Mining giant Freeport-McMoRan Copper & Gold Inc. on Wednesday said first-quarter profit jumped sharply as it capitalized on surging prices of copper, gold and molybdenum.
The company reported net income of $897 million, or $2 per share, compared with just $43 million, or 11 cents per share, in the year-ago period when demand fell sharply due to the recession.
Revenue nearly doubled to $4.36 billion from $2.6 billion.
Rising metal prices far outweighed weaker sales of copper and gold. Copper volume declined 6 percent, but the company's average realized price doubled, to $3.42 per pound from $1.72 in the year-ago period. Gold sales slid 12 percent. The average sales price was $1,110 an ounce, up from $904 an ounce in the first quarter of last year. Molybdenum sales grew by 70 percent and prices surged.
Sales of gold and copper were down from a year ago in part because some mines produced lower grades of ore. Molybdenum sales rose as demand picked up. The metal is used to strengthen steel and in other products.
The company expects sales volumes in the second half of 2010 to be higher than the first half. For the full-year, Freeport-McMoRan projected sales volumes of about 3.8 billion pounds of copper, 1.8 million ounces of gold and 62 million pounds of molybdenum, which is used to strengthen steel. That compares with 2009 sales volumes of 4.1 billion for copper, 2.6 billion for gold and 58 million pounds of molybdenum.
Looking ahead, Freeport-McMoRan plans to ramp up exploration spending to $100 million for the year, compared with the $72 million it spent in 2009. The company wants to explore near existing mines to expand reserves.
Total capital spending for the year is planned for about $1.7 billion, up from $1.6 billion in 2009.
Separately, the company raised its cash dividend on common stock to $1.20 per share from 60 cents per share. The first quarterly dividend payment of 30 cents per share is scheduled for Aug. 1.
Freeport-McMoRan, based in Phoenix, mines key metals used to make a variety of products. Copper is used in wiring and plumbing for commercial buildings and homes, for electronics and in automobiles. Gold is bought by investors and is used in jewelry and other products.
The global mining giant has not seen much improvement in domestic markets for copper. It has benefited from robust demand in China where construction is under way on roads, buildings and other infrastructure projects.
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