Freeport-McMoRan 2009 Annual Report Download

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FREEPORT-McMoRan COPPER & GOLD INC. Annual Report 2009PROVEN PERFORMANCE SHINING FUTURE
FREEPORT-McMoRan COPPER & GOLD INC. Annual Report 2009
PROVEN PERFORMANCE
SHINING FUTURE
FREEPORT-McMoRan COPPER & GOLD INC. Annual Report 2009
PROVEN PERFORMANCE
SHINING FUTURE

Table of contents

  • Page 1
    PROVEN PROVEN PERFORMANCE PERFORMANCE SHINING SHINING FUTURE FUTURE FREEPORT-McMoRan FREEPORT-McMoRanCOPPER COPPER& &GOLD GOLDINC. INC.Annual AnnualReport Report2009 2009

  • Page 2
    FREEPORT-McMoRan COPPER & GOLD INC. Freeport-McMoRan Copper & Gold Inc. (FCX) is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. ...

  • Page 3
    ... for the long-term future of our business and the values of our assets. Table of Contents 2 Major Mine Operations & Development Projects 3 Letter to Shareholders 6 Operational Overview 12 Board of Directors and Management 13 Financial & Operating Information 104 Performance Graph 105 Stockholder...

  • Page 4
    MAJOR MINE OPERATIONS & DEVELOPMENT PROJECTS 3 Locations Copper (Cu) Gold (Au) Molybdenum (Mo) Cobalt (Co) 1 Morenci, Arizona Sierrita, Arizona Bagdad, Arizona Safford, Arizona Miami, Arizona Henderson, Colorado 3 4 5 6 Tyrone, New Mexico Cerro Verde, Peru El Abra, Chile Candelaria / Ojos del ...

  • Page 5
    ... Site Production & Delivery Costs $ per lb. of copper 1.75 1.25 0.75 0.25 2008 2009 Consolidated Unit Net Cash Costs+ $ per lb. of copper 1.25 1.00 0.75 0.50 0.25 2008 2009 Net of by-product credits and excluding Africa mining 3 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 6
    ... the environmental impacts of our operations. The safety of our workforce is our highest priority. Our programs are designed to achieve a safe environment for all our workers. Our comprehensive Working Toward Sustainable Development report, 4 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 7
    ... in our annual report and have made possible the "Shining Future" for our Company and our shareholders. Copper cathode production at Morenci, Arizona James R. Moffett Chairman of the Board Richard C. Adkerson President and Chief Executive Officer March 19, 2010 At current copper prices above...

  • Page 8
    ... 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...

  • Page 9
    ... Mine, Arizona (above) Cerro Verde Concentrating Facilities, Peru (left) North America Unit Net Cash Costs $ per lb. of copper 1.50 1.25 1.00 0.75 0.50 0.25 2008 2009 South America Unit Net Cash Costs $ per lb. of copper 1.25 1.00 0.75 0.50 0.25 2008 2009 FREEPORT-McMoRan COPPER & GOLD...

  • Page 10
    ... Block Cave and the Big Gossan underground mines, and future development of the Deep Mill Level Zone underground mine. Indonesia Unit Net Cash Costs $ per lb. of copper 1.00 0.75 0.50 0.25 -0.25 -0.50 2008 2009 Grasberg Mine, Indonesia 8 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 11
    ... to the Grasberg open pit. These projects include continued development of the Common Infrastructure project, the Grasberg Block Cave and the Big Gossan underground mines, and future development of the Deep Mill Level Zone underground mine. FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 9

  • Page 12
    The Tenke Fungurume mining operations in the Democratic Republic of Congo achieved targeted copper production rates in September 2009. The Tenke Fungurume minerals district in the highly prospective African copper belt offers exciting exploration potential. Copper Reserve Breakdown 33% Indonesia ...

  • Page 13
    ... Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, version 3.0 (G3). FCX's 2009 Working Toward Sustainable Development report will be available on FCX's web site at www.fcx.com upon completion of third-party assurance. FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 11

  • Page 14
    BOARD OF DIRECTORS AND MANAGEMENT James R. Moffett Chairman of the Board Freeport-McMoRan Copper & Gold Inc. Richard C. Adkerson President and Chief Executive Officer Freeport-McMoRan Copper & Gold Inc. Robert J. Allison, Jr. (2, 3, 4) Director and Chairman Emeritus Anadarko Petroleum Corporation ...

  • Page 15
    FINANCIAL & OPERATING INFORMATION PROVEN PERFORMANCE Table of Contents   :  LSLJ[LK-PUHUJPHSHUK 6WLYH[PUN+H[H   4  HUHNLTLU[»Z+PZJ\ZZPVU HUK(UHS`ZPZ   9  LWVY[VM0UKLWLUKLU[ 9LNPZ[LYLK7\ISPJ (JJV\U[PUN-...

  • Page 16
    ... continuing operations before income taxes and noncontrolling interests was $28 million lower and net income was $16 million ($0.07 per share) lower than if we had not adopted this guidance. Results for prior years have not been restated. 14 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 17
    ...UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z @LHYZ,UKLK+LJLTILY 2009  H  H H FCX CONSOLIDATED MINING OPERATING... :HSLZL_JS\KPUNW\YJOHZLZ  (]LYHNLYLHSPaLKWYPJLWLYWV\UK NORTH AMERICA COPPER MINES Operating Data, Net of Joint Venture Interest 4,103  1,861 ...

  • Page 18
    SELECTED FINANCIAL AND OPERATING DATA @LHYZ,UKLK+LJLTILY 2009  H  H H SOUTH AMERICA COPPER MINES (continued) 4PSSVWLYH[PVUZ  6YLTPSSLKTL...LJ[PVUWYVNYHTZHTV\U[Z^LYL WLYWV\UKMVY WLYWV\UKMVYHUK WLYWV\UKMVY J (TV\U[^HZHWWYV_PTH[...

  • Page 19
    MANAGEMENT'S DISCUSSION AND ANALYSIS OVERVIEW and OUTLOOK 0U4HUHNLTLU[»Z+PZJ\ZZPVUHUK(UHS...LQ,QGRQHVLDZKLFKDFFRXQWHGIRU DSSUR[LPDWHO\SHUFHQWDVFDWKRGHVDQGDSSUR[LPDWHO\SHUFHQW   2009  (J[\HS 7YVQLJ[LK SURGXFHJROGDVDE\SURGXFWDWRXUFRSSHUPLQHVSULPDULO\DW...

  • Page 20
    MANAGEMENT'S DISCUSSION...2010 1,600 $4.00 $3.50 000s of metric tons 1,200 $3.00 Dollars per pound $2.50 800 $2.00 $1.50 400 $1.00 $0.50 2000 2002 LME Copper Prices LME & COMEX Exchange Stocks...HDUORZRISHUSRXQGLQ COPPER, GOLD AND MOLYBDENUM MARKETS 7KHJUDSKVEHORZ LOOXVWUDWHWKHPRYHPHQWV...

  • Page 21
    ...DQXDU\ London Gold Prices CRITICAL ACCOUNTING ESTIMATES 5HVXOWVRI2SHUDWLRQVLVEDVHGRQRXUFRQVROLGDWHGÀQDQFLDO 0DQDJHPHQWҋV'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG PLQHVDQGFRSSHUVPHOWHUV7KH/0(VSRWFRSSHUSULFHFORVHGDW Through January 29, 2010 $1,250 $1,150...

  • Page 22
    MANAGEMENT'S DISCUSSION AND ANALYSIS PRO\EGHQXPUHVHUYHVGXULQJDQG         Copper IPSSPVU WV\UKZ FRQVROLGDWHGUHFRYHUDEOH...LWLVGHWHUPLQHGWKDWDVVLJQHGDVVHWOLYHVGRQRWUHÁHFWWKH Gold TPSSPVU V\UJLZ Molybdenum IPSSPVU WV\UKZ SURVSHFWLYHGHSUHFLDWLRQUDWHV...

  • Page 23
    MANAGEMENT... SUHVHQWYDOXHRIFDVKÁRZHVWLPDWHVDIWHUFRQVLGHULQJLQÁDWLRQDQG Reclamation and Closure Costs. 5HFODPDWLRQLVDQRQJRLQJDFWLYLW\ DQQXDOO\DQGDW...DQGOHDFKVWRFNSLOHVWKDWDUHH[SHFWHGWREH Recoverable Copper. :HUHFRUGDVLQYHQWRU\DSSOLFDEOHFRVWVIRU FRVWHVWLPDWHV...

  • Page 24
    MANAGEMENT'S DISCUSSION AND ANALYSIS   2009   /LDELOLW\$FW &(5&/$ RUDQDORJRXVVWDWHSURJUDPVDQGIRU... TPSSPVUMVY;`YVUL+\YPUN ;`YVULÄSLKHUHWWLHSYLNHYKPUN[OLWVPU[VM NYV\UK^H[LY^P[OKYH^HS-PUHSPaLKJSVZ\YLWSHUYLX\PYLTLU[ZPUJS\KPUN[OVZLYLZ\S[PUN MYVT...

  • Page 25
    MANAGEMENT... Mining Operating Data Copper... YLJV]LYHISL   7YVK\J[PVUTPSSPVUZVMWV\UKZ   :HSLZL_JS\KPUNW\YJOHZLZTPSSPVUZVMWV\UKZ   (]LYHNLYLHSPaLKWYPJLWLYWV\UK   :P[LWYVK\J[PVUHUKKLSP]LY`JVZ[ZWLYWV\UK Q  

  • Page 26
    ... applicable to sales reported in our JVUZVSPKH[LKÄUHUJPHS Z[H[LTLU[Z YLMLY [V ¸6WLYH[PVUZ ¶

  • Page 27
    MANAGEMENT'S DISCUSSION AND ANALYSIS SULPDULO\RQTXRWHG/0(SULFHV UHIHUWR´'LVFORVXUHV$ERXW0DUNHW 5LVNV² &RPPRGLW\3ULFH5LVNµIRUIXUWKHUGLVFXVVLRQ $GMXVWPHQWVWR DQHWLQFUHDVHWRFRQVROLGDWHG...

  • Page 28
    MANAGEMENT'S DISCUSSION AND ANALYSIS Depreciation, Depletion and Amortization  *VTWHYLK^P[O &RQVROLGDWHGGHSUHFLDWLRQ... 'HFHPEHUZKLFKUHVXOWHGLQWKHUHFRJQLWLRQRIDVVHW Selling, General and Administrative Expenses  *VTWHYLK^P[O PLOOLRQLQFRPSDUHGZLWK...

  • Page 29
    ... or $0.02 per share) related to premiums SDLG DQG WKH DFFHOHUDWHG UHFRJQLWLRQ RI GHIHUUHG ÀQDQFLQJ FRVWV associated with the May 2007 redemption of our 10 1/8% Senior Notes. Refer to Note 10 for further discussion of these transactions. FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 27

  • Page 30
    MANAGEMENT'S DISCUSSION AND ANALYSIS Year Ended December 31, 2009     0UJVTL 3VZZ H  ,MMLJ[P]L ;H_9H[L 0UJVTL ;H_ ...7KHGLIIHUHQFHEHWZHHQRXUFRQVROLGDWHG OPERATIONS -VYJVTWHYH[P]LW\YWVZLZJLY[HPU...\UKLY -*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z North America Copper Mines ...

  • Page 31
    MANAGEMENT...IXWXUHRSHUDWLQJUHVXOWV   2009  FRPELQHGGDWDLVQRW...IRUWKHVDPHSXUSRVHDQGIRU Operating Data, Net of Joint Venture Interest Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV 1,147...]LILLU\UKLY-*?THUHNLTLU[VYVMM\[\YLVWLYH[PUNYLZ\S[Z I (TV\U[^HZ WLYWV\UKVM...

  • Page 32
    MANAGEMENT'S DISCUSSION AND ANALYSIS    2009 )`7YVK\J[ 4L[OVK  *V7YVK\J[4L[OVK *VWWLY 4VS`...WYPTHYPS`MVYOLKNPUN 0KSLMHJPSP[`HUKV[OLYUVUPU]LU[VYPHISLJVZ[Z  .YVZZWYVÄ[WLYWV\UK *VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ 4VS`IKLU\TZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ...

  • Page 33
    MANAGEMENT'S DISCUSSION AND ANALYSIS    )`7YVK\J[ 4L[OVK  *V....YVZZWYVÄ[WLYWV\UK *VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ 4VS`IKLU\TZHSLZ...SURWHFWLRQSURJUDP South America Copper Mines :HKDYHIRXURSHUDWLQJ...WKH\HDUVHQGHG'HFHPEHU Operating Data. )ROORZLQJLV...

  • Page 34
    MANAGEMENT'S DISCUSSION AND ANALYSIS   2009  H ELOOLRQSRXQGVRIFRSSHUDQGWKRXVDQGRXQFHVRIJROGLQ EHFDXVHRIWKHLPSDFWRIDQWLFLSDWHGORZHURUHJUDGHVDW(O$EUD Copper...   3URGXFWLRQ E SX/EW operations  /HDFKRUHSODFHGLQVWRFNSLOHV ...\UKLY-*?...

  • Page 35
    MANAGEMENT'S DISCUSSION AND ANALYSIS...[VYPHISLJVZ[Z   .YVZZWYVÄ[WLYWV\UK  *VWWLYZHSLZTPSSPVUZVMYLJV]LYHISLWV\UKZ H 9LÃ...LJ[Z[OLWLYPVKMYVT4HYJO[OYV...FHUWDLQXQLQFRUSRUDWHGMRLQWYHQWXUHVZLWK Indonesia Mining PLQHUDOVGLVWULFW:HRZQSHUFHQWRI37)UHHSRUW...

  • Page 36
    MANAGEMENT...RIFRSSHULVD   2009   Consolidated Operating Data, Net of Joint Venture Interest Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV ...         Gross Profit per Pound of Copper/per Ounce of Gold 7KHIROORZLQJWDEOHVVXPPDUL]HWKHXQLWQHWFDVK FUHGLWV FRVWV...

  • Page 37
    MANAGEMENT'S DISCUSSION AND ANALYSIS  2009 )`7YVK\J[ 4L[OVK  *V7YVK\J[4L[OVK .VSK  *VWWLY )`...WYPJPUNVU  WYPVY`LHYVWLUZHSLZ 7;:TLS[PUNPU[LYJVTWHU`WYVÄ[  .YVZZWYVÄ[WLYWV\UKV\UJL *VWWLYZHSLZ TPSSPVUZVMYLJV]LYHISLWV\UKZ .VSKZHSLZ [OV\ZHUKZVMYLJV]LYHISLV\UJLZ...

  • Page 38
    MANAGEMENT...ZKLFKYDU\ZLWKWKHYROXPH Africa Mining FREDOWPLQLQJFRQFHVVLRQVLQWKH.DWDQJD...UHODWHGFRQYHUVLRQIDFLOLWLHVWKDWDWWLPHVURDVWDQGRU Copper PLOOLRQVRIUHFRYHUDEOHSRXQGV  3URGXFWLRQ  ...WKHSURMHFWDSSUR[LPDWH PLOOLRQ Operating Data. )ROORZLQJLVVXPPDU\RSHUDWLQJ...

  • Page 39
    ...2009  H Molybdenum PLOOLRQVRIUHFRYHUDEOHSRXQGV    27  3URGXFWLRQ E  58  6DOHVH[FOXGLQJSXUFKDVHV F  $ 12.36  $YHUDJHUHDOL]HGSULFHSHUSRXQG  Henderson molybdenum mine...\KLZJOHYNLZVM WLYWV\UKPUHZZVJPH[LK^P[O3*4PU]LU... Atlantic Copper Smelting &...

  • Page 40
    MANAGEMENT...WR Morenci Mill ...Twin Buttes...Copper Mines ...CURRENT DEVELOPMENT PROJECTS ...Mines UHVWDUWOLPLWHGPLQLQJDFWLYLWLHVDWWKH0LDPLFRSSHUPLQHLQ$UL]RQD ZKLFKZLOOLPSURYHHIÀFLHQFLHVRIRQJRLQJUHFODPDWLRQSURMHFWV DVVRFLDWHGZLWKKLVWRULFDOPLQLQJRSHUDWLRQVDWWKHVLWH'XULQJWKH Miami...

  • Page 41
    MANAGEMENT'S DISCUSSION AND ANALYSIS Indonesia :HKDYHVHYHUDOSURMHFWVLQSURJUHVVLQWKH*UDVEHUJPLQHUDOV GLVWULFWLQFOXGLQJGHYHORSPHQWRIWKHODUJHVFDOHKLJKJUDGH XQGHUJURXQGRUHERGLHV...

  • Page 42
    MANAGEMENT'S DISCUSSION AND ANALYSIS Africa Mining ELOOLRQLQLWLDOSURMHFWDUH FRPSOHWH &RSSHUSURGXFWLRQFRPPHQFHG SRVLWLRQGXULQJDOORZLQJXVWRPDQDJHYRODWLOHFRQGLWLRQV Tenke Fungurume...FDVKHTXLYDOHQWV  2009  SURVSHFWLYHGLVWULFW...WR Operating Activities '...

  • Page 43
    ... Perpetual Preferred Stock, which converted into 17.9 million shares of FCX common stock; the remaining 1,025 shares were redeemed for approximately $1 million in cash. Refer to Note 12 for further discussion of these transactions. FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 41

  • Page 44
    ...October 2009, the Board reinstated an annual cash dividend on our common stock of $0.60 per share. On December 30, 2009, FCX declared a quarterly dividend of $0.15 per share, which was paid on February 1, 2010, to common shareholders of record at the close of business on January 15, 2010. The Board...

  • Page 45
    MANAGEMENT'S DISCUSSION AND ANALYSIS   ;V[...K 0U(\N\Z[([SHU[PJ*VWWLYJVTWSPLK^P[O:WHUPZOSLNPZSH[PVUI`HNYLLPUN[VM\UKTPSSPVUL\YVZHUU\HSS`MVY`LHYZ[VHUHWWYV]LKPUZ...VSHQGLQJFDUULHGRYHUIURP ENVIRONMENTAL AND RECLAMATION MATTERS Environmental 7KHFRVWRIFRPSO\...

  • Page 46
    MANAGEMENT'S DISCUSSION AND ANALYSIS ZLWKLQFUHDVHGVSHQGLQJIRUODUJHSURMHFWVLQ)RU...QHWLQFRPHDWWULEXWDEOHWR)&;FRPPRQ VWRFNKROGHUVRUSHUVKDUH LQ DISCLOSURES ABOUT MARKET RISKS Commodity Price Risk 2XUFRQVROLGDWHGUHYHQXHVLQFOXGHWKHVDOHRIFRSSHUFRQFHQWUDWHV...

  • Page 47
    MANAGEMENT'S DISCUSSION AND ANALYSIS     2009...South America  *OPSLHUWLZV  7LY\]PHUU\L]VZVS Atlantic Copper  ,\YV       9,420 ...  Interest Rate Risk $W'HFHPEHU...           NEW ACCOUNTING STANDARDS WRKDYHDVLJQLÀFDQWLPSDFW...

  • Page 48
    MANAGEMENT'S DISCUSSION AND ANALYSIS North America Copper Mines Product Revenues and Production Costs  Year Ended December 31, 2009 0UTPSSPVUZ )`7YVK\J[ 4L[OVK  *VWWLY *V7YVK\J[4L[OVK 4VS`IKLU\TH 6[OLYI ;V[HS 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^ :P[LWYVK\J[PVU...

  • Page 49
    MANAGEMENT'S DISCUSSION AND ANALYSIS North America Copper Mines Product Revenues and Production Costs (continued)  @LHY,UKLK+LJLTILY 0UTPSSPVUZ )`7YVK\J[ 4L[OVK  *VWWLY *V7YVK\J[4L[OVK 4VS`IKLU\TH 6[OLYI ;V[HS 9L]LU\...

  • Page 50
    MANAGEMENT'S DISCUSSION AND ANALYSIS North America Copper Mines Product Revenues and Production Costs (continued)  4HYJO [OYV\NO...    H 9LÃ...LJ[Z[OLYLZ\S[ZVM[OL5VY[O(TLYPJHJVWWLYTPULZ\UKLY-*?THUHNLTLU[ I 4VS`IKLU\TI`WYVK\J[JYLKP[ZHUKYL]LU\LZYLÃ...LJ[]VS\TLZ...

  • Page 51
    MANAGEMENT'S DISCUSSION AND ANALYSIS South America Copper Mines Product Revenues and Production Costs  Year Ended December 31, 2009 0UTPSSPVUZ  )`7YVK\J[ 4L[OVK  *V7YVK\J[4L[OVK *VWWLY 6[OLYH ;V[HS 9L]LU\LZL_JS\KPUNHKQ\Z[TLU[ZZOV^UILSV^ :P[LWYVK\J[PVUHUKKLSP]LY`...

  • Page 52
    MANAGEMENT'S DISCUSSION AND ANALYSIS South America Copper Mines Product Revenues and Production Costs (continued)  @LHY,UKLK+LJLTILY 0UTPSSPVUZ  )`7YVK\J[ 4L[OVK  *V7YVK\J[4L[OVK *VWWLY 6[OLY H ;V[HS 9L]LU\LZL_JS\KPUN...

  • Page 53
    MANAGEMENT'S DISCUSSION AND ANALYSIS South America Copper Mines Product Revenues and Production Costs (continued)  4HYJO [OYV\NO+LJLTILY...H 9LÃ...LJ[Z[OLYLZ\S[ZVM[OL:V\[O(TLYPJHJVWWLYTPULZ\UKLY-*?THUHNLTLU[ I 0UJS\KLZNVSKZPS]LYHUKTVS`IKLU\TWYVK\J[YL]LU\LZHUKWYVK\J[...

  • Page 54
    MANAGEMENT'S DISCUSSION AND ANALYSIS Indonesia Mining Product Revenues and Production Costs  Year Ended December 31, 2009 0UTPSSPVUZ )`7YVK\J[ 4L[OVK  *VWWLY *V7YVK\J[4L[OVK .VSK :PS]LY ;V[HS 9L]LU\LZHM[LYHKQ\Z[TLU[ZZOV^UILSV^ :P[LWYVK\J[PVUHUK...

  • Page 55
    MANAGEMENT'S DISCUSSION AND ANALYSIS Indonesia Mining Product Revenues and Production Costs (continued)  @LHY,UKLK+LJLTILY 0UTPSSPVUZ )`7YVK\J[ 4L[OVK  *VWWLY *V7YVK\J[4L[OVK .VSK :PS]LY ;V[HS 9L]LU\LZ...

  • Page 56
    MANAGEMENT'S DISCUSSION AND ANALYSIS Indonesia Mining Product Revenues and Production Costs (continued)  @LHY,UKLK+LJLTILY 0UTPSSPVUZ )`7YVK\J[ 4L[OVK  *VWWLY *V7YVK\J[4L[OVK .VSK :PS]LY ;V[HS 9L]LU\LZ...

  • Page 57
    MANAGEMENT'S DISCUSSION AND ANALYSIS Henderson Molybdenum Mine Product Revenues and Production Costs @LHYZ,UKLK+LJLTILY 0UTPSSPVUZ   2009  H 9L]LU\LZ :P[LWYVK\J[PVUHUKKLSP]LY`ILMVYLUL[UVUJHZO  HUKUVUYLJ\YYPUNJVZ[ZZOV^UILSV^  5L[JHZOJVZ[Z +LWYLJPH[PVU...

  • Page 58
    MANAGEMENT'S DISCUSSION AND ANALYSIS Henderson Molybdenum Mine Product Revenues and Production Costs (continued) 9LJVUJPSPH[PVU[V(TV\U[Z9LWVY[LK    ...OPJOYLWYLZLU[Z[OLYLZ\S[ZVM[OL/LUKLYZVUTVS`IKLU\TTPUL\UKLY-*?THUHNLTLU[ I 0UJS\KLZJOHYNLZ[V[HSPUN TPSSPVUMVY3*4PU]LU...

  • Page 59
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF  FREEPORT-McMoRan COPPER & GOLD INC. :HKDYHDXGLWHGWKHDFFRPSDQ\LQJFRQVROLGDWHGEDODQFHVKHHWVRI DQGDQGWKHUHODWHGFRQVROLGDWHGVWDWHPHQWVRIRSHUDWLRQV )UHHSRUW0F0R5DQ&RSSHU *...

  • Page 60
    MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING )UHHSRUW0F0R5DQ&RSSHU *ROG,QFҋV WKH&RPSDQ\ҋV  PDQDJHPHQWLVUHVSRQVLEOHIRUHVWDEOLVKLQJDQGPDLQWDLQLQJDGHTXDWH UHSRUWLQJLVGHÀQHGLQ5XOHD I RUG I XQGHUWKH LQWHUQDO...

  • Page 61
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF FREEPORT-McMoRan COPPER & GOLD INC. :HKDYHDXGLWHG)UHHSRUW0F0R5DQ&RSSHU *ROG,QFҋVLQWHUQDO FRQWURORYHUÀQDQFLDOUHSRUWLQJDVRI'HFHPEHUEDVHGRQ E\WKH&RPPLWWHHRI...

  • Page 62
    CONSOLIDATED STATEMENTS OF OPERATIONS @LHYZ,UKLK+LJLTILY 0U4PSSPVUZ,_JLW[7LY:OHYL(TV\U[Z   2009   9L]LU\LZ *VZ[VMZHSLZ!  7YVK\J[PVUHUKKLSP]LY`  +LWYLJPH[PVUKLWSL[PVUHUKHTVY[PaH[PVU  3V^LYVMJVZ[VYTHYRL[...

  • Page 63
    ...copper mines South America copper mines Indonesia Africa Other Acquisition of Phelps Dodge, net of cash acquired Net proceeds from the sale of Phelps Dodge International Corporation Proceeds from sales of assets Decrease in global reclamation...FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 61

  • Page 64
    ...Reclamation and environmental obligations, less current portion Other liabilities Total liabilities Equity: FCX stockholders' equity: 5½% Convertible Perpetual Preferred Stock, 1 shares...,989 (8,267) (305) (3,402) 5,773 1,328 7,101 $ 23,353 62 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 65
    ... Preferred Stock Acquisition of Phelps Dodge Sale of common stock Conversions of 7% Convertible Senior Notes Exercised and issued stock-based awards Stock-based compensation Tax benefit for stock-based awards Tender of shares for stock-based awards Cumulative effect adjustment to initially apply new...

  • Page 66
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Summary of Significant Accounting Policies )UHHSRUW0F0R5DQ&RSSHU *ROG,QF )&; LQFOXGHWKHDFFRXQWV Basis of Presentation.7KHFRQVROLGDWHGÀQDQFLDOVWDWHPHQWVRI UDWHVLQHIIHFWIRUWKHSHULRG7KHUHODWHGWUDQVODWLRQJDLQVDQGORVVHV ...

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    ...HYDOXDWLRQRIGHYHORSPHQWFRVWVXQLWFRVWVJUDGHV LQIRUPDWLRQ EHFRPHVDYDLODEOHDQGDVUHODWHGWHFKQRORJ\FKDQJHV Property, Plant, Equipment and Development Costs. 3URSHUW\ UHFRYHULHVDQGRWKHUPDWHULDOIDFWRUV,QIHUUHGPLQHUDOUHVRXUFHVDUH DQGPLQHUDOFRQWHQWVFDQEHHVWLPDWHG...

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    ...  Intangible Assets and Liabilities. )&;UHFRUGHGLQWDQJLEOHDVVHWV GHYHORSWKHUHVHUYHVDQGWKHWLPLQJRISURGXFLQJWKHUHVHUYHVDQG Deferred Mining Costs. 6WULSSLQJFRVWV i.e., WKHFRVWVRIUHPRYLQJ UHSRUWLQJXQLW EHORZLWVFDUU\LQJDPRXQW)&;XVHGGLVFRXQWHGFDVK ZDVOHVVWKDQ...

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    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UHODWLQJWRGHWHUPLQLQJWKHH[WHQWDQGW\SHRIUHPHGLDODFWLRQVDQG WKHDOORFDWLRQRIFRVWVDPRQJ353V DUHLQFOXGHGDVSDUWRIWKH HVWLPDWHGREOLJDWLRQ(QYLURQPHQWDOREOLJDWLRQVDVVXPHGLQWKH H[SRVXUHV(YHU\GHULYDWLYHLQVWUXPHQW LQFOXGLQJFHUWDLQ...

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    ... shares were excluded because they were anti-dilutive. Potential additional shares of common stock of approximately 2 million were anti-dilutive. Potential additional shares of common stock of approximately 1 million were anti-dilutive. 68 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 71
    ...DYHUDJH H[HUFLVHSULFHRILQDQGQRQHLQ New Accounting Standards.Noncontrolling Interests in LVVXHG7KLVJXLGDQFHVHWVIRUWK...WR UHWURVSHFWLYHO\ L WKHUHFODVVLÀFDWLRQRIQRQFRQWUROOLQJLQWHUHVWVWR 2009  FRQVROLGDWHGQHWLQFRPHWRLQFOXGHQHWLQFRPHDWWULEXWDEOH...

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    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 'HFHPEHUDYHUDJHGSHUSRXQGLQWKHIRXUWKTXDUWHURI $GGLWLRQDOO\ZKLOHPRO\EGHQXPPDUNHWVKDGEHHQVWURQJLQUHFHQW DQGFORVHGDWSHUSRXQGRQ'HFHPEHU FRSSHUSULFHVGHFOLQHGWRDIRXU\HDUORZRISHUSRXQGLQ...

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    ...$GGLWLRQVDQGDGMXVWPHQWV   3D\PHQWV  -DQXDU\SURJUDP   $GGLWLRQV   3D\PHQWV Balance at December 31, 2009  ³       (4) (29)  13 (12) $ 1  ³        16D (21) 4 (4) $ -  ³       12D (50) 17 (16) $ 1 )&;WRWDOHGPLOOLRQDW'HFHPEHU...

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    ...FRQWLQXHVWRSDUWLFLSDWH LQH[SORUDWLRQ NOTE 4. Inventories, and Mill and Leach Stockpiles 7KHFRPSRQHQWVRILQYHQWRULHVIROORZ +LJLTILY    2009  Sumitomo. )&;RZQVDQSHUFHQWXQGLYLGHGLQWHUHVWLQ0RUHQFL 0LQLQJ&R/WG DQG6XPLWRPR&RUSRUDWLRQ(DFKSDUWQHUWDNHVLQ NLQG...

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    ...DUHVXOWRIWKHGHFOLQHVLQ NOTE 5. Property, Plant, Equipment and Development Costs, Net 7KHFRPSRQHQWVRIQHWSURSHUW\SODQWHTXLSPHQW...DQGGHYHORSPHQW FRVWVDORQJZLWKLPSDLUPHQWFKDUJHVIROORZ      2009...

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    ...[PaH[PVU Intangible Assets and Liabilities7KHFRPSRQHQWVRILQWDQJLEOH NOTE 7. Other Assets 7KHFRPSRQHQWVRIRWKHUDVVHWVIROORZ +LJLTILY    2009  5L[ )VVR =HS\L ,QGHÀQLWHOLYHGZDWHUULJKWV 3DWHQWVDQGSURFHVVWHFKQRORJ\ 5R\DOW\SD\PHQWV 3RZHUFRQWUDFWV 2WKHULQWDQJLEOHV...

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    ...also secured with a pledge of 50.1 percent of the outstanding stock of PT Freeport Indonesia, over 90 percent of the assets of PT Freeport Indonesia and, with respect to borrowings by PT Freeport Indonesia, a pledge of the Contract of Work. FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report 75

  • Page 78
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS VHPLDQQXDOO\RQ0DUFKDQG6HSWHPEHU7KHVH QRWHVDUH 7KH 186HQLRU1RWHVGXH0DUFKEHDULQWHUHVWSD\DEOH UHGHHPDEOHLQZKROHRULQSDUWDWWKHRSWLRQRI)&;DWDPDNHZKROH UHGHPSWLRQSULFH,Q0DUFKLQFRQQHFWLRQZLWKWKH...

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    ...GHQRPLQDWHGLQ,QGRQHVLDQUXSLDKFRYHULQJ PT Freeport Indonesia Plan.37)UHHSRUW,QGRQHVLDKDVDGH...SDLGWRFHUWDLQUHWLUHG Atlantic Copper Plan.$WODQWLF&RSSHUKDVDFRQWUDFWXDOREOLJDWLRQ...DFFXPXODWHG Plan Information. )&;XVHVDPHDVXUHPHQWGDWHRI'HFHPEHU  2009  6XSSOHPHQWDO...

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    ...HQGHG'HFHPEHUDQGIROORZ   Fair Value at December 31, 2009  ;V[HS 3L]LS 3L]LS 3L]LS EHQHÀWFRVW...DQGWKHFRPSRQHQWVRIQHWSHULRGLFEHQHÀWFRVWIRU   7;-YLLWVY[0UKVULZPH 2009   :HLJKWHGDYHUDJHDVVXPSWLRQV  'LVFRXQWUDWH  ([SHFWHGUHWXUQ...

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    ... Postretirement and Other Benefits. )&;DOVRSURYLGHV SRVWUHWLUHPHQWPHGLFDODQGOLIHLQVXUDQFHEHQHÀWVIRUFHUWDLQ86 Fair Value at December 31, 2009 3L]LS 3L]LS HPSOR\HHVDQGLQVRPHFDVHVHPSOR\HHVRIFHUWDLQLQWHUQDWLRQDO VXEVLGLDULHV7KHVHSRVWUHWLUHPHQWEHQHÀWVYDU\DPRQJ...

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    ...WKLV 3ULRUWR-DQXDU\)0&KDGDGHÀQHGFRQWULEXWLRQSODQIRU 7KHDVVXPHGPHGLFDOFDUHWUHQGUDWHVDW'HFHPEHUDQG IROORZ    2009  FRQWULEXWHVHQKDQFHGDPRXQWVIRULWVHOLJLEOHHPSOR\HHVKLUHGRQRU HDUQLQJVUHJDUGOHVVRI\HDUVRIVHUYLFH+RZHYHUPRVW...

  • Page 84
    ... to increase the number of shares. The 2006 Plan provides for the issuance of stock options, SARs, restricted stock, restricted stock units and other stock-based awards for up to 37 million common shares. As of December 31, 2009, shares 82 FREEPORT-McMoRan COPPER & GOLD INC. 2009 Annual Report

  • Page 85
    ...FRVWVGXULQJWKH\HDUVHQGHG 'HFHPEHUDQG  Stock-Based Compensation Cost. &RPSHQVDWLRQFRVWFKDUJHG HQGHG'HFHPEHU...VWRFNRSWLRQDZDUGVGXULQJWKH \HDUVHQGHG'HFHPEHUDQGIROORZ  2009 WKHH[SHFWHGWHUPRIWKHRSWLRQDWWKHJUDQWGDWH7KHZHLJKWHG...

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    ...IDLUYDOXHRIUHVWULFWHGVWRFNXQLWVJUDQWHGGXULQJ H

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    ...)&;SDLGIHGHUDOVWDWHORFDODQGIRUHLJQ LQFRPHWD[HVWRWDOLQJ 7KHFRPSRQHQWVRIGHIHUUHGWD[HVIROORZ +LJLTILY    2009  )&;UHFHLYHGUHIXQGVRIIHGHUDOVWDWHORFDODQGIRUHLJQLQFRPHWD[HV )&;Ò‹VLQFRPHWD[UHFHLYDEOHGHFUHDVHGE\PLOOLRQSULPDULO\ DVDUHVXOWRI...

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    ...  &XUUHQW\HDUWD[SRVLWLRQV  /DSVHRIVWDWXWHRIOLPLWDWLRQV  ,QWHUHVWDQGSHQDOWLHV Balance at December 31, 2009 (TV\U[ZUV[HSSVJH[LK       ³        ³   25  12  -  - (13) (9) - $ 253                  * * 15 * * * (4) $34...

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    ...3LQDO&UHHNVLWHWKH1HZWRZQ SULQFLSDOO\ORFDWHGLQ$UL]RQD.DQVDVDQG2NODKRPDDQGXUDQLXP HQGHG'HFHPEHUDQGIROORZV   2009   REOLJDWLRQVIRUWKHVHVLWHVWRWDOHGELOOLRQDW'HFHPEHU %DODQFHDWEHJLQQLQJRI\HDU /LDELOLWLHVDVVXPHGLQWKH...

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    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS RIWKHFRVWV,Q)HEUXDU\)&;VHWWOHGWKRVHGLVDJUHHPHQWVDQG WKHDVVRFLDWHGOLWLJDWLRQ UHIHUWR1RWHIRUIXUWKHUGLVFXVVLRQ 7KH VHWWOHPHQWGLGQRWUHVXOWLQDFKDQJHWRWKHREOLJDWLRQZKLFKZDV VDPSOLQJUHSUHVHQWLQJDSSUR[LPDWHO\...

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    ...UHPHGLDWLRQDQG(3$DQGORFDO Uranium Mining Sites. 'XULQJDSHULRGEHWZHHQDQG...DQGFORVXUHFRVWHVWLPDWHV$VRI 2009   %DODQFHDWEHJLQQLQJ...'HSDUWPHQW 10(' KDVUHTXLUHGHDFKRIWKHVH New Mexico Environmental and Reclamation Programs. )&;Ò‹V 0H[LFR:DWHU4XDOLW\$FW...

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    ...,QGRQHVLDÒ‹V 37)UHHSRUW,QGRQHVLDÒ‹VRSHUDWLRQVZLOOEHGHWHUPLQHGEDVHGRQ PT Freeport Indonesia Reclamation and Closure Programs. 7KH WKH1HZ0H[LFR0LQLQJ$FW WKH...WRUHJXODWRU\RYHUVLJKWDQGFRPSOLDQFHLQ Arizona Environmental and Reclamation Programs. )&;Ò‹V$UL]RQD 'HFHPEHU...

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    ...WKDW Letters of Credit and Surety Bonds. 6WDQGE\OHWWHUVRIFUHGLW NOTE 15. Commitments and Guarantees Operating Leases. )&;OHDVHVYDULRXV...XQGHUWKH&RQWUDFWRI:RUNEHWZHHQ37 )UHHSRUW,QGRQHVLDDQGWKH Mining Contracts. Indonesia. )&;LVHQWLWOHGWRPLQHLQ,QGRQHVLD DSSUR[LPDWHO\\...

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    ...RSHUDWH WKH'5&JRYHUQPHQWWRUHVROYHWKHVHPDWWHUVEXWFDQQRWSUHGLFWWKH KDVQRWDIIHFWHG)&;ҋVGHYHORSPHQWVFKHGXOHDQG)&;LVFRQWLQXLQJ Community Development Programs. )&;KDVDGRSWHGSROLFLHV VSHFLÀHGDQQXDODPRXQWVRIFRSSHUJROGDQGVLOYHUH[SHFWHGWREH DERYHPHWULFWRQV...

  • Page 95
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS RIGLVFXVVLRQVZLWKORFDOPD\RUVLQWKH$UHTXLSDUHJLRQ&HUUR9HUGH DQGVHZDJHWUHDWPHQWSODQWVIRUWKHEHQHÀWRIWKHUHJLRQ7KHVH IDFLOLWLHVDUHEHLQJGHVLJQHGLQDPRGXODUIDVKLRQVRWKDWLQLWLDO FRPPXQLW\VXSSRUWSURMHFWVRYHUWKH\HDUV'XULQJ...

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    ...VZDSFRQWUDFWVDQGWKHQOLTXLGDWLQJWKHFRSSHU DQGIROORZV   2009   &RPPRGLW\FRQWUDFWV  (PEHGGHGGHULYDWLYHVLQSURYLVLRQDO $ ...FXVWRPHUVUHTXHVWDÀ[HGPDUNHWSULFHLQVWHDGRIWKH&20(; Copper Futures and Swap Contracts. 6RPHRI)0&Ò‹V86FRSSHU ZLWK...

  • Page 97
    ...UDWHV)&;KDGQRRXWVWDQGLQJIRUHLJQ Interest Rate Swap Contracts. )URPWLPHWRWLPH... QRRXWVWDQGLQJLQWHUHVWUDWHVZDSFRQWUDFWVDW'HFHPEHU Credit Risk. )&;LVH[SRVHGWRFUHGLWORVVZKHQÀQDQFLDO...EHFDXVHRIFHUWDLQWHUPVLQWKHVDOHV Copper Futures and Swap Contracts. ,Q DGGLWLRQ...

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    ...DQGOLDELOLWLHVPHDVXUHGDWIDLU Fair Value at December 31, 2009 ;V[HS 3L]LS 3L]LS 3L]LS &...[WYPJLZ 86WUHDVXU\VHFXULWLHV NOTE 18. Acquisition of Phelps Dodge SURGXFHURIFRSSHUDQGPRO\EGHQXPZLWK...DVVXFKDUH Available-for-sale securities. )&;Ò‹VDYDLODEOHIRUVDOHVHFXULWLHV...

  • Page 99
    ...PTH[LKMHPY]HS\LZHZZPNULK[VUL[HZZL[Z Unaudited Pro Forma Financial Information. 7KHIROORZLQJ 3KHOSV'RGJHHIIHFWLYH-DQXDU\7KHPRVWVLJQLÀFDQW ...RQO\DQGLVQRWLQWHQGHG NOTE 19. Discontinued Operations 2Q2FWREHU)&;VROGLWVLQWHUQDWLRQDOZLUHDQGFDEOH EXVLQHVV...

  • Page 100
    ...RZQHUVKLSLQWHUHVWV North America Copper Mines. )&;KDVVL[RSHUDWLQJFRSSHU...FRSSHUFRQFHQWUDWHV $PHULFDFRSSHUGXULQJ  Morenci. 7KH0RUHQFLRSHQSLWPLQHORFDWHG...FRQYHUVLRQIDFLOLWLHVORFDWHGLQ1RUWK$PHULFDDQGLQFOXGHVDUHÀQHU\ Rod & Refining. 7KH5RG 5HÀQLQJVHJPHQWFRQVLVWV...

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    ...2009    LQWRWKHVSHFLÀHGSURGXFWV UHWXUQHGWRWKHFXVWRPHUZKRSD\V)&;IRUSURFHVVLQJLWVPDWHULDO Atlantic Copper...RIVDOHVWRXQDIÀOLDWHG FXVWRPHUVDQGWUDQVSRUWDWLRQSUHPLXPV Intersegment sales. ,QWHUVHJPHQWVDOHVEHWZHHQ)&;ҋVRSHUDWLRQV 5HYHQXHVD  8QLWHG6WDWHV ...

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    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Segments DQGDUHSUHVHQWHGLQWKHIROORZLQJWDEOHV     ...&RSSHU &RUSRUDWH 6PHOWLQJ 2WKHU  5HILQLQJ (OLPLQDWLRQV )&;7RWDO Year Ended December 31, 2009 5HYHQXHV   8QDIILOLDWHGFXVWRPHUV   $ 68 1,073 622 $ 94 2,000 1,289 ...

  • Page 103
    ...LK[VYLWVY[PUN\UP[Z NOTE 21. Supplementary Mineral Reserve Information (unaudited) RI'HFHPEHULQDFFRUGDQFHZLWK,QGXVWU\*XLGHDV...   9LJV]LYHISL7YV]LUHUK7YVIHISL 9LZLY]LZH December 31, 2009 Copper Gold Molybdenum IPSSPVUWV\UKZ TPSSPVUV\UJLZ TPSSPVUWV\UKZ UHVHUYH...

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    ...SULFHVIRUWKHSDVWWKUHH      @LHY,UK 6YL TPSSPVU TL[YPJ[VUZ  JROGSHUSRXQGIRUPRO...HUK 7YVIHISL9LZLY]LZ .VSK TPSSPVU V\UJLZ 4VS`IKLU\T   *VWWLY IPSSPVU WV\UKZ TPSSPVU WV\UKZ 2009         13,807     0.49     0.17  5(  ...

  • Page 105
    ...NOTE 22. Quarterly Financial Information (unaudited)   -PYZ[ 8\HY[LY :LJVUK 8\HY[LY ;OPYK 8\HY[LY -V\Y[O 8\HY[LY @LHY 2009 9L]LU\LZ ... L      L All references to income or losses per share are on a diluted basis, unless otherwise noted. H 0UJS\KLZJOHYNLZMVY3*4...

  • Page 106
    ...HUKJ[OL: 74H[LYPHSZ0UKL_ COMPARISON OF CUMULATIVE TOTAL RETURN* Freeport-McMoRan Copper & Gold Inc., S&P 500 Stock Index and S&P 500 Materials Index    KVSSHYZ           +LJLTILY  -YLLWVY[4J4V9HU...

  • Page 107
    ...company entitled to vote at its annual meeting, upon written request. The Investor Relations Department can be contacted as follows: Freeport-McMoRan Copper & Gold Inc. Investor Relations Department One North Central Ave. Phoenix, AZ 85004 Telephone (602) 366-8400 www.fcx.com Common Stock Dividends...

  • Page 108
    PROVEN PERFORMANCE SHINING FUTURE One OneNorth NorthCentral CentralAve. Ave. Phoenix, Phoenix,AZ AZ85004 85004 602.366.8100 602.366.8100 www.fcx.com www.fcx.com FREEPORT-McMoRan COPPER & GOLD INC. Annual Report 2009