In plush offices a stone's throw from virgin jungle, Chief financial officerSteve Jones says Freeport should still be digging for metal in Indonesia'sIrian Jaya province in 2050, based on ore reserves so far discovered.

The chances are there is a lot more ore out there in the highest mountainsbetween the Himalayas and the Andes.

"I think somebody will be mining from here 50 years from now. In 100 years,I think it is quite possible," Jones said in an interview.

Asia's economic crisis in the last two years has hit demand for copper inthe last two years. At the same time new sources came on stream in Chile.Copper prices slumped to 60 cents per pound this year, while gold pricesalso went down to as low as $2.60 per ounce. Both have recovered, butFreeport's bottom line was not spared, nor that of its parent, FreeportMcMoRan Copper & Gold Inc.

"We don't hedge either of our commodities so we are subject to thecyclicality of the commodity cycle. In '99 both of them hit all-time lows,"said Jones. "Copper will be down slightly. Gold will be down significantly."We really don't run our business by trying to predict prices. We run ourbusiness by trying to be the lowest cost producer."

As the slump hit in 1998, New Orleans-based FreeportMcMoRan reported netincome of $118 million, down $90 million on the previous year. FreeportMcMoRan owns 81 per cent of Freeport Indonesia and is overwhelminglydependent on income from its operation in Irian Jaya.

Bad sentiment on Indonesia also hit the company's share price in the UnitedStates. Attracting funds into Indonesia has been difficult even for amassively profitable venture like Freeport, Jones said.

Exploration and some other budgets have been cut back, but Freeport willstill repay $270 million in debt in 1999.

Even at record low prices, Freeport's surreal operation at an elevation ofover 4,000 metres (13,120 ft) was still yielding operating profits of wellover 200 per cent.

"Given what commodity prices have been I think our results thisyear will be quite good compared to last year," Jones said. "In terms of netincome they will be down slightly. In terms of operating cash flow they willbe up."

The mine currently yields more than two million tonnes of concentrate peryear, which yields around 8,00,000 tonnes of copper metal. Gold productionin 1999 will be around 2.3 million ounces, Jones said. It also produces asmall amount of silver.

Next year's copper production will be around the same, he said. Gold will bedown slightly due to a lower gold content in the next layers of ore.

Current prices have been fluctuating around 80 cents per pound for copperand $2.80 an ounce for gold and predictions are both will go up, butFreeport will not be banking on that.

"We are not going to do an exploration that will require prices any higherthan that. The pessimism about the prices has changed. But we would not planon prices for our commodities going back to $1.30 for copper or $3.50 forgold."

What may change is the amount of ore processed. Current capacity is around2,00,000 to 2,20,000 tonnes a day. Production is 90 per cent from themassive Grasberg pit, where ore is stripped off, sent to a mill where it iscrushed and treated, then piped to the coast as a concentrate which isshipped to smelters.

Jones says the firm is looking at adding additional capacity for another50,000 to 60,000 tonnes of ore a day, but no firm plans have been set."We are continuing to study that and probably some time in the second halfof 2,000 we will announce some sort of a firm prediction as to where wewould go."