By Stewart Bailey

Nov. 18 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, fired 691 workers at its North American mines as part of a plan to reduce higher-cost output and delay some expansion projects.

Freeport, based in Phoenix, cut 402 positions at Morenci, 66 at Bagdad, 70 at Sierrita and 59 at Safford, all in Arizona, spokesman Eric Kinneberg said today in an e-mailed response to questions. Fifty-eight people were fired at the company's Climax project in Colorado and 36 at Tyrone in New Mexico, he said.

Chief Executive Officer Richard Adkerson, faced with plummeting metal prices and restrictive borrowing conditions, is trying to conserve cash by delaying expansion and paring copper and molybdenum production at higher-cost U.S. mines. Those actions mirror measures by other mining companies trying to maintain profit margins, including Lonmin Plc and Xstrata Plc. "It's prudent, given the cyclical deflationary spiral we're in," Michael Pento, who helps manage $1.5 billion including Freeport shares at Delta Global Advisors in Holmdel, New Jersey, said in a telephone interview. "I see a lot of projects being deferred or held in abeyance because it makes no sense to bring on new production."

Freeport dropped $1.12, or 4.8 percent, to $22.02 at 12:28 p.m. in New York Stock Exchange composite trading, taking this year's fall to 79 percent. The shares are the second-biggest decliner in the 16-member Philadelphia Stock Exchange Gold & Silver Index, which has slipped 55 percent this year.

2009 Profit Estimate

Assuming prices remain near current levels, with copper at $1.80 a pound, molybdenum at $14.50 a pound and gold at $763 an ounce, profit will plunge to 23 cents a share in 2009, JPMorgan Chase & Co. analyst Michael Gambardella said yesterday in a note to clients. That would be the lowest level since 2003, according to Bloomberg data.

Under that scenario, Freeport's operations would generate $2.2 billion in cash, Gambardella said. That compares with a capital budget of $2 billion, payments of $255 million to holders of preferred shares and a dividend of $764 million.

Freeport has said it will delay restarting the Climax molybdenum mine and the Miami copper mine in Arizona, as well as expansions at its Bagdad and Sierrita copper mines. The company also announced plans to cut production from its Henderson molybdenum mine in Colorado by 25 percent, or 10 million pounds.

Most of the fired employees "were recently hired, many in anticipation of expansions, which have been deferred," Kinneberg said.

Many workers probably will be rehired in 12 months to 16 months, once the current deflationary cycle ends, Pento said.