

• Mining equipment and engineering servicesOpportunity

  Bagdad's expansion creates potential orders for equipment suppliers and engineering contractors. Revenue depends on when Freeport advances procurement and construction.^[1]

• Copper miningNeutral

  Freeport is expanding an existing mine to increase future copper sales volumes. Rival miners could eventually face more supply competition, with the impact depending on demand when the project enters production.^[1]