Freeport-McMoRan 2009 Annual Report Download - page 8

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OPERATIONAL OVERVIEW
North America
Freeport-McMoRan Copper & Gold Inc. (FCX) leads the metals industry in North America in
the production of copper and molybdenum. FCX operates six open-pit copper mines in the
United States (Morenci, Sierrita, Bagdad, Safford and Miami in Arizona and Tyrone in New
Mexico). FCX conducts molybdenum mining operations at the Henderson underground
mine in Colorado, in addition to sales of by-product molybdenum from Sierrita and Bagdad.
Consolidated copper sales in North America totaled 1.2 billion pounds at an average realized
price of $2.38 per pound in 2009, compared to 1.4 billion pounds at an average realized
price of $3.07 per pound in 2008. Consolidated molybdenum sales from the Henderson
primary molybdenum mine and by-product molybdenum from copper mines totaled 58
million pounds at an average realized price of $12.36 per pound in 2009, compared to 71
million pounds at an average realized price of $30.55 per pound in 2008. FCX operated
at reduced rates at certain of its North America copper mines and its molybdenum mine
in 2009 in response to market conditions and reduced demand in the Western world.
FCX expects 2010 sales from North America copper mines to approximate 1.0 billion
pounds of copper, reecting the impact of reduced 2009 mining activities on 2010 leaching
operations, and molybdenum sales from its mines to approximate 60 million pounds in 2010.
North America unit net cash costs, including molybdenum credits, averaged $1.11 per
pound in 2009, compared with $1.33 per pound in 2008. North America unit net cash
costs were lower in 2009 primarily because of cost reduction and efciency efforts,
including the impact of lower operating rates and reduced input costs, primarily for energy.
Additionally, molybdenum by-product credits were signicantly lower because of lower
molybdenum prices and lower sales volumes during 2009. Based on current operating
plans and assuming achievement of current sales estimates, an average molybdenum
price of $12 per pound for 2010 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 $1.23 per pound of copper in 2010.
In October 2009, FCX announced initiatives to resume limited mining activities at
the Miami mine in Arizona. FCX is also initiating activities to restart the Morenci
mill, which was shut down in February 2009, to process available sulde material
currently being mined. In December 2009, FCX purchased property adjacent to
its Sierrita operations, which includes the Twin Buttes copper mine that ceased
operations in 1994. The purchase provides signicant 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.
South America
FCX operates four copper mines in South America – Cerro Verde in Peru and Candelaria,
Ojos del Salado and El Abra in Chile. South America consolidated copper sales totaled
1.4 billion pounds at an average realized price of $2.70 per pound in 2009, compared
to 1.5 billion pounds at an average realized price of $2.57 per pound in 2008.
6 FREEPORT-McMoRan COPPER & GOLD INC.
2009 Annual Report