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

333 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
Second-Quarter and Six-Month 2010 Results

§  
Net income attributable to common stock for second-quarter 2010 was $649 million, $1.40 per share, compared with net income of $588 million, $1.38 per share, for second-quarter 2009.  Net income attributable to common stock for the first six months of 2010 was $1.5 billion, $3.40 per share, compared with $631 million, $1.54 per share, for the first six months of 2009.

§  
Consolidated sales from mines for second-quarter 2010 totaled 914 million pounds of copper, 298 thousand ounces of gold and 16 million pounds of molybdenum, compared with 1.1 billion pounds of copper, 837 thousand ounces of gold and 16 million pounds of molybdenum for second-quarter 2009.

§  
Consolidated sales from mines for the year 2010 are expected to approximate 3.8 billion pounds of copper, 1.8 million ounces of gold and 63 million pounds of molybdenum, including 970 million pounds of copper, 410 thousand ounces of gold and 15 million pounds of molybdenum for third-quarter 2010.

§  
Consolidated unit net cash costs (net of by-product credits) averaged $0.97 per pound for second-quarter 2010, compared with $0.43 per pound for second-quarter 2009.  Assuming average prices of $1,200 per ounce for gold and $14 per pound for molybdenum for the second half of 2010, consolidated unit net cash costs (net of by-product credits) are estimated to average approximately $0.86 per pound for the year 2010.  Quarterly unit net cash costs will vary with fluctuations in sales volumes of copper and by-products.

§  
Operating cash flows totaled $1.1 billion for second-quarter 2010 and $2.9 billion for the first six months of 2010.  Using estimated 2010 sales volumes and assuming average prices of $3.00 per pound for copper, $1,200 per ounce for gold and $14 per pound for molybdenum for the second half of 2010, operating cash flows for the year 2010 are estimated to exceed $5 billion.

§  
Capital expenditures totaled $296 million for second-quarter 2010 and $527 million for the first six months of 2010.  FCX currently expects capital expenditures to approximate $1.7 billion for the year 2010, including $0.9 billion for sustaining capital and $0.8 billion for major projects.  A number of studies are ongoing, which may result in increased capital spending programs.

§  
At June 30, 2010, total debt approximated $4.8 billion and consolidated cash approximated $3.0 billion.  During the second quarter of 2010, FCX repaid $1.3 billion in debt, including the April 1st redemption of $1.0 billion of outstanding Senior Floating Rate Notes due 2015.

§  
During the second quarter of 2010, FCX’s 6¾% Mandatory Convertible Preferred Stock converted into 39 million shares of FCX common stock.

§  
FCX’s Board of Directors declared a common stock dividend of $0.30 per share payable on August 1, 2010, to holders of record as of July 15, 2010.  As previously announced, during the second quarter of 2010, FCX’s Board of Directors authorized an increase in the annual cash dividend on its common stock from $0.60 per share to $1.20 per share ($0.30 per share quarterly).
 
 
1
 

PHOENIX, AZ, July 21, 2010 – Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported second-quarter 2010 net income attributable to common stock of $649 million, $1.40 per share, compared with net income of $588 million, $1.38 per share, for the second quarter of 2009.  For the six months ended June 30, 2010, FCX reported net income attributable to common stock of $1.5 billion, $3.40 per share, compared with $631 million, $1.54 per share, in the 2009 six-month period.
 
James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, “Our second-quarter results reflect continued strong production and cost management throughout our global portfolio of mining operations.  During the quarter, we executed our operating plans effectively, strengthened our balance sheet and advanced projects to enhance our future growth options.  We remain positive about the outlook for our business based on the fundamentals of global supply and demand.  We anticipate generating strong cash flows, which would enable us to invest in future growth and return cash to shareholders.”
 
SUMMARY FINANCIAL AND OPERATING DATA

   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
   
2010
  
2009
  
2010
  
2009
  
Financial Data (in millions, except per share amounts)
                  
Revenuesa
  
$3,864
  
$3,684
  
$8,227
  
$6,286
  
Operating income
  
$1,424
  
$1,508
  
$3,472
  
$2,180
  
Net income
  
$832
  
$812
  
$2,047
  
$1,019
  
Net income attributable to common stockb
  
$649
c
$588
  
$1,546
c
$631
  
Diluted net income per share of common stock
  
$1.40
c
$1.38
  
$3.40
c
$1.54
  
Diluted weighted-average common shares outstanding
  
473
  
471
  
474
  
426
  
Operating cash flowsd
  
$1,064
  
$1,154
  
$2,882
  
$896
  
Capital expenditures
  
$296
  
$375
  
$527
  
$894
  
                   
FCX Operating Data
                  
Copper (millions of recoverable pounds)
                  
Production
  
930
  
1,069
  
1,859
  
2,110
  
Sales, excluding purchased metal
  
914
  
1,102
  
1,874
  
2,122
  
Average realized price per pound
  
$3.06
  
$2.22
  
$3.13
  
$2.03
  
Site production and delivery unit costs per pounde
  
$1.41
  
$1.04
f
$1.38
  
$1.05
f
Unit net cash costs per pounde
  
$0.97
  
$0.43
f
$0.89
  
$0.54
f
Gold (thousands of recoverable ounces)
                  
Production
  
316
  
802
  
765
  
1,397
  
Sales, excluding purchased metal
  
298
  
837
  
776
  
1,382
  
Average realized price per ounce
  
$1,234
  
$932
  
$1,171
  
$919
  
Molybdenum (millions of recoverable pounds)
                  
Production
  
17
  
13
  
34
  
27
  
Sales, excluding purchased metal
  
16
  
16
  
33
  
26
  
Average realized price per pound
  
$18.18
  
$10.11
  
$16.62
  
$10.65
  
                   
 
a.  
Includes impacts of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (see discussion on page 10).
 
b.  
After noncontrolling interests and preferred dividends.
 
c.  
Includes losses on early extinguishment of debt totaling $42 million to net income attributable to common stock or $0.09 per share in second-quarter 2010 and $65 million to net income attributable to common stock or $0.14 per share in the first six months of 2010.
 
d.  
Includes working capital sources (uses) of $(173) million in second-quarter 2010, $(31) million in second-quarter 2009, $107 million in the first six months of 2010 and $(926) million in the first six months of 2009.
 
 
2
 
 
e.  
Reflects per pound weighted-average site production and delivery unit costs and unit net cash costs, net of by-product credits.  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.”
 
f.  
Excludes results from Tenke Fungurume, where start-up activities were still under way during the 2009 periods.
 
OPERATIONS
 
Consolidated.  Second-quarter 2010 consolidated copper sales of 914 million pounds were higher than the April 2010 estimate of 830 million pounds but lower than the second-quarter 2009 copper sales of 1.1 billion pounds.  The variance to the April 2010 estimate primarily reflects favorable production performance in North and South America and Indonesia and the timing of shipments, principally in North America.  The variance to the 2009 period primarily reflects the anticipated lower copper ore grades at Grasberg resulting from planned mine sequencing and anticipated lower sales from South America mines, partially offset by higher sales from the Tenke Fungurume mine in Africa.
 
Second-quarter 2010 consolidated gold sales of 298 thousand ounces were higher than the April 2010 estimate of 270 thousand ounces but significantly lower than the second-quarter 2009 gold sales of 837 thousand ounces.  The favorable variance to the April 2010 estimate primarily reflects timing of mine sequencing at Grasberg.  The variance to the 2009 period primarily reflects anticipated lower gold ore grades at Grasberg resulting from planned mine sequencing.
 
Consolidated molybdenum sales totaled 16 million pounds in each of the second quarter periods.  The second-quarter 2010 sales were higher than the April 2010 estimate of 15 million pounds because of improved demand in the chemicals sector.
 
Consolidated unit site production and delivery costs averaged $1.41 per pound of copper in the second quarter of 2010, compared with second-quarter 2009 unit costs of $1.04 per pound.  Second-quarter 2010 unit net cash costs, net of by-product credits, averaged $0.97 per pound, compared with $0.43 per pound in the year-ago period.  The higher unit net cash costs primarily reflected anticipated lower copper and gold volumes at Grasberg and South America, partly offset by higher by-product gold and molybdenum prices.
 
Assuming average prices of $1,200 per ounce for gold and $14 per pound for molybdenum for the second half of 2010 and using current 2010 sales and costs estimates; consolidated unit net cash costs (net of by-product credits and including Tenke Fungurume) are expected to average approximately $0.86 per pound for the year 2010.  Quarterly unit net cash costs will vary with fluctuations in sales volumes.  Unit net cash costs for 2010 would change by approximately $0.01 per pound for each $50 per ounce change in the average price of gold for the second half of 2010 and by approximately $0.005 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2010.
 
Development Activities.  FCX has significant reserves and future development opportunities within its portfolio of assets.  At December 31, 2009, in addition to estimated proven and probable reserves of 104 billion pounds of copper (determined using a long-term average price of $1.60 per pound for copper), FCX identified estimated mineralized material (assessed using a long-term average price of $2.00 per pound for copper) with incremental contained copper of an additional 122 billion pounds.  FCX continues to evaluate opportunities to convert this material into reserves, future production volumes and cash flow.
 
FCX is undertaking major development projects, including the development of the El Abra sulfide reserves and the massive underground ore bodies at Grasberg.  FCX is also advancing development activities at the Climax primary molybdenum project.
 
In addition, studies are under way to evaluate the potential to more than double the concentrator capacity at the large Cerro Verde mine, a major mill project in the El Abra district, various mill projects to process significant sulfide ore in North America and staged expansion options at Tenke Fungurume.  The advancement of these studies will provide flexibility in initiating expansion projects as market conditions warrant, enabling FCX to continue to maintain its position as one of the largest copper producers in the world.
 
 
3
 

North America Copper Mines.  FCX operates six open-pit copper mines in North America (Morenci, Sierrita, Bagdad, Safford and Miami 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.
 
   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
North America Copper Mining Operations
  
2010
  
2009
  
2010
  
2009
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
263
    
272
    
527
    
561
  
Sales, excluding purchased metal
    
289
    
281
    
580
    
582
  
Average realized price per pound
  
$
3.21
  
$
2.18
  
$
3.27
  
$
1.88
  
                           
Molybdenum (millions of recoverable pounds)a
                          
Production
    
5
    
7
    
11
    
13
  
                           
Unit net cash costs per pound of copper:
                          
Site production and delivery, excluding adjustments
  
$
1.46
  
$
1.24
  
$
1.39
  
$
1.28
  
By-product credits, primarily molybdenum
    
(0.38
)
  
(0.21
)
  
(0.32
)
  
(0.19
)
Treatment charges
    
0.09
    
0.09
    
0.08
    
0.08
  
Unit net cash costsb
  
$
1.17
  
$
1.12
  
$
1.15
  
$
1.17
  
                           
 
a.  
Represents by-product production.  Sales of by-product molybdenum are reflected in the molybdenum division discussion on page 9.
 
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.”
 
Second-quarter 2010 consolidated copper sales in North America of 289 million pounds were higher than second-quarter 2009 sales of 281 million pounds.
 
For the year 2010, FCX expects sales from North America copper mines to approximate 1.1 billion pounds of copper, compared with 1.2 billion pounds of copper for 2009.  FCX is increasing mining and milling rates at its Morenci mine and is restarting its Miami mine, which are expected to result in higher production in future periods (see “Operating and Development Activities” below).
 
North America unit site production and delivery costs were higher in the second quarter of 2010, compared with the second quarter of 2009, primarily because of higher input costs and increased mining and milling activities at certain mines.  Second-quarter 2010 unit net cash costs benefited from higher by-product credits primarily because of higher molybdenum prices.
 
Based on current operating plans, assuming an average molybdenum price of $14 per pound for the second half of 2010 and using current 2010 sales and costs estimates, FCX estimates that average unit net cash costs, including molybdenum credits, for its North America copper mines would approximate $1.24 per pound of copper for the year 2010.  Unit net cash costs for 2010 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2010.
 
Operating and Development Activities.  At Morenci, FCX has commenced a staged ramp up from the current mining rate of 450,000 metric tons of ore per day to 635,000 metric tons per day.  In addition, FCX restarted the Morenci mill in March 2010 to process available sulfide material currently being mined.  Mill throughput averaged 28,000 metric tons of ore per day during the second quarter of 2010 and is expected to increase to approximately 50,000 metric tons per day by 2011.  The increased mining and milling activities are expected to expose additional ore and enable copper production to increase by approximately 125 million pounds annually beginning in 2011.  Further increases to Morenci’s mining rate are being evaluated.
 
 
4
 
 
FCX has initiated mining activities at the Miami mine in Arizona to improve efficiencies of ongoing reclamation projects associated with historical mining operations at the site.  During an approximate five-year mine life, FCX expects to ramp up production at Miami to approximately 100 million pounds of copper per year by the second half of 2011.  FCX is investing $40 million in this project, which is benefiting from the use of existing mining equipment.
 
FCX is advancing plans to construct a sulphur burner at Safford, which will provide a more cost effective source of sulphuric acid used in solution extraction/electrowinning operations and lower transportation costs.  This project is expected to be complete during 2011 at a capital investment of approximately $150 million.
 
FCX is evaluating the restart of mining and milling activities at the Chino mine in New Mexico, which were suspended in late 2008 in response to global economic conditions.  The preliminary economics of the project appear attractive and would increase copper production by approximately 150 to 200 million pounds per year.  At December 31, 2009, Chino’s reserves, excluding metal in stockpiles, totaled 1.1 billion pounds of copper (determined using a long-term average price of $1.60 per pound for copper) and reserves would increase with higher prices.
 
Operating plans at the other North America sites are being assessed and adjustments will be made based on market conditions.
 
South America Mining.  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.
   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
South America Mining Operations
  
2010
  
2009
  
2010
  
2009
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
329
    
358
    
651
    
706
  
Sales
    
311
    
363
    
618
    
713
  
Average realized price per pound
  
$
3.02
  
$
2.22
  
$
3.07
  
$
2.10
  
                           
Gold (thousands of recoverable ounces)
                          
Production
    
20
    
24
    
39
    
47
  
Sales
    
20
    
25
    
39
    
48
  
Average realized price per ounce
  
$
1,221
  
$
928
  
$
1,175
  
$
915
  
                           
Molybdenum (millions of recoverable pounds)a
                          
Production
    
1
    
-
    
3
    
1
  
                           
Unit net cash costs per pound of copper:
                          
Site production and delivery, excluding adjustments
  
$
1.22
  
$
1.00
  
$
1.21
  
$
1.00
  
Molybdenum and gold credits
    
(0.19
)
  
(0.10
)
  
(0.18
)
  
(0.11
)
Treatment charges
    
0.11
    
0.15
    
0.13
    
0.15
  
Unit net cash costsb
  
$
1.14
  
$
1.05
  
$
1.16
  
$
1.04
  
                           
 
a.  
Represents by-product production.  Sales of by-product molybdenum are reflected in the molybdenum division discussion on page 9.
 
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.”
 
 
5
 
 
Consolidated copper sales in South America totaled 311 million pounds in the second quarter of 2010, 14 percent lower than second-quarter 2009 sales, primarily reflecting lower ore grades at Candelaria and timing of shipments at Cerro Verde.
 
For the year 2010, FCX expects South America sales of 1.3 billion pounds of copper and 100 thousand ounces of gold, compared with 1.4 billion pounds of copper and 90 thousand ounces of gold for 2009.  Projected sales volumes for 2010 are lower than 2009 primarily because of the impacts of anticipated lower ore grades, principally at El Abra in connection with the depletion of the oxide ore resource and the transition to the sulfide deposit.
 
South America unit site production and delivery costs were higher in the second quarter of 2010, compared with the second quarter of 2009, primarily because of lower sales volumes.  Partly offsetting these higher unit costs were higher molybdenum credits and lower treatment charges.
 
Using current 2010 sales and costs estimates, FCX estimates that average unit net cash costs, including molybdenum and gold credits, for its South America mining operations would approximate $1.18 per pound of copper for the year 2010.
 
Operating and Development Activities.  FCX is engaged in construction activities associated with the development of a large sulfide deposit at El Abra to extend its mine life by over 10 years.  Production from the sulfide ore, which will ramp up to approximately 300 million pounds of copper per year, is expected to begin in 2012 and will replace the currently depleting oxide copper production.  The capital investment for this project is expected to total $725 million through 2015, including $535 million for the initial phase of the project expected to be completed in 2012.  In addition, FCX has initiated studies for a potential milling operation to process additional sulfide material and to achieve higher recoveries.
 
FCX is completing a project to optimize throughput at the existing Cerro Verde concentrator.  The project, which is expected to be completed by the end of 2010, 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.
 
In addition, FCX is evaluating a large scale concentrator expansion at Cerro Verde.  Reserve additions in recent years have provided opportunities potentially to more than double the existing facility’s capacity.  A feasibility study is expected to be completed in the first half of 2011.
 
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.
   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
Indonesia Mining Operations
  
2010
  
2009
  
2010
  
2009
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
276
    
403
    
555
    
807
  
Sales
    
259
    
432
    
555
    
801
  
Average realized price per pound
  
$
2.95
  
$
2.24
  
$
3.05
  
$
2.06
  
                           
Gold (thousands of recoverable ounces)
                          
Production
    
294
    
778
    
723
    
1,348
  
Sales
    
276
    
811
    
734
    
1,332
  
Average realized price per ounce
  
$
1,235
  
$
932
  
$
1,171
  
$
919
  
                           
Unit net cash costs (credits) per pound of copper:
                          
Site production and delivery, excluding adjustments
  
$
1.62
  
$
0.93
  
$
1.58
  
$
0.92
  
Gold and silver credits
    
(1.41
)
  
(1.80
)
  
(1.61
)
  
(1.58
)
Treatment charges
    
0.26
    
0.22
    
0.24
    
0.21
  
Royalties
    
0.11
    
0.12
    
0.11
    
0.09
  
Unit net cash costs (credits)a
  
$
0.58
  
$
(0.53
)
$
0.32
  
$
(0.36
)
                           
 
 
6
 
 
a.  
For a reconciliation of unit net cash costs (credits) 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.”
 
As expected, Indonesia reported lower copper and gold sales in the second quarter of 2010, compared to the second quarter of 2009, as a result of sequencing of mining in a lower ore-grade section of the Grasberg open pit.  At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in fluctuations in quarterly and annual sales of copper and gold.
 
PT-FI has revised its mine plans to incorporate precautionary remedial activities and geotechnical considerations affecting a relatively high-grade section of the Grasberg open pit previously scheduled to be mined in 2010 and 2011.  The impact of these mine plan changes results in the deferral of approximately 130 million pounds of copper and 270,000 ounces of gold, net to PT-FI's interest, from the 2010 to 2014 period to the 2015 to 2016 period.  The revised plans, which are subject to ongoing review and optimization, reflect timing differences and do not result in significant changes to reserves or ultimate production from the open pit.
 
FCX expects Indonesia sales of 1.2 billion pounds of copper and 1.7 million ounces of gold for the year 2010, compared with 1.4 billion pounds of copper and 2.5 million ounces of gold for 2009.  Anticipated changes in ore grades throughout the year are expected to result in significant variability in quarterly volumes.  Mine sequencing at Grasberg is expected to result in higher copper and gold grades beginning in the fourth quarter of 2010.
 
Indonesia unit site production and delivery costs were higher in the second quarter of 2010, compared with the second quarter of 2009, primarily because of anticipated lower copper volumes for the 2010 period.  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.  Gold credits were lower in the second quarter of 2010 because of lower gold volumes, which also resulted in higher unit net cash costs in the second quarter of 2010.
 
Assuming an average gold price of $1,200 per ounce for the second half of 2010 and using current 2010 sales and costs estimates, FCX expects PT-FI’s average unit net cash costs, including gold and silver credits, to approximate $0.14 per pound for the year 2010.  Unit net cash costs for 2010 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of gold for the second half of 2010.  Quarterly unit net cash costs will vary significantly with variations in quarterly metal sales volumes.
 
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 approximately $2 billion initial project were completed in 2009.  Production of copper cathode commenced in March 2009 and achieved targeted rates in September 2009.  The cobalt plant and sulphuric acid plant were commissioned in the third quarter of 2009.  Tenke Fungurume continues to address start-up and quality issues in the cobalt circuit and expects to implement corrective actions over the next several quarters.  Based on the 10-year average of current design operations, Tenke Fungurume expects to produce 250 million pounds of copper and 18 million pounds of cobalt per year.  Higher grades of cobalt in the initial years are expected to result in higher than life-of-mine average annual cobalt production volumes.

 
7
 
 
   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
Africa Mining Operations
  
2010
  
2009
  
2010
  
2009
  
                           
Copper (millions of recoverable pounds)
                          
Production
    
62
    
36
    
126
    
36
  
Sales
    
55
    
26
    
121
    
26
  
Average realized price per pound
  
$
2.96
  
$
2.20
  
$
3.12
  
$
2.20
  
                           
Cobalt (millions of contained pounds)
                          
Production
    
4
    
N/A
a
  
9
    
N/A
a
Sales
    
4
    
N/A
a
  
7
    
N/A
a
Average realized price per pound
  
$
12.74
    
N/A
a
$
11.91
    
N/A
a
                           
Unit net cash costs per pound of copper:
                          
Site production and delivery, excluding adjustments
  
$
1.27
    
N/A
a
$
1.32
    
N/A
a
Cobalt credits
    
(0.54
)b
  
N/A
a
  
(0.46
)b
  
N/A
a
Royalties
    
0.06
    
N/A
a
  
0.07
    
N/A
a
Unit net cash costsc
  
$
0.79
    
N/A
a
$
0.93
    
N/A
a
                           
 
a.  
Information has not been included for the 2009 periods as start-up activities were still under way.
 
b.  
Net of cobalt downstream processing and freight costs.
 
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.”
 
FCX expects Tenke Fungurume sales of approximately 250 million pounds of copper and 20 million pounds of cobalt for the year 2010, compared with 130 million pounds of copper and 3 million pounds of cobalt for 2009.
 
During the second quarter of 2010, Tenke Fungurume’s unit site production and delivery costs averaged $1.27 per pound of copper and its unit net cash costs, net of cobalt by-product credits, averaged $0.79 per pound of copper.
 
FCX has recently updated its cost forecast for Tenke Fungurume to incorporate revised modeling for estimated sulphuric acid consumption, increased input costs and actual cost history, and increased government fees and administrative costs associated with the complex nature of the operating environment in the DRC.  Assuming an average cobalt price of $12 per pound for the second half of 2010 and the year 2011, average unit net cash costs are expected to approximate $0.93 per pound of copper for the year 2010 and $0.80 per pound of copper for the year 2011.  Each $2 per pound change in the average price of cobalt would impact unit net cash costs by approximately $0.10 per pound of copper.
 
Operating and Development Activities.  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 is completing studies to evaluate a second phase of the project, which would include optimizing the current plant and increasing capacity.  A range of expansion options are being considered.
 
The milling facilities, which were designed to produce at a capacity rate of 8,000 metric tons of ore per day, have been performing above capacity in recent months.  Tenke Fungurume is procuring additional mining equipment, which will enable additional high-grade material to be mined and processed.  Based on these enhancements to the mine plan and an expected mill throughput rate of 10,000 metric tons of ore per day, FCX estimates copper production will increase from the current level of 250 million pounds per annum to a rate approximating 290 million pounds per annum during 2011.
 
Other Matters.  FCX is continuing to work with the DRC government to resolve the ongoing contract review and a number of administrative disputes.  FCX believes its contract is fair and equitable, complies with Congolese law and is enforceable without modification.
 
 
8
 

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 from its North and South America copper mines.

   
Three Months
  
Six Months
  
   
Ended June 30,
  
Ended June 30,
  
Molybdenum Mining Operations
  
2010
  
2009
  
2010
  
2009
  
                           
Molybdenum (millions of recoverable pounds)
                          
Productiona
    
11
    
6
    
20
    
13
  
Sales, excluding purchased metalb
    
16
    
16
    
33
    
26
  
Average realized price per pound
  
$
18.18
  
$
10.11
  
$
16.62
  
$
10.65
  
                           
Unit net cash costs per pound of molybdenumc
  
$
5.73
  
$
7.09
d
$
5.65
  
$
6.87
d
                           
 
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.”
 
d.  
Includes freight and downstream conversion costs totaling $1.10 per pound in the second quarter of 2009 and $1.09 per pound in the 2009 six-month period that were not included in unit net cash costs in prior years.
 
Consolidated molybdenum sales from the Henderson mine and by-product mines totaled 16 million pounds in each of the second quarter periods.  Molybdenum markets were significantly affected beginning in the fourth quarter of 2008 by the downturn in global economic conditions, resulting in FCX’s operating its Henderson mine at reduced rates throughout 2009.  Improved market conditions have resulted in an increase in Henderson rates to approximately 90 percent capacity.
 
For the year 2010, FCX expects molybdenum sales from its mines to approximate 63 million pounds (includes by-product production of approximately 30 million pounds from the North and South America copper mines), compared with 58 million pounds in 2009 (includes by-product production of 27 million pounds from the North and South America copper mines).  The weekly average Metals Week Molybdenum Dealer Oxide price as of July 20, 2010, was $13.88 per pound.
 
Unit net cash costs at the Henderson primary molybdenum mine were lower in the second quarter of 2010, compared with the second quarter of 2009, primarily because of higher volumes.  Using current 2010 sales estimates, FCX expects average unit net cash costs for its Henderson mine to approximate $6.25 per pound of molybdenum for the year 2010.
 
Operating and Development Activities.  FCX is monitoring market conditions to determine the timing for restarting construction of the Climax molybdenum project, which was suspended in the fourth quarter of 2008.  FCX believes that this project is one of the most attractive primary molybdenum development projects in the world, with large scale production capacity, attractive cash costs and future growth options.  The Climax mine would have an initial annual design capacity of 30 million pounds with significant expansion options.  FCX has continued to advance the project to prepare for resumption of construction activities as market conditions improve.  As of June 30, 2010, the estimated remaining costs for the project approximate $500 million.  FCX is investing $60 million to advance certain construction activities during the next several months to provide flexibility in start-up timing options.

 
9
 
 
EXPLORATION ACTIVITIES
 
FCX is conducting exploration activities near its existing mines with a focus on opportunities to expand reserves that will support the development of additional future production capacity in the large mineral districts where it currently operates.  Significantly expanded drilling activities in recent years have been successful in generating meaningful reserve additions and in identifying potential additional mineral resources adjacent to existing ore bodies.  Results indicate opportunities for significant future potential reserve additions at Morenci, Sierrita and Bagdad in North America; Cerro Verde and El Abra in South America and in the Tenke Fungurume district.
 
Exploration spending in 2010 is estimated to approximate $120 million, compared with $72 million in 2009.  Exploration activities will continue to focus primarily on the potential in FCX’s existing mineral districts.
 
PROVISIONAL PRICING AND OTHER
 
For the first six months of 2010, approximately 47 percent of FCX’s mined copper was sold in concentrate, 27 percent as cathode and 26 percent as rod from North America operations.  Under the long-established structure of sales agreements prevalent in the industry, substantially all of 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 March 31, 2010, 372 million pounds of copper sales at FCX’s copper mining operations (net of intercompany sales and noncontrolling interests) were provisionally priced at an average of $3.53 per pound.  Unfavorable adjustments to the March 31, 2010, provisionally priced copper sales decreased second-quarter 2010 consolidated revenues by $169 million ($72 million to net income attributable to common stock or $0.15 per share), and favorable adjustments to the March 31, 2009, provisionally priced copper sales increased second-quarter 2009 consolidated revenues by $43 million ($13 million to net income attributable to common stock or $0.03 per share).  Unfavorable adjustments to the December 31, 2009, provisionally priced copper sales decreased consolidated revenues in the first six months of 2010 by $23 million ($9 million to net income attributable to common stock or $0.02 per share), and favorable adjustments to the December 31, 2008, provisionally priced copper sales increased consolidated revenues in the first six months of 2009 by $132 million ($62 million to net income attributable to common stock or $0.15 per share).
 
LME copper prices averaged $3.18 per pound during the second quarter of 2010, compared with FCX’s recorded average price of $3.06 per pound.  At June 30, 2010, FCX had copper sales of 364 million pounds of copper at its copper mining operations (net of intercompany sales and noncontrolling interests) priced at an average of $2.95 per pound, subject to final pricing over the next several months.  Each $0.05 change from the June 30, 2010, average price for provisionally priced copper sales would have an approximate $12 million effect on FCX’s 2010 net income attributable to common stock.  The LME closing settlement price for copper on July 20, 2010, was $2.96 per pound.
 
FCX defers recognizing profits on its PT-FI and 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.  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 $137 million at December 31, 2009, $157 million at March 31, 2010, and $93 million at June 30, 2010.  Changes in FCX’s net deferrals attributable to variability in intercompany volumes resulted in additions to net income attributable to common stock totaling $20 million, $0.04 per share, in the second quarter of 2010 and reductions of $28 million, $0.06 per share, in the first six months of 2010.  For the 2009 periods, changes in FCX’s net deferrals attributable to variability in intercompany volumes resulted in additions to net income attributable to common stock totaling $13
 
 
10
 
 
million, $0.03 per share, for the second quarter and reductions of $3 million, $0.01 per share, for the first six months of 2009.  Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX’s net deferred profits and quarterly earnings.
 
CASH FLOWS, CASH, DEBT and EQUITY
 
Operating cash flows totaled $1.1 billion for the second quarter of 2010, net of $173 million of working capital requirements, and $2.9 billion for the first six months of 2010, including $107 million from working capital sources.  Capital expenditures totaled $296 million for the second quarter of 2010 and $527 million for the first six months of 2010.
 
At June 30, 2010, FCX had consolidated cash of $3.0 billion.  Net of noncontrolling interests’ share, taxes and other costs, cash available to parent company totaled $2.2 billion as shown below (in billions):

 
June 30,
  
 
2010
  
Cash at domestic companies
$
1.0
a
Cash at international operations
  
2.0
  
Total consolidated cash
  
3.0
  
Less: Noncontrolling interests’ share
  
(0.6
)
Cash, net of noncontrolling interests’ share
  
2.4
  
Withholding taxes and other
  
(0.2
)
Net cash
$
2.2
  
 
a.  
Includes cash at FCX’s parent and North America mining operations.
 
At June 30, 2010, FCX had $4.8 billion in debt.  FCX had no borrowings and $42 million of letters of credit issued under its revolving credit facilities, resulting in total availability of approximately $1.5 billion at June 30, 2010.
 
During the second quarter of 2010, FCX reduced debt by $1.3 billion, including the April 1st redemption of $1.0 billion of outstanding Senior Floating Rate Notes due 2015 and repayment of $278 million of its senior debt through open-market purchases at a cost of $302 million.  From January 1, 2009, through June 30, 2010, FCX has repaid approximately $2.6 billion in debt (approximately 35 percent of outstanding debt on January 1, 2009), resulting in estimated annual interest savings of approximately $172 million.
 
FCX’s debt maturities through 2012 are indicated in the table below (in millions).

2010
  
$
5
2011
    
97
2012
    
5
Total 2010 – 2012
  
$
107
 
At June 30, 2010, FCX had 470 million common shares outstanding.  In the second quarter of 2010, FCX’s 6¾% Mandatory Convertible Preferred Stock converted into 39 million shares of FCX common stock (conversion rate equal to 1.3716 shares of FCX common stock).
 
OUTLOOK
 
Projected sales volumes for 2010 approximate 3.8 billion pounds of copper, 1.8 million ounces of gold and 63 million pounds of molybdenum, including 970 million pounds of copper, 410 thousand ounces of gold and 15 million pounds of molybdenum in the third quarter of 2010.  Mining sequencing at Grasberg is resulting in significant fluctuations in quarterly sales of copper and gold during 2010.
 
Using current 2010 sales estimates and assuming average prices of $3.00 per pound of copper, $1,200 per ounce of gold and $14 per pound of molybdenum for the second half of 2010, FCX’s consolidated operating cash flows are estimated to exceed $5 billion in 2010.  The impact of price changes in the second half of 2010 on FCX’s 2010 operating cash flows would approximate $150 million
 
 
11
 
 
for each $0.10 per pound change for copper, $30 million for each $50 per ounce change for gold and $25 million for each $2 per pound change for molybdenum.
 
FCX’s capital expenditures are currently estimated to approximate $1.7 billion for 2010.  Capital expenditures for major projects in 2010 are expected to approximate $0.8 billion, which primarily includes underground development activities at Grasberg, the sulfide ore project at El Abra and investments in a new sulphur burner facility at Safford.  Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.
 
FINANCIAL POLICY
 
FCX has a long-standing tradition of seeking to build shareholder value through pursuing development projects with high rates of return and returning cash to shareholders through common stock dividends and share purchases.
 
In April 2010, FCX’s Board of Directors authorized an increase in the cash dividend on common stock from an annual rate of $0.60 per share to $1.20 per share ($0.30 per share quarterly).  The first quarterly dividend of $0.30 per share was declared on June 24, 2010, and is payable on August 1, 2010.
 
There are 23.7 million shares remaining under FCX’s 30 million share open-market share purchase program.  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 FCX discusses its performance in the future.  Forward-looking statements are all statements other than statements of historical facts, such as those statements regarding projected ore grades and milling rates, projected production and sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, the impact of copper, gold, molybdenum and cobalt price changes, reserve estimates, potential prepayments of debt, future dividend payments and potential share purchases.  The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions and/or statements that are not historical facts, in each case as they relate to FCX or its management, are intended to identify those assertions as forward-looking statements.  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.  This press release also includes forward-looking statements regarding mineralized material not included in reserves.  The mineralized material described in this press release will not qualify as reserves until comprehensive engineering studies establish their economic feasibility.  Accordingly, no assurance can be given that the estimated mineralized material not included in reserves will become proven and probable reserves.
 
In making any forward-looking statements, the person making them believes that the expectations are based on reasonable assumptions.  FCX cautions readers that those statements are not guarantees of future performance and its actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements.  Important factors that can cause FCX’s actual results to differ materially from those anticipated in the forward-looking statements include commodity prices, mine sequencing, production rates, industry risks, regulatory changes, political risks, the potential effects of violence in Indonesia, potential outcomes of the contract review process and resolution of administrative disputes in the Democratic Republic of Congo, weather-related risks, labor relations, environmental risks, litigation results, currency translation risks and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (SEC).  Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on FCX’s results of operations or financial condition.  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.
 
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.”

 
12
 
 
A copy of this release is available on FCX’s web site, “www.fcx.com.”  A conference call with securities analysts about second-quarter 2010 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, August 20, 2010.
# # #
 
 
13
 

FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
     
   
Three Months Ended June 30,
   
Production
  
Sales
COPPER (millions of recoverable pounds)
  
2010
  
2009
  
2010
  
2009
MINED COPPER (FCX’s net interest in %)
                        
North America
                        
Morenci (85%)
  
114
a
  
103
a
  
118
a
  
111
a
Bagdad (100%)
  
49
    
55
    
55
    
54
  
Safford (100%)
  
32
    
36
    
41
    
38
  
Sierrita (100%)
  
37
    
43
    
41
    
41
  
Tyrone (100%)
  
20
    
21
    
22
    
20
  
Chino (100%)
  
8
    
10
    
9
    
13
  
Miami (100%)
  
3
    
4
    
3
    
4
  
Other (100%)
  
-
    
-
    
-
    
-
  
Total North America
  
263
    
272
    
289
    
281
  
                         
South America
                        
Cerro Verde (53.56%)
  
166
    
169
    
150
    
174
  
Candelaria/Ojos del Salado (80%)
  
80
    
98
    
77
    
99
  
El Abra (51%)
  
83
    
91
    
84
    
90
  
Total South America
  
329
    
358
    
311
    
363
  
                         
Indonesia
                        
Grasberg (90.64%)
  
276
b
  
403
b
  
259
b
  
432
b
                         
Africa
                        
Tenke Fungurume (57.75%)
  
62
    
36
    
55
    
26
  
                         
Consolidated
  
930
    
1,069
    
914
    
1,102
  
                         
Less noncontrolling interests
  
186
    
196
    
173
    
196
  
Net
  
744
    
873
    
741
    
906
  
                         
Consolidated sales from mines
              
914
    
1,102
  
Purchased copper
              
44
    
51
  
Total consolidated sales
              
958
    
1,153
  
                         
Average realized price per pound
              
$3.06
    
$2.22
  
                         
GOLD (thousands of recoverable ounces)
                        
MINED GOLD (FCX’s net interest in %)
                        
North America (100%)
  
2
    
-
    
2
    
1
  
South America (80%)
  
20
    
24
    
20
    
25
  
Indonesia (90.64%)
  
294
b
  
778
b
  
276
b
  
811
b
Consolidated
  
316
    
802
    
298
    
837
  
                         
Less noncontrolling interests
  
31
    
77
    
30
    
81
  
Net
  
285
    
725
    
268
    
756
  
                         
Total consolidated sales
              
298
    
837
  
                         
Average realized price per ounce
              
$1,234
    
$932
  
                         
MOLYBDENUM (millions of recoverable pounds)
                        
MINED MOLYBDENUM (FCX’s net interest in %)
                        
Henderson (100%)
  
11
    
6
    
N/A
    
N/A
  
By-product – North America (100%)
  
5
    
7
    
N/A
    
N/A
  
By-product – Cerro Verde (53.56%)
  
1
    
-
    
N/A
    
N/A
  
Consolidated
  
17
    
13
    
16
    
16
  
                         
Less noncontrolling interests
  
-
c
  
-
c
  
-
c
  
-
c
Net
  
17
    
13
    
16
    
16
  
                         
Consolidated sales from mines
              
16
    
16
  
Purchased molybdenum
              
1
    
2
  
Total consolidated sales
              
17
    
18
  
                         
Average realized price per pound
              
$18.18
    
$10.11
  
                         
COBALT (millions of contained pounds)
                        
MINED COBALT (FCX’s net interest in %)
                        
Tenke Fungurume (57.75%)
  
4
    
N/A
d
  
4
    
N/A
d
Consolidated
  
4
    
N/A
d
  
4
    
N/A
d
                         
Less noncontrolling interests
  
2
    
N/A
d
  
2
    
N/A
d
Net
  
2
    
N/A
d
  
2
    
N/A
d
                         
Total consolidated sales
              
4
    
N/A
d
                         
Average realized price per pound
              
$12.74
    
N/A
d
                         
a. Net of Morenci’s joint venture partner’s 15 percent interest.
b. 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.
d. Information has not been included for second-quarter 2009 as start-up activities were still under way.
 
 
I
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA (continued)
     
   
Six Months Ended June 30,
   
Production
  
Sales
COPPER (millions of recoverable pounds)
  
2010
  
2009
  
2010
  
2009
MINED COPPER (FCX’s net interest in %)
                        
North America
                        
Morenci (85%)
  
212
a
  
216
a
  
225
a
  
235
a
Bagdad (100%)
  
101
    
110
    
112
    
107
  
Safford (100%)
  
79
    
83
    
92
    
79
  
Sierrita (100%)
  
72
    
84
    
81
    
83
  
Tyrone (100%)
  
40
    
42
    
44
    
40
  
Chino (100%)
  
16
    
18
    
18
    
30
  
Miami (100%)
  
6
    
8
    
7
    
8
  
Other (100%)
  
1
    
-
    
1
    
-
  
Total North America
  
527
    
561
    
580
    
582
  
                         
South America
                        
Cerro Verde (53.56%)
  
331
    
336
    
306
    
341
  
Candelaria/Ojos del Salado (80%)
  
152
    
194
    
151
    
195
  
El Abra (51%)
  
168
    
176
    
161
    
177
  
Total South America
  
651
    
706
    
618
    
713
  
                         
Indonesia
                        
Grasberg (90.64%)
  
555
b
  
807
b
  
555
b
  
801
b
                         
Africa
                        
Tenke Fungurume (57.75%)
  
126
    
36
    
121
    
26
  
                         
Consolidated
  
1,859
    
2,110
    
1,874
    
2,122
  
                         
Less noncontrolling interests
  
372
    
372
    
354
    
370
  
Net
  
1,487
    
1,738
    
1,520
    
1,752
  
                         
Consolidated sales from mines
              
1,874
    
2,122
  
Purchased copper
              
65
    
91
  
Total consolidated sales
              
1,939
    
2,213
  
                         
Average realized price per pound
              
$3.13
    
$2.03
  
                         
GOLD (thousands of recoverable ounces)
                        
MINED GOLD (FCX’s net interest in %)
                        
North America (100%)
  
3
    
2
    
3
    
2
  
South America (80%)
  
39
    
47
    
39
    
48
  
Indonesia (90.64%)
  
723
b
  
1,348
b
  
734
b
  
1,332
b
Consolidated
  
765
    
1,397
    
776
    
1,382
  
                         
Less noncontrolling interests
  
75
    
135
    
77
    
134
  
Net
  
690
    
1,262
    
699
    
1,248
  
                         
Total consolidated sales
              
776
    
1,382
  
                         
Average realized price per ounce
              
$1,171
    
$919
  
                         
MOLYBDENUM (millions of recoverable pounds)
                        
MINED MOLYBDENUM (FCX’s net interest in %)
                        
Henderson (100%)
  
20
    
13
    
N/A
    
N/A
  
By-product – North America (100%)
  
11
    
13
    
N/A
    
N/A
  
By-product – Cerro Verde (53.56%)
  
3
    
1
    
N/A
    
N/A
  
Consolidated
  
34
    
27
    
33
    
26
  
                         
Less noncontrolling interests
  
1
    
1
    
1
    
1
  
Net
  
33
    
26
    
32
    
25
  
                         
Consolidated sales from mines
              
33
    
26
  
Purchased molybdenum
              
2
    
3
  
Total consolidated sales
              
35
    
29
  
                         
Average realized price per pound
              
$16.62
    
$10.65
  
                         
COBALT (millions of contained pounds)
                        
MINED COBALT (FCX’s net interest in %)
                        
Tenke Fungurume (57.75%)
  
9
    
N/A
c
  
7
    
N/A
c
Consolidated
  
9
    
N/A
c
  
7
    
N/A
c
                         
Less noncontrolling interests
  
4
    
N/A
c
  
3
    
N/A
c
Net
  
5
    
N/A
c
  
4
    
N/A
c
                         
Total consolidated sales
              
7
    
N/A
c
                         
Average realized price per pound
              
$11.91
    
N/A
c
                         
a. Net of Morenci’s joint venture partner’s 15 percent interest.
b. Net of Grasberg’s joint venture partner’s interest, which varies in accordance with the terms of the joint venture agreement.
c. Information has not been included for the 2009 six-month period as start-up activities were still under way.
 
 
II
 


FREEPORT-McMoRan COPPER & GOLD INC.
  
SELECTED OPERATING DATA (continued)
  
                 
 
Three Months Ended
  
Six Months Ended
  
 
June 30,
  
June 30,
  
 
2010
  
2009
  
2010
  
2009
  
100% North America Copper Mining Operating Data
                
Solution Extraction/Electrowinning (SX/EW) Operations
                
Leach ore placed in stockpiles (metric tons per day)
646,100
  
553,700
  
624,100
  
611,200
  
Average copper ore grade (percent)
0.25
  
0.31
  
0.25
  
0.30
  
Copper production (millions of recoverable pounds)
182
  
201
  
384
  
423
  
                 
Mill Operations
                
Ore milled (metric tons per day)
195,300
  
170,600
  
179,200
  
175,700
  
Average ore grades (percent):
                
Copper
0.32
  
0.31
  
0.31
  
0.33
  
Molybdenum
0.02
  
0.03
  
0.02
  
0.03
  
Copper recovery rate (percent)
81.4
  
84.8
  
83.3
  
85.3
  
Production (millions of recoverable pounds):
                
Copper
100
  
89
  
180
  
177
  
Molybdenum (by-product)
5
  
7
  
11
  
13
  
                 
100% South America Mining Operating Data
                
SX/EW Operations
                
Leach ore placed in stockpiles (metric tons per day)
247,400
  
260,200
  
251,600
  
255,400
  
Average copper ore grade (percent)
0.42
  
0.44
  
0.43
  
0.45
  
Copper production (millions of recoverable pounds)
130
  
141
  
263
  
278
  
                 
Mill Operations
                
Ore milled (metric tons per day)
187,100
  
186,300
  
183,600
  
184,400
  
Average ore grades (percent):
                
Copper
0.62
  
0.67
  
0.62
  
0.68
  
Molybdenum
0.02
  
0.02
  
0.02
  
0.02
  
Copper recovery rate (percent)
89.9
  
90.2
  
89.5
  
89.6
  
Production (millions of recoverable pounds):
                
Copper
199
  
217
  
388
  
428
  
Molybdenum
1
  
-
  
3
  
1
  
                 
100% Indonesia Mining Operating Data
                
Ore milled (metric tons per day)
223,400
  
237,700
  
228,700
  
237,600
  
Average ore grades:
                
Copper (percent)
0.81
  
1.10
  
0.79
  
1.11
  
Gold (grams per metric ton)
0.63
  
1.51
  
0.75
  
1.32
  
Recovery rates (percent):
                
Copper
89.1
  
90.6
  
88.7
  
90.6
  
Gold
78.2
  
83.6
  
78.7
  
82.9
  
Production (recoverable):
                
Copper (millions of pounds)
305
  
457
  
613
  
913
  
Gold (thousands of ounces)
319
  
849
  
785
  
1,468
  
                 
100% Africa Mining Operating Data
                
Ore milled (metric tons per day)
8,800
  
6,800
  
9,200
  
6,300
a
Average ore grades (percent):
                
Copper
3.87
  
3.45
  
3.78
  
3.21
a
Cobalt
0.35
  
N/A
b
0.40
  
N/A
b
Copper recovery rate (percent)
90.7
  
92.1
  
91.2
  
92.1
a
Production (millions of pounds)
                
Copper (recoverable)
62
  
36
  
126
  
36
a
Cobalt (contained)
4
  
N/A
b
9
  
N/A
b
                 
100% North America Primary Molybdenum Mine Operating Data
                
Henderson Molybdenum Mine Operations
                
Ore milled (metric tons per day)
22,800
  
11,700
  
23,000
  
13,400
  
Average molybdenum ore grade (percent)
0.25
  
0.27
  
0.24
  
0.25
  
Molybdenum production (millions of recoverable pounds)
11
  
6
  
20
  
13
  
                 

a.  
Represents year-to-date results since March 2009.
b.  
Information has not been included for the 2009 periods as start-up activities were still under way.
 
 
III
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                         
 
Three Months Ended
  
Six Months Ended
  
 
June 30,
  
June 30,
  
 
2010
  
2009
  
2010
  
2009
  
 
(In Millions, Except Per Share Amounts)
  
Revenues
$
3,864
a
$
3,684
a
$
8,227
a
$
6,286
a
Cost of sales:
                        
Production and delivery
  
2,052
    
1,809
    
3,970
    
3,371
  
Depreciation, depletion and amortization
  
249
    
256
    
520
    
488
  
Lower of cost or market inventory adjustments
  
-
    
-
    
-
    
19
b
Total cost of sales
  
2,301
    
2,065
    
4,490
    
3,878
  
Selling, general and administrative expenses
  
101
    
89
    
196
    
151
  
Exploration and research expenses
  
38
    
24
    
69
    
54
  
Restructuring and other charges
  
-
    
(2
)
  
-
    
23
c
Total costs and expenses
  
2,440
    
2,176
    
4,755
    
4,106
  
Operating income
  
1,424
    
1,508
    
3,472
    
2,180
  
Interest expense, net
  
(122
)d
  
(158
)d
  
(267
)d
  
(289
)d
Losses on early extinguishment of debt
  
(50
)
  
-
    
(77
)
  
-
  
Other income (expense), net
  
9
    
(3
)
  
21
    
(17
)
Income before income taxes and equity in
                        
affiliated companies’ net earnings
  
1,261
    
1,347
    
3,149
    
1,874
  
Provision for income taxes
  
(433
)
  
(542
)
  
(1,111
)
  
(873
)
Equity in affiliated companies’ net earnings
  
4
    
7
    
9
    
18
  
Net income
  
832
    
812
    
2,047
    
1,019
  
Net income attributable to noncontrolling interests
  
(168
)
  
(164
)
  
(438
)
  
(268
)
Preferred dividends
  
(15
)
  
(60
)
  
(63
)
  
(120
)
Net income attributable to FCX common stockholders
$
649
  
$
588
  
$
1,546
  
$
631
  
                         
Net income per share attributable to FCX common stockholders:
                        
Basic
$
1.42
  
$
1.43
  
$
3.48
  
$
1.56
  
Diluted
$
1.40
  
$
1.38
  
$
3.40
  
$
1.54
e
                         
Weighted-average common shares outstanding:
                        
Basic
  
458
    
412
    
444
    
406
  
Diluted
  
473
    
471
    
474
    
426
e
                         
Dividends declared per share of common stock
$
0.30
  
$
-
  
$
0.45
  
$
-
  
                         

a.  
Includes (negative) positive adjustments to provisionally priced copper sales recognized in the prior periods totaling $(169) million in second-quarter 2010, $43 million in second-quarter 2009, $(23) million in the 2010 six-month period and $132 million in the 2009 six-month period.
b.  
Relates to molybdenum inventories.
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.  
Consolidated interest expense (before capitalization) totaled $132 million in second-quarter 2010, $172 million in second-quarter 2009, $283 million in the 2010 six-month period and $348 million in the 2009 six-month period.  Lower interest expense in the 2010 periods primarily reflects the impact of debt repayments during 2009 and the first half of 2010.  Capitalized interest totaled $10 million in second-quarter 2010, $14 million in second-quarter 2009, $16 million in the 2010 six-month period and $59 million in the 2009 six-month period. Lower capitalized interest in the 2010 periods primarily reflects the completion of development activities for the initial project at the Tenke Fungurume mine.
e.  
Preferred dividends of $97 million and additional shares of common stock of approximately 39 million shares for the 6¾% Mandatory Convertible Preferred Stock were excluded for the 2009 six-month period because they were anti-dilutive.

 
IV
 

FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
           
 
June 30,
    
December 31,
  
 
2010
    
2009
  
 
(In Millions)
  
ASSETS
              
Current assets:
              
Cash and cash equivalents
$
3,042
    
$
2,656
  
Trade accounts receivable
  
1,009
      
1,517
  
Other accounts receivable
  
235
      
286
  
Inventories:
              
Product
  
1,031
      
1,110
  
Materials and supplies, net
  
1,097
      
1,093
  
Mill and leach stockpiles
  
768
      
667
  
Other current assets
  
111
      
104
  
Total current assets
  
7,293
      
7,433
  
Property, plant, equipment and development costs, net
  
16,272
      
16,195
  
Long-term mill and leach stockpiles
  
1,353
      
1,321
  
Intangible assets, net
  
333
      
347
  
Other assets
  
728
      
700
  
Total assets
$
25,979
    
$
25,996
  
               
LIABILITIES AND EQUITY
              
Current liabilities:
              
Accounts payable and accrued liabilities
$
2,065
    
$
2,038
  
Dividends payable, including dividends payable to noncontrolling interests
  
329
      
99
  
Accrued income taxes
  
240
      
474
  
Current portion of reclamation and environmental obligations
  
198
      
214
  
Current portion of long-term debt and short-term borrowings
  
101
      
16
  
Rio Tinto share of joint venture cash flows
  
50
      
161
  
Total current liabilities
  
2,983
      
3,002
  
Long-term debt, less current portion
  
4,684
a
    
6,330
  
Deferred income taxes
  
2,612
      
2,503
  
Reclamation and environmental obligations, less current portion
  
2,005
      
1,981
  
Other liabilities
  
1,402
      
1,423
  
Total liabilities
  
13,686
      
15,239
  
Equity:
              
FCX stockholders’ equity:
              
6¾% Mandatory Convertible Preferred Stock
  
-
b
    
2,875
  
Common stock
  
59
b
    
55
  
Capital in excess of par value
  
18,639
b
    
15,680
  
Accumulated deficit
  
(4,466
)
    
(5,805
)
Accumulated other comprehensive loss
  
(268
)
    
(273
)
Common stock held in treasury
  
(3,432
)
    
(3,413
)
       Total FCX stockholders’ equity
  
10,532
      
9,119
  
Noncontrolling interests
  
1,761
      
1,638
  
Total equity
  
12,293
      
10,757
  
Total liabilities and equity
$
25,979
    
$
25,996
  
               
a.  
During the first six months of 2010, FCX purchased in the open market $218 million of its 8.25% Senior Notes due 2015 for $237 million (an average purchase price of 108.4 percent) and $329 million of its 8.375% Senior Notes due 2017 for $358 million (an average purchase price of 108.5 percent).  In addition, FCX redeemed all of its $1.0 billion of outstanding Senior Floating Rate Notes due 2015 for 101 percent of the principal amount together with accrued and unpaid interest.
b.  
During the second quarter of 2010, FCX‘s 6¾% Mandatory Convertible Preferred Stock converted into 39 million shares of FCX common stock.

 
V
 

FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
       
   
Six Months Ended June 30,
  
   
2010
    
2009
  
   
(In Millions)
  
Cash flow from operating activities:
                
Net income
  
$
2,047
    
$
1,019
  
Adjustments to reconcile net income to net cash provided by
                
operating activities:
                
Depreciation, depletion and amortization
    
520
      
488
  
Lower of cost or market inventory adjustments
    
-
      
19
  
Stock-based compensation
    
75
      
57
  
Charges for reclamation and environmental obligations, including accretion
    
75
      
112
  
Payments of reclamation and environmental obligations
    
(97
)
    
(47
)
Losses on early extinguishment of debt
    
77
      
-
  
Deferred income taxes
    
107
      
61
  
Intercompany profit on PT Freeport Indonesia sales to PT Smelting
    
(29
)
    
37
  
Increase in long-term mill and leach stockpiles
    
(31
)
    
(31
)
Changes in other assets and liabilities
    
5
      
71
  
Other, net
    
26
      
36
  
(Increases) decreases in working capital:
                
Accounts receivable
    
502
      
(803
)
Inventories, and mill and leach stockpiles
    
(39
)
    
53
  
Other current assets
    
(9
)
    
105
  
Accounts payable and accrued liabilities
    
(161
)
    
(675
)
Accrued income and other taxes
    
(186
)
    
394
  
Net cash provided by operating activities
    
2,882
      
896
  
                 
Cash flow from investing activities:
                
Capital expenditures:
                
North America copper mines
    
(81
)
    
(100
)
South America
    
(154
)
    
(111
)
Indonesia
    
(195
)
    
(128
)
Africa
    
(50
)
    
(458
)
Other
    
(47
)
    
(97
)
Proceeds from the sale of assets and other, net
    
8
      
(1
)
Net cash used in investing activities
    
(519
)
    
(895
)
                 
Cash flow from financing activities:
                
Net proceeds from sale of common stock
    
-
      
740
  
Proceeds from debt
    
35
      
155
  
Repayments of debt
    
(1,655
)
    
(285
)
Cash dividends and distributions paid:
                
Common stock
    
(130
)
    
-
  
Preferred stock
    
(95
)
    
(120
)
Noncontrolling interests
    
(145
)
    
(63
)
Contributions from noncontrolling interests
    
15
      
29
  
Net payments for stock-based awards
    
(6
)
    
(7
)
Excess tax benefit from stock-based awards
    
4
      
-
  
Other
    
-
      
(3
)
Net cash (used in) provided by financing activities
    
(1,977
)
    
446
  
                 
Net increase in cash and cash equivalents
    
386
      
447
  
Cash and cash equivalents at beginning of year
    
2,656
      
872
  
Cash and cash equivalents at end of period
  
$
3,042
    
$
1,319
  
                 
 
 
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, shared 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 other 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.  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 June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments
$
925
  
$
925
  
$
104
  
$
19
  
$
1,048
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
421
    
376
    
51
    
9
    
436
  
By-product creditsa
  
(108
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
26
    
26
    
-
    
-
    
26
  
Net cash costs
  
339
    
402
    
51
    
9
    
462
  
Depreciation, depletion and amortization
  
66
    
62
    
3
    
1
    
66
  
Noncash and other costs, net
  
53
    
52
    
1
    
-
    
53
  
Total costs
  
458
    
516
    
55
    
10
    
581
  
Revenue adjustments, primarily for hedging
  
(1
)
  
(1
)
  
-
    
-
    
(1
)
Idle facility and other non-inventoriable costs
  
(21
)
  
(21
)
  
-
    
-
    
(21
)
Gross profit
$
445
  
$
387
  
$
49
  
$
9
  
$
445
  
                               
Copper sales (millions of recoverable pounds)
  
288
    
288
                    
Molybdenum sales (millions of recoverable pounds)c
              
5
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments
$
3.21
  
$
3.21
  
$
17.34
              
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.46
    
1.31
    
8.55
              
By-product creditsa
  
(0.38
)
  
-
    
-
              
Treatment charges
  
0.09
    
0.08
    
-
              
Unit net cash costs
  
1.17
    
1.39
    
8.55
              
Depreciation, depletion and amortization
  
0.23
    
0.22
    
0.64
              
Noncash and other costs, net
  
0.19
    
0.18
    
0.04
              
Total unit costs
  
1.59
    
1.79
    
9.23
              
Revenue adjustments, primarily for hedging
  
-
    
-
    
-
              
Idle facility and other non-inventoriable costs
  
(0.08
)
  
(0.08
)
  
(0.01
)
            
Gross profit per pound
$
1.54
  
$
1.34
  
$
8.10
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
1,048
  
$
436
  
$
66
              
Net noncash and other costs per above
  
N/A
    
53
    
N/A
              
Treatment charges per above
  
N/A
    
26
    
N/A
              
Revenue adjustments, primarily for hedging per above
  
(1
)
  
N/A
    
N/A
              
Idle facility and other non-inventoriable costs per above
  
N/A
    
21
    
N/A
              
Eliminations and other
  
(3
)
  
1
    
5
              
North America copper mines
  
1,044
    
537
    
71
              
South America mining
  
849
    
389
    
59
              
Indonesia mining
  
927
    
427
    
57
              
Africa mining
  
207
    
96
    
30
              
Molybdenum
  
325
    
190
    
12
              
Rod & Refining
  
1,129
    
1,121
    
2
              
Atlantic Copper Smelting & Refining
  
616
    
605
    
9
              
Corporate, other & eliminations
  
(1,233
)
  
(1,313
)
  
9
              
As reported in FCX’s consolidated financial statements
$
3,864
  
$
2,052
  
$
249
              
                               
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 June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments
$
615
  
$
615
  
$
60
  
$
10
  
$
685
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
350
    
318
    
38
    
6
    
362
  
By-product creditsa
  
(58
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
25
    
24
    
-
    
1
    
25
  
Net cash costs
  
317
    
342
    
38
    
7
    
387
  
Depreciation, depletion and amortization
  
60
    
57
    
3
    
-
    
60
  
Noncash and other costs, net
  
41
    
41
    
-
    
-
    
41
  
Total costs
  
418
    
440
    
41
    
7
    
488
  
Revenue adjustments, primarily for hedging
  
19
    
19
    
-
    
-
    
19
  
Idle facility and other non-inventoriable costs
  
(24
)
  
(24
)
  
-
    
-
    
(24
)
Gross profit
$
192
  
$
170
  
$
19
  
$
3
  
$
192
  
                               
Copper sales (millions of recoverable pounds)
  
281
    
281
                    
Molybdenum sales (millions of recoverable pounds)c
              
7
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments
$
2.18
  
$
2.18
  
$
8.43
              
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.24
    
1.13
    
5.34
              
By-product creditsa
  
(0.21
)
  
-
    
-
              
Treatment charges
  
0.09
    
0.08
    
-
              
Unit net cash costs
  
1.12
    
1.21
    
5.34
              
Depreciation, depletion and amortization
  
0.21
    
0.21
    
0.36
              
Noncash and other costs, net
  
0.15
    
0.14
    
0.04
              
Total unit costs
  
1.48
    
1.56
    
5.74
              
Revenue adjustments, primarily for hedging
  
0.06
    
0.06
    
-
              
Idle facility and other non-inventoriable costs
  
(0.08
)
  
(0.08
)
  
-
              
Gross profit per pound
$
0.68
  
$
0.60
  
$
2.69
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
685
  
$
362
  
$
60
              
Net noncash and other costs per above
  
N/A
    
41
    
N/A
              
Treatment charges per above
  
N/A
    
25
    
N/A
              
Revenue adjustments, primarily for hedging per above
  
19
    
N/A
    
N/A
              
Idle facility and other non-inventoriable costs per above
  
N/A
    
24
    
N/A
              
Eliminations and other
  
(1
)
  
9
    
4
              
North America copper mines
  
703
    
461
    
64
              
South America mining
  
884
    
366
    
69
              
Indonesia mining
  
1,610
    
415
    
78
              
Africa mining
  
57
    
92
    
14
              
Molybdenum
  
186
    
162
    
13
              
Rod & Refining
  
747
    
743
    
2
              
Atlantic Copper Smelting & Refining
  
415
    
419
    
9
              
Corporate, other & eliminations
  
(918
)
  
(849
)
  
7
              
As reported in FCX’s consolidated financial statements
$
3,684
  
$
1,809
  
$
256
              
                               
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.
 
 
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
         
Six Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments
$
1,890
  
$
1,890
  
$
181
  
$
31
  
$
2,102
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
802
    
725
    
92
    
14
    
831
  
By-product creditsa
  
(183
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
48
    
47
    
-
    
1
    
48
  
Net cash costs
  
667
    
772
    
92
    
15
    
879
  
Depreciation, depletion and amortization
  
144
    
136
    
7
    
1
    
144
  
Noncash and other costs, net
  
77
    
76
    
1
    
-
    
77
  
Total costs
  
888
    
984
    
100
    
16
    
1,100
  
Revenue adjustments, primarily for hedging
  
(2
)
  
(2
)
  
-
    
-
    
(2
)
Idle facility and other non-inventoriable costs
  
(39
)
  
(39
)
  
-
    
-
    
(39
)
Gross profit
$
961
  
$
865
  
$
81
  
$
15
  
$
961
  
                               
Copper sales (millions of recoverable pounds)
  
579
    
579
                    
Molybdenum sales (millions of recoverable pounds)c
              
11
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments
$
3.27
  
$
3.27
  
$
15.71
              
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.39
    
1.25
    
8.00
              
By-product creditsa
  
(0.32
)
  
-
    
-
              
Treatment charges
  
0.08
    
0.08
    
-
              
Unit net cash costs
  
1.15
    
1.33
    
8.00
              
Depreciation, depletion and amortization
  
0.25
    
0.24
    
0.63
              
Noncash and other costs, net
  
0.13
    
0.13
    
0.05
              
Total unit costs
  
1.53
    
1.70
    
8.68
              
Revenue adjustments, primarily for hedging
  
-
    
-
    
-
              
Idle facility and other non-inventoriable costs
  
(0.08
)
  
(0.08
)
  
(0.01
)
            
Gross profit per pound
$
1.66
  
$
1.49
  
$
7.02
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
2,102
  
$
831
  
$
144
              
Net noncash and other costs per above
  
N/A
    
77
    
N/A
              
Treatment charges per above
  
N/A
    
48
    
N/A
              
Revenue adjustments, primarily for hedging per above
  
(2
)
  
N/A
    
N/A
              
Idle facility and other non-inventoriable costs per above
  
N/A
    
39
    
N/A
              
Eliminations and other
  
(2
)
  
6
    
9
              
North America copper mines
  
2,098
    
1,001
    
153
              
South America mining
  
1,918
    
765
    
120
              
Indonesia mining
  
2,386
    
902
    
120
              
Africa mining
  
456
    
206
    
60
              
Molybdenum
  
600
    
375
    
25
              
Rod & Refining
  
2,202
    
2,188
    
4
              
Atlantic Copper Smelting & Refining
  
1,249
    
1,233
    
19
              
Corporate, other & eliminations
  
(2,682
)
  
(2,700
)
  
19
              
As reported in FCX’s consolidated financial statements
$
8,227
  
$
3,970
  
$
520
              
                               
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.
 
 
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
         
Six Months Ended June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Molybdenum a
  
Other b
  
Total
  
                               
Revenues, excluding adjustments
$
1,095
  
$
1,095
  
$
119
  
$
16
  
$
1,230
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
746
    
696
    
64
    
8
    
768
  
By-product creditsa
  
(113
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
50
    
49
    
-
    
1
    
50
  
Net cash costs
  
683
    
745
    
64
    
9
    
818
  
Depreciation, depletion and amortization
  
131
    
126
    
4
    
1
    
131
  
Noncash and other costs, net
  
87
    
86
    
1
    
-
    
87
  
Total costs
  
901
    
957
    
69
    
10
    
1,036
  
Revenue adjustments, primarily for hedging
  
88
    
88
    
-
    
-
    
88
  
Idle facility and other non-inventoriable costs
  
(62
)
  
(62
)
  
-
    
-
    
(62
)
Gross profit
$
220
  
$
164
  
$
50
  
$
6
  
$
220
  
                               
Copper sales (millions of recoverable pounds)
  
582
    
582
                    
Molybdenum sales (millions of recoverable pounds)c
              
13
              
                               
Gross profit per pound of copper and molybdenum:
                    
                               
Revenues, excluding adjustments
$
1.88
  
$
1.88
  
$
9.02
              
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.28
    
1.19
    
4.85
              
By-product creditsa
  
(0.19
)
  
-
    
-
              
Treatment charges
  
0.08
    
0.08
    
-
              
Unit net cash costs
  
1.17
    
1.27
    
4.85
              
Depreciation, depletion and amortization
  
0.23
    
0.22
    
0.29
              
Noncash and other costs, net
  
0.15
    
0.15
    
0.10
              
Total unit costs
  
1.55
    
1.64
    
5.24
              
Revenue adjustments, primarily for hedging
  
0.15
    
0.15
    
-
              
Idle facility and other non-inventoriable costs
  
(0.10
)
  
(0.11
)
  
-
              
Gross profit per pound
$
0.38
  
$
0.28
  
$
3.78
              
                               
Reconciliation to Amounts Reported
          
Depreciation,
              
       
Production
  
Depletion and
              
(In Millions)
Revenues
  
and Delivery
  
Amortization
              
Totals presented above
$
1,230
  
$
768
  
$
131
              
Net noncash and other costs per above
  
N/A
    
87
    
N/A
              
Treatment charges per above
  
N/A
    
50
    
N/A
              
Revenue adjustments, primarily for hedging per above
  
88
    
N/A
    
N/A
              
Idle facility and other non-inventoriable costs per above
  
N/A
    
62
    
N/A
              
Eliminations and other
  
3
    
47
    
8
              
North America copper mines
  
1,321
    
1,014
    
139
              
South America mining
  
1,586
    
733
    
134
              
Indonesia mining
  
2,732
    
765
    
143
              
Africa mining
  
57
    
108
    
17
              
Molybdenum
  
332
    
300
d
  
22
              
Rod & Refining
  
1,366
    
1,357
    
4
              
Atlantic Copper Smelting & Refining
  
707
    
712
    
17
              
Corporate, other & eliminations
  
(1,815
)
  
(1,599
)
  
12
              
As reported in FCX’s consolidated financial statements
$
6,286
  
$
3,390
d
$
488
              
                               
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 (LCM) molybdenum inventory adjustments of $19 million.
 
 
XI
 


FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments
$
936
  
$
936
  
$
60
  
$
996
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
379
    
356
    
26
    
382
  
By-product credits
  
(57
)
  
-
    
-
    
-
  
Treatment charges
  
33
    
33
    
-
    
33
  
Net cash costs
  
355
    
389
    
26
    
415
  
Depreciation, depletion and amortization
  
59
    
57
    
2
    
59
  
Noncash and other costs, net
  
5
    
4
    
1
    
5
  
Total costs
  
419
    
450
    
29
    
479
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(114
)
  
(114
)
  
-
    
(114
)
Other non-inventoriable costs
  
(6
)
  
(5
)
  
(1
)
  
(6
)
Gross profit
$
397
  
$
367
  
$
30
  
$
397
  
                         
Copper sales (millions of recoverable pounds)
  
311
    
311
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments
$
3.02
  
$
3.02
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.22
    
1.14
              
By-product credits
  
(0.19
)
  
-
              
Treatment charges
  
0.11
    
0.11
              
Unit net cash costs
  
1.14
    
1.25
              
Depreciation, depletion and amortization
  
0.19
    
0.18
              
Noncash and other costs, net
  
0.02
    
0.02
              
Total unit costs
  
1.35
    
1.45
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(0.37
)
  
(0.37
)
            
Other non-inventoriable costs
  
(0.02
)
  
(0.02
)
            
Gross profit per pound
$
1.28
  
$
1.18
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
996
  
$
382
  
$
59
        
Net noncash and other costs per above
  
N/A
    
5
    
N/A
        
Treatment charges per above
  
(33
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
(114
)
  
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
6
    
N/A
        
Eliminations and other
  
-
    
(4
)
  
-
        
South America mining
 
849
  
 
389
  
 
59
        
North America copper mines
  
1,044
    
537
    
71
        
Indonesia mining
  
927
    
427
    
57
        
Africa mining
  
207
    
96
    
30
        
Molybdenum
  
325
    
190
    
12
        
Rod & Refining
  
1,129
    
1,121
    
2
        
Atlantic Copper Smelting & Refining
  
616
    
605
    
9
        
Corporate, other & eliminations
  
(1,233
)
  
(1,313
)
  
9
        
As reported in FCX’s consolidated financial statements
$
3,864
  
$
2,052
  
$
249
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
 
 
XII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments
$
803
  
$
803
  
$
40
  
$
843
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
364
    
346
    
19
    
365
  
By-product credits
  
(39
)
  
-
    
-
    
-
  
Treatment charges
  
54
    
54
    
-
    
54
  
Net cash costs
  
379
    
400
    
19
    
419
  
Depreciation, depletion and amortization
  
69
    
67
    
2
    
69
  
Noncash and other costs, net
  
(2
)
  
(1
)
  
(1
)
  
(2
)
Total costs
  
446
    
466
    
20
    
486
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
95
    
95
    
-
    
95
  
Other non-inventoriable costs
  
(8
)
  
(5
)
  
(3
)
  
(8
)
Gross profit
$
444
  
$
427
  
$
17
  
$
444
  
                         
Copper sales (millions of recoverable pounds)
  
363
    
363
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments
$
2.22
  
$
2.22
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.00
    
0.95
              
By-product credits
  
(0.10
)
  
-
              
Treatment charges
  
0.15
    
0.15
              
Unit net cash costs
  
1.05
    
1.10
              
Depreciation, depletion and amortization
  
0.19
    
0.19
              
Noncash and other costs, net
  
(0.01
)
  
-
              
Total unit costs
  
1.23
    
1.29
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
0.26
    
0.26
              
Other non-inventoriable costs
  
(0.02
)
  
(0.01
)
            
Gross profit per pound
$
1.23
  
$
1.18
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
843
  
$
365
  
$
69
        
Net noncash and other costs per above
  
N/A
    
(2
)
  
N/A
        
Treatment charges per above
  
(54
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
95
    
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
8
    
N/A
        
Eliminations and other
  
-
    
(5
)
  
-
        
South America mining
  
884
    
366
    
69
        
North America copper mines
  
703
    
461
    
64
        
Indonesia mining
  
1,610
    
415
    
78
        
Africa mining
  
57
    
92
    
14
        
Molybdenum
  
186
    
162
    
13
        
Rod & Refining
  
747
    
743
    
2
        
Atlantic Copper Smelting & Refining
  
415
    
419
    
9
        
Corporate, other & eliminations
  
(918
)
  
(849
)
  
7
        
As reported in FCX’s consolidated financial statements
$
3,684
  
$
1,809
  
$
256
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
 
 
XIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Six Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments
$
1,898
  
$
1,898
  
$
116
  
$
2,014
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
746
    
704
    
49
    
753
  
By-product credits
  
(108
)
  
-
    
-
    
-
  
Treatment charges
  
80
    
80
    
-
    
80
  
Net cash costs
  
718
    
784
    
49
    
833
  
Depreciation, depletion and amortization
  
119
    
115
    
5
    
120
  
Noncash and other costs, net
  
7
    
6
    
1
    
7
  
Total costs
  
844
    
905
    
55
    
960
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(17
)
  
(17
)
  
-
    
(17
)
Other non-inventoriable costs
  
(14
)
  
(12
)
  
(2
)
  
(14
)
Gross profit
$
1,023
  
$
964
  
$
59
  
$
1,023
  
                         
Copper sales (millions of recoverable pounds)
  
618
    
618
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments
$
3.07
  
$
3.07
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.21
    
1.14
              
By-product credits
  
(0.18
)
  
-
              
Treatment charges
  
0.13
    
0.13
              
Unit net cash costs
  
1.16
    
1.27
              
Depreciation, depletion and amortization
  
0.19
    
0.18
              
Noncash and other costs, net
  
0.01
    
0.01
              
Total unit costs
  
1.36
    
1.46
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(0.03
)
  
(0.03
)
            
Other non-inventoriable costs
  
(0.02
)
  
(0.02
)
            
Gross profit per pound
$
1.66
  
$
1.56
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
2,014
  
$
753
  
$
120
        
Net noncash and other costs per above
  
N/A
    
7
    
N/A
        
Treatment charges per above
  
(80
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
(17
)
  
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
14
    
N/A
        
Eliminations and other
  
1
    
(9
)
  
-
        
South America mining
  
1,918
    
765
    
120
        
North America copper mines
  
2,098
    
1,001
    
153
        
Indonesia mining
  
2,386
    
902
    
120
        
Africa mining
  
456
    
206
    
60
        
Molybdenum
  
600
    
375
    
25
        
Rod & Refining
  
2,202
    
2,188
    
4
        
Atlantic Copper Smelting & Refining
  
1,249
    
1,233
    
19
        
Corporate, other & eliminations
  
(2,682
)
  
(2,700
)
  
19
        
As reported in FCX’s consolidated financial statements
$
8,227
  
$
3,970
  
$
520
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
 
 
XIV
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Six Months Ended June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Other a
  
Total
  
                         
Revenues, excluding adjustments
$
1,497
  
$
1,497
  
$
84
  
$
1,581
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
716
    
669
    
53
    
722
  
By-product credits
  
(78
)
  
-
    
-
    
-
  
Treatment charges
  
102
    
102
    
-
    
102
  
Net cash costs
  
740
    
771
    
53
    
824
  
Depreciation, depletion and amortization
  
134
    
129
    
5
    
134
  
Noncash and other costs, net
  
3
    
4
    
(1
)
  
3
  
Total costs
  
877
    
904
    
57
    
961
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
106
    
106
    
-
    
106
  
Other non-inventoriable costs
  
(17
)
  
(13
)
  
(4
)
  
(17
)
Gross profit
$
709
  
$
686
  
$
23
  
$
709
  
                         
Copper sales (millions of recoverable pounds)
  
713
    
713
              
                         
Gross profit per pound of copper:
              
                         
Revenues, excluding adjustments
$
2.10
  
$
2.10
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.00
    
0.94
              
By-product credits
  
(0.11
)
  
-
              
Treatment charges
  
0.15
    
0.14
              
Unit net cash costs
  
1.04
    
1.08
              
Depreciation, depletion and amortization
  
0.19
    
0.18
              
Noncash and other costs, net
  
-
    
0.01
              
Total unit costs
  
1.23
    
1.27
              
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
0.15
    
0.15
              
Other non-inventoriable costs
  
(0.03
)
  
(0.02
)
            
Gross profit per pound
$
0.99
  
$
0.96
              
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
1,581
  
$
722
  
$
134
        
Net noncash and other costs per above
  
N/A
    
3
    
N/A
        
Treatment charges per above
  
(102
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
106
    
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
17
    
N/A
        
Eliminations and other
  
1
    
(9
)
  
-
        
South America mining
  
1,586
    
733
    
134
        
North America copper mines
  
1,321
    
1,014
    
139
        
Indonesia mining
  
2,732
    
765
    
143
        
Africa mining
  
57
    
108
    
17
        
Molybdenum
  
332
    
300
b
  
22
        
Rod & Refining
  
1,366
    
1,357
    
4
        
Atlantic Copper Smelting & Refining
  
707
    
712
    
17
        
Corporate, other & eliminations
  
(1,815
)
  
(1,599
)
  
12
        
As reported in FCX’s consolidated financial statements
$
6,286
  
$
3,390
b
$
488
        
                         
a. Includes gold, silver and molybdenum product revenues and production costs.
b. Includes LCM molybdenum inventory adjustments of $19 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 June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments
$
765
  
$
765
  
$
352
  
$
14
  
$
1,131
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
422
    
285
    
132
    
5
    
422
  
Gold and silver credits
  
(366
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
67
    
45
    
21
    
1
    
67
  
Royalty on metals
  
28
    
19
    
9
    
-
    
28
  
Net cash costs
  
151
    
349
    
162
    
6
    
517
  
Depreciation and amortization
  
57
    
38
    
17
    
2
    
57
  
Noncash and other costs, net
  
5
    
4
    
1
    
-
    
5
  
Total costs
  
213
    
391
    
180
    
8
    
579
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(109
)
  
(109
)
  
-
    
-
    
(109
)
PT Smelting intercompany profit
  
17
    
11
    
5
    
1
    
17
  
Gross profit
$
460
  
$
276
  
$
177
  
$
7
  
$
460
  
                               
Copper sales (millions of recoverable pounds)
  
259
    
259
                    
Gold sales (thousands of recoverable ounces)
              
276
              
Silver sales (thousands of recoverable ounces)
                    
800
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments
$
2.95
  
$
2.95
  
$
1,235.26
  
$
16.78
        
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.62
    
1.10
    
474.65
    
6.46
        
Gold and silver credits
  
(1.41
)
  
-
    
-
    
-
        
Treatment charges
  
0.26
    
0.18
    
75.18
    
1.02
        
Royalty on metals
  
0.11
    
0.07
    
31.10
    
0.42
        
Unit net cash costs
  
0.58
    
1.35
    
580.93
    
7.90
        
Depreciation and amortization
  
0.22
    
0.15
    
63.62
    
0.87
        
Noncash and other costs, net
  
0.02
    
0.01
    
6.36
    
0.09
        
Total unit costs
  
0.82
    
1.51
    
650.91
    
8.86
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(0.42
)
  
(0.42
)
  
37.24
    
0.54
        
PT Smelting intercompany profit
  
0.06
    
0.04
    
18.86
    
0.26
        
Gross profit per pound/ounce
$
1.77
  
$
1.06
  
$
640.45
  
$
8.72
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
1,131
  
$
422
  
$
57
              
Net noncash and other costs per above
  
N/A
    
5
    
N/A
              
Treatment charges per above
  
(67
)
  
N/A
    
N/A
              
Royalty on metals per above
  
(28
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
(109
)
  
N/A
    
N/A
              
Indonesia mining
  
927
    
427
    
57
              
North America copper mines
  
1,044
    
537
    
71
              
South America mining
  
849
    
389
    
59
              
Africa mining
  
207
    
96
    
30
              
Molybdenum
  
325
    
190
    
12
              
Rod & Refining
  
1,129
    
1,121
    
2
              
Atlantic Copper Smelting & Refining
  
616
    
605
    
9
              
Corporate, other & eliminations
  
(1,233
)
  
(1,313
)
  
9
              
As reported in FCX’s consolidated financial statements
$
3,864
  
$
2,052
  
$
249
              
                               

 
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 June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments
$
966
  
$
966
  
$
753
  
$
23
  
$
1,742
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
401
    
223
    
172
    
6
    
401
  
Gold and silver credits
  
(776
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
94
    
53
    
40
    
1
    
94
  
Royalty on metals
  
49
    
28
    
21
    
-
    
49
  
Net cash (credits) costs
  
(232
)
  
304
    
233
    
7
    
544
  
Depreciation and amortization
  
78
    
44
    
33
    
1
    
78
  
Noncash and other costs, net
  
14
    
7
    
7
    
-
    
14
  
Total (credits) costs
  
(140
)
  
355
    
273
    
8
    
636
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
11
    
11
    
-
    
-
    
11
  
PT Smelting intercompany profit
  
(30
)
  
(17
)
  
(12
)
  
(1
)
  
(30
)
Gross profit
$
1,087
  
$
605
  
$
468
  
$
14
  
$
1,087
  
                               
Copper sales (millions of recoverable pounds)
  
432
    
432
                    
Gold sales (thousands of recoverable ounces)
              
811
              
Silver sales (thousands of recoverable ounces)
                    
1,635
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments
$
2.24
  
$
2.24
  
$
932.32
  
$
13.95
        
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
0.93
    
0.52
    
214.22
    
3.19
        
Gold and silver credits
  
(1.80
)
  
-
    
-
    
-
        
Treatment charges
  
0.22
    
0.12
    
50.10
    
0.75
        
Royalty on metals
  
0.12
    
0.06
    
26.44
    
0.39
        
Unit net cash (credits) costs
  
(0.53
)
  
0.70
    
290.76
    
4.33
        
Depreciation and amortization
  
0.18
    
0.10
    
41.45
    
0.62
        
Noncash and other costs, net
  
0.03
    
0.02
    
6.66
    
0.10
        
Total unit (credits) costs
  
(0.32
)
  
0.82
    
338.87
    
5.05
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
0.03
    
0.03
    
(4.04
)
  
(0.12
)
      
PT Smelting intercompany profit
  
(0.07
)
  
(0.04
)
  
(16.23
)
  
(0.24
)
      
Gross profit per pound/ounce
$
2.52
  
$
1.41
  
$
573.18
  
$
8.54
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
1,742
  
$
401
  
$
78
              
Net noncash and other costs per above
  
N/A
    
14
    
N/A
              
Treatment charges per above
  
(94
)
  
N/A
    
N/A
              
Royalty on metals per above
  
(49
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
11
    
N/A
    
N/A
              
Indonesia mining
  
1,610
    
415
    
78
              
North America copper mines
  
703
    
461
    
64
              
South America mining
  
884
    
366
    
69
              
Africa mining
  
57
    
92
    
14
              
Molybdenum
  
186
    
162
    
13
              
Rod & Refining
  
747
    
743
    
2
              
Atlantic Copper Smelting & Refining
  
415
    
419
    
9
              
Corporate, other & eliminations
  
(918
)
  
(849
)
  
7
              
As reported in FCX’s consolidated financial statements
$
3,684
  
$
1,809
  
$
256
              
                               
 
 
XVII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Six Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments
$
1,694
  
$
1,694
  
$
861
  
$
35
  
$
2,590
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
878
    
574
    
292
    
12
    
878
  
Gold and silver credits
  
(896
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
134
    
88
    
44
    
2
    
134
  
Royalty on metals
  
64
    
42
    
21
    
1
    
64
  
Net cash costs
  
180
    
704
    
357
    
15
    
1,076
  
Depreciation and amortization
  
120
    
78
    
40
    
2
    
120
  
Noncash and other costs, net
  
24
    
16
    
8
    
-
    
24
  
Total costs
  
324
    
798
    
405
    
17
    
1,220
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(6
)
  
(6
)
  
-
    
-
    
(6
)
PT Smelting intercompany profit
  
29
    
19
    
9
    
1
    
29
  
Gross profit
$
1,393
  
$
909
  
$
465
  
$
19
  
$
1,393
  
                               
Copper sales (millions of recoverable pounds)
  
555
    
555
                    
Gold sales (thousands of recoverable ounces)
              
734
              
Silver sales (thousands of recoverable ounces)
                    
2,066
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments
$
3.05
  
$
3.05
  
$
1,170.67
  
$
17.16
        
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
1.58
    
1.03
    
397.55
    
5.76
        
Gold and silver credits
  
(1.61
)
  
-
    
-
    
-
        
Treatment charges
  
0.24
    
0.16
    
60.53
    
0.88
        
Royalty on metals
  
0.11
    
0.08
    
28.90
    
0.42
        
Unit net cash costs
  
0.32
    
1.27
    
486.98
    
7.06
        
Depreciation and amortization
  
0.22
    
0.14
    
54.28
    
0.79
        
Noncash and other costs, net
  
0.04
    
0.03
    
10.91
    
0.16
        
Total unit costs
  
0.58
    
1.44
    
552.17
    
8.01
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
(0.01
)
  
(0.01
)
  
1.82
    
(0.16
)
      
PT Smelting intercompany profit
  
0.05
    
0.04
    
13.05
    
0.19
        
Gross profit per pound/ounce
$
2.51
  
$
1.64
  
$
633.37
  
$
9.18
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
2,590
  
$
878
  
$
120
              
Net noncash and other costs per above
  
N/A
    
24
    
N/A
              
Treatment charges per above
  
(134
)
  
N/A
    
N/A
              
Royalty on metals per above
  
(64
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
(6
)
  
N/A
    
N/A
              
Indonesia mining
  
2,386
    
902
    
120
              
North America copper mines
  
2,098
    
1,001
    
153
              
South America mining
  
1,918
    
765
    
120
              
Africa mining
  
456
    
206
    
60
              
Molybdenum
  
600
    
375
    
25
              
Rod & Refining
  
2,202
    
2,188
    
4
              
Atlantic Copper Smelting & Refining
  
1,249
    
1,233
    
19
              
Corporate, other & eliminations
  
(2,682
)
  
(2,700
)
  
19
              
As reported in FCX’s consolidated financial statements
$
8,227
  
$
3,970
  
$
520
              
                               
 
 
XVIII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Six Months Ended June 30, 2009
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Gold
  
Silver
  
Total
  
                               
Revenues, excluding adjustments
$
1,650
  
$
1,650
  
$
1,230
  
$
40
  
$
2,920
  
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
740
    
418
    
312
    
10
    
740
  
Gold and silver credits
  
(1,270
)
  
-
    
-
    
-
    
-
  
Treatment charges
  
169
    
96
    
71
    
2
    
169
  
Royalty on metals
  
74
    
42
    
31
    
1
    
74
  
Net cash (credits) costs
  
(287
)
  
556
    
414
    
13
    
983
  
Depreciation and amortization
  
143
    
81
    
60
    
2
    
143
  
Noncash and other costs, net
  
25
    
14
    
11
    
-
    
25
  
Total (credits) costs
  
(119
)
  
651
    
485
    
15
    
1,151
  
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
55
    
55
    
-
    
-
    
55
  
PT Smelting intercompany profit
  
(37
)
  
(21
)
  
(15
)
  
(1
)
  
(37
)
Gross profit
$
1,787
  
$
1,033
  
$
730
  
$
24
  
$
1,787
  
                               
Copper sales (millions of recoverable pounds)
  
801
    
801
                    
Gold sales (thousands of recoverable ounces)
              
1,332
              
Silver sales (thousands of recoverable ounces)
                    
2,949
        
                               
Gross profit per pound of copper/per ounce of gold and silver:
                
                               
Revenues, excluding adjustments
$
2.06
  
$
2.06
  
$
919.28
  
$
13.35
        
                               
Site production and delivery, before net noncash
                              
and other costs shown below
  
0.92
    
0.52
    
233.90
    
3.46
        
Gold and silver credits
  
(1.58
)
  
-
    
-
    
-
        
Treatment charges
  
0.21
    
0.12
    
53.44
    
0.79
        
Royalty on metals
  
0.09
    
0.05
    
23.48
    
0.35
        
Unit net cash (credits) costs
  
(0.36
)
  
0.69
    
310.82
    
4.60
        
Depreciation and amortization
  
0.18
    
0.10
    
45.11
    
0.67
        
Noncash and other costs, net
  
0.03
    
0.02
    
7.99
    
0.12
        
Total unit (credits) costs
  
(0.15
)
  
0.81
    
363.92
    
5.39
        
Revenue adjustments, primarily for pricing on
                              
prior period open sales
  
0.07
    
0.07
    
4.12
    
0.32
        
PT Smelting intercompany profit
  
(0.05
)
  
(0.03
)
  
(11.81
)
  
(0.17
)
      
Gross profit per pound/ounce
$
2.23
  
$
1.29
  
$
547.67
  
$
8.11
        
                               
Reconciliation to Amounts Reported
    
Production
  
Depreciation,
              
     
and
  
Depletion and
              
(In Millions)
Revenues
  
Delivery
  
Amortization
              
Totals presented above
$
2,920
  
$
740
  
$
143
              
Net noncash and other costs per above
  
N/A
    
25
    
N/A
              
Treatment charges per above
  
(169
)
  
N/A
    
N/A
              
Royalty on metals per above
  
(74
)
  
N/A
    
N/A
              
Revenue adjustments, primarily for pricing on
                              
prior period open sales per above
  
55
    
N/A
    
N/A
              
Indonesia mining
  
2,732
    
765
    
143
              
North America copper mines
  
1,321
    
1,014
    
139
              
South America mining
  
1,586
    
733
    
134
              
Africa mining
  
57
    
108
    
17
              
Molybdenum
  
332
    
300
a
  
22
              
Rod & Refining
  
1,366
    
1,357
    
4
              
Atlantic Copper Smelting & Refining
  
707
    
712
    
17
              
Corporate, other & eliminations
  
(1,815
)
  
(1,599
)
  
12
              
As reported in FCX’s consolidated financial statements
$
6,286
  
$
3,390
a
$
488
              
                               
a. Includes LCM molybdenum inventory adjustments of $19 million.
 
 
XIX
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Africa Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Three Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Cobalt
  
Total
  
                         
Revenues, excluding adjustments
$
163
  
$
163
  
$
48
  
$
211
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
70
    
64
    
24
    
88
  
Cobalt credits
  
(30
)a
  
-
    
-
    
-
  
Royalties
  
3
    
2
    
1
    
3
  
Net cash costs
  
43
    
66
    
25
    
91
  
Depreciation, depletion and amortization
  
30
    
26
    
4
    
30
  
Noncash and other costs, net
  
3
    
2
    
1
    
3
  
Total costs
  
76
    
94
    
30
    
124
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
-
    
-
    
-
    
-
  
Other non-inventoriable costs
  
(6
)
  
(5
)
  
(1
)
  
(6
)
Gross profit
$
81
  
$
64
  
$
17
  
$
81
  
                         
Copper sales (millions of recoverable pounds)
  
55
    
55
              
Cobalt sales (millions of contained pounds)
              
4
        
                         
Gross profit per pound of copper/cobalt:
              
                         
Revenues, excluding adjustments
$
2.96
  
$
2.96
  
$
12.74
        
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.27
    
1.15
    
6.63
        
Cobalt credits
  
(0.54
)a
  
-
    
-
        
Royalties
  
0.06
    
0.05
    
0.20
        
Unit net cash costs
  
0.79
    
1.20
    
6.83
        
Depreciation, depletion and amortization
  
0.55
    
0.47
    
1.13
        
Noncash and other costs, net
  
0.04
    
0.03
    
0.08
        
Total unit costs
  
1.38
    
1.70
    
8.04
        
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
(0.01
)
  
(0.01
)
  
(0.02
)
      
Other non-inventoriable costs
  
(0.10
)
  
(0.09
)
  
(0.22
)
      
Gross profit per pound
$
1.47
  
$
1.16
  
$
4.46
        
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
211
  
$
88
  
$
30
        
Net noncash and other costs per above
  
N/A
    
3
    
N/A
        
Royalties per above
  
(3
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
-
    
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
6
    
N/A
        
Eliminations and other
  
(1
)
  
(1
)
  
-
        
Africa mining
 
207
  
 
96
  
 
30
        
North America copper mines
  
1,044
    
537
    
71
        
South America mining
  
849
    
389
    
59
        
Indonesia mining
  
927
    
427
    
57
        
Molybdenum
  
325
    
190
    
12
        
Rod & Refining
  
1,129
    
1,121
    
2
        
Atlantic Copper Smelting & Refining
  
616
    
605
    
9
        
Corporate, other & eliminations
  
(1,233
)
  
(1,313
)
  
9
        
As reported in FCX’s consolidated financial statements
$
3,864
  
$
2,052
  
$
249
        
                         
a. Net of cobalt downstream processing and freight costs.
 
 
XX
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Africa Mining Product Revenues and Production Costs and Unit Net Cash Costs
         
Six Months Ended June 30, 2010
        
 
By-Product
  
Co-Product Method
  
(In Millions)
Method
  
Copper
  
Cobalt
  
Total
  
                         
Revenues, excluding adjustments
$
377
  
$
377
  
$
87
  
$
464
  
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
160
    
151
    
40
    
191
  
Cobalt credits
  
(56
)a
  
-
    
-
    
-
  
Royalties
  
8
    
7
    
1
    
8
  
Net cash costs
  
112
    
158
    
41
    
199
  
Depreciation, depletion and amortization
  
60
    
49
    
11
    
60
  
Noncash and other costs, net
  
4
    
3
    
1
    
4
  
Total costs
  
176
    
210
    
53
    
263
  
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
-
    
-
    
-
    
-
  
Other non-inventoriable costs
  
(12
)
  
(10
)
  
(2
)
  
(12
)
Gross profit
$
189
  
$
157
  
$
32
  
$
189
  
                         
Copper sales (millions of recoverable pounds)
  
121
    
121
              
Cobalt sales (millions of contained pounds)
              
7
        
                         
Gross profit per pound of copper/cobalt:
              
                         
Revenues, excluding adjustments
$
3.12
  
$
3.12
  
$
11.91
        
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
1.32
    
1.25
    
5.73
        
Cobalt credits
  
(0.46
)a
  
-
    
-
        
Royalties
  
0.07
    
0.05
    
0.21
        
Unit net cash costs
  
0.93
    
1.30
    
5.94
        
Depreciation, depletion and amortization
  
0.49
    
0.41
    
1.53
        
Noncash and other costs, net
  
0.03
    
0.03
    
0.09
        
Total unit costs
  
1.45
    
1.74
    
7.56
        
Revenue adjustments, primarily for pricing
                        
on prior period open sales
  
-
    
-
    
0.51
        
Other non-inventoriable costs
  
(0.10
)
  
(0.08
)
  
(0.30
)
      
Gross profit per pound
$
1.57
  
$
1.30
  
$
4.56
        
                         
Reconciliation to Amounts Reported
          
Depreciation,
        
       
Production
  
Depletion and
        
(In Millions)
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
464
  
$
191
  
$
60
        
Net noncash and other costs per above
  
N/A
    
4
    
N/A
        
Royalties per above
  
(8
)
  
N/A
    
N/A
        
Revenue adjustments, primarily for pricing on prior
                        
period open sales per above
  
-
    
N/A
    
N/A
        
Other non-inventoriable costs per above
  
N/A
    
12
    
N/A
        
Eliminations and other
  
-
    
(1
)
  
-
        
Africa mining
 
456
  
 
206
  
 
60
        
North America copper mines
  
2,098
    
1,001
    
153
        
South America mining
  
1,918
    
765
    
120
        
Indonesia mining
  
2,386
    
902
    
120
        
Molybdenum
  
600
    
375
    
25
        
Rod & Refining
  
2,202
    
2,188
    
4
        
Atlantic Copper Smelting & Refining
  
1,249
    
1,233
    
19
        
Corporate, other & eliminations
  
(2,682
)
  
(2,700
)
  
19
        
As reported in FCX’s consolidated financial statements
$
8,227
  
$
3,970
  
$
520
        
                         
a. Net of cobalt downstream processing and freight costs.
 
 
XXI
 

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 June 30,
              
(In Millions)
2010
  
2009a
              
                         
Revenues, excluding adjustments
$
177
  
$
62
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
48
    
34
              
Treatment charges and other
  
11
    
7
              
Net cash costs
  
59
    
41
              
Depreciation, depletion and amortization
  
8
    
6
              
Noncash and other costs, net
  
-
    
-
              
Total costs
  
67
    
47
              
Gross profitb
$
110
  
$
15
              
                         
Molybdenum sales (millions of recoverable pounds)
  
11
    
6
              
                         
Gross profit per pound of molybdenum:
              
                         
Revenues, excluding adjustments
$
17.36
  
$
10.96
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
4.65
    
5.99
              
Treatment charges and other
  
1.08
    
1.10
              
Unit net cash costs
  
5.73
    
7.09
              
Depreciation, depletion and amortization
  
0.82
    
1.00
              
Noncash and other costs, net
  
0.02
    
0.07
              
Total unit costs
  
6.57
    
8.16
              
Gross profit per pound
$
10.79
  
$
2.80
              
                         
Reconciliation to Amounts Reported
                        
(In Millions)
          
Depreciation,
        
       
Production
  
Depletion and
        
Three Months Ended June 30, 2010
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
177
  
$
48
  
$
8
        
Treatment charges and other per above
  
(11
)
  
N/A
    
N/A
        
Net noncash and other costs per above
  
N/A
    
-
    
N/A
        
Henderson mine
  
166
    
48
    
8
        
Other molybdenum operations and eliminationsc
  
159
    
142
    
4
        
Molybdenum
  
325
    
190
    
12
        
North America copper mines
  
1,044
    
537
    
71
        
South America mining
  
849
    
389
    
59
        
Indonesia mining
  
927
    
427
    
57
        
Africa mining
  
207
    
96
    
30
        
Rod & Refining
  
1,129
    
1,121
    
2
        
Atlantic Copper Smelting & Refining
  
616
    
605
    
9
        
Corporate, other & eliminations
  
(1,233
)
  
(1,313
)
  
9
        
As reported in FCX’s consolidated financial statements
$
3,864
  
$
2,052
  
$
249
        
                         
Three Months Ended June 30, 2009
                        
Totals presented above
$
62
  
$
34
  
$
6
        
Treatment charges and other per above
  
(7
)
  
N/A
    
N/A
        
Net noncash and other costs per above
  
N/A
    
-
    
N/A
        
Henderson mine
  
55
    
34
    
6
        
Other molybdenum operations and eliminationsc
  
131
    
128
    
7
        
Molybdenum
  
186
    
162
    
13
        
North America copper mines
  
703
    
461
    
64
        
South America mining
  
884
    
366
    
69
        
Indonesia mining
  
1,610
    
415
    
78
        
Africa mining
  
57
    
92
    
14
        
Rod & Refining
  
747
    
743
    
2
        
Atlantic Copper Smelting & Refining
  
415
    
419
    
9
        
Corporate, other & eliminations
  
(918
)
  
(849
)
  
7
        
As reported in FCX’s consolidated financial statements
$
3,684
  
$
1,809
  
$
256
        
                         
a. Revenues and costs were adjusted to include freight and downstream conversion costs in net cash costs; gross profit was not affected by these adjustments.
b. 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.
c. Primarily includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced as a by-product at the North and South America copper mines.
 
 
XXII
 

FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Henderson Molybdenum Mine Product Revenues and Production Costs and Unit Net Cash Costs
                         
 
Six Months Ended June 30,
              
(In Millions)
2010
  
2009a
              
                         
Revenues, excluding adjustments
$
316
  
$
139
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
90
    
71
              
Treatment charges and other
  
21
    
14
              
Net cash costs
  
111
    
85
              
Depreciation, depletion and amortization
  
16
    
12
              
Noncash and other costs, net
  
1
    
-
              
Total costs
  
128
    
97
              
Gross profitb
$
188
  
$
42
              
                         
Molybdenum sales (millions of recoverable pounds)
  
20
    
13
              
                         
Gross profit per pound of molybdenum:
              
                         
Revenues, excluding adjustments
$
16.06
  
$
11.32
              
                         
Site production and delivery, before net noncash
                        
and other costs shown below
  
4.57
    
5.78
              
Treatment charges and other
  
1.08
    
1.09
              
Unit net cash costs
  
5.65
    
6.87
              
Depreciation, depletion and amortization
  
0.83
    
0.96
              
Noncash and other costs, net
  
0.03
    
0.05
              
Total unit costs
  
6.51
    
7.88
              
Gross profit per pound
$
9.55
  
$
3.44
              
                         
Reconciliation to Amounts Reported
                        
(In Millions)
          
Depreciation,
        
       
Production
  
Depletion and
        
Six Months Ended June 30, 2010
Revenues
  
and Delivery
  
Amortization
        
Totals presented above
$
316
  
$
90
  
$
16
        
Treatment charges and other per above
  
(21
)
  
N/A
    
N/A
        
Net noncash and other costs per above
  
N/A
    
1
    
N/A
        
Henderson mine
  
295
    
91
    
16
        
Other molybdenum operations and eliminationsc
  
305
    
284
    
9
        
Molybdenum
  
600
    
375
    
25
        
North America copper mines
  
2,098
    
1,001
    
153
        
South America mining
  
1,918
    
765
    
120
        
Indonesia mining
  
2,386
    
902
    
120
        
Africa mining
  
456
    
206
    
60
        
Rod & Refining
  
2,202
    
2,188
    
4
        
Atlantic Copper Smelting & Refining
  
1,249
    
1,233
    
19
        
Corporate, other & eliminations
  
(2,682
)
  
(2,700
)
  
19
        
As reported in FCX’s consolidated financial statements
$
8,227
  
$
3,970
  
$
520
        
                         
Six Months Ended June 30, 2009
                        
Totals presented above
$
139
  
$
71
  
$
12
        
Treatment charges and other per above
  
(14
)
  
N/A
    
N/A
        
Net noncash and other costs per above
  
N/A
    
-
    
N/A
        
Henderson mine
  
125
    
71
    
12
        
Other molybdenum operations and eliminationsc
  
207
    
229
d
  
10
        
Molybdenum
  
332
    
300
    
22
        
North America copper mines
  
1,321
    
1,014
    
139
        
South America mining
  
1,586
    
733
    
134
        
Indonesia mining
  
2,732
    
765
    
143
        
Africa mining
  
57
    
108
    
17
        
Rod & Refining
  
1,366
    
1,357
    
4
        
Atlantic Copper Smelting & Refining
  
707
    
712
    
17
        
Corporate, other & eliminations
  
(1,815
)
  
(1,599
)
  
12
        
As reported in FCX’s consolidated financial statements
$
6,286
  
$
3,390
d
$
488
        
                         
a. Revenues and costs were adjusted to include freight and downstream conversion costs in net cash costs; gross profit was not affected by these adjustments.
b. 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.
c. Primarily includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced as a by-product at the North and South America copper mines.
d. Includes LCM molybdenum inventory adjustments of $19 million.
 
 
XXIII
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
PROVISION FOR INCOME TAXES

PROVISION FOR INCOME TAXES
FCX’s income tax provision for the second quarter of 2010 resulted from taxes on international operations ($382 million) and U.S. operations ($51 million).  FCX’s income tax provision for the first six months of 2010 resulted from taxes on international operations ($979 million) and U.S. operations ($132 million).  As presented in the table below, FCX’s consolidated effective income tax rate was 35 percent for the first six months of 2010, which is consistent with the U.S. federal statutory rate.

FCX’s income tax provision for the second quarter of 2009 resulted from taxes on international operations ($538 million) and U.S. operations ($4 million).  FCX’s income tax provision for the first six months of 2009 resulted from taxes on international operations ($868 million) and U.S. operations ($5 million).  During the first half of 2009, FCX did not record a benefit for losses generated in the U.S., and those losses could not be used to offset income generated from international operations.  These factors combined with the high proportion of income earned in Indonesia, which was taxed at an effective tax rate of 43 percent, caused FCX’s consolidated effective income tax rate of 47 percent for the first six months of 2009 to be higher than the U.S. federal statutory rate of 35 percent.

Summaries of the approximate amounts in the calculation of FCX’s consolidated provision for income taxes follow (in millions, except percentages):

   
Three Months Ended June 30,
  
   
2010
  
2009
  
             
Income Tax
              
Income Tax
  
   
Income
    
Effective
  
(Provision)
  
Income
    
Effective
  
(Provision)
  
   
(Loss)a
    
Tax Rate
  
Benefit
  
(Loss)a
    
Tax Rate
  
Benefit
  
U.S.
  
$
257
    
20%
  
$
(51
)
$
(30
)
  
(13)%
  
$
(4
)
South America
    
399
    
34%
    
(134
)
  
441
    
31%
    
(137
)
Indonesia
    
440
    
40%
    
(177
)
  
1,070
    
43%
    
(461
)
Africa
    
57
    
32%
    
(18
)
  
(84
)
  
30%
    
25
  
Eliminations and other
    
108
    
N/A
    
(53
)
  
(50
)
  
N/A
    
35
  
Consolidated FCX
  
$
1,261
    
34%
  
$
(433
)
$
1,347
    
40%
  
$
(542
)

   
Six Months Ended June 30,
  
   
2010
  
2009
  
             
Income Tax
              
Income Tax
  
   
Income
    
Effective
  
(Provision)
  
Income
    
Effective
  
(Provision)
  
   
(Loss)a
    
Tax Rate
  
Benefit
  
(Loss)a
    
Tax Rate
  
Benefit
  
U.S.
  
$
586
    
23%
  
$
(132
)
$
(318
)
  
(2)%
  
$
(5
)
South America
    
1,022
    
32%
    
(331
)
  
694
    
32%
    
(221
)
Indonesia
    
1,349
    
42%
    
(570
)
  
1,759
    
43%
    
(749
)
Africa
    
142
    
30%
    
(43
)
  
(86
)
  
30%
    
26
  
Eliminations and other
    
50
    
N/A
    
(24
)
  
(175
)
  
N/A
    
56
  
Annualized rate adjustmentb
    
N/A
    
N/A
    
(11
)
  
N/A
    
N/A
    
20
  
Consolidated FCX
  
$
3,149
    
35%c
  
$
(1,111
)
$
1,874
    
47%
  
$
(873
)

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 2010 will vary with commodity price changes and the mix of income from international and U.S. operations.  Assuming average prices of $3.00 per pound for copper, $1,200 per ounce for gold, $14 per pound for molybdenum for the second half of 2010 and using current 2010 sales and costs estimates, FCX estimates its annual consolidated effective tax rate will approximate 36 percent.
 
 
XXIV
 

FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS

FCX has organized its operations into five primary divisions – North America copper mines, South America mining, 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 has six operating copper mines in North America – Morenci, Sierrita, Bagdad, Safford, Miami and Tyrone.  The North America copper mines include Morenci 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.  South America mining includes four operating copper mines – Cerro Verde in Peru, and Candelaria, Ojos del Salado and El Abra in Chile.  South America mining includes Cerro Verde as a reportable segment.  In addition to copper, the Cerro Verde mine produces molybdenum concentrates as a by-product.  Other South America mining includes 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 mining concession in the Katanga province of the Democratic Republic of Congo.  The Tenke Fungurume mine produces copper cathode and cobalt hydroxide.  Copper cathode production commenced in March 2009 and the first copper cathode was sold in the second quarter of 2009.  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 FCX’s North and South America copper mines that produce molybdenum as a by-product.

Rod & Refining.  The Rod & Refining segment consists of copper conversion facilities located in North America, including a refinery, three rod mills and a specialty copper products facility.  These operations process copper produced at FCX’s North America mines and purchased copper into copper cathode, rod and custom copper shapes.  At times these operations refine copper and produce 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.

 
XXV
 

FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS
(continued)
                                                     
(in millions)
North America Copper Mines
  
South America
  
Indonesia
  
Africa
                      
                                         
Atlantic
          
                                         
Copper
  
Corporate,
      
     
Other
      
Cerro
  
Other
              
Molyb-
  
Rod &
  
Smelting
  
Other &
  
FCX
  
Three Months Ended June 30, 2010
Morenci
  
Mines
  
Total
  
Verde
  
Mines
  
Total
  
Grasberg
  
Tenke
  
denum
  
Refining
  
& Refining
  
Eliminations
  
Total
  
Revenues:
                                                                              
Unaffiliated customers
$
1
  
$
1
  
$
2
  
$
274
  
$
453
  
$
727
  
 $
871
a
$
207
  
 $
325
  
$
1,123
  
$
616
  
$
(7
)
$
3,864
  
Intersegment
  
386
    
656
    
1,042
    
108
    
14
    
122
    
56
    
-
    
-
    
6
    
-
    
(1,226
)
  
-
  
Production and delivery
  
177
    
360
    
537
    
148
    
241
    
389
    
427
    
96
    
190
    
1,121
    
605
    
(1,313
)
  
2,052
  
Depreciation, depletion and amortization
  
35
    
36
    
71
    
33
    
26
    
59
    
57
    
30
    
12
    
2
    
9
    
9
    
249
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
23
    
-
    
3
    
-
    
4
    
71
    
101
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
38
    
38
  
Operating income (loss)
  
175
    
261
    
436
    
201
    
200
    
401
    
420
    
81
    
120
    
6
    
(2
)
  
(38
)
  
1,424
  
                                                                               
Interest expense, net
  
-
    
3
    
3
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
3
    
116
    
122
  
Provision for income taxes
  
-
    
-
    
-
    
68
    
66
    
134
    
177
    
18
    
-
    
-
    
-
    
104
    
433
  
Total assets at June 30, 2010
  
1,882
    
4,218
    
6,100
    
4,318
    
2,744
    
7,062
    
4,703
    
3,458
    
1,781
    
306
    
934
    
1,635
    
25,979
  
Capital expenditures
  
12
    
50
    
62
    
19
    
87
    
106
    
97
    
11
    
5
    
1
    
3
    
11
    
296
  
                                                                               
Three Months Ended June 30, 2009
                                                                              
Revenues:
                                                                              
Unaffiliated customers
$
18
  
$
27
  
$
45
  
$
342
  
$
465
  
$
807
  
$
1,430
a
$
57
  
$
186
  
$
741
  
$
415
  
$
3
  
$
3,684
  
Intersegment
  
234
    
424
    
658
    
70
    
7
    
77
    
180
    
-
    
-
    
6
    
-
    
(921
)
  
-
  
Production and delivery
  
144
    
317
    
461
    
153
    
213
    
366
    
415
    
92
b
  
162
    
743
    
419
    
(849
)
  
1,809
  
Depreciation, depletion and amortization
  
34
    
30
    
64
    
40
    
29
    
69
    
78
    
14
    
13
    
2
    
9
    
7
    
256
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
22
    
-
    
3
    
-
    
5
    
59
    
89
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
24
    
24
  
Restructuring and other charges
  
2
    
-
    
2
    
-
    
(6
)
  
(6
)
  
-
    
-
    
-
    
-
    
-
    
2
    
(2
)
Operating income (loss)
  
72
    
104
    
176
    
219
    
236
    
455
    
1,095
    
(49
)
  
8
    
2
    
(18
)
  
(161
)
  
1,508
  
                                                                               
Interest expense, net
  
1
    
4
    
5
    
-
    
-
    
-
    
-
    
3
    
-
    
-
    
1
    
149
    
158
  
Provision for (benefit from) income taxes
  
-
    
-
    
-
    
67
    
70
    
137
    
461
    
(25
)
  
-
    
-
    
-
    
(31
)
  
542
  
Total assets at June 30, 2009
  
2,022
    
4,023
    
6,045
    
4,016
    
2,535
    
6,551
    
5,312
    
3,160
    
1,750
    
292
    
842
    
672
    
24,624
  
Capital expenditures
  
5
    
23
    
28
    
33
    
4
    
37
    
73
    
207
    
16
    
3
    
6
    
5
    
375
  
                                                                               
a. Includes PT Freeport Indonesia’s sales to PT Smelting totaling $373 million in second-quarter 2010 and $563 million in second-quarter 2009.
b. Includes charges totaling $49 million associated with Tenke Fungurume’s project start-up costs.
 
 
XXVI
 
 
FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS
(continued)
                                                     
(in millions)
North America Copper Mines
  
South America
  
Indonesia
  
Africa
                      
                                         
Atlantic
          
                                         
Copper
  
Corporate,
      
     
Other
      
Cerro
  
Other
              
Molyb-
  
Rod &
  
Smelting
  
Other &
  
FCX
  
Six Months Ended June 30, 2010
Morenci
  
Mines
  
Total
  
Verde
  
Mines
  
Total
  
Grasberg
  
Tenke
  
denum
  
Refining
  
& Refining
  
Eliminations
  
Total
  
Revenues:
                                                                              
Unaffiliated customers
$
10
  
$
16
  
$
26
  
$
732
  
$
950
  
$
1,682
  
$
2,032
a
$
456
  
$
600
  
$
2,189
  
$
1,249
  
$
(7
)
$
8,227
  
Intersegment
  
742
    
1,330
    
2,072
    
191
    
45
    
236
    
354
    
-
    
-
    
13
    
-
    
(2,675
)
  
-
  
Production and delivery
  
323
    
678
    
1,001
    
319
    
446
    
765
    
902
    
206
    
375
    
2,188
    
1,233
    
(2,700
)
  
3,970
  
Depreciation, depletion and amortization
  
77
    
76
    
153
    
67
    
53
    
120
    
120
    
60
    
25
    
4
    
19
    
19
    
520
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
52
    
-
    
6
    
-
    
10
    
128
    
196
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
1
    
-
    
-
    
68
    
69
  
Operating income (loss)
  
352
    
592
    
944
    
537
    
496
    
1,033
    
1,312
    
190
    
193
    
10
    
(13
)
  
(197
)
  
3,472
  
                                                                               
Interest expense, net
  
2
    
6
    
8
    
-
    
-
    
-
    
-
    
2
    
-
    
-
    
5
    
252
    
267
  
Provision for income taxes
  
-
    
-
    
-
    
173
    
158
    
331
    
570
    
43
    
-
    
-
    
-
    
167
    
1,111
  
Capital expenditures
  
15
    
66
    
81
    
31
    
123
    
154
    
195
    
50
    
12
    
2
    
12
    
21
    
527
  
                                                                               
Six Months Ended June 30, 2009
                                                                              
Revenues:
                                                                              
Unaffiliated customers
$
39
  
$
50
  
$
89
  
$
588
  
$
803
  
$
1,391
  
$
2,350
a
$
57
  
$
332
  
$
1,354
  
$
707
  
$
6
  
$
6,286
  
Intersegment
  
446
    
786
    
1,232
    
147
    
48
    
195
    
382
    
-
    
-
    
12
    
-
    
(1,821
)
  
-
  
Production and delivery
  
334
    
680
    
1,014
    
302
    
431
    
733
    
765
    
108
b
  
281
    
1,357
    
712
    
(1,599
)
  
3,371
  
Depreciation, depletion and amortization
  
70
    
69
    
139
    
75
    
59
    
134
    
143
    
17
    
22
    
4
    
17
    
12
    
488
  
Lower of cost or market inventory adjustments
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
19
    
-
    
-
    
-
    
19
  
Selling, general and administrative expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
40
    
-
    
7
    
-
    
7
    
97
    
151
  
Exploration and research expenses
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
54
    
54
  
Restructuring and other charges
  
26
    
(2
)
  
24
    
-
    
-
    
-
    
-
    
-
    
(1
)
  
(2
)
  
-
    
2
    
23
  
Operating income (loss)
  
55
    
89
    
144
    
358
    
361
    
719
    
1,784
    
(68
)
  
4
    
7
    
(29
)
  
(381
)
  
2,180
  
                                                                               
Interest expense, net
  
2
    
6
    
8
    
-
    
1
    
1
    
1
    
3
    
-
    
-
    
2
    
274
    
289
  
Provision for (benefit from) income taxes
  
-
    
-
    
-
    
114
    
107
    
221
    
749
    
(26
)
  
-
    
-
    
-
    
(71
)
  
873
  
Capital expenditures
  
34
    
66
    
100
    
70
    
41
    
111
    
128
    
458
    
60
    
6
    
12
    
19
    
894
  
                                                                               
a. Includes PT Freeport Indonesia’s sales to PT Smelting totaling $859 million in the 2010 six-month period and $826 million in the 2009 six-month period.
b. Includes charges totaling $49 million associated with Tenke Fungurume’s project start-up costs.

 
XXVII