NEWS RELEASE

(PHELPS DODGE LOGO)
           One North Central Avenue, Phoenix, AZ 85004 (602) 366-8100

                                                           FOR IMMEDIATE RELEASE
                                                  MEDIA:           Peter J. Faur
                                                                  (602) 366-7993

                                                  INVESTORS:  Stanton K. Rideout
                                                                  (602) 366-8589


     PHELPS DODGE MINING CO., NEW MEXICO AMEND FINANCIAL ASSURANCE AGREEMENT

PHOENIX, OCT. 1, 2003 - Phelps Dodge Corp. (NYSE:PD) and the state of New Mexico
have amended the agreement they reached in May to provide for financial
assurance required as part of the closure and closeout plans related to the
operation of Phelps Dodge's subsidiaries at Chino, Tyrone and Cobre, the company
announced today.

The amendment increases the cash component of the financial assurance agreement
from $75 million to a benchmark objective of $109.8 million - including
projected trust earnings - by Dec. 31, 2008. It also allocates the amounts and
types of financial assurance required for each of the three New Mexico
properties.

The amendment does not change the major principles established in the agreement
reached in May. The total required amount of financial assurance remains at $484
million (net present value) for the three mines. Approximately 30 percent of
this amount will be provided through a combination of cash trust funds and
collateral; 70 percent will be provided as a corporate performance guarantee
from Phelps Dodge Corp. The portion of financial assurance covered by the
performance guarantee will be reduced over the next 10 years as reclamation
projects are completed at the three mine sites.

New Mexico and Phelps Dodge mutually sought to amend the agreement after a
subsidiary of Phelps Dodge Corp. announced that it had reached an agreement
to acquire the one-third interest of its partner, Heisei Minerals Corp., in
Chino Mines Co.  Heisei, a subsidiary of Mitsubishi Materials Corp. and
Mitsubishi Corp., said it decided to exit the partnership because Chino was
no longer a strategic fit with its business.

As part of leaving the partnership, Heisei has agreed to deposit approximately
$64 million in cash into an acceptable form of trust to cover its one-third
share of closure/closeout financial assurance obligations at Chino. Under the
terms of the amendment, the remaining financial assurance for Chino will be
provided by a corporate performance guarantee from Phelps Dodge Corp.


                                     -more-

FINANCIAL ASSURANCE                                                  PAGE 2 OF 2

At Tyrone, financial assurance will be provided with a combination of a cash
trust fund, collateral and a corporate performance guarantee. The trust fund
will be funded initially with $17 million. Phelps Dodge's Tyrone operations will
deposit a half million dollars into the fund on a quarterly basis until the fund
totals $27 million or until the collective total of the three trust funds
exceeds $109.8 million. Thirty percent of the net present value amount of
financial assurance initially required for Tyrone will be provided by a
combination of the cash trust fund and collateral. The balance will be provided
with a Phelps Dodge corporate performance guarantee.

The trust fund for Cobre will be funded initially with $1 million. Phelps Dodge
will deposit $100,000 into the fund on a quarterly basis until the fund totals
$3 million or until the collective total of the three trust funds exceeds $109.8
million. Thirty percent of the net present value amount of financial assurance
initially required for Cobre will be provided by a combination of the cash trust
fund and collateral. The balance will be provided with a Phelps Dodge corporate
performance guarantee.

Another component of the financial assurance agreement reached in May requires
Phelps Dodge to spend at least $30 million over the next 10 years on accelerated
reclamation activities in New Mexico. A list of projects and a schedule
acceptable to the state have been developed as part of the amendment.

Financial assurance is a requirement of two state laws, the Water Quality Act
and the Mining Act. Both laws require companies to provide financial assurance
to the state that reclamation and closure work can proceed at a mine site in the
event a company is unable to complete the work. Under New Mexico law, the
amounts are premised on hiring a third party to complete the necessary work. The
company plans to conduct the required reclamation at its New Mexico operations
at the appropriate time in the life of each respective mine.


In the past, the company has met its financial assurance obligations through
surety bonds. The insurance industry, however, no longer makes these bonds
available as an economically feasible means of satisfying financial assurance
obligations to support reclamation programs.

The amendment to the agreement, like the agreement itself, has the support of
the governor of New Mexico, the state's environmental secretary and the state's
secretary of energy, minerals and natural resources. The amendment is subject to
public review and comment as well as the completion of required permitting
processes.


Phelps Dodge Corp. is the world's second-largest producer of copper, a world
leader in the production of molybdenum, the largest producer of molybdenum-based
chemicals and continuous-cast copper rod, and among the leading producers of
magnet wire and carbon black. The company's two divisions, Phelps Dodge Mining
Co. and Phelps Dodge Industries, employ approximately 13,500 people in 27
countries.


                                     # # #