Morenci mine to cut 1,550 workers
By Dale Quinn
arizona daily star
Tucson, Arizona | Published: 01.10.2009

A major mining operation in Eastern Arizona plans to cut its work force in half in another round of layoffs since the bottom fell out of the copper market.

Freeport-McMoRan Copper & Gold announced Friday that it will let go of at least 1,550 employees at its Morenci mine by the end of March. Most of the workers will be put on paid leave starting Feb. 2, with a limited number being asked to work as needed until their scheduled layoff date, Freeport spokesman Richard Peterson said.

The layoffs are part of a cost-cutting plan to further reduce production at the mine due to lower copper prices, Peterson said.

Copper prices plummeted after reaching a peak spot price of $4.26 a pound on May 5. The spot price Friday was about $1.55 a pound.
Freeport employs 3,300 people at the Morenci operation, which is the highest-producing copper mine in North America. The new layoffs represent at least 47 percent of the work force.

They come on top of 402 job cuts at the mine that took place in November, when Freeport eliminated nearly 600 jobs from its four Southern Arizona mines.

The Morenci employees who live in company-owned housing will have to move when their jobs end, but the number of people who would be affected wasn't available, Peterson said.

Shares of Freeport, which are traded on the New York Stock Exchange, closed at $28.75 Friday, down 1.71 percent from the previous day's close and down sharply from last year's high of $127.24 in May 2008, according to Yahoo Finance.

Word of the closure rippled quickly through the small town of Clifton, near the mine.

Mike Mitchell, who owns a bar in Clifton called The Cave, said miners are his customer base, and job concerns have weighed heavily on their minds recently.

"It's all everybody talks about," he said.

The mine is the town's main employer, other than a few small businesses like his, Mitchell said.

"This town is going to be dead," he said.

Mitchell, 67, said his family has owned the bar in Clifton since 1894 and it has been at the same location since 1951, so he's learned to save money for lean times even when the copper market is good.

"People that have been here a long time know that copper is cyclical," he said.

Greenlee County, which draws 94 percent of its tax base from the mine, already has taken steps to tighten its belt in anticipation of the layoffs, said County Administrator Kay Gale. When the mine was ramping up its work force as copper's price climbed, the county didn't add jobs or increase its budget, Gale said.

"We've been through this before," she said. "We've had to deal with downsizing."

County officials will work to provide services even if the tax base shrinks, she said.

Liz Barker Alvarez, a spokeswoman for the Department of Economic Security, which handles unemployment claims, said Friday that she had not heard about the layoffs.

Coming into the holidays, DES was receiving 10,000 unemployment claims per week, and the mine layoffs "would add to the high number of claims we are already working to process," she said.

The job cuts at Morenci are indicative of the decreasing demand for copper and the "financial panic" that occurred in economic conditions after the price peaked, said George Leaming, owner of the Western Economic Analysis Center. But the market for copper should improve with time, he said.

In 2006 and 2007, the price peaked around $3.50 and then dropped to about $3, Leaming said.

A normal average for the price of copper is between $2 and $2.50, he said. At its peak last year, the price was nearly double that.

"Obviously it got too high, and it came back down," Leaming said. "If the U.S. government doesn't mess it up, everything should bounce back in a reasonable time."

StarNet: Freeport-McMoRan was ninth on the Star 200 list of Southern Arizona's largest employers in 2008. See the complete list at azstarnet.com/star200

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