Freeport-McMoRan 2007 Annual Report Download - page 11

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9
Operational Overview
NORTH AMERICA
OPERATIONS
Freeport-McMoRan Copper & Gold Inc.
(FCX), through its successful 2007
acquisition and integration of
Phelps Dodge, is a leader in North
American copper production and
is working to optimize and expand
production at its mines in the
southwestern United States (U.S.).
The company operates six copper
mines in two states — Morenci,
Bagdad, Sierrita and Safford in Arizona
and Chino and Tyrone in New Mexico.
All of these mines are wholly owned,
except for Morenci, in which FCX holds
an 85-percent joint venture interest.
Consolidated pro forma copper sales
from North American operations
totaled 1.3 billion pounds in 2007 and
2006 at average realized prices of
$3.12 per pound in 2007 and $2.26
per pound in 2006, which is net of a
$0.14 per pound impact on 2007 and
a $0.77 impact on 2006 for hedging
losses related to copper price protection
programs. Our North American mines
have long-lived reserves and substantial
additional development potential.
FCX is the world’s largest producer
of molybdenum through its wholly
owned Henderson molybdenum mine
in Colorado and as a by-product at the
Sierrita, Bagdad, Chino and Morenci
operations in the U.S. and at the Cerro
Verde mine in Peru. The Henderson
block-cave underground mining complex
produces high-purity, chemical-grade
molybdenum concentrates, which are
further processed into value-added
molybdenum chemical products.
Consolidated pro forma molybdenum
sales from the Henderson and by-
product mines totaled 69 million pounds
in 2007 and 2006 at average realized
prices of $25.87 per pound in 2007 and
$21.87 in 2006.
DEVELOPMENT PROJECTS
The Safford mine in Arizona, where
production commenced in late 2007,
is the first new copper mine in North
America in decades. The Safford
operation will produce ore from two
open-pit mines and includes a solution
extraction/electrowinning (SX/EW)
facility. Ramp up to full production of
240 million pounds of copper per year
is expected in the first half of 2008. The
total capital investment for the Safford
project is approximately $675 million.
A concentrate-leach, direct electrowinning
facility at the Morenci mine in Arizona
was commissioned in 2007. The project
uses the company’s proprietary medium-
temperature, pressure-leaching and
direct electrowinning technology, which
will enhance cost savings by processing
concentrate on-site instead of shipping
the product to smelters for treatment.
This project also included the restart
of a mill. Mill throughput adds 115
million pounds of copper per year and is
operating near capacity of 49,000 metric
tons per day. The capital investment
for these projects at Morenci was
approximately $250 million.
We are pursuing a project to restart the
Climax molybdenum mine near Leadville,
Positioned for Success
FCX is the world’s largest producer of
molybdenum through its wholly owned
Henderson molybdenum mine in Colorado
and as a by-product at several operations
in the U.S. and Cerro Verde in Peru.
Photo: Henderson molybdenum mine in Colorado
A series of incremental expansion projects at various sites in North America will
add to an expanding copper production profile. Our standing as the world’s largest
producer of molybdenum will grow stronger as we proceed with the restart of the
Climax mine in Colorado.