Freeport-McMoRan 2011 Annual Report Download - page 82

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80 | FREEPORT-McMoRan COPPER & GOLD INC.
NOTE 4. Property, Plant, Equipment and
Development Costs, Net
e components of net property, plant, equipment and
development costs follow:
December 31, 2011 2010
Proven and probable reserves $ 4,572 $ 4,503
VBPP 1,071 1,100
Development and other 3,447 3,188
Buildings and infrastructure 3,151 2,815
Machinery and equipment 8,171 7, 523
Mobile equipment 2,859 2,365
Construction in progress 2,704 1,885
Property, plant, equipment and
development costs 25,975 23,379
Accumulated depreciation, depletion and
amortization (7,526) (6,594)
Property, plant, equipment and
development costs, net $ 18,449 $ 16,78 5
FCX recorded $2.2 billion for VBPP in connection with the FMC
acquisition in 2007 and transferred to proven and probable
reserves $23 million during 2011, $197 million during 2010 and
$542 million prior to 2010. Cumulative impairments of VBPP total
$477 million, of which $6 million was recorded in 2011, and
none in 2010 and 2009.
FCX capitalized interest totaling $109 million in 2011, $66 million
in 2010 and $78 million in 2009. Capitalized interest primarily
related to the development projects at the Climax, Cerro Verde and
Candelaria mines, and in the Grasberg minerals district in
Indonesia in 2011; at the Climax and El Abra mines in 2010; and at
the Tenke Fungurume mine in 2009.
NOTE 5. Intangible Assets and Liabilities
e components of intangible assets and intangible liabilities
(included in other liabilities) follow:
Gross Net
Carrying Accumulated Book
December 31, 2011 Value Amortization Value
Indefinite-lived water rights $ 239 $ — $ 239
Patents and process technology 48 (14) 34
Royalty payments 37 (21) 16
Power contracts 25 (18) 7
Other intangibles 38 (9) 29
Total intangible assets $ 387 $ (62) $ 325
Intangible liabilities:
Treatment and refining terms in
sales contracts $ 52 $ (30) $ 22
Gross Net
Carrying Accumulated Book
December 31, 2010 Value Amortization Value
Indefinite-lived water rights $ 245 $ — $ 245
Patents and process technology 48 (11) 37
Royalty payments 37 (18) 19
Power contracts 25 (17) 8
Other intangibles 25 (6) 19
Total intangible assets $ 380 $ (52) $ 328
Intangible liabilities:
Treatment and refining terms in
sales contracts $ 52 $ (25) $ 27
FCX performs its annual impairment testing of indenite-lived
intangible assets in the fourth quarter of each year. No material
impairments were recorded during the three-year period ended
December31,2011.
Amortization of intangible assets recognized in production and
delivery costs was $10 million in 2011 and 2010, and $16 million in
2009. Amortization of intangible liabilities recognized in revenues
was $5 million in 2011, $4 million in 2010 and $6 million in 2009.
e estimated net amortization expense for the next ve years is
considered to be immaterial.
NOTE 6. Long-Term Receivables and Other Assets
e components of long-term receivables follow:
December 31, 2011 2010
Income taxes $ 295 $ —
Loan to a DRC public electric utility 138 110
Disputed tax assessments (refer to Note 13) 109 —
Loan to La Générale des Carrières et des Mines
(related party) 30 —
Other 103 90
Total long-term receivables $ 675 $ 200
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS