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Phelps shuttering plants
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June 30, 1999: 1:43 p.m. ET
No. 1 copper producer cutting 1,650 jobs as demand, prices decline
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NEW YORK (CNNfn) - Phelps Dodge Corp., the biggest U.S. copper producer, said Wednesday it is trimming output by a third and eliminating 1,650 positions to cut costs and streamline operations.
The announcement comes against the backdrop of slumping copper prices, which have suffered for the better part of two years due to slumping demand in the Far East. It also follows a similar announcement last Friday by Australian resource company Broken Hills Proprietary Co. to shutter its U.S. operations.
"We are facing the potential of an extended downturn in the price of copper and significant chance and uncertainty in key global markets for wire and cable," said Douglas Yearley, Phelps Dodge chairman.
In late May, copper prices bottomed at a 12-year low of $1,354.50 per metric ton, a drop of almost 50 percent from June 1997. The price of copper was quoted recently at $1,640 per metric ton.
All told, Phelps Dodge will eliminate some 1,650 positions from the various closures and consolidation, though the company likely will move workers to different areas of production and may even add positions as output at other plants increases, a company spokeswoman said. She declined to provide further details about the new positions.
The positions being eliminated will come from a variety of operations. Phelps Dodge (PD) said it plans to temporarily close its Hidalgo smelter in New Mexico and a portion of its Morenci mining complex. It also plans to scale back production at its El Paso refinery, cutting some 150 million pounds of annual copper production.
Phelps Dodge also plans to close two small wire plants in Montville and Fairfield, N.J., a plant in Hopkinsville, Ky., and some additional operations in Ecuador and Venezuela. On top of that, it said it will close a carbon black plant in the Philippines and shift that production to a new Korean plant.
The company also announced it is selling its South African fluorspar operations to South African Land & Exploration Co. for $12.3 million.
Specifically, 900 positions will be eliminated through plant consolidations and closures, 670 jobs will be removed by merging Phelps Dodge Magnet Wire, Phelps Dodge International and Phelps Dodge and 80 positions will be lost when the company closes Colombian Chemicals Co., its carbon black and specialty chemicals unit, the company said.
The restructuring is expected to result in an after-tax charge of $61 million, or $1.05 per share, in the company's fiscal second quarter. Phelps Dodge said it will spend about $26.2 million in cash and an additional $20 million through 2000 to cover the costs of moving people and equipment around.
--from staff and wire reports
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