BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2011

Business Segments [Abstract]

Business Segments

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. Refer to Note 2 for information on FCX’s ownership interests and Note 14 for discussion of PT Freeport Indonesia’s and TFM’s mining contracts.

North America Copper Mines.  FCX has seven operating copper mines in North America – Morenci, Sierrita, Bagdad, Safford and Miami in Arizona, and Tyrone and Chino in New Mexico. The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. A majority of the copper produced at the North America copper mines is cast into copper rod by FCX’s Rod & Refining operations. The North America copper mines include the Morenci copper mine as a reportable segment.

Morenci. The Morenci open-pit mine, located in southeastern Arizona, produces copper cathodes and copper concentrates. In addition, the Morenci mine produces molybdenum concentrates. The Morenci mine produced 42 percent of FCX’s North America copper during 2011.

Other Mines. Other mines include FCX’s other operating southwestern U.S. copper mines – Sierrita, Bagdad, Safford, Miami, Tyrone and Chino. In addition to copper, certain of these mines (primarily the Sierrita and Bagdad mines) produce molybdenum concentrates.

South America.  South America mining includes four operating copper mines – Cerro Verde in Peru, and Candelaria, Ojos del Salado and El Abra in Chile. These operations include open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. South America mining includes the Cerro Verde copper mine as a reportable segment.

Cerro Verde. The Cerro Verde open-pit copper mine, located near Arequipa, Peru, produces copper cathodes and copper concentrates. In addition to copper, the Cerro Verde mine produces molybdenum concentrates. The Cerro Verde mine produced 50 percent of FCX’s South America copper during 2011.

Other Mines. Other mines include FCX’s Chilean copper mines – Candelaria, Ojos del Salado and El Abra. In addition to copper, the Candelaria and Ojos del Salado mines produce gold and silver.

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 minerals district. The Tenke Fungurume mine includes open-pit mining, leaching and SX/EW operations. In addition to copper, the Tenke Fungurume mine produces cobalt hydroxide. Copper cathode production commenced in March 2009.

Molybdenum.  The Molybdenum segment is an integrated producer of molybdenum, with mining, sulfide ore concentrating, roasting and processing facilities that produce high-purity, molybdenum-based chemicals, molybdenum metal powder and metallurgical products, which are sold to customers around the world, and includes the wholly owned Henderson molybdenum mine in Colorado and related conversion facilities. The Henderson underground mine produces high-purity, chemical-grade molybdenum concentrates, which are typically further processed into value-added molybdenum chemical products. This segment also includes a sales company that purchases and sells molybdenum from the Henderson mine as well as from FCX’s North and South America copper mines that also produce molybdenum. This segment also includes FCX’s wholly owned Climax molybdenum mine in Colorado, for which construction activities are substantially complete and is planned to commence production during 2012.

In addition, at times this segment roasts and/or processes material on a toll basis. Toll arrangements require the tolling customer to deliver appropriate molybdenum-bearing material to FCX’s facilities for processing into a product that is returned to the customer, who pays FCX for processing its material into the specified products.

Rod & Refining.  The Rod & Refining segment consists of copper conversion facilities located in North America, and includes a refinery, three rod mills and a specialty copper products facility. These operations process copper produced at FCX’s North America copper 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. Toll arrangements require the tolling customer to deliver appropriate copper-bearing material to FCX’s facilities for processing into a product that is returned to the customer, who pays FCX for processing its material into the specified products.

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. During 2011, Atlantic Copper purchased 17 percent of its concentrate requirements from PT Freeport Indonesia and 30 percent from the South America mines at market prices.

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. 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 country. 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 division 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.

Product Revenue

FCX revenues attributable to the products it produced for the years ended December 31 follow:

	2011		2010		2009
Refined copper products	$	10,297	$	9,203	$	6,563
Copper in concentratesa	5,938		5,674		4,763
Gold	2,429		2,370		2,591
Molybdenum	1,348		1,143		792
Other	868		592		331
Total	$	20,880	$	18,982	$	15,040

a. Amounts are net of treatment and refining charges totaling $362 million for 2011, $413 million for 2010 and $429 million for 2009.

Geographic Area

Information concerning financial data by geographic area follows:

	Years Ended December 31,
	2011		2010		2009
Revenues:a
United States	$	7,176	$	5,295	$	4,890
Japan	2,501		3,428		3,093
Indonesia	2,266		2,266		1,937
Spain	1,643		1,483		986
Switzerland	1,219		1,063		379
China	942		795		496
India	878		690		566
Chile	741		759		563
Korea	561		745		475
Others	2,953		2,458		1,655
Total	$	20,880	$	18,982	$	15,040

a. Revenues are attributed to countries based on the location of the customer.

	December 31,
	2011		2010		2009
Long-lived assets:a
United States	$	7,899	$	7,101	$	6,499
Indonesia	4,469		3,475		3,298
Democratic Republic of Congo	3,497		3,220		3,207
Peru	3,265		3,203		3,240
Chile	2,242		1,892		1,519
Spain	257		266		277
Others	68		48		50
Total	$	21,697	$	19,205	$	18,090

a. Long-lived assets exclude deferred tax assets and intangible assets.

Major Customers

Sales to PT Smelting totaled $2.3 billion in 2011 and 2010 (11 percent and 12 percent, respectively, of FCX’s consolidated revenues) and $1.9 billion (13 percent of FCX's consolidated revenues) in 2009. Refer to Note 2 for further discussion of FCX’s investment in PT Smelting.

Business Segments

Business segments data for the years ended December 31 are presented in the following tables.

Business Segments

	North America Copper Mines								South America						Indonesia			Africa
	Morenci		Other Mines			Total			Cerro Verde		Other Mines		Total		Grasberg			Tenke Fung-urume		Molyb- denum		Rod & Refining		Atlantic Copper Smelting & Refining			Corporate, Other & Elimi- nations			FCX Total
Year Ended December 31, 2011
Revenues:
Unaffiliated customers	$	418	$	180		$	598		$	2,115	$	2,457	$	4,572	$	4,504	a	$	1,282	$	1,424	$	5,523	$	2,969		$	8		$	20,880
Intersegment	1,697		3,338			5,035			417		269		686		542			7		—		26		15			(6,311		)	—
Production and delivery	984		1,645			2,629			827		1,078		1,905		1,902			591		1,036		5,527		2,991			(6,683		)	9,898
Depreciation, depletion and amortization	116		163			279			135		123		258		215			140		60		8		40			22			1,022
Selling, general and administrative expenses	2		2			4			4		3		7		124			8		15		—		22			235			415
Exploration and research expenses	7		—			7			—		—		—		—			—		3		—		—			261			271
Environmental and shutdown expenses	4		(15		)	(11		)	—		—		—		—			—		—		1		—			144			134
Operating income (loss)	1,002		1,723			2,725			1,566		1,522		3,088		2,805			550		310		13		(69		)	(282		)	9,140
Interest expense, net	2		6			8			1		—		1		8			6		—		—		15			274			312
Provision for income taxes	—		—			—			553		522		1,075		1,256			120		—		—		—			636			3,087
Total assets at December 31, 2011	2,006		5,086			7,092			5,110		3,604		8,714		5,349			3,890		2,434		259		1,109			3,223			32,070
Capital expenditures	95		400			495			198		405		603		648			193		461		10		32			92			2,534
Year Ended December 31, 2010
Revenues:
Unaffiliated customers	$	59	$	52		$	111		$	1,957	$	2,449	$	4,406	$	5,230	a	$	1,106	$	1,205	$	4,444	$	2,473		$	7		$	18,982
Intersegment	1,465		2,597			4,062			453		132		585		1,147			—		—		26		18			(5,838		)	—
Production and delivery	691		1,361			2,052			705		973		1,678		1,904			488		784		4,442		2,470			(5,483		)	8,335
Depreciation, depletion and amortization	134		139			273			148		102		250		257			128		51		8		38			31			1,036
Selling, general and administrative expenses	—		—			—			—		—		—		117			—		11		—		20			233			381
Exploration and research expenses	—		—			—			—		—		—		—			—		2		—		—			141			143
Environmental and shutdown expenses	—		—			—			—		—		—		—			—		—		1		—			18			19
Operating income (loss)	699		1,149			1,848			1,557		1,506		3,063		4,099			490		357		19		(37		)	(771		)	9,068
Interest expense, net	4		10			14			—		—		—		—			5		—		—		10			433			462
Provision for income taxes	—		—			—			516		483		999		1,709			118		—		—		—			157			2,983
Total assets at December 31, 2010	1,940		4,477			6,417			4,272		3,263		7,535		6,048			3,640		1,897		311		1,317			2,221			29,386
Capital expenditures	47		186			233			106		364		470		436			100		89		7		28			49			1,412

a. Includes PT Freeport Indonesia's sales to PT Smelting totaling $2.3 billion in 2011 and 2010.

	North America Copper Mines						South America						Indonesia				Africa
	Morenci		Other Mines		Total		Cerro Verde		Other Mines		Total		Grasberg				Tenke Fung-urume				Molyb- denum			Rod & Refining			Atlantic Copper Smelting & Refining			Corporate, Other & Elimi- nations			FCX Total
Year Ended December 31, 2009
Revenues:
Unaffiliated customers	$	68	$	94	$	162	$	1,491	$	1,950	$	3,441	$	4,972		a	$	389			$	847		$	3,328		$	1,892		$	9		$	15,040
Intersegment	1,074		2,028		3,102		286		112		398		936				—				—			28			—			(4,464		)	—
Production and delivery	623		1,288		1,911		648		915		1,563		1,505				315			b	660			3,336			1,895			(4,179		)	7,006
Depreciation, depletion and amortization	142		138		280		153		122		275		275				66				49			8			36			25			1,014
Selling, general and administrative expenses	—		—		—		—		—		—		94				—				11			—			17			199			321
Exploration and research expenses	—		—		—		—		—		—		—				—				2			—			—			88			90
Environmental and shutdown expensesc	26		27		53		—		—		—		—				—				(1		)	(2		)	—			56			106
Operating income (loss)	351		669		1,020		976		1,025		2,001		4,034				8				126			14			(56		)	(644		)	6,503
Interest expense, net	3		12		15		—		2		2		(3		)		10				—			—			5			557			586
Provision for (benefit from) income taxes	—		—		—		313		337		650		1,697				(15		)		—			—			—			(25		)	2,307
Total assets at December 31, 2009	1,934		4,207		6,141		3,937		2,515		6,452		4,974				3,386				1,731			291			991			2,030			25,996
Capital expenditures	46		299		345		103		61		164		266				659				82			9			31			31			1,587

a. Includes PT Freeport Indonesia's sales to PT Smelting totaling $1.9 billion.

b. Includes charges totaling $50 million associated with Tenke Fungurume's project start-up costs.

c. Includes charges totaling $23 million associated with net restructuring charges, primarily at the Morenci mine.