UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from	to
Commission File Number: 001-11307-01

Freeport-McMoRan Copper & Gold Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-2480931
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
333 North Central Avenue
Phoenix, Arizona	85004-2189
(Address of principal executive offices)	(Zip Code)
(602) 366-8100
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.10 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act  þ Yes ¨ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).           þ Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   þ Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).                             ¨ Yes þ No

The aggregate market value of common stock held by non-affiliates of the registrant was $34.5 billion on February 14, 2014, and $28.3 billion on June 28, 2013.

Common stock issued and outstanding was 1,038,417,983 shares on February 14, 2014, and 1,037,809,895 shares on June 28, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our proxy statement for our 2014 annual meeting of stockholders are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this report.

FREEPORT-McMoRan COPPER & GOLD INC.

TABLE OF CONTENTS
	Page
Part I	1
Items 1. and 2. Business and Properties	1
Item 1A. Risk Factors	48
Item 1B. Unresolved Staff Comments	66
Item 3. Legal Proceedings	66
Item 4. Mine Safety Disclosures	68
Executive Officers of the Registrant	68
Part II	69
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities	69
Item 6. Selected Financial Data	71
Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results
of Operations and Quantitative and Qualitative Disclosures about Market Risk	75
Item 8. Financial Statements and Supplementary Data	134
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	208
Item 9A. Controls and Procedures	208
Item 9B. Other Information	209
Part III	209
Item 10. Directors, Executive Officers and Corporate Governance	209
Item 11. Executive Compensation	209
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters	209
Item 13. Certain Relationships and Related Transactions, and Director Independence	210
Item 14. Principal Accounting Fees and Services	210
Part IV	210
Item 15. Exhibits, Financial Statement Schedules	210
Signatures	S-1
Index to Financial Statements	F-1
Exhibit Index	E-1

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PART I

Items 1. and 2. Business and Properties.

All of our periodic reports filed with the United States (U.S.) Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, through our website, www.fcx.com, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. These reports and amendments are available through our website as soon as reasonably practicable after we electronically file or furnish such material to the SEC.

References to “we,” “us” and “our” refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries. References to “Notes” refer to the Notes to Consolidated Financial Statements included herein (refer to Item 8), and references to “MD&A” refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included herein (refer to Item 7).

GENERAL

As further discussed in Note 2, during second-quarter 2013, we completed the acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR). With these acquisitions, we are a premier U.S.-based natural resource company with an industry leading global portfolio of mineral assets, significant oil and natural gas resources and a growing production profile. Our principal executive offices are in Phoenix, Arizona, and our company was incorporated under the laws of the state of Delaware on November 10, 1987.

Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits, significant mining operations in North and South America, the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa and significant oil and natural gas assets in North America. Below is FCX's ownership interest in its operating mines and its oil and gas business through its subsidiary, FCX Oil & Gas Inc. (FM O&G), at December 31, 2013:

a. We have an 85 percent interest in Morenci and our direct ownership in PT Freeport Indonesia (PT-FI) totals 81.28 percent. Refer to Note 3 for further discussion of our ownership in subsidiaries and joint ventures.

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Mining

At December 31, 2013, consolidated recoverable proven and probable mineral reserves totaled 111.2 billion pounds of copper, 31.3 million ounces of gold, 3.26 billion pounds of molybdenum, 308.5 million ounces of silver and 0.87 billion pounds of cobalt. Following is a summary of our consolidated recoverable proven and probable mineral reserves at December 31, 2013, by geographic location (refer to “Mining Operations” for further discussion):

	Copper	Gold	Molybdenum	Silver	Cobalt
North America	33%	1%	78%	28%	—
South America	33%	4%	22%	35%	—
Indonesia	27%	95%	—	37%	—
Africa	7%	—	—	—	100%
	100%	100%	100%	100%	100%

In North America, we have seven operating copper mines – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico, and two operating molybdenum mines – Henderson and Climax in Colorado. In addition to copper, certain of our North America copper mines also produce molybdenum concentrates.

In South America, we have four operating copper mines – Cerro Verde in Peru, and El Abra, Candelaria and Ojos del Salado in Chile. In addition to copper, the Cerro Verde mine also produces molybdenum concentrates, and the Candelaria and Ojos del Salado mines produce gold and silver.

In Indonesia, our subsidiary PT-FI operates the mines in the Grasberg minerals district. In addition to copper, the Grasberg minerals district also produces significant quantities of gold and silver.

In Africa, our subsidiary Tenke Fungurume Mining S.A.R.L. (TFM) operates the mines in the Tenke minerals district. In addition to copper, the Tenke minerals district also produces cobalt hydroxide.

Following is a summary of our consolidated copper, gold and molybdenum production for the year 2013 by geographic location (refer to "Mining Operations" for further information):

	Copper	Gold	Molybdenum
North America	35%	1%	86%
South America	32%	8%	14%
Indonesia	22%	91%	—
Africa	11%	—	—
	100%	100%	100%

The locations of our operating mines are shown on the world map below.

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Oil and Gas

At December 31, 2013, our estimated proved oil and natural gas reserves totaled 464 million barrels of oil equivalents (MMBOE). All of our proved oil and natural gas reserves were located in the U.S., with 80 percent comprised of oil (including natural gas liquids, or NGLs) and 66 percent represented by proved developed reserves. Refer to “Oil and Gas Operations” for further discussion.

Our oil and gas operations include oil production facilities and growth potential in the Deepwater Gulf of Mexico (GOM), oil production from the onshore Eagle Ford shale play in Texas, oil production facilities onshore and offshore California, onshore natural gas resources in the Haynesville shale play in Louisiana, natural gas production from the Madden area in central Wyoming, and an industry-leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana.

The locations of our U.S. oil and gas operations are shown on the map below:

COPPER, GOLD, MOLYBDENUM AND OIL

Following provides a brief discussion of our primary natural resources, copper, gold, molybdenum and oil. For further discussion of historical market prices of these metals refer to MD&A.

Copper

Copper is an internationally traded commodity, and its prices are determined by the major metals exchanges – the London Metal Exchange (LME), New York Mercantile Exchange (NYMEX) and Shanghai Futures Exchange (SHFE). Prices on these exchanges generally reflect the worldwide balance of copper supply and demand, and can be volatile and cyclical. During 2013, LME spot copper prices ranged from a low of $3.01 per pound to a high of $3.74 per pound and averaged $3.31 per pound. In general, demand for copper reflects the rate of underlying world economic growth, particularly in industrial production and construction. According to Wood Mackenzie, a widely followed independent metals market consultant, copper’s end-use markets (and their estimated shares of total consumption) are:

Electrical applications	34	%
Construction	31	%
Industrial machinery	13	%
Transportation	13	%
Consumer products	9	%
	100	%

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Gold

Gold is used for jewelry, coinage and bullion as well as various industrial and electronic applications. Gold can be readily sold on numerous markets throughout the world. Benchmark prices are generally based on London Bullion Market Association (London) PM quotations. During 2013, London PM gold prices ranged from a low of $1,192 per ounce to a high of $1,694 per ounce and averaged $1,405 per ounce.

Molybdenum

Molybdenum is a key alloying element in steel and the raw material for several chemical-grade products used in catalysts, lubrication, smoke suppression, corrosion inhibition and pigmentation. Molybdenum, as a high-purity metal, is also used in electronics such as flat-panel displays and in super alloys used in aerospace. Reference prices for molybdenum are available in several publications, including Metals Week, Ryan’s Notes and Metal Bulletin. During 2013, the weekly average price of molybdenum quoted by Metals Week ranged from a low of $9.18 per pound to a high of $11.95 per pound and averaged $10.32 per pound.

Oil

Oil products include transportation fuels, fuel oils for heating and electricity generation, asphalt and road oil, and the feedstocks used to make chemicals, plastics and synthetic materials. The price of crude oil is set in the global marketplace, with prices largely determined by regional benchmarks, including Brent, West Texas Intermediate (WTI) and Light Louisiana Sweet (LLS). Prices generally reflect the worldwide supply and demand balance, and can be volatile. During 2013, the Brent crude oil price ranged from a low of $97.69 per barrel to a high of $118.90 per barrel and averaged $108.68 per barrel.

PRODUCTS AND SALES

FCX’s consolidated revenues for 2013 primarily included sales of copper (69 percent), oil (11 percent), gold (8 percent) and molybdenum (5 percent). Oil sales reflect sales for the seven-month period following the acquisition of our oil and gas operations. Refer to Note 16 for a summary of our consolidated revenues and operating income by business segment and geographic area.

PT-FI's sales to PT Smelting (PT-FI's 25 percent owned copper smelter and refinery in Indonesia - refer to "Mining Operations - Smelting Facilities and Other Mining Properties" for further discussion) represented 8 percent of our consolidated revenues in 2013, and 11 percent in 2012 and 2011. No other customer accounted for more than 10 percent of our consolidated revenues in any of the past three years.

Copper Products

We are one of the world’s leading producers of copper concentrate, cathode and continuous cast copper rod. During 2013, 49 percent of our mined copper was sold in concentrate, 28 percent as cathode and 23 percent as rod.

Our copper ore is generally processed either by smelting and refining or by solution extraction and electrowinning (SX/EW). Before being subject to the smelting and refining process, ore is crushed and treated to produce a copper concentrate with copper content of approximately 20 to 30 percent. Copper concentrate is then smelted (i.e., subjected to extreme heat) to produce copper anodes, which weigh between 800 and 900 pounds each and have an average copper content of 99.5 percent. The anodes are further treated by electrolytic refining to produce copper cathodes, which weigh between 100 and 350 pounds each and have an average copper content of 99.99 percent. For ore subject to the SX/EW process, copper is extracted from the ore by dissolving it with a weak sulphuric acid solution. The copper content of the solution is increased in two additional solution-extraction stages and then the copper-bearing solution undergoes an electrowinning process to produce cathode that is, on average, 99.99 percent copper. Our copper cathodes are used as the raw material input for copper rod, brass mill products and for other uses.

Copper Concentrate.  We produce copper concentrate at eight of our mines, of which PT-FI is our largest producer. In North America, copper concentrate is produced at our Morenci, Bagdad, Sierrita and Chino mines, and is generally shipped to our Miami smelter in Arizona. In South America, we produce copper concentrate at our Cerro Verde, Candelaria and Ojos del Salado mines.

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Copper Cathode.  We produce copper cathode at our electrolytic refinery located in El Paso, Texas, and at 10 of our mines. In North America, SX/EW cathode is produced from our Morenci, Bagdad, Safford, Sierrita, Miami, Chino and Tyrone mines; in South America from our Cerro Verde and El Abra mines; and from the Tenke minerals district in Africa. Atlantic Copper S.L.U. (Atlantic Copper, our wholly owned copper smelting and refining unit in Spain - refer to "Mining Operations - Smelting Facilities and Other Mining Properties" for further discussion) and PT Smelting also produce copper cathode.

Continuous Cast Copper Rod.  We manufacture continuous cast copper rod at our facilities in El Paso, Texas; Norwich, Connecticut; and Miami, Arizona, primarily using copper cathode produced at our North America copper mines.

Copper Sales

North America.  The majority of the copper produced at our North America copper mines and refined in our El Paso, Texas, refinery is consumed at our rod plants. The remainder of our North America copper production is sold in the form of copper cathode or copper concentrate under U.S. dollar-denominated annual contracts. Cathode and rod contract prices are generally based on the prevailing Commodity Exchange Inc. (COMEX - a division of NYMEX) monthly average spot price for the month of shipment and include a premium. Generally, copper rod is sold to wire and cable manufacturers, while cathode is sold to rod, brass or tube fabricators. During 2013, four percent of our North America mines' copper sales volumes were shipped to Atlantic Copper in the form of copper concentrate.

South America. Production from our South America mines is sold as copper concentrate or copper cathode under U.S. dollar-denominated, annual and multi-year contracts. Our South America mines generally sell approximately 60 to 70 percent of copper production in concentrate and the rest as cathode. During 2013, 12 percent of our South America mines' copper sales volumes were shipped to Atlantic Copper in the form of copper concentrate.

Substantially all of South America’s copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average spot copper prices. Revenues from South America’s concentrate sales are recorded net of treatment and refining charges (i.e., fees paid to smelters and refiners that are generally negotiated annually), including any applicable price participation charges that are based on the market price of copper. In addition, because a portion of the metals contained in copper concentrates is unrecoverable from the smelting process, revenues from South America’s concentrate sales are also recorded net of allowances for unrecoverable metals, which are a negotiated term of the contracts and vary by customer.

Indonesia. PT-FI sells its production in the form of copper concentrate, which contains significant quantities of gold and silver, under U.S. dollar-denominated, long-term contracts. PT-FI also sells a small amount of copper concentrates in the spot market. Following is a summary of PT-FI’s aggregate percentage concentrate sales to PT Smelting, Atlantic Copper and third parties for the last three years:

	2013		2012		2011
PT Smelting	41	%	52	%	44	%
Atlantic Copper	9	%	11	%	10	%
Third parties	50	%	37	%	46	%
	100	%	100	%	100	%

Substantially all of PT-FI’s concentrate sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average spot copper prices. Revenues from PT-FI’s concentrate sales are recorded net of royalties, treatment and refining charges, and allowances for unrecoverable metals.

Africa.  TFM sells its production in the form of copper cathode under U.S. dollar-denominated contracts. Substantially all of TFM's cathode sales provide final copper pricing in the month after the shipment date based on quoted LME monthly average spot copper prices. Revenues from TFM's cathode sales are recorded net of royalties and also include adjustments for point-of-sale transportation costs that are negotiated in customer contracts.

Gold Products and Sales

We produce gold, mostly from the Grasberg minerals district. Gold is primarily sold as a component of our copper concentrate or in slimes, which are a product of the smelting and refining process. Gold generally is priced at the average London price for a specified month near the month of shipment. Revenues from gold sold as a component

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of our copper concentrate are recorded net of treatment and refining charges. Revenues from gold sold in slimes are recorded net of refining charges.

Molybdenum Products and Sales

We are the world’s largest producer of molybdenum and molybdenum-based chemicals. In addition to production from our Henderson and Climax molybdenum mines, we produce molybdenum concentrate at certain of our North America copper mines, and at our Cerro Verde copper mine in Peru. The majority of our molybdenum concentrates are processed in our own conversion facilities. Molybdenum generally is priced based on the average Metals Week price for the month prior to the month of shipment.

Cobalt and Silver Products and Sales

We produce cobalt hydroxide at the Tenke minerals district. Cobalt hydroxide is priced at a discount to the average monthly low price published by Metal Bulletin for a specified month near the month of shipment. Beginning in 2014, we will begin using LME-based pricing for our cobalt hydroxide sales contracts.

We also produce silver as a component of our copper concentrate or in slimes. Silver generally is priced at the average London price for a specified month near the month of shipment.

Oil and Gas Products and Sales

We produce and sell oil and gas throughout the U.S. Our oil production is primarily sold under contracts with prices based upon regional benchmarks. Approximately 50 percent of our gas production is sold monthly based on published index pricing, with the remainder priced daily on the spot market.

Approximately 68 percent of our California production is attributable to heavy crude oil, which is primarily sold under a long-term contract with prices based upon regional benchmarks. We sell a large portion of our Eagle Ford production to third parties using a LLS-based pricing mechanism. In the GOM, our share of oil and gas production is sold under a series of contracts pursuant to which crude oil is sold directly to refineries in the Gulf Coast regions of Texas and Louisiana at prices based on widely-used industry benchmarks.

LABOR MATTERS

At December 31, 2013, we employed approximately 36,100 people (13,300 in the U.S., 12,300 in Indonesia, 5,800 in South America, 3,300 in Africa and 1,400 in Europe and other locations). Additionally, we have contractors that have personnel at many of our operations, including approximately 19,400 at our Grasbergminerals district, 12,800 at our South America mining operations, 3,800 at our Tenke minerals district, 1,900 in the U.S. and 500 in Europe and other locations. The number of employees represented by unions at December 31, 2013, and the expiration date of the applicable union agreements are listed below. Refer to Item 1A. "Risk Factors" for further information on labor matters.

Location	Number of Unions	Number of Union- Represented Employees	Expiration Date
PT-FI – Indonesia	1	9,356	September 2015
TFM – DRC	6	3,327	N/A	a
Cerro Verde – Peru	2	1,846	August 2018	b
El Abra – Chile	2	1,007	May 2016
Candelaria – Chile	2	904	December 2016
Atlantic Copper – Spain	2	450	December 2015
Kokkola - Finland	3	410	November 2016
Chino – New Mexico	1	352	November 2014
Rotterdam – The Netherlands	2	62	March 2015
Aurex – Chile	1	38	December 2017
Bayway – New Jersey	1	37	April 2016
Stowmarket – United Kingdom	1	31	May 2014

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a. The Collective Labor Agreement (CLA) between TFM and its workers’ unions has no expiration date, but can be amended at any time in accordance with an established process. Additionally, in September 2012 TFM negotiated a 4-year salary scale with union-represented employees.

b. In November 2013, Cerro Verde signed a new four-year CLA, which is effective September 1, 2014, upon the expiration of the current agreement.

ENVIRONMENTAL AND RECLAMATION MATTERS

The cost of complying with environmental laws is a fundamental and substantial cost of our business. For information about environmental regulation, litigation and related costs, refer to Item 1A. “Risk Factors” and Notes 1 and 12.

COMPETITION

The top 10 producers of copper comprise approximately 50 percent of total worldwide mined copper production. We currently rank second among those producers, with approximately eight percent of total worldwide estimated mined copper production. Our competitive position is based on the size, quality and grade of our ore bodies and our ability to manage costs compared with other producers. We have a diverse portfolio of mining operations with varying ore grades and cost structures. Our costs are driven by the location, grade and nature of our ore bodies and the level of input costs, including energy, labor and equipment. The metals markets are cyclical and our ability to maintain our competitive position over the long term is based on our ability to acquire and develop quality deposits, hire and retain a skilled workforce and to manage our costs.

Within the oil and gas industry, our competitors include national and international oil companies, major integrated oil and gas companies, numerous independent oil and gas companies and others. There is substantial competition in the oil and gas industry. Our ability to identify and successfully develop additional prospects and to discover oil and gas reserves in the future will depend on our ability to evaluate and select suitable properties, consummate transactions and manage our operations in a cost-efficient and effective manner in a highly competitive environment.

MINING OPERATIONS

Following are maps and descriptions of our mining operations in North America (including both copper and molybdenum operations), South America, Indonesia and Africa.

North America

In the U.S., most of the land occupied by our copper and molybdenum mines, concentrators, SX/EW facilities, smelter, refinery, rod mills, molybdenum roasters and processing facilities is generally owned by us or is located on unpatented mining claims owned by us. Certain portions of our Bagdad, Sierrita, Miami, Chino, Tyrone, Henderson and Climax operations are located on government-owned land and are operated under a Mine Plan of Operations or other use permit. Various federal and state permits or leases on government land are held for purposes incidental to mine operations.

Morenci

We own an 85 percent undivided interest in Morenci, with the remaining 15 percent owned by affiliates of Sumitomo Corporation. Each partner takes in kind its share of Morenci’s production.

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Morenci is an open-pit copper mining complex that has been in continuous operation since 1939 and previously was mined through underground workings. Morenci is located in Greenlee County, Arizona, approximately 50 miles northeast of Safford on U.S. Highway 191. The site is accessible by a paved highway and a railway spur.

The Morenci mine is a porphyry copper deposit that has oxide and secondary sulfide mineralization, and primary sulfide mineralization. The predominant oxide copper mineral is chrysocolla. Chalcocite is the most important secondary copper sulfide mineral with chalcopyrite as the dominant primary copper sulfide.

The Morenci operation consists of a 50,000 metric ton-per-day concentrator, that produces copper and molybdenum concentrates; a 68,000 metric ton-per-day crushed-ore leach pad and stacking system; a low-grade run-of-mine (ROM) leaching system; four SX plants; and three EW tank houses that produce copper cathode. Total EW tank house capacity is approximately 900 million pounds of copper per year. Morenci’s concentrate leach, direct-electrowinning facility was commissioned in 2007 and processed copper concentrate until early 2009 when it was placed on care-and-maintenance status. The available mining fleet consists of one hundred and seven 236-metric ton haul trucks loaded by 12 shovels with bucket sizes ranging from 47 to 57 cubic meters, which are capable of moving an average of 815,000 metric tons of material per day.

Morenci’s production, including our joint venture partner’s share, totaled 664 million pounds of copper and 2 million pounds of molybdenum in 2013, 632 million pounds of copper and 3 million pounds of molybdenum in 2012, and 614 million pounds of copper and 2 million pounds of molybdenum in 2011.

Morenci is expanding mining and milling capacity to process additional sulfide ores identified through exploratory drilling. The project is targeting incremental annual production (net of our joint venture partner's share) of approximately 225 million pounds of copper beginning in 2014 through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day. Refer to “Mining Development Projects and Exploration” for further discussion.

Morenci is located in a desert environment with rainfall averaging 13 inches per year. The highest bench elevation is 2,000 meters above sea level and the ultimate pit bottom is expected to have an elevation of 840 meters above sea level. The Morenci operation encompasses approximately 64,750 acres, comprising 50,800 acres of patented mining claims and other fee lands, 10,900 acres of unpatented mining claims and 3,050 acres of land held by state or federal permits, easements and rights-of-way.

The Morenci operation's electrical power is primarily sourced from Tucson Electric Power Company, Arizona Public Service Company and the Luna Energy facility (in which we own a one-third interest) in Deming, New Mexico. Although we believe the Morenci operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water rights claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Morenci operation. Refer to Item 1A. "Risk Factors" and Item 3. “Legal Proceedings” for further discussion.

Bagdad

Our wholly owned Bagdad mine is an open-pit copper and molybdenum mining complex located in Yavapai County in west-central Arizona. It is approximately 60 miles west of Prescott and 100 miles northwest of Phoenix. The property can be reached by Arizona Highway 96, which ends at the town of Bagdad. The closest railroad is at

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Hillside, Arizona, approximately 24 miles southeast on Arizona Highway 96. The open-pit mining operation has been ongoing since 1945, and prior mining was conducted through underground workings.

The Bagdad mine is a porphyry copper deposit containing both sulfide and oxide mineralization. Chalcopyrite and molybdenite are the dominant primary sulfides and are the primary economic minerals in the mine. Chalcocite is the most common secondary copper sulfide mineral, and the predominant oxide copper minerals are chrysocolla, malachite and azurite.

The Bagdad operation consists of a 75,000 metric ton-per-day concentrator that produces copper and molybdenum concentrates, an SX/EW plant that can produce up to 25 million pounds per year of copper cathode from solution generated by low-grade stockpile leaching, and a pressure leach plant to process molybdenum concentrates. The available mining fleet consists of thirty 235-metric ton haul trucks loaded by five shovels with bucket sizes ranging from 44 to 62 cubic meters, which are capable of moving an average of 200,000 metric tons of material per day.

Bagdad’s production totaled 216 million pounds of copper and 8 million pounds of molybdenum in 2013, 197 million pounds of copper and 10 million pounds of molybdenum in 2012, and 194 million pounds of copper and 10 million pounds of molybdenum in 2011.

Bagdad is located in a desert environment with rainfall averaging 15 inches per year. The highest bench elevation is 1,200 meters above sea level and the ultimate pit bottom is expected to be 310 meters above sea level. The Bagdad operation encompasses approximately 21,750 acres, comprising 21,150 acres of patented mining claims and other fee lands and 600 acres of unpatented mining claims.

Bagdad receives electrical power from Arizona Public Service Company. Although we believe the Bagdad operation has sufficient water sources to support current operations, we are a party to litigation that may set legal precedents, which could adversely affect our water rights at Bagdad and at our other properties in Arizona. Refer to Item 1A. "Risk Factors" and Item 3. “Legal Proceedings” for further discussion.

Safford

Our wholly owned Safford mine has been in operation since 2007 and is an open-pit copper mining complex located in Graham County, Arizona, approximately eight miles north of the town of Safford and 170 miles east of Phoenix. The site is accessible by paved county road off U.S. Highway 70.

The Safford mine includes two copper deposits that have oxide mineralization overlaying primary copper sulfide mineralization. The predominant oxide copper minerals are chrysocolla and copper-bearing iron oxides with the predominant copper sulfide material being chalcopyrite.

The property is a mine-for-leach project and produces copper cathodes. The operation consists of two open pits feeding a crushing facility with a capacity of 103,000 metric tons per day. The crushed ore is delivered to leach pads by a series of overland and portable conveyors. Leach solutions feed a SX/EW facility with a capacity of 240 million pounds of copper per year. A sulphur burner plant is also in operation at Safford, providing a cost-effective source of sulphuric acid used in SX/EW operations. The available mining fleet consists of twenty 235-metric ton haul trucks loaded by four shovels with bucket sizes ranging from 31 to 34 cubic meters, which are capable of moving an average of 225,000 metric tons of material per day.

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Safford’s copper production totaled 146 million pounds in 2013, 175 million pounds in 2012 and 151 million pounds in 2011.

Safford is located in a desert environment with rainfall averaging 10 inches per year. The highest bench elevation is 1,250 meters above sea level and the ultimate pit bottom is expected to have an elevation of 750 meters above sea level. The Safford operation encompasses approximately 25,000 acres, comprising 21,000 acres of patented lands, 3,950 acres of unpatented lands and 50 acres of land held by federal permit.

The Safford operation’s electrical power is primarily sourced from Tucson Electric Power Company, Arizona Public Service Company and the Luna Energy facility. Although we believe the Safford operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Safford operation. Refer to Item 1A. "Risk Factors" and Item 3. “Legal Proceedings” for further discussion.

Sierrita

Our wholly owned Sierrita mine has been in operation since 1959 and is an open-pit copper and molybdenum mining complex located in Pima County, Arizona, approximately 20 miles southwest of Tucson and seven miles west of the town of Green Valley and Interstate Highway 19. The site is accessible by a paved highway and by rail.

The Sierrita mine is a porphyry copper deposit that has oxide and secondary sulfide mineralization, and primary sulfide mineralization. The predominant oxide copper minerals are malachite, azurite and chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite are the dominant primary sulfides.

The Sierrita operation includes a 102,000 metric ton-per-day concentrator that produces copper and molybdenum concentrates. Sierrita also produces copper from a ROM oxide-leaching system. Cathode copper is plated at the Twin Buttes EW facility, which has a design capacity of approximately 50 million pounds of copper per year. The Sierrita operation also has a copper sulfate crystal plant, which has the capacity to produce 40 million pounds of copper sulfate per year, and molybdenum facilities consisting of a leaching circuit, two molybdenum roasters and a packaging facility. The molybdenum facilities process molybdenum concentrate produced by Sierrita, from our other mines and from third-party sources. The available mining fleet consists of twenty-five 235-metric ton haul trucks loaded by four shovels with bucket sizes ranging from 34 to 56 cubic meters, which are capable of moving an average of 200,000 metric tons of material per day.

Sierrita’s production totaled 171 million pounds of copper and 20 million pounds of molybdenum in 2013, 157 million pounds of copper and 21 million pounds of molybdenum in 2012, and 177 million pounds of copper and 23 million pounds of molybdenum in 2011.

Sierrita is located in a desert environment with rainfall averaging 12 inches per year. The highest bench elevation is 1,160 meters above sea level and the ultimate pit bottom is expected to be 440 meters above sea level. The Sierrita operation, including the adjacent Twin Buttes site (refer to "Smelting Facilities and Other Mining Properties" for further discussion), encompasses approximately 37,650 acres, comprising 13,300 acres of patented mining claims and 24,350 acres of split-estate lands.

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Sierrita receives electrical power through long-term contracts with the Tucson Electric Power Company. Although we believe the Sierrita operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water rights claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Sierrita operation. Refer to Item 1A. "Risk Factors" and Item 3. “Legal Proceedings” for further discussion.

Miami

Our wholly owned Miami mine is an open-pit copper mining complex located in Gila County, Arizona, approximately 90 miles east of Phoenix and six miles west of the city of Globe on U.S. Highway 60. The site is accessible by a paved highway and by rail.

The Miami mine is a porphyry copper deposit that has leachable oxide and secondary sulfide mineralization. The predominant oxide copper minerals are chrysocolla, copper-bearing clays, malachite and azurite. Chalcocite and covellite are the most important secondary copper sulfide minerals.

Since about 1915, the Miami mining operation had processed copper ore using both flotation and leaching technologies. Current operations include leaching by the SX/EW process. The design capacity of the SX/EW plant is 200 million pounds of copper per year. The available mining fleet consists of twelve 227-metric ton haul trucks loaded by three shovels with bucket sizes ranging from 31 to 34 cubic meters, which are capable of moving an average of 95,000 metric tons of material per day.

Miami’s copper production totaled 61 million pounds in 2013 and 66 million pounds in both 2012 and 2011.

Miami is located in a desert environment with rainfall averaging 18 inches per year. The highest bench elevation is 1,390 meters above sea level, and the ultimate pit bottom will have an elevation of 810 meters above sea level. The Miami operation encompasses approximately 9,100 acres, comprising 8,750 acres of patented mining claims and other fee lands and 350 acres of unpatented mining claims.

Miami receives electrical power through long-term contracts with the Salt River Project and natural gas through long-term contracts with El Paso Natural Gas as the transporter. Although we believe the Miami operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Miami operation. Refer to Item 1A. "Risk Factors" and Item 3. “Legal Proceedings” for further discussion.

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Chino and Tyrone

Chino

Our wholly owned Chino mine is an open-pit copper mining complex located in southwestern New Mexico in Grant County, approximately 15 miles east of the town of Silver City off of State Highway 180. The mine is accessible by paved roads and by rail. Chino has been in operation since 1910.

The Chino mine is a porphyry copper deposit with adjacent copper skarn deposits. There is leachable oxide and secondary sulfide mineralization, and millable primary sulfide mineralization. The predominant oxide copper minerals are chrysocolla and azurite. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite the dominant primary sulfides.

The Chino operation consists of a 36,000 metric ton-per-day concentrator that produces copper and molybdenum concentrates, and a 150 million pound-per-year SX/EW plant that produces copper cathode from solution generated by ROM leaching. The available mining fleet consists of thirty-five 240-metric ton haul trucks loaded by four shovels with bucket sizes ranging from 42 to 48 cubic meters, which are capable of moving an average of 220,000 metric tons of material per day.

Ramp up activities at Chino are continuing, with production of approximately 250 million pounds of copper per year targeted in 2014. Chino's production totaled 171 million pounds of copper and 2 million pounds of molybdenum in 2013, 144 million pounds of copper and 2 million pounds of molybdenum in 2012, and 69 million pounds of copper in 2011.

Chino is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,250 meters above sea level, and the ultimate pit bottom is expected to be 1,500 meters above sea level. The Chino operation encompasses approximately 118,600 acres, comprising 113,200 acres of patented mining claims and other fee lands and 5,400 acres of unpatented mining claims.

Chino receives power from the Luna Energy facility and from the open market. We believe Chino has sufficient water resources to support current operations.

Tyrone

Our wholly owned Tyrone mine is an open-pit copper mining complex which has been in operation since 1967. It is located in southwestern New Mexico in Grant County, approximately 10 miles south of Silver City, New Mexico, along State Highway 90. The site is accessible by paved road and rail.

The Tyrone mine is a porphyry copper deposit. Mineralization is predominantly secondary sulfide consisting of chalcocite with leachable oxide mineralization consisting of chrysocolla.

Copper processing facilities consist of a SX/EW operation with a maximum capacity of approximately 100 million pounds of copper cathodes per year. The available mining fleet consists of nineteen 240-metric ton haul trucks loaded by three shovels with bucket sizes ranging from 17 to 47 cubic meters, which are capable of moving an average of 135,000 metric tons of material per day.

Tyrone’s copper production totaled 96 million pounds in 2013, 83 million pounds in 2012 and 76 million pounds in 2011.

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Tyrone is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,000 meters above sea level and the ultimate pit bottom is expected to have an elevation of 1,500 meters above sea level. The Tyrone operation encompasses approximately 35,200 acres, comprising 18,750 acres of patented mining claims and other fee lands and 16,450 acres of unpatented mining claims.

Tyrone receives electrical power from the Luna Energy facility and from the open market. We believe the Tyrone operation has sufficient water resources to support current operations.

Henderson and Climax

Henderson

Our wholly owned Henderson molybdenum mine has been in operation since 1976 and is located approximately 42 miles west of Denver, Colorado, off U.S. Highway 40. Nearby communities include the towns of Empire, Georgetown and Idaho Springs. The Henderson mill site is located approximately 15 miles west of the mine and is accessible from Colorado State Highway 9. The Henderson mine and mill are connected by a 10-mile conveyor tunnel under the Continental Divide and an additional five-mile surface conveyor. The tunnel portal is located five miles east of the mill.

The Henderson mine is a porphyry molybdenum deposit with molybdenite as the primary sulfide mineral.

The Henderson operation consists of a large block-cave underground mining complex feeding a concentrator with a current capacity of approximately 32,000 metric tons per day. Henderson has the capacity to produce approximately 40 million pounds of molybdenum per year. The majority of the molybdenum concentrate produced is shipped to our Fort Madison, Iowa, processing facility. The available underground mining equipment fleet consists of fourteen 9-metric ton load-haul-dump (LHD) units and six 73-metric ton haul trucks, which deliver ore to a gyratory crusher feeding a series of three overland conveyors to the mill stockpiles.

Henderson’s molybdenum production totaled 30 million pounds in 2013, 34 million pounds in 2012 and 38 million pounds in 2011.

The Henderson mine is located in a mountainous region with the main access shaft at 3,180 meters above sea level. The main production levels are currently at elevations of 2,200 and 2,350 meters above sea level. This region experiences significant snowfall during the winter months.

The Henderson mine and mill operations encompass approximately 11,900 acres, comprising 11,850 acres of patented mining claims and other fee lands and a 50-acre easement with the U.S. Forest Service for the surface portion of the conveyor corridor.

Henderson operations receive electrical power through long-term contracts with Xcel Energy and natural gas through long-term contracts with BP Energy Company (with Xcel Energy as the transporter). We believe the Henderson operation has sufficient water resources to support current operations.

Climax

Our wholly owned Climax mine is located 13 miles northeast of Leadville, Colorado, off Colorado State Highway 91 at the top of Fremont Pass. The mine is accessible by paved roads.

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The Climax ore body is a porphyry molybdenum deposit with molybdenite as the primary sulfide mineral.

The Climax open-pit mine was commissioned in second-quarter 2012 and includes a 25,000 metric ton-per-day mill facility. The available mining fleet consists of nine 177-metric ton haul trucks loaded by two hydraulic shovels with bucket sizes of 34 cubic meters, which are capable of moving an average of 90,000 metric tons of material per day.

Molybdenum production from Climax totaled 19 million pounds in 2013 and 7 million pounds in 2012 (reflecting production since the start of commercial operations in May 2012).

The Climax mine is located in a mountainous region with snowfall averaging 23 feet per year. The highest bench elevation is approximately 4,050 meters above sea level, and the ultimate pit bottom is expected to have an elevation of approximately 3,100 meters above sea level. The operations encompass approximately 14,350 acres, consisting primarily of patented mining claims and other fee lands.

Climax operations receive electrical power through long-term contracts with Xcel Energy and natural gas through long-term contracts with BP Energy Company (with Xcel Energy as the transporter). We believe the Climax operation has sufficient water resources to support current operations.

South America

At our operations in South America, mine properties and facilities are controlled through mining claims or concessions under the general mining laws of the relevant country. The claims or concessions are owned or controlled by the operating companies in which we or our subsidiaries have a controlling ownership interest. Roads, power lines and aqueducts are controlled by easements.

Cerro Verde

We have a 53.56 percent ownership interest in Cerro Verde, with the remaining 46.44 percent held by SMM Cerro Verde Netherlands B.V. (21.0 percent), Compañia de Minas Buenaventura S.A.A. (19.58 percent) and other stockholders whose shares are publicly traded on the Lima Stock Exchange (5.86 percent).

Cerro Verde is an open-pit copper and molybdenum mining complex that has been in operation since 1976 and is located 20 miles southwest of Arequipa, Peru. The site is accessible by paved highway. A majority of Cerro Verde’s copper cathode production is sold locally and the remaining copper cathodes and concentrate production are transported approximately 70 miles by truck and rail to the Port of Matarani for shipment to international markets.

The Cerro Verde mine is a porphyry copper deposit that has oxide and secondary sulfide mineralization, and primary sulfide mineralization. The predominant oxide copper minerals are brochantite, chrysocolla, malachite and copper “pitch.” Chalcocite and covellite are the most important secondary copper sulfide minerals. Chalcopyrite and molybdenite are the dominant primary sulfides.

Cerro Verde’s current operation consists of an open-pit copper mine, a 120,000 metric ton-per-day concentrator and SX/EW leaching facilities. Leach copper production is derived from a 39,000 metric ton-per-day crushed leach facility and a ROM leach system. This leaching operation has a capacity of approximately 200 million pounds of copper per year. The available fleet consists of forty-two 230-metric ton haul trucks loaded by four electric shovels with bucket sizes ranging in size from 33 to 53 cubic meters and one hydraulic shovel with a bucket size of 21 cubic meters, which are capable of moving an average of 335,000 metric tons of material per day.

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Cerro Verde’s production totaled 558 million pounds of copper and 13 million pounds of molybdenum in 2013, 595 million pounds of copper and 8 million pounds of molybdenum in 2012, and 647 million pounds of copper and 10 million pounds of molybdenum in 2011.

Construction activities associated with a large-scale expansion at Cerro Verde are in progress, which are expected to expand the concentrator facilities to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. Refer to “Mining Development Projects and Exploration” for further discussion.

Cerro Verde is located in a desert environment with rainfall averaging 1.5 inches per year and is in an active seismic zone. The highest bench elevation is 2,753 meters above sea level and the ultimate pit bottom is expected to be 1,568 meters above sea level. The Peruvian general mining law and Cerro Verde's mining stability agreement grants the surface rights of mining concessions located on government land. Cerro Verde has a mining concession covering approximately 157,000 acres, including 14,500 acres rented from the Regional Government of Arequipa, plus 25 acres of owned property, and 80 acres of rights-of-way outside the mining concession area.

Cerro Verde receives electrical power under long-term contracts with Kallpa Generación SA and Empresa de Generación Eléctrica de Arequipa. Water for our Cerro Verde processing operations comes from renewable sources through a series of storage reservoirs on the Rio Chili watershed that collect water primarily from seasonal precipitation. Cerro Verde’s participation in the Pillones Reservoir Project has secured water rights from the regulated system that we believe will be sufficient to support Cerro Verde’s current operations.

An agreement has been reached with the Regional Government of Arequipa, the National Government, the local water utility company, Servicio de Agua Potable y Alcantarillado de Arequipa S.A. (SEDAPAR), and other local institutions to allow Cerro Verde to finance, engineer and construct a wastewater treatment plant for the city of Arequipa. Cerro Verde has obtained authorization to reuse an annual average of one cubic meter per second of the treated water, which would be used to supplement existing water supplies to support the concentrator expansion.

For further discussion of risks associated with the availability of water, see Item 1A. “Risk Factors.”

El Abra

We own a 51 percent interest in El Abra, and the remaining 49 percent interest is held by the state-owned copper enterprise Corporación Nacional del Cobre de Chile (CODELCO).

El Abra is an open-pit copper mining complex that has been in operation since 1996 and is located 47 miles north of Calama in Chile’s El Loa province, Region II. The site is accessible by paved highway and by rail.

The El Abra mine is a porphyry copper deposit that has sulfide and oxide mineralization. The predominant primary sulfide copper minerals are bornite and chalcopyrite. There is a minor amount of secondary sulfide mineralization

as chalcocite. The oxide copper minerals are chrysocolla and pseudomalachite. There are lesser amounts of copper-bearing clays and tenorite.

The El Abra operation consists of an open-pit copper mine and a SX/EW facility with a capacity of 500 million pounds of copper cathode per year from a 125,000 metric ton-per-day crushed leach circuit and a similar-sized

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ROM leaching operation. The available fleet consists of forty-one 220-metric ton haul trucks loaded by four shovels with buckets ranging in size from 26 to 41 cubic meters, which are capable of moving an average of 223,000 metric tons of material per day.

El Abra’s copper production totaled 343 million pounds in 2013, 338 million pounds in 2012 and 274 million pounds in 2011.

We continue to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Refer to "Mining Development Projects and Exploration" for further discussion.

El Abra is located in a desert environment with rainfall averaging less than one inch per year and is in an active seismic zone. The highest bench elevation is 4,180 meters above sea level and the ultimate pit bottom is expected to be 3,430 meters above sea level. El Abra controls a total of approximately 151,300 acres of mining claims covering the ore deposit, stockpiles, process plant, and water wellfield and pipeline. In addition, El Abra has land surface rights for the road between the processing plant and the mine, the water wellfield, power transmission lines and for the water pipeline from the Salar de Ascotán aquifer.

El Abra currently receives electrical power under a long-term contract with Electroandina. Water for our El Abra processing operations comes from pumping of groundwater from the Salar de Ascotán aquifer pursuant to regulatory approval. We believe El Abra has sufficient water rights to support current operations. For a discussion of risks associated with the availability of water, see Item 1A. “Risk Factors.”

Candelaria and Ojos del Salado

Candelaria

We have an 80 percent ownership interest in Candelaria, with the remaining 20 percent interest owned by affiliates of Sumitomo Corporation.

Candelaria’s open-pit copper mine has been in operation since 1993 and the underground mine has been in operation since 2005. The Candelaria copper mining complex is located approximately 12 miles south of Copiapó in northern Chile’s Atacama province, Region III. The site is accessible by two maintained dirt roads, one coming through the Tierra Amarilla community and the other off of Route 5 of the International Pan-American Highway. Copper concentrates are transported by truck to the Punta Padrones port facility located in Caldera, approximately 50 miles northwest of the mine.

The Candelaria mine is an iron oxide, copper and gold deposit. Primary sulfide mineralization consists of chalcopyrite.

The Candelaria operation consists of an open-pit copper mine and a 6,000 metric ton-per-day underground copper mine, which is mined by sublevel stoping, feeding a 75,000 metric ton-per-day concentrator. The available fleet consists of forty-eight 225-metric ton haul trucks loaded by six shovels with bucket sizes ranging from 28 to 43 cubic meters, which are capable of moving an average of 250,000 metric tons of material per day.

Candelaria’s production totaled 370 million pounds of copper and 87 thousand ounces of gold in 2013, 271 million pounds of copper and 69 thousand ounces of gold in 2012, and 327 million pounds of copper and 85 thousand ounces of gold in 2011.

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Candelaria is located in a desert environment with rainfall averaging less than one inch per year and is in an active seismic zone. The highest bench elevation is 832 meters above sea level and the ultimate pit bottom is expected to be 80 meters below sea level. The Candelaria property encompasses approximately 13,400 acres, including approximately 125 acres for the port facility in Caldera.

Candelaria receives electrical power through long-term contracts with AES Gener S.A., a local energy company. Candelaria’s water supply comes from a nearby wastewater treatment facility and our desalination plant and pipeline that was completed in 2013. We believe that both of these sources will supply Candelaria's long term water needs.

Ojos del Salado

We have an 80 percent ownership interest in Ojos del Salado, with the remaining 20 percent interest owned by affiliates of Sumitomo Corporation.

The Ojos del Salado operation began commercial production in 1929 and consists of two underground copper mines (Santos and Alcaparrosa) and a 3,800 metric ton-per-day concentrator. The operation is located approximately 10 miles east of Copiapó in northern Chile’s Atacama province, Region III, and is accessible by paved highway. The Ojos del Salado mines are iron oxide and copper and gold deposits. Primary sulfide mineralization consists of chalcopyrite.

The Ojos del Salado operation has a capacity of 3,800 metric tons per day of ore from the Santos underground mine and 4,000 metric tons of ore per day from the Alcaparrosa underground mine. The ore from both mines is mined by sublevel stoping since both the ore and enclosing rocks are competent. The broken ore is removed from the stopes using scoops and loaded into an available fleet of twenty-six 28-metric ton trucks, which transport the ore to the surface. The ore from the Santos mine is hauled directly to the Ojos del Salado mill for processing, and the ore from the Alcaparrosa mine is reloaded into six 54-metric ton trucks and hauled seven miles to the Candelaria mill for processing. The Ojos del Salado concentrator has the capacity to produce over 30 million pounds of copper and 9 thousand ounces of gold per year. Tailings from the Ojos del Salado mill are pumped to the Candelaria tailings facility for final deposition. The Candelaria facility has sufficient capacity for the remaining Ojos del Salado tailings.

Ojos del Salado’s production totaled 52 million pounds of copper and 14 thousand ounces of gold in 2013, 53 million pounds of copper and 14 thousand ounces of gold in 2012, and 58 million pounds of copper and 16 thousand ounces of gold in 2011.

Ojos del Salado is located in a desert environment with rainfall averaging less than one inch per year and is in an active seismic zone. The highest underground level is at an elevation of 530 meters above sea level, with the lowest underground level at 40 meters above sea level. The Ojos del Salado mineral rights encompass approximately 15,800 acres, which includes 6,800 acres of owned land in and around the Ojos del

Salado underground mines and plant site.

Ojos del Salado receives electrical power through long-term contracts with AES Gener S.A. Ojos del Salado’s water supply comes from a nearby wastewater treatment facility and our desalination plant and pipeline that was completed in 2013. We believe that both of these sources will supply Ojos del Salado's long term water needs.

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Indonesia

Ownership. PT-FI is a limited liability company organized under the laws of the Republic of Indonesia and incorporated in Delaware. We directly own 81.28 percent of the outstanding common stock of PT-FI and indirectly own 9.36 percent through our wholly owned subsidiary, PT Indocopper Investama; the Indonesian government owns the remaining 9.36 percent.

We have established certain unincorporated joint ventures with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and future production exceeding specified annual amounts of copper, gold and silver. Refer to Note 3 for further discussion of our joint ventures with Rio Tinto.

We also conducted exploration activities in Papua, Indonesia through two other entities: PT Nabire Bakti Mining (PTNBM) and PT Irja Eastern Minerals (Eastern Minerals), of which we own 100 percent. As further discussed below, we have begun the process to terminate the Contracts of Work (COW) for PTNBM and Eastern Minerals and to return the exploration areas to the Indonesian government.

Contracts of Work. PT-FI conducts its current exploration and mining operations in Indonesia through a COW with the Indonesian government. The COW governs our rights and obligations relating to taxes, exchange controls, royalties, repatriation and other matters, and was concluded pursuant to the 1967 Foreign Capital Investment Law, which expresses Indonesia’s foreign investment policy and provides basic guarantees of remittance rights and protection against nationalization, a framework for economic incentives and basic rules regarding other rights and obligations of foreign investors. Specifically, the COW provides that the Indonesian government will not nationalize or expropriate PT-FI’s mining operations. Any disputes regarding the provisions of the COW are subject to international arbitration; however, we have not had an arbitration during the more than 40 years we have operated in Indonesia.

PT-FI’s original COW was entered into in 1967 and was replaced by a new COW in 1991. The initial term of the current COW expires in 2021, but can be extended for two 10-year periods subject to Indonesian government approval, which pursuant to the COW cannot be withheld or delayed unreasonably. The COW allows us to conduct exploration, mining and production activities in the 24,700-acre Block A area, which is where all of PT-FI’s proven and probable mineral reserves and current mining operations are located. Under the COW, PT-FI also conducts exploration activities in the Block B area. We expect the Block B area to be reduced to approximately 413,000 acres once the Department of Energy and Mineral Resources (DEMR) formally accepts PT-FI's relinquishment of approximately 89,000 acres, and further relinquishments may result from the COW evaluation process discussed in Note 13.

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PT-FI pays royalties on copper, gold and silver under its COW, and has agreed to pay additional royalties to the Indonesian government that are not required under its COW. The additional royalties provide further support to the local governments and to the people of the Indonesian province of Papua. PT-FI’s share of the combined royalties totaled $109 million in 2013, $93 million in 2012 and $137 million in 2011.

Under a joint venture agreement through PTNBM, we were allowed to conduct exploration activities under a separate COW on three parcels contiguous to PT-FI’s Block B and one of Eastern Minerals’ blocks. Since 2011, we have made a number of requests of the DEMR, including suspension of activities for the COW, while awaiting receipt of permits from the Indonesian government's Department of Forestry that would allow us to resume exploration activities. In September 2013, we received notification from the DEMR advising us to lodge a completed feasibility study within 30 days and enter into the construction period within the COW timeline. However, since we had not completed our exploration program, we were unable to comply. The letter was in effect, a denial of our previously unanswered requests, resulting in a decision to terminate the COW. We have initiated actions required under the COW that will result in its formal termination.

Eastern Minerals is allowed to conduct exploration in Papua through a joint venture agreement under a separate COW. The situation with the Eastern Minerals COW is similar to that of PTNBM, and we expect to receive a similar response from the DEMR. Because of this expected outcome, we have notified the DEMR of our intentions to terminate the COW and have initiated the formal termination process.

In 2009, Indonesia enacted a mining law (2009 Mining Law), which operates under a licensing system that is significantly less protective of licensees than the contract of work system that governs PT-FI, Eastern Minerals and PTNBM. The 2009 Mining Law and the regulations issued pursuant to that law provide that contracts of work would continue to be honored until their expiration. However, the regulations, including those issued in January 2014, attempt to apply certain provisions of the 2009 Mining Law and regulations to existing contracts of work and seek to apply the licensing system to any extension periods of contracts of work.

In January 2012, the President of Indonesia issued a decree calling for the creation of a team of Ministers to evaluate contracts of work for adjustment to the 2009 Mining Law and to take steps to assess and determine the Indonesian government's position on reduction to the size of contract concessions, increasing government revenues and domestic processing of minerals. We have been engaged in discussions with officials of the Indonesian government to complete this evaluation process and obtain an extension of the PT-FI COW beyond its primary term ending in 2021 to 2041, as provided under the terms of the COW, which can only be modified by mutual agreement between PT-FI and the Indonesian government. Refer to Item 1A. "Risk Factors" for further discussion.

In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates in the amount of 25 percent in 2014, rising to 60 percent by mid-2016. PT-FI’s COW authorizes it to export concentrates and specifies the taxes and other fiscal terms available to its operations. The COW states that PT-FI shall not be subject to taxes, duties or fees subsequently imposed or approved by the Indonesian government except as expressly provided in the COW. Additionally, PT-FI complied with the requirements of its COW for local processing by arranging for the construction and commissioning of Indonesia's only copper smelter and refinery, which is owned and operated by PT Smelting (refer to "Smelting Facilities and Other Mining Properties").

The January 2014 regulations conflict with PT-FI’s contractual rights under its COW. We are working with the Indonesian government to clarify the situation and to defend PT-FI's rights under its COW. PT-FI is also seeking to obtain the required administrative permits for 2014 exports, which have been delayed as a result of the new regulations.

As of February 21, 2014, PT-FI has not obtained administrative approval for 2014 exports. PT-FI has implemented near-term changes to its operations to coordinate its concentrate production with PT Smelting’s operating plans. Since mid-January 2014, PT-FI’s milling rate has averaged approximately 112,000 metric tons of ore per day, which is approximately half of normal rates. PT-FI is engaging with the government of Indonesia to reach a resolution that would enable PT-FI to resume normal operations as soon as possible. In the event that PT-FI is unable to resume normal operations for an extended period, we plan to consider further actions, including constraining operating

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costs, deferring capital expenditures and implementing workforce reductions. PT-FI may also be required to declare force majeure under its concentrate sales agreements.

Grasberg Minerals District.  PT-FI operates in the remote highlands of the Sudirman Mountain Range in the province of Papua, Indonesia, which is on the western half of the island of New Guinea. We and our predecessors have been the only operator of exploration and mining activities in Block A since 1967.

The Grasberg minerals district has three operating mines: the Grasberg open pit, the Deep Ore Zone (DOZ) underground mine and the Big Gossan underground mine. We also have several projects in progress in the Grasberg minerals district related to the development of the large-scale, long-lived, high-grade underground ore bodies located beneath and nearby the Grasberg open pit. In aggregate, these underground ore bodies are expected to ramp up over several years to produce approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in 2017. Refer to “Mining Development Projects and Exploration” for further discussion.

PT-FI’s production, including our joint venture partner’s share, totaled 928 million pounds of copper and 1.14 million ounces of gold in 2013, 695 million pounds of copper and 862 thousand ounces of gold in 2012 and 882 million pounds of copper and 1.44 million ounces of gold in 2011.

Our principal source of power for all our Indonesian operations is a coal-fired power plant that we built in 1998. Diesel generators supply peaking and backup electrical power generating capacity. A combination of naturally occurring mountain streams and water derived from our underground operations provides water for our operations. Our Indonesian operations are in an active seismic zone and experience average annual rainfall of approximately 200 inches.

Grasberg Open Pit  

We began open-pit mining of the Grasberg ore body in 1990, with mining operations expected to continue through early 2017. Production in the open pit is currently at the 3,190- to 3,940- meter elevation level and totaled 46 million metric tons of ore in 2013, which provided 71 percent of PT-FI's 2013 mill feed.

The current open-pit equipment fleet consists of over 500 units. The larger mining equipment directly associated with production includes an available fleet of 157 haul trucks with payloads ranging from 218 to 330 metric tons and 16 shovels with bucket sizes ranging from 30 to 42 cubic meters, which mined an average of 381,000 metric tons of material per day during 2013, 399,000 metric tons per day in 2012 and 486,000 metric tons per day in 2011.

Grasberg crushing and conveying systems are integral to the mine and provide the capacity to transport up to 250,000 metric tons per day of Grasberg ore to the mill and 150,000 metric tons per day of overburden to the overburden stockpiles. The remaining overburden is moved by haul trucks.

DOZ underground mine

The DOZ ore body lies vertically below the now depleted Intermediate Ore Zone. We began production from the DOZ ore body in 1989 using open stope mining methods, but suspended production in 1991 in favor of production from the Grasberg open pit. Production resumed in September 2000 using the block-cave method and is at the 3,110-meter elevation level. Production from the DOZ mine averaged 49,400 metric tons of ore per day for the year 2013 and is expected to ramp up to the design rate of 80,000 metric tons of ore per day during 2014 pending approval of export permits as described above. Production at the DOZ mine is expected to continue through 2019.

The DOZ mine fleet consists of over 200 pieces of mobile heavy equipment, which is capable of mining an average of 80,000 metric tons of material per day. The primary mining equipment directly associated with production and development includes an available fleet of 44 LHD units and 20 haul trucks. Each production LHD unit typically carries approximately 11 metric tons of ore. Using ore passes and chutes, the LHD units transfer ore into 55-metric ton capacity haul trucks. The trucks dump into two gyratory crushers and the ore is then conveyed to the surface stockpiles for processing.

The success of the development of the DOZ mine, one of the world’s largest underground mines, provides confidence in the future development of PT-FI’s large-scale undeveloped underground ore bodies.

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Big Gossan underground mine

The Big Gossan mine lies underground and adjacent to the current mill site. It is a tabular, near vertical ore body with approximate dimensions of 1,200 meters along strike and 800 meters down dip with varying thicknesses from 20 meters to 120 meters. The mine utilizes a blasthole stoping method with delayed paste backfill. Stopes of varying sizes are mined and the ore dropped down passes to a truck haulage level. Trucks are chute loaded and transport the ore to a jaw crusher. The crushed ore is then hoisted vertically via a two-skip production shaft to a level where it is loaded onto a conveyor belt. The belt carries the ore to one of the main underground conveyors where the ore is transferred and conveyed to the surface stockpiles for processing.

The Big Gossan underground mine averaged 2,100 metric tons of ore per day for the year 2013 and is expected to ramp up to 7,000 metric tons of ore per day by 2016. Although development activities continue, production from the Big Gossan underground mine is currently suspended pending resolution of the export regulatory matter discussed above.

The Big Gossan underground mine fleet consists of over 70 pieces of mobile heavy equipment, which includes 11 loaders and eight trucks used in development and production activities.

Description of Ore Bodies. Our Indonesia ore bodies are located within and around two main igneous intrusions, the Grasberg monzodiorite and the Ertsberg diorite. The host rocks of these ore bodies include both carbonate and clastic rocks that form the ridge crests and upper flanks of the Sudirman Range, and the igneous rocks of monzonitic to dioritic composition that intrude them. The igneous-hosted ore bodies (the Grasberg open pit and block cave, and portions of the DOZ block cave) occur as vein stockworks and disseminations of copper sulfides, dominated by chalcopyrite and, to a lesser extent, bornite. The sedimentary-rock hosted ore bodies (portions of the DOZ and all of the Big Gossan) occur as “magnetite-rich, calcium/magnesian skarn” replacements, whose location and orientation are strongly influenced by major faults and by the chemistry of the carbonate rocks along the margins of the intrusions.

The copper mineralization in these skarn deposits is dominated by chalcopyrite, but higher bornite concentrations are common. Moreover, gold occurs in significant concentrations in all of the district’s ore bodies, though rarely visible to the naked eye. These gold concentrations usually occur as inclusions within the copper sulfide minerals, though, in some deposits, these concentrations can also be strongly associated with pyrite.

The following diagram indicates the relative elevations (in meters) of our reported ore bodies.

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The following map, which encompasses an area of approximately 42 square kilometers (approximately 16 square miles), indicates the relative positions and sizes of our reported Indonesia ore bodies and their locations.

Africa

TFM is organized under the laws of the DRC. We own an effective 56 percent interest in TFM, with the remaining ownership interests held by Lundin Mining Corporation (Lundin) (an effective 24 percent interest) and La Générale des Carrières et des Mines (Gécamines), which is wholly owned by the DRC government (a 20 percent non-dilutable interest).

TFM is entitled to mine in the DRC under an Amended and Restated Mining Convention (ARMC) with the DRC government. The original Mining Convention was entered into in 1996 and was replaced with the ARMC in 2005, which was further amended in 2010 (approved in 2011). The current ARMC will remain in effect for as long as the Tenke concessions are exploitable.

TFM pays a royalty of two percent of net revenues under the ARMC, which totaled $29 million in 2013, $25 million in 2012 and $24 million in 2011.

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The Tenke minerals district is located in the Katanga province of the DRC approximately 110 miles northwest of Lubumbashi and is accessible by paved roads and by rail. The deposits are sediment-hosted copper and cobalt deposits with oxide, mixed oxide-sulfide and sulfide mineralization. The dominant oxide minerals are malachite, pseudomalachite and heterogenite. Important sulfide minerals consist of bornite, carrollite, chalcocite and chalcopyrite.

Initial copper production commenced at the Tenke minerals district in March 2009. TFM completed its second phase expansion project in early 2013, which included optimizing the current plant and increasing mine, mill and processing capacity. The expanded mill facility throughput rates averaged 14,900 metric tons of ore per day during 2013, compared with original design capacity of 14,000 metric tons of ore per day, enabling an increase in Tenke's copper production to over 430 million pounds per year. The addition of a second sulphuric acid plant is expected to be completed in 2016.

We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective Tenke minerals district. These analyses are being incorporated into future plans for potential expansions of production capacity. Future expansions are subject to a number of factors, including economic and market conditions and the business and investment climate in the DRC.

The current equipment fleet includes one 10-cubic meter mass excavator, three 17-cubic meter mass excavators, three 12-cubic meter front-end loaders, ten 7-cubic meter front-end loaders, thirty-two 91-metric ton haul trucks and eleven 45-metric ton haul trucks.

Copper and cobalt are recovered through an agitation-leach plant. Production from the Tenke minerals district totaled 462 million pounds of copper and 28 million pounds of cobalt in 2013, 348 million pounds of copper and 26 million pounds of cobalt in 2012 and 281 million pounds of copper and 25 million pounds of cobalt in 2011.

The Tenke minerals district is located in a tropical region; however, temperatures are moderated by its higher altitudes. Weather in this region is characterized by a dry season and a wet season, each lasting about six months with average rainfall of 47 inches per year. The highest bench elevation is expected to be 1,518 meters above sea level and the ultimate pit bottom is expected to be 1,110 meters above sea level. The Tenke deposits are covered by six exploitation permits totaling approximately 394,450 acres.

TFM has long-term power supply and infrastructure funding agreements with La Société Nationale d’Electricité, the state-owned electric utility company serving the region. The results of a recent water exploration program, as well as the regional geological and hydro-geological conditions, indicate that adequate water is available during the expected life of the operation.

Smelting Facilities and Other Mining Properties

Atlantic Copper. Our wholly owned Atlantic Copper smelter and refinery is located on land concessions from the Huelva, Spain, port authorities, which are scheduled to expire in 2027.

The design capacity of the smelter is approximately 300,000 metric tons of copper per year and the refinery currently has a capacity of 285,000 metric tons of copper per year. During 2013, Atlantic Copper treated approximately 869,400 million metric tons of concentrate and scrap and produced 224,300 metric tons of copper anodes from its smelter and 226,000 metric tons of copper cathodes from its refinery. Following is a summary of Atlantic Copper's concentrate purchases from our copper mining operations and third parties for the last three years:

	2013		2012		2011
North America copper mines	13	%	16	%	2	%
South America mining	32	%	31	%	30	%
Indonesia mining	16	%	10	%	17	%
Third parties	39	%	43	%	51	%
	100	%	100	%	100	%

During 2013, Atlantic Copper successfully completed a scheduled 68-day major maintenance turnaround. Atlantic Copper's major maintenance turnarounds typically occur approximately every eight years, with short-term maintenance turnarounds in the interim. The next short-term maintenance turnaround is scheduled for the second half of 2015.

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PT Smelting. PT-FI’s COW required us to construct or cause to be constructed a smelter in Indonesia if we and the Indonesian government determined that such a project would be economically viable. In 1995, following the completion of a feasibility study, we entered into agreements relating to the formation of PT Smelting, an Indonesian company, and the construction of the copper smelter and refinery in Gresik, Indonesia. PT Smelting owns and operates the smelter and refinery. PT-FI, Mitsubishi Materials Corporation, Mitsubishi Corporation Unimetals Ltd. and JX Nippon Mining & Metals Corporation own 25 percent, 60.5 percent, 9.5 percent and 5 percent, respectively, of the outstanding PT Smelting common stock.

PT-FI’s contract with PT Smelting provides for the supply of 100 percent of the copper concentrate requirements (subject to a minimum or maximum rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI also sells copper concentrate to PT Smelting (at market rates) for quantities in excess of 205,000 metric tons of copper annually. 

During 2013, PT Smelting treated 967,800 metric tons of concentrate and produced 217,700 metric tons of copper anodes from its smelter and 214,300 metric tons of copper cathodes from its refinery.

PT Smelting's maintenance turnarounds (which range from two weeks to a month to complete) typically are expected to occur approximately every two years, with short-term maintenance turnarounds in the interim. PT Smelting completed an 18-day maintenance turnaround during first-quarter 2014, and the next major maintenance turnaround is scheduled for 2016.

Miami Smelter. We own and operate a smelter at our Miami, Arizona, mining operation. The smelter has been operating for approximately 100 years and has been upgraded numerous times during that period to implement new technologies, to improve production and to comply with air quality requirements. As a result of new air quality standards for sulfur dioxide emissions, the Miami smelter is required to install pollution control equipment as part of an expansion that will allow the smelter to operate and comply with the new standard (refer to Item 1A. “Risk Factors” for further discussion).

The Miami smelter processes copper concentrate primarily from our Arizona copper mines. Concentrate processed through the smelter totaled approximately 629,000 metric tons in 2013. In addition, because sulphuric acid is a by-product of smelting concentrates, the Miami smelter is also the most significant source of sulphuric acid for our North America leaching operations.

Major maintenance turnarounds (which take approximately three weeks to complete) typically occur approximately every 14 months for the Miami smelter, with shorter term maintenance turnarounds in the interim.

Rod & Refining Operations. Our Rod & Refining operations consist of conversion facilities located in North America, including a refinery in El Paso, Texas; rod mills in El Paso, Texas, Norwich, Connecticut, and Miami, Arizona; and a specialty copper products facility in Bayway, New Jersey. We refine our copper anode production from our Miami smelter at our El Paso refinery. The El Paso refinery has the potential to operate at an annual production capacity of about 900 million pounds of copper cathode, which is sufficient to refine all of the copper anode we produce at Miami. Our El Paso refinery also produces nickel carbonate, copper telluride and autoclaved slimes material containing gold, silver, platinum and palladium.

Molybdenum Conversion Facilities. We process molybdenum concentrates at our conversion plants in the U.S. and Europe into such products as technical-grade molybdic oxide, ferromolybdenum, pure molybdic oxide, ammonium molybdates and molybdenum disulfide. We operate molybdenum roasters in Sierrita, Arizona; Fort Madison, Iowa; and Rotterdam, the Netherlands, and we operate a molybdenum pressure leach plant in Bagdad, Arizona. We also produce ferromolybdenum for customers worldwide at our conversion plant located in Stowmarket, United Kingdom.

Freeport Cobalt. On March 29, 2013, we, through a newly formed consolidated joint venture, completed the acquisition of a cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition provides direct end-market access for the cobalt hydroxide production at the Tenke minerals district. The joint venture operates under the name Freeport Cobalt, and we are the operator with an effective 56 percent ownership interest. The remaining effective ownership interest is held by our partners in TFM, including 24 percent by Lundin and 20 percent by Gécamines. The Kokkola refinery has an annual refining capacity of approximately 12,000 metric tons of cobalt, sufficient to refine the majority of the cobalt we produce in the Tenke minerals district.

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Other North America Copper Mines. In addition to our operating mines, we have four non-operating copper mines in North America – Ajo, Bisbee and Tohono in Arizona, and Cobre in New Mexico – that have been on care-and-maintenance status for several years and would require new or updated environmental studies, new permits, and additional capital investment, which could be significant, to return them to operating status.

In December 2009, we purchased the Twin Buttes copper mine, which ceased operations in 1994 and is adjacent to our Sierrita mine in Arizona. The purchase provides significant synergies in the Sierrita minerals district, including the potential for expanded mining activities and access to material that can be used for Sierrita tailings and stockpile reclamation purposes. We have completed drilling on the property and metallurgical studies to support a future feasibility study.

Mining Development Projects and Exploration

We have several projects and potential opportunities to expand production volumes, extend mine lives and develop large-scale underground ore bodies. Our near-term major development projects, which will require substantial additional capital investment, are presented below. Also refer to MD&A for further discussion of these projects, our other development projects and exploration activities.

Considering the long-term nature and large size of our development projects, actual costs and timing could vary from estimates. We continue to review our mine development and processing plans to maximize the value of our mineral reserves.

Morenci. We are expanding mining and milling capacity at Morenci to process additional sulfide ores identified through exploratory drilling. The project is targeting incremental annual production of approximately 225 million pounds of copper beginning in 2014 (an approximate 40 percent increase from 2013) through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day. At full rates, Morenci's copper production is expected to approach 1 billion pounds in 2015 compared with 564 million pounds in 2013. At December 31, 2013, construction is more than 60 percent complete and the project is on track for first copper production in the first half of 2014.

Cerro Verde. Construction activities associated with a large-scale expansion at Cerro Verde are in progress. At December 31, 2013, engineering was more than 90 percent complete and construction progress is advancing on schedule. The project is expected to 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 and 15 million pounds of molybdenum beginning in 2016. In addition, construction activities are progressing on a wastewater treatment plant for the city of Arequipa, which will be used to supplement existing water supplies to support the concentrator expansion.

El Abra. We continue to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results in recent years at El Abra indicate a significant sulfide resource, which could potentially support a major mill project.

Grasberg. We have several projects in progress in the Grasberg minerals district related to the development of large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to produce approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) mines is advancing to enable DMLZ to commence production in 2015 and the Grasberg Block Cave mine to commence production in 2017.

In addition to the near-term development projects in progress in the Grasberg minerals district, we also have an additional long-term underground mine development project in the Grasberg minerals district for the Kucing Liar ore body, which lies on the southern flank of and underneath the southern portion of the Grasberg open pit at the 2,605-meter elevation level. We expect to mine the Kucing Liar ore body using the block-cave method; aggregate capital cost estimates for development of the Kucing Liar ore body are projected to approximate $2 billion (which are expected to be made between 2019 and 2032). Additionally, our current mine development plans include approximately $3 billion of capital expenditures at our processing facilities to optimize the handling of underground ore types once the Grasberg open-pit operations cease (we expect substantially all of these expenditures to be made between 2016 and 2034).

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Sources and Availability of Energy, Natural Resources and Raw Materials

Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy represented approximately 20 percent of our 2013 consolidated copper production costs and included purchases of approximately 260 million gallons of diesel fuel; 7,200 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); 705 thousand metric tons of coal for our coal power plant in Indonesia; and 1 MMBtu (million British thermal units) of natural gas at certain of our North America mines. For 2014, we estimate energy will approximate 21 percent of our consolidated copper production costs.

Our mining operations also require significant quantities of water for mining, ore processing and related support facilities. Although we believe our mining operations have sufficient water rights, the loss of water rights for any of our mines, in whole or in part, or shortages of water to which we have rights, could require us to curtail or shut down mining operations. For a further discussion of risks and legal proceedings associated with the availability of water, refer to Item 1A. “Risk Factors” and Item 3. “Legal Proceedings.”

Sulphuric acid is used in the SX/EW process and is produced as a by-product of the smelting process at our smelters and from our sulphur burners at the Safford and Tenke mines. Sulphuric acid needs in excess of the sulphuric acid produced by our operations are purchased from third parties.

Community and Human Rights

We have adopted policies that govern our working relationships with the communities where we operate and are designed to guide our practices and programs in a manner that respects basic human rights and the culture of the local people impacted by our operations. We continue to make significant expenditures on community development, education, training and cultural programs, which include:

• comprehensive job training programs

• basic education programs

• public health programs, including malaria control and HIV testing                                                                                             

• agricultural assistance programs

• small and medium enterprise development programs

• cultural promotion and preservation programs

• clean water and sanitation projects

• community infrastructure development

• charitable donations

In December 2000, we endorsed the joint U.S. State Department-British Foreign Office Voluntary Principles on Human Rights and Security (Voluntary Principles). We participated in developing these Voluntary Principles with other major natural resources companies and international human rights organizations and they are incorporated into our human rights policy and site level projects.

We also are currently integrating the United Nations Guiding Principles on Business and Human Rights into our human rights program by conducting a corporate level human rights impact assessment. The results of this assessment will be used to evaluate and help direct our human rights program going forward, including a review of our human rights policy. We also participate in a multi-industry human rights working group to help us learn from peer companies and determine the best way to integrate human rights due diligence into our business practices and to support our Voluntary Principles program.

We believe that our social and economic development programs are responsive to the issues raised by the local communities near our areas of operation and should help us maintain good relations with the surrounding communities and avoid disruptions of mining operations. As part of our ongoing, annual commitment to sustainable community development, we have made significant investments in social programs, including in-kind support and administration, across our global operations. Over the last three years, these investments have averaged $179 million per year. Nevertheless, social and political instability in the areas of our operations may adversely impact our mining operations. Refer to Item 1A. “Risk Factors” for further discussion.

South America. Cerro Verde has provided a variety of community support projects over the years. Following engagements with regional and local governments, civic leaders and development agencies, in 2006, Cerro Verde committed to support the costs for a new potable water treatment plant to serve Arequipa. In addition, an agreement was reached with the Peruvian government for development of a water storage and distribution network, which was

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financed by the Cerro Verde Civil Association (the Association). The Association manages contributions made by Cerro Verde for projects that focus on education, training, health, cultural preservation and basic infrastructure.

Cerro Verde has also reached agreement with the Regional Government of Arequipa, the National Government, SEDAPAR and other local institutions to allow it to finance, engineer and construct a wastewater treatment plant for the city of Arequipa (refer to MD&A for further discussion). Treating this water will improve the Rio Chili's water quality, enhance agriculture products grown in the area and reduce waterborne illnesses.

Indonesia. In 1996, PT-FI established the Freeport Partnership Fund for Community Development (the Partnership Fund), through which PT-FI has made available funding and technical assistance to support community development initiatives in the areas of health, education and economic development of the area. PT-FI has committed through 2016 to provide one percent of its annual revenue for the development of the local people in its area of operation through the Partnership Fund. Our share of contributions to the Partnership Fund totaled $41 million in 2013, $39 million in 2012 and $50 million in 2011.

The Amungme and Kamoro Community Development Organization (Lembaga Pengembangan Masyarakat Amungme dan Kamoro or LPMAK) oversees disbursement of the program funds we contribute to the Partnership Fund. LPMAK is governed by a board of commissioners and a board of directors, which are comprised of representatives from the local Amungme and Kamoro tribal communities, government leaders, church leaders, and one representative of PT-FI on each board. The Amungme and Kamoro people are original inhabitants of the land in our area of operations.

Security Matters.Consistent with our COW in Indonesia and our commitment to protect our employees and property, we have taken steps to provide a safe and secure working environment. As part of its security program, PT-FI maintains its own internal security department, which is unarmed and performs functions such as protecting company facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The security department has received human rights training and each member is required to certify his or her compliance with our human rights policy.

PT-FI’s share of costs for its internal civilian security department totaled $51 million for 2013, $52 million for 2012 and $37 million for 2011.

PT-FI, and all businesses and residents of Indonesia, rely on the Indonesian government for the maintenance of public order, upholding the rule of law and the protection of personnel and property. The Grasberg minerals district has been designated by the Indonesian government as one of Indonesia’s vital national assets. This designation results in the police, and to a lesser extent, the military, playing a significant role in protecting the area of our operations. The Indonesian government is responsible for employing police and military personnel and directing their operations.

From the outset of PT-FI’s operations, the Indonesian government has looked to PT-FI to provide logistical and infrastructure support and assistance for these necessary services because of the limited resources of the Indonesian government and the remote location of and lack of development in Papua. PT-FI’s financial support for the Indonesian government security institutions assigned to the operations area represents a prudent response to its requirements to protect its workforce and property, better ensuring that personnel are properly fed and lodged, and have the logistical resources to patrol PT-FI’s roads and secure its operating area. In addition, the provision of such support is consistent with PT-FI’s obligations under the COW, reflects our philosophy of responsible corporate citizenship, and is in keeping with our commitment to pursue practices that will promote human rights.

PT-FI’s share of support costs for the government-provided security was $25 million in 2013, $22 million in 2012 and $14 million in 2011. This supplemental support consists of various infrastructure and other costs, such as food, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military and police.

Refer to Item 1A. "Risk Factors" for further discussion of security risks in Indonesia.

Africa. TFM has committed to assist the communities living within its concession in the Katanga province of the DRC. Initiatives include an integrated malaria control program, construction, renovation and building of local health facilities, construction and renovation of local schools, installation of over 90 clean water wells in rural villages as well as construction of urban water distribution systems, and economic development programs supporting

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development and training of local entrepreneurs, contractors and farmers. We have also made significant investments in infrastructure in the region that will have lasting benefits to the country, including upgrading a portion of a national road and the regional power generation and transmission systems.

Through the Amended and Restated Mining Convention, TFM has also committed to contribute 0.3 percent of net sales revenue from production to a community development fund to assist the local communities with development of local infrastructure and related services including health, education and agriculture. The TFM Social Community Fund is managed by a board of directors comprised of two local community representatives, one representative nominated by the provincial governor and four TFM representatives. A community stakeholder forum comprised of 40 community representatives provides for increased community participation and input regarding project priorities, community needs, and transparency of fund management. The TFM Social Community Fund contributions totaled $4 million in each of the years 2013, 2012 and 2011.

Security Matters. TFM maintains an unarmed internal security department. The national government also has assigned Mines Police to the TFM concession area. The Mines Police are a division of the Congolese National Police and are responsible for maintaining security in mining concessions throughout the DRC. TFM provides food, housing, monetary allowances and logistical support as well as direct payments to the government for the provision of the security assigned to the concession area. The total cost to TFM for this support, including in-kind support, totaled less than $1 million in each of the years 2013, 2012 and 2011.

TFM also participates in monthly security coordination meetings with host country security personnel, other mining companies, and representatives from the United Nations to discuss security issues and concerns. As an outcome of the coordination meetings, TFM has partnered with MONUSCO (United Nations Stabilization Mission in the DRC) to conduct human rights training in the TFM concession for host government security personnel, local representatives and TFM security employees.

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Mining Production Data

	Years Ended December 31,
(FCX’s net interest in %)	2013	2012	2011	2010	2009
COPPER (millions of recoverable pounds)
North America
Morenci (85%)a	564	537	522	437	428
Bagdad (100%)	216	197	194	203	225
Safford (100%)	146	175	151	143	184
Sierrita (100%)	171	157	177	147	170
Miami (100%)	61	66	66	18	16
Chino (100%)	171	144	69	34	36
Tyrone (100%)	96	83	76	82	86
Other (100%)	6	4	3	3	2
Total North America	1,431	1,363	1,258	1,067	1,147
South America
Cerro Verde (53.56%)	558	595	647	668	662
El Abra (51%)	343	338	274	320	358
Candelaria/Ojos del Salado (80%)	422	324	385	366	370
Total South America	1,323	1,257	1,306	1,354	1,390
Indonesia
Grasberg (90.64%)b	915	695	846	1,222	1,412
Africa
Tenke Fungurume (56%)c	462	348	281	265	154
Consolidated	4,131	3,663	3,691	3,908	4,103
Less noncontrolling interests	801	723	710	766	754
Net	3,330	2,940	2,981	3,142	3,349
GOLD (thousands of recoverable ounces)
North America (100%)a	7	13	10	7	4
South America (80%)	101	83	101	93	92
Indonesia (90.64%)b	1,142	862	1,272	1,786	2,568
Consolidated	1,250	958	1,383	1,886	2,664
Less noncontrolling interests	127	98	139	186	258
Net	1,123	860	1,244	1,700	2,406
MOLYBDENUM(millions of recoverable pounds)
Henderson (100%)	30	34	38	40	27
Climax (100%)d	19	7	—	—	—
North America copper mines (100%)a	32	36	35	25	25
Cerro Verde (53.56%)	13	8	10	7	2
Consolidated	94	85	83	72	54
Less noncontrolling interest	6	4	5	3	1
Net	88	81	78	69	53
COBALT (millions of contained pounds)
Consolidated - Tenke Fungurume (56%)c	28	26	25	20	—
Less noncontrolling interests	12	11	11	8	—
Net	16	15	14	12	—

a. Amounts are net of Morenci’s 15 percent joint venture partner interest.

b. Amounts are net of Grasberg’s joint venture partner’s interest, which varies in accordance with terms of the joint venture agreement.

c. Initial copper production commenced at the Tenke mines in March 2009. Effective March 26, 2012, FCX's effective ownership interest in TFM was prospectively reduced from 57.75 percent to 56 percent.

d. The Climax molybdenum mine began commercial operations in May 2012.

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Mining Sales Data

	Years Ended December 31,
(FCX’s net interest in %)	2013		2012		2011		2010		2009
COPPER (millions of recoverable pounds)
North America
Morenci (85%)a	561		532		521		434		459
Bagdad (100%)	212		196		201		206		225
Safford (100%)	151		175		147		155		176
Sierrita (100%)	170		162		175		152		172
Miami (100%)	60		68		59		17		16
Chino (100%)	168		132		62		35		52
Tyrone (100%)	94		82		79		83		85
Other (100%)	6		4		3		3		2
Total North America	1,422		1,351		1,247		1,085		1,187
South America
Cerro Verde (53.56%)	560		589		657		654		667
El Abra (51%)	341		338		276		315		361
Candelaria/Ojos del Salado (80%)	424		318		389		366		366
Total South America	1,325		1,245		1,322		1,335		1,394
Indonesia
Grasberg (90.64%)b	885		716		846		1,214		1,400
Africa
Tenke Fungurume (56%)c	454		336		283		262		130
Consolidated sales from mines	4,086		3,648		3,698		3,896		4,111
Less noncontrolling interests	795		717		717		756		746
Net	3,291		2,931		2,981		3,140		3,365
Consolidated sales from mines	4,086		3,648		3,698		3,896		4,111
Purchased copper	223		125		223		182		166
Total copper sales, including purchases	4,309		3,773		3,921		4,078		4,277
Average realized price per pound	$	3.30	$	3.60	$	3.86	$	3.59	$	2.60
GOLD(thousands of recoverable ounces)
North America (100%)a	6		13		7		5		6
South America (80%)	102		82		101		93		90
Indonesia (90.64%)b	1,096		915		1,270		1,765		2,543
Consolidated sales from mines	1,204		1,010		1,378		1,863		2,639
Less noncontrolling interests	123		102		139		184		256
Net	1,081		908		1,239		1,679		2,383
Average realized price per ounce	$	1,315	$	1,665	$	1,583	$	1,271	$	993
MOLYBDENUM(millions of recoverable pounds)
Consolidated sales from mines	93		83		79		67		58
Less noncontrolling interests	5		4		4		3		1
Net	88		79		75		64		57
Average realized price per pound	$	11.85	$	14.26	$	16.98	$	16.47	$	12.36
COBALT (millions of contained pounds)
Consolidated - Tenke Fungurume (56%)c	25		25		25		20		—
Less noncontrolling interests	11		11		10		8		—
Net	14		14		15		12		—
Average realized price per pound	$	8.02	$	7.83	$	9.99	$	10.95	$	—

a. Amounts are net of Morenci’s joint venture partner’s 15 percent interest.

b. Amounts are net of Grasberg’s joint venture partner’s interest, which varies in accordance with terms of the joint venture agreement.

c. Initial copper production commenced at the Tenke mines in March 2009. Effective March 26, 2012, FCX's effective ownership interest in TFM was prospectively reduced from 57.75 percent to 56 percent.

30

Mineral Reserves

Recoverable proven and probable mineral reserves from our mining operations summarized below and detailed on the following pages have been calculated as of December 31, 2013, in accordance with Industry Guide 7 as required by the Securities Exchange Act of 1934. Proven and probable reserves may not be comparable to similar information regarding mineral reserves disclosed in accordance with the guidance of other countries. Proven and probable mineral reserves were determined by the use of mapping, drilling, sampling, assaying and evaluation methods generally applied in the mining industry, as more fully discussed below. The term “reserve,” as used in the reserve data presented here, means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The term “proven reserves” means mineral reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (2) grade and/or quality are computed from the results of detailed sampling; and (3) the sites for inspection, sampling and measurements are spaced so closely and the geologic character is sufficiently defined that size, shape, depth and mineral content of reserves are well established. The term “probable reserves” means mineral reserves for which quantity and grade are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

Our mineral reserve estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our ore bodies to optimize economic values and to manage risk. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees; a majority of these estimates are reviewed and verified by independent experts in mining, geology and reserve determination.

Estimated recoverable proven and probable mineral reserves at December 31, 2013, were determined using long-term average prices of $2.00 per pound for copper (consistent with the long-term average copper price used since December 31, 2010), $1,000 per ounce for gold and $10 per pound for molybdenum. For the three-year period ended December 31, 2013, LME spot copper prices averaged $3.64 per pound, London PM gold prices averaged $1,550 per ounce, and the weekly average price of molybdenum quoted by Metals Week averaged $12.85 per pound.

The recoverable proven and probable mineral reserves presented in the table below represent the estimated metal quantities from which we expect to be paid after application of estimated metallurgical recovery rates and smelter recovery rates, where applicable. Recoverable reserves are the part of a mineral deposit that we estimate can be economically and legally extracted or produced at the time of the reserve determination.

	Recoverable Proven and Probable Mineral Reserves Estimated at December 31, 2013
	Coppera (billion pounds)	Gold (million ounces)	Molybdenum (billion pounds)	Silverb (million ounces)	Cobaltb (billion pounds)
North America	36.2	0.4	2.55	87.5	—
South America	37.0	1.1	0.71	107.5	—
Indonesia	30.0	29.8	—	113.5	—
Africa	8.0	—	—	—	0.87
Consolidated basisc	111.2	31.3	3.26	308.5	0.87
Net equity interestd	88.6	28.3	2.93	252.9	0.48

a. Recoverable copper reserves include 3.3 billion pounds in leach stockpiles and 1.4 billion pounds in mill stockpiles (refer to “Mill and Leach Stockpiles” for further discussion).

b. Determined using long-term average prices of $15 per ounce for silver and $10 per pound for cobalt.

c. Consolidated reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and at the Grasberg minerals district in Indonesia.

d. Net equity interest reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership.

31

		Recoverable Proven and Probable Mineral Reserves
		Estimated at December 31, 2013
		Proven Reserves							Probable Reserves
			Average Ore Grade							Average Ore Grade
	Processing	Million	Copper	Gold		Moly	Silver	Cobalt	Million	Copper	Gold		Moly	Silver	Cobalt
	Method	metric tons	%	g/t		%	g/t	%	metric tons	%	g/t		%	g/t	%
North America
Morenci	Mill	677	0.49	—		0.02	—	—	8	0.47	—		0.02	—	—
	Crushed leach	407	0.51	—		—	—	—	6	0.52	—		—	—	—
	ROM leach	2,610	0.18	—		—	—	—	71	0.15	—		—	—	—
Bagdad	Mill	1,023	0.34	—	a	0.02	1.61	—	152	0.32	—	a	0.02	1.61	—
	ROM leach	175	0.15	—		—	—	—	99	0.17	—		—	—	—
Safford	Crushed leach	97	0.45	—		—	—	—	52	0.45	—		—	—	—
Sierrita	Mill	2,273	0.24	—	a	0.03	1.42	—	239	0.20	—	a	0.02	1.21	—
	ROM leach	12	0.19	—		—	—	—	10	0.17	—		—	—	—
Miami	ROM leach	12	0.44	—		—	—	—	3	0.38	—		—	—	—
Chino	Mill	83	0.62	0.04		0.01	0.53	—	62	0.59	0.04		0.01	0.50	—
	ROM leach	173	0.31	—		—	—	—	58	0.27	—		—	—	—
Tyrone	ROM leach	68	0.34	—		—	—	—	1	0.25	—		—	—	—
Henderson	Mill	103	—	—		0.17	—	—	2	—	—		0.16	—	—
Climax	Mill	166	—	—		0.17	—	—	23	—	—		0.10	—	—
Cobreb	ROM leach	71	0.40	—		—	—	—	2	0.29	—		—	—	—
		7,950							788
South America
Cerro Verde	Mill	1,123	0.39	—		0.02	1.60	—	2,757	0.37	—		0.02	1.52	—
	Crushed leach	37	0.50	—		—	—	—	57	0.41	—		—	—	—
	ROM leach	16	0.21	—		—	—	—	57	0.21	—		—	—	—
El Abra	Crushed leach	365	0.50	—		—	—	—	91	0.47	—		—	—	—
	ROM leach	91	0.29	—		—	—	—	29	0.25	—		—	—	—
Candelaria	Mill	269	0.58	0.13		—	2.12	—	12	0.66	0.17		—	2.65	—
Ojos del Salado	Mill	6	1.05	0.24		—	4.04	—	2	0.88	0.20		—	3.50	—
		1,907							3,005
Indonesia
Grasberg open pit	Mill	94	1.05	1.34		—	2.71	—	112	0.87	0.86		—	2.09	—
Deep Ore Zone	Mill	48	0.57	0.73		—	2.33	—	104	0.55	0.73		—	2.21	—
Big Gossan	Mill	15	2.38	1.05		—	15.04	—	39	2.16	0.95		—	12.89	—
Grasberg Block Caveb	Mill	387	1.20	0.99		—	3.95	—	613	0.90	0.64		—	3.26	—
Kucing Liarb	Mill	154	1.31	1.11		—	7.48	—	266	1.21	1.04		—	6.13	—
Deep Mill Level Zoneb	Mill	72	0.91	0.75		—	4.45	—	454	0.82	0.69		—	4.10	—
		770							1,588
Africa
Tenke Fungurume	Agitation leach	52	3.66	—		—	—	0.39	61	3.07	—		—	—	0.33
Total FCX - 100% Basis		10,679							5,442

a. Grade not shown because of rounding.

b. Undeveloped reserves that would require additional capital investment, which could be significant, to bring into production.

The reserve table above and the tables on the following pages utilize the abbreviations described below:

• g/t – grams per metric ton

• Moly – Molybdenum

• ROM – Run of Mine

32

		Recoverable Proven and Probable Mineral Reserves
		Estimated at December 31, 2013
		(continued)
		Proven and
		Probable	Average Ore Grade						Recoveriesa
	Processing	Million	Copper	Gold		Moly	Silver	Cobalt	Copper	Gold	Moly	Silver	Cobalt
	Method	metric tons	%	g/t		%	g/t	%	%	%	%	%	%
North America
Morenci	Mill	685	0.49	—		0.02	—	—	79.5	—	50.5	—	—
	Crushed leach	413	0.51	—		—	—	—	78.0	—	—	—	—
	ROM leach	2,681	0.18	—		—	—	—	43.5	—	—	—	—
Bagdad	Mill	1,175	0.34	—	b	0.02	1.61	—	85.8	59.1	70.8	49.3	—
	ROM leach	274	0.16	—		—	—	—	23.4	—	—	—	—
Safford	Crushed leach	149	0.45	—		—	—	—	65.2	—	—	—	—
Sierrita	Mill	2,512	0.23	—	b	0.03	1.40	—	83.9	59.9	76.6	49.3	—
	ROM leach	22	0.18	—		—	—	—	53.1	—	—	—	—
Miami	ROM leach	15	0.43	—		—	—	—	56.0	—	—	—	—
Chino	Mill	145	0.61	0.04		0.01	0.52	—	79.5	77.9	44.0	78.5	—
	ROM leach	231	0.30	—		—	—	—	39.5	—	—	—	—
Tyrone	ROM leach	69	0.34	—		—	—	—	61.3	—	—	—	—
Henderson	Mill	105	—	—		0.17	—	—	—	—	84.2	—	—
Climax	Mill	189	—	—		0.16	—	—	—	—	89.9	—	—
Cobrec	ROM leach	73	0.39	—		—	—	—	50.7	—	—	—	—
		8,738
South America
Cerro Verde	Mill	3,880	0.37	—		0.02	1.55	—	86.3	—	53.1	44.7	—
	Crushed leach	94	0.44	—		—	—	—	79.5	—	—	—	—
	ROM leach	73	0.21	—		—	—	—	49.8	—	—	—	—
El Abra	Crushed leach	456	0.50	—		—	—	—	57.5	—	—	—	—
	ROM leach	120	0.28	—		—	—	—	30.7	—	—	—	—
Candelaria	Mill	281	0.58	0.14		—	2.14	—	89.7	71.9	—	76.3	—
Ojos del Salado	Mill	8	1.00	0.23		—	3.87	—	90.2	71.9	—	76.3	—
		4,912
Indonesia
Grasberg open pit	Mill	206	0.95	1.08		—	2.37	—	84.1	81.1	—	43.7	—
Deep Ore Zone	Mill	152	0.56	0.73		—	2.25	—	86.7	77.5	—	66.2	—
Big Gossan	Mill	54	2.22	0.97		—	13.49	—	91.6	67.1	—	63.8	—
Grasberg Block Cavec	Mill	1,000	1.02	0.78		—	3.53	—	84.2	64.8	—	57.1	—
Kucing Liarc	Mill	420	1.24	1.07		—	6.63	—	84.9	45.2	—	38.7	—
Deep Mill Level Zonec	Mill	526	0.83	0.70		—	4.15	—	86.7	78.8	—	64.6	—
		2,358
Africa
Tenke Fungurume	Agitation leach	113	3.34	—		—	—	0.36	86.4	—	—	—	75.6
Total FCX - 100% Basis		16,121

a. Recoveries are net of estimated mill and smelter losses.

b. Grade not shown because of rounding.

c. Undeveloped reserves that would require additional capital investment, which could be significant, to bring into production.

33

Recoverable Proven and Probable Mineral Reserves
Estimated at December 31, 2013
(continued)
			Recoverable Reserves
			Copper		Gold		Moly	Silver	Cobalt
	FCX’s	Processing	billion		million		billion	million	billion
	Interest	Method	lbs.		ozs.		lbs.	ozs.	lbs.
North America
Morenci	85%	Mill	5.9		—		0.15	—	—
		Crushed leach	3.6		—		—	—	—
		ROM leach	4.5		—		—	—	—
Bagdad	100%	Mill	7.6		0.1		0.39	30.0	—
		ROM leach	0.2		—		—	—	—
Safford	100%	Crushed leach	1.0		—		—	—	—
Sierrita	100%	Mill	10.8		0.1		1.08	55.6	—
		ROM leach	—	a	—		—	—	—
Miami	100%	ROM leach	0.1		—		—	—	—
Chino	100%	Mill	1.5		0.2		0.01	1.9	—
		ROM leach	0.6		—		—	—	—
Tyrone	100%	ROM leach	0.3		—		—	—	—
Henderson	100%	Mill	—		—		0.33	—	—
Climax	100%	Mill	—		—		0.60	—	—
Cobre	100%	ROM leach	0.3		—		—	—	—
			36.4		0.4		2.56	87.5	—
Recoverable metal in stockpilesb			1.9		—		0.01	—	—
100% operations			38.3		0.4		2.57	87.5	—
Consolidatedc			36.2		0.4		2.55	87.5	—
Net equity interestd			36.2		0.4		2.55	87.5	—
South America
Cerro Verde	53.56%	Mill	27.5		—		0.69	86.2	—
		Crushed leach	0.7		—		—	—	—
		ROM leach	0.2		—		—	—	—
El Abra	51%	Crushed leach	2.9		—		—	—	—
		ROM leach	0.2		—		—	—	—
Candelaria	80%	Mill	3.3		0.9		—	14.8	—
Ojos del Salado	80%	Mill	0.1		—	a	—	0.7	—
			34.9		0.9		0.69	101.7	—
Recoverable metal in stockpilesb			2.1		0.2		0.02	5.8	—
100% operations			37.0		1.1		0.71	107.5	—
Consolidatedc			37.0		1.1		0.71	107.5	—
Net equity interestd			20.7		0.9		0.38	62.5	—
Indonesia
Grasberg open pit	e	Mill	3.6		5.8		—	6.9	—
Deep Ore Zone	e	Mill	1.6		2.8		—	7.3	—
Big Gossan	e	Mill	2.5		1.1		—	15.0	—
Grasberg Block Cave	e	Mill	18.9		16.1		—	64.8	—
Kucing Liar	e	Mill	9.8		6.5		—	34.6	—
Deep Mill Level Zone	e	Mill	8.3		9.3		—	45.3	—
100% operations			44.7		41.6		—	173.9	—
Consolidatedc			30.0		29.8		—	113.5	—
Net equity interestd			27.2		27.0		—	102.9	—
Africa
Tenke Fungurume	56%	Agitation leach	7.2		—		—	—	0.68
Recoverable metal in stockpilesb			0.8		—		—	—	0.19
100% operations			8.0		—		—	—	0.87
Consolidatedc			8.0		—		—	—	0.87
Net equity interestd			4.5		—		—	—	0.48
Total FCX –  100% basis			128.0		43.1		3.28	368.9	0.87
Total FCX –  Consolidated basisc			111.2		31.3		3.26	308.5	0.87
Total FCX –  Net equity interestd			88.6		28.3		2.93	252.9	0.48

a. Amounts not shown because of rounding.

b. Refer to "Mill and Leach Stockpiles" for additional information.

c. Consolidated reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and at the Grasberg minerals district in Indonesia.

d. Net equity interest represents estimated consolidated metal quantities further reduced for noncontrolling interest ownership.

e. Our joint venture agreement with Rio Tinto provides that PT-FI will receive cash flow from specified annual amounts of copper, gold and silver through 2021, calculated by reference to its proven and probable reserves as of December 31, 1994, and 60 percent of all remaining cash flow.

34

In defining our open-pit reserves, we apply a “variable cutoff grade” strategy. The objective of this strategy is to maximize the net present value of our operations. We use a "break-even cutoff grade" to define the in-situ reserves for our underground ore bodies. The break-even cutoff grade is defined for a metric ton of ore as that equivalent copper grade, once produced and sold, that generates sufficient revenue to cover all operating and administrative costs associated with our production.

Our copper mines may contain other commercially recoverable metals, such as gold, molybdenum, silver and cobalt. We value all commercially recoverable metals in terms of a copper equivalent percentage to determine a single cutoff grade. Copper equivalent percentage is used to express the relative value of multi-metal ores in terms of one metal. The calculation expresses the relative value of the ore using estimates of contained metal quantities, metals prices as used for reserve determination, recovery rates, treatment charges and royalties. Our molybdenum properties use a molybdenum cutoff grade.

The table below shows the minimum cutoff grade by process for each of our existing ore bodies as of December 31, 2013:                

	Copper Equivalent Cutoff Grade (Percent)			Molybdenum Cutoff Grade (Percent)
	Mill	Crushed or Agitation Leach	ROM Leach	Mill
North America
Morenci	0.25	0.20	0.03	—
Bagdad	0.20	—	0.09	—
Safford	—	0.13	—	—
Sierrita	0.18	—	0.07	—
Miami	—	—	0.05	—
Chino	0.20	—	0.08	—
Tyrone	—	—	0.05	—
Henderson	—	—	—	0.12
Climax	—	—	—	0.06
Cobre	—	—	0.17	—
South America
Cerro Verde	0.17	0.19	0.14	—
El Abra	—	0.11	0.07	—
Candelaria	0.24	—	—	—
Ojos del Salado	0.81	—	—	—
Indonesia
Grasberg open pit	0.25	—	—	—
Deep Ore Zone	0.77	—	—	—
Big Gossan	1.88	—	—	—
Grasberg Block Cave	0.71	—	—	—
Kucing Liar	0.83	—	—	—
Deep Mill Level Zone	0.72	—	—	—
Africa
Tenke Fungurume	—	1.33	—	—

35

Drill hole spacing data is used by mining professionals, such as geologists and geological engineers, in determining the suitability of data coverage (on a relative basis) in a given deposit type and mining method scenario so as to achieve a given level of confidence in the resource estimate. Drill hole spacing is only one of several criteria necessary to establish resource classification. Drilling programs are typically designed to achieve an optimum sample spacing to support the level of confidence in results that apply to a particular stage of development of a mineral deposit.

The following table sets forth the average drill hole spacing based on average sample distance or drill pattern spacing for proven and probable ore reserves by process type:

		Average Drill Hole Spacing (in Meters)
		Proven		Probable
	Mining Unit	Mill	Leach	Mill	Leach
North America
Morenci	Open Pit	86	86	122	122
Bagdad	Open Pit	86	86	122	122
Safford	Open Pit	—	86	—	122
Sierrita	Open Pit	73	61	104	91
Miami	Open Pit	—	61	—	91
Chino	Open Pit	43	86	86	122
Tyrone	Open Pit	—	86	—	86
Henderson	Block Cave	38	—	85	—
Climax	Open Pit	61	—	91	—
Cobre	Open Pit	—	61	—	91
South America
Cerro Verde	Open Pit	50	50	100	100
El Abra	Open Pit	—	75	—	120
Candelaria	Open Pit	35	—	70	—
Ojos del Salado	Sublevel Stoping	25	—	50	—
Indonesia
Grasberg	Open Pit	32	—	86	—
Deep Ore Zone	Block Cave	23	—	57	—
Big Gossan	Open Stope	14	—	42	—
Grasberg	Block Cave	31	—	79	—
Kucing Liar	Block Cave	39	—	99	—
Deep Mill Level Zone	Block Cave	21	—	79	—
Africa
Tenke Fungurume	Open Pit	—	50	—	100

36

Production Sequencing

The following chart illustrates our current plans for sequencing and producing our proven and probable reserves at each of our ore bodies and the years in which we currently expect production from each ore body. The chart also shows the term of PT-FI's COW. Production volumes are typically lower in the first few years for each ore body as development activities are ongoing and as the mine ramps up to full production and production volumes may also be lower as the mine reaches the end of its life. The ultimate timing of the start of production from our undeveloped mines is dependent upon a number of factors, including the results of our exploration and development efforts, and may vary from the dates shown below. In addition, we develop our mine plans based on maximizing the net present value from the ore bodies. Significant additional capital expenditures will be required at many of these mines in order to achieve the life-of-mine plans reflected below.

Mill and Leach Stockpiles

Mill and leach stockpiles generally contain lower grade ores that have been extracted from the ore body and are available for copper recovery. For mill stockpiles, recovery is through milling, concentrating, smelting and refining or, alternatively, by concentrate leaching. For leach stockpiles, recovery is through exposure to acidic solutions that dissolve contained copper and deliver it in solution to extraction processing facilities.

Because it is generally impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper grades of material delivered to mill and leach stockpiles.

Expected copper recovery rates for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately.

37

Expected copper recovery rates for leach stockpiles are determined using small-scale laboratory tests, small- to large-scale column testing (which simulates the production-scale process), historical trends and other factors, including mineralogy of the ore and rock type. Total copper recovery in leach stockpiles can vary significantly from a low percentage to more than 90 percent depending on several variables, including processing methodology, processing variables, mineralogy and particle size of the rock. For newly placed material on active stockpiles, as much as 80 percent of total copper recovery may be extracted during the first year, and the remaining copper may be recovered over many years.

Processes and recovery rates are monitored continuously, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes.

Following are our stockpiles and the estimated recoverable copper contained within those stockpiles as of December 31, 2013:

				Recoverable
	Million	Average	Recovery	Copper
	Metric Tons	Ore Grade (%)	Rate (%)	(billion pounds)
Mill stockpiles
Cerro Verde	112	0.39	82.1	0.8
Candelaria	92	0.36	83.5	0.6
	204			1.4
Leach stockpiles
Morenci	5,465	0.24	2.0	0.6
Bagdad	488	0.26	2.2	0.1
Safford	161	0.43	15.9	0.2
Sierrita	650	0.15	11.8	0.2
Miami	483	0.39	2.7	0.1
Chino	1,639	0.26	4.9	0.5
Tyrone	1,078	0.28	2.6	0.2
Cerro Verde	452	0.52	3.2	0.2
El Abra	529	0.42	10.3	0.5
Tenke Fungurume	31	1.25	91.9	0.8
	10,976			3.4
Total FCX - 100% basis				4.8
Total FCX - Consolidated basisa				4.7
Total FCX - Net equity interestb				3.5

a. Consolidated represents estimated metal quantities after reduction for our joint venture partner’s interest in the Morenci mine in North America.

b. Net equity interest represents estimated consolidated metal quantities further reduced for noncontrolling interest ownership.

Mineralized Material

We hold various properties containing mineralized material that we believe could be brought into production should market conditions warrant. However, permitting and significant capital expenditures would be required before operations could commence at these properties. Mineralized material is a mineralized body that has been delineated by appropriately spaced drilling and/or underground sampling to support the reported tonnage and average metal grades. Such a deposit cannot qualify as recoverable proven and probable reserves until legal and economic feasibility are confirmed based upon a comprehensive evaluation of development costs, unit costs, grades, recoveries and other material factors. Estimated mineralized materials as presented on the following page were assessed using prices of $2.20 per pound for copper, $1,000 per ounce for gold and $12 per pound for molybdenum.

38

Mineralized Material
Estimated at December 31, 2013
		Milling Material							Leaching Material		Total Mineralized Material
		Million							Million		Million
	FCX’s	metric	Copper	Gold		Moly		SIlver	metric	Copper	metric
	Interest	tons	%	g/t		%		g/t	tons	%	tons
North America
Morenci	85%	1,328	0.26	—		0.02		—	1,350	0.20	2,678
Bagdad	100%	437	0.28	—	a	0.02		1.3	7	0.12	444
Safford	100%	431	0.53	0.10		—	a	2.0	161	0.24	592
Sierrita	100%	1,509	0.19	—	a	0.02		1.1	16	0.16	1,525
Chino	100%	110	0.42	—		0.01		—	28	0.27	138
Tyrone	100%	—	—	—		—		—	52	0.34	52
Henderson	100%	158	—	—		0.15		—	—	—	158
Climax	100%	421	—	—		0.15		—	—	—	421
Cobre	100%	39	0.54	—		—		—	9	0.26	48
Ajo	100%	817	0.33	0.07		0.01		0.9	—	—	817
Cochise/Bisbee	100%	—	—	—		—		—	258	0.45	258
Lone Star	100%	—	—	—		—		—	656	0.44	656
Sanchez	100%	—	—	—		—		—	160	0.29	160
Tohono	100%	203	0.70	—		—		—	248	0.65	451
Twin Buttes	100%	445	0.40	—		0.03		2.3	53	0.21	498
Christmas	100%	224	0.38	0.05		—	a	1.0	—	—	224
South America
Cerro Verde	53.56%	319	0.35	—		0.01		1.5	7	0.39	326
El Abra	51%	1,842	0.45	0.02		0.01		1.4	192	0.28	2,034
Candelaria	80%	46	0.60	0.14		—		1.8	—	—	46
Indonesia
Grasberg minerals district	54.38%b	2,666	0.61	0.54		—		3.4	—	—	2,666
Africa
Tenke Fungurumec	56%	65	3.90	—		—		—	28	2.81	93
Kisanfuc	95%	49	2.48	—		—		—	47	3.16	96
Total FCX - 100% basis		11,109							3,272		14,381
Total FCX - Consolidated basisd		9,844							3,069		12,913
Total FCX - Net equity intereste		8,603							2,957		11,560

a. Amounts not shown because of rounding.

b. FCX's interest in the Grasberg minerals district reflects our 60 percent joint venture ownership further reduced by noncontrolling interest ownership.

c. Stated tonnage also includes cobalt at Tenke Fungurume (0.31 percent) and Kisanfu (1.15 percent).

d. Consolidated basis represents estimated mineralized materials after reduction for our joint venture partners' interest in the Morenci mine and the Grasberg minerals district.

e. Net equity interest represents estimated consolidated mineralized material further reduced for noncontrolling interest ownership.

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OIL AND GAS OPERATIONS

As further discussed in Note 2, during second-quarter 2013, we acquired oil and gas operations by completing the acquisitions of PXP and MMR. Our oil and gas operations include oil production facilities and growth potential in the Deepwater GOM, oil production from the onshore Eagle Ford shale play in Texas, oil production facilities onshore and offshore California, onshore natural gas resources in the Haynesville shale play in Louisiana, natural gas production from the Madden area in central Wyoming, and an industry-leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana. Refer to "General" for a map showing the locations of our oil and gas operations.

Acreage

At December 31, 2013, we owned interests in approximately 45 thousand oil and gas leases covering 5.1 million gross acres (2.8 million acres net to our interest). The following table summarizes, by geographic area, the developed and undeveloped oil and gas acreage in which we held interests at December 31, 2013:

		Developed		Undeveloped
		Gross Acres	Net Acres	Gross Acres	Net Acres
Louisiana:
	Onshore	377,767	71,152	84,611	41,557
	Offshore	469,412	267,374	967,868	536,721
Texas		70,812	40,953	31,361	16,735
California:
	Onshore	61,287	60,721	63,408	39,980
	Offshore	43,335	39,062	—	—
Wyoming		83,252	16,286	138,524	114,737
Nevada		—	—	246,073	246,073
Florida		160	24	114,600	14,982
Utah		—	—	86,862	71,880
Other		3,124	529	150,469	107,715
Total U.S.		1,109,149	496,101	1,883,776	1,190,380
Morocco		—	—	2,154,014	1,120,087
		1,109,149	496,101	4,037,790	2,310,467

Approximately 41 percent of our total U.S. net undeveloped acres are covered by leases that expire from 2014 to 2016; however, a significant portion of this acreage is expected to be retained by drilling operations or other means. The lease for our Morocco acreage expires in 2016; however, we have the ability to extend the lease through 2019.

Oil and Gas Properties

Our oil and gas properties are subject to customary royalty interests, liens incident to operating agreements, liens for current taxes and other burdens, including other mineral encumbrances and restrictions. We do not believe that any of these burdens materially interfere with our use of the properties in the operation of our business.

We believe that we have satisfactory title to or rights in all of our producing properties. As is customary in the oil and gas industry, we make minimal investigation of title at the time we acquire undeveloped properties. We make title investigations and receive title opinions of local counsel only before we commence drilling operations. We believe that we have satisfactory title to all of our other assets. Although title to our properties is subject to encumbrances in certain cases, we believe that none of these burdens will materially detract from the value of our properties or from our interest therein or will materially interfere with our use in the operation of our business.

Following are descriptions of our primary U.S. oil and gas properties:

Gulf of Mexico.

Deepwater GOM. Our Deepwater GOM portfolio includes a 100 percent working interest in the Holstein, Horn Mountain, Marlin, Dorado and King fields, a 31 percent working interest in the Ram Powell field and a 33.3 percent working interest in the Diana and Hoover fields.

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The following table summarizes our Deepwater GOM platforms at December 31, 2013:

					Capacity per Day
Platform	Field Location	Type of Platform	Production Commenced	Water Depth (feet)	Oil (Bbls)	Gas (Mcf)
Holsteina	Green Canyon Blocks 644, 645 and 688	Truss Spar	2004	4,300	113,500	142,300
Horn Mountaina	Mississippi Canyon Blocks 126 and 127	Truss Spar	2002	5,400	75,000	72,000
Marlin Huba	Severalb	Tension Leg	2000	3,200	60,000	235,000
Ram Powell	Viosca Knoll Blocks 911 to 913 and 955 to 957	Tension Leg	1997	3,200	70,000	310,000
Hoover	Severalc	Deep Draft Caisson Vessel	2000	4,800	100,000	325,000

a. We are the operator of the Holstein, Horn Mountain and Marlin Hub platforms.

b. The Marlin Hub is the production facility for three fields: the Marlin field (S/2 Viosca Knoll Block 871 and N/2 Viosca Knoll Block 915), the Dorado field (S/2 Viosca Knoll Block 915) and the King field (Mississippi Canyon Blocks 84, 85, 128 and 129). The Marlin field currently produces via a combination of platform and subsea tie-back wells while the Dorado and King fields currently produce exclusively via subsea wells and tie-back infrastructure.

c.The Hoover platform is a deep draft caisson vessel located in Alaminos Canyon Block 25. The Diana field is located in East Breaks Blocks 945, 946 and 989, and the Hoover field is located in Alaminos Canyon Blocks 25 and 26.

Additionally, our subsidiary Plains Offshore Operations Inc. (Plains Offshore), holds a 23.33 percent working interest in the Lucius oil field and a 50 percent working interest in the Phobos discovery. Refer to Note 2 for further discussion of Plains Offshore.

Our Deepwater GOM exploration portfolio includes interests in 147 blocks containing 60 prospects in the Pliocene, Miocene and Lower Tertiary reservoirs.

GOM Shelf.Our GOM Shelf properties are primarily located on the outer continental shelf in the shallow waters (less than 500 feet of water) of the GOM and onshore in the Gulf Coast area of Louisiana, with drilling depths not exceeding 15,000 feet considered to be traditional shelf prospects.

Inboard Lower Tertiary/Cretaceous. Prospects with drilling depths below the salt weld (generally at depths exceeding 25,000 feet) are considered Inboard Lower Tertiary/Cretaceous prospects. Refer to "Exploration and Development Activities" for further discussion.

Eagle Ford. TheEagle Ford shale play is Upper Cretaceous in age, and typical well depths range from 9,500 feet to 11,500 feet. The area is currently being developed with horizontal wells with lateral lengths ranging from 3,500 feet to 6,000 feet at a measured total depth from 14,500 to 17,500 feet. We own approximately 392 square miles of 3-D seismic data on our acreage. Based on the 60 to 130 acre well spacing, we anticipate over 600 potential well locations, with approximately 250 locations remaining.

California.

Onshore California. We hold a 100 percent working interest in the majority of our Los Angeles Basin properties in the Inglewood, Las Cienegas, Montebello, Packard and San Vicente fields, and a 100 percent working interest in the majority of our San Joaquin Basin properties in the Cymric, Midway Sunset and South Belridge fields. The Los Angeles Basin properties are characterized by light crude oil (21 to 32 degree American Petroleum Institute (API) gravity), have well depths ranging from 2,000 feet to over 10,000 feet and include both primary production and mature wells using waterflood recovery methods (whereby water is injected into the reservoir formation to displace residual oil), where producing wells have a high ratio of water produced compared to total liquids produced (high water cuts). The San Joaquin Basin properties are long-lived fields that have heavier oil (12 to 16 degree API gravity) and shallow wells (generally less than 2,000 feet) that require enhanced oil recovery techniques, including steam injection, and produce with high water cuts.

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We also hold a 100 percent working interest (94 percent net revenue interest) in the Arroyo Grande Field located in San Luis Obispo County, which is a long-lived field that has heavier oil (12 to 16 degree API gravity) and well depths averaging 1,700 feet requiring continuous steam injection.

Offshore California. All of our offshore California properties are located in federal waters approximately five to seven miles offshore in the Santa Maria Basin. We hold a 69.3 percent working interest (58 perecent net revenue interest) in the Point Arguello Unit, composed of the Hidalgo, Hermosa and Harvest platforms, and the various partnerships owning the related transportation, processing and marketing infrastructure. We also hold a 100 percent working interest (83 percent net revenue interest) in the Point Pedernales field, which includes the Irene platform, that is utilized to access the Federal Outer Continental Shelf Monterey Reservoir by extended reach directional wells and support facilities which lie within the onshore Lompoc field.

Haynesville. The Haynesville shale play is characterized by gas production from the Jurassic aged Haynesville shale formation in Louisiana, and typical well depth is 10,500 feet. The area has historically been developed with approximately 4,000 foot horizontal wells at a measured total depth of 16,000 feet.

Madden. We own an approximate 14 percent working interest in the Madden Deep Unit and Lost Cabin Gas Plant located in central Wyoming. The Madden Deep Unit is a federal unit operated by a third party and consists of acreage in the Wind River Basin. The Madden area is characterized by gas production from multiple stratigraphic horizons of the Lower Fort Union, Lance, Mesaverde and Cody sands and the Madison Dolomite. Production from the Madden Deep Unit is typically found at depths ranging from 5,500 to 25,000 feet.

Exploration and Development Activities

Our oil and gas business has significant proved, probable and possible reserves with financially attractive organic growth opportunities. The portfolio includes a broad range of development opportunities and high-potential exploration prospects. Substantial capital expenditures will continue to be required for our oil and gas exploration and development activities, which are expected to be funded by oil and gas operating cash flows and proceeds from asset sales. Also refer to MD&A for further discussion of our oil and gas exploration, operating and development activities.

Gulf of Mexico.Multiple development and exploration opportunities have been identified in the Deepwater GOM that are expected to benefit from tie-back opportunities to available production capacity at the FM O&G operated large-scale Holstein, Marlin and Horn Mountain deepwater production platforms.

Holstein, in which we have a 100 percent working interest, is located in Green Canyon and has production facilities capable of producing in excess of 100 thousand barrels of oil equivalents (MBOE) per day. The Holstein platform rig refurbishment program was conducted in the second half of 2013 in preparation for drilling and workover activity, which commenced in first-quarter 2014. Over the 2014 to 2016 period, we expect to drill seven sidetrack wells from the Holstein platform and five subsea tie-back wells from contracted drill ships to enhance production volumes from the spar. Near-term tie-back prospects in the Holstein area include Holstein Deep and Copper.

The Holstein Deep development, in which we have a 100 percent working interest, is located four miles west of the Holstein platform. FM O&G acquired the acreage associated with this development in the 2013 lease sale held by the Bureau of Ocean Energy Management. Two successful wells had previously been drilled and encountered approximately 500 net feet of oil pay in recent years. We plan to delineate this prospect during 2014.

The Copper exploration prospect, in which we have a 100 percent working interest, is located southeast of the Holstein field in 4,400 feet of water and is a subsea tie-back opportunity to the Holstein facility. The prospect is a Holstein analog play with Pliocene objectives and has a proposed total depth of 14,500 feet.

Development of the Lucius field in Keathley Canyon, in which our subsidiary Plains Offshore has a 23.33 percent working interest, is progressing with first production anticipated in the second half of 2014. The geologic results from the six wells drilled since 2009 confirm a significant oil resource. Subsea infrastructure is currently being installed, and topside facilities are more than 90 percent complete and on schedule to be delivered and lifted into place during 2014. The sanctioned development of Lucius is a subsea development consisting of a truss spar hull located in 7,200 feet of water with a topside capacity of 80 thousand barrels (MBbls) of oil per day and 450 million cubic feet (MMcf) of gas per day.

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During 2014, Plains Offshore also plans to commence drilling at the Tara exploration prospect, in which we have a 100 percent working interest, located northwest of the Lucius discovery in Keathley Canyon in 8,700 feet of water. Tara is a Lucius analog prospect with Pliocene/Miocene objectives and has a proposed total depth of 23,000 feet.

Eagle Ford. We have an attractive position in an oil- and NGL-rich section of the Eagle Ford shale play in South Texas. Production from the field has grown significantly in recent years and sales averaged 46 MBOE per day for the seven-month period following the acquisition of our oil and gas operations in 2013. As part of our capital spending reduction initiatives, we have reduced drilling activity at Eagle Ford from eight rigs in mid-2013. At December 31, 2013, there were three drilling rigs operating, which we expect to reduce to two during 2014. At December 31, 2013, there were 36 wells that were drilling or were drilled and pending completion or connection to pipelines.

California.Development plans are principally focused on maintaining stable production levels in the long established producing fields onshore California through continued drilling.

Haynesville.We have rights to a substantial natural gas resource, located in the Haynesville shale play in north Louisiana. Drilling activities in recent years have been significantly reduced to maximize cash flows in a low natural gas price environment and to benefit from potentially higher future natural gas prices.

Inboard Lower Tertiary/Cretaceous. We have an industry leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend, located on the Shelf of the GOM and onshore South Louisiana. We have a significant onshore and offshore lease acreage position with high-quality prospects and the potential to develop a significant long-term, low-cost source of natural gas. Data from eight wells drilled to date indicate the presence of geologic formations that are analogous to productive formations in the Deepwater GOM and onshore in the Gulf Coast region. The near-term focus is on defining the trend onshore. We are currently completing two Inboard Lower Tertiary/Cretaceous exploration prospects, including one onshore well, and plan to perform production tests on these two wells and a third well in 2014.

The Lomond North discovery well within the Highlander area, in which we are the operator and have a 72 percent working interest, located in St. Martin Parish, Louisiana, has encountered gas pay in several Wilcox and Cretaceous aged sands between 24,000 feet and 29,000 feet. The wireline log and core data obtained from the Wilcox and Cretaceous sand packages indicated favorable reservoir characteristics with approximately 150 feet of net pay. The Lomond North discovery well is currently in completion operations to test Lower Wilcox and Cretaceous objectives found below the salt weld. We have identified multiple exploratory prospects in the Highlander area where we control rights to approximately 56,000 gross acres.

During 2013, we commenced completion operations at Davy Jones No. 2, in which we have a 75 percent working interest, located on South Marsh Island Block 234. Flow testing is anticipated in the first half of 2014. During 2014, we also plan to complete the Blackbeard West No. 2 well, in which we have a 92 percent working interest, located on Ship Shoal Block 188. The Lineham Creek exploration well, in which we have a 36 percent working interest, located in Cameron Parish has been suspended while future plans are being developed.

Future production from certain specified Inboard Lower Tertiary/Cretaceous exploration prospects is subject to a five percent overriding royalty interest held by Gulf Coast Ultra Deep Royalty Trust. The overriding royalty interest is proportionately reduced based on our working interest in each prospect as provided in the trust documents. At December 31, 2013, we beneficially owned 27 percent of the royalty trust. Refer to Note 2 for further discussion of the royalty trust.

Morocco. We have a commitment to fund and drill two wells offshore the Kingdom of Morocco. We expect to commence drilling of the first exploration well in early 2015.

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Production and Sales Data

The following table presents summary production data, average realized prices and average production costs for our oil and gas operations for the seven-month period in 2013 following the acquisition dates.

	Seven-Month Period
	June 1, 2013, to December 31, 2013
	GOMa	Eagle Ford	California	Haynesville/Madden/Other	Totalb
Oil Sales (million barrels)	11.3	7.2	8.0	0.1	26.6
Natural Gas Sales (billion cubic feet)
Production	17.3	8.8	2.1	26.8	55.0
Used as fuel in our operations	—	—	0.8	—	0.8
Sales	17.3	8.8	1.3	26.8	54.2
NGL Sales (million barrels)	1.1	1.3	—	—	2.4
MMBOE
Production	15.3	9.9	8.4	4.6	38.2
Sales	15.3	9.9	8.3	4.6	38.1
Average Realized Price, excluding derivatives
Oil (per barrel)					$	99.67
Natural gas (per MMBtu)					$	3.73
NGLs (per barrel)					$	38.20
Average Cost per BOE
Production costsc					$	15.18
Production and ad valorem taxes					1.96
Cash production costsd					$	17.14

a. Includes properties on the Shelf and in the Deepwater GOM.

b. At December 31, 2013, no individual fields represented 15 percent or more of our proved oil and gas reserves.

c. Reflects costs incurred to operate and maintain wells and related equipment and facilities.

d. Refer to MD&A for further discussion of cash production costs per BOE and for a reconciliation to production and delivery costs reported in our consolidated financial statements.

Oil and Natural Gas Reserves

Our reserve volumes have been determined in accordance with the current regulations and guidelines established by the SEC, which require the use of an average price, calculated as the twelve-month average of the first-day-of-the-month historical reference price as adjusted for location and quality differentials, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions and the impact of derivatives. Reference prices for reserve determination are the WTI spot price for crude oil and the Henry Hub spot price for natural gas. At December 31, 2013, our estimates were based on reference prices of $96.94 per barrel and $3.67 per MMBtu. All of our oil and natural gas reserves are located in the U.S.

Proved Reserves. All of our estimated proved oil and natural gas reserves at December 31, 2013, are based upon reserve reports prepared by the independent petroleum engineering firms of Netherland, Sewell & Associates, Inc. (NSAI) and Ryder Scott Company, L.P. (Ryder Scott). The scope and results of procedures employed by NSAI and Ryder Scott are summarized in letters that are filed as exhibits to this annual report on Form 10-K. For purposes of reserve estimation, we and our independent petroleum engineers used technical and economic data including well logs, geologic maps, seismic data, well test data, production data, historical price and cost information, and property ownership interests. Our reserves have been estimated using deterministic methods. Standard engineering and geoscience methods were used, or a combination of methods, including performance analysis, volumetric analysis and analogy, which we and our independent petroleum engineers considered to be appropriate and necessary to categorize and estimate reserves in accordance with SEC definitions and regulations. A substantial portion of these reserves are for undeveloped locations; such reserves are based on estimates of reserve volumes and recovery efficiencies along with analogy to properties with similar geologic and reservoir characteristics. Because these estimates depend on many assumptions, any or all of which may differ substantially from actual results, reserve estimates may differ from the quantities of oil and natural gas that we ultimately recover.

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Proved reserves represent quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and natural gas actually recovered will equal or exceed the estimate. At December 31, 2013, our estimated proved oil and natural gas reserves totaled 464 MMBOE, of which 80 percent was comprised of oil (including NGLs).

	Proved Oil and Natural Gas Reserves
	Estimated at December 31, 2013
	Oila	Natural Gas	Total
	(MMBbls)	(Bcf)	(MMBOE)
Proved Developed:
Gulf of Mexico	73	125	94
Eagle Ford	36	41	43
California	126	29	131
Haynesville/Madden/Other	1	228	39
	236	423	307
Proved Undeveloped:
Gulf of Mexico	64	77	77
Eagle Ford	14	12	16
California	56	7	57
Haynesville/Madden/Other	—	43	7
	134	139	157
Total Proved Reserves	370	562	464

a. Includes 20 MMBbls of NGL proved reserves, consisting of 14 MMBbls of proved developed and 6 MMBbls of proved undeveloped.

At December 31, 2013, we have an estimated total proved reserve life of seven years and a proved developed reserve life of 4.6 years. At December 31, 2013, our proved undeveloped reserves are 34 percent of our total proved reserves; 93 percent of our proved undeveloped reserves are scheduled for development within five years and 91 percent, or $3.2 billion, of our estimated future proved undeveloped capital is associated with the development of those reserves. The only exceptions are related to four planned sidetrack development wells in certain Shelf and Deepwater GOM properties that cannot be executed until the current producing wells deplete. During the seven month period from June 1, 2013, to December 31, 2013, we invested $369 million and converted 19 MMBOE to proved developed.

During the seven month period from June 1, 2013, to December 31, 2013, we participated in 66 gross exploratory wells, of which 65 were successful, and 95 gross development wells, of which 94 were successful (refer to "Drilling Activities"). During this period, proved reserve additions from extensions and discoveries totaled 24 MMBOE.

The following table reflects the present value of estimated future net cash flows before income taxes from the production and sale of our estimated proved reserves reconciled to the standardized measure of discounted net cash flows (standardized measure) at December 31, 2013 (in millions):

Estimated undiscounted future net cash flows before income taxes	$	19,647
Present value of estimated future net cash flows before income taxes (PV-10)a,b	$	12,643
Discounted future income taxes	(3,226		)
Standardized measure (refer to Note 21)	$	9,417

a. In accordance with SEC guidelines, estimates of future net cash flows from our proved reserves and the present value thereof are made using the twelve-month average of the first-day-of-the-month historical reference prices as adjusted for location and quality differentials. Reference prices as of December 31, 2013, were $96.94 per barrel of oil and $3.67 per MMBtu of natural gas. These prices are held constant throughout the life of the oil and gas properties, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations. In accordance with the guidelines and excluding the impact of derivative instruments, the average realized prices used in our reserve reports as of December 31, 2013, were $99.67 per barrel of oil and $3.64 per Mcf of natural gas. Our reference prices are the WTI spot price for crude oil and the Henry Hub spot price for natural gas and are calculated as the twelve-month average of the first-day-of-the-month historical prices.

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b. The present value of estimated future net cash flows before income taxes (PV-10) is not considered a U.S. generally accepted accounting principle (GAAP) financial measure. We believe that our PV-10 presentation is an important measure and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves before taking into account the related future income taxes, as such taxes may differ among companies because of differences in the amounts and timing of deductible basis, net operating loss carryforwards and other factors. We believe investors use our PV-10 as a basis for comparison of the relative size and value of our proved reserves to the reserve estimates of other companies. PV-10 is not a measure of financial or operating performance under U.S. GAAP and is not intended to represent the current market value of our estimated oil and natural gas reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure of discounted future net cash flows as defined under U.S. GAAP.

Probable Reserves. All of our estimated probable oil and natural gas reserves at December 31, 2013, are based upon reserve reports prepared by the independent petroleum engineering firms of NSAI and Ryder Scott. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves, but which, together with proved reserves, are as likely as not to be recovered. In addition to the uncertainties inherent in estimating quantities and values of proved reserves, probable reserves may be assigned to areas where data control or interpretations of available data are less certain even if the interpreted reservoir continuity of structure or productivity does not meet the reasonably certain criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. Probable reserve estimates also include potential incremental qualities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves. Undeveloped reserves that meet the reasonably certain, economic and other requirements to be classified as proved undeveloped, except that they are not expected to be developed within five years, are classified as probable reserves. At December 31, 2013, our estimated probable oil and natural gas reserves totaled 184 MMBOE, of which 83 percent was comprised of oil (including NGLs).

	Probable Oil and Natural Gas Reserves
	Estimated at December 31, 2013
	Oila	Natural Gas	Total
	(MMBbls)	(Bcf)	(MMBOE)
Probable Developedb:
Gulf of Mexico	22	34	28
Eagle Ford	1	2	2
California	5	1	5
Haynesville/Madden/Other	—	14	2
	28	51	37
Probable Undeveloped:
Gulf of Mexico	36	59	46
Eagle Ford	7	5	8
California	82	38	88
Haynesville/Madden/Other	—	32	5
	125	134	147
Total Probable Reserves	153	185	184

a. Includes 6 MMBbls of NGL probable reserves, consisting of 2 MMBbls of probable developed and 4 MMBbls of probable undeveloped.

b. Reflects reserves associated with incremental recovery from existing production/injection wells that require minimal to no future development costs and reserves associated with work performed on existing producers/injectors that do not meet the reasonable certainty requirements to be classified as proved reserves.

Internal Control and Qualifications of Third Party Engineers and Internal Staff. The technical personnel responsible for preparing the reserve estimates at NSAI and Ryder Scott meet the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Both NSAI and Ryder Scott are independent firms of petroleum engineers, geologists, geophysicists, and petrophysicists; neither firm owns an interest in our properties nor are employed on a contingent fee basis. Our internal reservoir engineering staff are led and overseen by our Vice President of Engineering, who has over 37 years of technical experience in petroleum engineering and reservoir evaluation and analysis. This individual directs the activities of our internal reservoir staff for the internal reserve estimation process and also to provide the appropriate data to NSAI and Ryder Scott for our year-end oil and natural gas reserves estimation process.

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Drilling Activities

The following table provides the total number of wells that we drilled during the seven month period from June 1, 2013, to December 31, 2013:

		Gross	Net
Exploratory
	Productive:
	Oil	40	35
	Gas	25	2
	Dry	1	1
		66	38
Development
	Productive:
	Oil	71	66
	Gas	23	8
	Dry	1	1
		95	75
		161	113

At December 31, 2013, there were 36 gross exploratory and 60 gross development wells (23 net exploratory and 19 net development wells) in progress, including 50 gross wells (5 net wells) in progress in the Haynesville shale play and 36 gross wells (31 net wells) in progress in the Eagle Ford shale play.

Productive Wells

At December 31, 2013, we had working interests in 3,310 gross (3,153 net) active producing oil wells and 1,651 gross (238 net) active producing natural gas wells. One or more completions in the same well bore are considered one well. If any well in which one of the multiple completions is an oil completion, such well is classified as an oil well. At December 31, 2013, we owned interests in five gross wells containing multiple completions.

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Item 1A. Risk Factors.

This report contains "forward-looking statements" within the meaning of United States (U.S.) federal securities laws. Forward-looking statements are all statements other than statements of historical facts, such as expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; cash production costs per barrel of oil equivalent (BOE); operating cash flows; capital expenditures; exploration efforts and results; development and production activities and costs; liquidity; tax rates; the impact of copper, gold, molybdenum, cobalt and crude oil price changes; the impact of derivative positions; availability of power, water, labor and equipment; reclamation and closure costs and plans; litigation contingencies; political, economic and social conditions; the impact of deferred intercompany profits on earnings; reserve estimates; future dividend payments; debt reduction and share purchases. We undertake no obligation to update any forward-looking statements. Readers are cautioned that forward-looking statements are not guarantees of future performance and our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that could cause our actual results to differ materially from those anticipated in the forward-looking statements include the following:

Financial risks

Declines in the market prices of copper, gold and/or oil could adversely affect our earnings, cash flows and asset values and, if sustained, could adversely affect our ability to repay debt. Fluctuations in the market prices of copper, gold or oil can cause significant volatility in our financial performance and adversely affect the trading prices of our debt and common stock.

Our financial results vary with fluctuations in the market prices of the commodities we produce, primarily copper, gold and oil, and to a lesser extent molybdenum, silver, cobalt and natural gas. For further information about the market prices of our primary commodities, refer to the discussion below and MD&A. A substantial or extended decline in the market prices of these commodities could have a material adverse effect on our financial results, the value of our assets and/or our ability to repay our debt and meet our other fixed obligations, and could depress the trading prices of our common stock and of our publicly traded debt securities.

Additionally, if the market prices for the commodities we produce decline for a sustained period of time, we may have to revise our operating plans, including curtailing production, halting or delaying expansion projects, reducing operating costs and capital expenditures and discontinuing certain exploration and development programs. We may be unable to decrease our costs in an amount sufficient to offset reductions in revenues, and may incur losses.

Fluctuations in commodities prices can occur because of varied and complex factors beyond our control, including:

• Global supply and demand balances and inventory levels;

• Global economic and geopolitical conditions;

• Government regulatory, trade and tax policies;

• Commodities investment activity and speculation;

• Price and availability of substitute products; and

• Changes in technology.

Copper prices may also be affected by demand from China, which has become the largest consumer of refined copper in the world, and by increases in demand for industrial products containing copper.

Factors particularly affecting gold prices may include the relative strength of the U.S. dollar to other currencies, inflation and interest rate expectations, purchases and sales of gold by governments and central banks, demand from China and India, two of the world’s largest consumers of gold, and demand for jewelry containing gold.

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Crude oil prices may also be affected by actions of the Organization of the Petroleum Exporting Countries and other major oil producing nations; political and weather conditions in oil producing regions; transportation and refinery capacity; the amount of foreign imports of oil into the U.S.; and potential changes in U.S. laws restricting oil exports.

Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted London Metal Exchange (LME) monthly average spot copper prices. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

A decline in the price of crude oil, and to a lesser extent natural gas, could also result in a "ceiling" write-down of the carrying value of our proved oil and natural gas properties and/or of goodwill recorded in connection with our oil and gas acquisitions. At December 31, 2013, the ceiling with respect to our oil and gas properties exceeded the net capitalized costs of those properties by approximately 4 percent, and we did not record an impairment. Given the volatility of crude oil and natural gas prices, it is likely that our estimate of discounted future net revenues from proved oil and natural gas reserves will change in the near term. If crude oil and natural gas prices decline in the future, even if only by a small amount, impairments of our oil and gas properties could occur.

For further discussion of our accounting policies and estimates used in evaluating our oil and gas properties and goodwill for impairment, refer to Note 1 and MD&A. Any impairment charge related to our oil and gas properties or goodwill could have a material adverse effect on our results of operations and stockholders' equity, but would have no effect on cash flows.

Our debt and other financial commitments may limit our financial and operating flexibility.

At December 31, 2013, our total consolidated debt was $20.7 billion, including $17.2 billion incurred or assumed in connection with the acquisition of Plains Exploration & Production Company (PXP), and our total consolidated cash was $2.0 billion. Although we have been successful in repaying significant amounts of debt in the past, there can be no assurance that we can do so in the future. We also have various other financial commitments, including for reclamation and environmental obligations, take-or-pay contracts, derivative contracts and leases. Our level of indebtedness and other financial commitments could have important consequences to our business, including the following:

• Limiting our flexibility in planning for, or reacting to, changes in the industries in which we operate;

• Increasing our vulnerability to general adverse economic and industry conditions;

• Limiting our ability to fund future working capital and capital expenditures, to engage in future development activities, or to otherwise realize the value of our assets and opportunities fully because of the need to dedicate a substantial portion of our cash flows from operations to payments on our debt; or

• Placing us at a competitive disadvantage compared to our competitors that have less debt and/or fewer financial commitments.

In addition, a future downgrade in our credit rating could negatively affect our cost of and ability to access capital. At December 31, 2013, our senior unsecured debt was rated "BBB" with a negative outlook by Standard and Poor’s, "BBB" with a stable outlook by Fitch Ratings, and "Baa3" with a stable outlook by Moody’s Investors Service. We cannot be assured that our credit ratings will not be downgraded in the future. In addition, a downgrade could affect our requirements to provide significant financial assurance of our performance under certain legal requirements and contractual arrangements. Refer to the following risk factor for more information.

Under U.S. federal and state laws that require closure and reclamation plans for our mines, we generally are required to provide financial assurance sufficient to allow a third party to implement those plans if we are unable to do so. We are also required to provide bonds or other forms of financial assurance in connection with our oil and gas operations.The failure to comply with these requirements could have a material adverse effect on us.

We are required by U.S. federal and state mining laws to provide financial assurance sufficient to allow a third party to implement approved closure and reclamation plans if we are unable to do so. The U.S. Environmental Protection

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Agency (EPA) and state agencies may also seek financial assurance for investigation and remediation actions that are required under settlements of enforcement actions under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or equivalent state regulations.

With respect to our mining operations, most of our financial assurance obligations are imposed by state laws that vary significantly by jurisdiction. Currently there are no financial assurance requirements under CERCLA, but in July 2009, EPA published a notice identifying classes of facilities within the hardrock mining industry for which the agency will develop financial responsibility requirements under CERCLA. In EPA's semi-annual regulatory agenda issued in November 2013, EPA indicated that it intends to propose regulations regarding hardrock mining financial responsibility in August 2016. It is uncertain how the new requirements, if promulgated, will affect the amount and form of our existing and future financial assurance obligations.

We are also subject to financial assurance requirements in connection with our oil and gas operations under both state and federal laws. For example, permits, bonding and insurance are required to drill, operate, and plug and abandon wells. Also, the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) regulations applicable to lessees in federal waters require that lessees have substantial U.S. assets and net worth or post bonds or other acceptable financial assurance that the regulatory obligations will be met. Financial responsibility requirements are also required under the Oil Pollution Act of 1990 to cover containment and cleanup costs resulting from an oil spill.

BOEM has signaled its intention to redesign and implement revised financial assurance requirements associated with offshore plugging and abandonment obligations. BOEM has recently taken a stricter approach regarding the level of decommissioning liabilities to be included in its financial test for purposes of determining eligibility for exemption from financial assurance requirements. It is uncertain whether additional changes will be implemented by the BOEM and how these changes might affect the form and amount of our existing and future financial assurance obligations associated with our offshore activities in federal waters.

As of December 31, 2013, our financial assurance obligations associated with closure, reclamation and remediation in our mining and plugging and abandonment obligations in our oil and gas operations totaled approximately $2.4 billion, and a substantial portion of these obligations were satisfied by FCX guarantees and financial capability demonstrations. If our financial condition were to deteriorate substantially or our credit rating were downgraded, we may be required to provide additional or alternative forms of financial assurance, such as letters of credit, surety bonds or collateral. These other forms of assurance would be costly to provide and, depending on our financial condition and market conditions, may be difficult or impossible to obtain. Failure to provide the required financial assurance could result in the closure of mines or suspension of the affected oil and gas operations.

For additional information, refer to the environmental risk factor "Mine closure regulations impose substantial costs on our operations. We also have plugging and abandonment obligations relating to our oil and gas operations."

Movements in foreign currency exchange rates could negatively affect our operating results.

The functional currency for most of our operations is the U.S. dollar. All of our revenues and a significant portion of our costs are denominated in U.S.dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesian rupiah, Australian dollar, Chilean peso, Peruvian nuevo sol and euro. Generally, our results are positively affected when the U.S.dollar strengthens in relation to those foreign currencies and adversely affected when the U.S. dollar weakens in relation to those foreign currencies. Refer to Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" for a summary of the estimated impact of changes in foreign currency rates on our annual operating costs.

From time to time, we may implement currency hedges intended to reduce our exposure to changes in foreign currency exchange rates; however, our hedging strategies may not be successful, and any of our unhedged foreign currency payments will continue to be subject to market fluctuations.

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International risks

Our international operations are subject to political, social and geographic risks of doing business in countries outside the U.S.

We are a U.S.-based natural resource company with substantial mining assets located outside of the U.S. (as of December 31, 2013, substantially all of our oil and gas operations were in the U.S.). We conduct international mining operations in Indonesia, Peru, Chile and the Democratic Republic of Congo (DRC). Accordingly, in addition to the usual risks associated with conducting business in countries outside the U.S., our business may be adversely affected by political, economic and social uncertainties in each of these countries. Risks of conducting business in countries outside of the U.S. include:

• Renegotiation, cancellation or forced modification of existing contracts;

• Expropriation or nationalization of property;

• Changes in another country's laws, regulations and policies, including those relating to labor, taxation, royalties, divestment, imports, exports, trade regulations, currency and environmental matters, which because of rising "resource nationalism" in countries around the world, may impose increasingly onerous requirements on foreign operations and investment;

• Political instability, bribery, extortion, corruption, civil strife, acts of war, guerrilla activities, insurrection and terrorism;

• Changes in the aspirations and expectations of local communities in which we operate with respect to our contributions to employee health and safety, infrastructure and community development and other factors that may affect our social license to operate, all of which lead to increased costs;

• Foreign exchange controls; and

• The risk of having to submit to the jurisdiction of an international court or arbitration panel or having to enforce the judgment of an international court or arbitration panel against a sovereign nation within its own territory.

Our insurance does not cover most losses caused by the above described risks. Accordingly, our exploration, development and production activities outside of the U.S. may be substantially affected by many unpredictable factors beyond our control, some of which could materially and adversely affect our results of operations and financial condition.

Our international operations must comply with the U.S. Foreign Corrupt Practices Act and similar anti-corruption and anti-bribery laws of the other jurisdictions in which we operate. There has been a substantial increase in the global enforcement of these laws. Although we have a compliance program in place designed to reduce the likelihood of violations of such laws, any violation could result in significant criminal or civil fines and penalties, litigation, and loss of operating licenses or permits, and may damage our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

We are involved in several significant tax proceedings and other tax matters with the Indonesian and Peruvian tax authorities (refer to Note 12 for further discussion of these matters). Other risks specific to certain countries in which we operate are discussed in more detail below.

Because our Grasberg minerals district is our most significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia.

Our mining operations in Indonesia are conducted by our subsidiary PT Freeport Indonesia (PT-FI) pursuant to a Contract of Work (COW) with the Indonesian government. Maintaining a good working relationship with the Indonesian government is important to us because of the significance of our Indonesia operations to our business, and because our mining operations there are among Indonesia's most significant business enterprises. Partially because of their significance to Indonesia's economy, the environmentally sensitive area in which they are located,

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and the number of people employed, our Indonesia operations have been the subject of political debates and of criticism in the Indonesian press, and have been the target of protests and occasional violence.

In 2009, Indonesia enacted a mining law (2009 Mining Law), which operates under a licensing system that is significantly less protective of licensees than the contract of work system that governs PT-FI. The 2009 Mining Law and the regulations issued pursuant to that law provide that contracts of work would continue to be honored until their expiration. However, the regulations, including those issued in January 2014, attempt to apply certain provisions of the 2009 Mining Law and regulations to existing contracts of work and seek to apply the licensing system to any extension periods of contracts of work.

In January 2012, the President of Indonesia issued a decree calling for the creation of a team of Ministers to evaluate contracts of work for adjustment to the 2009 Mining Law and to take steps to assess and determine the Indonesian government's position on reduction to the size of contract concessions, increasing government revenues and domestic processing of minerals. We have been engaged in discussions with officials of the Indonesian government to complete this evaluation process and obtain an extension of the PT-FI COW beyond its primary term ending in 2021 to 2041, as provided under the terms of the COW, which can only be modified by mutual agreement between PT-FI and the Indonesian government. We cannot predict the outcome of our engagement with the Indonesian government regarding the relationship between the 2009 Mining Law and related regulations and our COW, nor whether or on what terms we will be able to secure an extension of our COW, but the outcome of these discussions may result in revisions to certain terms of the COW.

In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates in the amount of 25 percent in 2014, rising to 60 percent by mid-2016. PT-FI’s COW authorizes it to export concentrates and specifies the taxes and other fiscal terms available to its operations. The COW states that PT-FI shall not be subject to taxes, duties or fees subsequently imposed or approved by the Indonesian government except as expressly provided in the COW. Additionally, PT-FI complied with the requirements of its COW for local processing by arranging for the construction and commissioning of Indonesia’s only copper smelter and refinery, which is owned and operated by PT Smelting (PT-FI's 25 percent owned smelter).

The January 2014 regulations conflict with PT-FI’s contractual rights under its COW. We are working with the Indonesian government to clarify the situation and to defend PT-FI’s rights under its COW. PT-FI is also seeking to obtain the required administrative permits for 2014 exports, which have been delayed as a result of the new regulations.

As of February 21, 2014, PT-FI has not obtained administrative approval for 2014 exports. PT-FI has implemented near-term changes to its operations to coordinate its concentrate production with PT Smelting’s operating plans. Since mid-January 2014, PT-FI’s milling rate has averaged approximately 112,000 metric tons of ore per day, which is approximately half of normal rates. PT-FI is engaging with the government of Indonesia to reach a resolution that would enable PT-FI to resume normal operations as soon as possible. In the event that PT-FI is unable to resume normal operations for an extended period, we plan to consider further actions, including constraining operating costs, deferring capital expenditures and implementing workforce reductions. PT-FI may also be required to declare force majeure under its concentrate sales agreements.

In April 2014, Indonesia will hold elections for legislators at the national, provincial and district levels. The presidential election will be held in July 2014, with a run-off in September 2014, if required. The outcome of these elections could affect the country’s policies pertaining to foreign investment.

Indonesia has also faced separatist movements and civil and religious strife in a number of provinces. Several separatist groups have sought political independence for the province of Papua, where our Grasberg minerals district is located. In response, Indonesia enacted regional autonomy laws, which became effective January1, 2001. The manner in which those laws are being implemented and the degree of political and economic autonomy they may bring to individual provinces, including Papua, remain uncertain and continue to be ongoing issues in Indonesian politics. In Papua, there have been sporadic attacks on civilians by separatists and sporadic but highly publicized conflicts between separatists and the Indonesian military. Social, economic and political instability in Papua could materially and adversely affect us if it results in damage to our property or interruption of our Indonesian operations.

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Since July 2009 there have been 51 incidents in and around the Grasberg minerals district, including along the road leading to our mining and milling operations, which have resulted in 17 fatalities and 59 injuries. The safety of our workforce is a critical concern, and PT-FI continues to work with the Indonesian government to address security issues. The investigation of these incidents is ongoing. We also continue to limit the use of the road leading to our mining and milling operations to secured convoys. Any additional prolonged limitations on access to the road could adversely affect our Indonesian operations.

Large numbers of illegal miners continue to operate along the river used to transport the tailings from the mill to PT-FI's government-approved tailings management area in the lowlands. The illegal miners have periodically clashed with police who have attempted unsuccessfully for years to move them away from our facilities. In 2006, the illegal miners temporarily blocked the road leading to the Grasberg mine and mill in protest, and PT-FI temporarily suspended mining and milling operations as a precautionary measure.

We cannot predict whether additional incidents will occur that could disrupt or suspend our Indonesian operations. If other disruptive incidents occur, they could adversely affect our results of operations and financial condition in ways that we cannot predict at this time.

For discussion of labor disruptions at PT-FI, refer to the operational risk factor "Labor unrest and activism could disrupt our operations and may adversely affect our business, financial condition, results of operations and prospects."

We will not mine all of our ore reserves in Indonesia before the initial term of our COW expires.

The initial term of PT-FI's COW expires in 2021, but can be extended for two 10-year periods subject to Indonesian government approval, which pursuant to the COW cannot be withheld or delayed unreasonably. Our proven and probable ore reserves in Indonesia reflect estimates of minerals that can be recovered through the end of 2041, and our current mine plan and planned operations are based on the assumption that we will receive the two 10-year extensions. As a result, we will not mine all of these ore reserves during the initial term of the current COW. Prior to the end of 2021, we expect to mine 26 percent of aggregate proven and probable recoverable ore at December 31, 2013, representing 32percent of PT-FI's share of recoverable copper reserves and 45percent of its share of recoverable gold reserves. There can be no assurance that the Indonesian government will approve our COW extensions. For further discussion, refer to the above risk factor "Because our Grasberg minerals district is our most significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia."

PT-FI's COW may be subject to termination if we do not comply with our contractual obligations, and if a dispute arises, we may have to submit to the jurisdiction of an international arbitration panel.

PT-FI's COW was entered into under Indonesia's 1967 Foreign Capital Investment Law, which provides guarantees of remittance rights and protection against nationalization. The COW may be subject to termination by the Indonesian government if we do not satisfy our contractual obligations, which include the payment of royalties and taxes to the government and the satisfaction of certain mining, environmental, safety and health requirements.

Certain Indonesian laws and regulations may conflict with the mining rights established under the COW. Although the COW grants to PT-FI the unencumbered right to operate in accordance with the COW, government agencies may seek to impose additional restrictions on PT-FI that could affect exploration and operating requirements. For discussion of the regulations published in January 2014 by the Indonesian government, which conflict with our COW, refer to the risk factor "Because our Grasberg minerals district is our most significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia."

At times, certain government officials and others in Indonesia have questioned the validity of contracts entered into by the Indonesian government prior to May 1998 (i.e., during the Suharto regime, which lasted over 30years), including PT-FI's COW, which was signed in December 1991. We cannot provide assurance that the validity of, or our compliance with, the COW will not be challenged for political or other reasons.

PT-FI's COW requires that disputes with the Indonesian government be submitted to international arbitration. Accordingly, if a dispute arises under the COW, we face the risk of having to submit to the jurisdiction of an

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international arbitration panel, and if we prevail in such a dispute, we will face the additional risk of having to enforce the judgment of an international arbitration panel against Indonesia within its own territory. Additionally, our operations may be adversely affected while resolution of a dispute is pending.

The Tenke Fungurume (Tenke) minerals district is located in the Katanga province of the DRC, and may be adversely affected by security risks and political, economic and social instability in the DRC.

Since gaining independence in 1960, the DRC has undergone outbreaks of violence, changes in national leadership and financial crises. These factors heighten the risk of abrupt changes in the national policy toward foreign investors, which in turn could result in unilateral modification of concessions or contracts, increased taxation, denial of permits or permit renewals or expropriation of assets. As part of a review of all mining contracts by the Ministry of Mines (the Ministry) in the DRC, in February 2008, we received notification that the Ministry wished to renegotiate several material provisions of Tenke Fungurume Mining S.A.R.L.'s (TFM) mining contracts. In October 2010, the DRC government concluded its review of TFM's existing mining contracts and confirmed that they are in good standing. In connection with the review, several amendments were made to TFM’s mining contracts and governing documents, and in March 2012, FCX's effective ownership in TFM was reduced from 57.75 percent to 56 percent.

Political, economic, social and security risks in the DRC are generally outside of our control and could adversely affect our business. These risks include legal and regulatory uncertainties; exposure to an environment of governmental corruption and bribery; attempts to increase taxes or claims for fees and penalties by governmental officials, including retroactive claims; administrative disputes; security risks resulting from political instability in the DRC; and risk of loss because of civil strife, acts of war, guerrilla activities, insurrection and terrorism.

In addition to ongoing conflict in the eastern region of the DRC, there have been acts of violence in the Katanga province where the Tenke minerals district is located. The safety of our workforce at all of our operations is our highest priority, and TFM works cooperatively with government officials to address security issues; however, no assurance can be given that conflict or random acts of violence will not occur near or impact Tenke's operations.

Accordingly, our Tenke operations and future development activities at the Tenke minerals district may be substantially affected by factors beyond our control, any of which could interrupt TFM’s operations or future development activities, which could have a material adverse effect on our results of operations and financial condition.

Operational risks

Our mining and oil and gas operations are subject to operational risks that could adversely affect our business.

Mining. Mines by their nature are subject to many operational risks, some of which are outside of our control, and many of which are not covered fully, or in some cases even partially, by insurance. These operational risks, which could adversely affect our business, operating results and cash flow, include the following:

• Earthquakes, floods and other natural disasters;

• The occurrence of unexpected weather or operating conditions and other force majeure events;

• The failure of equipment or processes to operate in accordance with specifications, design or expectations;

• Accidents;

• Wall failures and rock slides in our open-pit mines, and structural collapses in our underground mines;

• Interruption of energy supply;

• Lower than expected ore grades or recovery rates;

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• Metallurgical and other processing problems;

• Unanticipated ground and water conditions;

• Adverse claims to water rights, adverse outcomes of pending water adjudications and physical shortages of water to which we have legal rights;

• Adjacent land ownership or usage that results in constraints on current or future mine operations;

• Delays in the receipt of or failure to receive necessary government authorizations, approvals or permits;

• Delays in transportation and disruptions of supply routes; and

• The inability to obtain satisfactory insurance coverage.

Managing the volume of waste rock, leach material and tailings produced in our mining operations also presents significant environmental, safety and engineering challenges and risks. We maintain large leach pads and tailings impoundments containing viscous material, which are monitored for structural stability and leakages; our tailings impoundments in arid areas must have effective programs to suppress fugitive dust emissions; and we must effectively monitor and treat acid rock drainage. In Indonesia, we use a river transport system for tailings management, which presents other risks, as discussed elsewhere in these risk factors. The failure to adequately manage these risks could result in significant personal injury, loss of life, property damage and damage to the environment, both in and around our areas of operations, as well as damage to production facilities and delays in or curtailments of production.

Oil and gas. Our oil and gas operations are also subject to operating hazards, including well blowouts, cratering, explosions, fires, uncontrollable flows of oil, gas or well fluids and pipeline ruptures, as well as natural disasters such as earthquakes, mudslides and hurricanes. Our operations in California, including transportation of oil by pipelines within the city and county of Los Angeles, are especially susceptible to damage from earthquakes and involve increased risks of personal injury, property damage and marketing interruptions because of the population density of southern California. Our operations in the Gulf of Mexico (GOM) and Gulf Coast region are particularly susceptible to interruption and damage from hurricanes. Any of these operating hazards could cause personal injuries, fatalities, oil spills, discharge of hazardous substances into the air, soil, water and groundwater and other property or environmental damage, lost production and revenue, remediation and clean-up costs and liability for damages, all of which could adversely affect our financial condition and results of operations and may not be fully covered by our insurance. Further, drilling, completing, and operating wells may also be delayed or canceled as a result of a variety of factors, including unexpected geologic conditions, increases in the cost of or shortages or delays in the availability of drilling rigs and equipment, and delays in the issuance of required permits by governmental agencies.

Increased production costs could reduce our profitability and cash flows.

Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. For the year 2013, energy represented approximately 20 percent of our consolidated copper production costs. An inability to procure sufficient fuel and energy at reasonable prices could adversely affect our financial condition and results of operations. Our consolidated copper production costs are also affected by the prices of commodities we use in our operations, such as sulphuric acid, grinding media, steel, reagents, liners, tires and explosives. The prices of such commodities are influenced by supply and demand trends affecting the mining industry in general and other factors outside our control, and such prices are at times subject to volatile movements. Increases in the costs of commodities that we consume or use may also significantly affect the capital costs of new projects.

In our oil and gas operations, increased costs or unavailability of drilling rigs, workboats, experienced personnel, or other equipment, supplies or oil field services, which may occur particularly during times of increased industry activity, may adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget, and could have a material adverse effect on the financial performance of our oil and gas operations.

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Labor unrest and activism could disrupt our operations and may adversely affect our business, financial condition, results of operations and prospects.

As further described in Part I, Items 1 and 2 "Business and Properties" we are party to labor agreements with various unions that represent employees at certain of our mining operations (none of the employees of our oil and gas operations are represented by a union or covered by a collective labor agreement). Labor agreements are negotiated on a periodic basis, and the risk exists that labor agreements may not be renewed on reasonably satisfactory terms to us or at all. Issues that may be raised by the collective bargaining units representing our employees are unpredictable and, if raised, negotiations concerning those issues may not be concluded successfully. Our production and sales volumes could be significantly reduced and our business, financial condition and results of operations adversely affected by significant reductions in productivity or protracted work stoppages at one or more of our operations. Additionally, if we enter into a new labor agreement with any union that significantly increases our labor costs relative to our competitors, our ability to compete may be materially and adversely affected.

During 2011, PT-FI was adversely affected by labor disruptions, including an eight-day work stoppage in July 2011 and an approximate three-month strike that concluded in December 2011. The strike involved civil unrest, transportation blockades, sabotage of important operating facilities and violence. Additionally, during first-quarter 2012, PT-FI experienced work interruptions in connection with its efforts to resume normal operations and temporarily suspended operations. In October 2013, PT-FI entered into a new biennial labor agreement.

In fourth-quarter 2011, there was an approximate two-month labor strike at Cerro Verde during the negotiation of a new labor agreement. The strike did not have a significant impact on production, and a new three-year agreement with the union was reached in late December 2011. In November 2013, Cerro Verde entered into a new four-year labor agreement with its union, which is effective upon the expiration of the current agreement, beginning September 1, 2014.

As of December 31, 2013, 49 percent of our labor force was covered by collective bargaining agreements, and one percent of our labor force is covered by agreements that will expire during 2014. If we do not successfully negotiate new collective bargaining agreements with our union workers, we may incur prolonged strikes and other work stoppages at our mining operations, which could adversely affect our financial condition and results of operations.

Our mining production depends on the availability of sufficient water supplies.

Our mining operations require significant quantities of water for mining, ore processing and related support facilities. Most of our mining operations in North and South America are in areas where water is scarce and competition among users for continuing access to water is significant. Continuous production at our mines is dependent on our ability to maintain our water rights and claims, and the continuing physical availability of the water supplies.

At our North America mining operations, certain of our water supplies are supported by surface water rights, which allow us to use public waters for a statutorily defined beneficial use at a designated location. In Arizona, we are a participant in two active general stream adjudications in which the Arizona courts have been attempting, for over 30 years, to quantify and prioritize surface water claims for two of the state's largest river systems, which affect four of our operating mines (Morenci, Safford, Sierrita and Miami). The legal precedent set in these proceedings may also affect our Bagdad mine. Groundwater has historically been treated differently from surface water under Arizona law, which has generally allowed land owners to pump at will, subject to the doctrine of reasonable use. However, court decisions in one of the adjudications have concluded that groundwater pumping may affect surface water, thereby bringing the pumping within the jurisdiction of the general stream adjudications. The effort to define the boundaries between groundwater and surface water remains contested, however, and is currently a primary focus of one of those adjudications. Because groundwater accounts for approximately 40 percent of Arizona’s water supplies, the re-characterization of any significant portion of that water as surface water could jeopardize the ability of consumers, farmers, ranchers, municipalities, and industrial users like us, to continue to access water supplies that have been relied on for decades. Because we are a significant user of groundwater in Arizona, we are an active participant in the adjudication proceedings.

In Colorado, our surface water and groundwater rights are subject to adjudication and we are involved in legal proceedings to resolve disputes regarding priority and administration of rights, including priority of some of our rights for the Climax molybdenum mine. In New Mexico, our surface water and groundwater rights are fully licensed or have been fully adjudicated.

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Water for our Cerro Verde mining operation in Peru comes from renewable sources through a series of storage reservoirs on the Rio Chili watershed that collect water primarily from seasonal precipitation. Due to occasional drought conditions and the possibility that climate change will reduce precipitation levels, temporary supply shortages are possible that could affect our current and planned Cerro Verde operations. Cerro Verde completed studies to assess opportunities for additional water supplies to support current operations and potential future expansion projects. Cerro Verde has reached agreements with the Regional Government of Arequipa, the National Government, the local water utility Servicio de Agua Potable y Alcantarillado de Arequipa S.A. (SEDAPAR), and other local institutions to allow it to finance, engineer and construct a wastewater treatment plant for the city of Arequipa. Cerro Verde has obtained authorization to reuse an annual average of one cubic meter per second of the treated water, which is expected to supplement existing water supplies to support the concentrator expansion.

Water for our El Abra mining operation in Chile comes from the continued pumping of groundwater from the Salar de Ascotán aquifer. In 2010, El Abra obtained regulatory approval, subject to certain conditions, for the continued pumping of groundwater from the Salar de Ascotán aquifer for its sulfide processing plant, which began operations in 2011. El Abra has sufficient water rights to support current operations; however, a change to the sulfide ore project, such as increased production or mill processing, would require additional water beyond our allowable groundwater pumping, which is permitted through 2021. El Abra is conducting studies to assess the feasibility of constructing a desalination plant near the Pacific Ocean to treat seawater for possible increased sulfide ore production or mill processing.

Water for our Candelaria and Ojos del Salado mining operations in Chile comes from a nearby wastewater treatment facility and our desalination plant and pipeline that were completed in 2013. Both of these sources will supply Candelaria's and Ojos del Salado’s long-term water needs.

Although each of our mining operations currently has access to sufficient water supplies to support current operational demands, some supplies are subject to unresolved claims by others, and additional supplies that may be needed to support expanded operations are expensive, in short supply, and can be difficult to access because of logistical and legal obstacles. Moreover, we cannot predict the potential outcome of pending or future legal proceedings on our water rights, claims and uses. Loss of a water right, loss of continued use of a currently available water supply, or inability to expand our water resources could materially and adversely affect our mining operations, by significantly increasing the cost of water, forcing us to curtail operations, preventing us from expanding operations or forcing premature closures, thereby increasing and/or accelerating costs or foregoing profitable operations.

In addition to the usual risks encountered in the mining industry, our Indonesia operations involve additional risks because they are located on unusually difficult terrain in a very remote area.

The Grasberg minerals district is located in steep mountainous terrain in a remote area of Indonesia. These conditions require us to overcome special engineering difficulties and develop extensive infrastructure facilities. In addition, the area receives considerable rainfall, which has led to periodic floods and mudslides. The mine site is also in an active seismic area and has experienced earth tremors from time to time. Our insurance may not sufficiently cover an unexpected natural or operating disaster.

In May 2013, a tragic accident, which resulted in 28 fatalities and 10 injuries, occurred at PT-FI when the rock structure above an underground ceiling for a training facility collapsed. While the accident occurred outside the area of mining operations, PT-FI temporarily suspended mining and processing activities at the Grasberg complex to conduct inspections of its facilities in coordination with Indonesian government authorities. Following approval from Indonesia's Department of Energy and Mineral Resources, PT-FI resumed open-pit mining and concentrating activities at its Grasberg operations on June 24, 2013, and resumed underground operations on July 9, 2013.

In April 2011, two PT-FI employees died in an accident when a portion of the DOZ underground mine experienced an uncontrolled muck flow. The area was temporarily shut down during the investigation of the accident. We have experienced mud/topsoil slides and slippages of material in and near our open-pit operations in the past, which have since October 2003 resulted in 11 fatalities and some production delays.

No assurance can be given that similar events will not occur in the future.

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In addition to the usual risks encountered in the mining industry, our Africa mining operations involve additional risks because it is located in a remote area of the DRC.

The Tenke minerals district is located in a remote area of the DRC and is subject to additional challenges, including severely limited infrastructure, including road, bridge and rail access that is in disrepair and receives minimal maintenance; limited and unreliable energy supply from antiquated equipment and from power distribution corridors that are not maintained; challenges in obtaining experienced personnel; security risks; and limited health care in an area plagued by disease and other potential endemic health issues, including malaria, cholera and HIV.

Additionally, because of limited rail access, we currently truck a significant portion of the production from the Tenke mines approximately 1,900 miles to ports in South Africa. The Tenke minerals district and its future development may be substantially affected by factors beyond our control, which could adversely affect their contribution to our operating results and increase the cost of future development.

Our reserves are estimates, and actual recoveries may vary significantly.

There are numerous uncertainties and assumptions inherent in estimating mineral and oil and natural gas reserves, and geological, technical and economic assumptions that are valid at the time of estimation may change significantly when new information becomes available. Assumptions and estimates include the geology of the ore body or reservoir, development methods to be used and projected operating costs. Fluctuations in these variables and in commodities prices may result in lower grade reserves or resources being deemed uneconomic, and could lead to a reduction in reserves or resources. Our actual recoveries may vary significantly from our estimated reserves. Decreases in estimated reserves could result in prospective increases in our depreciation, depletion and amortization expense, which could have a significant negative impact on our results of operations, and could also result in impairment charges. Refer to Notes 1, 20 and 21 and MD&Afor further discussion.

We must continually replace reserves depleted by production, but our exploration activities may not result in additional discoveries.

Our existing mineral and oil and natural gas reserves will be depleted over time by production from our operations. Because our profits are derived from our mining and oil and gas operations, our ability to replenish our reserves is essential to our long-term success. Our exploration projects involve many risks, require substantial expenditures and may not result in the discovery of additional deposits or reservoirs that can be produced profitably. We may not be able to discover, enhance, develop or acquire reserves in sufficient quantities to maintain or grow our current reserve levels, which could negatively affect our business and prospects.

Development projects are inherently risky and may require more capital than anticipated, which could adversely affect our business.

There are many risks and uncertainties inherent in all development projects (refer to MD&A for further discussion of our current development projects). The economic feasibility of development projects is based on many factors, including the accuracy of estimated reserves, estimated capital and operating costs, and estimated future prices of the relevant commodity. The capital expenditures and time required to develop new mines, wells, or other projects are considerable, and changes in costs or construction or drilling schedules can adversely affect project economics. Key factors that may affect the timing, costs and outcome of such projects include the following:

• Geologic, geotechnical, hydrogeologic and weather conditions;

• Hiring and training of personnel;

• Issuance of necessary permits and licenses by governmental agencies;

• Civil and political environment of the country or region in which the project is located; and

• Access to or development of supporting infrastructure and availability of critical equipment.

New development projects have no operating history upon which to base estimates of future cash flow. The actual costs, production rates and economic returns of our development projects may differ materially from our estimates, which may have a material adverse impact on our business and results of operations.

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Operations in the Deepwater GOM present greater operating risks than operations in the shallower waters or onshore. In addition, our shallow water and onshore operations that target ultra-deep prospects involve greater risks and costs than conventional GOM Shelf and onshore Gulf Coast prospects.

The Deepwater GOM area presents significant challenges because of risks associated with geological complexity, water depth and higher drilling and development costs, any of which can cause substantial cost overruns. The Deepwater GOM also lacks the infrastructure present in shallower waters, which can result in significant delays in obtaining or maintaining production. As a result, deepwater operations may require significant time between a discovery and marketability, thereby increasing the financial risk of these operations.

Our Inboard Lower Tertiary/Cretaceous exploration prospects target formations below the salt weld on the GOM Shelf and onshore in South Louisiana. These targets have not traditionally been the subject of exploratory activity in these regions, so that little direct comparative data is available. To date, there has been no production of hydrocarbons from Inboard Lower Tertiary/Cretaceous reservoirs in these areas. The lack of comparative data and the limitations of diagnostic tools operating in the extreme temperatures and pressures encountered at these depths make it difficult to predict reservoir quality and well performance of these formations. Wells drilled in these formations are also significantly more expensive to drill and complete than wells drilled to more conventional depths. Major contributors to such increased costs include far higher temperatures and pressures encountered down hole, longer drilling times and the cost and extended procurement time related to the specialized equipment required to drill and complete these types of wells.

Our operations are subject to extensive regulations, some of which require permits and other approvals. These regulations increase our costs and in some circumstances may delay or suspend our operations.

Our operations are subject to extensive and complex laws and regulations that are subject to change and to changing interpretation by governmental agencies and other bodies vested with broad supervisory authority. As a natural resource company, compliance with environmental legal requirements is an integral and costly part of our business. For additional information, see "Environmental risks." We are also subject to extensive regulation of worker health and safety, including the requirements of the U.S. federal Occupational Safety and Health Act and similar laws of other jurisdictions. In the U.S., the operation of our mines is subject to regulation by the U.S. Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977. MSHA inspects our mines on a regular basis and issues citations and orders when it believes a violation has occurred. If such inspections result in an alleged violation, we may be subject to fines and penalties and, in instances of alleged significant violations, our mining operations could be subject to temporary or extended closures.

Our oil and gas operations are subject to extensive laws and regulations that require, among other things, permits for the drilling and operation of wells and bonding and insurance to drill, operate and plug and abandon wells, and that regulate the safety of our pipelines. Our U.S. offshore operations in federal waters are subject to broad regulation by the BOEM/BSEE, which among other things must issue permits in connection with our exploration, drilling, development and production plans. Under certain circumstances BOEM/BSEE may impose penalties and may suspend or terminate any of our operations on federal leases. Many other governmental bodies regulate our operations, and our failure to comply with these legal requirements can result in substantial penalties. In addition, new laws and regulations or changes to existing laws and regulations and new interpretations of existing laws and regulations by courts or regulatory authorities occur regularly, but are difficult to predict. Any such variations could have a material adverse effect on our business and prospects.

Certain of our undeveloped oil and gas leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage.

Approximately 41 percent of our total U.S. net undeveloped acres are covered by leases that expire from 2014 to 2016. With respect to our undeveloped oil and gas leaseholds, unless production in paying quantities is established on units during the term of the leases, the leases will expire. If leases expire and we are unable to renew or obtain new leases, we will lose our right to develop those properties. Our drilling plans are subject to change based upon various factors, including drilling results, oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints, and regulatory approvals. Refer to Items 1. and 2. "Business and Properties" for further discussion of our oil and gas operations' acreage.

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We have limited control over the development of oil and gas properties in which we have an interest but do not operate.

Certain of our oil and gas properties, including Lucius, Ram Powell, Lineham Creek, Haynesville and portions of our Eagle Ford acreage, are operated by other companies and involve third party working interest owners. As a result, we have limited ability to influence or control the operation or future development of such properties, including compliance with environmental, safety and other regulations, or the amount of capital expenditures that we will be required to fund with respect to such properties. Additionally, we are dependent on the other working interest owners of such projects to fund their contractual share of the operating costs and capital expenditures of such projects. These limitations and our dependence on the operator and other working interest owners for their operation and/or funding of these projects could cause us to incur unexpected future costs, result in lower production and materially and adversely affect our results of operations and financial condition.

Our business may be adversely affected by information technology disruptions.

Cybersecurity incidents are increasing in frequency, evolving in nature and include, but are not limited to, installation of malicious software, unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. We have experienced cybersecurity incidents in the past and may experience them in the future. We believe that we have implemented appropriate measures to mitigate potential risks. However, given the unpredictability of the timing, nature and scope of information technology disruptions, we could be subject to manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our financial condition and results of operations.

Environmental risks

Our operations are subject to complex and evolving environmental laws and regulations. Compliance with environmental regulatory requirements involves significant costs and may constrain our expansion opportunities.

Our operations, both in the U.S. and internationally, are subject to extensive environmental laws and regulations governing the generation, transportation and disposal of hazardous substances, waste disposal, air emissions, water discharges, remediation, restoration and reclamation of environmental contamination, including oil spill cleanup, mine closure and well plug and abandonment requirements, protection of endangered and protected species, and other related matters. In addition, we must obtain regulatory permits and approvals to start, continue and expand operations. Laws such as CERCLA and similar state laws may subject us to joint and several liability for environmental damages caused by previous owners or operators of properties we acquired or are currently operating or at sites where we sent materials for processing, recycling or disposal. As discussed in more detail in the next risk factor, we have substantial obligations for environmental remediation on mining properties previously owned or operated by Freeport-McMoRan Corporation (FMC) and certain of its affiliates. Some of our onshore California oil and gas fields have been in operation for more than 100 years, and current or future legal requirements may impose substantial expenditures to remediate the properties or to otherwise comply with these requirements. Noncompliance with these laws and regulations could result in material penalties or other liabilities. In addition, compliance with these laws may from time to time result in delays in or changes to our development or expansion plans. Compliance with these laws and regulations imposes substantial costs, which we expect will continue to increase over time because of increased regulatory oversight, adoption of increasingly stringent environmental standards, as well as other factors.

For example, under the Clean Air Act, EPA recently lowered the National Ambient Air Quality Standards (NAAQS) for sulfur dioxide. The area around our smelter in Miami, Arizona, has sulfur dioxide levels in excess of the new standard, and the smelter is the primary contributor to those levels. As a result, we are required to install pollution control equipment as part of an expansion that will allow the smelter to operate and comply with the new sulfur dioxide standard, but will increase our operating cost.

In addition, in response to the 2010 Deepwater Horizon incident in the GOM, the BOEM/BSEE issued new guidelines and regulations regarding, among other things, environmental matters and decommissioning applicable to oil and gas drilling in the GOM. These regulations require, among other things, independent third-party inspections, certification of well design and well control equipment and emergency response plans in the event of a blowout.

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We also believe there has generally been more aggressive application of the Endangered Species Act, resulting in increases in the number of protected species and expansive designations of their critical habitat, which may make obtaining federal permits and securing additional water resources more time-consuming, unpredictable and expensive.

New or revised environmental legal requirements are frequently proposed, many of which result in substantially increased costs for our business. For example, EPA has proposed rules that, if effective, would reclassify some mineral processing materials as "hazardous waste" under the Federal Resource Conservation and Recovery Act, which would reverse long-standing EPA regulatory determinations and subject the industry to significant new and costly waste management requirements.

Other regulation under consideration by environmental regulatory agencies include provisions that would impose additional restrictions on waterway discharges and land use, and regulate environmental impacts of radioactive materials associated with mining operations and expand regulation of solid wastes, among other things. Adoption of these or similar new environmental regulations or more stringent application of existing regulations may materially increase our costs and constrain our expansion opportunities.

During 2013, we incurred environmental capital expenditures and other environmental costs (including our joint venture partners' shares) to comply with applicable environmental laws and regulations that affect our operations of $595 million, compared with $612 million in 2012 and $387 million in 2011. For 2014, we expect to incur approximately $475 million of aggregate environmental capital expenditures and other environmental costs. The timing and amounts of estimated payments could change as a result of changes in regulatory requirements, changes in scope and costs of reclamation and plug and abandonment activities, the settlement of environmental matters and as actual spending occurs.

We incur significant costs for remediating environmental conditions on mining properties that have not been operated in many years.

FMC and its subsidiaries, and many of their affiliates and predecessor companies have been involved in exploration, mining, milling, smelting and manufacturing in the U.S. for more than a century. Activities that occurred in the late 19th century and the 20th century prior to the advent of modern environmental laws were not subject to environmental regulation and were conducted before American industrial companies fully understood the long-term effects of their operations on the surrounding environment. With the passage of CERCLA in 1980, companies like FMC became legally responsible for the clean up of hazardous substances released into the environment from properties owned or operated by them, including damages to natural resources, irrespective of when the damage to the environment occurred or who caused it. That liability is often shared on a joint and several basis with all other prior and subsequent owners and operators, meaning that each owner or operator of the property is fully responsible for the clean-up, although in many cases some or all of the other historical owners or operators no longer exist, do not have the financial ability to respond or cannot be found. As a result, because of our acquisition of FMC in 2007, many of the subsidiary companies we now own are responsible for a wide variety of environmental remediation projects throughout the U.S., and we expect to spend substantial sums annually for many years to address those remediation issues. We are also subject to claims where the release of hazardous substances is alleged to have damaged natural resources. At December 31, 2013, we had more than 100 active remediation projects (including damaged natural resource claims) in 28 U.S. states. In addition, FMC and certain affiliates and predecessor companies were parties to agreements relating to the transfer of businesses or properties, which contained indemnification provisions relating to environmental matters, and which from time to time become the source of claims against us.

At December 31, 2013, we had $1.2 billion recorded in our consolidated balance sheet for environmental obligations attributed to CERCLA or analogous state programs and for estimated future costs associated with environmental matters at closed facilities or closed portions of certain operating facilities. Our environmental obligation estimates are primarily based upon:

• Our knowledge and beliefs about complex scientific and historical facts and circumstances that in many cases involve events that occurred many decades ago;

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• Our beliefs and assumptions regarding the nature, extent and duration of remediation activities that we will be required to undertake and the estimated costs of those remediation activities, which are subject to varying interpretations; and

• Our beliefs regarding the requirements that are imposed on us by existing laws and regulations and, in some cases, the clarification of uncertain regulatory requirements that could materially affect our environmental obligation estimates.

Significant adjustments to these estimates are likely to occur in the future as additional information becomes available. The actual environmental costs may exceed our current and future accruals for these costs, and any such changes could be material.

In addition, remediation standards for environmental media imposed by EPA and state environmental agencies have generally become more stringent over time and may become more stringent in the future. Imposition of more stringent remediation standards poses a risk that additional remediation work could be required at sites that we have already remediated to the satisfaction of the responsible governmental agencies, and may increase the risk of toxic tort litigation.

Refer to Note 12 for further discussion of our environmental obligations.

Our Indonesia mining operations create difficult and costly environmental challenges, and future changes in environmental laws, or unanticipated environmental impacts from those operations, could require us to incur increased costs.

Mining operations on the scale of our Indonesia operations involve significant environmental risks and challenges. Our primary challenge is to dispose of the large amount of crushed and ground rock material, called tailings, that results from the process by which we physically separate the copper-, gold- and silver-bearing materials from the ore that we mine. Our tailings management plan, which has been approved by the Indonesian government, uses the unnavigable river system in the highlands near our mine to transport the tailings to an engineered area in the lowlands where the tailings and natural sediments are managed in a deposition area. Lateral levees have been constructed to help contain the footprint of the tailings and to limit their impact in the lowlands.

Another major environmental challenge is managing overburden, which is the rock that must be moved aside in the mining process to reach the ore. In the presence of air, water and naturally occurring bacteria, some overburden can generate acid rock drainage, or acidic water containing dissolved metals that, if not properly managed, can adversely affect the environment.

From time to time, certain Indonesian government officials have raised questions with respect to our tailings and overburden management plans, including a suggestion that we implement a pipeline system rather than the river transport system for tailings management and disposition. Because our Indonesia mining operations are remotely located in steep mountainous terrain and in an active seismic area, a pipeline system would be costly, difficult to construct and maintain, and more prone to catastrophic failure, and could therefore involve significant potentially adverse environmental issues. Based on our own studies and others conducted by third parties, we do not believe that a pipeline system is necessary or practical.

In connection with obtaining our environmental approvals from the Indonesian government, we committed to perform a one-time environmental risk assessment on the impacts of our tailings management plan. We completed this extensive environmental risk assessment with more than 90 scientific studies conducted over four years and submitted it to the Indonesian government in December 2002. We developed the risk assessment study using internationally recognized methods with input from an independent review panel, which included representatives from the Indonesian government, academia and non-governmental organizations. The risks identified during this process were consistent with our impact projections of the tailings management program contained in our environmental approval documents.

Since 2005, PT-FI has participated in the Indonesian government's PROPER (Program for Pollution Control, Evaluation and Rating) program. PT-FI received a Blue rating for the last PROPER audit by the Indonesian Ministry of Environment. That audit was conducted in 2010, and the Blue rating indicated that PT-FI's environmental management practices were in compliance with the laws and regulations of Indonesia. Since then, as allowed under Environmental Law 4/2009, the Indonesian Ministry of Environment has continued to audit PT-FI but not using the

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PROPER protocol, which has proven to be impractical for the size of the PT-FI operation. There have been no compliance issues, and the latest audit was in fourth-quarter 2013.

Mine closure regulations impose substantial costs on our operations.We also have plugging and abandonment obligations relating to our oil and gas operations.

Our U.S. mining operations are subject to various federal and state permitting requirements that include mine closure and mined-land reclamation obligations. These requirements are complex and vary depending upon the jurisdiction. The laws govern the determination of the scope and cost of the closure and reclamation obligations and the amount and forms of financial assurance sufficient to allow a third party to meet the obligations of those plans if we are unable to do so.In general, our U.S. mines are required to review estimated closure and reclamation costs on either a periodic basis or at the time of significant permit modifications and to post increasing amounts of financial assurance as required by state regulators. It is uncertain how potential EPA requirements for financial assurance will affect the timing of periodic closure cost reviews or the scope of closure activities.

In July 2011, the Chilean senate passed legislation regulating mine closure, which established new requirements for closure plans and became effective in November 2012. Our Chilean operations are required to update closure plans and provide financial assurance for these obligations. Revised closure plans for the Chilean mine sites are due in November 2014.

Cerro Verde is subject to regulation under the Mine Closure Law administered by the Peruvian Ministry of Energy and Mines. Under the closure regulations, mines must submit a closure plan that includes the reclamation methods, closure cost estimates, methods of control and verification, closure and post-closure plans and financial assurance. An updated closure plan for the Cerro Verde mine expansion was submitted to the Peruvian Ministry of Energy and Mines in November 2013.

In December 2009, PT-FI submitted its revised mine closure plan to the Department of Energy and Mineral Resources for review and has addressed comments received during the course of this review process. In December 2010, the President of Indonesia issued a regulation regarding mine reclamation and closure, which requires a company to provide a mine closure guarantee in the form of a time deposit placed in a state-owned bank in Indonesia. In accordance with its COW, PT-FI is working with the Department of Energy and Mineral Resources to review these requirements, including discussions of other options for the mine closure guarantee.

We cannot predict at this time the cost of these mine closure plans or the levels or forms of financial assurance that may be required, which amounts could be substantial.

Additionally, substantially all of our oil and gas leases require that, upon termination of economic production, the working interest owners plug and abandon non-producing wellbores, remove equipment and facilities from leased acreage and restore land in accordance with applicable local, state and federal laws.

At December 31, 2013, we had asset retirement obligations (AROs) of $2.3 billion recorded in our consolidated balance sheet, which included $1.1 billion for our oil and gas operations. ARO cost estimates may increase or decrease significantly in the future as a result of changes in closure regulations, changes in engineering designs and technology, permit modifications or updates, changes in mine plans, inflation or other factors and as actual reclamation spending occurs. Refer to Note 12 for further discussion.

Regulation of greenhouse gas emissions and climate change issues may increase our costs and adverselyaffect our operations and markets.

Many scientists believe that emissions from the combustion of carbon-based fuels contribute to greenhouse effects and, therefore, contribute to climate change. Carbon-based energy is a significant input in our operations, and our revenues include significant sales of oil, NGLs and gas, and other carbon-based energy products.

A number of governments have introduced or are contemplating regulatory initiatives designed to control and reduce greenhouse gas emissions. Many U.S. states have taken legal measures to reduce emissions of greenhouse gases. For example, in California, the California Air Resources Board (CARB) has developed "cap and trade" regulations pursuant to the California Global Warming Solutions Act of 2006 intended to achieve an overall reduction in greenhouse gas emissions to 1990 levels, a 15 percent reduction by 2020. Some of our operations in California are subject to these regulations, which require us to purchase offsets and allowance instruments (i.e.,

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equivalent units equal to one metric ton of emissions under the California Global Warming Solutions Act of 2006). The total amount of instruments we must purchase will vary annually. While we do not expect these costs to be material, similar or more onerous state regulations could substantially increase our costs.

In June 2010, the EPA issued final regulations under the Clean Air Act for the control of greenhouse gases from new large stationary sources and major modifications to existing large stationary sources. This and other federal greenhouse gas regulations have been challenged in judicial proceedings. Certain of our operations, including the Miami smelter, could be materially affected by these regulations if plant emissions exceed applicable thresholds. In addition, anticipated future EPA regulations covering large fossil fuel fired power plants may materially increase energy costs at our operations. The U.S. may also become a party to international agreements to reduce greenhouse gas emissions, which could lead to new regulations affecting our U.S. operations.

From a medium and long-term perspective, we may experience increased costs relating to our greenhouse gas emissions as a result of regulatory initiatives in the U.S. and other countries in which we operate. In addition, the cost of electricity that we purchase from others may increase if our suppliers incur increased costs from the regulation of their greenhouse gas emissions. Although we have modeled different scenarios, we cannot predict the magnitude of increased costs with any certainty given the wide scope of potential regulatory changes in the many countries in which we operate. Increased regulation of greenhouse gas emissions may also reduce demand for the oil and gas we produce.

The potential physical impacts of climate change on our operations are highly uncertain, and would vary by operation based on particular geographic circumstances. These may include changes in rainfall patterns, water shortages, changing sea levels, changing storm patterns and intensities, and changing temperatures. These effects may adversely affect the cost, production and financial performance of our operations.

Proposed federal, state or local regulations regarding hydraulic fracturing could increase our oil and gas operating and capital costs.

Our oil and gas operations utilize hydraulic fracturing and other types of well stimulation. Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into rock formations to stimulate the flow of oil and gas. Hydraulic fracturing is necessary to produce commercial quantities of oil and gas from many reservoirs, especially shale formations such as the Haynesville and Eagle Ford shale plays.

The process is typically regulated by state oil and gas commissions and agencies, and continues to receive significant regulatory and legislative attention at the federal, state, and local levels. Several proposals are before the U.S. Congress that, if implemented, would either prohibit or restrict the practice of hydraulic fracturing or subject the process to more extensive regulations. Several states have adopted or are considering legislation to regulate hydraulic fracturing practices that could impose more stringent permitting, transparency, and well construction requirements on hydraulic-fracturing operations or otherwise seek to ban fracturing activities altogether. In addition, some municipalities have significantly limited or prohibited drilling activities and/or hydraulic fracturing, or are considering doing so.

Although it is not possible to predict the final outcome of any legislation regarding hydraulic fracturing, any new federal, state or local restrictions on hydraulic fracturing, including those related to use of land and water, that are enacted in areas where we conduct our oil and gas operations could result in increased compliance costs or additional operating restrictions.

Other risks

Unanticipated litigation or negative developments in pending litigation or with respect to other contingencies could have a material adverse effect on our results of operations and financial condition.

We are a party to the litigation and subject to other contingencies, including those described in Note 12 and in Item 3. "Legal Proceedings" involving such matters as asbestos exposure cases, disputes over the allocation of environmental remediation obligations at Superfund and other sites, claims of personal injury and property damage arising from environmental contamination, disputes over water rights, disputes over taxes and other disputes with regulatory authorities. The outcome of litigation is inherently uncertain and adverse developments or outcomes can result in significant monetary damages, penalties or injunctive relief against us, limitations on our property rights, or regulatory interpretations that increase our operating costs. If any of these disputes results in a substantial

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monetary judgment against us or is settled on unfavorable terms, or otherwise affects our operations, it could have a material adverse effect on our results of operations and financial condition. A negative outcome in any of these matters could have a material adverse effect on our results of operations and financial condition.

We depend on our senior management team and other key employees, and the loss of any of these employees could adversely affect our business.

Our success depends in part on our ability to attract, retain and motivate senior management and other key employees. Achieving this objective may be difficult because of many factors, including fluctuations in global economic and industry conditions, competitors' hiring practices, cost reduction activities, and the effectiveness of our compensation programs. Competition for qualified personnel can be very intense. We must continue to recruit, retain and motivate senior management and other key employees to maintain our current business and support our future projects. A loss of such personnel could prevent us from capitalizing on business opportunities, and our operating results could be adversely affected.

Our holding company structure may impact our stockholders’ ability to receive dividends.

We are a holding company with no material assets other than the capital stock of our subsidiaries. As a result, our ability to repay our indebtedness and pay dividends is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, loan, debt repayment or otherwise. Our subsidiaries do not have any obligation to make funds available to us to repay our indebtedness or pay dividends. Dividends from subsidiaries that are not wholly owned are shared with other equity owners. Cash at our international operations is also subject to foreign withholding taxes upon repatriation into the U.S.

In addition, our subsidiaries may not be able to, or be permitted to, make distributions to enable us to repay our indebtedness or pay dividends. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries. Our rights to participate in any distribution of our subsidiaries' assets upon their liquidation, reorganization or insolvency would generally be subject to the prior claims of the subsidiaries' creditors, including any trade creditors.

Anti-takeover provisions in our charter documents and Delaware law may make an acquisition of us more difficult.

Anti-takeover provisions in our charter documents and Delaware law may make an acquisition of us more difficult. These provisions:

• Authorize our Board of Directors (the Board) to issue preferred stock without stockholder approval and to designate the rights, preferences and privileges of each class; if issued, such preferred stock would increase the number of outstanding shares of our capital stock and could include terms that may deter an acquisition of us;

• Establish advance notice requirements for nominations to the Board or for proposals that can be presented at stockholder meetings;

• Limit removal of directors for cause only;

• Limit who may call stockholder meetings; and

• Require the approval of the holders of two thirds of our outstanding common stock to enter into certain business combination transactions, subject to certain exceptions, including if the consideration to be received by our common stockholders in the transaction is deemed to be a fair price.

These provisions may discourage potential takeover attempts, discourage bids for our common stock at a premium over market price or adversely affect the market price of, and the voting and other rights of the holders of, our common stock. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors other than the candidates nominated by the Board.

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In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit large stockholders from consummating a merger with, or acquisition of, us.

These provisions may deter an acquisition of us that might otherwise be attractive to stockholders.

Item 1B.  Unresolved Staff Comments.

Not applicable.

Item 3. Legal Proceedings.

We are involved in numerous legal proceedings that arise in the ordinary course of our business or are associated with environmental issues arising from legacy operations conducted over the years by Freeport-McMoRan Corporation (FMC) and its affiliates. We are also involved periodically in inquiries, investigations and other proceedings initiated by or involving government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Management does not believe, based on currently available information, that the outcome of any legal proceeding will have a material adverse effect on our financial condition; although individual outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period. Below is a discussion of our material water rights legal proceedings. Refer to Note 12 for discussion of our other material legal proceedings.

Water Rights

Our operations in the western United States (U.S.) require significant quantities of water for mining, ore processing and related support facilities. Continuous operation of our mines is dependent on our ability to maintain our water rights and claims and the continuing physical availability of the water supplies. In the arid western U.S., water rights are often contested, and disputes over water rights are generally time-consuming, expensive and not necessarily dispositive unless they resolve both actual and potential claims. The loss of a water right, loss of continued use of a currently available water supply, or inability to expand our water resources could materially and adversely affect our mining operations by significantly increasing the cost of water, forcing us to curtail operations, preventing us from expanding operations or forcing premature closures, thereby increasing and/or accelerating costs and foregoing profitable operations.

At our North America operations, certain of our water supplies are supported by surface water rights, which give us the right to use public waters for a statutorily defined beneficial use at a designated location. In Arizona, we are a participant in two active general stream adjudications in which, for over 30 years, the Arizona courts have been attempting to quantify and prioritize surface water claims for two of the state's largest river systems, which affect four of our operating mines (Morenci, Safford, Sierrita and Miami). The legal precedent set in these proceedings may also affect our Bagdad mine. Groundwater has historically been treated differently from surface water under Arizona law, which has generally allowed land owners to pump at will, subject to the doctrine of reasonable use. However, court decisions in one of the adjudications have concluded that groundwater pumping may affect surface water, thereby bringing the pumping within the jurisdiction of the general stream adjudications. The effort to define the boundaries between groundwater and surface water remains contested, however, and is currently the principal focus of one of those adjudications. Because groundwater accounts for approximately 40 percent of Arizona's water supplies, the re-characterization of any significant portion of that water as surface water could jeopardize the ability of consumers, farmers, ranchers, municipalities, and industrial users like us, to continue to access water supplies that have been relied on for decades. Because we are a significant user of groundwater in Arizona, we are an active participant in the adjudication proceedings.

In Re the General Adjudication of All Rights to Use Water in the Little Colorado Water System and Sources, Apache County, Superior Court, No. 6417, filed on or about February 17, 1978. The principal parties, in addition to us, include: the state of Arizona; the Salt River Project; the Arizona Public Service Company; the Navajo Nation, the Hopi Indian Tribe; the San Juan Southern Paiute Tribe; and the U.S. on behalf of those tribes, on its own behalf, and on behalf of the White Mountain Apache Tribe. This case involves adjudication of water rights claims, including federal claims, in the Little Colorado watershed.

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In Re The General Adjudication of All Rights to Use Water in the Gila River System and Sources, Maricopa County, Superior Court, Cause Nos. W-1 (Salt), W-2 (Verde), W-3 (Upper Gila), and W-4 (San Pedro). This case was originally initiated in 1974 with the filing of a petition with the Arizona State Land Department and was consolidated and transferred to the Maricopa County Superior Court in 1981. The principal parties, in addition to us, include: the state of Arizona; the Gila Valley Irrigation District; the Franklin Irrigation District; the San Carlos Irrigation and Drainage District; the Salt River Project; the San Carlos Apache Tribe; the Gila River Indian Community (GRIC); and the U.S. on behalf of those tribes, on its own behalf, and on behalf of the White Mountain Apache Tribe, the Fort McDowell Mohave-Apache Indian Community, the Salt River Pima-Maricopa Indian Community, and the Payson Community of Yavapai Apache Indians.

Prior to January 1, 1983, various Indian tribes filed suits in the U.S. District Court in Arizona claiming superior rights to water being used by many other water users, including us, and claiming damages for prior use in derogation of their allegedly superior rights. These federal proceedings have been stayed pending the Arizona Superior Court adjudications.

The Maricopa County Superior Court issued a decision in 2005 in the Gila River adjudication that directed the Arizona Department of Water Resources (ADWR) to prepare detailed recommendations regarding the delineation of the “sub-flow” zone of the San Pedro River basin, a tributary of the Gila River. According to the court, the sub-flow zone is the subsurface area adjacent to the river where the court may find that groundwater is connected to the surface water such that groundwater pumping may reduce surface flows. Although we have minimal interests in the San Pedro River basin, a decision that re-characterizes groundwater in that basin as surface water may set a precedent for other river systems in Arizona that could have material implications for many commercial, industrial, municipal and agricultural users of groundwater, including our Arizona operations.

ADWR produced its recommendations in June 2009, and those recommendations were objected to by numerous parties on both sides of the issue. ADWR responded to those objections in January 2011. Following a three-day hearing held in late January 2012, at which various parties provided testimony and oral argument regarding the strengths and weaknesses of ADWR's technical approach to characterizing underground flows as groundwater or surface water, the court directed ADWR to submit a further report detailing the additional work it deemed necessary to properly delineate the San Pedro River basin subflow zone. On October 12, 2012, the court issued an order instructing ADWR to conduct additional technical work and issue revised subflow zone maps for the San Pedro River basin. On October 17, 2012, the Arizona Supreme Court announced the appointment of a replacement for the judge who had presided over the case for more than 10 years as a result of his appointment to the federal bankruptcy court. The new presiding judge is the fourth judge to preside over the case since its inception almost 40 years ago. On January 10, 2013, the new presiding judge heard oral arguments regarding the additional work to be performed by ADWR in order to develop revised subflow zone maps for the San Pedro River basin and issued an order instructing ADWR to complete additional technical work and submit a new report by April 1, 2014. Given the legal and technical complexity of this adjudication, its long history, and its long-term legal, economic and political implications, it is difficult to predict the timing or the outcome of this issue or of the overall adjudication. If we are unable to satisfactorily resolve the issues being addressed in this adjudication, our ability to pump groundwater could be diminished or curtailed, and our operations at Morenci, Safford, Sierrita, Miami and Bagdad could be adversely affected.

As part of the Gila River adjudication, the U.S. has asserted numerous claims for federal non-Indian reserved water rights throughout Arizona. These claims are based on reservations of federal land for specific purposes (e.g., national parks, military bases, and wilderness areas). Unlike state law-based water rights, federal reserved water rights are not based on a history of beneficial use of specific amounts of water. Instead, these rights are given priority in the prior appropriation system based on the date the land was reserved, not the date that water was first used on the land. As a result, these water rights can be very disruptive to existing state law-based water rights and uses, particularly groundwater uses, which are not assigned a priority date under state law.

Because federal reserved water rights are not quantified, the task of determining how much water each federal reservation may use has been left to the Gila River adjudication court. Several “contested cases” to quantify reserved water rights for particular federal reservations are currently pending in the adjudication. In multiple instances, the U.S. asserts a right to all water in a particular watershed that was not appropriated prior to the reservation. This creates risks for both surface water users and groundwater users because such claims can severely impede current and future uses of water within the same watershed.

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Federal reserved rights present additional risks to water users aside from the significant quantities of water claimed by the U.S. Of particular significance, federal reserved rights enjoy greater protection from groundwater pumping than is accorded to state law-based water rights. This means that the existence of a federal reserved right may threaten a groundwater user’s ability to continue pumping groundwater under circumstances in which a state law-based right may pose no risk.

Because there are numerous federal reservations in watersheds across Arizona, the reserved water right claims of the U.S. pose a significant risk to multiple operations, including Morenci and Safford in the Upper Gila River watershed, Sierrita in the Santa Cruz watershed, and Bagdad in the Bill Williams River watershed. Although the Bill Williams watershed is not part of the Gila River adjudication, decisions made in the Gila River adjudication may be asserted as precedents for similar federal claims in the Bill Williams watershed. Because federal reserved water rights may adversely affect water uses at each of these operations, we have been actively involved in litigation over these claims.

Item 4. Mine Safety Disclosures.

The safety and health of all employees is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. Our approach towards the health and safety of our workforce is to continuously improve performance through implementing robust management systems and providing adequate training, safety incentive and occupational health programs.

Our objective is zero work place injuries and occupational illnesses. We measure progress toward achieving our objective against regularly established benchmarks, including measuring company-wide Total Recordable Incident Rates (TRIR). During 2013, our TRIR (including contractors) was 0.74 per 200,000 man-hours worked, compared to the preliminary metal mining sector industry average reported by the U.S. Mine Safety and Health Administration (MSHA) for 2013 of 2.35 per 200,000 man-hours worked. Our TRIR (including contractors) was 0.58 per 200,000 man-hours worked in 2012 and 0.61 per 200,000 man-hours worked in 2011, compared to MSHA’s metal mining sector industry average of 2.25 per 200,000 man-hours worked in 2012 and 2.29 per 200,000 man-hours worked in 2011.

Refer to Exhibit 95.1 for mine safety disclosures required in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K.

Executive Officers of the Registrant.

Certain information as of February 14, 2014, about our executive officers is set forth in the following table and accompanying text:

Name	Age	Position or Office
James R. Moffett	75	Chairman of the Board
Richard C. Adkerson	67	Director, Vice Chairman, and FCX President and Chief Executive Officer
James C. Flores	54	Director, Vice Chairman, and FM O&G President and Chief Executive Officer
Michael J. Arnold	61	Executive Vice President and Chief Administrative Officer
Kathleen L. Quirk	50	Executive Vice President, Chief Financial Officer and Treasurer

James R. Moffett has served as Chairman of the Board since May 1992. Mr. Moffett previously served as the Chief Executive Officer from July 1995 until December 2003. He served as Co-Chairman of the Board of McMoRan Exploration Co. (MMR) from September 1998, and President and Chief Executive Officer from May 2010 until FCX's acquisition of MMR in 2013.

Richard C. Adkerson has served as Vice Chairman since June 2013, President since January 2008 and also from April 1997 to March 2007, Chief Executive Officer since December 2003 and a director since October 2006. Mr. Adkerson previously served as Chief Financial Officer from October 2000 to December 2003. Mr. Adkerson served as Co-Chairman of the Board of MMR from September 1998 until FCX's acquisition of MMR in 2013.

James C. Flores has served as Vice Chairman, and FM O&G President and Chief Executive Officer since June 2013. Mr. Flores previously served as Chairman of the Board, President and Chief Executive Officer of Plains Exploration & Production Company (PXP) from September 2002 until FCX's acquisition of PXP in 2013.

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Michael J. Arnold has served as Executive Vice President since March 2007 andChief Administrative Officer since December 2003.

Kathleen L. Quirk has served as Executive Vice President since March 2007, Chief Financial Officer since December 2003 and Treasurer since February 2000. Ms. Quirk previously served as Senior Vice President from December 2003 to March 2007. Ms. Quirk served as the Senior Vice President of MMR from April 2002 and as Treasurer from January 2000 until FCX's acquisition of MMR in 2013.

PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Unregistered Sales of Equity Securities

None.

Common Stock

Our common shares trade on the New York Stock Exchange (NYSE) under the symbol “FCX.” The FCX share price is reported daily in the financial press under “FMCG” in most listings of NYSE securities. The table below shows the NYSE composite tape common share price ranges during 2013 and 2012:

	2013		2012
	High	Low	High	Low
First Quarter	$36.26	$30.72	$48.96	$36.76
Second Quarter	$34.00	$26.37	$39.43	$31.16
Third Quarter	$34.99	$26.95	$43.65	$31.08
Fourth Quarter	$38.00	$32.34	$42.89	$30.54

At February 14, 2014, there were 15,753 holders of record of our common stock.

Common Stock Dividends

The declaration of dividends is at the discretion of the FCX Board of Directors (the Board) and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board. In February 2012, the Board authorized an increase in the cash dividend on our common stock to the current annual rate of $1.25 per share ($0.3125 per share quarterly). The Board also authorized a supplemental common stock dividend of $1.00 per share that was paid in July 2013. Below is a summary of dividends on FCX common stock for 2013 and 2012:

	2013
	Per Share Amount	Record Date	Payment Date
First Quarter	$0.3125	01/15/2013	02/01/2013
Second Quarter	$0.3125	04/15/2013	05/01/2013
Supplemental Dividend	$1.0000	06/14/2013	07/01/2013
Third Quarter	$0.3125	07/15/2013	08/01/2013
Fourth Quarter	$0.3125	10/15/2013	11/01/2013

	2012
	Per Share Amount	Record Date	Payment Date
First Quarter	$0.2500	01/13/2012	02/01/2012
Second Quarter	$0.3125	04/13/2012	05/01/2012
Third Quarter	$0.3125	07/13/2012	08/01/2012
Fourth Quarter	$0.3125	10/15/2012	11/01/2012

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On December 20, 2013, the Board declared a regular quarterly dividend of $0.3125 per share, which was paid on February 3, 2014, to common stockholders of record at the close of business on January 15, 2014.

Issuer Purchases of Equity Securities

The following table sets forth information with respect to shares of FCX common stock purchased by us during the three months ended December 31, 2013:

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programsa	(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programsa
October 1-31, 2013	—	$	—	—	23,685,500
November 1-30, 2013	—	—		—	23,685,500
December 1-31, 2013	—	—		—	23,685,500
Total	—	—		—	23,685,500

a. On July 21, 2008, the Board approved an increase in our open-market share purchase program for up to 30 million shares. The program does not have an expiration date.

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Item 6. Selected Financial Data.

FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED FINANCIAL AND OPERATING DATA

	Years Ended December 31,
	2013a			2012			2011			2010			2009
FCX CONSOLIDATED FINANCIAL DATA	(In millions, except per share amounts)
Revenues	$	20,921	b	$	18,010		$	20,880		$	18,982		$	15,040
Operating income	5,351		b,c,d,e	5,814		c,d,e	9,140		e	9,068			6,503
Net income	3,441			3,980			5,747			5,544			3,534
Net income attributable to FCX common stockholders	2,658		b,c,d,e,f,g	3,041		c,d,e,f,h	4,560		e,f,h	4,273		f	2,527		f
Basic net income per share attributable to FCX common stockholders	$	2.65		$	3.20		$	4.81		$	4.67		$	3.05
Basic weighted-average common shares outstanding	1,002			949			947			915			829
Diluted net income per share attributable to FCX common stockholders	$	2.64	b,c,d,e,f,g	$	3.19	c,d,e,f,h	$	4.78	e,f,h	$	4.57	f	$	2.93	f
Diluted weighted-average common shares outstanding	1,006			954			955			949			938
Dividends declared per share of common stock	$	2.25		$	1.25		$	1.50		$	1.125		$	0.075
Operating cash flowsi	6,139			3,774			6,620			6,273			4,397
Capital expenditures	5,286			3,494			2,534			1,412			1,587
At December 31:
Cash and cash equivalents	$	1,985		$	3,705		$	4,822		$	3,738		$	2,656
Property, plant, equipment and mining development costs, net	24,042			20,999			18,449			16,785			16,195
Oil and gas properties, net	23,359			—			—			—			—
Goodwill	1,916			—			—			—			—
Total assets	63,473			35,440			32,070			29,386			25,996
Total debt, including current portion	20,706			3,527			3,537			4,755			6,346
Redeemable noncontrolling interest	716			—			—			—			—
Total FCX stockholders’ equity	20,934			17,543			15,642			12,504			9,119

The selected consolidated financial data shown above is derived from our audited consolidated financial statements. These historical results are not necessarily indicative of results that you can expect for any future period. You should read this data in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and Notes thereto contained in this annual report.

a. Includes the results of FCX Oil & Gas Inc. (FM O&G) beginning June 1, 2013.

b. Includes charges for net unrealized and noncash realized losses on crude oil and natural gas derivative contracts totaling $312 million ($194 million to net income attributable to common stockholders or $0.19 per share) for the seven-month period from June 1, 2013, to December 31, 2013.

c. Includes transaction and related costs principally associated with our oil and gas acquisitions totaling $80 million ($50 million to net income attributable to common stockholders or $0.05 per share) in 2013 and $9 million ($7 million to net income attributable to common stockholders or $0.01 per share) in 2012.

d. The year 2013 includes charges of (i) $76 million ($49 million to net income attributable to common stock or $0.05 per share) associated with updated mine plans at Morenci that resulted in a loss of recoverable copper in leach stockpiles and (ii) $37 million ($23 million to net income attributable to common stockholders of $0.02 per share) for restructuring an executive employment arrangement. The year 2012 includes a gain of $59 million ($31 million to net income attributable to common stockholders or $0.03 per share) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT Freeport Indonesia's (PT-FI) concentrate pipelines.

e. Includes charges associated with labor agreements totaling $36 million ($13 million to net income attributable to common stockholders or $0.01 per share) at Cerro Verde in 2013, $16 million ($8 million to net income attributable to common stockholders or $0.01 per share) at Candelaria in 2012 and $116 million ($50 million to net income attributable to common stockholders or $0.05 per share) at PT-FI, Cerro Verde and El Abra in 2011.

f. Includes net losses on early extinguishment and conversion of debt totaling $28 million ($0.03 per share) in 2013, $149 million ($0.16 per share) in 2012, $60 million ($0.06 per share) in 2011, $71 million ($0.07 per share) in 2010 and $43 million ($0.04 per share) in 2009.

g. Includes gains associated with our oil and gas acquisitions, including (i) $128 million ($0.13 per share) primarily related to our preferred stock investments in and the subsequent acquisition of McMoRan Exploration Co., and (ii) a net tax credit of $199 million ($0.20 per share) associated with net reductions in our deferred tax liabilities and deferred tax asset valuation allowances.

h. Includes a net tax credit of $98 million, net of noncontrolling interests ($0.11 per share), in 2012 associated with adjustments to Cerro Verde's deferred income taxes, and a tax charge of $49 million, net of noncontrolling interests ($0.05 per share), in 2011 for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its 1998 stability agreement.

i. Net of working capital uses and changes in other tax payments totaling $377 million in 2013, $1.4 billion in 2012, $461 million in 2011, $834 million in 2010 and $770 million in 2009.

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FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)

	Years Ended December 31,
	2013		2012		2011		2010		2009
FCX CONSOLIDATED MINING OPERATING DATA
Copper (recoverable)
Production (millions of pounds)	4,131		3,663		3,691		3,908		4,103
Production (thousands of metric tons)	1,874		1,662		1,674		1,773		1,861
Sales, excluding purchases (millions of pounds)	4,086		3,648		3,698		3,896		4,111
Sales, excluding purchases (thousands of metric tons)	1,853		1,655		1,678		1,767		1,865
Average realized price per pound	$	3.30	$	3.60	$	3.86	$	3.59	$	2.60
Gold (thousands of recoverable ounces)
Production	1,250		958		1,383		1,886		2,664
Sales, excluding purchases	1,204		1,010		1,378		1,863		2,639
Average realized price per ounce	$	1,315	$	1,665	$	1,583	$	1,271	$	993
Molybdenum (millions of recoverable pounds)
Production	94		85		83		72		54
Sales, excluding purchases	93		83		79		67		58
Average realized price per pound	$	11.85	$	14.26	$	16.98	$	16.47	$	12.36
NORTH AMERICA COPPER MINES
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	1,431		1,363		1,258		1,067		1,147
Production (thousands of metric tons)	649		618		571		484		520
Sales, excluding purchases (millions of pounds)	1,422		1,351		1,247		1,085		1,187
Sales, excluding purchases (thousands of metric tons)	645		613		566		492		538
Average realized price per pound	$	3.36	$	3.64	$	3.99	$	3.42	$	2.38
Molybdenum (millions of recoverable pounds)
Production	32		36		35		25		25
100% Operating Data
Solution extraction/electrowinning (SX/EW) operations
Leach ore placed in stockpiles (metric tons per day)	1,003,500		998,600		888,300		648,800		589,400
Average copper ore grade (percent)	0.22		0.22		0.24		0.24		0.29
Copper production (millions of recoverable pounds)	889		866		801		746		859
Mill operations
Ore milled (metric tons per day)	246,500		239,600		222,800		189,200		169,900
Average ore grade (percent):
Copper	0.39		0.37		0.38		0.32		0.33
Molybdenum	0.03		0.03		0.03		0.03		0.02
Copper recovery rate (percent)	85.3		83.9		83.1		83.0		86.0
Copper production (millions of recoverable pounds)	642		592		549		398		364
SOUTH AMERICA MINING
Copper (recoverable)
Production (millions of pounds)	1,323		1,257		1,306		1,354		1,390
Production (thousands of metric tons)	600		570		592		614		631
Sales (millions of pounds)	1,325		1,245		1,322		1,335		1,394
Sales (thousands of metric tons)	601		565		600		606		632
Average realized price per pound	$	3.30	$	3.58	$	3.77	$	3.68	$	2.70
Gold (thousands of recoverable ounces)
Production	101		83		101		93		92
Sales	102		82		101		93		90
Average realized price per ounce	$	1,350	$	1,673	$	1,580	$	1,263	$	982
Molybdenum (millions of recoverable pounds)
Production	13		8		10		7		2
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	274,600		229,300		245,200		268,800		258,200
Average copper ore grade (percent)	0.50		0.55		0.50		0.41		0.45
Copper production (millions of recoverable pounds)	448		457		439		504		565
Mill operations
Ore milled (metric tons per day)	192,600		191,400		189,200		188,800		181,300
Average ore grade:
Copper (percent)	0.65		0.60		0.66		0.65		0.66
Gold (grams per metric ton)	0.12		0.10		0.12		0.10		0.10
Molybdenum (percent)	0.02		0.02		0.02		0.02		0.02
Copper recovery rate (percent)	90.9		90.1		89.6		90.0		88.9
Copper production (millions of recoverable pounds)	875		800		867		850		825

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FREEPORT-McMoRan COPPER & GOLD INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)

	Years Ended December 31,
	2013			2012			2011		2010		2009
INDONESIA MINING
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	915			695			846		1,222		1,412
Production (thousands of metric tons)	415			315			384		554		640
Sales (millions of pounds)	885			716			846		1,214		1,400
Sales (thousands of metric tons)	401			325			384		551		635
Average realized price per pound	$	3.28		$	3.58		$	3.85	$	3.69	$	2.65
Gold (thousands of recoverable ounces)
Production	1,142			862			1,272		1,786		2,568
Sales	1,096			915			1,270		1,765		2,543
Average realized price per ounce	$	1,312		$	1,664		$	1,583	$	1,271	$	994
100% Operating Data
Ore milled (metric tons per day):a
Grasberg open pit	127,700			118,800			112,900		149,800		166,300
Deep Ore Zone underground mine	49,400			44,600			51,700		79,600		72,000
Big Gossan underground mine	2,100			1,600			1,500		800		—
Total	179,200			165,000			166,100		230,200		238,300
Average ore grade:
Copper (percent)	0.76			0.62			0.79		0.85		0.98
Gold (grams per metric ton)	0.69			0.59			0.93		0.90		1.30
Recovery rates (percent):
Copper	90.0			88.7			88.3		88.9		90.6
Gold	80.0			75.7			81.2		81.7		83.7
Production (recoverable):
Copper (millions of pounds)	928			695			882		1,330		1,641
Gold (thousands of ounces)	1,142			862			1,444		1,964		2,984
AFRICA MINING
Copper (recoverable)
Production (millions of pounds)	462			348			281		265		154		b
Production (thousands of metric tons)	210			158			127		120		70		b
Sales (millions of pounds)	454			336			283		262		130		b
Sales (thousands of metric tons)	206			152			128		119		59		b
Average realized price per pound	$	3.21		$	3.51		$	3.74	$	3.45	$	2.85	b
Cobalt (millions of contained pounds)
Production	28			26			25		20		—
Sales	25			25			25		20		—
Average realized price per pound	$	8.02		$	7.83		$	9.99	$	10.95	—
Ore milled (metric tons per day)	14,900			13,000			11,100		10,300		7,300		b
Average ore grade (percent):
Copper	4.22			3.62			3.41		3.51		3.69		b
Cobalt	0.37			0.37			0.40		0.40		—
Copper recovery rate (percent)	91.4			92.4			92.5		91.4		92.1		b
MOLYBDENUM MINES
Molybdenum production (millions of recoverable pounds)	49		c	41		c	38		40		27
Ore milled (metric tons per day)d	35,700			20,800			22,300		22,900		14,900
Average molybdenum ore grade (percent)d	0.19			0.23			0.24		0.25		0.25
OIL AND GAS OPERATIONSe
Sales Volumes:
Oil (million barrels)	26.6
Natural gas (billion cubic feet)	54.2			—			—		—		—
Natural gas liquids (NGLs) (million barrels)	2.4			—			—		—		—
Million barrels of oil equivalents (MMBOE)	38.1			—			—		—		—
Average Realizations:
Oil (per barrel)	$	98.32		—			—		—		—
Natural gas(per million British thermal units)	$	3.99		—			—		—		—
NGLs (per barrel)	$	38.20		—			—		—		—

a. Represents the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.

b. Copper production began in March 2009.

c. Includes production from the Climax molybdenum mine, which began commercial operations in May 2012.

d. The 2013 period reflects operating data for the Henderson and Climax mines; the prior periods reflect operating data of only the Henderson mine.

e. Represents the results of FM O&G beginning June 1, 2013.

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Ratio of Earnings to Fixed Charges

For the ratio of earnings to fixed charges calculation, earnings consist of income (loss) from continuing operations before income taxes, noncontrolling interests in consolidated subsidiaries, equity in affiliated companies’ net earnings, cumulative effect of accounting changes and fixed charges. Fixed charges include interest and that portion of rent deemed representative of interest. For the ratio of earnings to fixed charges and preferred stock dividends calculation, we assumed that our preferred stock dividend requirements were equal to the pre-tax earnings that would be required to cover those dividend requirements. We computed those pre-tax earnings using the effective tax rate for each year. Our ratio of earnings to fixed charges was as follows for the years presented:

	Years Ended December 31,
	2013	2012	2011	2010	2009
Ratio of earnings to fixed charges	7.4x	19.8x	20.7x	16.3x	9.3x
Ratio of earnings to fixed charges
and preferred stock dividends	7.4x	19.8x	20.7x	13.9x	6.1x

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Items 7. and 7A.  Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, “we,” “us” and “our” refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries. The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). In particular, the financial results for the year ended 2013 include the results of FCX Oil & Gas Inc. (FM O&G) only since June 1, 2013. References to “Notes” are Notes included in our Notes to Consolidated Financial Statements. Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, all references to earnings or losses per share are on a diluted basis, unless otherwise noted.

OVERVIEW

In 2013, we completed the acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR). Refer to Note 2 for further discussion of these acquisitions, including a summary of the preliminary purchase price allocations. With these acquisitions, we are a premier U.S.-based natural resource company with an industry leading global portfolio of mineral assets, significant oil and natural gas resources and a growing production profile. We are the world's largest publicly traded copper producer. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits, significant mining operations in North and South America, the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa and significant oil and natural gas assets in North America, including reserves in the Deepwater Gulf of Mexico (GOM), onshore and offshore California and in the Eagle Ford shale play in Texas, in the Haynesville shale play in Louisiana, in the Madden area in central Wyoming, and an industry-leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana (previously referred to as the ultra-deep gas trend).

We have significant mineral reserves, resources and future development opportunities within our portfolio of mining assets. At December 31, 2013, our estimated consolidated recoverable proven and probable mineral reserves totaled 111.2 billion pounds of copper, 31.3 million ounces of gold and 3.26 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum. Refer to “Critical Accounting Estimates – Mineral Reserves” for further discussion.

A summary of the sources of our consolidated copper, gold and molybdenum production for the year 2013 by geographic location follows:

	Copper	Gold	Molybdenum
North America	35%	1%	86%	a
South America	32%	8%	14%
Indonesia	22%	91%	—
Africa	11%	—	—
	100%	100%	100%

a. For 2013, 60 percent of our consolidated molybdenum production in North America was from the Henderson and Climax primary molybdenum mines.

Copper production from the Grasberg, Morenci and Cerro Verde mines totaled 49 percent of our consolidated copper production in 2013. During 2013, we completed our second phase expansion project at Tenke. We also advanced construction on the Morenci mill expansion, with startup expected in the first half of 2014, and commenced construction on the Cerro Verde mill expansion, with completion expected in 2016. These projects are expected to significantly increase our minerals production in future periods. Refer to “Operations” for further discussion of our mining operations.

Our oil and gas business has significant proved, probable and possible reserves with financially attractive organic growth opportunities. Our estimated proved oil and natural gas reserves at December 31, 2013, totaled 464 million barrels of oil equivalents (MMBOE), with 80 percent comprised of oil (including natural gas liquids, or NGLs). Our portfolio includes a broad range of development opportunities and high-potential exploration prospects. For the seven-month period following the acquisition date, our oil and gas sales volumes totaled 38.1 MMBOE, including

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26.6 million barrels (MMBbls) of crude oil, 54.2 billion cubic feet (Bcf) of natural gas and 2.4 MMBbls of NGLs. Refer to “Operations” for further discussion of our oil and gas operations and to “Critical Accounting Estimates – Oil and Natural Gas Reserves” for further discussion of our reserves.

Our results for 2013, compared with 2012, primarily benefited from higher copper and gold sales volumes, partly offset by lower metals price realizations, and include the results of FM O&G beginning June 1, 2013. Refer to “Consolidated Results” for discussion of items impacting our consolidated results for the three years ended December 31, 2013.

At December 31, 2013, we had $2.0 billion in consolidated cash and cash equivalents and $20.7 billion in total debt, including $10.5 billion of acquisition-related debt and $6.7 billion of debt assumed in connection with the oil and gas acquisitions. Refer to Note 8 and "Capital Resources and Liquidity" for further discussion.

At current copper and crude oil prices, we expect to produce significant operating cash flows, and to use our cash to invest in our development projects, reduce debt and return cash to shareholders through dividends on our common stock.

OUTLOOK

We view the long-term outlook for our business positively, supported by limitations on supplies of copper and oil and by the requirements for copper and oil in the world’s economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold, molybdenum and oil, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs for our mining operations, cash production costs per BOE for our oil and gas operations and consolidated operating cash flow. The outlook for each of these measures follows.

Sales Volumes.  Following are our projected consolidated sales volumes for 2014 and actual consolidated sales volumes for 2013:

	2014		2013
	(Projected)		(Actual)
Copper (millions of recoverable pounds):
North America copper mines	1,725		1,422
South America mining	1,190		1,325
Indonesia mining	1,070		885
Africa mining	445		454
	4,430		4,086
Gold (thousands of recoverable ounces):
Indonesia mining	1,650		1,096
North and South America mining	100		108
	1,750		1,204
Molybdenum (millions of recoverable pounds)	95	a	93
Oil Equivalents (MMBOE)	60.7		38.1	b

a. Projected molybdenum sales include 48 million pounds produced at our molybdenum mines and 47 million pounds produced at our North and South America copper mines.

b. Reflects sales of oil and gas for the seven-month period June 1, 2013, to December 31, 2013.

Projected sales volumes are dependent on a number of factors, including operational performance and other factors.

In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements, for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates in the amount of 25 percent in 2014, rising to 60 percent by mid-2016. The January 2014 regulations conflict with PT Freeport Indonesia's (PT-FI) contractual rights under the Contract of Work (COW).

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We are working with the Indonesian government to clarify the situation and to defend PT-FI's right under the COW. Refer to “Operations – Indonesia Mining” for further discussion.

Our 2014 copper and gold sales estimates, mining unit net cash costs and operating cash flow projections assume no changes to PT-FI’s planned 2014 concentrate shipments. As of February 21, 2014, PT-FI has not obtained administrative approvals for 2014 exports. PT-FI has implemented near-term changes to its operations to coordinate its concentrate production with PT Smelting's (PT-FI's 25 percent owned smelter in Indonesia) operating plans. These changes will result in the deferral of an estimated 40 million pounds of copper and 80 thousand ounces of gold per month pending resolution of these matters. Since mid-January 2014, PT-FI’s milling rate has averaged approximately 112,000 metric tons of ore per day, which is approximately half of normal rates.

Mining Unit Net Cash Costs. Assuming average prices of $1,200 per ounce of gold and $9.50 per pound of molybdenum, and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mining operations are expected to average $1.45 per pound in 2014. Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices (primarily gold and molybdenum prices). Unit net cash costs are expected to decline in 2014, compared to the 2013 average, as we gain access to higher grade ore in Indonesia. The impact of price changes in 2014 on consolidated unit net cash costs would approximate $0.02 per pound for each $50 per ounce change in the average price of gold and $0.02 per pound for each $2 per pound change in the average price of molybdenum. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production and delivery costs for our mining operations.

Oil and Gas Cash Production Costs per BOE. Based on current sales volume and cost estimates, cash production costs are expected to approximate $20 per BOE for 2014, which is higher than 2013 costs per BOE, primarily reflecting the impact of lower estimated volumes from planned downtime associated with platform maintenance and subsea tie-back upgrades on the Marlin facility in the GOM during third-quarter 2014. Refer to “Operations – Oil and Gas Operations” for further discussion of oil and gas production and delivery costs.

Consolidated Operating Cash Flow. Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil sales, our sales volumes, production costs, income taxes and other working capital changes and other factors. Based on current sales volume and cost estimates and assuming average prices of $3.25 per pound of copper, $1,200 per ounce of gold, $9.50 per pound of molybdenum and $105 per barrel of Brent crude oil in 2014, consolidated operating cash flows are estimated to approximate $9 billion (including $0.8 billion of net working capital sources and changes in other tax payments) in 2014. Projected consolidated operating cash flows for the year 2014 also reflect estimated taxes of $2.1 billion (refer to “Consolidated Results – Provision for Income Taxes” for discussion of our projected annual consolidated effective tax rate for 2014). The impact of price changes in 2014 on consolidated operating cash flows would approximate $370 million for each $0.10 per pound change in the average price of copper, $85 million for each $50 per ounce change in the average price of gold, $120 million for each $2 per pound change in the average price of molybdenum and $125 million for each $5 per barrel change in the price of Brent crude oil above $100 per barrel.

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MARKETS

Metals. World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2004 through January 2014, the London Metal Exchange (LME) spot copper price varied from a low of $1.06 per pound in 2004 to a record high of $4.60 per pound in February 2011; the London Bullion Market Association (London) PM gold price fluctuated from a low of $375 per ounce in 2004 to a record high of $1,895 per ounce in September 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $7.35 per pound in 2004 to a high of $39.25 per pound in 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2013.

This graph presents LME spot copper prices and combined reported stocks of copper at the LME, Commodity Exchange Inc. (COMEX), a division of the New York Mercantile Exchange (NYMEX), and the Shanghai Futures Exchange from January 2004 through January 2014. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories. In late 2008, slowing consumption, turmoil in the U.S. financial markets and concerns about the global economy led to a sharp decline in copper prices, which reached a low of $1.26 per pound in December 2008. Higher copper prices since that time are attributable to a combination of continuing demand from developing economies and an improving global economic environment. During 2013, LME spot copper prices ranged from a low of $3.01 per pound to a high of $3.74 per pound, averaged $3.31 per pound and closed at $3.35 per pound on December 31, 2013.

We believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging supply environment. Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters. The LME spot copper price closed at $3.25 per pound on February 14, 2014.

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This graph presents London PM gold prices from January 2004 through January 2014. An improving economic outlook and positive global equity performance contributed to lower demand for gold in 2013. During 2013, gold prices ranged from a low of $1,192 per ounce to a high of $1,694 per ounce, averaged $1,405 per ounce and closed at $1,205 per ounce on December 31, 2013. Gold prices closed at $1,320 per ounce on February 14, 2014.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2004 through January 2014. Market conditions for molybdenum declined in 2013 because of weak demand in the metallurgical sector and increased supply. During 2013, the weekly average price of molybdenum ranged from a low of $9.18 per pound to a high of $11.95 per pound, averaged $10.32 per pound and was $9.70 per pound on December 31, 2013. The Metals Week Molybdenum Dealer Oxide weekly average price was $9.83 per pound on February 14, 2014.

Oil and Gas.Market prices for crude oil and natural gas can fluctuate significantly. During the period from January 2004 through January 2014, the Brent crude oil price ranged from a low of $28.83 per barrel in 2004 to a high of $146.08 per barrel in 2008 and the NYMEX natural gas price fluctuated from a low of $2.04 per million British

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thermal units (MMBtu) in 2012 to a high of $13.91 per MMBtu in 2005. Crude oil and natural gas prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2013.

This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January 2004 through January 2014. Crude oil prices reached a record high in July 2008 as economic growth in emerging economies and the U.S. created high global demand for oil and lower inventories. By the end of 2008, financial turmoil in the U.S. contributed to a global economic slowdown and a decline in many commodity prices, including crude oil which reached a low of $36.61 per barrel in December 2008. Crude oil prices have rebounded since 2008, supported by a gradually improving global economy and demand outlook. Additionally, increased North American oil supplies led by U.S. shale production have negatively impacted U.S. Gulf Coast crude oil prices relative to Brent pricing. During 2013, the Brent crude oil price ranged from a low of $97.69 per barrel to a high of $118.90 per barrel, averaged $108.68 per barrel and was $110.80 per barrel on December 31, 2013. The Brent crude oil price was $109.08 per barrel on February 14, 2014.

CRITICAL ACCOUNTING ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles (GAAP) in the U.S. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The areas requiring the use of management’s estimates are also discussed in Note 1 under the subheading “Use of Estimates.” Management has reviewed the following discussion of its development and selection of critical accounting estimates with the Audit Committee of our Board.

Mineral Reserves

Recoverable proven and probable reserves are the part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The determination of reserves involves numerous uncertainties with respect to the ultimate geology of the ore bodies, including quantities, grades and recovery rates. Estimating the quantity and grade of mineral reserves requires us to determine the size, shape and depth of our ore bodies by analyzing geological data, such as samplings of drill holes, tunnels and other underground workings. In addition to the geology of our mines, assumptions are required to determine the economic feasibility of mining these reserves, including estimates of future commodity prices and demand, the mining methods we use and the related costs incurred to develop and mine our reserves. Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees. A majority of these estimates are reviewed annually and verified by independent experts in mining, geology and reserve determination.

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At December 31, 2013, our consolidated estimated recoverable proven and probable reserves were determined using long-term average prices of $2.00 per pound for copper (consistent with the long-term average copper price used since December 31, 2010), $1,000 per ounce for gold and $10 per pound for molybdenum. The following table summarizes changes in our estimated consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2013 and 2012:

	Coppera (billion pounds)		Gold (million ounces)	Molybdenum (billion pounds)
Consolidated reserves at December 31, 2011	119.7		33.9	3.42
Net additions/revisions	0.5		(0.4)	0.08
Production	(3.7	)	(1.0)	(0.08)
Consolidated reserves at December 31, 2012	116.5		32.5	3.42
Net additions/revisions	(1.2	)	—	(0.07)
Production	(4.1	)	(1.2)	(0.09)
Consolidated reserves at December 31, 2013	111.2		31.3	3.26

a. Includes estimated recoverable metals contained in stockpiles. See below for additional discussion of recoverable copper in stockpiles.

Refer to Note 20 for further information regarding estimated recoverable proven and probable mineral reserves.

As discussed in Note 1, we depreciate our life-of-mine mining and milling assets and values assigned to proven and probable mineral reserves using the unit-of-production (UOP) method based on our estimated recoverable proven and probable mineral reserves. Because the economic assumptions used to estimate mineral reserves change from period to period and additional geological data is generated during the course of operations, estimates of reserves may change, which could have a significant impact on our results of operations, including changes to prospective depreciation rates and impairments of asset carrying values. Excluding impacts associated with changes in the levels of finished goods inventories and based on projected copper sales volumes for 2014, if estimated copper reserves at our mines were 10 percent higher at December 31, 2013, we estimate that our annual depreciation, depletion and amortization expense for 2014 would decrease by $59 million ($30 million to net income attributable to common stockholders), and a 10 percent decrease in copper reserves would increase depreciation, depletion and amortization expense by $72 million ($37 million to net income attributable to common stockholders). We perform annual assessments of our existing assets in connection with the review of mine operating and development plans. If it is determined that assigned asset lives do not reflect the expected remaining period of benefit, any change could affect prospective depreciation rates.

As discussed below and in Note 1, we review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, and changes to our estimates of recoverable proven and probable mineral reserves could have an impact on our assessment of asset recoverability.

Recoverable Copper in Stockpiles

We record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Mill and leach stockpiles are evaluated periodically to ensure that they are stated at the lower of cost or market. Accounting for recoverable copper from mill and leach stockpiles represents a critical accounting estimate because (i) it is impracticable to determine copper contained in mill and leach stockpiles by physical count, thus requiring management to employ reasonable estimation methods and (ii) recovery rates from leach stockpiles can vary significantly. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper grade contained in the material delivered to the mill and leach stockpiles.

Expected copper recovery rates for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately.

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Expected copper recovery rates for leach stockpiles are determined using small-scale laboratory tests, small- to large-scale column testing (which simulates the production-scale process), historical trends and other factors,

including mineralogy of the ore and rock type. Total copper recovery in leach stockpiles can vary significantly from a low percentage to more than 90 percent depending on several variables, including processing methodology, processing variables, mineralogy and particle size of the rock. For newly placed material on active stockpiles, as much as 80 percent total copper recovery may be extracted during the first year, and the remaining copper may be recovered over many years.

Processes and recovery rates for mill and leach stockpiles are monitored regularly, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes. Adjustments to recovery rates will typically result in a future impact to the value of the material removed from the stockpiles at a revised weighted-average cost per pound of recoverable copper. At December 31, 2013, estimated consolidated recoverable copper was 3.3 billion pounds in leach stockpiles (with a carrying value of $3.3 billion) and 1.4 billion pounds in mill stockpiles (with a carrying value of $789 million), compared with 2.9 billion pounds in leach stockpiles (with a carrying value of $2.9 billion) and 1.4 billion pounds in mill stockpiles (with a carrying value of $719 million) at December 31, 2012.

Oil and Natural Gas Reserves

Proved reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and natural gas actually recovered will equal or exceed the estimate. Engineering estimates of proved oil and natural gas reserves directly impact financial accounting estimates, including depreciation, depletion and amortization and the ceiling limitation under the full cost method. Estimates of total proved reserves are determined using methods prescribed by the U.S. Securities and Exchange Commission (SEC), which require the use of an average reference price calculated as the twelve-month average of the first-day-of-the-month historical market prices for crude oil and natural gas. At December 31, 2013, our estimates were based on reference prices of $96.94 per barrel (West Texas Intermediate) and $3.67 per MMBtu (Henry Hub spot natural gas) as adjusted for location and quality differentials, which are held constant throughout the lives of the oil and gas properties, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations. Actual future prices and costs may be materially higher or lower than the average prices and costs as of the date of the estimate.

There are numerous uncertainties inherent in estimating quantities and values of proved oil and natural gas reserves and in projecting future rates of production and the amount and timing of development expenditures, including many factors beyond our control. Future development and abandonment costs are determined annually for each of our properties based upon its geographic location, type of production structure, water depth, reservoir depth and characteristics, currently available procedures and consultations with engineering consultants. Because these costs typically extend many years into the future, estimating these future costs is difficult and requires management to make judgments that are subject to future revisions based upon numerous factors, including changing technology and the political and regulatory environment. Reserve engineering is a subjective process of estimating the recovery from underground accumulations of oil and natural gas that cannot be measured in an exact manner and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Because all reserve estimates are subjective, the quantities of oil and natural gas that are ultimately recovered, production and operating costs, the amount and timing of future development expenditures and future oil and natural gas sales prices may all differ from those assumed in our estimates.

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The following table summarizes our changes in estimated proved oil and natural gas reserves during 2013 based upon reserve reports prepared by the independent petroleum engineers of Netherland, Sewell & Associates, Inc. and Ryder Scott Company, L.P.:

	Oil and Natural Gas
	(MMBOE)
Acquisitions of PXP and MMR	472
Extensions and discoveries	24
Revisions of previous estimates	7
Sales of reserves in-place	(1	)
Production	(38	)
Estimated proved reserves at December 31, 2013	464

Refer to Note 21 for further information regarding estimated proved oil and natural gas reserves.

Changes to estimates of proved reserves could result in changes to the prospective UOP amortization rate for our oil and gas properties, which could have a significant impact on our results of operations. Based on our estimated proved reserves and our net oil and gas properties subject to amortization at December 31, 2013, a 10 percent increase in our costs subject to amortization would increase our amortization rate by approximately $3.79 per BOE and a 10 percent reduction to proved reserves would increase our amortization rate by approximately $4.21 per BOE. Changes in estimates of proved oil and natural gas reserves may also affect our ceiling test calculation (refer to Note 1).

Impairment of Long-Lived Mining Assets

As discussed in Note 1, we evaluate our long-lived mining assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable. In evaluating our long-lived assets for recoverability, estimates of after-tax undiscounted future cash flows of our individual mining operations are used, with impairment losses measured by reference to fair value. As quoted market prices are unavailable for our individual mining operations, fair value is determined through the use of discounted estimated future cash flows. The estimated cash flows used to assess recoverability of our long-lived assets and measure fair value of our mining operations are derived from current business plans, which are developed using near-term price forecasts reflective of the current price environment and management's projections for long-term average metal prices. In addition to near- and long-term metal price assumptions, other key assumptions include commodity-based and other input costs; proven and probable reserves, including the timing and cost to develop and produce the reserves; and the use of appropriate escalation and discount rates. We believe our estimates and models used to determine fair value are similar to what a market participant would use.

Because the cash flows used to assess recoverability of our long-lived assets and measure fair value of our mining operations require us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our long-lived asset values. Events that could result in impairment of our long-lived assets include, but are not limited to, decreases in future metal prices, decreases in estimated recoverable proven and probable mineral reserves and any event that might otherwise have a material adverse effect on mine site production levels or costs.

Impairment of Oil and Gas Properties

As discussed in Note 1, we follow the full cost method of accounting for our oil and gas operations, whereby all costs associated with oil and gas property acquisition, exploration and development activities are capitalized and amortized to expense under the UOP method on a country-by-country basis using estimates of proved oil and natural gas reserves relating to each country where such activities are conducted.

In evaluating our oil and gas properties for impairment, estimates of future cash flows are used (refer to Note 1 for further discussion of the ceiling test calculation). Additionally, SEC rules require that we price our future oil and gas production at the twelve-month average of the first-day-of-the-month historical reference prices adjusted for location and quality differentials. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts excluding derivatives. The pricing in ceiling test impairment calculations required by full cost accounting may cause results that do not reflect current market conditions that exist at the end of an accounting period. For example, in periods of increasing oil and gas prices, the

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use of a twelve-month historical average price in the ceiling test calculation may result in an impairment. Conversely, in times of declining prices, ceiling test calculations may not result in an impairment.

At December 31, 2013, the ceiling with respect to our oil and gas properties exceeded the net capitalized costs of those properties by approximately 4 percent, and we did not record an impairment. Given the volatility of crude oil and natural gas prices, it is likely that our estimate of discounted future net revenues from proved oil and natural gas reserves will change in the near term. If crude oil and natural gas prices decline in the future, even if only by a small amount, impairments of our oil and gas properties could occur.

At December 31, 2013, we also had $10.9 billion of costs for unproved oil and gas properties, which are excluded from amortization. These costs will be transferred into the amortization base as the properties are evaluated and proved reserves are established or if impairment is determined. We assess our unproved properties at least annually, and if impairment is indicated, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and subject to amortization. Accordingly, an impairment of unproved properties does not immediately result in the recognition of a charge to the consolidated statements of income, but rather increases the costs subject to amortization. The transfer of costs into the amortization base involves a significant amount of judgment and may be subject to changes over time based on our drilling plans and results, geological and geophysical evaluations, the assignment of proved reserves, availability of capital and other factors.

Because the transfer of unevaluated property to the full cost pool requires significant judgment and the ceiling test used to evaluate impairment of our proved oil and gas properties requires us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our oil and gas properties. Events that could result in impairment of our oil and gas properties include, but are not limited to, decreases in future crude oil and natural gas prices, decreases in estimated proved oil and natural gas reserves, increases in production, development or abandonment costs and any event that might otherwise have a material adverse effect on our oil and gas production levels or costs.

Impairment of Goodwill

We account for business combinations using the acquisition method of accounting, which requires us to allocate the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Determining the fair values of assets acquired and liabilities assumed requires management's judgment, the utilization of independent valuation experts, and often involves the use of significant estimates and assumptions, including future cash flows, discount rates and forward prices. The excess of acquisition consideration over the fair values of assets acquired and liabilities assumed is recorded as goodwill. As of December 31, 2013, our consolidated balance sheet included $1.9 billion of goodwill, all of which had been assigned to our U.S. oil and gas reporting unit. As described in Note 2, the final valuation of assets acquired, liabilities assumed and noncontrolling interests in the 2013 oil and gas acquisitions is not complete, and any adjustments to these values could impact the amount of goodwill recorded.

Goodwill is required to be evaluated for impairment on at least an annual basis, or at any other time if events or circumstances indicate that its carrying amount may no longer be recoverable. We conduct a qualitative or quantitative goodwill impairment assessment during the fourth quarter of each year. A qualitative assessment involves examining relevant events and circumstances which could have a negative impact on our goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, dispositions and acquisitions, and any other relevant events or circumstances. After assessing the relevant events and circumstances for the qualitative impairment assessment during fourth-quarter 2013, we determined that performing a quantitative goodwill impairment test was unnecessary, and no goodwill impairment was recognized.

Crude oil and natural gas prices and our estimated oil and natural gas reserves represent the most significant assumptions used in our assessment to evaluate goodwill for impairment. Accordingly, we believe events negatively affecting crude oil and natural gas prices or our estimates of oil and natural gas reserves may indicate impairment of goodwill assigned to our U.S. oil and gas reporting unit, and we could have an impairment of goodwill in the future.

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Environmental Obligations

Our current and historical operating activities are subject to various national, state and local environmental laws and regulations that govern the protection of the environment, and compliance with those laws requires significant expenditures. Environmental expenditures are expensed or capitalized, depending upon their future economic benefits. The guidance provided by U.S. GAAP requires that liabilities for contingencies be recorded when it is probable that obligations have been incurred and the cost can be reasonably estimated. At December 31, 2013, environmental obligations recorded in our consolidated balance sheet totaled $1.2 billion, which reflect obligations for environmental liabilities attributed to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) or analogous state programs and for estimated future costs associated with environmental matters. Refer to Notes 1 and 12 for further discussion of environmental obligations, including a summary of changes in our estimated environmental obligations for the three years ending December 31, 2013.

Accounting for environmental obligations represents a critical accounting estimate because changes to environmental laws and regulations and/or circumstances affecting our operations could result in significant changes to our estimates, which could have a significant impact on our results of operations. We perform a comprehensive annual review of our environmental obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. Judgments and estimates are based upon available facts, existing technology, presently enacted laws and regulations, remediation experience, whether or not we are a potentially responsible party (PRP), the ability of other PRPs to pay their allocated portions and take into consideration reasonably possible outcomes. Our cost estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, updated cost assumptions (including increases and decreases to cost estimates), changes in the anticipated scope and timing of remediation activities, the settlement of environmental matters, required remediation methods and actions by or against governmental agencies or private parties.

Asset Retirement Obligations

We record the fair value of our estimated asset retirement obligations (AROs) associated with tangible long-lived assets in the period incurred. Fair value is measured as the present value of cash flow estimates after considering inflation and a market risk premium. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible long-lived assets in the period incurred. These cost estimates may differ from financial assurance cost estimates for reclamation activities because of a variety of factors, including obtaining updated cost estimates for reclamation activities, the timing of reclamation activities, changes in scope and the exclusion of certain costs not considered reclamation and closure costs. At least annually, we review our ARO estimates for changes in the projected timing of certain reclamation and closure/restoration costs, changes in cost estimates and additional AROs incurred during the period. At December 31, 2013, AROs recorded in our consolidated balance sheet totaled $2.3 billion, including $1.1 billion associated with our oil and gas operations. Refer to Notes 1 and 12 for further discussion of reclamation and closure costs, including a summary of changes in our AROs for the three years ended December 31, 2013.

Generally, ARO activities are specified by regulations or in permits issued by the relevant governing authority, and management judgment is required to estimate the extent and timing of expenditures. Accounting for AROs represents a critical accounting estimate because (i) we will not incur most of these costs for a number of years, requiring us to make estimates over a long period, (ii) reclamation and closure laws and regulations could change in the future and/or circumstances affecting our operations could change, either of which could result in significant changes to our current plans, (iii) the methods used or required to plug and abandon non-producing oil and gas well bores, remove platforms, tanks, production equipment and flow lines, and restore the wellsite could change (iv) calculating the fair value of our AROs requires management to estimate projected cash flows, make long-term assumptions about inflation rates, determine our credit-adjusted, risk-free interest rates and determine market risk premiums that are appropriate for our operations and (v) given the magnitude of our estimated reclamation, mine closure and wellsite abandonment and restoration costs, changes in any or all of these estimates could have a significant impact on our results of operations.

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Deferred Income Taxes

In preparing our annual consolidated financial statements, we estimate the actual amount of income taxes currently payable or receivable as well as deferred income tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized in income in the period in which such changes are enacted.

A valuation allowance is provided for those deferred income tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income as well as feasible tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred income tax assets, we will increase our valuation allowance. Conversely, if we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

Our valuation allowances totaled $2.5 billion at December 31, 2013, and $2.4 billion at December 31, 2012, and covered all of FCX’s U.S. foreign tax credit carryforwards, and a portion of its foreign net operating loss carryforwards, U.S. state net operating loss carryforwards, U.S. state deferred tax assets and U.S. capital loss carryforwards. In addition, the valuation allowance at December 31, 2012, covered a portion of U.S. minimum tax credit carryforwards. Refer to Note 11 for further discussion.

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CONSOLIDATED RESULTS

	Years Ended December 31,
	2013a			2012			2011
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)
Revenuesb,c	$	20,921	d	$	18,010		$	20,880
Operating incomeb,c	$	5,351	d,e,f,g,h	$	5,814	e,f,g,h	$	9,140	e,g
Net income attributable to FCX common stockholdersc,l	$	2,658	d,e,f,g,h,i,j	$	3,041	e,f,g,h,j,k	$	4,560	e,g,j,k
Diluted net income per share attributable to FCX common stockholdersc,l	$	2.64	d,e,f,g,h,i,j	$	3.19	e,f,g,h,j,k	$	4.78	e,g,j,k
Diluted weighted-average common shares outstanding	1,006			954			955
Operating cash flowsm	$	6,139		$	3,774		$	6,620
Capital expenditures	$	5,286		$	3,494		$	2,534
At December 31:
Cash and cash equivalents	$	1,985		$	3,705		$	4,822
Total debt, including current portion	$	20,706		$	3,527		$	3,537

a. Includes the results of FM O&G beginning June 1, 2013.

b.Following is a summary of revenues and operating income by operating division (in millions):

	Years Ended December 31,
Revenues	2013			2012			2011
North America copper mines	$	5,183		$	5,486		$	5,629
South America mining	4,485			4,728			5,258
Indonesia mining	4,087			3,921			5,046
Africa mining	1,637			1,359			1,289
Molybdenum mines	522			529			595
Rod & Refining	5,022			5,016			5,549
Atlantic Copper Smelting & Refining	2,041			2,709			2,984
U.S. oil & gas operations	2,616			—			—
Other mining, corporate, other & eliminations	(4,672		)	(5,738		)	(5,470		)
Total FCX revenues	$	20,921		$	18,010		$	20,880
Operating income (loss)
North America copper mines	$	1,506		$	2,204		$	2,771
South America mining	2,063			2,321			3,088
Indonesia mining	1,420			1,298			2,916
Africa mining	625			562			550
Molybdenum mines	123			150			291
Rod & Refining	23			14			13
Atlantic Copper Smelting & Refining	(75		)	8			(69		)
U.S. oil & gas operations	450			—			—
Other mining, corporate, other & eliminations	(784		)	(743		)	(420		)
Total FCX operating income	$	5,351		$	5,814		$	9,140

Refer to Note 16 for further discussion of operating divisions and business segments.

c. Includes adjustments to provisionally priced concentrate and cathode sales recognized in prior periods totaling $(26) million ($(12) million to net income attributable to common stock or $(0.01) per share) for the year 2013, $101 million ($43 million to net income attributable to common stock or $0.05 per share) for the year 2012 and $(12) million ($(5) million to net income attributable to common stock or $(0.01) per share) for the year 2011. Refer to “Revenues” for further discussion. 

d. Includes charges for net unrealized and noncash realized losses on crude oil and natural gas derivative contracts totaling $312 million ($194 million to net income attributable to common stockholders or $0.19 per share) for the seven-month period from June 1, 2013, to December 31, 2013.

e. Includes net charges (credits) for adjustments to environmental obligations and related litigation reserves totaling $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) in 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) in 2011.

f. Includes transaction and related costs principally associated with the oil and gas acquisitions totaling $80 million ($50 million to net income attributable to common stockholders or $0.05 per share) in 2013 and $9 million ($7 million to net income attributable to common stockholders or $0.01 per share) in 2012.

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g. Includes charges associated with new labor agreements totaling $36 million ($13 million to net income attributable to common stock or $0.01 per share) at Cerro Verde in 2013, $16 million ($8 million to net income attributable to common stockholders or $0.01 per share) at Candelaria in 2012 and $116 million ($50 million to net income attributable to common stock or $0.05 per share) at PT-FI, Cerro Verde and El Abra in 2011.

h. The year 2013 includes charges of (i) $76 million ($49 million to net income attributable to common stock or $0.05 per share) associated with updated mine plans at Morenci that resulted in a loss of recoverable copper in leach stockpiles and (ii) $37 million ($23 million to net income attributable to common stock or $0.02 per share) for restructuring an executive employment arrangement. The year 2012 includes a gain of $59 million ($31 million to net income attributable to common stockholders or $0.03 per share) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT-FI's concentrate pipelines.

i. The year 2013 includes gains associated with our oil and gas acquisitions, including (i) $128 million ($0.13 per share) primarily related to FCX's preferred stock investment in and the subsequent acquisition of MMR, and (ii) a tax benefit of $199 million ($0.20 per share) associated with net reductions in FCX's deferred tax liabilities and deferred tax asset valuation allowances. Refer to Note 11 and "Provision for Income Taxes" below for further discussion.

j. Includes net losses on early extinguishment of debt totaling $28 million ($0.03 per share) in 2013, $149 million ($0.16 per share) in 2012 and $60 million ($0.06 per share) in 2011. Refer to Note 8 for further discussion.

k. The year 2012 includes a tax benefit of $98 million, net of noncontrolling interests, ($0.11 per share) associated with adjustments to Cerro Verde's deferred income taxes. The year 2011 includes a tax charge of $49 million, net of noncontrolling interests ($0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its 1998 stability agreement. Refer to Note 11 and "Provision for Income Taxes" below for further discussion.

l. We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to "Operations - Smelting & Refining" for a summary of net impacts from changes in these deferrals.

m. Includes net working capital uses and changes in other tax payments of $377 million for the year 2013, $1.4 billion for the year 2012 and $461 million for the year 2011.

	Years Ended December 31,
	2013a		2012		2011
SUMMARY OPERATING DATA
Copper (recoverable)
Production (millions of pounds)	4,131		3,663		3,691
Sales, excluding purchases (millions of pounds)	4,086		3,648		3,698
Average realized price per pound	$	3.30	$	3.60	$	3.86
Site production and delivery costs per poundb	$	1.88	$	2.00	$	1.72
Unit net cash costs per poundb	$	1.49	$	1.48	$	1.01
Gold (recoverable)
Production (thousands of ounces)	1,250		958		1,383
Sales, excluding purchases (thousands of ounces)	1,204		1,010		1,378
Average realized price per ounce	$	1,315	$	1,665	$	1,583
Molybdenum (recoverable)
Production (millions of pounds)	94		85		83
Sales, excluding purchases (millions of pounds)	93		83		79
Average realized price per pound	$	11.85	$	14.26	$	16.98
Oil Equivalents
Sales volumes:
MMBOE	38.1
MBOE per day	178
Cash operating margin per BOEc:
Realized revenues	$	76.87
Cash production costs	17.14
Cash operating margin	$	59.73

a. Includes the results of FM O&G beginning June 1, 2013.

b. Reflects per pound weighted-average 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 the per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.”

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c. Cash operating margin for our oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude net unrealized and noncash realized losses on derivative contracts and cash production costs exclude accretion and other costs. For reconciliations of realized revenues and cash production costs per BOE to revenues and production and delivery costs reported in our consolidated financial statements, refer to "Product Revenues and Production Costs."

Revenues

Consolidated revenues totaled $20.9 billion in 2013, $18.0 billion in 2012 and $20.9 billion in 2011, and included the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum and other metals by our North and South America copper mines; the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operations; the sale of copper cathodes and cobalt hydroxide by our Africa mining operations; the sale of molybdenum in various forms by our Molybdenum operations; the sale of copper cathodes, copper anodes, and gold in anodes and slimes by Atlantic Copper; and beginning June 1, 2013, the sale of oil, natural gas and NGLs by our oil and gas operations. Our consolidated revenues for 2013 included sales of copper (69 percent), oil (11 percent), gold (8 percent) and molybdenum (5 percent). Following is a summary of year-to-year changes in our consolidated revenues (in millions):

	2013			2012
Consolidated revenues - prior year	$	18,010		$	20,880
Mining operations:
Higher (lower) sales volumes from mining operations:
Copper	1,576			(194		)
Gold	323			(583		)
Molybdenum	151			61
Silver	53			(38		)
Cobalt	6			(6		)
(Lower) higher price realizations from mining operations:
Copper	(1,226		)	(948		)
Gold	(421		)	82
Molybdenum	(225		)	(225		)
Silver	(70		)	(44		)
Cobalt	5			(54		)
(Unfavorable) favorable impact of net adjustments for prior year provisionally priced sales	(133		)	132
Higher (lower) revenues from purchased copper	313			(469		)
Lower Atlantic Copper revenues	(668		)	(275		)
Other, including intercompany eliminations	611			(309		)
Oil and gas operations:
Oil and gas revenues, including net realized losses on derivative contracts	2,928			—
Net unrealized and noncash realized losses on crude oil and natural gas derivative contracts	(312		)	—
Consolidated revenues - current year	$	20,921		$	18,010

Mining Sales Volumes

Consolidated sales volumes totaled 4.1 billion pounds of copper, 1.2 million ounces of gold and 93 million pounds of molybdenum in 2013, compared with 3.65 billion pounds of copper, 1.0 million ounces of gold and 83 million pounds of molybdenum in 2012 and 3.7 billion pounds of copper, 1.4 million ounces of gold and 79 million pounds of molybdenum in 2011. Higher consolidated copper and gold sales volumes in 2013, compared with 2012, primarily reflected improved volumes throughout our global mining operations. Lower consolidated copper and gold sales volumes in 2012, compared with 2011, primarily reflected lower volumes in Indonesia and South America, partly offset by increased copper production in North America and Africa. Refer to “Operations” for further discussion of sales volumes at our operating divisions.

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Metal Price Realizations

Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. Following is a summary of our average price realizations for the years ended December 31:

	2013		2012		2011
Copper (per pound)	$	3.30	$	3.60	$	3.86
Gold (per ounce)	$	1,315	$	1,665	$	1,583
Molybdenum (per pound)	$	11.85	$	14.26	$	16.98
Silver (per ounce)	$	22.13	$	30.06	$	36.24
Cobalt (per pound)	$	8.02	$	7.83	$	9.99

We generally recognized lower price realizations from our mining operations in 2013, compared with 2012, and also in 2012, compared with 2011. Refer to "Markets" for further discussion.

Provisionally Priced Sales

Impacts of net adjustments for prior year provisionally priced sales primarily relates to copper sales. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices (refer to “Disclosures About Market Risks – Commodity Price Risk” for further discussion). Revenues included (unfavorable) favorable net adjustments to prior years' provisionally priced copper sales totaling $(26) million in 2013, $101 million in 2012 and $(12) million in 2011.

Purchased Copper

From time to time, we purchase copper cathode for processing by our Rod & Refining segment when production from our North America copper mines does not meet customer demand.

Atlantic Copper Revenues

The decrease in Atlantic Copper’s revenues in 2013, compared with 2012, primarily reflected the impact of a major maintenance turnaround in 2013. The decrease in Atlantic Copper's revenues in 2012, compared with 2011, primarily reflected lower gold volumes. Refer to "Operations" for further discussion.

Oil & Gas Revenues

Consolidated sales of 38.1 MMBOE for the seven-month period following the acquisition date, included 26.6 MMBbls of crude oil, 54.2 Bcf of natural gas and 2.4 MMBbls of NGLs. Our average realized prices, for the seven-month period following the acquisition date, were $98.32 per barrel for crude oil, $3.99 per MMBtu for natural gas and $38.20 per barrel for NGLs. Refer to “Operations” for further discussion of sales volumes at our oil and gas operations.

Our oil and gas operations use various derivative contracts to manage exposure to commodity price risk for a substantial portion of our oil and gas production through 2015. In connection with the acquisition of PXP, we assumed derivative contracts for 2013, 2014 and 2015 that consisted of crude oil options, and crude oil and natural gas swaps. These crude oil and natural gas derivative contracts are not designated as hedging instruments; accordingly, they are recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. Net charges to revenues for unrealized and noncash realized losses on crude oil and natural gas derivative contracts totaled $312 million for the seven-month period following the acquisition date. Refer to Note 14 and "Disclosure About Market Risks - Commodity Price Risk" for further discussion of crude oil and natural gas derivative contracts.

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Production and Delivery Costs

2013 Compared with 2012

Consolidated production and delivery costs totaled $11.8 billion in 2013, compared with $10.4 billion in 2012. Excluding production and delivery costs associated with oil and gas operations of $682 million for the seven-month period following the acquisition date, higher production and delivery costs for our mining operations primarily reflected higher copper purchases.

Consolidated unit site production and delivery costs, before net noncash and other costs, for our copper mining operations averaged $1.88 per pound of copper in 2013, compared with $2.00 per pound of copper in 2012. Lower consolidated unit site production and delivery costs in 2013 primarily reflects higher copper volumes in Indonesia and South America. Assuming achievement of current 2014 volume and cost estimates, consolidated site production and delivery costs are expected to average $1.87 per pound of copper for 2014. Refer to "Operations – Indonesia Mining" for discussion of a regulatory matter impacting projected unit net cash costs, “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy approximated 20 percent of our consolidated copper production costs in 2013 and included purchases of approximately 260 million gallons of diesel fuel; 7,200 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); 705 thousand metric tons of coal for our coal power plant in Indonesia; and 1 MMBtu (million British thermal units) of natural gas at certain of our North America mines. For 2014, we estimate energy will approximate 21 percent of our consolidated copper production costs.

2012 Compared with 2011

Consolidated production and delivery costs totaled $10.4 billion in 2012, compared with $9.9 billion in 2011. Higher production and delivery costs for 2012 primarily reflected higher costs at our mining operations, partly offset by lower costs of concentrate purchases at Atlantic Copper associated with lower copper prices and lower volumes and lower costs of cathode purchases in North America.

Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization expense totaled $2.8 billion in 2013 (which included $1.4 billion for the seven-month period following the acquisition date for our oil and gas operations), $1.2 billion in 2012 and $1.0 billion in 2011. Depreciation will vary under the UOP method as a result of changes in sales volumes and the related UOP rates at our mining and oil and gas operations. Excluding oil and gas operations, higher depreciation, depletion and amortization expense in 2013 primarily reflected asset additions and higher production at our mining operations.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses totaled $657 million in 2013, $431 million in 2012 and $415 million in 2011. Excluding selling, general and administrative expenses associated with oil and gas operations of $120 million for the seven-month period following the acquisition date, higher expense in 2013, compared with 2012, primarily reflected transaction and related costs associated with acquisitions ($80 million in 2013, compared with $9 million in 2012) and a $37 million charge in 2013 for restructuring an executive employment arrangement.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled $210 million in 2013, $285 million in 2012 and $271 million in 2011. In 2013, we took steps to reduce or defer operating, exploration and other costs in response to market conditions and our debt reduction objectives. We are actively conducting exploration activities near our existing mines with a focus on opportunities to expand reserves that will support additional future production capacity in the large mineral districts where we currently operate. Exploration results indicate opportunities for what we believe could be significant future reserve additions in North and South America and in the Tenke minerals district. The drilling data in North America continues to indicate the potential for expanded sulfide production.

For 2014, exploration and research expenditures for our mining operations are expected to total approximately $150 million, including approximately $120 million for exploration.

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As further discussed in Note 1, under the full cost method of accounting, exploration costs for our oil and gas operations are capitalized to oil and gas properties.

Environmental Obligations and Shutdown Costs

Environmental obligation costs (credits) reflect net revisions to our long-term environmental obligations, which will vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates (refer to "Critical Accounting Estimates - Environmental Obligations" for further discussion). Shutdown costs include care and maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges (credits) for environmental obligations and shutdown costs totaled a $66 million in 2013, $(22) million in 2012 and $134 million in 2011. Refer to Note 12 for further discussion of environmental obligations and litigation matters.

Interest Expense, Net

Consolidated interest expense (excluding capitalized interest) totaled $692 million in 2013, $267 million in 2012 and $421 million in 2011. The increase in interest expense in 2013 primarily reflects additional interest expense associated with acquisition-related debt (refer to Note 8 for discussion).

Capitalized interest is primarily related to the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $174 million in 2013, $81 million in 2012 and $109 million in 2011. The increase in 2013, compared with the 2012, primarily reflects the addition of capitalized interest associated with expenditures for our oil and gas properties totaling $69 million for the seven-month period following the acquisition date. Refer to “Capital Resources and Liquidity - Investing Activities” for further discussion of current development projects.

Losses on Early Extinguishment of Debt

During 2013, we recorded net losses on early extinguishment of debt totaling $35 million primarily associated with the termination of the bridge loan facilities for the PXP and MMR acquisitions, partly offset by a gain on the redemption of MMR's remaining outstanding 11.875% Senior Notes. During 2012, we recorded losses on early extinguishment of debt totaling $168 million associated with the redemption of our remaining 8.375% Senior Notes. During 2011, we recorded losses on early extinguishment of debt totaling $68 million associated with the redemption of our 8.25% Senior Notes, the revolving credit facilities that were replaced in March 2011 and open-market purchases of our 9.50% Senior Notes. Refer to Note 8 for further discussion of these transactions.

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Provision for Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the years ended December 31 (in millions, except percentages):

	2013							2012
	Incomea		Effective Tax Rate	Income Tax (Provision) Benefit				Incomea		Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	1,080	23%	$	(243	)		$	1,571	23%	$	(357	)
South America	2,021		36%	(720		)		2,211		36%	(791		)	b
Indonesia	1,370		44%	(603		)		1,287		39%	(497		)
Africa	425		31%	(131		)		357		31%	(112		)
Eliminations and other	17		N/A	23				61		N/A	13
	4,913		34%	(1,674		)		$	5,487	32%	$	(1,744	)
Adjustments	—		N/A	199			c	—		N/A	234			d
Consolidated FCX	$	4,913	30%	$	(1,475	)		$	5,487	28%	$	(1,510	)

a. Represents income by geographic location before income taxes and equity in affiliated companies’ net earnings.

b. In 2012, Cerro Verde signed a new 15-year mining stability agreement with the Peruvian government, which became effective January 1, 2014. In connection with the new mining stability agreement, Cerro Verde's income tax rate increased from 30 percent to 32 percent, and we recognized additional deferred tax expense of $29 million ($25 million net of noncontrolling interests).

c. Reflects net reductions in our deferred tax liabilities and deferred tax asset valuation allowances resulting from the oil and gas acquisitions (see Note 11).

d. Reflects the reversal of a net deferred tax liability totaling $234 million ($123 million net of noncontrolling interest) related to reinvested profits at Cerro Verde that were not expected to be distributed prior to expiration of its 1998 stability agreement on December 31, 2013.

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the year ended December 31 (in millions, except percentages):

	2011
	Incomea		Effective Tax Rate	Income Tax Provision
U.S.	$	2,109	23%	$	(477	)
South America	3,017		36%	(1,075		)	b
Indonesia	2,923		43%	(1,256		)
Africa	357		34%	(120		)
Eliminations and other	412		N/A	(159		)
Consolidated FCX	$	8,818	35%	$	(3,087	)

a. Represents income by geographic location before income taxes and equity in affiliated companies’ net earnings.

b. In September 2011, Peru enacted a new mining tax and royalty regime and also created a special mining burden that companies with stability agreements could elect to pay. Cerro Verde elected to pay this special mining burden during the remaining term of its 1998 stability agreement, which expired on December 31, 2013. As a result, Cerro Verde recognized additional tax expense of $53 million ($49 million net of noncontrolling interests) in 2011.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Assuming average prices of $3.25 per pound for copper, $1,200 per ounce for gold, $9.50 per pound for molybdenum and Brent crude oil of $105 per barrel and achievement of current sales volume and cost estimates, we estimate our annual consolidated effective tax rate for the year 2014 will approximate 35 percent.

Refer to Note 11 for further discussion of income taxes.

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OPERATIONS

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. We record our 85 percent joint venture interest in Morenci using the proportionate consolidation method.

The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper sales is in the form of copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate is also produced by certain of our North America copper mines (Sierrita, Bagdad, Morenci and Chino).

Operating and Development Activities. We have increased production from our North America copper mines in recent years and we continue to evaluate opportunities to invest in additional production capacity following positive exploration results. Future investments will be undertaken based on the results of economic and technical feasibility studies and market conditions.

Morenci Mill Expansion. We are expanding mining and milling capacity to process additional sulfide ores identified through exploratory drilling. The project is targeting incremental annual production of approximately 225 million pounds of copper beginning in 2014 (an approximate 40 percent increase from 2013) through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day. At full rates, Morenci's copper production is expected to approach 1 billion pounds in 2015, compared with 564 million pounds in 2013. As of December 31, 2013, construction was more than 60 percent complete and the project is on track for first copper production in the first half of 2014. At December 31, 2013, project costs of $1.0 billion had been incurred ($0.7 billion during 2013), with approximately $0.6 billion remaining to be incurred.

Operating Data. Following is summary operating data for the North America copper mines for the years ended December 31:

	2013		2012		2011
Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production	1,431		1,363		1,258
Sales, excluding purchases	1,422		1,351		1,247
Average realized price per pound	$	3.36	$	3.64	$	3.99
Molybdenum (millions of recoverable pounds)
Productiona	32		36		35
100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	1,003,500		998,600		888,300
Average copper ore grade (percent)	0.22		0.22		0.24
Copper production (millions of recoverable pounds)	889		866		801
Mill operations
Ore milled (metric tons per day)	246,500		239,600		222,800
Average ore grade (percent):
Copper	0.39		0.37		0.38
Molybdenum	0.03		0.03		0.03
Copper recovery rate (percent)	85.3		83.9		83.1
Copper production (millions of recoverable pounds)	642		592		549

a. Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includes sales of molybdenum produced at the North America copper mines.

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2013 Compared with 2012

Copper sales volumes from our North America copper mines increased to 1.42 billion pounds in 2013, compared with 1.35 billion pounds in 2012, primarily because of higher mining and milling rates, higher copper ore grades and higher recovery rates.

North America copper production is expected to continue to improve in 2014 following the completion of the Morenci mill expansion. Copper sales volumes from our North America copper mines are expected to approximate 1.73 billion pounds in 2014. Refer to "Outlook" for projected molybdenum sales volumes.

2012 Compared with 2011

Copper sales volumes from our North America copper mines increased to 1.35 billion pounds in 2012, compared with 1.25 billion pounds in 2011, primarily reflecting increased production at the Chino mine.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. 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 our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and Molybdenum

The following tables summarize unit net cash costs and gross profit per pound at our North America copper mines for the years ended December 31. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2013								2012
	By-				Co-Product Method				By-			Co-Product Method
	Product Method				Copper		Molyb- denuma		Product Method			Copper		Molyb- denuma
Revenues, excluding adjustments	$	3.36			$	3.36	$	10.79	$	3.64		$	3.64	$	13.00
Site production and delivery, before net noncash
and other costs shown below	2.00				1.94		3.79		1.91			1.75		6.32
By-product credits	(0.24		)		—		—		(0.36		)	—		—
Treatment charges	0.11				0.11		—		0.12			0.11		—
Unit net cash costs	1.87				2.05		3.79		1.67			1.86		6.32
Depreciation, depletion and amortization	0.28				0.27		0.22		0.26			0.24		0.48
Noncash and other costs, net	0.14			b	0.14		0.04		0.10			0.10		0.09
Total unit costs	2.29				2.46		4.05		2.03			2.20		6.89
Revenue adjustments, primarily for pricing on prior period open sales	—				—		—		0.01			0.01		—
Gross profit per pound	$	1.07			$	0.90	$	6.74	$	1.62		$	1.45	$	6.11
Copper sales (millions of recoverable pounds)	1,416				1,416				1,347			1,347
Molybdenum sales (millions of recoverable pounds)a							32							36

a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b. Includes $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. During 2013, average unit net cash costs (net of by-product credits) for the North America copper mines ranged from $1.55 per pound to $2.28 per pound at the individual mines and averaged $1.87 per pound. Higher average unit net cash costs (net of by-product credits) in 2013, compared with $1.67 per pound in 2012, primarily reflected lower molybdenum credits and increased mining and milling activities, partly offset by higher copper sales volumes.

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Because certain assets are depreciated on a straight-line basis, North America's average unit depreciation rate may vary with asset additions and the level of copper production and sales.

Assuming achievement of current sales volume and cost estimates and an average price of $9.50 per pound of molybdenum for 2014, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.76 per pound of copper in 2014. North America's average unit net cash costs for 2014 would change by approximately $0.04 per pound for each $2 per pound change in the average price of molybdenum during 2014.

	2012							2011
	By-			Co-Product Method				By-			Co-Product Method
	Product Method			Copper		Molyb- denuma		Product Method			Copper		Molyb- denuma
Revenues, excluding adjustments	$	3.64		$	3.64	$	13.00	$	3.99		$	3.99	$	15.72
Site production and delivery, before net noncash
and other costs shown below	1.91			1.75		6.32		1.78			1.60		6.86
By-product credits	(0.36		)	—		—		(0.48		)	—		—
Treatment charges	0.12			0.11		—		0.11			0.10		—
Unit net cash costs	1.67			1.86		6.32		1.41			1.70		6.86
Depreciation, depletion and amortization	0.26			0.24		0.48		0.21			0.20		0.39
Noncash and other costs, net	0.10			0.10		0.09		0.13			0.13		0.09
Total unit costs	2.03			2.20		6.89		1.75			2.03		7.34
Revenue adjustments, primarily for pricing on prior period open sales	0.01			0.01		—		—			—		—
Gross profit per pound	$	1.62		$	1.45	$	6.11	$	2.24		$	1.96	$	8.38
Copper sales (millions of recoverable pounds)	1,347			1,347				1,244			1,244
Molybdenum sales (millions of recoverable pounds)a						36							35

a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

Unit net cash costs (net of by-product credits) for our North America copper mines increased to $1.67 per pound of copper in 2012, compared with $1.41 per pound in 2011, primarily reflecting increased mining and milling activities and lower molybdenum credits, partly offset by higher copper sales volumes.

South America Mining

We operate four copper mines in South America – Cerro Verde in Peru, and El Abra, Candelaria and Ojos del Salado in Chile. We own a 53.56 percent interest in Cerro Verde, a 51 percent interest in El Abra, and an 80 percent interest in the Candelaria and Ojos del Salado mining complex. All operations in South America are consolidated in our financial statements.

South America mining includes open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or copper cathode under long-term contracts. Our South America mines ship a portion of their copper concentrate inventories to Atlantic Copper. In addition to copper, the Candelaria and Ojos del Salado mines produce gold and silver, and the Cerro Verde mine produces molybdenum concentrates.

Operating and Development Activities.

Cerro Verde Expansion. Construction activities associated with a large-scale expansion at Cerro Verde are in progress. At December 31, 2013, engineering was more than 90 percent complete and construction progress is advancing on schedule. The project is expected to 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 and 15 million pounds of molybdenum beginning in 2016. At December 31, 2013, $1.5 billion had been incurred for this project (approximately $1.0 billion during 2013), with approximately $3.1 billion remaining to be incurred. Considering the long-term nature and large size of the project, actual costs could vary from these estimates.

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El Abra Sulfide. We continue to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results at El Abra have identified a significant sulfide resource, which could potentially support a major mill project. Future investments will be dependent on technical studies, economic factors and global market conditions.

Operating Data. Following is summary operating data for our South America mining operations for the years ended December 31.

	2013		2012		2011
Copper (millions of recoverable pounds)
Production	1,323		1,257		1,306
Sales	1,325		1,245		1,322
Average realized price per pound	$	3.30	$	3.58	$	3.77
Gold (thousands of recoverable ounces)
Production	101		83		101
Sales	102		82		101
Average realized price per ounce	$	1,350	$	1,673	$	1,580
Molybdenum (millions of recoverable pounds)
Productiona	13		8		10
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	274,600		229,300		245,200
Average copper ore grade (percent)	0.50		0.55		0.50
Copper production (millions of recoverable pounds)	448		457		439
Mill operations
Ore milled (metric tons per day)	192,600		191,400		189,200
Average ore grade:
Copper (percent)	0.65		0.60		0.66
Gold (grams per metric ton)	0.12		0.10		0.12
Molybdenum (percent)	0.02		0.02		0.02
Copper recovery rate (percent)	90.9		90.1		89.6
Copper production (millions of recoverable pounds)	875		800		867

a. Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includes sales of molybdenum produced at Cerro Verde.

2013 Compared with 2012

Consolidated copper sales volumes from South America totaled 1.33 billion pounds in 2013, compared with 1.25 billion in 2012, primarily reflecting higher ore grades at Candelaria, partly offset by lower ore grades at Cerro Verde.

For the year 2014, consolidated sales volumes from South America mines are expected to approximate 1.2 billion pounds of copper, which are lower than 2013 volumes, primarily reflecting lower ore grades at Candelaria and Cerro Verde. Refer to "Outlook" for projected gold and molybdenum sales volumes.

2012 Compared with 2011

Copper sales volumes from our South America mining operations totaled 1.25 billion pounds in 2012, compared with 1.32 billion pounds in 2011, primarily reflecting lower ore grades at Candelaria and Cerro Verde, partially offset by higher mining rates and ore grades at El Abra.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. 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 our measure may not be comparable to similarly titled measures reported by other companies.

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Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound at our South America mining operations for the years ended December 31. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had small amounts of molybdenum, gold and silver sales. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2013							2012
	By-Product Method				Co-Product Method			By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	3.30			$	3.30		$	3.58			$	3.58
Site production and delivery, before net noncash
and other costs shown below	1.53			a	1.42			1.60			a	1.49
By-product credits	(0.27		)		—			(0.26		)		—
Treatment charges	0.17				0.17			0.16				0.16
Unit net cash costs	1.43				1.59			1.50				1.65
Depreciation, depletion and amortization	0.26				0.24			0.23				0.22
Noncash and other costs, net	0.04				0.03			0.09				0.06
Total unit costs	1.73				1.86			1.82				1.93
Revenue adjustments, primarily for pricing on
prior period open sales	(0.03		)		(0.03		)	0.09				0.09
Gross profit per pound	$	1.54			$	1.41		$	1.85			$	1.74
Copper sales (millions of recoverable pounds)	1,325				1,325			1,245				1,245

a. Includes labor agreement costs totaling $36 million ($0.03 per pound) at Cerro Verde in 2013 and $16 million ($0.01 per pound) at Candelaria in 2012.

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-products and other factors. During 2013, unit net cash costs (net of by-product credits) for the South America mines ranged from $1.24 per pound to $2.02 per pound at the individual mines and averaged $1.43 per pound. Average unit net cash costs (net of by-product credits) for our South America mining operations decreased to $1.43 per pound of copper in 2013, compared with $1.50 per pound in 2012, primarily reflecting higher volumes.

Because certain assets are depreciated on a straight-line basis, South America's unit depreciation rate may vary with asset additions and the level of copper production and sales.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results - Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Assuming achievement of current sales volume and cost estimates and average prices of $1,200 per ounce of gold and $9.50 per pound of molybdenum in 2014, we estimate that average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $1.61 per pound of copper in 2014, which are higher than 2013 average unit net cash costs primarily because of lower volumes.

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	2012						2011
	By-Product Method				Co-Product Method		By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	3.58			$	3.58	$	3.77			$	3.77
Site production and delivery, before net noncash
and other costs shown below	1.60			a	1.49		1.38			a	1.27
By-product credits	(0.26		)		—		(0.35		)		—
Treatment charges	0.16				0.16		0.17				0.17
Unit net cash costs	1.50				1.65		1.20				1.44
Depreciation, depletion and amortization	0.23				0.22		0.20				0.18
Noncash and other costs, net	0.09				0.06		0.06				0.05
Total unit costs	1.82				1.93		1.46				1.67
Revenue adjustments, primarily for pricing on
prior period open sales	0.09				0.09		0.01				—
Gross profit per pound	$	1.85			$	1.74	$	2.32			$	2.10
Copper sales (millions of recoverable pounds)	1,245				1,245		1,322				1,322

a. Includes labor agreement costs totaling $16 million ($0.01 per pound) at Candelaria in 2012 and $50 million ($0.04 per pound) at Cerro Verde and El Abra in 2011.

Unit net cash costs (net of by-product credits) for our South America mining operations increased to $1.50 per pound of copper in 2012, compared with $1.20 per pound in 2011, primarily reflecting higher mining and input costs, lower by-product credits and lower sales volumes.

Indonesia Mining

Indonesia mining includes PT-FI’s Grasberg minerals district. We own 90.64 percent of PT-FI, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama (refer to Notes 3 and 13).

PT-FI produces copper concentrates, which contain significant quantities of gold and silver. Substantially all of PT-FI’s copper concentrates are sold under long-term contracts, of which approximately one-half is sold to Atlantic Copper and PT Smelting, and the remainder to other third-party customers.

PT-FI proportionately consolidates certain unincorporated joint ventures with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and future production exceeding specified annual amounts of copper, gold and silver. Refer to Note 3 for further discussion of our joint ventures with Rio Tinto. Refer to "Regulatory Matters" below and Note 13 for further discussion of PT-FI's COW with the Indonesian government. Refer to "Risk Factors" contained in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2013, for discussion of risks associated with operations in Indonesia.

Regulatory Matters. In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates in the amount of 25 percent in 2014, rising to 60 percent by mid-2016. PT-FI’s COW, which has a primary term through 2021 and allows for two 10-year extensions through 2041 (subject to approval by the Indonesian government, which cannot be withheld or delayed unreasonably), authorizes it to export concentrates and specifies the taxes and other fiscal terms available to its operations. The COW states that PT-FI shall not be subject to taxes, duties or fees subsequently imposed or approved by the Indonesian government except as expressly provided in the COW. Additionally, PT-FI complied with the requirements of its COW for local processing by arranging for the construction and commissioning of Indonesia's only copper smelter and refinery, which is owned by PT Smelting. During 2014, approximately 40 percent of PT-FI’s production is expected to be shipped to PT Smelting, with the balance of its concentrates expected to be sold pursuant to long-term contracts with other international smelters.

The January 2014 regulations conflict with PT-FI’s contractual rights under its COW. We are working with the Indonesian government to clarify the situation and to defend PT-FI's rights under its COW. PT-FI is also seeking to obtain the required administrative permits for 2014 exports, which have been delayed as a result of the new regulations.

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PT-FI's 2014 copper and gold sales estimates discussed below assume no changes to planned 2014 concentrate shipments. As of February 21, 2014, PT-FI has not obtained administrative approval for 2014 exports. PT-FI has implemented near-term changes to its operations to coordinate its concentrate production with PT Smelting’s operating plans. These changes will reduce PT-FI’s monthly copper and gold production by an estimated 40 million pounds of copper and 80 thousand ounces of gold pending resolution of these matters. Since mid-January 2014, PT-FI’s milling rate has averaged approximately 112,000 metric tons of ore per day, which is approximately half of normal rates. PT-FI is engaging with the government of Indonesia to reach a resolution that would enable PT-FI to resume normal operations as soon as possible. In the event that PT-FI is unable to resume normal operations for an extended period, we plan to consider further actions, including constraining operating costs, deferring capital expenditures and implementing workforce reductions. PT-FI may also be required to declare force majeure under its concentrate sales agreements.

PT-FI is also engaged in discussions with officials of the Indonesian government on its operations, future plans and COW. We are working with the government in its review of PT-FI's COW and to obtain an extension of our COW beyond 2021, as provided under the terms of the COW. Refer to Note 13 for further discussion.

Operating and Development Activities. We have several projects in progress in the Grasberg minerals district related to the development of the large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to produce approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in 2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $0.9 billion per year ($0.7 billion per year net to PT-FI). Considering the long-term nature and large size of these projects, actual costs could vary from these estimates.

The following provides additional information on the continued development of the Common Infrastructure project, the Grasberg Block Cave underground mine and development of the Deep Mill Level Zone (DMLZ) ore body that lies below the Deep Ore Zone (DOZ) underground mine.

Common Infrastructure and Grasberg Block Cave Mine. In 2004, PT-FI commenced its Common Infrastructure project to provide access to its large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in 2010. Development of the DMLZ and Grasberg Block Cave underground mines is advancing using the Common Infrastructure project tunnels as access.

The Grasberg Block Cave underground mine accounts for more than 40 percent of our recoverable proven and probable reserves in Indonesia. Production at the Grasberg Block Cave mine is expected to commence in 2017, at the end of mining the Grasberg open pit. Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 160,000 metric tons of ore per day.

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate $5.2 billion (incurred from 2008 to 2021), with PT-FI’s share totaling approximately $4.6 billion. Aggregate project costs totaling $1.3 billion have been incurred through December 31, 2013 ($0.5 billion during 2013).

DMLZ. The DMLZ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. We plan to mine the ore body using a block-cave method with production beginning in 2015. Targeted production rates once the DMLZ mining operation reaches full capacity are expected to approximate 80,000 metric tons of ore per day. Drilling efforts continue to determine the extent of this ore body. Aggregate mine development capital costs for the DMLZ mine are expected to approximate $2.6 billion (incurred between 2009 to 2020), with PT-FI’s share totaling approximately $1.5 billion. Aggregate project costs totaling $0.8 billion have been incurred through December 31, 2013 ($0.3 billion during 2013).

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Operating Data. Following is summary operating data for our Indonesia mining operations for the years ended December 31.

	2013		2012		2011
Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production	915		695		846
Sales	885		716		846
Average realized price per pound	$	3.28	$	3.58	$	3.85
Gold (thousands of recoverable ounces)
Production	1,142		862		1,272
Sales	1,096		915		1,270
Average realized price per ounce	$	1,312	$	1,664	$	1,583
100% Operating Data
Ore milled (metric tons per day):a
Grasberg open pit	127,700		118,800		112,900
DOZ underground mineb	49,400		44,600		51,700
Big Gossan underground minec	2,100		1,600		1,500
Total	179,200		165,000		166,100
Average ore grade:
Copper (percent)	0.76		0.62		0.79
Gold (grams per metric ton)	0.69		0.59		0.93
Recovery rates (percent):
Copper	90.0		88.7		88.3
Gold	80.0		75.7		81.2
Production (recoverable):
Copper (millions of pounds)	928		695		882
Gold (thousands of ounces)	1,142		862		1,444

a. Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.

b. Production from the DOZ underground mine is expected to ramp up to the design rate of 80,000 metric tons of ore per day during 2014, pending approval of export permits as described above.

c. Production from the Big Gossan underground mine is expected to ramp up to 7,000 metric tons of ore per day by 2016; however, production is currently suspended pending resolution of the export regulatory matter.

2013 Compared with 2012

Indonesia's sales volumes increased to 885 million pounds of copper and 1.1 million ounces of gold in 2013, compared with 716 million pounds of copper and 915 thousand ounces of gold in 2012, primarily reflecting higher ore grades and increased mill rates.

At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold. Consolidated sales volumes from our Indonesia mining operations are expected to approximate 1.1 billion pounds of copper and 1.65 million ounces of gold for 2014. Sales from Indonesia mining are expected to increase in 2014 through 2016 as PT-FI gains access to higher grade ore. PT-FI's estimated sales volumes are subject to change depending on timing of resolution of export matter as described in "Regulatory Matters" above.

2012 Compared with 2011

Sales volumes from our Indonesia mining operations declined to 716 million pounds of copper and 915 thousand ounces of gold in 2012, compared with 846 million pounds of copper and 1.3 million ounces of gold in 2011 primarily reflecting lower ore grades.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined

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in accordance with U.S. 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 metal mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper/per Ounce of Gold

The following tables summarize the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations for the years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2013									2012
	By- Product			Co-Product Method						By- Product			Co-Product Method
	Method			Copper			Gold			Method			Copper			Gold
Revenues, excluding adjustments	$	3.28		$	3.28		$	1,312		$	3.58		$	3.58		$	1,664
Site production and delivery, before net noncash
and other costs shown below	2.46			1.62			648			3.12			1.93			894
Gold and silver credits	(1.69		)	—			—			(2.22		)	—			—
Treatment charges	0.23			0.15			61			0.21			0.13			61
Royalty on metals	0.12			0.08			33			0.13			0.08			38
Unit net cash costs	1.12			1.85			742			1.24			2.14			993
Depreciation and amortization	0.28			0.19			73			0.30			0.18			85
Noncash and other costs, net	0.13			0.09			35			0.11			0.07			33
Total unit costs	1.53			2.13			850			1.65			2.39			1,111
Revenue adjustments, primarily for pricing on
prior period open sales	—			—			(1		)	0.02			0.02			3
PT Smelting intercompany loss	(0.02		)	(0.01		)	(6		)	(0.05		)	(0.03		)	(15		)
Gross profit per pound/ounce	$	1.73		$	1.14		$	455		$	1.90		$	1.18		$	541
Copper sales (millions of recoverable pounds)	885			885						716			716
Gold sales (thousands of recoverable ounces)							1,096									915

A significant portion of PT-FI's costs are fixed and unit costs vary depending on sales volumes. Indonesia's unit net cash costs (net of gold and silver credits) averaged $1.12 per pound of copper in 2013, compared with $1.24 per pound in 2012, primarily reflecting higher volumes.

Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold.

Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate varies with the level of copper production and sales.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results - Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Intercompany profit (loss) from sales to PT Smelting represents the elimination of 25 percent of PT-FI's sales to PT Smelting.

Assuming achievement of current sales volume and cost estimates, and an average gold price of $1,200 per ounce for 2014, we estimate that Indonesia's unit net cash costs (net of gold and silver credits) are expected to approximate $0.81 per pound of copper for the year 2014, which are lower than 2013 unit cash costs primarily because of higher volumes. Indonesia's projected unit net cash costs would change by approximately $0.075 per pound for each $50 per ounce change in the average price of gold during 2014. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold volumes.

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	2012									2011
	By- Product			Co-Product Method						By- Product				Co-Product Method
	Method			Copper			Gold			Method				Copper			Gold
Revenues, excluding adjustments	$	3.58		$	3.58		$	1,664		$	3.85			$	3.85		$	1,583
Site production and delivery, before net noncash
and other costs shown below	3.12			1.93			894			2.21			a	1.34			551
Gold and silver credits	(2.22		)	—			—			(2.47		)		—			—
Treatment charges	0.21			0.13			61			0.19				0.11			46
Royalty on metals	0.13			0.08			38			0.16				0.10			41
Unit net cash costs	1.24			2.14			993			0.09				1.55			638
Depreciation and amortization	0.30			0.18			85			0.25				0.16			63
Noncash and other costs, net	0.11			0.07			33			0.04				0.02			10
Total unit costs	1.65			2.39			1,111			0.38				1.73			711
Revenue adjustments, primarily for pricing on
prior period open sales	0.02			0.02			3			(0.01		)		(0.01		)	(13		)
PT Smelting intercompany (loss) profit	(0.05		)	(0.03		)	(15		)	0.13				0.08			32
Gross profit per pound/ounce	$	1.90		$	1.18		$	541		$	3.59			$	2.19		$	891
Copper sales (millions of recoverable pounds)	716			716						846				846
Gold sales (thousands of recoverable ounces)							915										1,270

a. Includes $66 million ($0.08 per pound) for bonuses and other strike-related costs.

Unit net cash costs (net of gold and silver credits) for our Indonesia mining operations averaged $1.24 per pound of copper in 2012, compared with $0.09 per pound in 2011. Higher unit net cash costs primarily reflected lower copper and gold sales volumes.

Africa Mining

Africa mining includes TFM's Tenke minerals district. We hold an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Katanga province of the DRC through our consolidated subsidiary TFM, and we are the operator of Tenke.

The Tenke operation includes surface mining, leaching and SX/EW operations. Copper production from the Tenke minerals district is sold as copper cathode. In addition to copper, the Tenke minerals district produces cobalt hydroxide.

Operating and Development Activities. TFM completed its second phase expansion project in early 2013, which included optimizing the current plant and increasing mine, mill and processing capacity. The expanded mill facility is performing well. Throughput rates averaged 14,900 metric tons of ore per day during 2013, compared with original design capacity of 14,000 metric tons of ore per day, which has enabled an increase in Tenke's copper production to over 430 million pounds per year. The addition of a second sulphuric acid plant is expected to be completed in 2016.

We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective Tenke minerals district. These analyses are being incorporated in future plans for potential expansions of production capacity. Future expansions are subject to a number of factors, including economic and market conditions, and the business and investment climate in the DRC.

During the second half of 2013, our Africa mining operations experienced several power interruptions which negatively impacted operating rates. Power availability has improved, and TFM continues to work with its power provider and DRC authorities to establish more consistent and reliable power availability.

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Operating Data. Following is summary operating data for our Africa mining operations for the years ended December 31.

	2013		2012		2011
Copper (millions of recoverable pounds)
Production	462		348		281
Sales	454		336		283
Average realized price per pounda	$	3.21	$	3.51	$	3.74
Cobalt (millions of contained pounds)
Production	28		26		25
Sales	25		25		25
Average realized price per pound	$	8.02	$	7.83	$	9.99
Ore milled (metric tons per day)	14,900		13,000		11,100
Average ore grade (percent):
Copper	4.22		3.62		3.41
Cobalt	0.37		0.37		0.40
Copper recovery rate (percent)	91.4		92.4		92.5

a. Includes point-of-sale transportation costs as negotiated in customer contracts.

2013 Compared with 2012

Copper sales volumes from TFM increased to 454 million pounds in 2013, compared with 336 million pounds in 2012, primarily reflecting increased mining and milling rates resulting from the expansion project completed in early 2013, and higher ore grades.

Consolidated sales volumes from our Africa mining operations are expected to approximate 445 million pounds of copper and 30 million pounds of cobalt in 2014.

2012 Compared with 2011

Copper sales volumes from our Africa mining operations increased to 336 million pounds of copper in 2012, compared with 283 million pounds of copper in 2011, primarily reflecting higher mining and milling rates principally related to the ramp-up of the expansion project.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. 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 our measure may not be comparable to similarly titled measures reported by other companies.

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Gross Profit per Pound of Copper and Cobalt

The following tables summarize the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2013							2012
	By-Product			Co-Product Method				By-Product			Co-Product Method
	Method			Copper		Cobalt		Method			Copper		Cobalt
Revenues, excluding adjustmentsa	$	3.21		$	3.21	$	8.02	$	3.51		$	3.51	$	7.83
Site production and delivery, before net noncash
and other costs shown below	1.43			1.35		4.35		1.49			1.39		4.86
Cobalt creditsb	(0.29		)	—		—		(0.33		)	—		—
Royalty on metals	0.07			0.06		0.14		0.07			0.06		0.12
Unit net cash costs	1.21			1.41		4.49		1.23			1.45		4.98
Depreciation, depletion and amortization	0.54			0.48		1.00		0.52			0.47		0.67
Noncash and other costs, net	0.06			0.06		0.11		0.09			0.08		0.11
Total unit costs	1.81			1.95		5.60		1.84			2.00		5.76
Revenue adjustments, primarily for pricing on
prior period open sales	—			—		0.09		0.02			0.02		0.09
Gross profit per pound	$	1.40		$	1.26	$	2.51	$	1.69		$	1.53	$	2.16
Copper sales (millions of recoverable pounds)	454			454				336			336
Cobalt sales (millions of contained pounds)						25							25

a. Includes point-of-sale transportation costs as negotiated in customer contracts.

b. Net of cobalt downstream processing and freight costs.

Lower unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.21 per pound of copper in 2013, compared with $1.23 per pound of copper in 2012, primarily reflected higher copper sales volumes, partly offset by lower cobalt credits.

Assuming achievement of current sales volume and cost estimates, and an average cobalt market price of $12 per pound for 2014, average unit net cash costs (net of cobalt credits) are expected to approximate $1.28 per pound of copper in 2014. Africa's projected unit net cash costs for 2014 would change by $0.08 per pound for each $2 per pound change in the average price of cobalt during 2014.

	2012							2011
	By-Product			Co-Product Method				By-Product			Co-Product Method
	Method			Copper		Cobalt		Method			Copper		Cobalt
Revenues, excluding adjustmentsa	$	3.51		$	3.51	$	7.83	$	3.74		$	3.74	$	9.99
Site production and delivery, before net noncash
and other costs shown below	1.49			1.39		4.86		1.57			1.39		5.58
Cobalt creditsb	(0.33		)	—		—		(0.58		)	—		—
Royalty on metals	0.07			0.06		0.12		0.08			0.07		0.16
Unit net cash costs	1.23			1.45		4.98		1.07			1.46		5.74
Depreciation, depletion and amortization	0.52			0.47		0.67		0.50			0.42		0.78
Noncash and other costs, net	0.09			0.08		0.11		0.20			0.18		0.32
Total unit costs	1.84			2.00		5.76		1.77			2.06		6.84
Revenue adjustments, primarily for pricing on
prior period open sales	0.02			0.02		0.09		—			—		0.06
Gross profit per pound	$	1.69		$	1.53	$	2.16	$	1.97		$	1.68	$	3.21
Copper sales (millions of recoverable pounds)	336			336				283			283
Cobalt sales (millions of contained pounds)						25							25

a. Includes point-of-sale transportation costs as negotiated in customer contracts.

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b. Net of cobalt downstream processing and freight costs.

Unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.23 per pound of copper in 2012 were higher than unit net cash costs of $1.07 per pound of copper in 2011 primarily reflecting higher mining and input costs (including sulphuric acid and energy) and lower cobalt credits, partly offset by higher volumes.

Molybdenum Mines

We have two wholly owned molybdenum mines in North America – the Henderson underground mine and the Climax open-pit mine, both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrates, which are typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrates produced at the Henderson and Climax mines, as well as from certain of our North and South America copper mines, are processed at our own conversion facilities.

Operating Data. Following is summary operating data for the Molybdenum operations for the years ended December 31.

	2013		2012		2011
Molybdenum mines operating data
Molybdenum production (millions of recoverable pounds)	49	a	41	a	38
Ore milled (metric tons per day)b	35,700		20,800		22,300
Average molybdenum ore grade (percent)b	0.19		0.23		0.24

a. Includes molybdenum production from the Climax mine since the start of commercial operations in May 2012.

b. The year 2013 reflects operating data for the Henderson and Climax mines; 2012 and 2011 reflect the operating data of only the Henderson mine.

Market conditions for molybdenum have declined in 2013 resulting from weak demand in the metallurgical sector and increased supply. We continue to monitor market conditions and will adjust our primary molybdenum production as market conditions warrant. Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our molybdenum mines and at our North and South America copper mines, and refer to "Outlook" for projected consolidated molybdenum sales volumes.

Unit Net Cash Costs. Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. 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 our measure may not be comparable to similarly titled measures reported by other companies.

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Gross Profit per Pound of Molybdenum

The following table summarizes the unit net cash costs and gross profit per pound of molybdenum at our Henderson and Climax molybdenum mines for the year ended December 31, 2013, and at the Henderson mine for the years ended December 31, 2012, and 2011. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2013a		2012a		2011a
Revenues, excluding adjustmentsb	$	11.65	$	14.27	$	16.42
Site production and delivery, before net noncash
and other costs shown below	6.24		6.19		5.46
Treatment charges and other	0.91		0.88		0.88
Unit net cash costs	7.15		7.07		6.34
Depreciation, depletion and amortization	1.68		0.97		0.96
Noncash and other costs, net	0.29		0.24		0.04
Total unit costs	9.12		8.28		7.34
Gross profit per pound	$	2.53	$	5.99	$	9.08
Molybdenum sales (millions of recoverable pounds)b	49		34		38

a. The year 2013 reflects operating data for the Henderson and Climax mines; 2012 and 2011 reflect the results of only the Henderson mine.

b. Revenues reflect sales of the molybdenum mines' production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on actual contract terms of sales made to third parties. As a result, our consolidated average realized price per pound of molybdenum (refer to "Consolidated Results") will differ from the amounts reported in this table.

Average unit net cash costs for our molybdenum mines totaled $7.15 per pound of molybdenum in 2013, compared with Henderson's unit net cash costs of $7.07 per pound in 2012 and $6.34 per pound in 2011. Assuming achievement of current sales volume and cost estimates, we estimate unit net cash costs for the molybdenum mines to average $7.25 per pound of molybdenum in 2014.

Smelting & Refining

Atlantic Copper, our wholly owned subsidiary located in Spain, smelts and refines copper concentrates and markets refined copper and precious metals in slimes. During 2013, Atlantic Copper purchased 32 percent of its concentrate requirements from our South America mining operations, 16 percent from our Indonesia mining operations and 13 percent from our North America copper mines, with the remainder purchased from third parties. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Smelting and refining charges consist of a base rate and, in certain contracts, price participation based on copper prices. Treatment charges for smelting and refining copper concentrates represent a cost to our mining operations, and income to Atlantic Copper and PT Smelting. Thus, higher treatment and refining charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment and refining charges because these operations are largely integrated with our wholly owned smelter located in Miami, Arizona.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of Indonesia mining's sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net reductions to net income attributable to common stockholders of $17 million ($0.02 per share) in 2013, compared with net reductions of $80 million ($0.08 per share) in 2012 and net additions of $156 million ($0.16 per share) in 2011. Our net deferred profits on inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stockholders totaled $127 million at December 31, 2013. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.

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Oil and Gas Operations

As further discussed in Note 2, during second-quarter 2013, we acquired oil and gas operations by completing the acquisitions of PXP and MMR (collectively FM O&G). Our oil and gas operations provide exposure to energy markets with positive fundamentals, strong margins and cash flows and a large resource base with financially attractive exploration and development opportunities. The portfolio of assets includes oil production facilities and growth potential in the Deepwater GOM, oil production from the onshore Eagle Ford shale play in Texas, oil production facilities onshore and offshore California, onshore natural gas resources in the Haynesville shale play in Louisiana, natural gas production from the Madden area in central Wyoming and an industry-leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana. In 2013, more than 90 percent of our oil and gas revenues were from oil and NGLs.

Exploration, Operating and Development Activities. Our oil and gas operations have significant proved, probable and possible reserves with financially attractive organic growth opportunities. The portfolio includes a broad range of development opportunities and high-potential exploration prospects. Substantial capital expenditures will continue to be required for our oil and gas exploration and development activities, which are expected to be funded by oil and gas operating cash flows and proceeds of asset sales.

Operating cash flows from oil and gas operations totaled $1.8 billion for the seven-month period following the acquisition date. Capital expenditures for our oil and gas operations totaled $1.45 billion for the seven-month period following the acquisition date, including $503 million incurred for Eagle Ford, $392 million for the GOM (principally Deepwater), $171 million for California and $197 million for the Inboard Lower Tertiary/Cretaceous natural gas trend. Capital expenditures for our oil and gas operations are projected to approximate $3 billion for 2014, including approximately $1.5 billion incurred for the Deepwater GOM, $0.4 billion for Eagle Ford and $0.3 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend.

Gulf of Mexico. Multiple development and exploration opportunities have been identified in the Deepwater GOM that are expected to benefit from tie-back opportunities to available production capacity at the FM O&G operated large-scale Holstein, Marlin and Horn Mountain deepwater production platforms.

Holstein, in which we have a 100 percent working interest, is located in Green Canyon and has production facilities capable of producing in excess of 100 MBOE per day. The Holstein platform rig refurbishment program was conducted in the second half of 2013 in preparation for drilling and workover activity, which commenced in first-quarter 2014. Over the 2014 to 2016 period, we expect to drill seven sidetrack wells from the Holstein platform and five subsea tie-back wells from contracted drill ships to enhance production volumes from the spar. Near-term tie-back prospects in the Holstein area include Holstein Deep and Copper.

The Holstein Deep development, in which we have a 100 percent working interest, is located four miles west of the Holstein platform. FM O&G acquired the acreage associated with this development in the 2013 lease sale held by the BOEM. Two successful wells had previously been drilled and encountered approximately 500 net feet of oil pay in recent years. We plan to delineate this prospect during 2014.

The Copper exploration prospect, in which we have a 100 percent working interest, is located southeast of the Holstein field in 4,400 feet of water and is a subsea tie-back opportunity to the Holstein facility. The prospect is a Holstein analog play with Pliocene objectives and has a proposed total depth of 14,500 feet.

Development of the Lucius field in Keathley Canyon, in which our subsidiary Plains Offshore has a 23.33 percent working interest, is progressing with first production anticipated in the second half of 2014. The geologic results from the six wells drilled since 2009 confirm a significant oil resource. Subsea infrastructure is currently being installed, and topside facilities are more than 90 percent complete and on schedule to be delivered and lifted into place during first-quarter 2014. The sanctioned development of Lucius is a subsea development consisting of a truss spar hull located in 7,200 feet of water with a topside capacity of 80 MBbls of oil per day and 450 MMcf of gas per day.

During 2014, Plains Offshore also plans to commence drilling at the Tara exploration prospect, in which we have a 100 percent working interest, located northwest of the Lucius discovery in Keathley Canyon in 8,700 feet of water. Tara is a Lucius analog prospect with Pliocene/Miocene objectives and has a proposed total depth of 23,000 feet.

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Eagle Ford. We have an attractive position in an oil- and NGL-rich section of the Eagle Ford shale play in South Texas. Production from the field has grown significantly in recent years and averaged 46 MBOE per day during the seven-month period following the acquisition date of our oil and gas operations in 2013. As part of our capital spending reduction initiatives, we have reduced drilling activity at Eagle Ford from eight rigs in mid-2013. At December 31, 2013, there were three drilling rigs operating, which we expect to reduce to two during 2014. At December 31, 2013, there were 36 wells that were drilling or were drilled and pending completion or connection to pipelines.

California. Development plans are principally focused on maintaining stable production levels in our long established producing fields principally onshore in California through continued drilling.

Haynesville. We have rights to a substantial natural gas resource, located in the Haynesville shale play in north Louisiana. Drilling activities in recent years have been significantly reduced to maximize cash flows in a low natural gas price environment and to benefit from potentially higher future natural gas prices.

Inboard Lower Tertiary/Cretaceous. We have an industry leading position in the emerging shallow-water Inboard Lower Tertiary/Cretaceous natural gas trend, located on the Shelf of the GOM and onshore South Louisiana. We have a significant onshore and offshore lease acreage position with high-quality prospects and the potential to develop a significant long-term, low-cost source of natural gas. Data from eight wells drilled to date indicate the presence of geologic formations that are analogous to productive formations in the Deepwater GOM and onshore in the Gulf Coast region. The near-term focus is on defining the trend onshore. We are currently completing two Inboard Lower Tertiary/Cretaceous exploration prospects, including one onshore well, and plan to perform production tests on these two wells and a third well in 2014.

The Lomond North discovery well within the Highlander area, in which we are the operator and have a 72 percent working interest, located in St. Martin Parish, Louisiana, is currently drilling and has encountered gas pay in several Wilcox and Cretaceous aged sands between 24,000 feet and 29,000 feet. The wireline log and core data obtained from the Wilcox and Cretaceous sand packages indicated favorable reservoir characteristics with approximately 150 feet of net pay. The Lomond North discovery well is currently in completion operations to test Lower Wilcox and Cretaceous objectives found below the salt weld. We have identified multiple exploratory prospects in the Highlander area where we control rights to approximately 56,000 gross acres.

During 2013, we commenced completion operations at Davy Jones No. 2, in which we have a 75 percent working interest, located on South Marsh Island Block 234. Flow testing is anticipated in the first half of 2014. During 2014, we also plan to complete the Blackbeard West No.2 well, in which we have a 92 percent working interest, located on Ship Shoal Block 188. The Lineham Creek exploration well, in which we have a 36 percent working interest, located in Cameron Parish, has been suspended while future plans are being developed.

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Financial and Operating Data. Following is summary operating results for the oil and gas operations:

	Seven Months From
	June 1, 2013, to
	December 31, 2013
Sales Volumes
Oil (MMBbls)	26.6
Natural gas (Bcf)	54.2
NGLs (MMBbls)	2.4
MMBOE	38.1
Average Realizationsa
Oil (per barrel)	$	98.32
Natural gas(per MMbtu)	$	3.99
NGLs (per barrel)	$	38.20
Gross Profit per BOE
Realized revenuesa	$	76.87
Less: Cash production costsa	17.14
Cash operating margina	59.73
Less: Depreciation, depletion and amortization	35.81
Less: Accretion and other costs	0.79
Revenue adjustments for unrealized losses on derivative contracts	(8.20		)
Other net adjustments	0.04
Gross profit	$	14.97

a. Cash operating margin for our oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude net unrealized and noncash realized losses on derivative contracts and cash production costs exclude accretion and other costs. For reconciliations of realized revenues (including average realizations for oil, natural gas and NGLs) and cash production costs per BOE to revenues and production and delivery costs reported in our consolidated financial statements, refer to "Product Revenues and Production Costs."

Realized revenues for our oil and gas operations averaged $76.87 per BOE and cash production costs averaged $17.14 per BOE for the seven-month period following the acquisition date. Based on current sales volume and cost estimates, cash production costs are expected to approximate $20 per BOE for 2014, primarily reflecting the impact of lower estimated volumes from planned downtime associated with platform maintenance and subsea tie-back upgrades on the Marlin facility in the GOM during third-quarter 2014.

Our average realized price for crude oil was $98.32 per barrel for the seven-month period following the acquisition date. Excluding the impact of realized derivative contracts, our average realized price for crude oil was $99.67 per barrel for the seven-month period following the acquisition date (92 percent of the average Brent crude oil price of $108.66 per barrel), reflecting quality and location differentials.

Our average realized price for natural gas was $3.99 per MMBtu for the seven-month period following the acquisition date. Excluding the impact of realized derivative contracts, our average realized price for natural gas was $3.73 per MMBtu for the seven-month period following the acquisition date, compared with NYMEX natural gas prices for the June through December 2013 contracts, which averaged $3.67 per MMBtu, reflecting quality and location differentials.

The following table presents average sales volumes per day by region for our oil and gas operations:

	Seven Months From
	June 1, 2013, to
	December 31, 2013
Sales Volumes (MBOE per day):
GOMa	72
Eagle Ford	46
California	39
Haynesville/Madden/Other	21
Total oil and gas operations	178

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a. Includes sales from properties on the GOM Shelf and in the Deepwater GOM. Production from the GOM Shelf totaled 13 MBOE per day (18 percent of the GOM total).

Daily sales volumes averaged 178 MBOE for the seven-month period following the acquisition date, including 124 MBbls of crude oil per day, 254 MMcf of natural gas per day and 11 MBbls of NGLs per day. Sales volumes from oil and gas operations are expected to average 166 MBOE per day for the year 2014, comprised of approximately 70 percent oil, 24 percent natural gas and 6 percent NGLs. Sales volumes for the year 2014 include the impacts of planned platform maintenance and subsea tie-back upgrades on the Marlin facility in the GOM during third-quarter 2014.

CAPITAL RESOURCES AND LIQUIDITY

Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil, our sales volumes, production costs, income taxes, other working capital changes and other factors. We have taken steps to reduce or defer capital expenditures, operating, exploration and other costs and are targeting reductions in total debt to $12 billion by year-end 2016. We will continue to review our portfolio of assets for opportunities to accelerate our deleveraging plans through potential asset sales, joint venture transactions or further adjustments to capital spending plans.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents, including cash available to the parent company, net of noncontrolling interests' share, taxes and other costs at December 31 (in billions):

	2013			2012
Cash at domestic companies	$	0.4		$	1.3
Cash at international operations	1.6			2.4
Total consolidated cash and cash equivalents	2.0			3.7
Less: Noncontrolling interests’ share	(0.6		)	(0.8		)
Cash, net of noncontrolling interests’ share	1.4			2.9
Less: Withholding taxes and other	(0.1		)	(0.2		)
Net cash available	$	1.3		$	2.7

Cash held at our international operations is generally used to support our foreign operations' capital expenditures, operating expenses, working capital and other tax payments or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility and uncommitted lines of credit (refer to Note 8). With the exception of TFM, we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests' share.

Debt

At December 31, 2013, we had total debt of $20.7 billion. Following is a summary of total debt and related weighted-average interest rates at December 31, 2013 (in billions, except percentages):

				Weighted-
				Average
				Interest Rate
Acquisition-related debt	$	10.5	a	3.0%
Assumed debt of PXP	6.7			6.8%
FCX's previously existing debt	3.5			3.4%
	$	20.7		4.2%

a. Proceeds from the issuance of $6.5 billion of senior notes and a $4.0 billion unsecured term loan were used to finance the acquisitions of PXP and MMR, repay certain PXP debt and for general corporate purposes. Refer to Note 8 for further discussion.

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Based on current sales volume and cost estimates and assuming average prices of $3.25 per pound of copper, $1,200 per ounce of gold, $9.50 per pound of molybdenum and $105 per barrel of Brent crude oil, we are targeting reductions in total debt to $12 billion by year-end 2016, most of which is projected to occur in 2016. We will continue to review our portfolio of assets and will consider opportunities to accelerate our deleveraging plans through potential asset sales, joint venture transactions or further adjustments to capital spending plans.

Upon closing of the PXP acquisition, we replaced our revolving credit facility with a new $3.0 billion senior unsecured revolving credit facility, which is available through May 2018. At December 31, 2013, we had no borrowings and $46 million of letters of credit issued under our revolving credit facility, resulting in availability of $3.0 billion.

In 2013, we entered into uncommitted unsecured lines of credit with three financial institutions totaling $450 million, which have terms and pricing that are more favorable than our revolving credit facility. As of December 31, 2013, there were no borrowings drawn on these lines of credit.

Cerro Verde expects to complete bank financing to fund a portion of its current expansion project in first-quarter 2014.

Operating Activities

We generated consolidated operating cash flows totaling $6.1 billion in 2013 (net of $377 million for working capital uses and changes in other tax payments), $3.8 billion in 2012 (net of $1.4 billion for working capital uses and changes in other tax payments) and$6.6 billion in 2011 (net of $461 million for working capital uses and changes in other tax payments).

Consolidated operating cash flows for 2013 benefited from our oil and gas operations (which generated $1.8 billion of operating cash flows for the seven-month period following the acquisition date), higher copper and gold sales volumes and a decrease in working capital uses and changes in other tax payments, primarily associated with changes in accrued income taxes, inventories and accounts receivable. Partly offsetting these increases was the impact of lower metals price realizations.

Lower consolidated operating cash flows for 2012, compared with 2011, primarily reflected lower copper and gold sales volumes, lower copper price realizations and an increase in working capital uses and changes in other tax payments, primarily associated with changes in accounts receivable, partly offset by timing of payments for accounts payable and accrued liabilities.

Based on current operating plans and subject to future copper, gold, molybdenum and crude oil prices, we expect estimated consolidated operating cash flows for the year 2014, plus available cash and availability under our revolving credit facility and uncommitted lines of credit, to be sufficient to fund our budgeted capital expenditures, dividends, noncontrolling interest distributions and other cash requirements for the year. Refer to “Outlook” for further discussion of projected consolidated operating cash flows for the year 2014.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $5.3 billion in 2013, including $2.3 billion for major projects at mining operations and $1.45 billion for oil and gas operations for the seven-month period following the acquisition date. Capital expenditures, including capitalized interest, totaled $3.5 billion in 2012 ($2.2 billion for major projects at mining operations) and $2.5 billion in 2011 ($1.4 billion for major projects at mining operations).

Increased capital expenditures for major projects at mining operations in 2013 were primarily associated with the expansion projects at Morenci and Cerro Verde and our underground development activities at Grasberg, partly offset by decreased spending for the expansion at Tenke, which was completed in early 2013, and at the Climax mine, which began commercial operations in May 2012. Refer to “Operations” for further discussion.

Capital expenditures are expected to approximate $7 billion for the year 2014, including $3 billion for major projects at our mining operations and $3 billion for our oil and gas operations. Major projects at our mining operations for 2014 primarily include the ongoing expansion projects at Morenci and Cerro Verde and underground development activities at Grasberg. Capital spending plans remain under review and will be revised as market conditions warrant. Refer to "Operations" for further discussion.

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Acquisitions. In second-quarter 2013, we paid $3.5 billion in cash (net of $315 million of cash acquired) to acquire PXP and $1.6 billion in cash (net of $29 million of cash acquired) to acquire MMR.

In first-quarter 2013, we paid $348 million (net of $34 million of cash acquired) to acquire a cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition was funded 70 percent by us and 30 percent by Lundin Mining Corporation, our joint venture partner.

Refer to Note 2 for further discussion of these acquisitions.

Financing Activities

Debt Transactions. During 2013, we sold $6.5 billion of senior notes in four tranches with a weighted-average interest rate of 3.9 percent, and we borrowed $4.0 billion under an unsecured bank term loan with an interest rate of LIBOR plus 1.50 percent. Net proceeds from these borrowings were used to fund the acquisitions of PXP and MMR, repay certain debt of PXP and for general corporate purposes.

Also in 2013, we redeemed the $299 million of MMR's outstanding 11.875% Senior Notes due 2014 and $400 million of PXP's 7⁵/₈% Senior Notes due 2018 assumed in the acquisitions.

During 2012, we sold $3.0 billion of senior notes in three tranches with a weighted-average interest rate of approximately 3.0 percent. Net proceeds from this offering, plus cash on hand, were used to redeem the remaining $3.0 billion of our 8.375% Senior Notes.

During 2011, we redeemed the remaining $1.1 billion of our outstanding 8.25% Senior Notes. In addition, we made open-market purchases of $35 million of our 9.5% Senior Notes and repaid the remaining $84 million of our 8.75% Senior Notes.

Refer to Note 8 for further discussion of these transactions.

Dividends and Other Equity Transactions. We paid dividends on our common stock totaling $2.3 billion in 2013 (including $1.0 billion for a supplemental dividend of $1.00 per share paid in July 2013), $1.1 billion in 2012 and $1.4 billion in 2011 (including $474 million for a supplemental dividend paid in June 2011). The current annual dividend rate for our common stock is $1.25 per share ($0.3125 per share quarterly). Based on outstanding common shares of 1.0 billion at December 31, 2013, and the current dividend rate, our estimated regular common stock dividend for 2014 approximates $1.3 billion. The declaration of dividends is at the discretion of the Board and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by the Board. The Board will continue to review our financial policy on an ongoing basis.

Cash dividends and other distributions paid to noncontrolling interests totaled $256 million in 2013, $113 million in 2012 and $391 million in 2011. Higher noncontrolling interest payments in 2013, compared with 2012, primarily reflected higher dividends to the noncontrolling interest holders of El Abra and Candelaria. Lower noncontrolling interest payments in 2012, compared with 2011, primarily reflected lower dividends to the noncontrolling interest holders of PT-FI as a result of lower production in 2012. These payments will vary based on the operating results and cash requirements of our consolidated subsidiaries.

Conversion of MMR's 8% Convertible Perpetual Preferred Stock and 5.75% Convertible Perpetual Preferred Stock, Series 1 required cash payments of $228 million during 2013. Refer to Note 2 for further discussion.

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CONTRACTUAL OBLIGATIONS

We have contractual and other long-term obligations, including debt maturities, which we expect to fund with available cash, projected operating cash flows, availability under our revolving credit facility or future financing transactions, if necessary. A summary of these various obligations at December 31, 2013, follows (in millions):

	Total		2014		2015 to 2016		2017 to 2018		Thereafter
Debt maturities	$	20,054	$	312	$	1,803	$	4,400	$	13,539
Scheduled interest payment obligationsa	8,880		852		1,668		1,575		4,785
ARO and environmental obligationsb	7,237		247		449		423		6,118
Take-or-pay contractsc	4,710		1,379		2,176		828		327
Operating lease obligations	336		45		84		75		132
Totald	$	41,217	$	2,835	$	6,180	$	7,301	$	24,901

a. Scheduled interest payment obligations were calculated using stated coupon rates for fixed-rate debt and interest rates applicable at December 31, 2013, for variable-rate debt.

b. Represents estimated cash payments, on an undiscounted and unescalated basis, associated with ARO and environmental activities (including $1.8 billion for our recently acquired oil and gas operations). The timing and the amount of these payments could change as a result of changes in regulatory requirements, changes in scope and timing of ARO activities, the settlement of environmental matters and as actual spending occurs. Refer to Note 12 for additional discussion of environmental and ARO matters.

c. Represents contractual obligations for purchases of goods or service agreements enforceable and legally binding and that specify all significant terms, including minimum commitments for two deepwater drillships expected to be delivered in late 2014 and early 2015 for the GOM drilling campaign ($1.5 billion), transportation services ($853 million), the procurement of copper concentrates ($800 million), electricity ($471 million) and deferred premium costs and future interest expected to be accrued on the crude oil derivative contracts ($454 million). Some of our take-or-pay contracts are settled based on the prevailing market rate for the service or commodity purchased, and in some cases, the amount of the actual obligation may change over time because of market conditions. Drillship obligations provide for an operating rate over the contractual term upon delivery of the drillship. Transportation obligations are primarily for South America and PT-FI contracted ocean freight. Obligations for copper concentrates provide for deliveries of specified volumes to Atlantic Copper at market-based prices. Electricity obligations are primarily for contractual minimum demand at the South America and Tenke mines.

d. This table excludes certain other obligations in our consolidated balance sheets, such as estimated funding for pension obligations as the funding may vary from year to year based on changes in the fair value of plan assets and actuarial assumptions, accrued liabilities totaling $87 million that relate to unrecognized tax benefits where the timing of settlement is not determinable, and other less significant amounts.This table also excludes purchase orders for the purchase of inventory and other goods and services, as purchase orders typically represent authorizations to purchase rather than binding agreements.

In addition to our debt maturities and other contractual obligations discussed above, we have other commitments, which we expect to fund with available cash, projected operating cash flows, available credit facilities or future financing transactions, if necessary. These include (i) PT-FI's commitment to provide one percent of its annual revenue for the development of the local people in its area of operations through the Freeport Partnership Fund for Community Development, (ii) TFM's commitment to provide 0.3 percent of its annual revenue for the development of the local people in its area of operations and (iii) other commercial commitments, including standby letters of credit, surety bonds and guarantees. Refer to Notes 12, and 13 for further discussion.

CONTINGENCIES

Environmental

The cost of complying with environmental laws is a fundamental and substantial cost of our business. At December 31, 2013, we had $1.2 billion recorded in our consolidated balance sheets for environmental obligations attributed to CERCLA or analogous state programs and for estimated future costs associated with environmental obligations that are considered probable based on specific facts and circumstances.

During 2013, we incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) of $595 million for programs to comply with applicable environmental laws and regulations that affect our operations, compared to $612 million in 2012 and $387 million in 2011. The increase in environmental cost in 2012, compared with 2011, primarily relates to higher expenditures for land and settlements of environmental matters. For 2014, we expect to incur approximately $475 million of aggregate environmental

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capital expenditures and other environmental costs, which are part of our overall 2014 operating budget. The timing and amount of estimated payments could change as a result of changes in regulatory requirements, changes in scope and timing of reclamation activities, the settlement of environmental matters and as actual spending occurs.

Refer to Note 12 for further information about environmental regulation, including significant environmental matters.

Asset Retirement Obligations

We recognize AROs as liabilities when incurred, with the initial measurement at fair value. These obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to income. Mine reclamation costs for disturbances are recorded as an ARO in the period of disturbance. Oil and gas plugging and abandonment costs are recognized as an ARO and as a related asset retirement cost (included in oil and gas properties) in the period in which the well is drilled or acquired. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible, long-lived assets. At December 31, 2013, we had $2.3 billion recorded in our consolidated balance sheets for AROs, including $1.1 billion related to our oil and gas properties. Spending on AROs totaled $107 million in 2013, $47 million in 2012 and $49 million in 2011. The increase in ARO spending in 2013, compared to 2012 and 2011, primarily reflected $64 million for our oil and gas operations for the seven-month period following the acquisition date. For 2014, we expect to incur approximately $115 million for aggregate ARO payments. Refer to Note 12 for further discussion.

Litigation and Other Contingencies

Refer to Note 12 and "Legal Proceedings" contained in Part I, Item 3 of our annual report on Form 10-K for the year ended December 31, 2013, for further discussion of contingencies associated with legal proceedings and other matters.

DISCLOSURES ABOUT MARKET RISKS

Commodity Price Risk

Metals. Our consolidated revenues from our mining operations include the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum and other metals by our North and South America mines, the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operations, the sale of copper cathodes and cobalt hydroxide by our Africa mining operations, the sale of molybdenum in various forms by our molybdenum operations, and the sale of copper cathodes, copper anodes and gold in anodes and slimes by Atlantic Copper. Our financial results can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our mining business are sales volumes, unit net cash costs and consolidated operating cash flow. Refer to “Outlook” for further discussion of projected sales volumes, unit net cash costs for our copper mining operations and consolidated operating cash flows for 2014.

For 2013, 49 percent of our mined copper was sold in concentrate, 28 percent as cathode and 23 percent as rod. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until the date of final pricing. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

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Following are the (unfavorable) favorable impacts of net adjustments to the prior years' provisionally priced copper sales for the years ended December 31 (in millions, except per share amounts):

	2013			2012		2011
Revenues	$	(26	)	$	101	$	(12	)
Net income attributable to FCX common stockholders	$	(12	)	$	43	$	(5	)
Net income per share of FCX common stock	$	(0.01	)	$	0.05	$	(0.01	)

At December 31, 2013, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling 481 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $3.34 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2013, provisional price recorded would have a net impact on our 2014 consolidated revenues of approximately $32 million ($16 million to net income attributable to common stockholders). The LME spot copper price closed at $3.25 per pound on February 14, 2014.

Oil & Gas. Our financial results from oil and gas operations may vary with fluctuations in crude oil prices and, to a lesser extent natural gas prices. Market prices for crude oil and natural gas have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, including oil and gas, the key measures that management focuses on in operating our oil and gas business are sales volumes, cash production costs per BOE and operating cash flows. Refer to “Outlook” for further discussion of projected sales volumes, cash production costs per BOE and operating cash flows for 2014.

Our oil and gas operations use various derivative contracts to manage exposure to commodity price risk for a substantial portion of its oil and gas production through 2015. In connection with the acquisition of PXP, we assumed derivative contracts for 2013, 2014 and 2015 that consisted of crude oil options, and crude oil and natural gas swaps. These crude oil and natural gas derivative contracts are not designated as hedging instruments; accordingly, they are recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. Net charges to revenues for realized losses on crude oil and natural gas derivative contracts totaled $22 million ($14 million to net income attributable to FCX common stockholders or $0.01 per share) and net unrealized and noncash realized losses on crude oil and natural gas derivative contracts totaled $312 million ($194 million to net income attributable to FCX common stockholders or $0.19 per share) for the seven months from June 1, 2013, to December 31, 2013.

As of December 31, 2013, our crude oil and natural gas derivatives consisted of crude oil put options and natural gas swaps. Following presents the estimated (increase) decrease in the net liability on our balance sheet of a 10 percent change in Brent crude oil and NYMEX forward natural gas prices on the fair values of outstanding crude oil and natural gas derivative contracts, compared with the forward prices used to determine the fair values at December 31, 2013 (in millions):

	10% Increase			10% Decrease
Crude oil puts	$	(72	)	$	146
Natural gas swaps	(14		)	14
	$	(86	)	$	160

At December 31, 2013, premium settlements of crude oil and natural gas derivative contracts are expected to result in realized losses of approximately $240 million for the year 2014. Refer to Note 14 for further discussion of our crude oil and natural gas derivative contracts. Our crude oil derivative arrangements provide us protection on the underlying volumes if prices decline below the prices at which these derivatives are set.

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Foreign Currency Exchange Risk

The functional currency for most of our operations is the U.S. dollar. All of our revenues and a significant portion of our costs are denominated in U.S. dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesian rupiah, Australian dollar, Chilean peso, Peruvian nuevo sol and euro. Generally, our results are positively affected when the U.S. dollar strengthens in relation to those foreign currencies and adversely affected when the U.S. dollar weakens in relation to those foreign currencies.

Following is a summary of estimated annual payments and the impact of changes in foreign currency rates on our annual operating costs:

	Exchange Rate per $1 at December 31,			Estimated Annual Payments			10% Change in Exchange Rate (in millions)a
	2013	2012	2011	(in local currency)	(in millions)b		Increase			Decrease
Indonesia
Rupiah	12,128	9,622	9,060	7.5 trillion	$	618	$	(56	)	$	69
Australian dollar	1.12	0.93	0.98	300 million	$	267	$	(24	)	$	30
South America
Chilean peso	525	480	519	350 billion	$	667	$	(61	)	$	74
Peruvian nuevo sol	2.80	2.55	2.70	570 million	$	204	$	(19	)	$	23
Atlantic Copper
Euro	0.73	0.76	0.77	130 million	$	179	$	(16	)	$	20

a. Reflects the estimated impact on annual operating costs assuming a 10 percent increase or decrease in the exchange rate reported at December 31, 2013.

b. Based on December 31, 2013, exchange rates.

Interest Rate Risk

At December 31, 2013, we had total debt maturities of $20.1 billion, of which approximately 20 percent was variable-rate debt with interest rates based on the London Interbank Offered Rate or the Euro Interbank Offered Rate. The table below presents average interest rates for our scheduled maturities of principal for our outstanding debt (excluding fair value adjustments) and the related fair values at December 31, 2013, (in millions, except percentages):

	2014			2015			2016			2017			2018			Thereafter			Fair Value
Fixed-rate debt	$	5		$	502		$	1		$	500		$	1,500		$	13,397		$	16,345
Average interest rate	6.8		%	1.4		%	6.7		%	2.2		%	2.4		%	5.4		%	4.9		%
Variable-rate debt	$	307		$	550		$	750		$	200		$	2,200		$	142		$	4,142
Average interest rate	1.6		%	1.7		%	1.7		%	1.7		%	1.7		%	3.8		%	1.7		%

NEW ACCOUNTING STANDARDS

We do not expect the provisions of recently issued accounting standards to have a significant impact on our future financial statements and disclosures.

OFF-BALANCE SHEET ARRANGEMENTS

Refer to Note 13 for discussion of off-balance sheet arrangements.

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PRODUCT REVENUES AND PRODUCTION COSTS

Mining 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 our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. 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 our measures may not be comparable to similarly titled measures reported by other companies.

We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by our management and the Board to monitor operations. In the co-product method presentation below, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.

We show revenue adjustments for prior period open sales as separate line items. Because these adjustments do not result from current period sales, we have reflected these separately from revenues on current period sales. Noncash and other costs consist of items such as stock-based compensation costs, start-up 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. The following schedules for our mining operations are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

Oil & Gas Product Revenues and Cash Production Costs per Unit

Realized revenues and cash production costs per unit are measures intended to provide investors with information about the cash operating margin of our oil and gas operations expressed on a basis relating to each product sold. We use this measure for the same purpose and for monitoring operating performance by our oil and gas operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. Our measures may not be comparable to similarly titled measures reported by other companies.

We show revenue adjustments from derivative contracts as separate line items. Because these adjustments do not result from oil and gas sales, these gains and losses have been reflected separately from revenues on current period sales. Additionally, accretion and other costs are removed from production and delivery costs in the calculation of cash production costs per BOE. The following schedules include calculations of oil and gas product revenues and cash production costs together with a reconciliation to amounts reported in our consolidated financial statements.

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North America Copper Mines Product Revenues and Production Costs

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper			Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,752			$	4,752		$	349	$	106	$	5,207
Site production and delivery, before net noncash
and other costs shown below	2,828				2,744			123		74		2,941
By-product credits	(342		)		—			—		—		—
Treatment charges	155				151			—		4		155
Net cash costs	2,641				2,895			123		78		3,096
Depreciation, depletion and amortization	391				378			7		6		391
Noncash and other costs, net	202			c	200			1		1		202
Total costs	3,234				3,473			131		85		3,689
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		(4		)	—		—		(4		)
Gross profit	$	1,514			$	1,275		$	218	$	21	$	1,514
Copper sales (millions of recoverable pounds)	1,416				1,416
Molybdenum sales (millions of recoverable pounds)a								32
Gross profit per pound of copper and molybdenum:
Revenues, excluding adjustments	$	3.36			$	3.36		$	10.79
Site production and delivery, before net noncash
and other costs shown below	2.00				1.94			3.79
By-product credits	(0.24		)		—			—
Treatment charges	0.11				0.11			—
Unit net cash costs	1.87				2.05			3.79
Depreciation, depletion and amortization	0.28				0.27			0.22
Noncash and other costs, net	0.14			c	0.14			0.04
Total unit costs	2.29				2.46			4.05
Revenue adjustments, primarily for pricing
on prior period open sales	—				—			—
Gross profit per pound	$	1.07			$	0.90		$	6.74
Reconciliation to Amounts Reported
								Depreciation,
					Production			Depletion and
(In millions)	Revenues				and Delivery			Amortization
Totals presented above	$	5,207			$	2,941		$	391
Treatment charges	—				155			—
Net noncash and other costs	—				202			—
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		—			—
Eliminations and other	(20		)		(32		)	11
North America copper mines	5,183				3,266			402
Other mining & eliminationsd	13,118				7,885			1,020
Total mining	18,301				11,151			1,422
U.S. oil & gas operations	2,616				682			1,364
Corporate, other & eliminations	4				7			11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840		$	2,797

a. Reflects sales of molybdenum by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b. Includes gold and silver product revenues and production costs.

c. Includes $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

d. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

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North America Copper Mines Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,908		$	4,908		$	468	$	91	$	5,467
Site production and delivery, before net noncash
and other costs shown below	2,572			2,357			227		60		2,644
By-product credits	(487		)	—			—		—		—
Treatment charges	161			147			—		14		161
Net cash costs	2,246			2,504			227		74		2,805
Depreciation, depletion and amortization	346			323			18		5		346
Noncash and other costs, net	138			134			3		1		138
Total costs	2,730			2,961			248		80		3,289
Revenue adjustments, primarily for pricing on prior period open sales	4			4			—		—		4
Gross profit	$	2,182		$	1,951		$	220	$	11	$	2,182
Copper sales (millions of recoverable pounds)	1,347			1,347
Molybdenum sales (millions of recoverable pounds)a							36
Gross profit per pound of copper and molybdenum:
Revenues, excluding adjustments	$	3.64		$	3.64		$	13.00
Site production and delivery, before net noncash
and other costs shown below	1.91			1.75			6.32
By-product credits	(0.36		)	—			—
Treatment charges	0.12			0.11			—
Unit net cash costs	1.67			1.86			6.32
Depreciation, depletion and amortization	0.26			0.24			0.48
Noncash and other costs, net	0.10			0.10			0.09
Total unit costs	2.03			2.20			6.89
Revenue adjustments, primarily for pricing
on prior period open sales	0.01			0.01			—
Gross profit per pound	$	1.62		$	1.45		$	6.11
Reconciliation to Amounts Reported
							Depreciation,
				Production			Depletion and
(In millions)	Revenues			and Delivery			Amortization
Totals presented above	$	5,467		$	2,644		$	346
Treatment charges	—			161			—
Net noncash and other costs	—			138			—
Revenue adjustments, primarily for pricing on prior period open sales	4			—			—
Eliminations and other	15			(10		)	14
North America copper mines	5,486			2,933			360
Other mining & eliminationsc	12,517			7,446			812
Total mining	18,003			10,379			1,172
U.S. oil & gas operations	—			—			—
Corporate, other & eliminations	7			3			7
As reported in FCX’s consolidated financial statements	$	18,010		$	10,382		$	1,179

a. Reflects sales of molybdenum by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b. Includes gold and silver product revenues and production costs.

c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

120

North America Copper Mines Product Revenues and Production Costs (continued)

Year Ended December 31, 2011
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,968		$	4,968		$	546	$	111	$	5,625
Site production and delivery, before net noncash
and other costs shown below	2,213			1,987			238		46		2,271
By-product credits	(599		)	—			—		—		—
Treatment charges	138			132			—		6		138
Net cash costs	1,752			2,119			238		52		2,409
Depreciation, depletion and amortization	264			247			13		4		264
Noncash and other costs, net	166			161			4		1		166
Total costs	2,182			2,527			255		57		2,839
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	(1		)	—		—		(1		)
Gross profit	$	2,785		$	2,440		$	291	$	54	$	2,785
Copper sales (millions of recoverable pounds)	1,244			1,244
Molybdenum sales (millions of recoverable pounds)a							35
Gross profit per pound of copper and molybdenum:
Revenues, excluding adjustments	$	3.99		$	3.99		$	15.72
Site production and delivery, before net noncash
and other costs shown below	1.78			1.60			6.86
By-product credits	(0.48		)	—			—
Treatment charges	0.11			0.10			—
Unit net cash costs	1.41			1.70			6.86
Depreciation, depletion and amortization	0.21			0.20			0.39
Noncash and other costs, net	0.13			0.13			0.09
Total unit costs	1.75			2.03			7.34
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			—
Gross profit per pound	$	2.24		$	1.96		$	8.38
Reconciliation to Amounts Reported
							Depreciation,
				Production			Depletion and
(In millions)	Revenues			and Delivery			Amortization
Totals presented above	$	5,625		$	2,271		$	264
Treatment charges	—			138			—
Net noncash and other costs	—			166			—
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	—			—
Eliminations and other	5			(10		)	14
North America copper mines	5,629			2,565			278
Other mining & eliminationsc	15,243			7,336			737
Total mining	20,872			9,901			1,015
U.S. oil & gas operations	—			—			—
Corporate, other & eliminations	8			(3		)	7
As reported in FCX’s consolidated financial statements	$	20,880		$	9,898		$	1,022

a. Reflects sales of molybdenum by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b. Includes gold and silver product revenues and production costs.

c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

121

South America Mining Product Revenues and Production Costs

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper			Other			Total
Revenues, excluding adjustments	$	4,366			$	4,366		$	374	a	$	4,740
Site production and delivery, before net noncash
and other costs shown below	2,023			b	1,875			170			2,045
By-product credits	(352		)		—			—			—
Treatment charges	226				226			—			226
Net cash costs	1,897				2,101			170			2,271
Depreciation, depletion and amortization	346				323			23			346
Noncash and other costs, net	49				44			5			49
Total costs	2,292				2,468			198			2,666
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		(28		)	—			(28		)
Gross profit	$	2,046			$	1,870		$	176		$	2,046
Copper sales (millions of recoverable pounds)	1,325				1,325
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.30			$	3.30
Site production and delivery, before net noncash
and other costs shown below	1.53			b	1.42
By-product credits	(0.27		)		—
Treatment charges	0.17				0.17
Unit net cash costs	1.43				1.59
Depreciation, depletion and amortization	0.26				0.24
Noncash and other costs, net	0.04				0.03
Total unit costs	1.73				1.86
Revenue adjustments, primarily for pricing
on prior period open sales	(0.03		)		(0.03		)
Gross profit per pound	$	1.54			$	1.41
Reconciliation to Amounts Reported
								Depreciation,
					Production			Depletion and
(In millions)	Revenues				and Delivery			Amortization
Totals presented above	$	4,740			$	2,045		$	346
Treatment charges	(226		)		—			—
Net noncash and other costs	—				49			—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		—			—
Eliminations and other	(1		)		(25		)	—
South America mining	4,485				2,069			346
Other mining & eliminationsc	13,816				9,082			1,076
Total mining	18,301				11,151			1,422
U.S. oil & gas operations	2,616				682			1,364
Corporate, other & eliminations	4				7			11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840		$	2,797

a. Includes gold sales of 102 thousand ounces ($1,350 per ounce average realized price) and silver sales of 4.1 million ounces ($21.88 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

b. Includes charges totaling $36 million ($0.03 per pound) associated with labor agreement costs at Cerro Verde.

c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

122

South America Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product				Co-Product Method
	Method				Copper			Other			Total
Revenues, excluding adjustments	$	4,462			$	4,462		$	355	a	$	4,817
Site production and delivery, before net noncash
and other costs shown below	1,995			b	1,846			173			2,019
By-product credits	(331		)		—			—			—
Treatment charges	202				202			—			202
Net cash costs	1,866				2,048			173			2,221
Depreciation, depletion and amortization	287				272			15			287
Noncash and other costs, net	110				75			35			110
Total costs	2,263				2,395			223			2,618
Revenue adjustments, primarily for pricing on prior period open sales	106				106			—			106
Gross profit	$	2,305			$	2,173		$	132		$	2,305
Copper sales (millions of recoverable pounds)	1,245				1,245
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.58			$	3.58
Site production and delivery, before net noncash
and other costs shown below	1.60			b	1.49
By-product credits	(0.26		)		—
Treatment charges	0.16				0.16
Unit net cash costs	1.50				1.65
Depreciation, depletion and amortization	0.23				0.22
Noncash and other costs, net	0.09				0.06
Total unit costs	1.82				1.93
Revenue adjustments, primarily for pricing
on prior period open sales	0.09				0.09
Gross profit per pound	$	1.85			$	1.74
Reconciliation to Amounts Reported
								Depreciation,
					Production			Depletion and
(In millions)	Revenues				and Delivery			Amortization
Totals presented above	$	4,817			$	2,019		$	287
Treatment charges	(202		)		—			—
Net noncash and other costs	—				110			—
Revenue adjustments, primarily for pricing on prior period open sales	106				—			—
Eliminations and other	7				(15		)	—
South America mining	4,728				2,114			287
Other mining & eliminationsc	13,275				8,265			885
Total mining	18,003				10,379			1,172
U.S. oil & gas operations	—				—			—
Corporate, other & eliminations	7				3			7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382		$	1,179

a. Includes gold sales of 82 thousand ounces ($1,673 per ounce average realized price) and silver sales of 3.2 million ounces ($30.33 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

b. Includes $16 million ($0.01 per pound) associated with labor agreement costs at Candelaria.

c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

123

South America Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2011
(In millions)	By-Product				Co-Product Method
	Method				Copper			Other			Total
Revenues, excluding adjustments	$	4,989			$	4,989		$	477	a	$	5,466
Site production and delivery, before net noncash
and other costs shown below	1,826			b	1,679			172			1,851
By-product credits	(452		)		—			—			—
Treatment charges	219				219			—			219
Net cash costs	1,593				1,898			172			2,070
Depreciation, depletion and amortization	258				242			16			258
Noncash and other costs, net	82				75			7			82
Total costs	1,933				2,215			195			2,410
Revenue adjustments, primarily for pricing on prior period open sales	15				(4		)	19			15
Gross profit	$	3,071			$	2,770		$	301		$	3,071
Copper sales (millions of recoverable pounds)	1,322				1,322
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.77			$	3.77
Site production and delivery, before net noncash
and other costs shown below	1.38			b	1.27
By-product credits	(0.35		)		—
Treatment charges	0.17				0.17
Unit net cash costs	1.20				1.44
Depreciation, depletion and amortization	0.20				0.18
Noncash and other costs, net	0.06				0.05
Total unit costs	1.46				1.67
Revenue adjustments, primarily for pricing
on prior period open sales