Phoenix-based mining giant Freeport McMoRan has announced plans to cut 10 percent of its employees and contractors at its United States mining operations.
The publically traded company, which operates seven open-pit copper mines in Arizona, points to a decline in copper prices, now approaching six-year-lows, as a primary reason for reducing its workforce.
Freeport McMoRan declined comment to KJZZ, but Arizona State University economics Professor Dennis Hoffman said the company, a major component in Arizona's economy, was in a tough position.
“The pressure to downsize when the price of your product is falling, due to no fault of your own, you’re put in a tough situation," Hoffman said.
Retired ASU business school dean Robert Mittlestaedt said even with this week’s market volatility, it likely wasn’t a hasty decision.
“I think it has a lot to do with the commodities market, but Freeport’s stock prices have been declining for a long time, and certainly they are obviously quite dependent on the commodities market, because they’re a copper miner, but they’re also the largest gold miner in the world," Mittlestaedt said.
Mittlestaedt said the recent economic downturn in China has reduced the demand for Freeport McMoRan's copper products, but that wild swings in the markets haven’t had a major impact on Arizona just yet.
Shares of Freeport McMoRan spiked nearly 29 percent on Thursday after the news of the impending cuts. That’s in part because of investor Carl Icahn's announcement that he has taken an 8.5 percent share in the company by acquiring a stake of 88 million shares.
