EX-99.1 2 a2q2011exhibit991.htm EXHIBIT 99.1 2Q 2011 Exhibit 99.1
333 North Central Avenue Phoenix, AZ 85004
Financial Contacts:
 
 
 
Media Contact:
 
Kathleen L. Quirk (602) 366-8016
 
David P. Joint
(504) 582-4203
 
Eric E. Kinneberg (602) 366-7994
Freeport-McMoRan Copper & Gold Inc. Reports
Second-Quarter and Six-Month 2011 Results
 
 
 
 
 
    
▪
Net income attributable to common stock for second-quarter 2011 was $1.4 billion, $1.43 per share, compared with net income of $649 million, $0.70 per share, for second-quarter 2010. Net income attributable to common stock for the first six months of 2011 was $2.9 billion, $3.00 per share, compared with $1.5 billion, $1.70 per share, for the first six months of 2010.
▪
Consolidated sales from mines for second-quarter 2011 totaled 1.0 billion pounds of copper, 356 thousand ounces of gold and 21 million pounds of molybdenum, compared with 914 million pounds of copper, 298 thousand ounces of gold and 16 million pounds of molybdenum for second-quarter 2010.
▪
Consolidated sales from mines for the year 2011 are expected to approximate 3.9 billion pounds of copper, 1.6 million ounces of gold and 77 million pounds of molybdenum, including 940 million pounds of copper, 415 thousand ounces of gold and 18 million pounds of molybdenum for third-quarter 2011.
▪
Consolidated unit net cash costs (net of by-product credits) averaged $0.93 per pound of copper for second-quarter 2011, compared with $0.97 per pound for second-quarter 2010. Based on current 2011 sales volume and cost estimates and assuming average prices of $1,500 per ounce for gold and $15 per pound for molybdenum for the second half of 2011, consolidated unit net cash costs (net of by-product credits) are estimated to average $1.01 per pound of copper for the year 2011.
▪
Operating cash flows totaled $1.7 billion for second-quarter 2011 and $4.0 billion for the first six months of 2011, compared with $1.1 billion for second-quarter 2010 and $2.9 billion for the first six months of 2010. Based on current 2011 sales volume and cost estimates and assuming average prices of $4.25 per pound for copper, $1,500 per ounce for gold and $15 per pound for molybdenum for the second half of 2011, operating cash flows are estimated to exceed $8 billion for the year 2011.
▪
Capital expenditures totaled $527 million for second-quarter 2011 and $1.0 billion for the first six months of 2011, compared with $296 million for second-quarter 2010 and $527 million for the first six months of 2010. Capital expenditures are expected to approximate $2.6 billion for the year 2011, including $1.4 billion for major projects and $1.2 billion for sustaining capital. A number of studies are ongoing, which may result in increased capital spending programs.
▪
At June 30, 2011, total debt approximated $3.5 billion and consolidated cash approximated $4.4 billion. During second-quarter 2011, FCX repaid $1.2 billion in debt, including the April 2011 redemption of $1.1 billion in 8.25% Senior Notes.


 
 
 
Freeport-McMoRan Copper & Gold                                 1

PHOENIX, AZ, July 21, 2011 - Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported second-quarter 2011 net income attributable to common stock of $1.4 billion, $1.43 per share, compared with $649 million, $0.70 per share, for second-quarter 2010. For the first six months of 2011, FCX reported net income attributable to common stock of $2.9 billion, $3.00 per share, compared with $1.5 billion, $1.70 per share, for the first six months of 2010.

James R. Moffett, Chairman of the Board, and Richard C. Adkerson, President and Chief Executive Officer, said, "Our second-quarter results reflect strong operating performance and favorable pricing for our products.  FCX's global team continues to execute our operating plans in an impressive fashion, producing significant quantities of copper, gold and molybdenum to meet growing global demand.  Our large resource position and successful exploration program provide significant opportunities for growth. We are advancing projects expeditiously to increase our production while generating attractive returns for shareholders.  Our strong financial position and cash flow generation provide the financial resources required for investment as well as substantial cash returns for shareholders."

SUMMARY FINANCIAL AND OPERATING DATA
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Financial Data (in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
Revenuesa
 
$
5,814

 
$
3,864

 
$
11,523

 
$
8,227

 
Operating incomeb
 
$
2,757

 
$
1,424

 
$
5,693

 
$
3,472

 
Net income attributable to common stock
 
$
1,368

c 
$
649

c 
$
2,867

c 
$
1,546

c 
Diluted net income per share of common stock
 
$
1.43

c 
$
0.70

c,d 
$
3.00

c 
$
1.70

c,d 
Diluted weighted-average common shares outstanding
 
956

 
947

d 
956

 
947

d 
Operating cash flows
 
$
1,680

e 
$
1,064

e 
$
4,039

e 
$
2,882

e 
Capital expenditures
 
$
527

 
$
296

 
$
1,032

 
$
527

 
 
 
 
 
 
 
 
 
 
 
Mining Operating Data
 
 
 
 
 
 
 
 
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
967

 
930

 
1,917

 
1,859

 
Sales, excluding purchases
 
1,002

 
914

 
1,928

 
1,874

 
Average realized price per pound
 
$
4.22

 
$
3.06

 
$
4.24

 
$
3.13

 
Site production and delivery costs per poundf
 
$
1.63

 
$
1.41

 
$
1.62

 
$
1.38

 
Unit net cash costs per poundf
 
$
0.93

 
$
0.97

 
$
0.87

 
$
0.89

 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
351

 
316

 
817

 
765

 
Sales
 
356

 
298

 
836

 
776

 
Average realized price per ounce
 
$
1,509

 
$
1,234

 
$
1,466

 
$
1,171

 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
22

 
17

 
42

 
34

 
Sales, excluding purchases
 
21

 
16

 
41

 
33

 
Average realized price per pound
 
$
18.16

 
$
18.18

 
$
18.13

 
$
16.62

 
 
 
 
 
 
 
 
 
 
 
a.
Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (refer to discussion on page 9).
b.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. Refer to the "Consolidated Statements of Income" on page IV for a summary of net impacts from changes in these deferrals.
c.
Includes net losses on early extinguishment of debt totaling $54 million ($0.06 per share) in second-quarter 2011, $42 million ($0.05 per share) in second-quarter 2010, $60 million ($0.06 per share) for the first six months of 2011 and $65 million ($0.07 per share) for the first six months of 2010.
d.
Amounts have been adjusted to reflect the February 1, 2011, two-for-one stock split.
e.
Includes working capital (uses) sources of $(496) million in second-quarter 2011, $(173) million in second-quarter 2010, $(382) million for the first six months of 2011 and $107 million for the first six months of 2010.

 
 
 
Freeport-McMoRan Copper & Gold                                 2

f.
Reflects per pound weighted-average site production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. For reconciliations of per pound unit costs by operating division 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 website, “www.fcx.com.”

OPERATIONS
Consolidated. Second-quarter 2011 consolidated copper sales of 1.0 billion pounds were higher than the April 2011 estimate of 965 million pounds primarily because of the timing of shipments, principally in North America. Second-quarter 2011 consolidated copper sales were also higher than second-quarter 2010 sales of 914 million pounds reflecting increased production in North America and the timing of shipments in South America and Africa.
Second-quarter 2011 consolidated gold sales of 356 thousand ounces were slightly lower than the April 2011 estimate of 365 thousand ounces but higher than second-quarter 2010 sales of 298 thousand ounces. These variances primarily reflect timing of mine sequencing at Grasberg.
Second-quarter 2011 consolidated molybdenum sales of 21 million pounds were higher than the April 2011 estimate of 17 million pounds and second-quarter 2010 sales of 16 million pounds primarily reflecting improved demand.
Consolidated sales from mines for the year 2011 are expected to approximate 3.9 billion pounds of copper, 1.6 million ounces of gold and 77 million pounds of molybdenum, including 940 million pounds of copper, 415 thousand ounces of gold and 18 million pounds of molybdenum in third-quarter 2011.
Consolidated average unit net cash costs (net of by-product credits) of $0.93 per pound of copper in second-quarter 2011 were lower than unit net cash costs of $0.97 per pound in second-quarter 2010 primarily because of higher gold and molybdenum credits in second-quarter 2011, partly offset by higher site production and delivery costs as a result of increased mining and milling activities and higher input costs, including materials, energy and currency exchange rate impacts.
Assuming average prices of $1,500 per ounce of gold and $15 per pound of molybdenum for the second half of 2011 and achievement of current 2011 sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for FCX's copper mining operations are expected to average approximately $1.01 per pound of copper for the year 2011. The impact of price changes on consolidated unit net cash costs would approximate $0.01 per pound for each $50 per ounce change in the average price of gold during the second half of 2011 and $0.01 per pound for each $2 per pound change in the average price of molybdenum during the second half of 2011. Quarterly unit net cash costs vary with fluctuations in sales volumes.

North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Tyrone and Chino in New Mexico. 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. In addition to copper, the Morenci, Bagdad and Sierrita mines also produce molybdenum concentrates.
Operating and Development Activities. At Morenci, FCX completed its project to ramp up mining rates to 635,000 metric tons of ore per day and milling rates to approximately 50,000 metric tons per day, resulting in an increase of 125 million pounds of copper per year.
FCX is advancing a feasibility study to expand mining and milling capacity at Morenci to process additional sulfide ores identified through positive exploratory drilling over the last few years. This project, which would require significant investment, would increase milling rates to approximately 115,000 metric tons of ore per day and target incremental annual copper production of approximately 225 million pounds within three years, following completion of the feasibility study, expected by year-end 2011.
The ramp up of mining activities at the Miami mine continues. FCX expects production at Miami to ramp up to approximately 100 million pounds of copper per year by 2012.
During second-quarter 2011, FCX successfully restarted mining and milling activities at the Chino mine. Planned mining and milling rates are expected to be achieved by the end of 2013. Incremental annual copper production is expected to be 100 million pounds in 2012 and 2013 and 200 million pounds in 2014. Costs for the project associated with equipment and mill refurbishment are expected to approximate $150 million.     

 
 
 
Freeport-McMoRan Copper & Gold                                 3

Operating Data. Following is summary consolidated operating data for the North America copper mines for the second quarters and first six months of 2011 and 2010:
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
313

 
263

 
595

 
527

 
Sales, excluding purchases
 
331

 
289

 
607

 
580

 
Average realized price per pound
 
$
4.19

 
$
3.21

 
$
4.28

 
$
3.27

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
10

 
5

 
17

 
11

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper:
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.78

 
$
1.46

 
$
1.76

 
$
1.39

 
By-product credits, primarily molybdenum
 
(0.52
)
 
(0.38
)
 
(0.50
)
 
(0.32
)
 
Treatment charges
 
0.10

 
0.09

 
0.10

 
0.08

 
Unit net cash costsb
 
$
1.36

 
$
1.17

 
$
1.36

 
$
1.15

 
 
 
 
 
 
 
 
 
 
 
a.
Reflects molybdenum production from certain of the North America copper mines. Sales of molybdenum are reflected in the Molybdenum division (refer to page 8).
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX's website, “www.fcx.com.”
Consolidated copper sales volumes from North America of 331 million pounds in second-quarter 2011 were higher than second-quarter 2010 sales of 289 million pounds primarily reflecting higher production at the Morenci and Miami mines.
FCX expects sales from the North America copper mines to approximate 1.2 billion pounds of copper for the year 2011, compared with 1.1 billion pounds of copper in 2010. The restart of the Miami and Chino mines and potential expansion of the Morenci mine are expected to further increase production in future periods.
As anticipated, average unit net cash costs (net of by-product credits) for the North America copper mines of $1.36 per pound of copper in second-quarter 2011 were higher than unit net cash costs of $1.17 per pound in second-quarter 2010, primarily reflecting increased mining and milling activities and higher input costs. Higher molybdenum credits partly offset the increased site production and delivery costs.
FCX estimates that average unit net cash costs (net of by-product credits) for the North America copper mines would approximate $1.42 per pound of copper for the year 2011, based on current sales volume and cost estimates and assuming an average molybdenum price of $15 per pound for the second half of 2011. North America's average unit net cash costs for 2011 would change by approximately $0.025 per pound for each $2 per pound change in the average price of molybdenum during the second half of 2011.

South America Mining. FCX operates four copper mines in South America - Cerro Verde in Peru and El Abra, Candelaria and Ojos del Salado in Chile. FCX owns a 53.56 percent interest in Cerro Verde, a 51 percent interest in El Abra, and 80 percent of the Candelaria and Ojos del Salado mining complexes. All operations in South America are consolidated in FCX's financial statements. South America mining includes open-pit and underground mining. In addition to copper, the Cerro Verde mine produces molybdenum concentrates, and the Candelaria and Ojos del Salado mines produce gold and silver.
Operating and Development Activities. During first-quarter 2011, FCX commenced production from El Abra's newly commissioned stacking and leaching facilities to transition from oxide to sulfide ores. Production from the sulfide ore, which is projected to reach design levels in the second half of 2011, is expected to approximate 300 million pounds of copper per year, replacing the currently depleting oxide copper production. The aggregate capital investment for this project is expected to total $725 million through 2015, including $565 million for the initial phase of the project expected to be completed in 2011.
    

 
 
 
Freeport-McMoRan Copper & Gold                                 4

FCX is also engaged in pre-feasibility studies for a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries.
At Cerro Verde, the feasibility study for a large-scale concentrator expansion was completed in second-quarter 2011. The $3.5 billion project would expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper beginning in 2016. FCX expects to file an environmental impact assessment in the second half of 2011.
Operating Data. Following is summary consolidated operating data for the South America mining operations for the second quarters and first six months of 2011 and 2010:
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
327

 
329

 
644

 
651

 
Sales
 
331

 
311

 
643

 
618

 
Average realized price per pound
 
$
4.24

 
$
3.02

 
$
4.24

 
$
3.07

 
 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
24

 
20

 
48

 
39

 
Sales
 
25

 
20

 
49

 
39

 
Average realized price per ounce
 
$
1,515

 
$
1,221

 
$
1,467

 
$
1,175

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
3

 
1

 
6

 
3

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper:
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.26

 
$
1.22

 
$
1.28

 
$
1.21

 
By-product credits
 
(0.37
)
 
(0.19
)
 
(0.37
)
 
(0.18
)
 
Treatment charges
 
0.19

 
0.11

 
0.19

 
0.13

 
Unit net cash costsb
 
$
1.08

 
$
1.14

 
$
1.10

 
$
1.16

 
 
 
 
 
 
 
 
 
 
 
a.
Reflects molybdenum production from Cerro Verde. Sales of molybdenum are reflected in the Molybdenum division (refer to page 8).
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX's website, “www.fcx.com.”
Copper sales from South America mining of 331 million pounds in second-quarter 2011 were higher than second-quarter 2010 sales of 311 million pounds primarily reflecting higher ore grades at Candelaria and timing of shipments at Cerro Verde, partly offset by lower mining rates at El Abra as it transitions from oxide to sulfide ores.
FCX expects South America's sales to approximate of 1.3 billion pounds of copper and 100 thousand ounces of gold for the year 2011, similar to 2010 sales of 1.3 billion pounds of copper and 93 thousand ounces of gold.
Average unit net cash costs (net of by-product credits) for South America of $1.08 per pound of copper in second-quarter 2011 were lower than unit net cash costs of $1.14 per pound in second-quarter 2010 primarily reflecting higher molybdenum, gold and silver credits, partly offset by higher treatment charges and higher site production and delivery costs, including materials, energy and currency exchange rate impacts.
FCX estimates that average unit net cash costs (net of by-product credits) for South America mining would approximate $1.21 per pound of copper for the year 2011, based on current sales volume and cost estimates and assuming average prices of $15 per pound of molybdenum and $1,500 per ounce of gold during the second half of 2011.


 
 
 
Freeport-McMoRan Copper & Gold                                 5

Indonesia Mining. Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia (PT-FI), FCX operates the world's largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia.
Operating and Development Activities. FCX has several projects in process in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up to approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in 2016.
The Deep Ore Zone (DOZ) mine, one of the world's largest underground mines, has been expanded to a capacity of 80,000 metric tons of ore per day; and a feasibility study for the Deep Mill Level Zone (DMLZ) has been completed. The high-grade Big Gossan mine, which began producing in fourth-quarter 2010, is expected to reach full rates of 7,000 metric tons of ore per day by the end of 2012. Substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies. Development of the terminal infrastructure and mine access for the Grasberg Block Cave and DMLZ ore bodies is in progress. Over the next five years, estimated aggregate capital spending is expected to average approximately $635 million ($500 million net to PT-FI) per year on underground development activities.
Operating Data. Following is summary consolidated operating data for the Indonesia mining operations for the second quarters and first six months of 2011 and 2010:
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
261

 
276

 
545

 
555

 
Sales
 
265

 
259

 
543

 
555

 
Average realized price per pound
 
$
4.26

 
$
2.95

 
$
4.23

 
$
3.05

 
 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
325

 
294

 
766

 
723

 
Sales
 
330

 
276

 
784

 
734

 
Average realized price per ounce
 
$
1,509

 
$
1,235

 
$
1,466

 
$
1,171

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper:
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.93

 
$
1.62

 
$
1.88

 
$
1.58

 
Gold and silver credits
 
(2.06
)
 
(1.41
)
 
(2.20
)
 
(1.61
)
 
Treatment charges
 
0.18

 
0.26

 
0.18

 
0.24

 
Royalty on metals
 
0.17

 
0.11

 
0.16

 
0.11

 
Unit net cash costsa
 
$
0.22

 
$
0.58

 
$
0.02

 
$
0.32

 
 
 
 
 
 
 
 
 
 
 
a.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedule, “Product Revenues and Production Costs,” beginning on page VII, which is available on FCX's website, “www.fcx.com.”
At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in varying quarterly and annual sales of copper and gold. Copper sales from Indonesia of 265 million pounds in second-quarter 2011 were slightly above second-quarter 2010 sales of 259 million pounds. Gold sales of 330 thousand ounces in second-quarter 2011 were higher than second-quarter 2010 sales of 276 thousand ounces.
During July 2011, PT-FI union workers commenced an eight-day labor strike, which led to a temporary suspension of mining, milling and concentrate shipments. On July 11, 2011, PT-FI reached an agreement with the union to end the strike and operations have resumed. PT-FI estimates the aggregate impact on 2011 production to approximate 35 million pounds of copper and 60 thousand ounces of gold. PT-FI has commenced negotiations with the union for its bi-annual renewal of the collective labor agreement, which is scheduled for renewal in October 2011.

 
 
 
Freeport-McMoRan Copper & Gold                                 6

FCX expects sales from Indonesia to approximate 1.0 billion pounds of copper and 1.45 million ounces of gold for the year 2011, compared with 1.2 billion pounds of copper and 1.8 million ounces of gold for the year 2010.
Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on volumes of copper and gold sold during the period. Unit net cash costs (net of gold and silver credits) for Indonesia of $0.22 per pound of copper in second-quarter 2011 were lower than unit net cash costs of $0.58 per pound in second-quarter 2010 as higher gold credits more than offset increases in site production and delivery costs.
FCX estimates Indonesia's average unit net cash costs (net of gold and silver credits) would approximate $0.28 per pound of copper for the year 2011, based on current sales volume and cost estimates and assuming an average gold price of $1,500 per ounce during the second half 2011. Indonesia's unit net cash costs for 2011 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of gold during the second half of 2011.

Africa Mining. FCX currently holds an effective 57.75 percent interest in the Tenke Fungurume (Tenke) copper and cobalt mining concessions in the Katanga province of the Democratic Republic of Congo (DRC), which is consolidated in FCX's financial statements. FCX's interest in Tenke will be reduced to 56 percent after receiving the required government approval of the modifications to Tenke Fungurume Mining's bylaws that reflect the agreement with the DRC government. In addition to copper, the Tenke mine produces cobalt hydroxide.
Operating and Development Activities. The milling facilities at Tenke, which were designed to produce at a capacity rate of 8,000 metric tons of ore per day, have performed above capacity, with throughput averaging 9,700 metric tons of ore per day in second-quarter 2011 and 10,200 metric tons of ore per day for the first six months of 2011. Mining rates have been increased to enable additional copper production from the initial project capacity of 250 million pounds per year to approximately 290 million pounds per year.
FCX is planning a second phase of the project, which would include optimizing the current plant and increasing capacity. As part of the second phase, FCX is completing studies to expand the mill rate to 14,000 metric tons of ore per day and to construct related processing facilities that would target the addition of approximately 150 million pounds of copper per year in an approximate two-year timeframe. FCX expects production volumes from the project to expand significantly over time.
FCX continues to engage in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in future plans to evaluate opportunities for expansion.
Operating Data. Following is summary consolidated operating data for the Africa mining operations for the second quarters and first six months of 2011 and 2010:
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
66

 
62

 
133

 
126

 
Sales
 
75

 
55

 
135

 
121

 
Average realized price per pounda
 
$
4.08

 
$
2.96

 
$
4.11

 
$
3.12

 
 
 
 
 
 
 
 
 
 
 
Cobalt (millions of contained pounds)
 
 
 
 
 
 
 
 
 
Production
 
6

 
4

 
12

 
9

 
Sales
 
7

 
4

 
13

 
7

 
Average realized price per pound
 
$
11.16

 
$
12.37

 
$
11.02

 
$
11.91

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copper:
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.62

 
$
1.27

 
$
1.57

 
$
1.32

 
Cobalt creditsb
 
(0.77
)
 
(0.54
)
 
(0.76
)
 
(0.46
)
 
Royalty on metals
 
0.09

 
0.06

 
0.10

 
0.07

 
Unit net cash costsc
 
$
0.94

 
0.79

 
$
0.91

 
$
0.93

 
 
 
 
 
 
 
 
 
 
 

 
 
 
Freeport-McMoRan Copper & Gold                                 7


a.
Includes adjustments for point-of-sale transportation costs as negotiated in customer contracts.
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 website, “www.fcx.com.”
Copper sales from Africa of 75 million pounds in second-quarter 2011 were higher than second-quarter 2010 copper sales of 55 million pounds, primarily reflecting the timing of shipments.
FCX expects Africa's sales to approximate 275 million pounds of copper and over 20 million pounds of cobalt for the year 2011, compared with 262 million pounds of copper and 20 million pounds of cobalt for the year 2010.
Unit net cash costs (net of cobalt credits) for Africa of $0.94 per pound of copper were higher than unit net cash costs of $0.79 per pound in second-quarter 2010, primarily reflecting increased mining and milling activity and higher input costs. Higher cobalt credits partly offset the increased production and delivery costs.
FCX estimates Africa's average unit net cash costs would approximate $0.97 per pound of copper for the year 2011, based on current sales volume and cost estimates and assuming an average cobalt price of $14 per pound for the second half of 2011. Africa's unit net cash costs for 2011 would change by approximately $0.05 per pound for each $2 per pound change in the average price of cobalt during the second half of 2011.

Molybdenum. FCX is the world's largest producer of molybdenum. FCX conducts molybdenum mining operations at its wholly owned Henderson underground mine in Colorado, is developing the Climax molybdenum mine and sells molybdenum produced from its North and South America copper mines.
Development Activities. Construction activities at the Climax molybdenum mine are approximately 75 percent complete. Construction is expected to be complete in early 2012, and FCX plans to commence production during 2012. Production from the Climax molybdenum mine is expected to ramp up to a rate of 20 million pounds per year during 2013 and, depending on market conditions, may be increased to 30 million pounds per year. FCX intends to operate its Climax and Henderson molybdenum mines in a flexible manner to meet market requirements. FCX believes that Climax 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. Estimated remaining costs for the initial phase of the project approximate $250 million.
Operating Data. Following is summary consolidated operating data for the Molybdenum operations for the second quarters and first six months of 2011 and 2010:
 
 
Three Months
 
Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
9

 
11

 
19

 
20

 
Sales, excluding purchasesb
 
21

 
16

 
41

 
33

 
Average realized price per pound
 
$
18.16

 
$
18.18

 
$
18.13

 
$
16.62

 
 
 
 
 
 
 
 
 
 
 
Unit net cash cost per pound of molybdenumc
 
$
6.21

 
$
5.73

 
$
6.17

 
$
5.65

 
 
 
 
 
 
 
 
 
 
 
a.
Reflects production at the Henderson molybdenum mine.
b.
Includes sales of molybdenum produced 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 website, “www.fcx.com.”
Consolidated molybdenum sales of 21 million pounds were higher than the April 2011 estimate of 17 million pounds and second-quarter 2010 sales of 16 million pounds primarily reflecting improved demand.
For the year 2011, FCX expects molybdenum sales to approximate 77 million pounds (including production of approximately 45 million pounds from the North and South America copper mines), compared with 67 million pounds in 2010 (including production of 32 million pounds from the North and South America copper mines).
    

 
 
 
Freeport-McMoRan Copper & Gold                                 8

Unit net cash costs at the Henderson mine of $6.21 per pound of molybdenum in second-quarter 2011 were higher than unit net cash costs of $5.73 per pound in second-quarter 2010, primarily reflecting higher input costs, including labor and materials.
Based on current sales volume and cost estimates, FCX expects average unit net cash costs for the Henderson mine would approximate $7.00 per pound of molybdenum for the year 2011. 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 minerals districts where it currently operates. Favorable exploration results indicate opportunities for significant future potential reserve additions in North and South America and in the Tenke Fungurume minerals district. The drilling data in North America continue to indicate the potential for expanded sulfide production.
Exploration spending for the year 2011 is expected to approximate $250 million, compared with $113 million in 2010. Exploration activities will continue to focus primarily on the potential for future reserve additions in FCX's existing minerals districts.

PROVISIONAL PRICING AND OTHER
For the first six months of 2011, 56 percent of FCX's mined copper was sold in concentrate, 22 percent as rod from North America operations and 22 percent as cathode. Under the long-established structure of sales agreements prevalent in the industry, substantially all of FCX's copper concentrate and cathode sales are provisionally priced at the time of shipment. The provisional prices are finalized in a contractually specified future month (generally one to four months from the shipment date) primarily based on quoted London Metal Exchange (LME) monthly average spot 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. LME spot copper prices averaged $4.14 per pound during second-quarter 2011, compared to FCX's recorded average price of $4.22 per pound.
At March 31, 2011, FCX had provisionally priced copper sales at its copper mining operations totaling 464 million pounds (net of intercompany sales and noncontrolling interests) recorded at an average of $4.27 per pound. Lower prices during second-quarter 2011 resulted in adjustments to these provisionally priced copper sales and decreased second-quarter 2011 consolidated revenues by $47 million ($23 million to net income attributable to common stock or $0.02 per share), compared with adjustments to the March 31, 2010, provisionally priced copper sales that decreased second-quarter 2010 consolidated revenues by $169 million ($72 million to net income attributable to common stock or $0.08 per share). Adjustments to the December 31, 2010, provisionally priced copper sales resulted in a decrease to consolidated revenues of $12 million ($5 million to net income attributable to common stock or $0.01 per share) for the first six months of 2011, compared with adjustments to the December 31, 2009, provisionally priced copper sales that resulted in a decrease to consolidated revenues of $23 million ($9 million to net income attributable to common stock or $0.01 per share) for the first six months of 2010.
At June 30, 2011, FCX had provisionally priced copper sales at its copper mining operations totaling 435 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $4.27 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the June 30, 2011, provisional price recorded would have an approximate $14 million effect on its 2011 net income attributable to common stock. The LME spot copper price on July 20, 2011, was $4.43 per pound.
FCX defers recognizing profits on its sales from its Indonesia and South America mining operations to Atlantic Copper and on 25 percent of Indonesia's mining 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 its Indonesia and South America concentrate inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $218 million at June 30, 2011. 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.


 
 
 
Freeport-McMoRan Copper & Gold                                 9

CASH FLOWS
FCX generated operating cash flows of $1.7 billion for second-quarter 2011 and $4.0 billion for the first six months of 2011. These amounts are net of working capital uses of $496 million for the second quarter and $382 million for the six-month period.
Based on current 2011 sales volume and cost estimates and assuming average prices of $4.25 per pound of copper, $1,500 per ounce of gold and $15 per pound of molybdenum for the second half of 2011, FCX's consolidated operating cash flows are estimated to exceed $8 billion for the year 2011. The impact of price changes on operating cash flows would approximate $80 million for each $0.05 per pound change in the average price of copper during the second half of 2011, $35 million for each $50 per ounce change in the average price of gold during the second half of 2011 and $40 million for each $2 per pound change in the average price of molybdenum during the second half of 2011.
Capital expenditures, including capitalized interest, totaled $527 million for second-quarter 2011 and $1.0 billion for the first six months of 2011. FCX's capital expenditures are currently estimated to approximate $2.6 billion for the year 2011, including $1.4 billion for major projects and $1.2 billion for sustaining capital. Major projects for 2011 primarily include underground development activities at Grasberg, construction activities at the Climax molybdenum mine and completion of the initial phase of the sulfide ore project at El Abra. FCX is also considering additional investments at several of its sites. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.

CASH AND DEBT
At June 30, 2011, FCX had consolidated cash of $4.4 billion. Net of noncontrolling interests' share, taxes and other costs, cash available to the parent company totaled $3.4 billion as shown below (in billions):
 
June 30,
 
2011
Cash at domestic companiesa
$
1.5

Cash at international operations
2.9

Total consolidated cash and cash equivalents
4.4

Less: Noncontrolling interests' share
(0.8
)
Cash, net of noncontrolling interests' share
3.6

Less: Withholding taxes and other
(0.2
)
Net cash available
$
3.4

 
 
a. Includes cash at FCX's parent company and North America operations.
At June 30, 2011, FCX had $3.5 billion in debt. FCX had no borrowings and $43 million of letters of credit issued under its revolving credit facility resulting in total availability of approximately $1.5 billion at June 30, 2011. Since January 1, 2009, FCX has repaid $3.8 billion in debt resulting in estimated annual interest savings of approximately $270 million based on current interest rates.
FCX does not have significant debt maturities in the near term (a total of $5 million through 2016); however, FCX may consider opportunities to prepay debt in advance of scheduled maturities. FCX has $3.0 billion in debt that is redeemable in whole or in part, at its option, at make-whole redemption prices prior to April 2012, and afterwards at stated redemption prices.

FINANCIAL POLICY
FCX has a long-standing tradition of seeking to build shareholder value through investing in projects with attractive rates of return and returning cash to shareholders through common stock dividends and share purchases. On June 1, 2011, FCX paid a supplemental common stock dividend of $0.50 per share, which is in addition to FCX's current annual common stock dividend of $1.00 per share ($0.25 per share quarterly). FCX has paid common stock dividends of $949 million for the first six months of 2011, which includes $474 million for the supplemental dividend paid on June 1, 2011. FCX intends to continue to maintain a strong financial position, invest aggressively in attractive growth projects and provide cash returns to shareholders. The Board will continue to review FCX's financial policy on an ongoing basis.

 
 
 
Freeport-McMoRan Copper & Gold                                 10

WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's second-quarter 2011 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 19, 2011.
-----------------------------------------------------------------------------------------------------------
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 minerals district, 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 website at “www.fcx.com.”

Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which FCX discusses its potential future performance. 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, exploration efforts and results, mine production and development plans, liquidity, other financial commitments and tax rates, the impact of copper, gold, molybdenum and cobalt price changes, 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 are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of FCX's Board of Directors (the Board) and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.
FCX cautions readers that forward-looking 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, the resolution of administrative disputes in the Democratic Republic of Congo, weather-related risks, labor relations, including the resolution of labor negotiations in Indonesia, 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, 2010, filed with the U.S. Securities and Exchange Commission (SEC) as updated by our subsequent filings with the SEC.
Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after our forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. We caution investors that we do not intend to update our forward-looking statements notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes, and we undertake no obligation to update any 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 website, “www.fcx.com.”
# # #

 
 
 
Freeport-McMoRan Copper & Gold                                 11
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
Production
 
Sales
 
COPPER (millions of recoverable pounds)
2011
 
2010
 
2011
 
2010
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (85%)a
135

 
114

 
142

 
118

 
Bagdad (100%)
48

 
49

 
54

 
55

 
Safford (100%)
37

 
32

 
38

 
41

 
Sierrita (100%)
45

 
37

 
46

 
41

 
Miami (100%)
15

 
3

 
15

 
3

 
Tyrone (100%)
18

 
20

 
22

 
22

 
Chino (100%)
14

 
8

 
13

 
9

 
Other (100%)
1

 
—

 
1

 
—

 
Total North America
313

 
263

 
331

 
289

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
170

 
166

 
173

 
150

 
El Abra (51%)
66

 
83

 
60

 
84

 
Candelaria/Ojos del Salado (80%)
91

 
80

 
98

 
77

 
Total South America
327

 
329

 
331

 
311

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
261

 
276

 
265

 
259

 
 
 
 
 
 
 
 
 
 
Africa
 
 
 
 
 
 
 
 
Tenke Fungurume (57.75%)
66

 
62

 
75

 
55

 
 
 
 
 
 
 
 
 
 
Consolidated
967

 
930

 
1,002

 
914

 
Less noncontrolling interests
181

 
186

 
186

 
173

 
Net
786

 
744

 
816

 
741

 
 
 
 
 
 
 
 
 
 
Consolidated sales from mines
 
 
 
 
1,002

 
914

 
Purchased copper
 
 
 
 
57

 
44

 
Total copper sales, including purchases
 
 
 
 
1,059

 
958

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
4.22

 
$
3.06

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
2

 
2

 
1

 
2

 
South America (80%)
24

 
20

 
25

 
20

 
Indonesia (90.64%)b
325

 
294

 
330

 
276

 
Consolidated
351

 
316

 
356

 
298

 
Less noncontrolling interests
35

 
31

 
36

 
30

 
Net
316

 
285

 
320

 
268

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,509

 
$
1,234

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
9

 
11

 
N/A

 
N/A

 
North America (100%)
10

 
5

 
N/A

 
N/A

 
Cerro Verde (53.56%)
3

 
1

 
N/A

 
N/A

 
Consolidated
22

 
17

 
21

 
16

 
Less noncontrolling interests
2

 
—

 
1

 
—

 
Net
20

 
17

 
20

 
16

 
 
 
 
 
 
 
 
 
 
Consolidated sales from mines
 
 
 
 
21

 
16

 
Purchased molybdenum
 
 
 
 
—

 
1

 
Total molybdenum sales, including purchases
 
 
 
 
21

 
17

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
18.16

 
$
18.18

 
 
 
 
 
 
 
 
 
 
COBALT (millions of contained pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Consolidated - Tenke Fungurume (57.75%)
6

 
4

 
7

 
4

 
Less noncontrolling interests
2

 
2

 
3

 
2

 
Net
4

 
2

 
4

 
2

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
11.16

 
$
12.37

 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's 15 percent joint venture partner's interest.
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.

I
FREEPORT-McMoRan COPPER & GOLD INC.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
Production
 
Sales
 
COPPER (millions of recoverable pounds)
2011
 
2010
 
2011
 
2010
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (85%)a
257

 
212

 
260

 
225

 
Bagdad (100%)
97

 
101

 
104

 
112

 
Safford (100%)
65

 
79

 
68

 
92

 
Sierrita (100%)
85

 
72

 
85

 
81

 
Miami (100%)
29

 
6

 
25

 
7

 
Tyrone (100%)
37

 
40

 
41

 
44

 
Chino (100%)
23

 
16

 
22

 
18

 
Other (100%)
2

 
1

 
2

 
1

 
Total North America
595

 
527

 
607

 
580

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
345

 
331

 
342

 
306

 
El Abra (51%)
114

 
168

 
110

 
161

 
Candelaria/Ojos del Salado (80%)
185

 
152

 
191

 
151

 
Total South America
644

 
651

 
643

 
618

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
545

 
555

 
543

 
555

 
 
 
 
 
 
 
 
 
 
Africa
 
 
 
 
 
 
 
 
Tenke Fungurume (57.75%)
133

 
126

 
135

 
121

 
 
 
 
 
 
 
 
 
 
Consolidated
1,917

 
1,859

 
1,928

 
1,874

 
Less noncontrolling interests
360

 
372

 
359

 
354

 
Net
1,557

 
1,487

 
1,569

 
1,520

 
 
 
 
 
 
 
 
 
 
Consolidated sales from mines
 
 
 
 
1,928

 
1,874

 
Purchased copper
 
 
 
 
134

 
65

 
Total copper sales, including purchases
 
 
 
 
2,062

 
1,939

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
4.24

 
$
3.13

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
3

 
3

 
3

 
3

 
South America (80%)
48

 
39

 
49

 
39

 
Indonesia (90.64%)b
766

 
723

 
784

 
734

 
Consolidated
817

 
765

 
836

 
776

 
Less noncontrolling interests
81

 
75

 
83

 
77

 
Net
736

 
690

 
753

 
699

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,466

 
$
1,171

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
19

 
20

 
N/A

 
N/A

 
North America (100%)
17

 
11

 
N/A

 
N/A

 
Cerro Verde (53.56%)
6

 
3

 
N/A

 
N/A

 
Consolidated
42

 
34

 
41

 
33

 
Less noncontrolling interests
3

 
1

 
2

 
1

 
Net
39

 
33

 
39

 
32

 
 
 
 
 
 
 
 
 
 
Consolidated sales from mines
 
 
 
 
41

 
33

 
Purchased molybdenum
 
 
 
 
—

 
2

 
Total molybdenum sales, including purchases
 
 
 
 
41

 
35

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
18.13

 
$
16.62

 
 
 
 
 
 
 
 
 
 
COBALT (millions of contained pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Consolidated - Tenke Fungurume (57.75%)
12

 
9

 
13

 
7

 
Less noncontrolling interests
5

 
4

 
6

 
3

 
Net
7

 
5

 
7

 
4

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
11.02

 
$
11.91

 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's 15 percent joint venture partner's interest.
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.


II
FREEPORT-McMoRan COPPER & GOLD INC.
 
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
100% North America Copper Mines
 
 
 
 
 
 
 
 
Solution Extraction/Electrowinning (SX/EW) Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
847,500

 
646,100

 
829,700

 
624,100

 
Average copper ore grade (percent)
0.24

 
0.25

 
0.24

 
0.25

 
Copper production (millions of recoverable pounds)
201

 
182

 
383

 
384

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
221,100

 
195,300

 
217,300

 
179,200

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.38

 
0.32

 
0.37

 
0.31

 
Molybdenum
0.03

 
0.02

 
0.03

 
0.02

 
Copper recovery rate (percent)
84.3

 
81.4

 
83.2

 
83.3

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
136

 
100

 
258

 
180

 
Molybdenum
10

 
5

 
17

 
11

 
 
 
 
 
 
 
 
 
 
100% South America Mining
 
 
 
 
 
 
 
 
SX/EW Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
241,200

 
247,400

 
251,600

 
251,600

 
Average copper ore grade (percent)
0.47

 
0.42

 
0.43

 
0.43

 
Copper production (millions of recoverable pounds)
113

 
130

 
203

 
263

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
197,600

 
187,100

 
194,700

 
183,600

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
0.62

 
0.62

 
0.65

 
0.62

 
Gold (grams per metric ton)
0.11

 
0.09

 
0.11

 
0.09

 
Molybdenum (percent)
0.02

 
0.02

 
0.02

 
0.02

 
Copper recovery rate (percent)
89.3

 
89.9

 
90.4

 
89.5

 
Production (recoverable):
 
 
 
 
 
 
 
 
Copper (millions of pounds)
214

 
199

 
441

 
388

 
Gold (thousands of ounces)
24

 
20

 
48

 
39

 
Molybdenum (millions of pounds)
3

 
1

 
6

 
3

 
 
 
 
 
 
 
 
 
 
100% Indonesia Mining
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
220,000

 
223,400

 
221,100

 
228,700

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
0.77

 
0.81

 
0.77

 
0.79

 
Gold (grams per metric ton)
0.79

 
0.63

 
0.84

 
0.75

 
Recovery rates (percent):
 
 
 
 
 
 
 
 
Copper
87.8

 
89.1

 
87.5

 
88.7

 
Gold
79.5

 
78.2

 
80.8

 
78.7

 
Production (recoverable):
 
 
 
 
 
 
 
 
Copper (millions of pounds)
282

 
305

 
566

 
613

 
Gold (thousands of ounces)
394

 
319

 
853

 
785

 
 
 
 
 
 
 
 
 
 
100% Africa Mining
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
9,700

 
8,800

 
10,200

 
9,200

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
3.67

 
3.87

 
3.54

 
3.78

 
Cobalt
0.41

 
0.35

 
0.40

 
0.40

 
Copper recovery rate (percent)
92.9

 
90.7

 
92.3

 
91.2

 
Production (millions of pounds):
 
 
 
 
 
 
 
 
Copper (recoverable)
66

 
62

 
133

 
126

 
Cobalt (contained)
6

 
4

 
12

 
9

 
 
 
 
 
 
 
 
 
 
100% Henderson Molybdenum Mine
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
22,000

 
22,800

 
22,700

 
23,000

 
Average molybdenum ore grade (percent)
0.24

 
0.25

 
0.24

 
0.24

 
Molybdenum production (millions of recoverable pounds)
9

 
11

 
19

 
20

 
 
 
 
 
 
 
 
 
 

III
FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(In Millions, Except Per Share Amounts)
 
Revenues
$
5,814

a 
$
3,864

a 
$
11,523

a 
$
8,227

a 
Cost of sales:
 
 
 
 
 
 
 
 
Production and delivery
2,557

 
2,052

 
4,934

 
3,968

 
Depreciation, depletion and amortization
267

 
249

 
499

 
520

 
Total cost of sales
2,824

 
2,301

 
5,433

 
4,488

 
Selling, general and administrative expenses
107

 
101

 
221

 
196

 
Exploration and research expenses
66

 
38

 
116

 
69

 
Environmental obligations and shutdown costs
60

 
—

 
60

 
2

 
Total costs and expenses
3,057

 
2,440

 
5,830

 
4,755

 
Operating income
2,757

b 
1,424

b 
5,693

b 
3,472

b 
Interest expense, net
(74
)
c 
(122
)
c 
(172
)
c 
(267
)
c 
Losses on early extinguishment of debt
(61
)
 
(50
)
 
(68
)
 
(77
)
 
Other income, net
2

 
9

 
12

 
21

 
Income before income taxes and equity in
 
 
 
 
 
 
 
 
affiliated companies' net earnings
2,624

 
1,261

 
5,465

 
3,149

 
Provision for income taxes
(906
)
 
(433
)
 
(1,890
)
 
(1,111
)
 
Equity in affiliated companies' net earnings
8

 
4

 
12

 
9

 
Net income
1,726

 
832

 
3,587

 
2,047

 
Net income attributable to noncontrolling interests
(358
)
 
(168
)
 
(720
)
 
(438
)
 
Preferred dividends
—

d 
(15
)
 
—

d 
(63
)
 
Net income attributable to FCX common stockholders
$
1,368

a,b 
$
649

a,b 
$
2,867

a,b 
$
1,546

a,b 
 
 
 
 
 
 
 
 
 
Net income per share attributable to FCX common stockholders:
 
 
 
 
 
 
 
 
Basic
$
1.44

 
$
0.71

e 
$
3.03

 
$
1.74

e 
Diluted
$
1.43

 
$
0.70

e 
$
3.00

 
$
1.70

e 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
947

 
915

e 
947

 
888

e 
Diluted
956

 
947

e 
956

 
947

e 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.75

 
$
0.15

e 
$
1.00

 
$
0.225

e 
 
 
 
 
 
 
 
 
 
a.
Includes unfavorable adjustments to provisionally priced copper sales recognized in prior periods totaling $47 million ($23 million to net income attributable to common stockholders) in second-quarter 2011, $169 million ($72 million to net income attributable to common stockholders) in second-quarter 2010, $12 million ($5 million to net income attributable to common stockholders) for the first six months of 2011 and $23 million ($9 million to net income attributable to common stockholders) for the first six months of 2010.
b.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions of $7 million ($14 million to net income attributable to common stockholders) in second-quarter 2011, $28 million ($20 million to net income attributable to common stockholders) in second-quarter 2010 and $1 million (a net reduction of $1 million to net income attributable to common stockholders) for the first six months of 2011, and a net reduction of $65 million ($28 million to net income attributable to common stockholders) for the first six months of 2010.
c.
Consolidated interest expense, excluding capitalized interest, totaled $97 million in second-quarter 2011, $132 million in second-quarter 2010, $220 million for the first six months of 2011 and $283 million for the first six months of 2010. Lower interest expense in the 2011 periods primarily reflects the impact of debt repayments during 2010 and the first six months of 2011.
d.
During 2010, FCX's 63/4% Mandatorily Convertible Preferred Stock automatically converted into shares of FCX common stock; as a result, FCX no longer has requirements to pay preferred dividends.
e.
Amounts have been adjusted to reflect the February 1, 2011, two-for-one stock split.

IV
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
 
 
 
 
 
June 30,
 
December 31,
 
 
2011
 
2010
 
 
(In Millions)
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
4,378

 
$
3,738

 
Trade accounts receivable
1,533

 
2,132

 
Other accounts receivable
252

 
293

 
Inventories:

 
 
 
Product
1,399

 
1,409

 
Materials and supplies, net
1,277

 
1,169

 
Mill and leach stockpiles
1,072

 
856

 
Other current assets
262

 
254

 
Total current assets
10,173

 
9,851

 
Property, plant, equipment and development costs, net
17,500

 
16,785

 
Long-term mill and leach stockpiles
1,523

 
1,425

 
Intangible assets, net
323

 
328

 
Other assets
1,060

 
997

 
Total assets
$
30,579

 
$
29,386

 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
$
2,343

 
$
2,441

 
Accrued income taxes
258

 
648

 
Dividends payable
239

 
240

 
Current portion of reclamation and environmental obligations
191

 
207

 
Rio Tinto's share of joint venture cash flows
70

 
132

 
Current portion of debt
5

 
95

 
Total current liabilities
3,106

 
3,763

 
Long-term debt, less current portion
3,537

 
4,660

 
Deferred income taxes
3,265

 
2,873

 
Reclamation and environmental obligations, less current portion
2,123

 
2,071

 
Other liabilities
1,446

 
1,459

 
Total liabilities
13,477

 
14,826

 
Equity:
 
 
 
 
FCX stockholders' equity:
 
 
 
 
Common stock
107

 
107

 
Capital in excess of par value
18,942

 
18,751

 
Accumulated deficit
(672
)
 
(2,590
)
 
Accumulated other comprehensive loss
(316
)
 
(323
)
 
Common stock held in treasury
(3,553
)
 
(3,441
)
 
Total FCX stockholders' equity
14,508

 
12,504

 
Noncontrolling interests
2,594

 
2,056

 
Total equity
17,102

 
14,560

 
Total liabilities and equity
$
30,579

 
$
29,386

 
 
 
 
 
 

V
FREEPORT-McMoRan COPPER & GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
 
 
 
 
 
Six Months Ended June 30,
 
 
 
2011
 
2010
 
 
 
(In Millions)
 
Cash flow from operating activities:
 
 
 
 
 
Net income
 
$
3,587

 
$
2,047

 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation, depletion and amortization
 
499

 
520

 
Stock-based compensation
 
69

 
75

 
Charges for reclamation and environmental obligations, including accretion
 
79

 
75

 
Payments of reclamation and environmental obligations
 
(88
)
 
(97
)
 
Losses on early extinguishment of debt
 
68

 
77

 
Deferred income taxes
 
337

 
107

 
Increase in long-term mill and leach stockpiles

 
(98
)
 
(31
)
 
Other, net
 
(32
)
 
2

 
(Increases) decreases in working capital:
 
 
 
 

 
Accounts receivable
 
577

 
502

 
Inventories
 
(346
)
 
(39
)
 
Other current assets
 
—

 
(9
)
 
Accounts payable and accrued liabilities
 
(184
)
 
(161
)
 
Accrued income and other taxes
 
(429
)
 
(186
)
 
Net cash provided by operating activities
 
4,039

 
2,882

 
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
North America copper mines
 
(204
)
 
(81
)
 
South America
 
(257
)
 
(154
)
 
Indonesia
 
(301
)
 
(195
)
 
Africa
 
(40
)
 
(50
)
 
Molybdenum
 
(162
)
 
(12
)
 
Other
 
(68
)
 
(35
)
 
Other, net
 
19

 
8

 
Net cash used in investing activities
 
(1,013
)
 
(519
)
 
 
 
 
 
 
 
Cash flow from financing activities:
 
 
 
 
 
Proceeds from debt
 
23

 
35

 
Repayments of debt
 
(1,288
)
 
(1,655
)
 
Cash dividends and distributions paid:
 
 
 
 
 
Common stock
 
(949
)
 
(130
)
 
Preferred stock
 
—

 
(95
)
 
Noncontrolling interests
 
(195
)
 
(145
)
 
Contributions from noncontrolling interests
 
13

 
15

 
Net payments for stock-based awards
 
(3
)
 
(6
)
 
Excess tax benefit from stock-based awards
 
22

 
4

 
Other, net
 
(9
)
 
—

 
Net cash used in financing activities
 
(2,386
)
 
(1,977
)
 
 
 
 
 
 
 
Net increase in cash and cash equivalents
 
640

 
386

 
Cash and cash equivalents at beginning of year
 
3,738

 
2,656

 
Cash and cash equivalents at end of period
 
$
4,378

 
$
3,042

 
 
 
 
 
 
 

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 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 in the following tables 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.

FCX shows revenue adjustments 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, write-offs of equipment and/or unusual charges. They are removed from site production and delivery costs in the calculation of unit net cash costs. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. Following are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in FCX's consolidated financial statements.


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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,384

 
$
1,384

 
$
160

 
$
23

 
$
1,567

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
587

 
528

 
62

 
10

 
600

 
By-product creditsa
 
(170
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
32

 
31

 
—

 
1

 
32

 
Net cash costs
 
449

 
559

 
62

 
11

 
632

 
Depreciation, depletion and amortization
 
67

 
62

 
4

 
1

 
67

 
Noncash and other costs, net
 
16

 
16

 
—

 
—

 
16

 
Total costs
 
532

 
637

 
66

 
12

 
715

 
Revenue adjustments
 
(5
)
 
(5
)
 
—

 
—

 
(5
)
 
Idle facility and other non-inventoriable costs
 
(17
)
 
(17
)
 
—

 
—

 
(17
)
 
Gross profit
 
$
830

 
$
725

 
$
94

 
$
11

 
$
830

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
330

 
330

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)c
 
 
 
 
 
10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper and molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.19

 
$
4.19

 
$
16.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.78

 
1.60

 
6.61

 
 
 
 
 
By-product creditsa
 
(0.52
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.10

 
0.09

 
—

 
 
 
 
 
Unit net cash costs
 
1.36

 
1.69

 
6.61

 
 
 
 
 
Depreciation, depletion and amortization
 
0.20

 
0.19

 
0.39

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
0.02

 
 
 
 
 
Total unit costs
 
1.61

 
1.93

 
7.02

 
 
 
 
 
Revenue adjustments
 
(0.02
)
 
(0.02
)
 
—

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
(0.05
)
 
(0.04
)
 
(0.03
)
 
 
 
 
 
Gross profit per pound
 
$
2.51

 
$
2.20

 
$
9.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
1,567

 
$
600

 
$
67

 
 
 
 
 
Treatment charges
 
N/A

 
32

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
16

 
N/A

 
 
 
 
 
Revenue adjustments
 
(5
)
 
N/A

 
N/A

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
N/A

 
17

 
N/A

 
 
 
 
 
Eliminations and other
 
(15
)
 
(6
)
 
4

 
 
 
 
 
North America copper mines
 
1,547

 
659

 
71

 
 
 
 
 
South America mining
 
1,448

 
441

 
66

 
 
 
 
 
Indonesia mining
 
1,564

 
518

 
60

 
 
 
 
 
Africa mining
 
378

 
156

 
38

 
 
 
 
 
Molybdenum
 
413

 
286

 
16

 
 
 
 
 
Rod & Refining
 
1,427

 
1,421

 
2

 
 
 
 
 
Atlantic Copper Smelting & Refining
 
653

 
685

 
9

 
 
 
 
 
Corporate, other & eliminations
 
(1,616
)
 
(1,609
)
 
5

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
5,814

 
$
2,557

 
$
267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Molybdenum 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, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
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
 
(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
 
—

 
—

 
—

 
 
 
 
 
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

 
 
 
 
 
Treatment charges
 
N/A

 
26

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
53

 
N/A

 
 
 
 
 
Revenue adjustments
 
(1
)
 
N/A

 
N/A

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
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 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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
2,593

 
$
2,593

 
$
284

 
$
44

 
$
2,921

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1,067

 
959

 
114

 
18

 
1,091

 
By-product creditsa
 
(304
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
62

 
60

 
—

 
2

 
62

 
Net cash costs
 
825

 
1,019

 
114

 
20

 
1,153

 
Depreciation, depletion and amortization
 
122

 
114

 
7

 
1

 
122

 
Noncash and other costs, net
 
57

 
56

 
1

 
—

 
57

 
Total costs
 
1,004

 
1,189

 
122

 
21

 
1,332

 
Revenue adjustments
 
(2
)
 
(2
)
 
—

 
—

 
(2
)
 
Idle facility and other non-inventoriable costs
 
(29
)
 
(28
)
 
(1
)
 
—

 
(29
)
 
Gross profit
 
$
1,558

 
$
1,374

 
$
161

 
$
23

 
$
1,558

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
605

 
605

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)c
 
 
 
 
 
17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper and molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.28

 
$
4.28

 
$
16.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.76

 
1.58

 
6.81

 
 
 
 
 
By-product creditsa
 
(0.50
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.10

 
0.10

 
—

 
 
 
 
 
Unit net cash costs
 
1.36

 
1.68

 
6.81

 
 
 
 
 
Depreciation, depletion and amortization
 
0.20

 
0.19

 
0.41

 
 
 
 
 
Noncash and other costs, net
 
0.10

 
0.09

 
0.06

 
 
 
 
 
Total unit costs
 
1.66

 
1.96

 
7.28

 
 
 
 
 
Revenue adjustments
 
—

 
—

 
—

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
(0.05
)
 
(0.05
)
 
(0.02
)
 
 
 
 
 
Gross profit per pound
 
$
2.57

 
$
2.27

 
$
9.62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
2,921

 
$
1,091

 
$
122

 
 
 
 
 
Treatment charges
 
N/A

 
62

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
57

 
N/A

 
 
 
 
 
Revenue adjustments
 
(2
)
 
N/A

 
N/A

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
N/A

 
29

 
N/A

 
 
 
 
 
Eliminations and other
 
(24
)
 
(5
)
 
7

 
 
 
 
 
North America copper mines
 
2,895

 
1,234

 
129

 
 
 
 
 
South America mining
 
2,850

 
852

 
123

 
 
 
 
 
Indonesia mining
 
3,294

 
1,044

 
117

 
 
 
 
 
Africa mining
 
687

 
280

 
66

 
 
 
 
 
Molybdenum
 
787

 
526

 
30

 
 
 
 
 
Rod & Refining
 
2,914

 
2,902

 
4

 
 
 
 
 
Atlantic Copper Smelting & Refining
 
1,415

 
1,448

 
19

 
 
 
 
 
Corporate, other & eliminations
 
(3,319
)
 
(3,352
)
 
11

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
11,523

 
$
4,934

 
$
499

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Molybdenum 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, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
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
 
(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
 
—

 
—

 
—

 
 
 
 
 
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

 
 
 
 
 
Treatment charges
 
N/A

 
48

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
77

 
N/A

 
 
 
 
 
Revenue adjustments
 
(2
)
 
N/A

 
N/A

 
 
 
 
 
Idle facility and other non-inventoriable costs
 
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
)
 
(2,702
)
 
19

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
8,227

 
$
3,968

 
$
520

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Molybdenum 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.


XI
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended June 30, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Other
 
Total
 
Revenues, excluding adjustments
 
$
1,404

 
$
1,404

 
$
129

a 
$
1,533

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
417

 
382

 
41

 
423

 
By-product credits
 
(123
)
 
—

 
—

 
—

 
Treatment charges
 
62

 
62

 
—

 
62

 
Net cash costs
 
356

 
444

 
41

 
485

 
Depreciation, depletion and amortization
 
65

 
61

 
4

 
65

 
Noncash and other costs, net
 
6

 
6

 
—

 
6

 
Total costs
 
427

 
511

 
45

 
556

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(24
)
 
(24
)
 
—

 
(24
)
 
Other non-inventoriable costs
 
(16
)
 
(15
)
 
(1
)
 
(16
)
 
Gross profit
 
$
937

 
$
854

 
$
83

 
$
937

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
331

 
331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.24

 
$
4.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.26

 
1.15

 
 
 
 
 
By-product credits
 
(0.37
)
 
—

 
 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
 
Unit net cash costs
 
1.08

 
1.34

 
 
 
 
 
Depreciation, depletion and amortization
 
0.19

 
0.19

 
 
 
 
 
Noncash and other costs, net
 
0.02

 
0.02

 
 
 
 
 
Total unit costs
 
1.29

 
1.55

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.07
)
 
(0.07
)
 
 
 
 
 
Other non-inventoriable costs
 
(0.05
)
 
(0.04
)
 
 
 
 
 
Gross profit per pound
 
$
2.83

 
$
2.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
Totals presented above
 
$
1,533

 
$
423

 
$
65

 
 
 
Treatment charges
 
(62
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
6

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(24
)
 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
N/A

 
16

 
N/A

 
 
 
Eliminations and other
 
1

 
(4
)
 
1

 
 
 
South America mining
 
1,448

 
441

 
66

 
 
 
North America copper mines
 
1,547

 
659

 
71

 
 
 
Indonesia mining
 
1,564

 
518

 
60

 
 
 
Africa mining
 
378

 
156

 
38

 
 
 
Molybdenum
 
413

 
286

 
16

 
 
 
Rod & Refining
 
1,427

 
1,421

 
2

 
 
 
Atlantic Copper Smelting & Refining
 
653

 
685

 
9

 
 
 
Corporate, other & eliminations
 
(1,616
)
 
(1,609
)
 
5

 
 
 
As reported in FCX's consolidated financial statements
 
$
5,814

 
$
2,557

 
$
267

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes gold sales of 25 thousand ounces ($1,515 per ounce average realized price) and silver sales of 766 thousand ounces ($41.03 per ounce average realized price); also includes molybdenum sales of 3 million pounds ($14.29 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.

XII
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended June 30, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Other
 
Total
 
Revenues, excluding adjustments
 
$
936

 
$
936

 
$
60

a 
$
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

 
 
 
Treatment charges
 
(33
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
5

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(114
)
 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
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 sales of 20 thousand ounces ($1,221 per ounce average realized price) and silver sales of 573 thousand ounces ($18.00 per ounce average realized price); also includes molybdenum sales of 1 million pounds ($12.26 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market based pricing.

XIII
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Six Months Ended June 30, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Other
 
Total
 
Revenues, excluding adjustments
 
$
2,725

 
$
2,725

 
$
248

a 
$
2,973

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
823

 
757

 
78

 
835

 
By-product credits
 
(236
)
 
—

 
—

 
—

 
Treatment charges
 
121

 
121

 
—

 
121

 
Net cash costs
 
708

 
878

 
78

 
956

 
Depreciation, depletion and amortization
 
122

 
115

 
7

 
122

 
Noncash and other costs, net
 
11

 
10

 
1

 
11

 
Total costs
 
841

 
1,003

 
86

 
1,089

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
12

 
(8
)
 
20

 
12

 
Other non-inventoriable costs
 
(30
)
 
(27
)
 
(3
)
 
(30
)
 
Gross profit
 
$
1,866

 
$
1,687

 
$
179

 
$
1,866

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
643

 
643

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.24

 
$
4.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.28

 
1.18

 
 
 
 
 
By-product credits
 
(0.37
)
 
—

 
 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
 
Unit net cash costs
 
1.10

 
1.37

 
 
 
 
 
Depreciation, depletion and amortization
 
0.19

 
0.18

 
 
 
 
 
Noncash and other costs, net
 
0.02

 
0.01

 
 
 
 
 
Total unit costs
 
1.31

 
1.56

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
0.02

 
(0.01
)
 
 
 
 
 
Other non-inventoriable costs
 
(0.05
)
 
(0.05
)
 
 
 
 
 
Gross profit per pound
 
$
2.90

 
$
2.62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
Totals presented above
 
$
2,973

 
$
835

 
$
122

 
 
 
Treatment charges
 
(121
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
11

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
12

 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
N/A

 
30

 
N/A

 
 
 
Eliminations and other
 
(14
)
 
(24
)
 
1

 
 
 
South America mining
 
2,850

 
852

 
123

 
 
 
North America copper mines
 
2,895

 
1,234

 
129

 
 
 
Indonesia mining
 
3,294

 
1,044

 
117

 
 
 
Africa mining
 
687

 
280

 
66

 
 
 
Molybdenum
 
787

 
526

 
30

 
 
 
Rod & Refining
 
2,914

 
2,902

 
4

 
 
 
Atlantic Copper Smelting & Refining
 
1,415

 
1,448

 
19

 
 
 
Corporate, other & eliminations
 
(3,319
)
 
(3,352
)
 
11

 
 
 
As reported in FCX's consolidated financial statements
 
$
11,523

 
$
4,934

 
$
499

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes gold sales of 49 thousand ounces ($1,467 per ounce average realized price) and silver sales of 1.5 million ounces ($37.55 per ounce average realized price); also includes molybdenum sales of 6 million pounds ($15.01 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.



XIV
FREEPORT-McMoRan COPPER & GOLD INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues and Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Six Months Ended June 30, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Other
 
Total
 
Revenues, excluding adjustments
 
$
1,898

 
$
1,898

 
$
116

a 
$
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

 
 
 
Treatment charges
 
(80
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
7

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(17
)
 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
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
)
 
(2,702
)
 
19

 
 
 
As reported in FCX's consolidated financial statements
 
$
8,227

 
$
3,968

 
$
520

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes gold sales of 39 thousand ounces ($1,175 per ounce average realized price) and silver sales of 1.2 million ounces ($17.71 per ounce average realized price); also includes molybdenum sales of 3 million pounds ($12.68 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.


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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Gold
 
Silver
 
Total
 
Revenues, excluding adjustments
 
$
1,131

 
$
1,131

 
$
498

 
$
30

a 
$
1,659

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
511

 
348

 
154

 
9

 
511

 
Gold and silver credits
 
(545
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
48

 
33

 
14

 
1

 
48

 
Royalty on metals
 
44

 
30

 
13

 
1

 
44

 
Net cash costs
 
58

 
411

 
181

 
11

 
603

 
Depreciation and amortization
 
60

 
41

 
18

 
1

 
60

 
Noncash and other costs, net
 
7

 
5

 
2

 
—

 
7

 
Total costs
 
125

 
457

 
201

 
12

 
670

 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(20
)
 
(20
)
 
16

 
1

 
(3
)
 
PT Smelting intercompany profit
 
(12
)
 
(8
)
 
(4
)
 
—

 
(12
)
 
Gross profit
 
$
974

 
$
646

 
$
309

 
$
19

 
$
974

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
265

 
265

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
330

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.26

 
$
4.26

 
$
1,509

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.93

 
1.31

 
465

 
 
 
 
 
Gold and silver credits
 
(2.06
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.18

 
0.13

 
44

 
 
 
 
 
Royalty on metals
 
0.17

 
0.11

 
40

 
 
 
 
 
Unit net cash costs
 
0.22

 
1.55

 
549

 
 
 
 
 
Depreciation and amortization
 
0.23

 
0.15

 
55

 
 
 
 
 
Noncash and other costs, net
 
0.02

 
0.02

 
6

 
 
 
 
 
Total unit costs
 
0.47

 
1.72

 
610

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.07
)
 
(0.07
)
 
48

 
 
 
 
 
PT Smelting intercompany profit
 
(0.05
)
 
(0.03
)
 
(11
)
 
 
 
 
 
Gross profit per pound/ounce
 
$
3.67

 
$
2.44

 
$
936

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
1,659

 
$
511

 
$
60

 
 
 
 
 
Treatment charges
 
(48
)
 
N/A

 
N/A

 
 
 
 
 
Royalty on metals
 
(44
)
 
N/A

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
7

 
N/A

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(3
)
 
N/A

 
N/A

 
 
 
 
 
Indonesia mining
 
1,564

 
518

 
60

 
 
 
 
 
North America copper mines
 
1,547

 
659

 
71

 
 
 
 
 
South America mining
 
1,448

 
441

 
66

 
 
 
 
 
Africa mining
 
378

 
156

 
38

 
 
 
 
 
Molybdenum
 
413

 
286

 
16

 
 
 
 
 
Rod & Refining
 
1,427

 
1,421

 
2

 
 
 
 
 
Atlantic Copper Smelting & Refining
 
653

 
685

 
9

 
 
 
 
 
Corporate, other & eliminations
 
(1,616
)
 
(1,609
)
 
5

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
5,814

 
$
2,557

 
$
267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 832 thousand ounces ($36.16 per ounce average realized price).
 
 
 
 
 


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, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Gold
 
Silver
 
Total
 
Revenues, excluding adjustments
 
$
765

 
$
765

 
$
342

 
$
14

a 
$
1,121

 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
 
10

 
—

 
(99
)
 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.95

 
$
2.95

 
$
1,235

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.62

 
1.10

 
475

 
 
 
 
 
Gold and silver credits
 
(1.41
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.26

 
0.18

 
75

 
 
 
 
 
Royalty on metals
 
0.11

 
0.07

 
31

 
 
 
 
 
Unit net cash costs
 
0.58

 
1.35

 
581

 
 
 
 
 
Depreciation and amortization
 
0.22

 
0.15

 
64

 
 
 
 
 
Noncash and other costs, net
 
0.02

 
0.01

 
6

 
 
 
 
 
Total unit costs
 
0.82

 
1.51

 
651

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.42
)
 
(0.42
)
 
37

 
 
 
 
 
PT Smelting intercompany profit
 
0.06

 
0.04

 
19

 
 
 
 
 
Gross profit per pound/ounce
 
$
1.77

 
$
1.06

 
$
640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
1,121

 
$
422

 
$
57

 
 
 
 
 
Treatment charges
 
(67
)
 
N/A

 
N/A

 
 
 
 
 
Royalty on metals
 
(28
)
 
N/A

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
5

 
N/A

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(99
)
 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 800 thousand ounces ($16.78 per ounce average realized price).
 
 
 

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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Gold
 
Silver
 
Total
 
Revenues, excluding adjustments
 
$
2,297

 
$
2,297

 
$
1,150

 
$
63

a 
$
3,510

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1,022

 
669

 
335

 
18

 
1,022

 
Gold and silver credits
 
(1,195
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
98

 
64

 
32

 
2

 
98

 
Royalty on metals
 
89

 
58

 
29

 
2

 
89

 
Net cash costs
 
14

 
791

 
396

 
22

 
1,209

 
Depreciation and amortization
 
117

 
77

 
38

 
2

 
117

 
Noncash and other costs, net
 
22

 
15

 
7

 
—

 
22

 
Total costs
 
153

 
883

 
441

 
24

 
1,348

 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(11
)
 
(11
)
 
(17
)
 
(1
)
 
(29
)
 
PT Smelting intercompany profit
 
35

 
23

 
11

 
1

 
35

 
Gross profit
 
$
2,168

 
$
1,426

 
$
703

 
$
39

 
$
2,168

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
543

 
543

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
784

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
4.23

 
$
4.23

 
$
1,466

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.88

 
1.23

 
427

 
 
 
 
 
Gold and silver credits
 
(2.20
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.18

 
0.12

 
41

 
 
 
 
 
Royalty on metals
 
0.16

 
0.11

 
37

 
 
 
 
 
Unit net cash costs
 
0.02

 
1.46

 
505

 
 
 
 
 
Depreciation and amortization
 
0.22

 
0.14

 
49

 
 
 
 
 
Noncash and other costs, net
 
0.04

 
0.02

 
9

 
 
 
 
 
Total unit costs
 
0.28

 
1.62

 
563

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.02
)
 
(0.02
)
 
(22
)
 
 
 
 
 
PT Smelting intercompany profit
 
0.06

 
0.04

 
15

 
 
 
 
 
Gross profit per pound/ounce
 
$
3.99

 
$
2.63

 
$
896

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
3,510

 
$
1,022

 
$
117

 
 
 
 
 
Treatment charges
 
(98
)
 
N/A

 
N/A

 
 
 
 
 
Royalty on metals
 
(89
)
 
N/A

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
22

 
N/A

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(29
)
 
N/A

 
N/A

 
 
 
 
 
Indonesia mining
 
3,294

 
1,044

 
117

 
 
 
 
 
North America copper mines
 
2,895

 
1,234

 
129

 
 
 
 
 
South America mining
 
2,850

 
852

 
123

 
 
 
 
 
Africa mining
 
687

 
280

 
66

 
 
 
 
 
Molybdenum
 
787

 
526

 
30

 
 
 
 
 
Rod & Refining
 
2,914

 
2,902

 
4

 
 
 
 
 
Atlantic Copper Smelting & Refining
 
1,415

 
1,448

 
19

 
 
 
 
 
Corporate, other & eliminations
 
(3,319
)
 
(3,352
)
 
11

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
11,523

 
$
4,934

 
$
499

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 1.7 million ounces ($36.65 per ounce average realized price).
 
 
 

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, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Gold
 
Silver
 
Total
 
Revenues, excluding adjustments
 
$
1,694

 
$
1,694

 
$
860

 
$
35

a 
$
2,589

 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
 
1

 
—

 
(5
)
 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.05

 
$
3.05

 
$
1,171

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.58

 
1.03

 
398

 
 
 
 
 
Gold and silver credits
 
(1.61
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.24

 
0.16

 
60

 
 
 
 
 
Royalty on metals
 
0.11

 
0.08

 
29

 
 
 
 
 
Unit net cash costs
 
0.32

 
1.27

 
487

 
 
 
 
 
Depreciation and amortization
 
0.22

 
0.14

 
54

 
 
 
 
 
Noncash and other costs, net
 
0.04

 
0.03

 
11

 
 
 
 
 
Total unit costs
 
0.58

 
1.44

 
552

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.01
)
 
(0.01
)
 
1

 
 
 
 
 
PT Smelting intercompany profit
 
0.05

 
0.04

 
13

 
 
 
 
 
Gross profit per pound/ounce
 
$
2.51

 
$
1.64

 
$
633

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
 
 
Totals presented above
 
$
2,589

 
$
878

 
$
120

 
 
 
 
 
Treatment charges
 
(134
)
 
N/A

 
N/A

 
 
 
 
 
Royalty on metals
 
(64
)
 
N/A

 
N/A

 
 
 
 
 
Net noncash and other costs
 
N/A

 
24

 
N/A

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(5
)
 
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
)
 
(2,702
)
 
19

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
8,227

 
$
3,968

 
$
520

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 2.1 million ounces ($17.16 per ounce average realized price).
 
 
 
 
 


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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
307

 
$
307

 
$
83

 
$
390

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
122

 
103

 
43

 
146

 
Cobalt creditsb
 
(58
)
 
—

 
—

 
—

 
Royalty on metals
 
7

 
6

 
1

 
7

 
Net cash costs
 
71

 
109

 
44

 
153

 
Depreciation, depletion and amortization
 
38

 
32

 
6

 
38

 
Noncash and other costs, net
 
7

 
6

 
1

 
7

 
Total costs
 
116

 
147

 
51

 
198

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(4
)
 
(4
)
 
(1
)
 
(5
)
 
Other non-inventoriable costs
 
(3
)
 
(3
)
 
—

 
(3
)
 
Gross profit
 
$
184

 
$
153

 
$
31

 
$
184

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
75

 
75

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
4.08

 
$
4.08

 
$
11.16

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.62

 
1.37

 
5.69

 
 
 
Cobalt creditsb
 
(0.77
)
 
—

 
—

 
 
 
Royalty on metals
 
0.09

 
0.08

 
0.19

 
 
 
Unit net cash costs
 
0.94

 
1.45

 
5.88

 
 
 
Depreciation, depletion and amortization
 
0.50

 
0.42

 
0.81

 
 
 
Noncash and other costs, net
 
0.11

 
0.09

 
0.16

 
 
 
Total unit costs
 
1.55

 
1.96

 
6.85

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.04
)
 
(0.04
)
 
(0.13
)
 
 
 
Other non-inventoriable costs
 
(0.05
)
 
(0.04
)
 
(0.08
)
 
 
 
Gross profit per pound
 
$
2.44

 
$
2.04

 
$
4.10

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
Totals presented above
 
$
390

 
$
146

 
$
38

 
 
 
Royalty on metals
 
(7
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
7

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(5
)
 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
N/A

 
3

 
N/A

 
 
 
Africa mining
 
378

 
156

 
38

 
 
 
North America copper mines
 
1,547

 
659

 
71

 
 
 
South America mining
 
1,448

 
441

 
66

 
 
 
Indonesia mining
 
1,564

 
518

 
60

 
 
 
Molybdenum
 
413

 
286

 
16

 
 
 
Rod & Refining
 
1,427

 
1,421

 
2

 
 
 
Atlantic Copper Smelting & Refining
 
653

 
685

 
9

 
 
 
Corporate, other & eliminations
 
(1,616
)
 
(1,609
)
 
5

 
 
 
As reported in FCX's consolidated financial statements
 
$
5,814

 
$
2,557

 
$
267

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes adjustments for point-of-sale transportation costs as negotiated in customer contracts.
 
b. 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
 
 
 
 
 
 
Three Months Ended June 30, 2010
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
163

 
$
163

 
$
47

 
$
210

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
70

 
64

 
24

 
88

 
Cobalt creditsb
 
(30
)
 
—

 
—

 
—

 
Royalty on metals
 
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
 
—

 
—

 
1

 
1

 
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 adjustmentsa
 
$
2.96

 
$
2.96

 
$
12.37

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.27

 
1.15

 
6.63

 
 
 
Cobalt creditsb
 
(0.54
)
 
—

 
—

 
 
 
Royalty on metals
 
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
)
 
0.35

 
 
 
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
 
$
210

 
$
88

 
$
30

 
 
 
Royalty on metals
 
(3
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
3

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
1

 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
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. Includes adjustments for point-of-sale transportation costs as negotiated in customer contracts.
 
b. Net of cobalt downstream processing and freight costs.
 

XXI
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, 2011
 
 
 
 
 
 
 
By-Product
 
Co-Product Method
 
(In Millions)
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
553

 
$
553

 
$
146

 
$
699

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
212

 
183

 
74

 
257

 
Cobalt creditsb
 
(103
)
 
—

 
—

 
—

 
Royalty on metals
 
13

 
10

 
3

 
13

 
Net cash costs
 
122

 
193

 
77

 
270

 
Depreciation, depletion and amortization
 
66

 
56

 
10

 
66

 
Noncash and other costs, net
 
17

 
14

 
3

 
17

 
Total costs
 
205

 
263

 
90

 
353

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(1
)
 
(1
)
 
2

 
1

 
Other non-inventoriable costs
 
(6
)
 
(5
)
 
(1
)
 
(6
)
 
Gross profit
 
$
341

 
$
284

 
$
57

 
$
341

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
135

 
135

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
13

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
4.11

 
$
4.11

 
$
11.02

 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.57

 
1.36

 
5.59

 
 
 
Cobalt creditsb
 
(0.76
)
 
—

 
—

 
 
 
Royalty on metals
 
0.10

 
0.08

 
0.18

 
 
 
Unit net cash costs
 
0.91

 
1.44

 
5.77

 
 
 
Depreciation, depletion and amortization
 
0.49

 
0.41

 
0.80

 
 
 
Noncash and other costs, net
 
0.12

 
0.11

 
0.20

 
 
 
Total unit costs
 
1.52

 
1.96

 
6.77

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.01
)
 
(0.01
)
 
0.16

 
 
 
Other non-inventoriable costs
 
(0.05
)
 
(0.04
)
 
(0.08
)
 
 
 
Gross profit per pound
 
$
2.53

 
$
2.10

 
$
4.33

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
(In Millions)
 
Revenues
 
and Delivery
 
Amortization
 
 
 
Totals presented above
 
$
699

 
$
257

 
$
66

 
 
 
Royalty on metals
 
(13
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
17

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
1

 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
N/A

 
6

 
N/A

 
 
 
Africa mining
 
687

 
280

 
66

 
 
 
North America copper mines
 
2,895

 
1,234

 
129

 
 
 
South America mining
 
2,850

 
852

 
123

 
 
 
Indonesia mining
 
3,294

 
1,044

 
117

 
 
 
Molybdenum
 
787

 
526

 
30

 
 
 
Rod & Refining
 
2,914

 
2,902

 
4

 
 
 
Atlantic Copper Smelting & Refining
 
1,415

 
1,448

 
19

 
 
 
Corporate, other & eliminations
 
(3,319
)
 
(3,352
)
 
11

 
 
 
As reported in FCX's consolidated financial statements
 
$
11,523

 
$
4,934

 
$
499

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes adjustments for point-of-sale transportation costs as negotiated in customer contracts.
 
b. Net of cobalt downstream processing and freight costs.
 

XXII
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 adjustmentsa
 
$
377

 
$
377

 
$
84

 
$
461

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
160

 
151

 
40

 
191

 
Cobalt creditsb
 
(56
)
 
—

 
—

 
—

 
Royalty on metals
 
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
 
—

 
—

 
3

 
3

 
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 adjustmentsa
 
$
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 creditsb
 
(0.46
)
 
—

 
—

 
 
 
Royalty on metals
 
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
 
$
461

 
$
191

 
$
60

 
 
 
Royalty on metals
 
(8
)
 
N/A

 
N/A

 
 
 
Net noncash and other costs
 
N/A

 
4

 
N/A

 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
prior period open sales
 
3

 
N/A

 
N/A

 
 
 
Other non-inventoriable costs
 
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
)
 
(2,702
)
 
19

 
 
 
As reported in FCX's consolidated financial statements
 
$
8,227

 
$
3,968

 
$
520

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes adjustments for point-of-sale transportation costs as negotiated in customer contracts.
 
b. Net of cobalt downstream processing and freight costs.
 


XXIII
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)
2011
 
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
$
164

 
$
177

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
50

 
48

 
 
 
 
 
 
Treatment charges and other
8

 
11

 
 
 
 
 
 
Net cash costs
58

 
59

 
 
 
 
 
 
Depreciation, depletion and amortization
8

 
8

 
 
 
 
 
 
Noncash and other costs, net
1

 
—

 
 
 
 
 
 
Total costs
67

 
67

 
 
 
 
 
 
Gross profita
$
97

 
$
110

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)
9

 
11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
$
17.35

 
$
17.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
5.33

 
4.65

 
 
 
 
 
 
Treatment charges and other
0.88

 
1.08

 
 
 
 
 
 
Unit net cash costs
6.21

 
5.73

 
 
 
 
 
 
Depreciation, depletion and amortization
0.89

 
0.82

 
 
 
 
 
 
Noncash and other costs, net
0.03

 
0.02

 
 
 
 
 
 
Total unit costs
7.13

 
6.57

 
 
 
 
 
 
Gross profit per pound
$
10.22

 
$
10.79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In Millions)
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
Three Months Ended June 30, 2011
Revenues
 
and Delivery
 
Amortization
 
 
 
 
Totals presented above
$
164

 
$
50

 
$
8

 
 
 
 
Treatment charges and other
(8
)
 
N/A

 
N/A

 
 
 
 
Net noncash and other costs
N/A

 
1

 
N/A

 
 
 
 
Henderson mine
156

 
51

 
8

 
 
 
 
Other molybdenum operations and eliminationsb
257

 
235

 
8

 
 
 
 
Molybdenum
413

 
286

 
16

 
 
 
 
North America copper mines
1,547

 
659

 
71

 
 
 
 
South America mining
1,448

 
441

 
66

 
 
 
 
Indonesia mining
1,564

 
518

 
60

 
 
 
 
Africa mining
378

 
156

 
38

 
 
 
 
Rod & Refining
1,427

 
1,421

 
2

 
 
 
 
Atlantic Copper Smelting & Refining
653

 
685

 
9

 
 
 
 
Corporate, other & eliminations
(1,616
)
 
(1,609
)
 
5

 
 
 
 
As reported in FCX's consolidated financial statements
$
5,814

 
$
2,557

 
$
267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2010
 
 
 
 
 
 
 
 
 
Totals presented above
$
177

 
$
48

 
$
8

 
 
 
 
Treatment charges and other
(11
)
 
N/A

 
N/A

 
 
 
 
Net noncash and other costs
N/A

 
—

 
N/A

 
 
 
 
Henderson mine
166

 
48

 
8

 
 
 
 
Other molybdenum operations and eliminationsb
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Gross profit reflects sales of Henderson products based on volumes produced at market-based pricing. On a consolidated basis, the Molybdenum division includes profits on sales as they are made to third parties and realizations based on actual contract terms. As a result, the actual gross profit realized will differ from the amounts reported in this table.
b. Primarily includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced at the North and South America copper mines.

XXIV
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)
2011
 
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
$
336

 
$
316

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
102

 
90

 
 
 
 
 
 
Treatment charges and other
17

 
21

 
 
 
 
 
 
Net cash costs
119

 
111

 
 
 
 
 
 
Depreciation, depletion and amortization
17

 
16

 
 
 
 
 
 
Noncash and other costs, net
1

 
1

 
 
 
 
 
 
Total costs
137

 
128

 
 
 
 
 
 
Gross profita
$
199

 
$
188

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)
19

 
20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
$
17.36

 
$
16.06

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
5.29

 
4.57

 
 
 
 
 
 
Treatment charges and other
0.88

 
1.08

 
 
 
 
 
 
Unit net cash costs
6.17

 
5.65

 
 
 
 
 
 
Depreciation, depletion and amortization
0.88

 
0.83

 
 
 
 
 
 
Noncash and other costs, net
0.04

 
0.03

 
 
 
 
 
 
Total unit costs
7.09

 
6.51

 
 
 
 
 
 
Gross profit per pound
$
10.27

 
$
9.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In Millions)
 
 
 
 
Depreciation,
 
 
 
 
 
 
 
Production
 
Depletion and
 
 
 
 
Six Months Ended June 30, 2011
Revenues
 
and Delivery
 
Amortization
 
 
 
 
Totals presented above
$
336

 
$
102

 
$
17

 
 
 
 
Treatment charges and other
(17
)
 
N/A

 
N/A

 
 
 
 
Net noncash and other costs
N/A

 
1

 
N/A

 
 
 
 
Henderson mine
319

 
103

 
17

 
 
 
 
Other molybdenum operations and eliminationsb
468

 
423

 
13

 
 
 
 
Molybdenum
787

 
526

 
30

 
 
 
 
North America copper mines
2,895

 
1,234

 
129

 
 
 
 
South America mining
2,850

 
852

 
123

 
 
 
 
Indonesia mining
3,294

 
1,044

 
117

 
 
 
 
Africa mining
687

 
280

 
66

 
 
 
 
Rod & Refining
2,914

 
2,902

 
4

 
 
 
 
Atlantic Copper Smelting & Refining
1,415

 
1,448

 
19

 
 
 
 
Corporate, other & eliminations
(3,319
)
 
(3,352
)
 
11

 
 
 
 
As reported in FCX's consolidated financial statements
$
11,523

 
$
4,934

 
$
499

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2010
 
 
 
 
 
 
 
 
 
Totals presented above
$
316

 
$
90

 
$
16

 
 
 
 
Treatment charges and other
(21
)
 
N/A

 
N/A

 
 
 
 
Net noncash and other costs
N/A

 
1

 
N/A

 
 
 
 
Henderson mine
295

 
91

 
16

 
 
 
 
Other molybdenum operations and eliminationsb
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
)
 
(2,702
)
 
19

 
 
 
 
As reported in FCX's consolidated financial statements
$
8,227

 
$
3,968

 
$
520

 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Gross profit reflects sales of Henderson products based on volumes produced at market-based pricing. On a consolidated basis, the Molybdenum division includes profits on sales as they are made to third parties and realizations based on actual contract terms. As a result, the actual gross profit realized will differ from the amounts reported in this table.
b. Primarily includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced at the North and South America copper mines.

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

Following are summaries of the approximate amounts in the calculation of FCX's consolidated provision for income taxes for the second quarters and first six months of 2011 and 2010 (in millions, except percentages):

 
Three Months Ended June 30,
 
2011
 
2010
 
 
 
Effective
 
Income Tax
 
 
 
Effective
 
Income Tax
 
Incomea
 
Tax Rate
 
Provision
 
Incomea
 
Tax Rate
 
Provision
U.S.
$
595

 
20%
 
$
120

 
$
257

 
20%
 
$
51

South America
913

 
35%
 
321

 
399

 
34%
 
134

Indonesia
944

 
41%
 
392

 
440

 
40%
 
177

Africa
136

 
29%
 
40

 
57

 
32%
 
18

Eliminations and other
36

 
N/A
 
28

 
108

 
N/A
 
44

Annualized rate adjustment b
N/A

 
N/A
 
5

 
N/A

 
N/A
 
9

Consolidated FCX
$
2,624

 
34%
 
$
906

 
$
1,261

 
34%
 
$
433

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
2011
 
2010
 
 
 
Effective
 
Income Tax
 
 
 
Effective
 
Income Tax
 
Incomea
 
Tax Rate
 
Provision
 
Income a
 
Tax Rate
 
Provision
U.S.
$
1,242

 
21%
 
$
258

 
$
586

 
23%
 
$
132

South America
1,827

 
34%
 
627

 
1,022

 
32%
 
331

Indonesia
2,105

 
43%
 
899

 
1,349

 
42%
 
570

Africa
240

 
33%
 
80

 
142

 
30%
 
43

Eliminations and other
51

 
N/A
 
39

 
50

 
N/A
 
24

Annualized rate adjustment b
N/A

 
N/A
 
(13
)
 
N/A

 
N/A
 
11

Consolidated FCX
$
5,465

 
35%
c 
$
1,890

 
$
3,149

 
35%
 
$
1,111


a.
Represents income 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 equal to its estimated annualized tax rate.
c.
FCX's consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which it operates. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. Assuming average prices of $4.25 per pound for copper, $1,500 per ounce for gold and $15 per pound for molybdenum for the second half of 2011 and achievement of current 2011 sales volume and cost estimates, FCX estimates its annual consolidated effective tax rate will approximate 35 percent.

XXVI
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, which are separately disclosed in the following table.

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 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 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.

XXVII
FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS (continued)
(In Millions)
North America Copper Mines
 
South America
 
Indonesia
 
Africa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Copper
 
Corporate,
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
 
 
 
 
Moly-
 
Rod &
 
Smelting
 
Other &
 
FCX
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Grasberg
 
Tenke
 
bdenum
 
Refining
 
& Refining
 
Eliminations
 
Total
Three Months Ended June 30, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
157

 
$
94

 
$
251

 
$
598

 
$
638

 
$
1,236

 
$
1,465

a 
$
375

 
$
413

 
$
1,421

 
$
651

 
$
2

 
$
5,814

Intersegment
441

 
855

 
1,296

 
138

 
74

 
212

 
99

 
3

 
—

 
6

 
2

 
(1,618
)
 
—

Production and delivery
260

 
399

 
659

 
198

 
243

 
441

 
518

 
156

 
286

 
1,421

 
685

 
(1,609
)
 
2,557

Depreciation, depletion and amortization
30

 
41

 
71

 
36

 
30

 
66

 
60

 
38

 
16

 
2

 
9

 
5

 
267

Selling, general and administrative expenses
1

 
—

 
1

 
1

 
—

 
1

 
28

 
3

 
4

 
—

 
5

 
65

 
107

Exploration and research expenses
1

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
1

 
—

 
—

 
64

 
66

Environmental obligations and shutdown costs
3

 
—

 
3

 
—

 
—

 
—

 
—

 
—

 
—

 
1

 
—

 
56

 
60

Operating income (loss)
303

 
509

 
812

 
501

 
439

 
940

 
958

 
181

 
106

 
3

 
(46
)
 
(197
)
 
2,757

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 
2

 
3

 
1

 
—

 
1

 
1

 
1

 
—

 
—

 
4

 
64

 
74

Provision for income taxes
—

 
—

 
—

 
159

 
162

 
321

 
392

 
40

 
—

 
—

 
—

 
153

 
906

Total assets at June 30, 2011
1,970

 
4,797

 
6,767

 
4,732

 
3,558

 
8,290

 
5,876

 
3,744

 
2,193

 
359

 
1,316

 
2,034

 
30,579

Capital expenditures
19

 
66

 
85

 
32

 
85

 
117

 
176

 
29

 
91

 
2

 
16

 
11

 
527

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
1

 
$
1

 
$
2

 
$
274

 
$
453

 
$
727

 
$
871

a 
$
207

 
$
325

 
$
1,123

 
$
605

 
$
4

 
$
3,864

Intersegment
386

 
656

 
1,042

 
108

 
14

 
122

 
56

 
—

 
—

 
6

 
11

 
(1,237
)
 
—

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

Environmental obligations and shutdown costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes PT Freeport Indonesia's sales to PT Smelting totaling $653 million in second-quarter 2011 and $373 million in second-quarter 2010.

XXVIII
FREEPORT-McMoRan COPPER & GOLD INC.
BUSINESS SEGMENTS (continued)
(In Millions)
North America Copper Mines
 
South America
 
Indonesia
 
Africa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Copper
 
Corporate,
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
 
 
 
 
Moly-
 
Rod &
 
Smelting
 
Other &
 
FCX
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Grasberg
 
Tenke
 
bdenum
 
Refining
 
& Refining
 
Eliminations
 
Total
Six Months Ended June 30, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
293

 
$
110

 
$
403

 
$
1,266

 
$
1,233

 
$
2,499

 
$
2,837

a 
$
684

 
$
787

 
$
2,902

 
$
1,407

 
$
4

 
$
11,523

Intersegment
827

 
1,665

 
2,492

 
198

 
153

 
351

 
457

 
3

 
—

 
12

 
8

 
(3,323
)
 
—

Production and delivery
470

 
764

 
1,234

 
373

 
479

 
852

 
1,044

 
280

 
526

 
2,902

 
1,448

 
(3,352
)
 
4,934

Depreciation, depletion and amortization
58

 
71

 
129

 
70

 
53

 
123

 
117

 
66

 
30

 
4

 
19

 
11

 
499

Selling, general and administrative expenses
1

 
1

 
2

 
2

 
1

 
3

 
71

 
5

 
8

 
—

 
13

 
119

 
221

Exploration and research expenses
1

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
2

 
—

 
—

 
113

 
116

Environmental obligations and shutdown costs
3

 
—

 
3

 
—

 
—

 
—

 
—

 
—

 
—

 
1

 
—

 
56

 
60

Operating income (loss)
587

 
939

 
1,526

 
1,019

 
853

 
1,872

 
2,062

 
336

 
221

 
7

 
(65
)
 
(266
)
 
5,693

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
2

 
3

 
5

 
1

 
—

 
1

 
2

 
3

 
—

 
—

 
8

 
153

 
172

Provision for income taxes
—

 
—

 
—

 
322

 
305

 
627

 
899

 
80

 
—

 
—

 
—

 
284

 
1,890

Capital expenditures
48

 
156

 
204

 
56

 
201

 
257

 
301

 
40

 
162

 
5

 
24

 
39

 
1,032

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
10

 
$
16

 
$
26

 
$
732

 
$
950

 
$
1,682

 
$
2,032

a 
$
456

 
$
600

 
$
2,189

 
$
1,238

 
$
4

 
$
8,227

Intersegment
742

 
1,330

 
2,072

 
191

 
45

 
236

 
354

 
—

 
—

 
13

 
11

 
(2,686
)
 
—

Production and delivery
323

 
678

 
1,001

 
319

 
446

 
765

 
902

 
206

 
375

 
2,188

 
1,233

 
(2,702
)
 
3,968

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

Environmental obligations and shutdown costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
2

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes PT Freeport Indonesia's sales to PT Smelting totaling $1.3 billion for the first six months of 2011 and $859 million for the first six months of 2010.


XXIX