Freeport-McMoRan revised its capital and operating plans in response to the recent decline in oil and copper prices resulting in reduced capital expenditures, lower production levels, and lower operating, administrative and exploration costs. Copper prices averaged $3.11/lb in 2014 and $2.69/lb in the six-month period ending June 30. During the third quarter of 2015, copper prices averaged $2.41/lb and they currently stand at $2.25/lb, near a six-year low.

Freeport’s long-term outlook for copper is positive. In the near-term, however, the company said it must respond aggressively to current market conditions by deferring investments and adjusting operations to maximize current cash flow while preserving its large mineral resources.

Freeport is now undertaking aggressive actions to modify its operations and spending plans to enhance its financial performance. The company has reduced its 2015 capital expenditure budget from $7.5 billion to $6.3 billion, including $700 million reduction in oil and gas spending and $500 million for mining. Capital expenditures for 2016 are expected to decline to a total of $4 billion, including $1.4 billion in mining projects, $600 million in mining sustaining capital, and $2 billion in oil and gas expenditures. The $4 billion figure is approximately 29% lower than the $5.6 billion estimate given in July.

“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,” the company said in a prepared statement.

The company is also planning to reduce copper sales to 150 million lb/y in 2016 and 2017, which would equate to a 20% reduction in estimated 2016 unit site production and delivery costs compared with estimates for 2015.

Since 2013, the company has pursued a business strategy that focused on completing three major organic growth projects in the U.S., South America and Africa, and on its long-term development plans in Indonesia, while aggressively managing operations to position the company for long-term free cash flow generation to be used for debt reduction.

Freeport successfully completed expansions at its Tenke Fungurume mine in Africa and its flagship U.S. Morenci mine, which are providing significant cash flows despite recent declines in copper prices. With the imminent completion of the Cerro Verde project and access to projected higher grades at Grasberg beginning in 2016, Freeport said it is positioned to generate strong cash flows for debt reduction.