Freeport-McMoRan chief bullish on gold
06:40 p.m Oct 08, 1998 Eastern
By Paul Simao
DENVER, Oct 8, (Reuters) - James Robert Moffet, chief executive of U.S. mining giant Freeport-McMoRan Copper & Gold Inc. (FSC.N), delivered a fire and brimstone rant against gold sceptics, currency traders and supporters of international bailouts on Thursday.
Moffet, known simply as ''Jim Bob'' in the tight-knit mining community, told an international gold conference here that the heavy selling of bullion over the past year had been shortsighted. He predicted the precious metal would return as an important hedge against international crises and financial uncertainty.
Gold tumbled this summer to 18-year lows near $270 an ounce, but interest in the metal has soared during the past six weeks as jittery investors reacted to falling international equity markets, the near collapse of a prominent U.S. hedge fund and a weaker U.S. dollar.
Gold closed at 298.80 an ounce on Thursday.
Moffet was clearly delighted by the modest comeback.
''Last year when I was here I said that maybe people, since they thought gold wasn't working anymore, were going to put cabbage behind their money. I think some of the people in the hedge funds wish they had,'' Moffet said in his trademark southern U.S. twang.
He also lambasted speculators for the recent currency crises in Asia and Russia and heaped scorn on the World Bank and International Monetary Fund for attempting a quick-fix solution to the problems of troubled economies around the world.
''We have to go back to stabilising the currencies and getting some political stability in the world instead of coming up with a 'black box solution.' Forget about the black box....the only long-term-capital is gold,'' Moffet asserted.
Although low gold prices have visited hardship and a general shakeout on the gold-mining industry, Moffet saw no need to pass the collection plate in Denver.
He said New Orleans-based Freeport, one of the world's largest and lowest-cost gold and copper producers, was well positioned to prosper during hard times.
Freeport, which is heavily invested in Indonesia, has focused on a two-part strategy designed to lower costs and increase copper and gold production.
''We are the lowest cost producer because of our high gold and silver credits and the high grades of copper ore, so obviously were are going to be the survivor,'' Moffet said.
Freeport's Grasberg open-pit mine, located in Irian Jaya, a part of Indonesia bordering Papua New Guinea, is the cornerstone of the company's operations, accounting for the lion's share of the 1.8 million ounces of gold and 1.2 billion pounds of copper produced in 1997.
Freeport expects the recent expansion of Grasberg's mine and mill facilities will increase production to 2.7 million ounces of gold and 1.7 billion pounds of copper this year.
''This ore body (Grasberg) contains more copper and gold than all the copper and gold that has ever been discovered in Papua New Guinea,'' Moffet said.
Freeport's shares closed down $0.25 at $11.56 on the New York Stock Exchange on Thursday.
Copyright 1998 Reuters Limited. |
