Freeport-McMoRan 2011 Annual Report Download - page 37

2011 ANNUAL REPORT | 35
OPERATIONS
North America Copper Mines
We currently operate seven copper mines in North America —
Morenci, Bagdad, Saord, Sierrita and Miami in Arizona, and
Tyrone and Chino in New Mexico. All of these mining operations
are wholly owned, except for Morenci, an unincorporated joint
venture in which we own an 85 percent undivided interest.
e North America copper mines include open-pit mining,
sulde ore concentrating, leaching and solution extraction/
electrowinning (SX/EW) operations. Molybdenum concentrate is
also produced by certain of our North America copper mines
(primarily Sierrita, Bagdad and Morenci). A majority of the copper
produced at our North America copper mines is cast into copper
rod by our Rod & Rening operations. e remainder of our North
America copper sales is primarily in the form of copper cathode or
copper concentrate.
Operating and Development Activities. During 2011 and 2010,
we increased production at our North America copper mines,
which had been curtailed in late 2008 because of weak market
conditions. Further discussion of the development projects at our
North America copper mines is presented below.
We also have a number of opportunities to invest in additional
production capacity at several of our North America copper
mines. Exploration results in recent years indicate the potential for
additional sulde development in North America.
Morenci Mine Ramp-up and Mill Restart. During second-quarter
2011, we completed the ramp up of Morenci’s mining rates to
635,000 metric tons of ore per day and milling rates to
approximately 50,000 metric tons of ore per day, resulting in
increased copper production of approximately 125 million pounds
of copper per year.
We are advancing a feasibility study to expand mining and
milling capacity at Morenci to process additional sulde ore
identied through exploratory drilling. is project, which would
require signicant investment, would increase milling rates from
the current level of 50,000 metric tons of ore per day to approximately
115,000 metric tons of ore per day and target incremental
annual copper production of approximately 225 million pounds.
Completion of the feasibility study is expected in the rst half
of 2012.
Chino Restart. During 2011, mining and milling activities were
restarted at the Chino mine. Production at Chino, which totaled
69 million pounds of copper in 2011, is expected to increase to
approximately 200 million pounds of copper per year by 2014.
Costs for the project associated with equipment and mill
refurbishment are expected to approximate $175 million. Project
costs of $105 million have been incurred as of December31,2011.
Miami Restart. e ramp up of mining activities at the Miami
mine is complete. Production at Miami totaled 66 million pounds
of copper in 2011 and is expected to be similar in 2012.
Saord Sulphur Burner. During 2011, we completed construction
of the $150 million sulphur burner project at the Saord mine,
which is providing a more cost-eective source of sulphuric acid
used in SX/EW operations and lower transportation costs.
Twin Buttes. In December 2009, we purchased the Twin Buttes
copper mine, which ceased operations in 1994, and is adjacent to
our Sierrita mine.e 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. We are
conducting drilling on the property and metallurgical studies to
support a feasibility study expected to commence in 2012.
Operating Data. Following is summary operating data for the
North America copper mines for the years ended December 31.
2011 2010 2009
Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production 1,258 1,067 1,147
Sales, excluding purchases 1,247 1,085 1,187
Average realized price per pound $ 3.99 $ 3.42 $ 2.38
Molybdenum (millions of recoverable
pounds)
Production
a
35 25 25
100% Operating Data
SX/EW operations
Leach ore placed in stockpiles
(metric tons per day) 888,300 648,800 589,400
Average copper ore grade (percent) 0.24 0.24 0.29
Copper production (millions of
recoverable pounds) 801 746 859
Mill operations
Ore milled (metric tons per day) 222,800 189,200 169,900
Average ore grade (percent):
Copper 0.38 0.32 0.33
Molybdenum 0.03 0.03 0.02
Copper recovery rate (percent) 83.1 83.0 86.0
Production (millions of recoverable
pounds):
Copper 549 398 364
Molybdenum 35 25 25
a. Reflects molybdenum production from certain of our North America copper mines. Sales
of molybdenum are reflected in the Molybdenum division.
2011 compared with 2010. Copper sales volumes from our North
America copper mines increased to 1.2 billion pounds in 2011,
compared with 1.1 billion pounds in 2010, primarily reecting
increased production at the Morenci, Miami and Chino mines.
Copper sales volumes from our North America copper mines
are expected to approximate 1.3 billion pounds in 2012.
Molybdenum production from our North America copper mines is
expected to approximate 30 million pounds in 2012.
MANAGEMENT’S DISCUSSION AND ANALYSIS