Freeport McMoRan Can Adjust if China Growth Slows: CEO
Slowing manufacturing demand for copper in China and throughout southeast Asia did not put much of a dent in Freeport McMoRan's second-quarter earnings.
But the company could adjust if growth falls too low, CEO Richard Adkerson told CNBC Thursday.
Freeport beat expectations, reporting net income of $1.37 billion, or $1.43 per share, for the period from $649 million, or 70 cents per share, a year ago.
China uses 40 percent of the world's copper, Adkerson said.
"China is the risk to the copper price today," he said. "If something were to happen with China I believe it would be temporary. The forces that have been unleashed for the global growth are not things we’re going to have to go back on."
But if necessary, the copper and gold miner would cut back on production as it did in 2008 and 2009 during the U.S. financial crisis.
Copper is priced at about $4 a pound, about four times Freeport's net unit cost of production.
"In a world that’s relatively weak, this is a remarkable copper price," he said. "We’re prepared for whatever the world brings to us but we’re very optimistic on any kind of long-run view about our business."
At the same time China's central bank is trying to cool down the economy "the country is spending tremendous amounts on infrastructure," said Adkerson, who added that industrial production in China was up 15 percent in June.
"There are many uncertainties in the world, but underlying that we have steady business" in the U.S. and Europe, Adkerson said. Freeport is making "significant investments to increase production. The challenge in our industry is you can’t turn production on with a spigot. That’s why the cost is so high."