(Freeport McMoRan earnings item updated to include analyst commentary and further details from the company's earnings release.)PHOENIX ( TheStreet) -- Freeport McMoRan ( FCX), the copper-mining giant, surpassed analysts' scaled-back expectations for its second-quarter earnings as copper prices took a nosedive during the period on evidence that China's economic growth had eased back from its breakneck pace. Freeport, which has largely relied on Chinese demand for copper and raw materials in general for its own bottom-line growth the last few quarters, said it earned $649 million, or $1.40 a share, in the quarter, better than the consensus Wall Street target of $1.31 a share, according to a survey of the sell side by Thomson Reuters.
In the second quarter, spot prices for copper averaged about $3.18 a pound, down substantially from the $3.42 the metal fetched in the first period of the year, when soaring prices allowed Freeport to exceed forecasts and post robust year-over-year comparisons. Despite the sharp rally in copper prices in recent sessions, the metal had declined enough in value since the spring that Freeport has reduced its forecast for copper's average selling price for the rest of 2010. In April, Freeport called for an average selling price of $3.50 a pound for 2010. Now, the company said it's assuming an average for the second half of the year of just $3 a pound. Freeport, which extracts gold as a byproduct at its massive copper mines, expects the yellow metal to average $1,200 an ounce in the second half of the year. Cash costs (including the sale of byprodcts) averaged 97 cents for every pound of copper removed from the earth during the second quarter, Freeport McMoRan said. That's higher than the 41 cents registered in the year-ago period. The company blamed the rise on an ongoing effort at its Grasberg mine to shift production in the enormous crater to areas with lower-grade ores -- a process called "mine sequencing." Almost 30 years old, Grasberg has yielded slowly dwindling ore grades -- at least in the open pit. Freeport is spending billions to finish construction on a complex of underground shaft mines at the site. The company continues to plan for capital expenditures in 2010 of $1.7 billion as it restarts mines and projects it had shut down or abandoned at the outset of the recession. But, Freeport said in its release, "A number of studies are ongoing, which may result in increased capital spending programs." -- Written by Scott Eden in New York Follow TheStreet.com on Twitter and become a fan on Facebook.