Freeport-McMoran Copper & Gold Inc. (FCX), through its wholly owned subsidiary, Phelps Dodge Corporation (Phelps Dodge) is a copper, gold and molybdenum mining company. The Company’s portfolio of assets includes the Grasberg minerals district in Indonesia, which contains single recoverable copper reserve and the single gold reserve of any mine; significant mining operations in North and South America, and the Tenke Fungurume development project in the Democratic Republic of Congo (DRC). As of December 31, 2008, consolidated recoverable proven and probable reserves totaled 102.0 billion pounds of copper, 40 million ounces of gold, 2.48 billion pounds of molybdenum, 266.6 million ounces of silver and 0.7 billion pounds of cobalt. Approximately 35 % of its copper reserves were in Indonesia, approximately 31 % were in South America, approximately 28 % were in North America and approximately six % were in Africa. Approximately 96 % of its gold reserves were in Indonesia, with its remaining gold reserves located in South America. The molybdenum reserves are primarily in North America (approximately 85 %), with its remaining molybdenum reserves in South America.
FCX’s mining revenues during the year ended December 31, 2008, include sales of copper (approximately 76 %), molybdenum (approximately 14 %) and gold (approximately seven %). It has five operating copper mines in North America, four in South America and the Grasberg minerals district in Indonesia. It also has one operating primary molybdenum mine in North America. During 2008, approximately 60 % of its consolidated copper production was from its Grasberg, Morenci and Cerro Verde mines, and more than half of its mined copper was sold in concentrate, approximately 27 % as rod (principally from its North America operations) and approximately 19 % as cathodes. During 2008, approximately 55 % of its consolidated molybdenum production was from the Henderson molybdenum mine and approximately 45 % was produced as a by-product primarily at its North America copper mines. It also produces gold as a by-product at its copper mines, primarily at the Grasberg minerals district in Indonesia, which accounted for approximately 90 % of its consolidated gold production during 2008.
In North America, FCX has five operating copper mines: Morenci, Sierrita, Bagdad and Safford in Arizona, and Tyrone in New Mexico. In addition, the Chino mine in New Mexico was placed on care-and-maintenance status in December 2008. All of these operations are wholly owned, except for Morenci, an unincorporated joint venture, in which it owns an 85 % undivided interest. In addition to copper, the Morenci, Sierrita and Bagdad mines produce molybdenum as a by-product. In Indonesia, PT Freeport Indonesia operates the Grasberg minerals district. It has joint venture agreements with Rio Tinto plc (Rio Tinto), an international mining company, with respect to a portion of its mining activities in Indonesia. It owns 90.64 % of PT Freeport Indonesia and the Government of Indonesia owns the remaining 9.36 % interest. Its Grasberg minerals district also produces significant quantities of gold and silver as by-products. PT Freeport Indonesia also owns 25 % of PT Smelting, a smelting and refining company in Gresik, Indonesia. It produces molybdenum at its wholly owned Henderson molybdenum mine in Colorado. Additionally, it owns the Climax molybdenum mine in Colorado. In addition to its operating mines, it has mines in development. In Indonesia, it developing its underground mines. In Africa, it holds an effective 57.75 % interest in the Tenke Fungurume copper and cobalt concession in the DRC.
North America Copper Mines
The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. A majority of the copper produced at the North America copper mines is cast into copper rod by FCX’s Rod & Refining operations. The North America copper mines division includes Morenci and Sierrita as reportable segments. The Morenci open-pit mine, located in southeastern Arizona, primarily produces copper cathodes and copper concentrates. In addition to copper, the Morenci mine produces a small amount of molybdenum concentrates as a by-product. The Sierrita open-pit mine, located in Pima County, Arizona, primarily produces copper cathodes, copper concentrates and copper sulfate. In addition to copper, the Sierrita mine produces molybdenum concentrate as a by-product. Other mines include FCX’s other operating southwestern U.S. copper mines: Bagdad, Safford and Tyrone. In addition to copper, the Bagdad mine produces molybdenum concentrate as a by-product. Other mines also include FCX’s southwestern United States copper mines that are on care-and-maintenance status, including Miami and Chino.
South America Copper Mines
FCX has four operating copper mines in South America-Cerro Verde in Peru, and Candelaria, Ojos del Salado and El Abra in Chile. These operations include open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. The South America copper mines division includes Cerro Verde. The Cerro Verde open-pit copper mine, located near Arequipa, Peru, produces copper cathodes and copper concentrates. In addition to copper, the Cerro Verde mine produces molybdenum concentrate as a by-product. In the first quarter of 2009, FCX announced plans to temporarily curtail the molybdenum circuit at Cerro Verde. Other mines include FCX’s Chilean copper mines – Candelaria, Ojos del Salado and El Abra, which include open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. In addition to copper, the Candelaria and Ojos del Salado mines produce gold and silver as by-products.
Indonesia
Indonesia mining includes PT Freeport Indonesia’s Grasberg minerals district. PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and silver.
Africa
Africa mining includes the Tenke Fungurume copper and cobalt mining concessions in the Katanga province of the DRC. Construction activities are well advanced and initial production is targeted during the second half of 2009. The initial project at Tenke Fungurume is based on mining and processing ore reserves approximating 119 million metric tons with average ore grades of 2.6 % copper and 0.35 % cobalt.
Molybdenum
The Molybdenum segment is an integrated producer of molybdenum, with mining, sulfide ore concentrating, roasting and processing facilities that produce high-purity, molybdenum-based chemicals, molybdenum metal powder and metallurgical products, which are sold to customers around the world, and includes the wholly owned Henderson molybdenum mine in Colorado and related conversion facilities. The Henderson underground mine produces high-purity, chemical-grade molybdenum concentrates, which are typically further processed into value-added molybdenum chemical products. This segment also includes a sales company that purchases and sells molybdenum from the Henderson mine, as well as from FCX’s North and South America copper mines that produce molybdenum as a by-product.
Rod & Refining
The Rod & Refining segment consists of copper conversion facilities located in North America.
Atlantic Copper Smelting & Refining
Atlantic Copper, FCX’s wholly owned smelting unit in Spain, smelts and refines copper concentrates and markets refined copper and precious metals in slimes. PT Freeport Indonesia and the South America copper mines generally sell a portion of their concentrate and cathode (South America) production to Atlantic Copper.
