Freeport-McMoRan 2008 Annual Report Download - page 11

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2008 Annual Report FREEPORT-McMoRan COPPER & GOLD INC. 9
Colorado. Approximately $180 million of the $500 million
project was incurred through December 31, 2008. The project
was previously expected to commence production in 2010.
Once a decision is made to resume construction activities, cost
estimates will be updated and the project would be capable
of starting up in approximately an 18-month timeframe.
North America unit net cash costs, including molybdenum
credits, averaged $1.33 per pound in 2008, compared with
$0.87 per pound in 2007. Unit net cash costs at our North
America operations were higher in 2008 than in 2007
primarily because of higher input costs, including higher
mining costs and milling rates, higher energy and acid
costs and higher costs associated with Safford as the mine
ramped up to full production rates. A sharp decline in
molybdenum prices in the fourth quarter of 2008 resulted in
lower by-product credits. Based on current operating plans
and assuming $9.00 per pound of molybdenum for 2009 and
estimates for commodity-based input costs, FCX estimates
that average unit net cash costs, including molybdenum
credits, for its North America copper mines would
approximate $1.17 per pound of copper in 2009.
South America
FCX operates four copper mines in South America — Cerro
Verde in Peru and Candelaria, Ojos del Salado and El Abra in
Chile. FCX owns a 53.56 percent interest in Cerro Verde, an 80
percent interest in both Candelaria and Ojos del Salado, and
a 51 percent interest in El Abra. South America consolidated
copper sales in 2008 totaled 1.5 billion pounds at an average
realized price of $2.57 per pound and approximately 1.4
billion pounds at an average realized price of $3.25 in 2007.
During the fourth quarter of 2008 and in January 2009,
FCX revised its operating plans at its South America mines
to reduce mining rates at the Candelaria and Ojos del
Salado mines; reduce capital spending plans, including a
deferral of the planned incremental expansion project at
Cerro Verde and a delay in the sulfide project at El Abra;
reduce spending on discretionary items and temporarily
curtail the molybdenum circuit at Cerro Verde.
For 2009, FCX expects South America sales of 1.4 billion
pounds of copper and 100 thousand ounces of gold. South
America unit net cash costs, including by-product credits
Geographically Diverse Resources
Our “Core Assets” are located in North and South America,
Indonesia and Africa. We are responding to economic conditions
by positioning our company to operate on a lean, efficient and
low-cost basis while preserving our valuable resources and
growth opportunities for the future.
Photo: The Cerro Verde open-pit mine in Peru