Freeport-McMoRan 2013 Annual Report Download - page 97

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2013 ANNUAL REPORT | 95
FCX recorded $2.2 billion for VBPP in connection with the FMC
acquisition in 2007 and transferred $22 million to proven and
probable mineral reserves during 2013, none during 2012 and
$762 million prior to 2012. Cumulative impairments of VBPP
total $482 million, which were primarily recorded in 2008.
Capitalized interest primarily related to FCX’s mining operations’
capital projects totaled $105 million in 2013, $81 million in 2012
and $109 million in 2011.
NOTE 6. OTHER ASSETS
The components of other assets follow:
December 31, 2013 2012
Legally restricted funds
a
$ 392 $ 163
Intangible assets
b
380 334
Disputed tax assessments
c
327 177
Investments:
MMR
d
— 446
PT Smelting
e
71 89
Available-for-sale securities 44 46
Other 63 51
Long-term receivable for income tax refunds 77 317
Loan to a DRC public electric utility 152 149
Debt issue costs 107 26
Loan to Gécamines (related party) 34 32
Deferred tax assets 2 220
Other 149 139
Total other assets $ 1, 7 9 8 $ 2 ,189
a. Included $210 million (time deposit that secures a bank guarantee) associated with the
Cerro Verde royalty dispute and $158 million for AROs related to properties in New Mexico
at December 31, 2013, and $161 million for AROs related to properties in New Mexico at
December 31, 2012 (refer to Note 12 for further discussion).
b. Intangible assets were net of accumulated amortization totaling $57 million at
December 31, 2013, and $71 million at December 31, 2012.
c. Included Indonesian disputed tax assessments of $255 million at December 31, 2013, and
$148 million at December 31, 2012 (refer to Note 12 for further discussion).
d. In December 2010, FCX purchased 500,000 shares of MMR’s 5.75% Convertible Perpetual
Preferred Stock for an aggregate purchase price of $500 million, which was recorded
at cost and subsequently reduced by dividends. On June 3, 2013, FCX acquired MMR
(refer to Note 2 for discussion of the acquisition of MMR).
e. FCX’s 25 percent ownership in PT Smelting (smelter and refinery in Gresik, Indonesia) is
recorded using the equity method. Amounts were reduced by unrecognized profits on
sales from PT-FI to PT Smelting totaling $58 million at December 31, 2013, and $39 million
at December 31, 2012.
Sumitomo. FCX owns an 85 percent undivided interest in Morenci
via an unincorporated joint venture. The remaining 15 percent
is owned by Sumitomo, a jointly owned subsidiary of Sumitomo
Metal Mining Co., Ltd. and Sumitomo Corporation. Each partner
takes in kind its share of Morenci’s production. FMC purchased
76 million pounds of Morenci’s copper cathode from Sumitomo
for $253 million during 2013. FCX had a receivable from
Sumitomo of $12 million at December 31, 2013, and $49 million at
December 31, 2012.
NOTE 4. INVENTORIES, INCLUDING LONG-TERM MILL
AND LEACH STOCKPILES
The components of inventories follow:
December 31, 2013 2012
Current inventories:
Raw materials (primarily concentrates) $ 238 $ 237
Work-in-process
a
199 252
Finished goods
b
1,146 911
Total product inventories $ 1,583 $ 1, 40 0
Mill stockpiles $ 91 $ 104
Leach stockpiles 1,614
c
1,568
Total current mill and leach stockpiles $ 1,705 $ 1,672
Total materials and supplies, net
d
$ 1,730 $ 1,5 04
Long-term inventories:
Mill stockpiles $ 698 $ 615
Leach stockpiles 1,688 1,340
Total long-term mill and leach stockpiles
e
$ 2,3 86 $ 1,955
a. FCX’s mining operations also have work-in-process inventories that are included in mill and
leach stockpiles.
b. Primarily included molybdenum concentrates; copper concentrates, anodes, cathodes
and rod; and various cobalt products.
c. Amount is net of a $76 million charge associated with updated mine plans at Morenci that
resulted in a loss in recoverable copper in leach stockpiles.
d. Materials and supplies inventory was net of obsolescence reserves totaling $24 million at
December 31, 2013, and $27 million at December 31, 2012.
e. Estimated metals in stockpiles not expected to be recovered within the next 12 months.
NOTE 5. PROPERTY, PLANT, EQUIPMENT AND MINING
DEVELOPMENT COSTS, NET
The components of net property, plant, equipment and mining
development costs follow:
December 31, 2013 2012
Proven and probable mineral reserves $ 4,651 $ 4,630
VBPP 1,044 1,067
Mining development and other 4,335 3,821
Buildings and infrastructure 4,334 3,811
Machinery and equipment 10,379 9,472
Mobile equipment 3,903 3,447
Construction in progress 5,603 3,402
Property, plant, equipment and mining
development costs 34,249 29,650
Accumulated depreciation, depletion and amortization (10,207) (8,651)
Property, plant, equipment and mining
development costs, net $ 24,042 $ 20,999