Phoenix-based Freeport-McMoRan Copper & Gold Inc. said Wednesday that it will close its Sierrita Mine in Green Valley, cutting about 450 jobs as it imposes deep spending cuts brought on by falling oil and metals prices.
The company also said it won’t pay an annual dividend this year and will make more spending cuts.
Freeport had previously announced it was cutting 580 jobs at the copper and molybdenum mine as it downsized operations. The open-pit mine will now completely shut down, bringing more bad news to an industry that was once a linchpin of the Arizona economy but has also been subject to boom-and-bust cycles.
Copper prices are down about 27 percent this year at about $2 a pound, or less than half its peak in 2011.
“We all were hoping markets would recover, but that hasn’t happened,” Richard Bark, the company’s director of government relations, said in a letter to community leaders.
Copper prices have been soft in recent months, though the company believes the longer-term outlook for the industry remains strong.
Local leaders are reaching out to the company to find out what type of assistance it will provide to displaced workers.
Freeport-McMoRan has invested in oil and gas in recent years to go along with its copper business.
Slumping oil and gas production also has hurt sales of molybdenum, which is used to make high-strength steel widely used in the industry.
To combat weaker demand for oil, the company had announced plans to reduce spending earlier this year.
It also said in October that it was considering selling its oil and gas business, or finding another alternative, so it could focus on copper mining.
Effect on Sahuarita
Sierrita employed more than 1,300 workers before Freeport announced in October it would immediately cut operations there in half, lay off 430 employees and consider closing the mine. That came after the company announced 130 job cuts at Sierrita in August.
At the start of this year, Freeport was the ninth-largest employer in Southern Arizona, with 5,800 employees, the Star 200 survey showed.
Green Valley officials say the mining giant’s cuts will have a dramatic impact on the local economy, as many miners live there, and jobs aren’t easily replaced.
“It hurts Green Valley, but most of the workers live in Sahuarita,” said Don Weaver, president of the non-profit Green Valley Council. Sahuarita doesn’t have the age restrictions of most of Green Valley, where Weaver estimated more than 90 percent of neighborhoods are restricted to age 55 and over.
“It’s going to really hurt, and we’re sad — they’re good corporate citizens,” Weaver said.
“It’s just very sad,” said Sen. Andrea Dalessandro, a Democrat who represents the area around the mine. “It’s especially hard-hitting as we’re at the beginning of the holiday season.”
The company says the Sierrita Mine pumps $357 million a year into the local economy, including $255 million in taxes, wages and spending by the company and its employees.
On Wednesday, Freeport-McMoRan said it will cut spending in its oil and gas business to $1.8 billion next year and to $1.2 billion in 2017.
It previously expected to spend $2 billion in both years. The company said it is also negotiating lower costs with its rig vendors and other service providers.
Besides closing Sierrita, Freeport said it is considering selling minority interests in certain mining assets.
The company said that ending its 20 cent per share yearly dividend will save it about $240 million a year.
The cuts come six years after it appeared Freeport would expand operations in the area — with copper prices soaring then — when it purchased the adjoining Twin Buttes Mine in Sahuarita, which has been shut since 1994. But that mine has not reopened.
Shares of Freeport-McMoRan Inc. rose 25 cents, or 3.7 percent, to close Wednesday at $6.99 in trading on the New York Stock Exchange.