FCX expects South America's sales to approximate 1.2 billion pounds of copper and 95 thousand ounces of gold for the year 2012, compared with 2011 sales of 1.3 billion pounds of copper and 101 thousand ounces of gold.
Average unit net cash costs (net of by-product credits) for South America of $1.55 per pound of copper in third-quarter 2012 were higher than unit net cash costs of $1.15 per pound in third-quarter 2011, primarily reflecting higher mining and input costs, including energy, lower by-product credits and the timing of profit sharing.
FCX estimates that average unit net cash costs (net of by-product credits) for South America mining would approximate $1.50 per pound of copper for the year 2012, based on current sales volume and cost estimates and assuming average prices of $1,700 per ounce of gold and $11 per pound of molybdenum for fourth-quarter 2012.
Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia, FCX operates the world's largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia. PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and also silver.
Operating and Development Activities.
FCX has several projects in progress in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up over several years to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016. Substantial progress is being achieved to establish underground mine development and infrastructure required for large-scale underground operations. Development of both the Grasberg Block Cave and Deep Mill Level Zone is advancing. Access to these underground ore bodies is complete. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $700 million per year ($550 million per year net to PT Freeport Indonesia).
The high-grade Big Gossan underground mine, which began producing in fourth-quarter 2010, averaged 1,900 metric tons of ore per day in third-quarter 2012. Full rates of 7,000 metric tons of ore per day are expected in 2014.