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2010 ANNUAL REPORT
Connecting the World

Table of contents

  • Page 1
    Connecting the World 2010 ANNUAL REPORT

  • Page 2
    ...-scale Morenci and Safford minerals districts in North America and the Cerro Verde and El Abra operations in South America; and the Tenke Fungurume minerals district in the Democratic Republic of Congo. Additional information about FCX is available on FCX's website at www.fcx.com. Summary Financial...

  • Page 3
    ... in the production of copper, gold and molybdenum and have a long and successful history of conducting our business in a safe, highly efficient and socially responsible manner for the benefit of our stakeholders. Table of Contents 2 Major Mine Operations and Development Projects 3 Letter to...

  • Page 4
    ... Safford, Arizona Miami, Arizona Henderson, Colorado Climax, Colorado Tyrone, New Mexico Chino, New Mexico Cerro Verde, Peru El Abra, Chile Candelaria, Chile Ojos del Salado, Chile Copper (Cu) Gold (Au) Molybdenum (Mo) Cobalt (Co) Major Mine Operations and Development Projects North America...

  • Page 5
    .... We are a global leader in the production of copper, gold and molybdenum and have a long and successful history of Grasberg, Indonesia conducting our business in a safe, highly efficient and socially responsible manner for the benefit of our stakeholders. 2010 was an outstanding year for our...

  • Page 6
    ...per share (pre-split) in December 2010, and our positive share price performance and outlook for our business enabled our Board to authorize a two-for-one stock split, which took effect on February 1, 2011. James R. Moffett Chairman of the Board Richard C. Adkerson President and Chief Executive Of...

  • Page 7
    5 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report We are actively pursuing large investments in mine expansions at several of our operating sites around the world to grow our production profile, improve efficiencies, and generate increased cash ï¬,ows and profits. The Morenci mine in ...

  • Page 8
    ... per pound. Lower copper sales volumes in 2010 primarily resulted from lower ore grades at the Grasberg open-pit mine in Indonesia and lower volumes from the North America copper mines, partly offset by additional volumes from the Tenke Fungurume mine in Africa. FCX's consolidated gold sales totaled...

  • Page 9
    ... FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Consolidated Copper Reserve Breakdown 35% North America 31% South America 27% Indonesia 7% Africa FCX's consolidated molybdenum sales totaled 67 million pounds at an average realized price of $16.47 per pound in 2010, compared with 2009 sales...

  • Page 10
    ...the Henderson underground mine (large photo) and the Climax mine (below) in Colorado, where we plan to advance construction and conduct mine preparation activities during 2011. produces both copper and molybdenum. It is one of our seven open-pit copper mines in North America. We produce a number of...

  • Page 11
    ... America in the production of copper and molybdenum. FCX operates seven open-pit copper mines in the United States (Morenci, Sierrita, Bagdad, Safford and Miami in Arizona, and Tyrone and Chino in New Mexico). FCX conducts molybdenum mining operations at the Henderson underground mine in Colorado...

  • Page 12
    10 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Operational Overview South America FCX operates four copper mines in South America - Cerro Verde in Peru and Candelaria, Ojos del Salado and El Abra in Chile. Cerro Verde also produces molybdenum concentrates. FCX is completing construction ...

  • Page 13
    ... Abra operations in Chile are now processing ore from a large sulfide deposit that will extend the mine life by more than 10 years. In January 2011, the El Recent optimization of the current Cerro Verde concentrator in Peru (above) is expected to result in incremental output from the mine. Reserve...

  • Page 14
    ... the world's largest reserve of both copper and gold. As mining continues in the Grasberg open pit (above), PT Freeport Indonesia is pursuing several major capital projects to continue development of the nearby large-scale, high-grade underground ore bodies (large photo). Copper is essential to the...

  • Page 15
    ... COPPER & GOLD INC. 2010 Annual Report Operational Overview Indonesia FCX mines the world's largest single reserve of both copper and gold through its subsidiary, PT Freeport Indonesia, in the Grasberg minerals district in Papua, Indonesia. PT Freeport Indonesia is pursuing several capital projects...

  • Page 16
    14 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Operational Overview Africa FCX operates the Tenke Fungurume copper and cobalt mine in the Katanga province of the Democratic Republic of Congo (DRC). FCX is engaged in drilling activities, exploration analyses and metallurgical testing to ...

  • Page 17
    .... Our milling (above) and processing (large photo) facilities at Tenke Fungurume performed above design capacity in 2010. Copper is core to a variety of energy-saving devices, including hybrid and electric vehicles (left), which require two to three times more copper than the average gas-engine...

  • Page 18
    ...our existing operations. (pictured: exploration drilling near the Morenci mine in Arizona). Reserves and Mineralized Material As of December 31, 2010, FCX's estimate of consolidated recoverable proven and probable reserves totaled 120.5 billion pounds of copper, 35.5 million ounces of gold and 3.39...

  • Page 19
    17 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 2010 Community Investment $189 million 54% Community Trust Funds 16% Education and Training 10% Safety, Health and Environment 8% Economic Development & Infrastructure 8% Administration 4% Resettlement and Other Sustainable Development FCX ...

  • Page 20
    18 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Board of Directors and Management BOARD OF DIRECTORS 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,...

  • Page 21
    19 FINANCIAL AND OPERATING INFORMATION TABLE OF CONTENTS 20 Selected Financial and Operating Data 23 Management's Discussion and Analysis 63 Report of Independent Registered Public Accounting Firm 64 Management's Report on Internal Control Over Financial Reporting 65 Report of Independent ...

  • Page 22
    ... to net loss attributable to FCX common stockholders or $0.63 per share) in 2008. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report f. Includes purchase accounting impacts related to the acquisition of Phelps Dodge totaling $1.0 billion ($622 million to net loss attributable to FCX common...

  • Page 23
    ... Gold (thousands of recoverable ounces) Production Sales, excluding purchases Average realized price per ounce Molybdenum (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound NORTH AMERICA COPPER MINES Operating Data, Net of Joint Venture Interest...

  • Page 24
    ... 0.23 37 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 20 20 $ 10.95 10,300 3.51 0.40 91.4 67 16.47 22,900 0.25 40 $ $ $ $ $ a. For comparative purposes, operating data for the years ended December 31, 2007 and 2006 combines our historical data with Phelps Dodge pre-acquisition data...

  • Page 25
    ... stock, per share amounts and dividends on common stock herein have been FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report retroactively adjusted to reï¬,ect the two-for-one stock split. In October 2010, the government of the DRC announced the conclusion of the review of Tenke Fungurume Mining...

  • Page 26
    ... 70 a. Represents the sum of projected copper sales volumes before rounding. b. Includes sales of molybdenum produced at our North and South America copper mines. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Consolidated sales volumes for 2011 are estimated to approximate 3.85 billion...

  • Page 27
    ... of molybdenum ranged from $11.75 per pound to $18.60 per pound, averaged $15.71 per pound and was $16.40 per pound on December 31, 2010. The Metals Week Molybdenum Dealer Oxide weekly average price was $17.58 per pound on February 11, 2011. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 25

  • Page 28
    ... in mining, geology and reserve determination. At December 31, 2010, our consolidated recoverable proven and probable reserves included 120.5 billion pounds of copper, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 35.5 million ounces of gold and 3.39 billion pounds of molybdenum, which...

  • Page 29
    ... 31 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Mill and leach stockpiles are evaluated periodically to ensure that they are stated at the lower of cost...

  • Page 30
    ... market risk premiums that are appropriate for our operations and (iv) given the magnitude of our estimated reclamation and closure costs, changes in any or all of these estimates could have a significant impact on our results of operations. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report...

  • Page 31
    ... include, but are not limited to, decreases in future metal prices, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report decreases in estimated recoverable proven and probable reserves and any event that might otherwise have a material adverse effect on mine site production levels or costs. 29

  • Page 32
    ... December 31, 2010 2009 2008 Revenues North America copper mines South America mining Indonesia mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations Total FCX revenues FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report $ 4,136 4,991...

  • Page 33
    ...) $15,040 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Consolidated revenues - prior year $15,040 Higher (lower) price realizations from mining operations: 3,779 Copper 517 Gold 273 Molybdenum Higher (lower) sales volumes from mining operations: (563) Copper (771) Gold 105 Molybdenum 195...

  • Page 34
    ... FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 2010 compared with 2009. Consolidated production and delivery costs totaled $8.4 billion in 2010, compared with $7.0 billion in 2009. Higher production and delivery costs for 2010 primarily reï¬,ect higher input costs at our mining operations...

  • Page 35
    ... FCX FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report common stockholders or $0.07 per share) associated with the redemption of our Senior Floating Rate Notes and open-market purchases of our 8.25%, 8.375% and 9.50% Senior Notes. During 2009, we recorded losses on early extinguishment of debt...

  • Page 36
    .... OPERATIONS North America Copper Mines We currently operate seven copper mines in North America - Morenci, Sierrita, Bagdad, Safford 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...

  • Page 37
    ... 0.33 Copper 0.03 0.02 Molybdenum 83.0 86.0 Copper recovery rate (percent) Production (millions of recoverable pounds): 398 364 Copper 25 25 Molybdenum FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report a. Reflects molybdenum production from certain of our North America copper mines. Sales of...

  • Page 38
    ...FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Our operating North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-products and other factors. During 2010, unit net cash costs for the North America copper mines...

  • Page 39
    ...to Atlantic Copper, an affiliated smelter. Refer to Note 18 for further discussion of our reportable segment (Cerro Verde) in the South America mining division. Operating and Development Activities. We have advanced certain project development activities, including the El Abra sulfide project and...

  • Page 40
    ... gold in 2011. 2009 compared with 2008. Copper sales volumes from our South America mining operations decreased to 1.4 billion pounds in 2009, compared with 1.5 billion in 2008, primarily reï¬,ecting lower ore grades at Candelaria and downtime for mill maintenance at Cerro Verde. Unit Net Cash Costs...

  • Page 41
    ...07 - 0.14 1.21 0.32 0.06 1.59 0.15 (0.02) $ 1.11 1,521 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Unit net cash costs (net of by-product credits) for our South America mining operations decreased to $1.12 per pound of copper in 2009, compared with $1.14 per pound in 2008, primarily re...

  • Page 42
    ... FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report continues on the Grasberg Block Cave terminal infrastructure and mine access. In 2008, we completed the feasibility study for the development of the Grasberg Block Cave underground mine, which accounts for over one-third of our reserves...

  • Page 43
    ... each producing mine. 2010 compared with 2009. At the Grasberg mine, the sequencing in mining areas with varying ore grades causes ï¬,uctuations in the timing of ore production resulting in varying quarterly and annual sales of copper and gold. PT Freeport Indonesia's share of sales decreased to...

  • Page 44
    ... in quarterly metal sales volumes, and unit net cash costs are expected to be higher in the first half of 2011 compared with the second half. 2009 By-Product Method Co-Product Method Copper Gold By-Product Method 2008 Co-Product Method Copper Gold FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual...

  • Page 45
    ... copper production at Tenke will increase from the initial rate of 250 million pounds of copper per year to approximately 290 million pounds of copper. Unit Net Cash Costs. Unit net cash costs per pound of copper FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report the initial development project...

  • Page 46
    ...per pound of copper in 2011. Each $2 per pound change in the average price of cobalt would have an FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report a. Reflects production at the Henderson molybdenum mine. b. Includes sales of molybdenum produced at certain of our North and South America mines...

  • Page 47
    ... ($0.07 per share) in 2010, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report summarizes the unit net cash costs and gross profit per pound of molybdenum at our Henderson molybdenum mine for the years ended December 31. Refer to "Product Revenues and Production Costs" for a reconciliation...

  • Page 48
    ... at the Climax molybdenum mine and completion of the initial phase of the sulfide ore project at El Abra. In addition, we are considering additional investments at several of our sites. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and...

  • Page 49
    ... December 29, 2010, the Board declared a regular quarterly dividend of $0.25 per share, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report which was paid on February 1, 2011, to common shareholders of record at the close of business on January 15, 2011. Based on outstanding common shares of 945...

  • Page 50
    ... to our debt maturities and other contractual obligations, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report ENVIRONMENTAL AND RECLAMATION MATTERS Environmental. The cost of complying with environmental laws we have other commitments, which we expect to fund with projected operating cash...

  • Page 51
    ... of reclamation and closure costs. DISCLOSURES ABOUT MARKET RISKS Commodity Price Risk. Our consolidated revenues include the sale of copper concentrates, copper cathodes, copper rod, molybdenum, gold and other metals by our North and South America mines, the sale of copper concentrates (which also...

  • Page 52
    ... of off-balance sheet arrangements. PRODUCT REVENUES AND PRODUCTION COSTS FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it...

  • Page 53
    ... 250 257 128 51 8 38 31 $ 1,036 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report a. Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita. b. Includes gold and silver product revenues and production costs. 51

  • Page 54
    ... other North America copper mines South America mining Indonesia mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated financial statements FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report $ 3,142...

  • Page 55
    ...8 35 38 $ 1,782 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita. Includes gold and silver product revenues and production costs. Includes charges totaling...

  • Page 56
    ... America mining North America copper mines Indonesia mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated financial statements a. Includes gold, silver and molybdenum product revenues and production costs...

  • Page 57
    ... America mining North America copper mines Indonesia mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated financial statements a. Includes gold, silver and molybdenum product revenues and production costs...

  • Page 58
    ... America mining North America copper mines Indonesia mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated financial statements a. Includes gold, silver and molybdenum product revenues and production costs...

  • Page 59
    ... and other costs per above Revenue adjustments, primarily for pricing on prior year open sales per above Indonesia mining North America copper mines South America mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX...

  • Page 60
    ...FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Totals presented above Treatment charges per above Royalty on metals per above Net noncash and other costs per above Revenue adjustments, primarily for pricing on prior year open sales per above Indonesia mining North America copper mines South...

  • Page 61
    ... and other costs per above Revenue adjustments, primarily for pricing on prior year open sales per above Indonesia mining North America copper mines South America mining Africa mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX...

  • Page 62
    ... costs per above Africa mining North America copper mines South America mining Indonesia mining Molybdenum Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated financial statements FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report...

  • Page 63
    ... and other costs per above Henderson mine Other molybdenum operations and eliminationsc Molybdenum North America copper mines South America mining Indonesia mining Africa mining Rod & Refining Atlantic Copper Smelting & Refining Corporate, other & eliminations As reported in FCX's consolidated...

  • Page 64
    ... prices, projected capital expenditures, projected exploration efforts and results, projected mine production and development plans, the impact of deferred intercompany profits on earnings, liquidity, other financial FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report anticipated, projected or...

  • Page 65
    ... ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF FREEPORT-MCMORAN COPPER & GOLD INC. We have audited the accompanying consolidated balance sheets of Freeport-McMoRan Copper & Gold Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations, equity...

  • Page 66
    ... of the Company's assets that could have a material effect on the financial statements. Richard C. Adkerson President and Chief Executive Officer Kathleen L. Quirk Executive Vice President, Chief Financial Officer and Treasurer 64 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report

  • Page 67
    ...of operations, equity and cash ï¬,ows for each of the three years in the period ended December 31, 2010, and our report dated February 25, 2011 expressed an unqualified opinion thereon. ERNST & YOUNG LLP Phoenix, Arizona February 25, 2011 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 65

  • Page 68
    ..., (In Millions, Except Per Share Amounts) 2010 2009 2008 Revenues Cost of sales: Production and delivery Depreciation, depletion and amortization Lower of cost or market inventory adjustments Total cost of sales Selling, general and administrative expenses Exploration and research expenses Long...

  • Page 69
    ... Accounts payable and accrued liabilities Accrued income and other taxes Net cash provided by operating activities Cash flow from investing activities: Capital expenditures: North America copper mines South America Indonesia Africa Other Investment in McMoRan Exploration Co. Proceeds from sales...

  • Page 70
    ...EQUITY Current liabilities: Accounts payable and accrued liabilities Accrued income taxes Dividends payable Current portion of reclamation and environmental obligations Rio Tinto share of joint venture cash flows Current portion of debt... 68 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report - ...

  • Page 71
    ...Number Par Value* Deficit) (Loss) of Shares At Cost Total FCX Stockholders' Noncontrolling Equity Interests Total Equity (In Millions) Balance at January 1, 2008 Conversions of 5½% Convertible Perpetual Preferred Stock Exercised and issued stock-based awards Stock-based compensation Tax benefit...

  • Page 72
    ... segments include individual mines. Operating segments that meet certain thresholds are reportable segments. Use of Estimates. The preparation of FCX's financial statements in FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report conformity with accounting principles generally accepted in the...

  • Page 73
    ...and indicated amounts, that FCX believes could be brought into production with the FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report at the lower of weighted-average cost or market. Both mill and leach stockpiles generally contain lower grade ores that have been extracted from the ore body and...

  • Page 74
    ...for patents and process technology. All indefiniteFREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report expensed or capitalized, depending upon their future economic benefits. Accruals for such expenditures are recorded when it is probable that obligations have been incurred and the costs can be...

  • Page 75
    ... based on terms of the sales contract, generally upon shipment or delivery of product. Revenues from FCX's concentrate and cathode sales are recorded based on a provisional sales price or a final sales price calculated FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report in accordance with the...

  • Page 76
    ... common stock outstanding for purposes of calculating diluted net income (loss) per share for the years ended December 31 follows: 2010 2009 2008 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Net income (loss) Net income attributable to noncontrolling interests Preferred dividends and...

  • Page 77
    ...and several development projects. At December 31, 2010, FMC's operating copper mines in North America were Morenci, Sierrita, Bagdad, Safford and Miami located in Arizona, and Tyrone and Chino located in New Mexico. FCX has an 85 percent interest in Morenci (refer to "Joint Ventures - Sumitomo") and...

  • Page 78
    ...Nabire Bakti Mining on an annual basis. Rio Tinto continues to participate in exploration joint ventures in PT Freeport Indonesia's FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report PT Freeport Indonesia, Mitsubishi Materials Corporation (Mitsubishi Materials), Mitsubishi Corporation Unimetals...

  • Page 79
    ... related to development projects at the Climax and El Abra mines in 2010 and at the Tenke Fungurume mine in 2009 and 2008. $ 856 $ 470 955 $1,425 NOTE 5. Goodwill, and Intangible Assets and Liabilities December 31, 2009 North South America America Indonesia Africa Total Goodwill. FCX recorded...

  • Page 80
    ... price of $16 per share of MMR common stock. Several of FCX's directors and executive officers also serve as directors or executive officers of MMR. b. Includes $137 million in 2010 and $129 million in 2009 of legally restricted funds for AROs at the Chino, Tyrone and Cobre mines (refer to Note 13...

  • Page 81
    ... FCX purchased in an open-market transaction $33 million of the 9½% Senior Notes for $46 million FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Revolving Credit Facilities Senior Notes: 8.375% Senior Notes due 2017 8.25% Senior Notes due 2015 Senior Floating Rate Notes due 2015 9½% Senior...

  • Page 82
    ..., but generally limit FCX's ability to pay certain dividends on common and preferred stock, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report repurchase or redeem common and preferred equity, prepay subordinated debt and make certain investments. The revolving credit facilities restrictions...

  • Page 83
    ... exceed the plan assets. Information for those plans where the accumulated benefit obligations exceed the plan FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report assets follows: December 31, 2010 2009 Projected benefit obligation Accumulated benefit obligation Fair value of plan assets...

  • Page 84
    ... only relates to the FMC plans. The weighted-average assumptions used to determine net periodic FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 2010 2009 2008 benefit cost and the components of net periodic benefit cost for FCX's pension plans (FMC's plans; and FCX's SERP, director and...

  • Page 85
    ... a dealer would pay for a security. These evaluations are based on quoted prices, if available, or models that use observable inputs. Private equity funds are valued at net realizable value using information from general partners or at the closing price reported on the active market on which the...

  • Page 86
    ... employees render service. The discount rate for FCX's postretirement medical and life insurance benefit plans was determined on the same basis as FCX's pension plans. Information on the postretirement benefit plans as of December 31 follows: 2010 2009 FREEPORT-McMoRan COPPER & GOLD INC. 2010...

  • Page 87
    ... revised mine operating plans and reductions in the workforce (refer to Note 17 for further discussion). The assumed medical-care trend rates at December 31 follow: 2010 2009 earnings, depending on years of service. Effective January 1, 2009, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report...

  • Page 88
    ... December 29, 2010, FCX declared a regular quarterly dividend of $0.25 per share, which was paid on February 1, 2011, to common shareholders of record at the close of business on January 15, 2011. stock-based compensation plans, including two Phelps Dodge plans resulting from the acquisition. As of...

  • Page 89
    ...) 35.21 19,705,894 32.49 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Stock options awarded to employees (including directors) Stock options awarded to nonemployees Restricted stock units awarded to employees (including directors) Restricted stock units in lieu of cash awards Restricted...

  • Page 90
    ...vesting of restricted stock units and restricted stock awards, employees may tender FCX shares to FCX to pay the exercise price and/or the minimum required taxes. These treasury shares were not affected by the two-for-one stock split. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 2,873,998...

  • Page 91
    ... that can be carried forward indefinitely, FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Deferred tax assets: Foreign tax credits Net operating loss carryforwards Minimum tax credits Accrued expenses Employee benefit plans Inventory Other Deferred tax assets Valuation allowances Net...

  • Page 92
    ... Indonesia 2005-2008 2009-2010 Peru 2006 2002-2005, 2007-2010 Chile 2009 2010 Arizona 2003-2007 2008-2010 New Mexico - 2003-2010 NOTE 13. Contingencies Environmental. FCX incurred aggregate environmental capital expenditures and other environmental costs, including joint venture partners' share...

  • Page 93
    ... from the City of New York's sewer system over more than a century resulted in significant environmental FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Balance at beginning of year Liabilities assumed in the acquisition of Phelps Dodge Accretion expensea Additions Reductions Spending...

  • Page 94
    ... owners in and around FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Oklahoma, from 1918 to 1974 resulted in contamination of soils and groundwater in Blackwell and the surrounding area. The complaint seeks unspecified compensatory and punitive damages on behalf of the putative class...

  • Page 95
    ... the closure of discharging facilities and to abate any groundwater or surface water contamination. In March 2009, the Tyrone operation appealed the WQCC Final Order, dated February 4, 2009, regarding FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report are reï¬,ected on a third-party cost basis...

  • Page 96
    ... PT Freeport Indonesia submitted its mine closure plan to the Department of Energy and Mineral Resources for review and has addressed comments received during the course of this review process. Litigation. FCX is involved in various legal proceedings that arise in the ordinary course of business or...

  • Page 97
    ...pay value added taxes on these types of goods imported after December 30, 2009. PT Freeport Indonesia has not received an assessment and is working with the applicable government authorities to resolve this matter. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report In December 2008, Cerro Verde...

  • Page 98
    ... and oxygen ($143 million) FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report that are essential to its operations worldwide. Some of FCX's unconditional purchase obligations are settled based on the prevailing market rate for the service or commodity purchased. In some cases, the amount of the...

  • Page 99
    ... FCX's operations. FCX continues to make FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report significant expenditures on community development, education, training and cultural programs. In 1996, PT Freeport Indonesia established the Freeport Partnership Fund for Community Development (formerly...

  • Page 100
    ...nancing Cerro Verde's share of the construction costs of these facilities. During 2006, the Peruvian government announced that all mining companies operating in Peru would make annual contributions to local development funds for a five-year period (covering the years 2006 through 2010) when copper...

  • Page 101
    ...the contract. Mark-to-market price ï¬,uctuations recorded through the settlement date are reï¬,ected in revenues for sales contracts and in cost of sales as production and delivery costs for purchase contracts. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Amounts recorded in other current...

  • Page 102
    ... transactions to lock in pricing on provisionally priced sales from time to time. However, FCX does not currently intend to change its long-standing policy of not hedging future copper production. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report institutions with which FCX has entered into...

  • Page 103
    ...COPPER & GOLD INC. 2010 Annual Report Valuation Techniques Money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Fixed income securities (government and agency securities, corporate bonds...

  • Page 104
    ... the first nine months of 2008, molybdenum FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report prices declined significantly to a four-year low of $8.75 per pound in November 2008, averaged approximately $16 per pound in the fourth quarter of 2008 and closed at $9.50 per pound on December 31...

  • Page 105
    ... mines - Sierrita, Bagdad, Safford, Miami, Tyrone and Chino. In addition to copper, the Sierrita and Bagdad mines produce molybdenum concentrates. South America. South America mining includes four operating copper mines - Cerro Verde in Peru, and Candelaria, Ojos del Salado and El Abra in Chile...

  • Page 106
    ... ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report Revenues:a United States Japan Indonesia Spain Switzerland China Chile Korea India Others Total $ 5,295 3,428 2,266 1,483...

  • Page 107
    .... North America Copper Mines Morenci Other Mines Total Cerro Verde South America Other Mines Total Indonesia Grasberg Africa Tenke Atlantic Copper Corporate, Rod & Smelting Other & Molybdenum Refining & Refining Eliminations FCX Total Year Ended December 31, 2010 Revenues: Unaffiliated customers...

  • Page 108
    ... North America Copper Mines Morenci Other Mines Total Cerro Verde South America Other Mines Total Indonesia Grasberg Africa Tenke Atlantic Copper Corporate, Rod & Smelting Other & Molybdenum Refining & Refining Eliminations FCX Total Year Ended December 31, 2008 Revenues: Unaffiliated...

  • Page 109
    ...ounce and the weekly average price for molybdenum quoted by Metals Week averaged $18.76 per pound. FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report At December 31, 2010, consolidated recoverable reserves include estimated recoverable copper totaling 2.6 billion pounds in leach stockpiles and...

  • Page 110
    ...: Climax Cobre South America Developed and producing: Cerro Verde El Abra Candelaria Ojos del Salado Indonesia Developed and producing: Grasberg open pit Deep Ore Zone Big Gossan Undeveloped: Grasberg block cave Kucing Liar Deep Mill Level Zone FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report...

  • Page 111
    ... ($0.05 per share) in the fourth quarter and for the year resulting from the completion of a review of U.S. deferred income tax accounts. NOTE 21. Subsequent Events In February 2011, SUNAT issued a ruling denying Cerro Verde's protest for the year 2008 assessment of mining royalties related to the...

  • Page 112
    ... S&P 500 Materials Index *Total return assumes reinvestment of dividends. $100.00 100.00 100.00 2006 $ 113.07 115.80 118.63 2007 $ 211.27 122.16 145.35 2008 $ 51.76 76.96 78.99 2009 $ 170.03 97.33 117.37 2010 $259.48 111.99 143.42 110 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report

  • Page 113
    ... annual meeting, upon written request. The Investor Relations Department can be contacted as follows: Freeport-McMoRan Copper & Gold Inc. Investor Relations Department 333 North Central Avenue Phoenix, Arizona 85004 Telephone (602) 366-8400 www.fcx.com Common Stock Dividends In December 2010, the...

  • Page 114
    1 FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report 333 NORTH CENTRAL AVENUE PHOENIX, ARIZONA 85004 602.366.8100 WWW.FCX.COM