Sierrita mine shutdown confirmed, to put 1,000+ out of work
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Sierrita mine shutdown confirmed, to put 1,000+ out of work

More than a thousand Southern Arizona miners will soon be on the unemployment line, with Freeport-McMoRan announcing Wednesday that the Sierrita open pit mine in Green Valley will be completely shut down.

The mining giant had announced in October that it would lay off about 430 workers at the mine, and would explore closing it completely. Freeport also announced the closure of the copper mine in Miami, north of Tucson.

The ending of mining operations will affect about 450 more workers than those included in layoffs announced over the past several months, company officials said.

About 1,300 workers were employed at the Sierrita mine in October, a company spokesman said. Production at the mine was already set to be cut in half in January, with about 130 layoffs announced in August. A skeleton crew of about 250 will be kept on to maintain the mine, which will allow the company to avoid triggering reclamation and cleanup obligations at the site.

"While the mine and mill will move to care and maintenance mode, operations of the moly leaching and packaging facilities and residual copper leaching and cathode production will continue," Freeport-McMoRan spokesman Eric Kinneberg said.

The company, the world's second-largest copper miner, announced Wednesday that it was suspending its stock dividend, cutting production of copper and molybdenum, and reducing capital investments by hundreds of millions of dollars. Ending the 20-cent dividend will save the company about $240 million per year. In March, Freeport slashed its dividend from $1.25 annually.

The company did not release a timeline for the shutdown, but under the federal WARN Act, large employers must provide a 90-day notice of layoffs.

From Kinneberg:

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Before implementing the full curtailment, the company will design and construct a system to effectively manage the water being pumped to control the sulfate plume downgradient from the Sierrita tailings impoundment, to be done in in accordance with requirements set forth by the Arizona Department of Environmental Quality. This water is currently being utilized in the concentrator operations. Until then, the mine will continue to run according to the current plan which includes reducing the mill throughput to 50 percent capacity in early January along with the associated reduction in force.

In October, Freeport said about 160 would lose their jobs in Miami, and another 210 jobs were being eliminated in New Mexico.

Low prices for copper and other minerals caused the Phoenix-based multi-national company to cut operations, the company indicated in a third-quarter financial report.

In a press release Wednesday, Freeport said "capital expenditures for 2016 and 2017 have been reduced further from $2.0 billion per year in 2016 and 2017 to $1.8 billion in 2016 and $1.2 billion in 2017, including idle rig costs. The revised plans, together with initiatives to obtain third party financing or other strategic alternatives, will be pursued with the goal of achieving funding for oil and gas capital spending within its cash flows and resources."

The company also said it was looking at selling a minority stake in some of its mining operations.

The company's shares rose about 4 percent Wednesday, to about $7 in afternoon trading. Earlier in the day, shares took a nearly 8 percent bounce on the news. FCX is down nearly 70 percent on the year.

The copper market has collapsed mainly because of a drop in demand from China, where the economy has slowed this year. That country makes up about 40 percent of the world's demand for copper.

"While copper prices have weakened in recent weeks and the near-term copper outlook is uncertain, we view the medium and longer term outlook positively, supported by copper’s important role in the global economy and limitations on global supplies," said James Moffett, the company's chairman.

Freeport-McMoRan had increased its North American production sharply in 2014, with a 19 percent increase over the prior year. That bump was mainly driven by the ramping up of milling activity in Morenci.

Mining at the Sierrita facility, which employed about 1,300 people a year ago, was already slowed when about 130 people were cut from the payroll in August. Production has been cut in half at the mile-wide, 1,400-foot deep open pit, the company said.

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Mining operations will end at the Miami open-pit, north of Tucson in the Globe-Miami copper mining district. About 1,000 workers were employed at Freeport's Miami operations last year.

About 160 jobs were being cut there, and the operation will employ about 780 people "once all of the changes have been implemented," the Freeport-McMoRan spokesman said in an October email. The company has a smelter and rod mill operation in Miami.

The company is also cutting production at its Tyrone mine near Silver City, N.M., by 50 percent. That mine had more than 1,600 employees at the end of last year, the company said.

About 210 jobs are being cut at the New Mexico site because of the reduced mining activity there, with the Tyrone operation expected to have about 400 workers after the cuts, Kinneberg said.

The job cuts will likely be made sometime in January, company officials said.

The Sierrita mine produced about 140 million pounds of copper and 17 million pounds of molybdenum for the first nine months of 2015. The total cutback at the mine will be about 100 million pounds of copper and 10 million pounds of molybdenum annually.

The company has cut about 250 million pounds of copper and 20 million pounds of molybdenum per year when combining the latest cuts with previously announced curtailments in production, the company reported.

The Miami mine had produced 33 million pounds of copper for the first nine months of 2015, while about produced 65 million pounds of copper was mined at Tyrone in the same period.

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2 comments on this story

2
1 comments
Dec 9, 2015, 5:39 pm
-0 +0

Copper prices go up and down like everything else.  Hudbay Minerals will most likely wait until the price of copper recovers.  In the meantime they will continue to perform the things they need to do to get the permits they require to develop this important resource. 

The demand for copper by modern society is not going to decrease.  It’s just a matter of time.. Someone will mine copper at Rosemont.  You can make book on it.

1
1 comments
Dec 9, 2015, 1:39 pm
-0 +0

Mmmm.  And so Hudbay thinks they’re going to open the Rosemont Mine while this mine is shutting?  When the Sierrita Mine is already open and operating?  Having the infrastructure in place is a big advantage, even though the ore grade may be lower.  Hudbay needs to be rethinking what they’re doing if they aren’t already.

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Click image to enlarge

courtesy Freeport-McMoRan

The Sierrita mine in Green Valley, south of Tucson.

Freeport mining layoffs

Freeport-McMoRan has announced layoffs at several points over the past several months, including:

  • August: 130 layoffs at Sierrita
  • October: 430 layoffs at Sierrita, 160 at Miama, and 210 at Tyrone, N.M.
  • December: 450 workers cut at Sierrita