(Recasts after conference call)
By Nicole Mordant
Jan 25 (Reuters) - Freeport-McMoRan Inc, the world’s biggest publicly-listed copper miner, warned on Wednesday that it would need to start slashing output and jobs at its Indonesia mine by mid-February if it fails to get an export permit from the government.
The Phoenix, Arizona-based miner also reported weaker-than-expected fourth-quarter earnings and cut its 2017 copper and gold production forecasts because it expects lower output at its massive Grasberg mine in Indonesia, sending its shares tumbling.
Freeport’s exports of copper concentrate from Indonesia have been halted since Jan. 12 when a ban on shipping semi-processed ore out of the Southeast Asian country came into effect to boost the local smelter industry.
The ban has removed more than 2 percent of supply from the global copper market, Jefferies analyst Christopher LaFemina estimates, a move that has helped copper prices hit two-month highs of $5,973 a tonne on Wednesday.
Freeport said it had told Jakarta that it would need to slash production at Grasberg to about 40 percent of capacity if it cannot export as it has limited amounts of storage for its copper concentrate.
It would need to reduce costs at the mine, its biggest, and suspend future investment worth billions of dollars on underground development projects and a second copper smelter in Indonesia.
Freeport has received “indications” from the government that it would be allowed to resume exports while it negotiates converting its contract of work to a special mining license under new mining sector rules unveiled on Jan. 12, Chief Executive Richard Adkerson said on a conference call.
A Freeport spokesman said earlier on Wednesday the company expected to resume exports from Indonesia “soon.”
The Indonesia situation “is likely to get worse before it gets better. It is bullish for copper, but will create continued volatility in the Freeport share price,” Jefferies’ LaFemina said in a note to clients.
Freeport’s shares were down 5.8 percent at $16.04 in early afternoon trade.
For each month it cannot export, output at Grasberg is expected to fall by about 70 million pounds of copper and 100,000 ounces of gold.
Freeport earlier reported adjusted earnings of 25 cents per share, well below analysts’ average estimate of 34 cents per share, mostly due to lower output from Grasberg where Adkerson said worker productivity was a problem.
Freeport also cut its previous full-year 2017 sales forecast. It now expects to produce about 4.1 billion pounds of copper and 2.2 million ounces of gold this year. (Additional reporting by John Benny in Bengaluru; editing by Paul Simao and G Crosse)