Gold and copper miner Freeport-McMoRan Inc. (NYSE: FCX) announced Thursday morning that the company has revised its capital and operating plans in response to the recent decline in copper prices, resulting in reduced capital expenditures, lower production levels and lower operating, administrative and exploration costs.

The collapse in copper prices has been dramatic:

[London Metal Exchange] copper prices averaged $3.11 per pound in 2014 and $2.69 per pound in the six month period ending June 30, 2015. During the third quarter of 2015, copper prices have averaged $2.41 per pound and currently approximate $2.25 per pound, near a six year low.

The company cut its 2015 capital expenditure (capex) budget from the prior year’s level of $7.5 billion to $6.3 billion, and Thursday said it would reduce capex in 2016 to a total of $4 billion. Freeport now says it will cut $1.1 billion from its 2015 estimated major mining projects capex budget, bringing the 2016 estimate down to $1.4 billion from a late July estimate of $1.5 billion in spending. Including other mining projects, 2016 capex in the mining segment is now estimated at $2 billion, down from $3.5 billion in 2015.

Year over year, the oil and gas capex budget will decline from $2.8 billion in 2015 to $2 billion in 2016. In July, the company budgeted $2.9 billion for oil and gas capex.

ALSO READ: Oppenheimer’s 7 Bull Market Leaders to Buy After the Sell-Off

Freeport-McMoRan paid $20 billion for oil and gas explorers McMoRan Exploration and Plains Exploration and Production in 2012, and that acquisition worked out well for about a year before crude oil prices collapsed. The company’s long-term debt at the end of the second quarter remained slightly above $20 billion and its interest expense in the quarter came to $146 million.

The company also expects to lower its copper production costs by 20% in 2016 to about $1.45 a pound, compared with 2015 production costs. Adding in by-product credits of $6 a pound for molybdenum and $1,150 per ounce for gold, 2016 production costs fall to $1.15 pound.

The company said that it is “positioned to generate strong cash flows for debt reduction,” but that it has to take “aggressive actions to modify its operations and spending plans to enhance its financial performance.”

The company’s executives said:

The steps we are taking to reduce costs and capital expenditures will strengthen our financial position during a period of weak and uncertain market conditions and preserve our large resource base for improved future market conditions. We appreciate the support and focus of our global organization as we execute these plans. Our high quality portfolio of long-lived assets, flexible operating structure and experienced management team provide a solid base to address the current market conditions while maintaining an attractive portfolio of assets positioned for long-term success.

ALSO READ: 10 Stocks That Have Ignored the Recent Massive Sell-Off

The company also said it plans to fire about 10% of its employees and contractors at its U.S. mining operations. Freeport-McMoRan operates seven open-pit copper mines in Arizona and New Mexico.

In early trading Thursday morning, Freeport-McMoRan shares were up nearly 11.5%, at $8.83 in a 52-week range of $7.76 to $36.48. The low was posted Wednesday. The consensus price target on the stock is $19.61.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.