EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

 
One North Central Avenue  §  Phoenix, AZ  85004
Financial Contacts:
      
Media Contact:
 
Kathleen L. Quirk
(602) 366-8016
  
David P. Joint
(504) 582-4203
  
William L. Collier
(504) 582-1750
 
Freeport-McMoRan Copper & Gold Inc. Reports
Third-Quarter and Nine-Month 2009 Results

§  
Net income attributable to common stock for third-quarter 2009 was $925 million, $2.07 per share, compared with $523 million, $1.31 per share, for third-quarter 2008.  Net income attributable to common stock for the first nine months of 2009 was $1.6 billion, $3.70 per share, compared with $2.6 billion, $6.20 per share, for the first nine months of 2008.

§  
Consolidated sales from mines for third-quarter 2009 totaled 1.0 billion pounds of copper, 706 thousand ounces of gold and 16 million pounds of molybdenum, compared with 1.0 billion pounds of copper, 307 thousand ounces of gold and 19 million pounds of molybdenum for third-quarter 2008.

§  
Consolidated sales from mines for the year 2009 are expected to approximate 4.0 billion pounds of copper, 2.5 million ounces of gold and 56 million pounds of molybdenum, including 915 million pounds of copper, 425 thousand ounces of gold and 14 million pounds of molybdenum for fourth-quarter 2009.

§  
Consolidated unit net cash costs (net of by-product credits and excluding Tenke Fungurume) averaged $0.50 per pound for third-quarter 2009, compared with $1.29 per pound for third-quarter 2008.  Assuming average prices of $1,000 per ounce for gold and $10 per pound for molybdenum for the fourth quarter of 2009, consolidated unit net cash costs are estimated to average approximately $0.60 per pound for the year 2009.

§  
Operating cash flows totaled $2.0 billion for third-quarter 2009 and $2.9 billion for the first nine months of 2009.  Using estimated sales volumes and assuming average prices of $2.75 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum for the fourth quarter of 2009, operating cash flows for the year 2009 are estimated to exceed $4.0 billion, net of $0.3 billion in working capital requirements.

§  
Capital expenditures totaled $244 million for third-quarter 2009 and $1.1 billion for the first nine months of 2009.  FCX currently expects capital expenditures to approximate $1.4 billion for the year 2009, including $0.6 billion for sustaining capital and $0.8 billion for major projects.

§  
At September 30, 2009, total debt approximated $6.6 billion and consolidated cash approximated $2.3 billion.  During the third quarter of 2009, FCX repaid $340 million of debt through the redemption of its 6⅞% Senior Notes due 2014 and made open market purchases totaling $191 million for its 8.25% and 8.375% senior notes.  Since September 30, 2009, FCX has made additional open-market debt purchases totaling $107 million.  These transactions reduced total debt by $638 million and will result in annual interest cost savings approximating $48 million.

§  
Conversion of Preferred Stock.  During the third quarter of 2009, FCX called for redemption its 5½% Convertible Perpetual Preferred Stock.  Holders of $831 million of FCX’s preferred stock converted their shares of preferred stock into 17.9 million common shares.  Annual preferred dividend savings approximate $46 million.

§  
Common Stock Dividend.  FCX announced that its Board of Directors has reinstated an annual cash dividend on its common stock of $0.60 per share.  The Board would declare a quarterly dividend of $0.15 per share, with the initial dividend expected to be paid on February 1, 2010.

 
1
 

PHOENIX, AZ, October 21, 2009 – Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported third-quarter 2009 net income attributable to common stock of $925 million, $2.07 per share, compared with $523 million, $1.31 per share, for the third quarter of 2008.  For the nine months ended September 30, 2009, FCX reported net income attributable to common stock of $1.6 billion, $3.70 per share, compared with $2.6 billion, $6.20 per share, in the 2008 nine-month period.
 
James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, “Our third-quarter results reflect strong operating performance, high volumes from our Grasberg mine and improved commodity prices for our products – copper, gold and molybdenum.  We are benefiting from improvements in our cost structure, particularly at our North America mines.  We are positioned to pursue additional investments and growth opportunities within our existing asset base, when economies in the developed countries recover.  Our strong performance in 2009 has enabled our Board to reinstate a cash dividend for our shareholders.  We will continue to focus our cash flows on strengthening our balance sheet, investing in our future growth and providing cash returns to shareholders.”
 
SUMMARY FINANCIAL AND OPERATING DATA

   
Third Quarter
  
Nine Months
  
   
2009
  
2008
  
2009
  
2008
  
Financial Data (in millions, except per share amounts)
                  
Revenuesa
  
$4,144
  
$4,616
  
$10,430
  
$15,729
  
Operating income
  
$2,084
  
$1,133
  
$4,264
  
$5,582
  
Net income
  
$1,203
  
$742
  
$2,222
  
$3,531
  
Net income attributable to common stockb
  
$925
c
$523
  
$1,556
c
$2,592
  
Diluted net income per share of common stock
  
$2.07
c
$1.31
  
$3.70
c
$6.20
  
Diluted weighted-average common shares outstandingd
  
472
  
447
  
428
  
449
  
Operating cash flows
  
$1,954
e
$1,545
e
$2,850
e
$3,169
e
Capital expenditures
  
$244
  
$766
  
$1,138
  
$1,929
  
                   
FCX Operating Data
                  
Copper (millions of recoverable pounds)
                  
Production
  
1,015
  
1,024
  
3,125
  
2,845
  
Sales, excluding purchased metal
  
1,000
  
1,016
  
3,122
  
2,869
  
Average realized price per pound
  
$2.75
  
$3.14
  
$2.35
  
$3.43
  
Site production and delivery unit costs per poundf
  
$1.15
  
$1.66
  
$1.08
  
$1.58
  
Unit net cash costs per poundf
  
$0.50
  
$1.29
  
$0.53
  
$1.21
  
Gold (thousands of recoverable ounces)
                  
Production
  
708
  
300
  
2,105
  
825
  
Sales, excluding purchased metal
  
706
  
307
  
2,088
  
852
  
Average realized price per ounce
  
$987
  
$869
  
$944
  
$897
  
Molybdenum (millions of recoverable pounds)
                  
Production
  
15
  
21
  
42
  
57
  
Sales, excluding purchased metal
  
16
  
19
  
42
  
59
  
Average realized price per pound
  
$13.95
  
$32.11
  
$11.93
  
$31.78
  
                   
 
a.  
Includes impacts of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (see discussion beginning on page 8).
 
b.  
After noncontrolling interests and preferred dividends.
 
c.  
Includes losses on early extinguishment of debt totaling $31 million ($28 million to net income attributable to common stock or $0.06 per share in third-quarter 2009 and $0.07 per share in the first nine months of 2009).
 
 
2
 
 
d.  
As applicable, diluted shares reflect the assumed conversion of FCX’s 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock.  See footnote d on page IV.  In addition, the 2009 periods include 26.8 million shares of common stock sold in February 2009.
 
e.  
Includes working capital sources (uses) of $450 million in third-quarter 2009, $568 million in third-quarter 2008, $(523) million in the first nine months of 2009 and $(1.5) billion in the first nine months of 2008.
 
f.  
Reflects per pound weighted average site production and delivery unit costs and unit net cash costs, net of by-product credits and excluding Tenke Fungurume which is currently in start up.  For reconciliations of unit costs per pound by operating division to production and delivery costs reported in FCX’s consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
OPERATIONS
 
Consolidated.  Third-quarter 2009 consolidated copper sales of 1.0 billion pounds approximated third-quarter 2008 copper sales and were higher than the July 2009 estimate of 910 million pounds.  The variance to the previous estimate primarily reflects accelerated mining of a high-grade section in the Grasberg open pit previously forecast to be mined in future periods.
 
Third-quarter 2009 consolidated gold sales of 706 thousand ounces were significantly higher than third-quarter 2008 gold sales of 307 thousand ounces and the July 2009 estimate of 550 thousand ounces, reflecting accelerated mining of a high-grade section in the Grasberg open pit.
 
Consolidated molybdenum sales of 16 million pounds in the third quarter of 2009 were lower than third-quarter 2008 sales of 19 million pounds but were slightly higher than the July 2009 estimate of 15 million pounds.  The decline from the year-ago period reflects reduced demand for molybdenum in the metallurgical and chemical sectors.
 
Consolidated unit site production and delivery costs, excluding Tenke Fungurume, averaged $1.15 per pound of copper in third-quarter 2009, 31 percent lower than third-quarter 2008 unit costs of $1.66 per pound.  Third-quarter 2009 unit net cash costs, after by-product credits, of $0.50 per pound were significantly lower than the year-ago period of $1.29 per pound.  The improved unit cost performance primarily reflects higher ore grades at Grasberg, reduced operating rates at North America mining operations to lower production of high-cost incremental volumes, achievement of cost savings initiatives and operating efficiencies, and lower energy and other commodity-based input costs.
 
Assuming average prices of $2.75 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum for the fourth quarter of 2009, unit net cash costs are expected to average approximately $0.60 per pound for the year 2009.  Because of the impact of projected lower fourth-quarter 2009 copper and gold sales volumes from Grasberg, average unit net cash costs of $0.85 per pound for fourth-quarter 2009 are expected to be higher than third-quarter 2009 unit net cash costs.  FCX will incorporate Tenke Fungurume in its consolidated unit net cash cost disclosures upon completion of ramp-up activities, expected in 2010.
 
North America Copper Mines.  FCX operates five open-pit copper mines in North America (Morenci, Sierrita, Bagdad and Safford in Arizona and Tyrone in New Mexico).  By-product molybdenum is produced primarily at Sierrita and Bagdad.  All of the North America mining operations are wholly owned, except for Morenci.  FCX records its 85 percent joint venture interest in Morenci using the proportionate consolidation method.

   
Third Quarter
  
Nine Months
  
North America Copper Mining Operations
  
2009
  
2008
  
2009
  
2008
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
290
    
374
    
851
    
1,051
  
Sales, excluding purchased metal
    
303
    
361
    
885
    
1,047
  
Average realized price per pound
  
$
2.69
  
$
3.42
  
$
2.15
  
$
3.56
  
                           
Molybdenum (millions of recoverable pounds)a
                          
Production
    
7
    
7
    
20
    
22
  
 
 
3
 
 
   
Third Quarter
  
Nine Months
  
North America Copper Mining Operations
  
2009
  
2008
  
2009
  
2008
  
                           
Unit net cash costs per pound of copper:
                          
Site production and delivery, after adjustments
  
$
1.22
  
$
2.07
  
$
1.26
  
$
1.86
  
By-product credits, primarily molybdenum
    
(0.29
)
  
(0.65
)
  
(0.23
)
  
(0.71
)
Treatment charges
    
0.08
    
0.09
    
0.09
    
0.09
  
Unit net cash costsb
  
$
1.01
  
$
1.51
  
$
1.12
  
$
1.24
  
                           
 
a.  
Represents by-product production.  Sales of by-product molybdenum are reflected in the molybdenum division discussion on page 8.
 
b.  
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX’s consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
Consolidated copper sales in North America totaled 303 million pounds in the third quarter of 2009, 16 percent lower than third-quarter 2008 sales.  FCX continues to operate at reduced rates at certain of its North America copper mines in response to reduced demand for copper in the western world.
 
For the year 2009, FCX expects sales from North America copper mines to approximate 1.2 billion pounds of copper, compared with 1.4 billion pounds of copper for 2008.  By-product molybdenum production is expected to approximate 26 million pounds in 2009, compared with 30 million pounds in 2008.  North America copper production in 2010 is currently expected to approximate 1.0 billion pounds, reflecting impacts of reduced 2009 mining activities on 2010 leaching operations.
 
North America unit site production and delivery costs were significantly lower in the 2009 periods as compared with the 2008 periods primarily because of cost reduction and efficiency efforts, including the impact of lower operating rates and reduced input costs, primarily for energy.  These decreases were partly offset by changes in inventory, reflecting the impact of historical production in inventory with a higher cost basis.  Molybdenum by-product credits were significantly lower in the 2009 periods compared with the 2008 periods primarily because of lower molybdenum prices.
 
Based on current operating plans and assuming achievement of current sales estimates, an average molybdenum price of $10 per pound for the fourth quarter of 2009 and estimates for commodity-based input costs, FCX estimates that average unit net cash costs, including molybdenum credits, for its North America copper mines would approximate $1.12 per pound of copper for the year 2009.  Unit net cash costs for the year 2009 would change by approximately $0.003 per pound for each $1 per pound change in the average price of molybdenum for the fourth quarter of 2009.
 
Development Activities.  FCX is initiating activities to restart copper production at the Miami mine in Arizona.  These activities will improve efficiencies of ongoing reclamation projects associated with historical mining operations at the site.  During the approximate five-year mine life, FCX expects to ramp up production to approximately 100 million pounds of copper per year by the second half of 2011.  This project, which was initially expected to require a $100 million investment, was deferred in late 2008 in response to market conditions.  FCX intends to transfer existing mining equipment from other North American sites to reduce the investment in the project to approximately $40 million.  Operating plans at the other North American sites continue to be reviewed and additional adjustments will be made in response to changes in market conditions.
 
South America Copper Mines.  FCX operates four copper mines in South America – Cerro Verde in Peru and Candelaria, Ojos del Salado and El Abra in Chile.  FCX owns a 53.56 percent interest in Cerro Verde, an open-pit mine currently producing both electrowon copper cathodes and copper concentrates.  FCX owns 80 percent of the Candelaria and Ojos del Salado mining complexes, which include the Candelaria open-pit and underground mines and the Ojos del Salado underground mines.  These mines use common processing facilities to produce copper concentrates.  FCX owns a 51 percent interest in El Abra, an open-pit mine producing electrowon copper cathodes.  All operations in South America are consolidated in FCX’s financial statements.
 
 
4
 

   
Third Quarter
  
Nine Months
  
South America Copper Mining Operations
  
2009
  
2008
  
2009
  
2008
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
340
    
394
    
1,046
    
1,116
  
Sales
    
327
    
391
    
1,040
    
1,122
  
Average realized price per pound
  
$
2.79
  
$
3.02
  
$
2.43
  
$
3.38
  
                           
Gold (thousands of recoverable ounces)
                          
Production
    
22
    
32
    
69
    
83
  
Sales
    
20
    
30
    
68
    
83
  
Average realized price per ounce
  
$
976
  
$
856
  
$
935
  
$
891
  
                           
Unit net cash costs per pound of copper:
                          
Site production and delivery, after adjustments
  
$
1.14
  
$
1.22
  
$
1.05
  
$
1.15
  
By-product credits, primarily gold
    
(0.10
)
  
(0.15
)
  
(0.11
)
  
(0.13
)
Treatment charges
    
0.15
    
0.09
    
0.15
    
0.16
  
Unit net cash costsa
  
$
1.19
  
$
1.16
  
$
1.09
  
$
1.18
  
                           
 
a.  
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX’s consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
Consolidated copper sales in South America totaled 327 million pounds in the third quarter of 2009, 16 percent lower than third-quarter 2008 sales, primarily reflecting lower ore grades at Candelaria and downtime for mill maintenance at Cerro Verde.
 
For the year 2009, FCX expects South America sales of 1.4 billion pounds of copper and 100 thousand ounces of gold, compared with 1.5 billion pounds of copper and 116 thousand ounces of gold for 2008.  Projected sales volumes for the year 2009 are lower than the year 2008 because of the impact of lower ore grades at Candelaria.
 
South America unit site production and delivery costs were slightly lower in the 2009 periods as compared with the 2008 periods primarily because of lower input costs, primarily for energy.  Treatment charges were higher in the third quarter of 2009 compared with the third quarter of 2008 because the year-ago period was reduced by prior period adjustments related to the significant decline of copper prices in the third quarter of 2008.
 
Assuming achievement of current sales estimates and estimates for commodity-based input costs, FCX estimates that average unit net cash costs, including gold credits, for its South America copper mines would approximate $1.11 per pound of copper for the year 2009.
 
Development Activities.  FCX is resuming construction activities associated with the development of the sulfide ore at El Abra.  The project, which had been deferred as a result of market conditions at the end of 2008, involves the development of a large sulfide deposit that will extend the mine life by over ten years.  Production from the sulfide ore of approximately 300 million pounds of copper per year is expected to replace the current oxide copper production that is expected to decline over the next several years.  The project will utilize a portion of the existing facilities to process the additional sulfide ore.  The capital investment for this project is expected to total $600 million through 2015, including $450 million for the initial phase of the project that is expected to be completed in 2012.
 
FCX has also commenced a project to optimize throughput at the existing Cerro Verde concentrator operations.  The project is expected to increase mill throughput from 108,000 metric tons of ore per day to 120,000 metric tons per day, resulting in incremental annual production of approximately 30 million pounds of copper.  The capital investment for this project is expected to total approximately $50 million.  FCX continues to study the potential for a major expansion at Cerro Verde.
 
 
5
 

Indonesia Mining.  Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia (PT-FI), FCX operates the world’s largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia.

   
Third Quarter
  
Nine Months
  
Indonesia Mining Operations
  
2009
  
2008
  
2009
  
2008
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
331
    
256
    
1,138
    
678
  
Sales
    
330
    
264
    
1,131
    
700
  
Average realized price per pound
  
$
2.77
  
$
2.94
  
$
2.41
  
$
3.33
  
                           
Gold (thousands of recoverable ounces)
                          
Production
    
685
    
264
    
2,033
    
731
  
Sales
    
683
    
271
    
2,015
    
757
  
Average realized price per ounce
  
$
988
  
$
870
  
$
944
  
$
897
  
                           
Unit net cash (credits) costs per pound of
                          
copper:
                          
Site production and delivery, after adjustments
  
$
1.10
  
$
1.76
  
$
0.98
  
$
1.84
  
Gold and silver credits
    
(2.10
)
  
(0.93
)
  
(1.74
)
  
(1.04
)
Treatment charges
    
0.24
    
0.24
    
0.22
    
0.28
  
Royalties
    
0.12
    
0.12
    
0.10
    
0.12
  
Unit net cash (credits) costsa
  
$
(0.64
)
$
1.19
  
$
(0.44
)
$
1.20
  
                           
 
a.  
For a reconciliation of unit net cash (credits) costs per pound to production and delivery costs applicable to sales reported in FCX’s consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
Indonesia copper and gold sales in the third quarter of 2009 were significantly higher than in the third quarter of 2008 as a result of mining of a higher ore grade section in the Grasberg open pit, including accelerated mining of a higher grade section previously scheduled to be mined in future periods.  At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production, resulting in varying quarterly and annual sales of copper and gold.
 
FCX expects Indonesia sales of 1.4 billion pounds of copper and 2.4 million ounces of gold for the year 2009, compared with 1.1 billion pounds of copper and 1.2 million ounces of gold for 2008.  Gold sales for 2009 are expected to be 100 thousand ounces higher than the July 2009 estimate because of the accelerated mining of a section of the Grasberg mine previously expected to be mined in 2010.  Copper and gold sales volumes in the fourth quarter of 2009 are expected to be lower than third-quarter 2009 volumes because of mine sequencing.
 
PT-FI’s unit net cash (credits) costs, including gold and silver credits, averaged a net credit of $0.64 per pound of copper for the third quarter of 2009, compared with a net cost of $1.19 per pound for the third quarter of 2008.  The lower unit net cash costs in the 2009 periods primarily reflected higher copper and gold volumes.  Unit site production and delivery costs will vary with fluctuations in production volumes because of the primarily fixed nature of PT-FI’s cost structure.
 
Assuming achievement of current 2009 sales estimates, average gold prices of $1,000 per ounce for the fourth quarter of 2009 and current estimates for energy, currency exchange rates and other cost factors, FCX expects PT-FI’s average unit net cash costs per pound to approximate a net credit of $0.33 per pound for the year 2009.  Fourth-quarter 2009 unit net cash costs are expected to be higher than third-quarter and year-to-date 2009 average unit net cash costs because of lower projected sales volumes.  Unit net cash costs for 2009 would change by approximately $0.015 per pound for each $50 per ounce change in the average price of gold for the fourth quarter of 2009.

 
6
 
 
Africa Mining.  FCX holds an effective 57.75 percent interest in the Tenke Fungurume copper and cobalt mining concessions in the Katanga province of the Democratic Republic of Congo (DRC) and is the operator of the project. Construction activities on the initial project are substantially complete.  Copper cathode production commenced in March 2009 and achieved targeted rates in September.  The cobalt plant and sulphuric acid plant were commissioned in the third quarter and start-up issues are being addressed.  The current operations are designed to produce 250 million pounds of copper and 18 million pounds of cobalt per year.  The following table presents Tenke Fungurume’s operating results for the periods ended September 30, 2009:

   
Third
  
Nine
  
Africa Mining Operations
  
Quarter
  
Months
  
                 
Copper (millions of recoverable pounds)
                
Production
    
54
      
90
  
Sales
    
40
      
66
  
Average realized price per pound
  
$
2.76
    
$
2.57
  
                 
 
The high grades of copper and cobalt in the ore at Tenke Fungurume are expected to result in an attractive cost structure once the full operation reaches design capacity.  Upon reaching design capacity in the copper and cobalt circuits and assuming average cobalt prices of $10 per pound, average unit net cash costs are targeted to be $0.50 per pound of copper or lower.  Each $2 per pound change in average prices of cobalt would impact unit net cash costs by $0.12 per pound of copper.  Costs in the initial operations will be higher as start-up issues are addressed.  FCX will incorporate Tenke Fungurume in its unit net cash cost disclosures upon completion of ramp-up activities, expected in 2010.
 
FCX continues to engage in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of the highly prospective district at Tenke Fungurume and expects its ore reserves to increase significantly over time.  These analyses are being incorporated in future plans to evaluate opportunities for expansion.  FCX plans to commence a feasibility study in the fourth quarter of 2009 to evaluate a second phase of the project, which would include optimizing the current plant and potentially increasing capacity by 50 percent.
 
The project was designed and constructed in a world-class fashion, using modern technology and following international standards for environmental management, occupational safety and social responsibility.  The facilities include impermeable lined tailing storage and waste-water treatment ponds, the first of their kind in the region.  FCX has made significant investments in infrastructure in the region that will have lasting benefits to the country, including upgrading a national road and the regional power generation and transmission systems.  FCX’s social and community development programs include development of local micro-enterprise businesses, agricultural capacity-building initiatives, malaria abatement programs, additional potable water wells, new medical facilities and several new schools.  The project will continue to provide important benefits to the Congolese through employment and the provision of local services and to the DRC government through substantial tax, royalty and dividend payments.
 
FCX is continuing to work cooperatively with the DRC government to resolve the ongoing contract review.  FCX believes its contract is fair and equitable, complies with Congolese law and is enforceable without modification.  The review process has not affected the development schedule or current operations.

 
7
 
 
Molybdenum.  FCX is the world’s largest producer of molybdenum.  FCX conducts molybdenum mining operations at its wholly owned Henderson underground mine in Colorado and sells by-product molybdenum primarily from its North America copper mines.

   
Third Quarter
  
Nine Months
  
Molybdenum Mining Operations
  
2009
  
2008
  
2009
  
2008
  
                   
Molybdenum (millions of recoverable pounds)
                  
Productiona
  
8
  
13
  
21
  
33
  
Sales, excluding purchased metalb
  
16
  
19
  
42
  
59
  
Average realized price per pound
  
$13.95
  
$32.11
  
$11.93
  
$31.78
  
Unit net cash costs per pound of
                  
molybdenumc
  
$4.69
  
$4.90
  
$5.34
  
$4.99
  
 
a.  
Amounts reflect production at the Henderson molybdenum mine.
 
b.  
Includes sales of molybdenum produced as a by-product at the North and South America copper mines.
 
c.  
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX’s consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
In the third quarter of 2009, consolidated molybdenum sales from the Henderson mine and by-product mines totaled 16 million pounds, 16 percent lower than third-quarter 2008 sales.  Molybdenum markets have been significantly affected by the downturn in global economic conditions; as a result, FCX continues to operate its Henderson primary molybdenum mine at 60 percent of capacity.  However, molybdenum prices in recent months have improved from the $9.50 per pound level at the start of 2009.  FCX has restarted the molybdenum circuit at the Cerro Verde mine, which produced 3 million pounds in 2008, and will continue to review and adjust its operating plans to reflect market conditions.
 
For the year 2009, FCX expects molybdenum sales from its mines to approximate 56 million pounds, compared with 71 million pounds in 2008.  The weekly average Metals Week Molybdenum Dealer Oxide price as of October 20, 2009, was $12.25 per pound.
 
Unit net cash costs were lower in the third quarter of 2009 compared with the third quarter of 2008 primarily because of cost reduction efforts, partly offset by lower volumes.  Unit net cash costs were higher in the first nine months of 2009 compared with the first nine months of 2008, primarily because of lower volumes.  Assuming achievement of current 2009 sales estimates, FCX estimates 2009 average unit net cash costs for its Henderson mine will approximate $5.60 per pound of molybdenum.
 
EXPLORATION ACTIVITIES
 
FCX is conducting exploration activities near its existing mines with a focus on opportunities to expand reserves that will support additional future production capacity in the large mineral districts where it currently operates.  Significantly expanded drilling activities during 2007 and 2008 were successful in providing significant reserve additions and in identifying potential additional ore adjacent to existing ore bodies.  Results indicate opportunities for significant future potential reserve additions at Morenci, Sierrita and Bagdad in North America; Cerro Verde in South America and in the Tenke Fungurume district.
 
Exploration spending in 2009 is estimated to approximate $75 million, compared with $248 million in 2008.  FCX continues to analyze exploratory data gained through the core drilling previously undertaken in addition to conducting new activities.
 
PROVISIONAL PRICING AND OTHER
 
For the first nine months of 2009, approximately 56 percent of FCX’s mined copper was sold in concentrate, 23 percent as cathode and 21 percent as rod (principally from North America operations).  Under the long-established structure of sales agreements prevalent in the industry, substantially all of
 
 
8
 
 
FCX’s concentrate and cathode sales are provisionally priced at the time of shipment.  The provisional prices are finalized in a contractually specified future period (generally one to four months from the shipment date) primarily based on quoted London Metal Exchange (LME) prices.  Because a significant portion of FCX’s concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of recorded revenues and the average recorded copper price for the period.
 
At June 30, 2009, 434 million pounds of copper (net of intercompany sales, forward sales contracts and noncontrolling interests) were provisionally priced at an average of $2.25 per pound.  Adjustments to the June 30, 2009, provisionally priced copper sales (net of forward copper sales contracts) resulted in an increase to consolidated revenues of $237 million ($116 million to net income attributable to common stock or $0.25 per share) in the third quarter of 2009, compared with a decrease of $280 million ($126 million to net income attributable to common stock or $0.28 per share) in the third quarter of 2008.  Adjustments to prior year provisionally priced copper sales in the first nine months of 2009 resulted in an increase to consolidated revenues of $132 million ($61 million to net income attributable to common stock or $0.14 per share) in the 2009 nine-month period, compared with an increase of $268 million ($114 million to net income attributable to common stock or $0.25 per share) in the 2008 nine-month period.
 
LME copper prices averaged $2.65 per pound during the third quarter of 2009, compared with FCX’s recorded average price of $2.75 per pound.  Approximately half of FCX’s consolidated copper sales during the third quarter were provisionally priced at the time of shipment and are subject to final pricing over the next several months.  At September 30, 2009, FCX had copper sales of 398 million pounds of copper (net of intercompany sales and noncontrolling interests) priced at an average of $2.79 per pound, subject to final pricing over the next several months.  Each $0.05 change in the price from the September 30, 2009, price for provisionally priced sales would have an approximate $13 million effect on FCX’s 2009 net income attributable to common stock.  The LME closing settlement price for copper on October 20, 2009, was $2.92 per pound.
 
FCX defers recognizing profits on PT-FI’s and its South America sales to Atlantic Copper and on 25 percent of PT-FI’s sales to PT Smelting, PT-FI’s 25 percent-owned Indonesian smelting unit, until final sales to third parties occur.  Changes in these net deferrals resulted in reductions to FCX’s net income attributable to common stock totaling $29 million, $0.06 per share, in the third quarter of 2009 and $124 million, $0.29 per share, in the first nine months of 2009.  For the 2008 periods, changes in these net deferrals resulted in additions to FCX’s net income attributable to common stock of $33 million, $0.07 per share, in both the third quarter and in the first nine months of 2008.  At September 30, 2009, FCX’s net deferred profits on PT-FI and South America concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled $152 million.
 
CASH, DEBT and EQUITY
 
At September 30, 2009, FCX had consolidated cash of $2.3 billion.  Net of noncontrolling interests’ share, taxes and other costs, cash available to parent company is $1.7 billion as shown below (in millions):

 
September 30,
  
 
2009
  
Cash at domestic companies
$
709
a
Cash at international operations
  
1,560
  
Total consolidated cash
  
2,269
  
Less: Noncontrolling interests’ share
  
(405
)
Cash, net of noncontrolling interests’ share
  
1,864
  
Withholding taxes and other
  
(185
)
Net cash available to parent company
$
1,679
  
 
a.  
Includes cash at FCX’s parent and North America mining operations.
 
 
9
 
 
At September 30, 2009, FCX had $6.6 billion in debt.  FCX had no borrowings and $73 million of letters of credit issued under its revolving credit facilities, resulting in total availability of approximately $1.4 billion at September 30, 2009.
 
During the third quarter of 2009 and through October 20, 2009, FCX repaid $638 million in debt through the redemption of its 6⅞% Senior Notes due 2014 and open-market purchases of its 8.25% Senior Notes due 2015 and 8.375% Senior Notes due 2017 at a cost of $672 million.  Annual interest cost savings associated with these transactions approximate $48 million.  Losses on early extinguishments of debt totaled $31 million ($28 million to net income attributable to common stock or $0.06 per share in the third quarter of 2009 and $0.07 per share in the first nine months of 2009) for the third-quarter transactions and are expected to approximate $10 million ($9 million to net income attributable to common stock in the fourth quarter of 2009) for the recent October transactions.  FCX may consider additional opportunities to prepay debt in advance of scheduled maturities.
 
FCX’s debt maturities through 2011 are indicated in the table below (in millions).

2009
  
$
26
2010
    
20
2011
    
119
Total 2009 - 2011
  
$
165
 
In September 2009, FCX called for redemption its remaining shares of 5½% Convertible Perpetual Preferred Stock.  Of the 831,554 shares outstanding at the time of the call, 830,529 shares converted into 17.9 million shares of FCX common stock and the remaining 1,025 shares were redeemed for approximately $1 million cash.  The conversions and redemptions of these preferred shares will result in preferred dividend savings of approximately $46 million per year.
 
At September 30, 2009, FCX had 430 million common shares outstanding.  Assuming conversion of FCX’s 6¾% Mandatory Convertible Preferred Stock, which automatically convert on May 1, 2010, FCX would have between 469 million and 477 million common shares outstanding (depending on the applicable market price of FCX’s common stock).
 
OUTLOOK
 
Projected sales volumes for 2009 approximate 4.0 billion pounds of copper, 2.5 million ounces of gold and 56 million pounds of molybdenum, including 915 million pounds of copper, 425 thousand ounces of gold and 14 million pounds of molybdenum in the fourth quarter of 2009.  The achievement of FCX’s sales estimates will be dependent on the achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors.
 
Operating cash flows totaled $2.0 billion for the third quarter of 2009 and $2.9 billion for the first nine months of 2009.  Using estimated sales volumes for 2009 and assuming average prices of $2.75 per pound of copper, $1,000 per ounce of gold and $10 per pound of molybdenum for the fourth quarter of 2009, FCX’s consolidated operating cash flows, net of an estimated $0.3 billion of working capital requirements, are estimated to exceed $4.0 billion in 2009.  Working capital requirements principally reflect final settlements with customers in early 2009 of prior year provisionally priced sales.  The impact of price changes on FCX’s operating cash flows over the fourth quarter of 2009 would approximate $80 million for each $0.10 per pound change for copper, $30 million for each $50 per ounce change for gold and $5 million for each $1 per pound change for molybdenum.
 
Capital expenditures totaled $244 million for the third quarter of 2009 and $1.1 billion for the first nine months of 2009.  FCX’s capital expenditures are currently estimated to approximate $1.4 billion for 2009 and $1.4 billion for 2010.  Capital expenditures for major projects in 2009 are expected to approximate $0.8 billion, which primarily includes Tenke Fungurume (substantially all of which has been funded through September 30, 2009) and underground development activities at Grasberg.  Capital expenditures for major projects in 2010 are expected to approximate $0.7 billion, which primarily includes underground development activities at Grasberg and the sulfide ore project at El Abra.  Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.
 
 
10
 
 
FINANCIAL POLICY
 
FCX has a long-standing tradition of seeking to build shareholder values through pursuing development projects with high rates of return and returning cash to shareholders through common stock dividends and share purchases.  FCX is committed to maintaining a strong balance sheet.
 
FCX announced separately today that its Board has reinstated an annual cash dividend on its common stock of $0.60 per share.  The Board would declare a quarterly dividend of $0.15 per share, with the initial dividend expected to be paid on February 1, 2010.  The Board will continue to review FCX’s financial policy on an ongoing basis.

-----------------------------------------------------------------------
 
FCX is a leading international mining company with headquarters in Phoenix, Arizona.  FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum.  FCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry and is the world’s largest producer of molybdenum.
 
The company’s portfolio of assets includes the Grasberg mining complex, the world’s largest copper and gold mine in terms of recoverable reserves, significant mining operations in the Americas, including the large scale Morenci and Safford minerals districts in North America and the Cerro Verde and El Abra operations in South America, and the Tenke Fungurume minerals district in the DRC.  Additional information about FCX is available on FCX’s web site at “www.fcx.com.”
 
Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which we discuss factors we believe may affect our performance in the future.  Forward-looking statements are all statements other than historical facts, such as statements regarding projected ore grades and milling rates, projected sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, the impact of copper, gold, molybdenum and cobalt price changes, and potential prepayments of debt, future dividend payments and open market purchases of FCX common stock.  The declaration and payment of dividends is at the discretion of FCX’s Board of Directors and will depend on FCX’s financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.  Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments.  FCX cautions readers that it assumes no obligation to update the forward-looking statements in this press release and does not intend to update the forward-looking statements more frequently than quarterly.  Additionally, important factors that might cause future results to differ from results anticipated by forward-looking statements include mine sequencing, production rates, industry risks, commodity prices, political risks, the potential effects of the recent violence in Indonesia, potential outcomes of the contract review process in the Democratic Republic of Congo, weather-related risks, labor relations, currency translation risks and other factors described in FCX's Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission (SEC) as updated by our subsequent filings with the SEC.
 
This press release also contains certain financial measures such as unit net cash costs per pound of copper and per pound of molybdenum.  As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX’s consolidated financial statements are in the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX’s web site, “www.fcx.com.”
 
A copy of this release is available on FCX’s web site at www.fcx.com.  A conference call with securities analysts about third-quarter 2009 results is scheduled for today at 10:00 a.m. Eastern Time.  The conference call will be broadcast on the Internet along with slides.  Interested parties may listen to the conference call live and view the slides by accessing “www.fcx.com”.  A replay of the webcast will be available through Friday, November 20, 2009.
 
# # #

 
11
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
     
   
Three Months Ended September 30,
COPPER
  
Production
  
Sales
(millions of recoverable pounds)
  
2009
  
2008
  
2009
  
2008
MINED COPPER (FCX’s net interest in %)
                        
North America
                        
Morenci (85%)
  
107
a
  
163
a
  
114
a
  
160
a
Bagdad (100%)
  
59
    
59
    
59
    
57
  
Sierrita (100%)
  
41
    
46
    
44
    
45
  
Safford (100%)
  
48
    
43
    
46
    
33
  
Tyrone (100%)
  
22
    
21
    
23
    
19
  
Chino (100%)
  
9
    
36
    
12
    
42
  
Miami (100%)
  
4
    
5
    
4
    
4
  
Other (100%)
  
-
    
1
    
1
    
1
  
Total North America
  
290
    
374
    
303
    
361
  
                         
South America
                        
Cerro Verde (53.56%)
  
161
    
174
    
157
    
173
  
Candelaria/Ojos del Salado (80%)
  
88
    
128
    
80
    
122
  
El Abra (51%)
  
91
    
92
    
90
    
96
  
Total South America
  
340
    
394
    
327
    
391
  
                         
Indonesia
                        
Grasberg (90.64%)
  
331
b
  
256
b
  
330
b
  
264
b
Africa
                        
Tenke Fungurume (57.75%)
  
54
    
-
    
40
    
-
  
                         
Consolidated
  
1,015
    
1,024
    
1,000
    
1,016
  
                         
Less noncontrolling participants’ share
  
191
    
176
    
180
    
176
  
Net
  
824
    
848
    
820
    
840
  
                         
Consolidated sales from mines
              
1,000
    
1,016
  
Purchased copper
              
47
    
122
  
Total consolidated sales
              
1,047
    
1,138
  
                         
Average realized price per pound
              
$2.75
    
$3.14
  
                         
GOLD
                        
(thousands of recoverable ounces)
                        
MINED GOLD (FCX’s net interest in %)
                        
North America (100%)
  
1
    
4
    
3
    
6
  
South America (80%)
  
22
    
32
    
20
    
30
  
Indonesia (90.64%)
  
685
b
  
264
b
  
683
b
  
271
b
Consolidated
  
708
    
300
    
706
    
307
  
                         
Less noncontrolling participants’ share
  
69
    
31
    
69
    
31
  
Net
  
639
    
269
    
637
    
276
  
                         
Consolidated sales from mines
              
706
    
307
  
Purchased gold
              
-
c
  
-
c
Total consolidated sales
              
706
    
307
  
                         
Average realized price per ounce
              
$987
    
$869
  
                         
MOLYBDENUM
                        
(millions of recoverable pounds)
                        
MINED MOLYBDENUM (FCX’s net interest in %)
                        
Henderson (100%)
  
8
    
13
    
N/A
    
N/A
  
By-product – North America (100%)
  
7
a
  
7
a
  
N/A
    
N/A
  
By-product – Cerro Verde (53.56%)
  
-
    
1
    
N/A
    
N/A
  
Consolidated
  
15
    
21
    
16
    
19
  
                         
Less noncontrolling participants’ share
  
-
    
-
c
  
-
c
  
-
c
Net
  
15
    
21
    
16
    
19
  
                         
Consolidated sales from mines
              
16
    
19
  
Purchased molybdenum
              
1
    
2
  
Total consolidated sales
              
17
    
21
  
                         
Average realized price per pound
              
$13.95
    
$32.11
  
                         
a. Amounts are net of Morenci’s joint venture partner’s 15 percent interest.
b. Amounts are net of Grasberg’s joint venture partner’s interest, which varies in accordance with the terms of the joint venture agreement.
c. Amount rounds to less than 1 million.

 
I
 

FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA (continued)
     
   
Nine Months Ended September 30,
COPPER
  
Production
  
Sales
(millions of recoverable pounds)
  
2009
  
2008
  
2009
  
2008
MINED COPPER (FCX’s net interest in %)
                        
North America
                        
Morenci (85%)
  
323
a
  
464
a
  
349
a
  
478
a
Bagdad (100%)
  
169
    
165
    
166
    
164
  
Sierrita (100%)
  
125
    
136
    
127
    
132
  
Safford (100%)
  
131
    
89
    
125
    
66
  
Tyrone (100%)
  
64
    
52
    
63
    
49
  
Chino (100%)
  
27
    
127
    
42
    
139
  
Miami (100%)
  
12
    
14
    
12
    
14
  
Other (100%)
  
-
    
4
    
1
    
5
  
Total North America
  
851
    
1,051
    
885
    
1,047
  
                         
South America
                        
Cerro Verde (53.56%)
  
497
    
519
    
498
    
522
  
Candelaria/Ojos del Salado (80%)
  
282
    
325
    
275
    
326
  
El Abra (51%)
  
267
    
272
    
267
    
274
  
Total South America
  
1,046
    
1,116
    
1,040
    
1,122
  
                         
Indonesia
                        
Grasberg (90.64%)
  
1,138
b
  
678
b
  
1,131
b
  
700
b
Africa
                        
Tenke Fungurume (57.75%)
  
90
    
-
    
66
    
-
  
                         
Consolidated
  
3,125
    
2,845
    
3,122
    
2,869
  
                         
Less noncontrolling participants’ share
  
563
    
503
    
550
    
507
  
Net
  
2,562
    
2,342
    
2,572
    
2,362
  
                         
Consolidated sales from mines
              
3,122
    
2,869
  
Purchased copper
              
138
    
423
  
Total consolidated sales
              
3,260
    
3,292
  
                         
Average realized price per pound
              
$2.35
    
$3.43
  
                         
GOLD
                        
(thousands of recoverable ounces)
                        
MINED GOLD (FCX’s net interest in %)
                        
North America (100%)
  
3
    
11
    
5
    
12
  
South America (80%)
  
69
    
83
    
68
    
83
  
Indonesia (90.64%)
  
2,033
b
  
731
b
  
2,015
b
  
757
b
Consolidated
  
2,105
    
825
    
2,088
    
852
  
                         
Less noncontrolling participants’ share
  
204
    
85
    
203
    
87
  
Net
  
1,901
    
740
    
1,885
    
765
  
                         
Consolidated sales from mines
              
2,088
    
852
  
Purchased gold
              
-
c
  
1
  
Total consolidated sales
              
2,088
    
853
  
                         
Average realized price per ounce
              
$944
    
$897
  
                         
MOLYBDENUM
                        
(millions of recoverable pounds)
                        
MINED MOLYBDENUM (FCX’s net interest in %)
                        
Henderson (100%)
  
21
    
33
    
N/A
    
N/A
  
By-product – North America (100%)
  
20
a
  
22
a
  
N/A
    
N/A
  
By-product – Cerro Verde (53.56%)
  
1
    
2
    
N/A
    
N/A
  
Consolidated
  
42
    
57
    
42
    
59
  
                         
Less noncontrolling participants’ share
  
1
    
1
    
1
    
1
  
Net
  
41
    
56
    
41
    
58
  
                         
Consolidated sales from mines
              
42
    
59
  
Purchased molybdenum
              
4
    
6
  
Total consolidated sales
              
46
    
65
  
                         
Average realized price per pound
              
$11.93
    
$31.78
  
                         
a. Amounts are net of Morenci’s joint venture partner’s 15 percent interest.
b. Amounts are net of Grasberg’s joint venture partner’s interest, which varies in accordance with the terms of the joint venture agreement.
c. Amount rounds to less than 1 million.

 
II
 

FREEPORT-McMoRan COPPER & GOLD INC.
  
SELECTED OPERATING DATA (continued)
  
                 
 
Three Months Ended
  
Nine Months Ended
  
 
September 30,
  
September 30,
  
 
2009
  
2008
  
2009
  
2008
  
100% North America Copper Mines Operating Data
              
Solution Extraction/Electrowinning (SX/EW) Operations
                
Leach ore placed in stockpiles (metric tons per day)
519,200
  
1,067,000
  
580,200
  
1,100,300
  
Average copper ore grade (percent)
0.30
  
0.23
  
0.30
  
0.22
  
Copper production (millions of recoverable pounds)
216
  
251
  
639
  
683
  
                 
Mill Operations
                
Ore milled (metric tons per day)
166,300
  
247,900
  
172,500
  
249,800
  
Average ore grades (percent):
                
Copper
0.32
  
0.40
  
0.33
  
0.40
  
Molybdenum
0.03
  
0.02
  
0.03
  
0.02
  
Copper recovery rate (percent)
86.8
  
83.5
  
85.7
  
83.1
  
Production (millions of recoverable pounds):
                
Copper
93
  
151
  
270
  
450
  
Molybdenum (by-product)
7
  
7
  
20
  
22
  
                 
100% South America Copper Mines Operating Data
                
SX/EW Operations
                
Leach ore placed in stockpiles (metric tons per day)
251,500
  
273,400
  
254,100
  
279,600
  
Average copper ore grade (percent)
0.46
  
0.45
  
0.45
  
0.44
  
Copper production (millions of recoverable pounds)
142
  
139
  
420
  
418
  
                 
Mill Operations
                
Ore milled (metric tons per day)
174,200
  
189,800
  
181,000
  
179,300
  
Average ore grades (percent):
                
Copper
0.66
  
0.78
  
0.67
  
0.75
  
Molybdenum
0.02
  
0.02
  
0.02
  
0.02
  
Copper recovery rate (percent)
89.0
  
87.8
  
89.4
  
89.5
  
Production (millions of recoverable pounds):
                
Copper
198
  
255
  
626
  
698
  
Molybdenum
-
  
1
  
1
  
2
  
                 
100% Indonesia Mining Operating Data
                
Ore milled (metric tons per day)
241,200
  
193,000
  
238,800
  
185,400
  
Average ore grades:
                
Copper (percent)
0.90
  
0.82
  
1.04
  
0.76
  
Gold (grams per metric ton)
1.33
  
0.61
  
1.32
  
0.59
  
Recovery rates (percent):
                
Copper
90.7
  
89.8
  
90.7
  
89.8
  
Gold
84.7
  
78.0
  
83.5
  
78.6
  
Production (recoverable):
                
Copper (millions of pounds)
385
  
274
  
1,298
  
725
  
Gold (thousands of ounces)
799
  
264
  
2,267
  
731
  
                 
100% Africa Mining Operating Data
                
Ore milled (metric tons per day)
7,900
  
-
  
7,100
  
-
  
Average copper ore grade (percent)
3.66
  
-
  
3.44
  
-
  
Copper recovery rate (percent)
89.3
  
-
  
90.5
  
-
  
Copper production (millions of recoverable pounds)
54
  
-
  
90
  
-
  
                 
100% Primary Molybdenum Operating Data
                
Henderson Molybdenum Mine Operations
                
Ore milled (metric tons per day)
17,600
  
27,800
  
14,800
  
26,500
  
Average molybdenum ore grade (percent)
0.26
  
0.25
  
0.26
  
0.23
  
Molybdenum production (millions of recoverable pounds)
8
  
13
  
21
  
33
  
                 

 
III
 

FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                         
 
Three Months Ended
  
Nine Months Ended
  
 
September 30,
  
September 30,
  
 
2009
  
2008
  
2009
  
2008
  
 
(In Millions, Except Per Share Amounts)
  
Revenues
$
4,144
a
$
4,616
a
$
10,430
a
$
15,729
a
Cost of sales:
                        
Production and delivery
  
1,715
    
2,857
    
5,086
    
8,294
  
Depreciation, depletion and amortization
  
252
    
442
    
740
    
1,322
  
Lower of cost or market inventory adjustments
  
-
    
17
b
  
19
b
  
22
b
Total cost of sales
  
1,967
    
3,316
    
5,845
    
9,638
  
Selling, general and administrative expenses
  
74
    
90
    
225
    
300
  
Exploration and research expenses
  
19
    
77
    
73
    
209
  
Restructuring and other charges
  
-
    
-
    
23
c
  
-
  
Total costs and expenses
  
2,060
    
3,483
    
6,166
    
10,147
  
Operating income
  
2,084
    
1,133
    
4,264
    
5,582
  
Interest expense, net
  
(162
)
  
(139
)
  
(451
)
  
(444
)
Losses on early extinguishment of debt
  
(31
)
  
-
    
(31
)
  
(6
)
Other income and expense, net
  
(7
)
  
(14
)
  
(24
)
  
10
  
Income before income taxes and equity in affiliated companies’
                        
 net earnings
  
1,884
    
980
    
3,758
    
5,142
  
Provision for income taxes
  
(684
)
  
(240
)
  
(1,557
)
  
(1,627
)
Equity in affiliated companies’ net earnings
  
3
    
2
    
21
    
16
  
Net income
  
1,203
    
742
    
2,222
    
3,531
  
Net income attributable to noncontrolling interests
  
(224
)
  
(155
)
  
(492
)
  
(748
)
Preferred dividends
  
(54
)
  
(64
)
  
(174
)
  
(191
)
Net income attributable to FCX common stockholders
$
925
  
$
523
  
$
1,556
  
$
2,592
  
                         
Net income per share attributable to FCX common stockholders:
                        
Basic
$
2.23
  
$
1.37
  
$
3.80
  
$
6.78
  
Diluted
$
2.07
d
$
1.31
d
$
3.70
d
$
6.20
d
                         
Weighted-average common shares outstanding:
                        
Basic
  
416
    
382
    
409
    
383
  
Diluted
  
472
d
  
447
d
  
428
d
  
449
d
                         
Dividends declared per share of common stock
$
-
  
$
0.50
  
$
-
  
$
1.375
  
                         

a.  
Includes positive (negative) adjustments to provisionally priced copper sales recognized in prior periods, totaling $237 million in third-quarter 2009, $(280) million in third-quarter 2008, $132 million in the 2009 nine-month period and $268 million in the 2008 nine-month period.
b.  
Relates to copper inventories for the 2008 periods and molybdenum inventories for the 2009 nine-month period.
c.  
Relates to contract cancellation costs and staff reductions primarily at the Morenci mine, partially offset by gains related to pension and postretirement special benefits and curtailments.
d.  
Reflects assumed conversion of FCX’s 5½% Convertible Perpetual Preferred Stock, resulting in the exclusion of dividends totaling $5 million in third-quarter 2009, $15 million in third-quarter 2008, $28 million in the 2009 nine-month period and $45 million in the 2008 nine-month period.  Also includes assumed conversion of FCX’s 6¾% Mandatory Convertible Preferred Stock, reflecting exclusion of dividends totaling $48 million in third-quarter 2009, $49 million in third-quarter 2008 and $146 million in the 2008 nine-month period.  The 6¾% Mandatory Convertible Preferred Stock was not dilutive for the nine months ended September 30, 2009, because the dilution threshold for the nine-month period is $3.72 per share. The assumed conversions result in the inclusion of 53 million common shares in third-quarter 2009, 17 million common shares in the 2009 nine-month period and 63 million common shares in each of the 2008 periods.  In addition, the 2009 periods include 26.8 million common shares sold in February 2009.

 
IV
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
           
 
September 30,
    
December 31,
  
 
2009
    
2008
  
 
(In Millions)
  
ASSETS
              
Current assets:
              
Cash and cash equivalents
$
2,269
    
$
872
  
Trade accounts receivable
  
1,292
      
374
  
Income tax receivables
  
390
      
611
  
Other accounts receivable
  
174
      
227
  
Product inventories and materials and supplies, net
  
2,314
      
2,192
  
Mill and leach stockpiles
  
602
      
571
  
Other current assets
  
365
      
386
  
Total current assets
  
7,406
      
5,233
  
Property, plant, equipment and development costs, net
  
16,075
      
16,002
  
Long-term mill and leach stockpiles
  
1,294
      
1,145
  
Intangible assets, net
  
342
      
364
  
Trust assets
  
140
      
142
  
Other assets
  
448
      
467
  
Total assets
$
25,705
    
$
23,353
  
               
LIABILITIES AND EQUITY
              
Current liabilities:
              
Accounts payable and accrued liabilities
$
1,986
    
$
2,766
  
Accrued income taxes
  
940
      
163
  
Current portion of reclamation and environmental liabilities
  
187
      
162
  
Current portion of long-term debt and short-term borrowings
  
44
      
67
  
Total current liabilities
  
3,157
      
3,158
  
Long-term debt, less current portion:
              
Senior notes
  
6,350
a
    
6,884
  
Project financing, equipment loans and other
  
228
      
250
  
Revolving credit facility
  
-
      
150
  
Total long-term debt, less current portion
  
6,578
      
7,284
  
Deferred income taxes
  
2,660
      
2,339
  
Reclamation and environmental liabilities, less current portion
  
2,006
      
1,951
  
Other liabilities
  
1,370
      
1,520
  
Total liabilities
  
15,771
      
16,252
  
Equity:
              
FCX stockholders’ equity:
              
5½% Convertible Perpetual Preferred Stock
  
-
      
832
  
6¾% Mandatory Convertible Preferred Stock
  
2,875
      
2,875
  
Common stock
  
55
      
51
  
Capital in excess of par value
  
15,627
      
13,989
  
Accumulated deficit
  
(6,711
)
    
(8,267
)
Accumulated other comprehensive loss
  
(224
)
    
(305
)
Common stock held in treasury
  
(3,413
)
    
(3,402
)
Total FCX stockholders’ equity
  
8,209
      
5,773
  
Noncontrolling interests
  
1,725
      
1,328
  
Total equity
  
9,934
      
7,101
  
Total liabilities and equity
$
25,705
    
$
23,353
  
               
a.  
On August 20, 2009, FCX redeemed the outstanding $340 million balance of its 6⅞% Senior Notes due 2014 for $352 million (equal to a redemption price of 103.438 percent).  During the third quarter of 2009, FCX purchased in the open market $99 million of its 8.25% Senior Notes due 2015 for $107 million (an average purchase price of 107.454 percent) and $92 million of its 8.375% Senior Notes due 2017 for $99 million (an average purchase price of 107.302 percent).  From October 1 through October 20, 2009, FCX purchased in the open market $42 million of its 8.25% Senior Notes for $45 million (an average purchase price of 107.640 percent) and $65 million of its 8.375% Senior Notes for $69 million (an average purchase price of 107.282 percent).

 
V
 

FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
       
   
Nine Months Ended
  
   
September 30,
  
   
2009
    
2008
  
   
(In Millions)
  
Cash flow from operating activities:
                
Net income
  
$
2,222
    
$
3,531
  
Adjustments to reconcile net income to net cash provided by
                
operating activities:
                
Depreciation, depletion and amortization
    
740
      
1,322
  
Lower of cost or market inventory adjustments
    
19
      
22
  
Stock-based compensation
    
75
      
113
  
Charges for reclamation and environmental liabilities, including accretion
    
150
      
141
  
Losses on early extinguishment of debt
    
31
      
6
  
Deferred income taxes
    
(32
)
    
(347
)
Intercompany profit on PT Freeport Indonesia sales to PT Smelting
    
47
      
(5
)
Increase in long-term mill and leach stockpiles
    
(68
)
    
(167
)
Changes in other assets and liabilities
    
136
      
35
  
Amortization of intangible assets/liabilities and other, net
    
53
      
59
  
(Increases) decreases in working capital:
                
Accounts receivable
    
(754
)
    
(198
)
Inventories
    
(176
)
    
(567
)
Other current assets
    
88
      
(58
)
Accounts payable and accrued liabilities
    
(518
)
    
(152
)
Accrued income and other taxes
    
913
      
(424
)
Settlement of reclamation and environmental liabilities
    
(76
)
    
(142
)
Net cash provided by operating activities
    
2,850
      
3,169
  
                 
Cash flow from investing activities:
                
Capital expenditures:
                
North America copper mines
    
(121
)
    
(498
)
South America copper mines
    
(129
)
    
(229
)
Indonesia
    
(186
)
    
(332
)
Africa
    
(577
)
    
(698
)
Other
    
(125
)
    
(172
)
Proceeds from the sale of assets and other, net
    
(8
)
    
58
  
Net cash used in investing activities
    
(1,146
)
    
(1,871
)
                 
Cash flow from financing activities:
                
Net proceeds from sale of common stock
    
740
      
-
  
Proceeds from revolving credit facility and other debt
    
307
      
183
  
Repayments of revolving credit facility and other debt
    
(1,066
)
    
(198
)
Purchases of FCX common stock
    
-
      
(500
)
Cash dividends paid:
                
Common stock
    
-
      
(504
)
Preferred stock
    
(181
)
    
(191
)
Noncontrolling interests
    
(149
)
    
(714
)
Net (payments for) proceeds from stock-based awards
    
(9
)
    
22
  
Excess tax benefit from stock-based awards
    
2
      
25
  
Contributions from noncontrolling interests
    
54
      
155
  
Bank fees and other
    
(5
)
    
-
  
Net cash used in financing activities
    
(307
)
    
(1,722
)
                 
Net increase (decrease) in cash and cash equivalents
    
1,397
      
(424
)
Cash and cash equivalents at beginning of year
    
872
      
1,626
  
Cash and cash equivalents at end of period
  
$
2,269
    
$
1,202
  
 
 
VI
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS

PRODUCT REVENUES AND UNIT NET CASH COSTS
Unit net cash costs per pound of copper and per pound of molybdenum are measures intended to provide investors with information about the cash-generating capacity of FCX’s mining operations expressed on a basis relating to the primary metal product for the respective operations.  FCX uses this measure for the same purpose and for monitoring operating performance by its mining operations.  This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP.  This measure is presented by other metals mining companies, although FCX’s measures may not be comparable to similarly titled measures reported by other companies.

FCX presents gross profit per pound of copper using both a “by-product” method and a “co-product” method.  FCX uses the by-product method in its presentation of gross profit per pound of copper because (i) the majority of its revenues are copper revenues, (ii) it mines ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of FCX’s costs to revenues from the copper, gold, molybdenum and other metals it produces, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by FCX’s management and Board of Directors to monitor operations.  In the co-product method presentations, costs are allocated to the different products based on their relative revenue values, which will vary to the extent FCX’s metals sales volumes and realized prices change.

In both the by-product and the co-product method calculations, FCX shows adjustments to copper revenues for prior period open sales as separate line items.  Because the copper pricing adjustments do not result from current period sales, FCX has reflected these separately from revenues on current period sales.  Noncash and nonrecurring costs consist of items such as stock-based compensation costs, lower of cost or market inventory adjustments, write-offs of equipment or unusual charges.  They are removed from site production and delivery costs in the calculation of unit net cash costs.  As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method.
 
 
VII
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments shown below
$
813
  
$
813
  
$
87
  
$
13
  
$
913
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
370
    
331
    
43
    
7
    
381
  
By-product creditsa
  
(89
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
24
    
24
    
-
    
-
    
24
  
Net cash costs
  
305
    
355
    
43
    
7
    
405
  
Depreciation, depletion and amortization
  
66
    
62
    
3
    
1
    
66
  
Noncash and nonrecurring costs, net
  
20
    
19
    
1
    
-
    
20
  
Total costs
  
391
    
436
    
47
    
8
    
491
  
Revenue adjustments, primarily for hedging
  
6
    
6
    
-
    
-
    
6
  
Idle facility and other non-inventoriable costs
  
(22
)
  
(22
)
  
-
    
-
    
(22
)
Gross profit
$
406
  
$
361
  
$
40
  
$
5
  
$
406
  
                               
Copper sales (in million pounds)
  
302
    
302
                    
Molybdenum sales (in million pounds)c
              
7
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments shown below
$
2.69
  
$
2.69
  
$
13.58
              
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.22
    
1.10
    
6.71
              
By-product credits
  
(0.29
)
  
-
    
-
              
Treatment charges
  
0.08
    
0.08
    
-
              
Unit net cash costs
  
1.01
    
1.18
    
6.71
              
Depreciation, depletion and amortization
  
0.22
    
0.20
    
0.53
              
Noncash and nonrecurring costs, net
  
0.07
    
0.07
    
0.05
              
Total unit costs
  
1.30
    
1.45
    
7.29
              
Revenue adjustments, primarily for hedging
  
0.02
    
0.02
    
-
              
Idle facility and other non-inventoriable costs
  
(0.07
)
  
(0.07
)
  
-
              
Gross profit per pound
$
1.34
  
$
1.19
  
$
6.29
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
913
  
$
381
  
$
66
              
Net noncash and nonrecurring costs per above
  
N/A
    
20
    
N/A
              
Treatment charges per above
  
N/A
    
24
    
N/A
              
Revenue adjustments, primarily for
                              
hedging per above
  
6
    
N/A
    
N/A
              
Eliminations and other
  
1
    
26
    
4
              
North America copper mines
  
920
    
451
    
70
              
South America copper mines
  
1,018
    
379
    
67
              
Indonesia mining
  
1,656
    
369
    
64
              
Africa mining
  
113
    
89
    
20
              
Molybdenum
  
258
    
177
    
13
              
Rod & Refining
  
963
    
957
    
2
              
Atlantic Copper Smelting & Refining
  
495
    
493
    
9
              
Corporate, other & eliminations
  
(1,279
)
  
(1,200
)
  
7
              
As reported in FCX’s consolidated financial statements
$
4,144
  
$
1,715
  
$
252
              
                               
a. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.
b. Includes gold and silver product revenues and production costs.
c. Reflects molybdenum produced by the North America copper mines.
 
 
 
VIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments shown below
$
1,236
  
$
1,236
  
$
231
  
$
22
  
$
1,489
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
747
    
648
    
105
    
11
    
764
  
By-product creditsa
  
(236
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
32
    
31
    
-
    
1
    
32
  
Net cash costs
  
543
    
679
    
105
    
12
    
796
  
Depreciation, depletion and amortization
  
188
    
167
    
19
    
2
    
188
  
Noncash and nonrecurring costs, net
  
33
    
31
    
1
    
1
    
33
  
Total costs
  
764
    
877
    
125
    
15
    
1,017
  
Revenue adjustments, primarily for hedging
  
(83
)
  
(83
)
  
-
    
-
    
(83
)
Idle facility and other non-inventoriable costs
  
(16
)
  
(15
)
  
(1
)
  
-
    
(16
)
Gross profit
$
373
  
$
261
  
$
105
  
$
7
  
$
373
  
                               
Copper sales (in million pounds)
  
361
    
361
                    
Molybdenum sales (in million pounds)c
              
7
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments shown below
$
3.42
  
$
3.42
  
$
33.47
              
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
2.07
    
1.79
    
15.30
              
By-product credits
  
(0.65
)
  
-
    
-
              
Treatment charges
  
0.09
    
0.09
    
-
              
Unit net cash costs
  
1.51
    
1.88
    
15.30
              
Depreciation, depletion and amortization
  
0.52
    
0.46
    
2.75
              
Noncash and nonrecurring costs, net
  
0.09
    
0.09
    
0.14
              
Total unit costs
  
2.12
    
2.43
    
18.19
              
Revenue adjustments, primarily for hedging
  
(0.23
)
  
(0.23
)
  
-
              
Idle facility and other non-inventoriable costs
  
(0.04
)
  
(0.04
)
  
(0.03
)
            
Gross profit per pound
$
1.03
  
$
0.72
  
$
15.25
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
1,489
  
$
764
  
$
188
              
Net noncash and nonrecurring costs per above
  
N/A
    
33
    
N/A
              
Treatment charges per above
  
N/A
    
32
    
N/A
              
Revenue adjustments, primarily for
                              
hedging per above
  
(83
)
  
N/A
    
N/A
              
Eliminations and other
  
(4
)
  
18
    
6
              
North America copper mines
  
1,402
    
847
d
  
194
              
South America copper mines
  
1,008
    
497
    
123
              
Indonesia mining
  
802
    
470
    
52
              
Africa mining
  
-
    
-
    
1
              
Molybdenum
  
683
    
417
    
52
              
Rod & Refining
  
1,485
    
1,478
    
2
              
Atlantic Copper Smelting & Refining
  
625
    
611
    
9
              
Corporate, other & eliminations
  
(1,389
)
  
(1,446
)
  
9
              
As reported in FCX’s consolidated financial statements
$
4,616
  
$
2,874
d
$
442
              
                               
a. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.
b. Includes gold and silver product revenues and production costs.
c. Reflects molybdenum produced by the North America copper mines.
d. Includes lower of cost or market copper inventory adjustments of $17 million.
 
 
IX
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments shown below
$
1,908
  
$
1,908
  
$
206
  
$
29
  
$
2,143
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1,116
    
1,027
    
107
    
15
    
1,149
  
By-product creditsa
  
(202
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
74
    
73
    
-
    
1
    
74
  
Net cash costs
  
988
    
1,100
    
107
    
16
    
1,223
  
Depreciation, depletion and amortization
  
197
    
188
    
7
    
2
    
197
  
Noncash and nonrecurring costs, net
  
107
    
105
    
2
    
-
    
107
  
Total costs
  
1,292
    
1,393
    
116
    
18
    
1,527
  
Revenue adjustments, primarily for hedging
  
94
    
94
    
-
    
-
    
94
  
Idle facility and other non-inventoriable costs
  
(84
)
  
(84
)
  
-
    
-
    
(84
)
Gross profit
$
626
  
$
525
  
$
90
  
$
11
  
$
626
  
                               
Copper sales (in million pounds)
  
885
    
885
                    
Molybdenum sales (in million pounds)c
              
20
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments shown below
$
2.15
  
$
2.15
  
$
10.52
              
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.26
    
1.16
    
5.46
              
By-product credits
  
(0.23
)
  
-
    
-
              
Treatment charges
  
0.09
    
0.09
    
-
              
Unit net cash costs
  
1.12
    
1.25
    
5.46
              
Depreciation, depletion and amortization
  
0.22
    
0.21
    
0.37
              
Noncash and nonrecurring costs, net
  
0.12
    
0.12
    
0.08
              
Total unit costs
  
1.46
    
1.58
    
5.91
              
Revenue adjustments, primarily for hedging
  
0.11
    
0.11
    
-
              
Idle facility and other non-inventoriable costs
  
(0.09
)
  
(0.09
)
  
-
              
Gross profit per pound
$
0.71
  
$
0.59
  
$
4.61
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
2,143
  
$
1,149
  
$
197
              
Net noncash and nonrecurring costs per above
  
N/A
    
107
    
N/A
              
Treatment charges per above
  
N/A
    
74
    
N/A
              
Revenue adjustments, primarily for
                              
hedging per above
  
94
    
N/A
    
N/A
              
Eliminations and other
  
4
    
135
    
12
              
North America copper mines
  
2,241
    
1,465
    
209
              
South America copper mines
  
2,604
    
1,112
    
201
              
Indonesia mining
  
4,388
    
1,134
    
207
              
Africa mining
  
170
    
197
    
37
              
Molybdenum
  
590
    
477
d
  
35
              
Rod & Refining
  
2,329
    
2,314
    
6
              
Atlantic Copper Smelting & Refining
  
1,202
    
1,205
    
26
              
Corporate, other & eliminations
  
(3,094
)
  
(2,799
)
  
19
              
As reported in FCX’s consolidated financial statements
$
10,430
  
$
5,105
d
$
740
              
                               
a. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.
b. Includes gold and silver product revenues and production costs.
c. Reflects molybdenum produced by the North America copper mines.
d. Includes lower of cost or market molybdenum inventory adjustments of $19 million.
 
 
X
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments shown below
$
3,721
  
$
3,721
  
$
720
  
$
59
  
$
4,500
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1,936
    
1,684
    
265
    
26
    
1,975
  
By-product creditsa
  
(740
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
100
    
97
    
-
    
3
    
100
  
Net cash costs
  
1,296
    
1,781
    
265
    
29
    
2,075
  
Depreciation, depletion and amortization
  
551
    
490
    
56
    
5
    
551
  
Noncash and nonrecurring costs, net
  
83
    
79
    
3
    
1
    
83
  
Total costs
  
1,930
    
2,350
    
324
    
35
    
2,709
  
Revenue adjustments, primarily for hedging
  
(28
)
  
(28
)
  
-
    
-
    
(28
)
Idle facility and other non-inventoriable costs
  
(43
)
  
(42
)
  
(1
)
  
-
    
(43
)
Gross profit
$
1,720
  
$
1,301
  
$
395
  
$
24
  
$
1,720
  
                               
Copper sales (in million pounds)
  
1,044
    
1,044
                    
Molybdenum sales (in million pounds)c
              
22
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments shown below
$
3.56
  
$
3.56
  
$
33.01
              
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.86
    
1.61
    
12.14
              
By-product credits
  
(0.71
)
  
-
    
-
              
Treatment charges
  
0.09
    
0.09
    
-
              
Unit net cash costs
  
1.24
    
1.70
    
12.14
              
Depreciation, depletion and amortization
  
0.53
    
0.47
    
2.57
              
Noncash and nonrecurring costs, net
  
0.08
    
0.08
    
0.15
              
Total unit costs
  
1.85
    
2.25
    
14.86
              
Revenue adjustments, primarily for hedging
  
(0.03
)
  
(0.03
)
  
-
              
Idle facility and other non-inventoriable costs
  
(0.04
)
  
(0.04
)
  
(0.03
)
            
Gross profit per pound
$
1.64
  
$
1.24
  
$
18.12
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
4,500
  
$
1,975
  
$
551
              
Net noncash and nonrecurring costs per above
  
N/A
    
83
    
N/A
              
Treatment charges per above
  
N/A
    
100
    
N/A
              
Revenue adjustments, primarily for
                              
hedging per above
  
(28
)
  
N/A
    
N/A
              
Eliminations and other
  
(3
)
  
58
    
14
              
North America copper mines
  
4,469
    
2,216
d
  
565
              
South America copper mines
  
4,043
    
1,391
    
380
              
Indonesia mining
  
2,870
    
1,308
    
145
              
Africa mining
  
-
    
12
    
3
              
Molybdenum
  
2,117
    
1,298
    
160
              
Rod & Refining
  
4,856
    
4,831
    
5
              
Atlantic Copper Smelting & Refining
  
2,014
    
1,960
    
27
              
Corporate, other & eliminations
  
(4,640
)
  
(4,700
)
  
37
              
As reported in FCX’s consolidated financial statements
$
15,729
  
$
8,316
d
$
1,322
              
                               
a. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.
b. Includes gold and silver product revenues and production costs.
c. Reflects molybdenum produced by the North America copper mines.
d. Includes lower of cost or market copper inventory adjustments of $22 million.
 
 
XI
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments shown below
$
912
  
$
912
  
$
33
  
$
945
  
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
372
    
357
    
15
    
372
  
By-product credits
  
(33
)
  
-
    
-
    
-
  
Treatment charges
  
50
    
50
    
-
    
50
  
Net cash costs
  
389
    
407
    
15
    
422
  
Depreciation, depletion and amortization
  
67
    
65
    
2
    
67
  
Noncash and nonrecurring costs, net
  
4
    
4
    
-
    
4
  
Total costs
  
460
    
476
    
17
    
493
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
123
    
123
    
-
    
123
  
Other non-inventoriable costs
  
(8
)
  
(8
)
  
-
    
(8
)
Gross profit
$
567
  
$
551
  
$
16
  
$
567
  
                         
Copper sales (in million pounds)
  
327
    
327
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments shown below
$
2.79
  
$
2.79
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1.14
    
1.09
              
By-product credits
  
(0.10
)
  
-
              
Treatment charges
  
0.15
    
0.15
              
Unit net cash costs
  
1.19
    
1.24
              
Depreciation, depletion and amortization
  
0.20
    
0.20
              
Noncash and nonrecurring costs, net
  
0.01
    
0.02
              
Total unit costs
  
1.40
    
1.46
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
0.37
    
0.37
              
Other non-inventoriable costs
  
(0.03
)
  
(0.02
)
            
Gross profit per pound
$
1.73
  
$
1.68
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
945
  
$
372
  
$
67
        
Net noncash and nonrecurring costs per above
  
N/A
    
4
    
N/A
        
Less: Treatment charges per above
  
(50
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
123
    
N/A
    
N/A
        
Eliminations and other
  
-
    
3
    
-
        
South America copper mines
  
1,018
    
379
    
67
        
North America copper mines
  
920
    
451
    
70
        
Indonesia mining
  
1,656
    
369
    
64
        
Africa mining
  
113
    
89
    
20
        
Molybdenum
  
258
    
177
    
13
        
Rod & Refining
  
963
    
957
    
2
        
Atlantic Copper Smelting & Refining
  
495
    
493
    
9
        
Corporate, other & eliminations
  
(1,279
)
  
(1,200
)
  
7
        
As reported in FCX’s consolidated financial statements
$
4,144
  
$
1,715
  
$
252
        
                         
a. Includes gold and silver product revenues and production costs.
 

 
XII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments shown below
$
1,181
  
$
1,181
  
$
62
  
$
1,243
  
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
476
    
453
    
27
    
480
  
By-product credits
  
(58
)
  
-
    
-
    
-
  
Treatment charges
  
36
    
36
    
-
    
36
  
Net cash costs
  
454
    
489
    
27
    
516
  
Depreciation, depletion and amortization
  
122
    
117
    
5
    
122
  
Noncash and nonrecurring costs, net
  
13
    
12
    
1
    
13
  
Total costs
  
589
    
618
    
33
    
651
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(198
)
  
(198
)
  
-
    
(198
)
Other non-inventoriable costs
  
(5
)
  
(4
)
  
(1
)
  
(5
)
Gross profit
$
389
  
$
361
  
$
28
  
$
389
  
                         
Copper sales (in million pounds)
  
391
    
391
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments shown below
$
3.02
  
$
3.02
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1.22
    
1.16
              
By-product credits
  
(0.15
)
  
-
              
Treatment charges
  
0.09
    
0.09
              
Unit net cash costs
  
1.16
    
1.25
              
Depreciation, depletion and amortization
  
0.32
    
0.30
              
Noncash and nonrecurring costs, net
  
0.03
    
0.03
              
Total unit costs
  
1.51
    
1.58
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(0.51
)
  
(0.51
)
            
Other non-inventoriable costs
  
(0.01
)
  
(0.01
)
            
Gross profit per pound
$
0.99
  
$
0.92
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
1,243
  
$
480
  
$
122
        
Net noncash and nonrecurring costs per above
  
N/A
    
13
    
N/A
        
Less: Treatment charges per above
  
(36
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
(198
)
  
N/A
    
N/A
        
Eliminations and other
  
(1
)
  
4
    
1
        
South America copper mines
  
1,008
    
497
    
123
        
North America copper mines
  
1,402
    
847
b
  
194
        
Indonesia mining
  
802
    
470
    
52
        
Africa mining
  
-
    
-
    
1
        
Molybdenum
  
683
    
417
    
52
        
Rod & Refining
  
1,485
    
1,478
    
2
        
Atlantic Copper Smelting & Refining
  
625
    
611
    
9
        
Corporate, other & eliminations
  
(1,389
)
  
(1,446
)
  
9
        
As reported in FCX’s consolidated financial statements
$
4,616
  
$
2,874
b
$
442
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
b. Includes lower of cost or market copper inventory adjustments of $17 million.
 
 
XIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments shown below
$
2,530
  
$
2,530
  
$
117
  
$
2,647
  
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1,088
    
1,026
    
68
    
1,094
  
By-product credits
  
(111
)
  
-
    
-
    
-
  
Treatment charges
  
152
    
152
    
-
    
152
  
Net cash costs
  
1,129
    
1,178
    
68
    
1,246
  
Depreciation, depletion and amortization
  
201
    
194
    
7
    
201
  
Noncash and nonrecurring costs, net
  
7
    
8
    
(1
)
  
7
  
Total costs
  
1,337
    
1,380
    
74
    
1,454
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
108
    
108
    
-
    
108
  
Other non-inventoriable costs
  
(25
)
  
(21
)
  
(4
)
  
(25
)
Gross profit
$
1,276
  
$
1,237
  
$
39
  
$
1,276
  
                         
Copper sales (in million pounds)
  
1,040
    
1,040
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments shown below
$
2.43
  
$
2.43
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1.05
    
0.99
              
By-product credits
  
(0.11
)
  
-
              
Treatment charges
  
0.15
    
0.14
              
Unit net cash costs
  
1.09
    
1.13
              
Depreciation, depletion and amortization
  
0.19
    
0.19
              
Noncash and nonrecurring costs, net
  
0.01
    
0.01
              
Total unit costs
  
1.29
    
1.33
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
0.11
    
0.11
              
Other non-inventoriable costs
  
(0.02
)
  
(0.02
)
            
Gross profit per pound
$
1.23
  
$
1.19
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
2,647
  
$
1,094
  
$
201
        
Net noncash and nonrecurring costs per above
  
N/A
    
7
    
N/A
        
Less: Treatment charges per above
  
(152
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
108
    
N/A
    
N/A
        
Eliminations and other
  
1
    
11
    
-
        
South America copper mines
  
2,604
    
1,112
    
201
        
North America copper mines
  
2,241
    
1,465
    
209
        
Indonesia mining
  
4,388
    
1,134
    
207
        
Africa mining
  
170
    
197
    
37
        
Molybdenum
  
590
    
477
b
  
35
        
Rod & Refining
  
2,329
    
2,314
    
6
        
Atlantic Copper Smelting & Refining
  
1,202
    
1,205
    
26
        
Corporate, other & eliminations
  
(3,094
)
  
(2,799
)
  
19
        
As reported in FCX’s consolidated financial statements
$
10,430
  
$
5,105
b
$
740
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
b. Includes lower of cost or market molybdenum inventory adjustments of $19 million.
 
 
XIV
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments shown below
$
3,794
  
$
3,794
  
$
167
  
$
3,961
  
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1,294
    
1,243
    
64
    
1,307
  
By-product credits
  
(154
)
  
-
    
-
    
-
  
Treatment charges
  
180
    
180
    
-
    
180
  
Net cash costs
  
1,320
    
1,423
    
64
    
1,487
  
Depreciation, depletion and amortization
  
379
    
365
    
14
    
379
  
Noncash and nonrecurring costs, net
  
69
    
68
    
1
    
69
  
Total costs
  
1,768
    
1,856
    
79
    
1,935
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
232
    
232
    
-
    
232
  
Other non-inventoriable costs
  
(24
)
  
(22
)
  
(2
)
  
(24
)
Gross profit
$
2,234
  
$
2,148
  
$
86
  
$
2,234
  
                         
Copper sales (in million pounds)
  
1,122
    
1,122
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments shown below
$
3.38
  
$
3.38
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
1.15
    
1.11
              
By-product credits
  
(0.13
)
  
-
              
Treatment charges
  
0.16
    
0.16
              
Unit net cash costs
  
1.18
    
1.27
              
Depreciation, depletion and amortization
  
0.34
    
0.32
              
Noncash and nonrecurring costs, net
  
0.06
    
0.06
              
Total unit costs
  
1.58
    
1.65
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
0.21
    
0.21
              
Other non-inventoriable costs
  
(0.02
)
  
(0.03
)
            
Gross profit per pound
$
1.99
  
$
1.91
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
3,961
  
$
1,307
  
$
379
        
Net noncash and nonrecurring costs per above
  
N/A
    
69
    
N/A
        
Less: Treatment charges per above
  
(180
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
232
    
N/A
    
N/A
        
Eliminations and other
  
30
    
15
    
1
        
South America copper mines
  
4,043
    
1,391
    
380
        
North America copper mines
  
4,469
    
2,216
b
  
565
        
Indonesia mining
  
2,870
    
1,308
    
145
        
Africa mining
  
-
    
12
    
3
        
Molybdenum
  
2,117
    
1,298
    
160
        
Rod & Refining
  
4,856
    
4,831
    
5
        
Atlantic Copper Smelting & Refining
  
2,014
    
1,960
    
27
        
Corporate, other & eliminations
  
(4,640
)
  
(4,700
)
  
37
        
As reported in FCX’s consolidated financial statements
$
15,729
  
$
8,316
b
$
1,322
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
b. Includes lower of cost or market copper inventory adjustments of $22 million.

 
XV
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments shown below
$
917
  
$
917
  
$
678
  
$
17
  
$
1,612
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
365
    
208
    
153
    
4
    
365
  
Gold and silver credits
  
(695
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
79
    
45
    
33
    
1
    
79
  
Royalty on metals
  
39
    
22
    
17
    
-
    
39
  
Net cash (credits) costs
  
(212
)
  
275
    
203
    
5
    
483
  
Depreciation and amortization
  
64
    
37
    
27
    
-
    
64
  
Noncash and nonrecurring costs, net
  
4
    
2
    
2
    
-
    
4
  
Total (credits) costs
  
(144
)
  
314
    
232
    
5
    
551
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
162
    
162
    
-
    
-
    
162
  
PT Smelting intercompany profit
  
(10
)
  
(5
)
  
(4
)
  
(1
)
  
(10
)
Gross profit
$
1,213
  
$
760
  
$
442
  
$
11
  
$
1,213
  
                               
Sales
                              
Copper (in million pounds)
  
330
    
330
                    
Gold (in thousand ounces)
              
683
              
Silver (in thousand ounces)
                    
1,105
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments shown below
$
2.77
  
$
2.77
  
$
987.55
  
$
15.54
        
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.10
    
0.63
    
224.69
    
3.51
        
Gold and silver credits
  
(2.10
)
  
-
    
-
    
-
        
Treatment charges
  
0.24
    
0.13
    
48.33
    
0.76
        
Royalty on metals
  
0.12
    
0.07
    
24.24
    
0.38
        
Unit net cash (credits) costs
  
(0.64
)
  
0.83
    
297.26
    
4.65
        
Depreciation and amortization
  
0.20
    
0.11
    
39.82
    
0.62
        
Noncash and nonrecurring costs, net
  
0.01
    
0.01
    
2.42
    
0.04
        
Total unit (credits) costs
  
(0.43
)
  
0.95
    
339.50
    
5.31
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
0.49
    
0.49
    
4.80
    
(0.02
)
      
PT Smelting intercompany profit
  
(0.02
)
  
(0.01
)
  
(5.65
)
  
(0.09
)
      
Gross profit per pound/ounce
$
3.67
  
$
2.30
  
$
647.20
  
$
10.12
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
1,612
  
$
365
  
$
64
              
Net noncash and nonrecurring costs per above
  
N/A
    
4
    
N/A
              
Less:    Treatment charges per above
  
(79
)
  
N/A
    
N/A
              
  Royalty on metals per above
  
(39
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
162
    
N/A
    
N/A
              
Indonesia mining
  
1,656
    
369
    
64
              
North America copper mines
  
920
    
451
    
70
              
South America copper mines
  
1,018
    
379
    
67
              
Africa mining
  
113
    
89
    
20
              
Molybdenum
  
258
    
177
    
13
              
Rod & Refining
  
963
    
957
    
2
              
Atlantic Copper Smelting & Refining
  
495
    
493
    
9
              
Corporate, other & eliminations
  
(1,279
)
  
(1,200
)
  
7
              
As reported in FCX’s consolidated financial statements
$
4,144
  
$
1,715
  
$
252
              
                               
 

 
XVI
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments shown below
$
783
  
$
783
  
$
233
  
$
11
  
$
1,027
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
466
    
355
    
106
    
5
    
466
  
Gold and silver credits
  
(244
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
63
    
48
    
14
    
1
    
63
  
Royalty on metals
  
32
    
24
    
8
    
-
    
32
  
Net cash costs
  
317
    
427
    
128
    
6
    
561
  
Depreciation and amortization
  
52
    
40
    
12
    
-
    
52
  
Noncash and nonrecurring costs, net
  
4
    
3
    
1
    
-
    
4
  
Total costs
  
373
    
470
    
141
    
6
    
617
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(130
)
  
(130
)
  
-
    
-
    
(130
)
PT Smelting intercompany profit
  
10
    
8
    
2
    
-
    
10
  
Gross profit
$
290
  
$
191
  
$
94
  
$
5
  
$
290
  
                               
Sales
                              
Copper (in million pounds)
  
264
    
264
                    
Gold (in thousand ounces)
              
271
              
Silver (in thousand ounces)
                    
812
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments shown below
$
2.94
  
$
2.94
  
$
870.08
  
$
14.21
        
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.76
    
1.34
    
390.55
    
6.18
        
Gold and silver credits
  
(0.93
)
  
-
    
-
    
-
        
Treatment charges
  
0.24
    
0.18
    
52.81
    
0.84
        
Royalty on metals
  
0.12
    
0.09
    
26.30
    
0.42
        
Unit net cash costs
  
1.19
    
1.61
    
469.66
    
7.44
        
Depreciation and amortization
  
0.20
    
0.15
    
44.45
    
0.70
        
Noncash and nonrecurring costs, net
  
0.02
    
0.02
    
3.70
    
0.06
        
Total unit costs
  
1.41
    
1.78
    
517.81
    
8.20
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(0.47
)
  
(0.47
)
  
(8.72
)
  
(0.57
)
      
PT Smelting intercompany profit
  
0.04
    
0.03
    
8.38
    
0.13
        
Gross profit per pound/ounce
$
1.10
  
$
0.72
  
$
351.93
  
$
5.57
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
1,027
  
$
466
  
$
52
              
Net noncash and nonrecurring costs per above
  
N/A
    
4
    
N/A
              
Less:    Treatment charges per above
  
(63
)
  
N/A
    
N/A
              
  Royalty on metals per above
  
(32
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
(130
)
  
N/A
    
N/A
              
Indonesia mining
  
802
    
470
    
52
              
North America copper mines
  
1,402
    
847
a
  
194
              
South America copper mines
  
1,008
    
497
    
123
              
Africa mining
  
-
    
-
    
1
              
Molybdenum
  
683
    
417
    
52
              
Rod & Refining
  
1,485
    
1,478
    
2
              
Atlantic Copper Smelting & Refining
  
625
    
611
    
9
              
Corporate, other & eliminations
  
(1,389
)
  
(1,446
)
  
9
              
As reported in FCX’s consolidated financial statements
$
4,616
  
$
2,874
a
$
442
              
                               
a. Includes lower of cost or market copper inventory adjustments of $17 million.
 
 
XVII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments shown below
$
2,730
  
$
2,730
  
$
1,908
  
$
57
  
$
4,695
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1,105
    
642
    
449
    
14
    
1,105
  
Gold and silver credits
  
(1,965
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
248
    
144
    
101
    
3
    
248
  
Royalty on metals
  
113
    
66
    
46
    
1
    
113
  
Net cash (credits) costs
  
(499
)
  
852
    
596
    
18
    
1,466
  
Depreciation and amortization
  
207
    
121
    
84
    
2
    
207
  
Noncash and nonrecurring costs, net
  
29
    
17
    
12
    
-
    
29
  
Total (credits) costs
  
(263
)
  
990
    
692
    
20
    
1,702
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
54
    
54
    
-
    
-
    
54
  
PT Smelting intercompany profit
  
(47
)
  
(27
)
  
(19
)
  
(1
)
  
(47
)
Gross profit
$
3,000
  
$
1,767
  
$
1,197
  
$
36
  
$
3,000
  
                               
Sales
                              
Copper (in million pounds)
  
1,131
    
1,131
                    
Gold (in thousand ounces)
              
2,015
              
Silver (in thousand ounces)
                    
4,054
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments shown below
$
2.41
  
$
2.41
  
$
944.05
  
$
13.94
        
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
0.98
    
0.57
    
222.78
    
3.33
        
Gold and silver credits
  
(1.74
)
  
-
    
-
    
-
        
Treatment charges
  
0.22
    
0.12
    
49.92
    
0.75
        
Royalty on metals
  
0.10
    
0.06
    
22.92
    
0.34
        
Unit net cash (credits) costs
  
(0.44
)
  
0.75
    
295.62
    
4.42
        
Depreciation and amortization
  
0.18
    
0.11
    
41.81
    
0.63
        
Noncash and nonrecurring costs, net
  
0.03
    
0.02
    
5.89
    
0.09
        
Total unit (credits) costs
  
(0.23
)
  
0.88
    
343.32
    
5.14
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
0.05
    
0.05
    
2.74
    
0.23
        
PT Smelting intercompany profit
  
(0.04
)
  
(0.02
)
  
(9.38
)
  
(0.14
)
      
Gross profit per pound/ounce
$
2.65
  
$
1.56
  
$
594.09
  
$
8.89
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
4,695
  
$
1,105
  
$
207
              
Net noncash and nonrecurring costs per above
  
N/A
    
29
    
N/A
              
Less:    Treatment charges per above
  
(248
)
  
N/A
    
N/A
              
  Royalty on metals per above
  
(113
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
54
    
N/A
    
N/A
              
Indonesia mining
  
4,388
    
1,134
    
207
              
North America copper mines
  
2,241
    
1,465
    
209
              
South America copper mines
  
2,604
    
1,112
    
201
              
Africa mining
  
170
    
197
    
37
              
Molybdenum
  
590
    
477
a
  
35
              
Rod & Refining
  
2,329
    
2,314
    
6
              
Atlantic Copper Smelting & Refining
  
1,202
    
1,205
    
26
              
Corporate, other & eliminations
  
(3,094
)
  
(2,799
)
  
19
              
As reported in FCX’s consolidated financial statements
$
10,430
  
$
5,105
a
$
740
              
                               
a. Includes lower of cost or market molybdenum inventory adjustments of $19 million.
 
 
XVIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Nine Months Ended September 30, 2008
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments shown below
$
2,344
  
$
2,344
  
$
686
  
$
40
  
$
3,070
  
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1,285
    
981
    
287
    
17
    
1,285
  
Gold and silver credits
  
(726
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
195
    
149
    
44
    
2
    
195
  
Royalty on metals
  
87
    
67
    
19
    
1
    
87
  
Net cash costs
  
841
    
1,197
    
350
    
20
    
1,567
  
Depreciation and amortization
  
145
    
110
    
33
    
2
    
145
  
Noncash and nonrecurring costs, net
  
23
    
18
    
5
    
-
    
23
  
Total costs
  
1,009
    
1,325
    
388
    
22
    
1,735
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
82
    
82
    
-
    
-
    
82
  
PT Smelting intercompany profit
  
5
    
4
    
1
    
-
    
5
  
Gross profit
$
1,422
  
$
1,105
  
$
299
  
$
18
  
$
1,422
  
                               
Sales
                              
Copper (in million pounds)
  
700
    
700
                    
Gold (in thousand ounces)
              
757
              
Silver (in thousand ounces)
                    
2,413
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments shown below
$
3.33
  
$
3.33
  
$
897.19
  
$
16.13
        
                               
Site production and delivery, before net noncash
                              
and nonrecurring costs shown below
  
1.84
    
1.40
    
379.34
    
6.93
        
Gold and silver credits
  
(1.04
)
  
-
    
-
    
-
        
Treatment charges
  
0.28
    
0.21
    
57.68
    
1.05
        
Royalty on metals
  
0.12
    
0.09
    
25.51
    
0.47
        
Unit net cash costs
  
1.20
    
1.70
    
462.53
    
8.45
        
Depreciation and amortization
  
0.21
    
0.16
    
42.89
    
0.78
        
Noncash and nonrecurring costs, net
  
0.03
    
0.03
    
6.85
    
0.13
        
Total unit costs
  
1.44
    
1.89
    
512.27
    
9.36
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
0.13
    
0.13
    
9.05
    
0.43
        
PT Smelting intercompany profit
  
0.01
    
0.01
    
1.38
    
0.03
        
Gross profit per pound/ounce
$
2.03
  
$
1.58
  
$
395.35
  
$
7.23
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
3,070
  
$
1,285
  
$
145
              
Net noncash and nonrecurring costs per above
  
N/A
    
23
    
N/A
              
Less:    Treatment charges per above
  
(195
)
  
N/A
    
N/A
              
  Royalty on metals per above
  
(87
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
82
    
N/A
    
N/A
              
Indonesia mining
  
2,870
    
1,308
    
145
              
North America copper mines
  
4,469
    
2,216
a
  
565
              
South America copper mines
  
4,043
    
1,391
    
380
              
Africa mining
  
-
    
12
    
3
              
Molybdenum
  
2,117
    
1,298
    
160
              
Rod & Refining
  
4,856
    
4,831
    
5
              
Atlantic Copper Smelting & Refining
  
2,014
    
1,960
    
27
              
Corporate, other & eliminations
  
(4,640
)
  
(4,700
)
  
37
              
As reported in FCX’s consolidated financial statements
$
15,729
  
$
8,316
a
$
1,322
              
                               
a. Includes lower of cost or market copper inventory adjustments of $22 million.

 
XIX
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Henderson Molybdenum Mine Product Revenues and Production Costs and Unit Net Cash Costs
                         
 
Three Months Ended
              
 
September 30,
              
(In Millions)
2009
  
2008
              
                         
Revenues
$
111
  
$
394
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
40
    
62
              
Net cash costs
  
40
    
62
              
Depreciation, depletion and amortization
  
8
    
53
              
Noncash and nonrecurring costs, net
  
1
    
5
              
Total costs
  
49
    
120
              
Gross profita
$
62
  
$
274
              
                         
Molybdenum sales (in million pounds)
  
8
    
13
              
                         
Gross profit per pound of molybdenum:
              
                         
Revenues
$
13.05
  
$
31.21
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
4.69
    
4.90
              
Unit net cash costs
  
4.69
    
4.90
              
Depreciation, depletion and amortization
  
1.00
    
4.20
              
Noncash and nonrecurring costs, net
  
0.02
    
0.39
              
Total unit costs
  
5.71
    
9.49
              
Gross profit per pound
$
7.34
  
$
21.72
              
                         
Reconciliation to Amounts Reported
                        
(In Millions)
          
Depreciation,
        
       
Production
  
Depletion and
        
Three Months Ended September 30, 2009
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
111
  
$
40
  
$
8
        
Net noncash and nonrecurring costs per above
  
N/A
    
1
    
N/A
        
Henderson mine
  
111
    
41
    
8
        
Other molybdenum operations and eliminationsb
  
147
    
136
    
5
        
Molybdenum
  
258
    
177
    
13
        
North America copper mines
  
920
    
451
    
70
        
South America copper mines
  
1,018
    
379
    
67
        
Indonesia mining
  
1,656
    
369
    
64
        
Africa mining
  
113
    
89
    
20
        
Rod & Refining
  
963
    
957
    
2
        
Atlantic Copper Smelting & Refining
  
495
    
493
    
9
        
Corporate, other & eliminations
  
(1,279
)
  
(1,200
)
  
7
        
As reported in FCX’s consolidated financial statements
$
4,144
  
$
1,715
  
$
252
        
                         
Three Months Ended September 30, 2008
                        
Totals presented above
$
394
  
$
62
  
$
53
        
Net noncash and nonrecurring costs per above
  
N/A
    
5
    
N/A
        
Henderson mine
  
394
    
67
    
53
        
Other molybdenum operations and eliminationsb
  
289
    
350
    
(1
)
      
Molybdenum
  
683
    
417
    
52
        
North America copper mines
  
1,402
    
847
c
  
194
        
South America copper mines
  
1,008
    
497
    
123
        
Indonesia mining
  
802
    
470
    
52
        
Africa mining
  
-
    
-
    
1
        
Rod & Refining
  
1,485
    
1,478
    
2
        
Atlantic Copper Smelting & Refining
  
625
    
611
    
9
        
Corporate, other & eliminations
  
(1,389
)
  
(1,446
)
  
9
        
As reported in FCX’s consolidated financial statements
$
4,616
  
$
2,874
c
$
442
        
                         
a. Gross profit reflects sales of Henderson products based on volumes produced at market-based pricing.  On a consolidated basis, the Molybdenum segment includes profits on sales    as they are made to third parties and realizations based on actual contract terms.  As a result, the actual gross profit realized will differ from the amounts reported in this table.
b. Primarily includes amounts associated with the molybdenum sales company, which is included in Molybdenum operations.
c. Includes lower of cost or market copper inventory adjustments of $17 million.
 
 
XX
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Henderson Molybdenum Mine Product Revenues and Production Costs and Unit Net Cash Costs
                         
 
Nine Months Ended
              
 
September 30,
              
(In Millions)
2009
  
2008
              
                         
Revenues
$
236
  
$
997
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
111
    
164
              
Net cash costs
  
111
    
164
              
Depreciation, depletion and amortization
  
20
    
139
              
Noncash and nonrecurring costs, net
  
1
    
6
              
Total costs
  
132
    
309
              
Gross profita
$
104
  
$
688
              
                         
Molybdenum sales (in million pounds)
  
21
    
33
              
                         
Gross profit per pound of molybdenum:
              
                         
Revenues
$
11.38
  
$
30.32
              
                         
Site production and delivery, before net noncash
                        
and nonrecurring costs shown below
  
5.34
    
4.99
              
Unit net cash costs
  
5.34
    
4.99
              
Depreciation, depletion and amortization
  
0.98
    
4.23
              
Noncash and nonrecurring costs, net
  
0.03
    
0.17
              
Total unit costs
  
6.35
    
9.39
              
Gross profit per pound
$
5.03
  
$
20.93
              
                         
Reconciliation to Amounts Reported
                        
(In Millions)
          
Depreciation,
        
       
Production
  
Depletion and
        
Nine Months Ended September 30, 2009
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
236
  
$
111
  
$
20
        
Net noncash and nonrecurring costs per above
  
N/A
    
1
    
N/A
        
Henderson mine
  
236
    
112
    
20
        
Other molybdenum operations and eliminationsb
  
354
    
365
c
  
15
        
Molybdenum
  
590
    
477
    
35
        
North America copper mines
  
2,241
    
1,465
    
209
        
South America copper mines
  
2,604
    
1,112
    
201
        
Indonesia mining
  
4,388
    
1,134
    
207
        
Africa mining
  
170
    
197
    
37
        
Rod & Refining
  
2,329
    
2,314
    
6
        
Atlantic Copper Smelting & Refining
  
1,202
    
1,205
    
26
        
Corporate, other & eliminations
  
(3,094
)
  
(2,799
)
  
19
        
As reported in FCX’s consolidated financial statements
$
10,430
  
$
5,105
c
$
740
        
                         
Nine Months Ended September 30, 2008
                        
Totals presented above
$
997
  
$
164
  
$
139
        
Net noncash and nonrecurring costs per above
  
N/A
    
6
    
N/A
        
Henderson mine
  
997
    
170
    
139
        
Other molybdenum operations and eliminationsb
  
1,120
    
1,128
    
21
        
Molybdenum
  
2,117
    
1,298
    
160
        
North America copper mines
  
4,469
    
2,216
d
  
565
        
South America copper mines
  
4,043
    
1,391
    
380
        
Indonesia mining
  
2,870
    
1,308
    
145
        
Africa mining
  
-
    
12
    
3
        
Rod & Refining
  
4,856
    
4,831
    
5
        
Atlantic Copper Smelting & Refining
  
2,014
    
1,960
    
27
        
Corporate, other & eliminations
  
(4,640
)
  
(4,700
)
  
37
        
As reported in FCX’s consolidated financial statements
$
15,729
  
$
8,316
d
$
1,322
        
                         
a. Gross profit reflects sales of Henderson products based on volumes produced at market-based pricing.  On a consolidated basis, the Molybdenum segment includes profits on sales as they are made to third parties and realizations based on actual contract terms.  As a result, the actual gross profit realized will differ from the amounts reported in this table.
b. Primarily includes amounts associated with the molybdenum sales company, which is included in Molybdenum operations.
c. Includes lower of cost or market molybdenum inventory adjustments of $19 million.
d. Includes lower of cost or market copper inventory adjustments of $22 million.

 
XXI
 

FREEPORT-McMoRan COPPER & GOLD INC.
PROVISION FOR INCOME TAXES

FCX’s third-quarter 2009 income tax provision resulted from taxes on international operations ($660 million) and U.S. operations ($24 million).  FCX’s income tax provision for the first nine months of 2009 resulted from taxes on international operations ($1.5 billion) and U.S. operations ($29 million).  FCX’s effective tax rate for 2009 has been highly sensitive to changes in commodity prices and the mix of income between U.S. and international operations.  Income taxes for FCX’s South America and Indonesia operations are recorded at the applicable statutory rates.  At certain commodity prices, FCX does not record a benefit for losses generated in the U.S. and those losses cannot be used to offset income generated from international operations.  The differences between FCX’s consolidated effective tax rates for the 2009 periods and the U.S. federal statutory rate of 35 percent were primarily attributable to the high proportion of income earned in Indonesia, which was taxed at an effective rate of 43 percent.

FCX’s third-quarter 2008 income tax provision resulted from taxes on international operations ($230 million) and U.S. operations ($10 million).  FCX’s income tax provision for the first nine months of 2008 resulted from taxes on international operations ($1.3 billion) and U.S. operations ($308 million).  The differences between FCX’s consolidated effective income tax rates for the 2008 periods and the U.S. federal statutory rate of 35 percent were primarily attributable to a U.S. benefit for percentage depletion, partly offset by withholding taxes and incremental U.S. income tax accrued on foreign earnings.

A summary of the approximate amounts in the calculation of FCX’s consolidated provision for income taxes for the three-month and nine-month periods ended September 30, 2009 and 2008 follows (in millions, except percentages):

   
Three Months Ended September 30,
  
   
2009
  
2008
  
             
Income Tax
              
Income Tax
  
   
Income
    
Effective
  
Provision
  
Income
    
Effective
  
Provision
  
   
(Loss)a
    
Tax Rate
  
(Benefit)
  
(Loss)a
    
Tax Rate
  
(Benefit)
  
U.S.
  
$
183
    
13%
  
$
24
  
$
358
    
3%
  
$
10
  
South America
    
575
    
34%
    
197
    
387
    
28%
    
109
  
Indonesia
    
1,193
    
43%
    
508
    
271
    
42%
    
114
  
Africa
    
(25
)
  
12%
    
(3
)
  
-
    
30%
    
-
  
Eliminations and other
    
(42
)
  
N/A
    
(18
)
  
(36
)
  
N/A
    
(34
)
Annualized rate adjustmentb
    
N/A
    
N/A
    
(24
)
  
N/A
    
N/A
    
41
  
Consolidated FCX
  
$
1,884
    
36%c
  
$
684
  
$
980
    
24%
  
$
240
  

   
Nine Months Ended September 30,
  
   
2009
  
2008
  
             
Income Tax
              
Income Tax
  
   
Income
    
Effective
  
Provision
  
Income
    
Effective
  
Provision
  
   
(Loss)a
    
Tax Rate
  
(Benefit)
  
(Loss)a
    
Tax Rate
  
(Benefit)
  
U.S.
  
$
(135
)
  
(21)%
  
$
29
  
$
1,649
    
19%
  
$
308
  
South America
    
1,269
    
33%
    
418
    
2,225
    
32%
    
717
  
Indonesia
    
2,952
    
43%
    
1,257
    
1,324
    
42%
    
558
  
Africa
    
(111
)
  
26%
    
(29
)
  
-
    
30%
    
-
  
Eliminations and other
    
(217
)
  
N/A
    
(74
)
  
(56
)
  
N/A
    
(15
)
Annualized rate adjustmentb
    
N/A
    
N/A
    
(44
)
  
N/A
    
N/A
    
59
  
Consolidated FCX
  
$
3,758
    
41%c
  
$
1,557
  
$
5,142
    
32%
  
$
1,627
  

a.  
Represents income (loss) by geographic location before income taxes and equity in affiliated companies’ net earnings.
b.  
In accordance with applicable accounting rules, FCX adjusts its interim provision for income taxes to equal its estimated annualized tax rate.
c.  
FCX’s estimated consolidated effective tax rate for 2009 will vary with commodity price changes and the mix of income from international and U.S. operations.  Following is a summary of FCX’s estimated annual and fourth quarter consolidated effective tax rates using projected sales volumes and based on various commodity price assumptions for the fourth quarter of 2009.

   
Estimated
  
Estimated
  
 
Copper
    
Gold
    
Molybdenum
  
Annual Effective
  
Fourth Quarter
  
 
(per pound)
    
(per ounce)
    
(per pound)
  
Tax Rate
  
Tax Rate
  
$
2.25
  
$
1,000
  
$
10
  
44%
  
57%
  
$
2.75
  
$
1,000
  
$
10
  
42%
  
44%
  
$
3.25
  
$
1,000
  
$
10
  
41%
  
41%
  
 
 
XXII
 

FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS

FCX has organized its mining operations into five primary divisions – North America copper mines, South America copper mines, Indonesia mining, Africa mining and Molybdenum operations.  Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis.  Therefore, FCX concluded that its operating segments include individual mines.  Operating segments that meet certain thresholds are reportable segments.  Further discussion of the reportable segments included in FCX’s primary operating divisions, as well as FCX’s other reportable segments – Rod & Refining and Atlantic Copper Smelting & Refining – follows.

North America Copper Mines.  FCX currently has five operating copper mines in North America – Morenci, Sierrita, Bagdad, Safford and Tyrone.  The North America mines division includes the Morenci copper mine as a reportable segment.  Other North America copper mines include FCX’s other southwestern U.S. copper mines including mines on care-and-maintenance status.  In addition to copper, the Sierrita and Bagdad mines produce molybdenum concentrates as a by-product.

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.  The South America copper mines division includes the Cerro Verde copper mine as a reportable segment.  Other South America copper mines include FCX’s Chilean copper mines.  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 mine.  The Tenke Fungurume mine produces copper cathode and cobalt hydroxide.  Copper cathode production commenced in March 2009 and the cobalt plant and sulphuric acid plant were commissioned in the third quarter of 2009.

Molybdenum.  The Molybdenum segment includes the Henderson molybdenum mine in Colorado and related conversion facilities.  The Molybdenum segment also includes a sales company that purchases and sells molybdenum from the Henderson mine as well as from the 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, including a refinery, three rod mills and a specialty copper products facility.  This segment processes copper produced at FCX’s North America mines and purchased copper into copper cathode, rod and custom copper shapes.  At times this segment refines copper and produces copper rod and shapes for customers on a toll basis.

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.

Intersegment Sales.  Intersegment sales between FCX’s operations are based on similar arms-length transactions with third parties at the time of the sale.  Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

Allocations.  FCX allocates certain operating costs, expenses and capital expenditures to the operating divisions and individual segments.  However, not all costs and expenses applicable to a mine or operation are allocated.  All U.S. federal and state income taxes are recorded and managed at the corporate level, whereas foreign income taxes are recorded and managed at the applicable mine or operation.  In addition, most exploration and research activities are managed at the corporate level, and those costs along with some selling, general and administrative costs are not allocated to the operating divisions or segments.  Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

 
XXIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS
(continued)
                                                     
(in millions)
North America Copper Mines
  
South America Copper Mines
  
Indonesia
  
Africa
                      
                                         
Atlantic
          
                                         
Copper
  
Corporate,
      
     
Other
      
Cerro
  
Other
              
Molyb-
  
Rod &
  
Smelting
  
Other &
  
FCX
  
Three Months Ended September 30, 2009
Morenci
  
 
Mines
  
Total
  
Verde
  
Mines
  
Total
  
Grasberg
  
Tenke
  
denum
  
Refining
  
& Refining
  
Eliminations
  
Total
  
Revenues:
                                                                              
Unaffiliated customers
$
18
  
$
25
  
$
43
  
$
386
  
$
546
  
$
932
  
$
1,348
a
$
113
  
$
258
  
$
955
  
$
495
  
$
-
  
$
4,144
  
Intersegment
  
299
    
578
    
877
    
83
    
3
    
86
    
308
    
-
    
-
    
8
    
-
    
(1,279
)
  
-
  
Production and delivery
  
148
    
303
    
451
    
154
    
225
    
379
    
369
    
89
    
177
    
957
    
493
    
(1,200
)
  
1,715
  
Depreciation, depletion and amortization
  
36
    
34
    
70
    
37
    
30
    
67
    
64
    
20
    
13
    
2
    
9
    
7
    
252
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
24
    
-
    
2
    
-
    
4
    
44
    
74
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
1
    
-
    
-
    
18
    
19
  
Operating income (loss)
  
133
    
266
    
399
    
278
    
294
    
572
    
1,199
    
4
    
65
    
4
    
(11
)
  
(148
)
  
2,084
  
                                                                               
Interest expense, net
  
1
    
3
    
4
    
-
    
-
    
-
    
2
    
5
    
-
    
-
    
1
    
150
    
162
  
Provision for (benefit from) income taxes
  
-
    
-
    
-
    
85
    
112
    
197
    
508
    
(3
)
  
-
    
-
    
-
    
(18
)
  
684
  
Total assets at September 30, 2009
  
1,977
    
4,012
    
5,989
    
4,259
    
2,426
    
6,685
    
5,446
    
3,318
    
1,771
    
321
    
1,069
    
1,106
    
25,705
  
Capital expenditures
  
8
    
13
    
21
    
13
    
5
    
18
    
58
    
119
    
11
    
2
    
11
    
4
    
244
  
                                                                               
                                                                               
Three Months Ended September 30, 2008
                                                                              
Revenues:
                                                                              
Unaffiliated customers
$
86
  
$
97
  
$
183
  
$
315
  
$
578
  
$
893
  
$
754
a
$
-
  
$
683
  
$
1,477
  
$
625
  
$
1
  
$
4,616
  
Intersegment
  
425
    
794
    
1,219
    
94
    
21
    
115
    
48
    
-
    
-
    
8
    
-
    
(1,390
)
  
-
  
Production and delivery
  
347
    
483
    
830
    
161
    
336
    
497
    
470
    
-
    
417
    
1,478
    
611
    
(1,446
)
  
2,857
  
Depreciation, depletion and amortization
  
81
    
113
    
194
    
42
    
81
    
123
    
52
    
1
    
52
    
2
    
9
    
9
    
442
  
Lower of cost or market inventory adjustments
  
-
    
17
    
17
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
17
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
20
    
-
    
3
    
-
    
4
    
63
    
90
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
77
    
77
  
Operating income (loss)
  
83
    
278
    
361
    
206
    
182
    
388
    
260
    
(1
)
  
211
    
5
    
1
    
(92
)
  
1,133
  
                                                                               
Interest expense, net
  
1
    
3
    
4
    
-
    
4
    
4
    
(1
)
  
-
    
-
    
1
    
3
    
128
    
139
  
Provision for income taxes
  
-
    
-
    
-
    
56
    
53
    
109
    
114
    
-
    
-
    
-
    
-
    
17
    
240
  
Goodwill at September 30, 2008
  
1,912
    
2,299
    
4,211
    
763
    
366
    
1,129
    
-
    
2
    
703
    
-
    
-
    
3
    
6,048
  
Total assets at September 30, 2008
  
7,130
    
12,222
    
19,352
    
4,933
    
4,350
    
9,283
    
4,121
    
2,254
    
4,181
    
493
    
856
    
1,466
    
42,006
  
Capital expenditures
  
85
    
110
    
195
    
26
    
37
    
63
    
109
    
314
    
60
    
2
    
7
    
16
    
766
  
                                                                               
 
a. Includes PT Freeport Indonesia’s sales to PT Smelting totaling $514 million in third-quarter 2009 and $376 million in third-quarter 2008.
                                                                               
 
 
XXIV
 

FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS
(continued)
                                                     
(in millions)
North America Copper Mines
  
South America Copper Mines
  
Indonesia
  
Africa
                      
                                         
Atlantic
          
                                         
Copper
  
Corporate,
      
     
Other
      
Cerro
  
Other
              
Molyb-
  
Rod &
  
Smelting
  
Other &
  
FCX
  
Nine Months Ended September 30, 2009
Morenci
  
Mines
  
Total
  
Verde
  
Mines
  
Total
  
Grasberg
  
Tenke
  
denum
  
Refining
  
& Refining
  
Eliminations
  
Total
  
Revenues:
                                                                              
Unaffiliated customers
$
57
  
$
75
  
$
132
  
$
974
  
$
1,349
  
$
2,323
  
$
3,698
a
$
170
  
$
590
  
$
2,309
  
$
1,202
  
$
6
  
$
10,430
  
Intersegment
  
745
    
1,364
    
2,109
    
230
    
51
    
281
    
690
    
-
    
-
    
20
    
-
    
(3,100
)
  
-
  
Production and delivery
  
482
    
983
    
1,465
    
456
    
656
    
1,112
    
1,134
    
197
b
  
458
    
2,314
    
1,205
    
(2,799
)
  
5,086
  
Depreciation, depletion and amortization
  
106
    
103
    
209
    
112
    
89
    
201
    
207
    
37
    
35
    
6
    
26
    
19
    
740
  
Lower of cost or market inventory adjustments
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
19
    
-
    
-
    
-
    
19
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
64
    
-
    
9
    
-
    
11
    
141
    
225
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
1
    
-
    
-
    
72
    
73
  
Restructuring and other chargesc
  
26
    
(2
)
  
24
    
-
    
-
    
-
    
-
    
-
    
(1
)
  
(2
)
  
-
    
2
    
23
  
Operating income (loss)
  
188
    
355
    
543
    
636
    
655
    
1,291
    
2,983
    
(64
)
  
69
    
11
    
(40
)
  
(529
)
  
4,264
  
                                                                               
Interest expense, net
  
3
    
9
    
12
    
-
    
1
    
1
    
3
    
8
    
-
    
-
    
3
    
424
    
451
  
Provision for (benefit from) income taxes
  
-
    
-
    
-
    
199
    
219
    
418
    
1,257
    
(29
)
  
-
    
-
    
-
    
(89
)
  
1,557
  
Capital expenditures
  
42
    
79
    
121
    
83
    
46
    
129
    
186
    
577
    
71
    
8
    
23
    
23
    
1,138
  
                                                                               
                                                                               
Nine Months Ended September 30, 2008
                                                                              
Revenues:
                                                                              
Unaffiliated customers
$
343
  
$
314
  
$
657
  
$
1,572
  
$
2,078
  
$
3,650
  
$
2,452
a
$
-
  
$
2,117
  
$
4,832
  
$
2,014
  
$
7
  
$
15,729
  
Intersegment
  
1,391
    
2,421
    
3,812
    
275
    
118
    
393
    
418
    
-
    
-
    
24
    
-
    
(4,647
)
  
-
  
Production and delivery
  
929
    
1,265
    
2,194
    
530
    
861
    
1,391
    
1,308
    
12
    
1,298
    
4,831
    
1,960
    
(4,700
)
  
8,294
  
Depreciation, depletion and amortization
  
242
    
323
    
565
    
131
    
249
    
380
    
145
    
3
    
160
    
5
    
27
    
37
    
1,322
  
Lower of cost or market inventory adjustments
  
-
    
22
    
22
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
22
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
104
    
-
    
14
    
-
    
18
    
164
    
300
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
1
    
-
    
-
    
208
    
209
  
Operating income (loss)
  
563
    
1,125
    
1,688
    
1,186
    
1,086
    
2,272
    
1,313
    
(15
)
  
644
    
20
    
9
    
(349
)
  
5,582
  
                                                                               
Interest expense, net
  
2
    
8
    
10
    
2
    
2
    
4
    
2
    
-
    
-
    
3
    
9
    
416
    
444
  
Provision for income taxes
  
-
    
-
    
-
    
383
    
334
    
717
    
558
    
-
    
-
    
-
    
-
    
352
    
1,627
  
Capital expenditures
  
244
    
254
    
498
    
88
    
141
    
229
    
332
    
698
    
104
    
6
    
19
    
43
    
1,929
  
                                                                               
 
a. Includes PT Freeport Indonesia’s sales to PT Smelting totaling $1.3 billion in the first nine months of 2009 and $1.2 billion in the first nine months of 2008.
b. Includes charges totaling $50 million associated with Tenke Fungurume’s project start-up costs.
c. The following table summarizes restructuring and other charges:
                                                                               
Restructuring charges
$
25
  
$
4
  
$
29
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
1
  
$
-
  
$
-
  
$
2
  
$
32
  
Special retirement benefits and curtailments
  
1
    
(6
)
  
(5
)
  
-
    
-
    
-
    
-
    
-
    
(2
)
  
(2
)
  
-
    
-
    
(9
)
Restructuring and other charges
$
26
  
$
(2
)
$
24
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
(1
)
$
(2
)
$
-
  
$
2
  
$
23
  
                                                                               

 
XXV