Southern Arizona’s mining outlook bleak due to global copper prices

Phoenix-based, multinational Freeport McMoRan Inc. and Asarco, the Tucson-based subsidiary of multinational mining giant Grupo Mexico, have fewer employees in Southern Arizona now than a year ago. It’s the first time since 2010 that Freeport reported year-over-year job reductions in this region and the first time since 2013 for Asarco.

In addition, Freeport, which plans to halt production at its Sierrita Mine near Green Valley this year, says it plans to reduce its current Southern Arizona workforce of 5,530 employees by the end of 2016. It shut down its Miami mine last year.

Asarco, after announcing a shutdown of its Hayden concentrator last year, plans no changes this year in its Southern Arizona headcount of 2,200, it told the Star 200 survey.

On the positive side, both companies still have more Southern Arizona employees today than they did six years ago. That year, Freeport had a workforce of 3,997 people here. Asarco had 2,125 Southern Arizona employees.

Since then, copper prices have skyrocketed, then swooned, due to a meteoric rise and then a sharp slowdown in economic growth in China. China consumes 40 percent of the world’s copper supply.

Most of this year, copper prices have been stuck in the $2- $2.25-per-pound level, barely half or less than half of what they were in late 2010 and early 2011.

Only a quarter of 16 traders, analysts and producers surveyed at an industry gathering in Santiago, Chile in the week of April 4-8 said copper has reached a bottom, Bloomberg News reported. The median forecast among the other 12 respondents was for prices to fall below $2 in the next year.

But Bloomberg recently reported as well that many copper companies around the world are reluctant to sell off their metal resource because they believe copper is one of the few metals expected to be in a shortage by the end of the decade.

Their reasoning is that low prices are cooling off investment in new mines, meaning that not enough mines are being built. At the same time, few experts are predicting that copper prices will return to even the $3 per pound level until late in this decade.

Freeport reflected this longer-term optimism in a news release in early 2016. It said the company “remains confident about the longer term outlook for copper prices based on the global demand and supply fundamentals.”