PROPERTY, PLANT, EQUIPMENT AND MINING DEVELOPMENT COSTS, NET

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment, Net [Abstract]

Property, Plant, Equipment and Mining Development Costs, Net

PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT COSTS, NET

The components of net property, plant, equipment and mine development costs follow:

	December 31,
	2016			2015
Proven and probable mineral reserves	$	3,863		$	3,880
VBPP	559			559
Mine development and other	5,755			4,878
Buildings and infrastructure	7,479			6,964
Machinery and equipment	11,744			11,558
Mobile equipment	3,725			3,843
Construction in progress	2,831			3,716
Property, plant, equipment and mine development costs	35,956			35,398
Accumulated depreciation, depletion and amortization	(12,737		)	(11,412		)
Property, plant, equipment and mine development costs, net	$	23,219		$	23,986

FCX recorded $1.6 billion for VBPP in connection with the FMC acquisition in 2007 (excluding $634 million associated with mining operations that were sold or included in assets held for sale) and transferred $640 million to proven and probable mineral reserves prior to 2015 (none in 2016 and 2015). Cumulative impairments of VBPP total $485 million, which were primarily recorded in 2008.

Capitalized interest, which primarily related to FCX's mining operations' capital projects, totaled $92 million in 2016, $157 million in 2015 and $148 million in 2014.

In response to market conditions, beginning in the second half of 2015, FCX made adjustments to its operating plans for its mining operations. Operating plans for the North America copper mines were revised to reduce operating and capital costs, and adjust production to reflect market conditions; operations at the El Abra mine in Chile were adjusted to reduce mining and stacking rates by approximately 50 percent to achieve lower operating and labor costs, defer capital expenditures and extend the life of the existing operation; and the Henderson molybdenum mine in Colorado operated at reduced rates during 2016, resulting in an approximate 65 percent reduction in its annual production volumes.

In connection with the decline in copper and molybdenum prices in 2015 and the revised operating plans discussed above, FCX evaluated its long-lived assets (other than indefinite-lived intangible assets) for impairment during 2015 and as of December 31, 2015, as described in Note 1. FCX’s evaluations of its copper mines at December 31, 2015, were based on near-term price assumptions reflecting prevailing copper future prices, which ranged from $2.15 per pound to $2.17 per pound for COMEX and from $2.13 per pound to $2.16 per pound for LME, and a long-term average price of $3.00 per pound. FCX's evaluations of its molybdenum mines at December 31, 2015, were based on near-term price assumptions that were consistent with then-current market prices for molybdenum and a long-term average price of $10.00 per pound.

FCX’s evaluations of long-lived assets (other than indefinite-lived intangible assets) resulted in the recognition of a charge to production costs for the impairment of the Tyrone mine totaling $37 million in 2015, net of a revision to Tyrone's ARO.

During 2016, FCX concluded there were no events or changes in circumstances that would indicate that the carrying amount of its long-lived mining assets might not be recoverable. Additionally, copper and molybdenum prices have improved. The LME copper spot price of $2.50 per pound at December 31, 2016, was 17 percent higher than the LME spot price of $2.13 per pound at December 31, 2015, and the weekly average price for molybdenum of $6.74 per pound at December 31, 2016, was 29 percent higher than the weekly average price of $5.23 per pound at December 31, 2015.