Freeport-McMoRan 2010 Annual Report Download - page 105

FREEPORT-McMoRan COPPER & GOLD INC. 2010 Annual Report
103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
restructuring charges reflected workforce reductions (approximately
3,000 employees related to fourth-quarter 2008 revised operating
plans and approximately 1,500 employees related to January 2009
revised operating plans) and other charges that reflected at that time
an approximate 50 percent total reduction in mining and crushed-
leach rates at the Morenci mine in Arizona, an approximate
50 percent reduction in mining and stacking rates at the Safford
mine in Arizona, an approximate 50 percent reduction in the mining
rate at the Tyrone mine in New Mexico, suspension of mining and
milling activities at the Chino mine in New Mexico (with limited
residual copper production from leach operations), and an approximate
40 percent reduction in annual production (an approximate
25 percent reduction began in the fourth quarter of 2008) at the
Henderson molybdenum mine in Colorado. In addition, the revised
operating plans included decisions at that time to defer certain
capital projects, including (i) the incremental expansion projects at
the Sierrita and Bagdad mines in Arizona, the Cerro Verde mine
in Peru and the sulfide project at the El Abra mine in Chile, (ii) the
restart of the Miami mine in Arizona and (iii) the restart of the
Climax molybdenum mine in Colorado.
The following table summarizes the liabilities (included in accounts
payable and accrued liabilities) incurred in connection with the
fourth-quarter 2008 and January 2009 restructuring activities:
Employee Contract
Severance Cancellation Total
and Benefit and Other Restructuring
Costs Costs Costs
Balance at January 1, 2009 $ 33 $ 5 $ 38
Fourth-quarter 2008 program:
Additions and adjustments (4) 16
a
12
a
Payments (29) (21) (50)
January 2009 program:
Additions 13 4 17
Payments (12) (4) (16)
Balance at December 31, 2009 $ 1 $ — $ 1
a. Excludes $3 million for the write off of other current assets in connection with a lease
cancellation.
NOTE 18. Business Segments
FCX has organized its operations into five primary divisions — North
America copper mines, South America mining, Indonesia mining,
Africa mining and Molybdenum operations. Notwithstanding this
structure, FCX internally reports information on a mine-by-mine
basis. Therefore, FCX concluded that its operating segments include
individual mines. Operating segments that meet certain thresholds
are reportable segments. Further discussion of the reportable
segments included in FCX’s primary operating divisions, as well
as FCX’s other reportable segments — Rod & Refining and Atlantic
Copper Smelting & Refining — follows. Refer to Note 2 for
information on FCX’s ownership interests and Note 14 for discussion
of PT Freeport Indonesia’s and TFM’s mining contracts.
North America Copper Mines. FCX has seven operating copper mines
in North America — Morenci, Sierrita, Bagdad, Safford and Miami
in Arizona, and Tyrone and Chino in New Mexico. The North America
copper mines include open-pit mining, sulfide ore concentrating,
leaching and SX/EW operations. A majority of the copper produced at
the North America copper mines is cast into copper rod by FCX’s
Rod & Refining operations. The North America copper mines include
the Morenci copper mine as a reportable segment.
Morenci. The Morenci open-pit mine, located in southeastern
Arizona, produces copper cathodes and copper concentrates. The
Morenci mine produced 41 percent of FCX’s North America copper
during 2010.
Other Mines. Other mines include FCX’s other operating
southwestern U.S. copper 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. These operations include open-pit and
underground mining, sulfide ore concentrating, leaching and SX/EW
operations. South America mining includes the Cerro Verde copper
mine as a reportable segment.
Cerro Verde. The Cerro Verde open-pit copper mine, located near
Arequipa, Peru, produces copper cathodes and copper concentrates.
In addition to copper, the Cerro Verde mine produces molybdenum
concentrates. The Cerro Verde mine produced 49 percent of FCX’s
South America copper during 2010.
Other Mines. Other mines include FCX’s Chilean copper mines
— Candelaria, Ojos del Salado and El Abra. In addition to copper,
the Candelaria and Ojos del Salado mines produce gold and silver.
Indonesia. Indonesia mining includes PT Freeport Indonesia’s
Grasberg minerals district. PT Freeport Indonesia produces copper
concentrates, which contain significant quantities of gold and silver.
Africa. Africa mining includes the Tenke Fungurume copper
and cobalt mining concessions in the Katanga province of the DRC.
The Tenke Fungurume mine includes open-pit mining, leaching
and SX/EW operations. In addition to copper, the Tenke Fungurume
mine produces cobalt hydroxide. Copper cathode production
commenced in March 2009.
Molybdenum. The Molybdenum segment is an integrated producer
of molybdenum, with mining, sulfide ore concentrating, roasting and
processing facilities that produce high-purity, molybdenum-based
chemicals, molybdenum metal powder and metallurgical products,
which are sold to customers around the world, and includes the
wholly owned Henderson molybdenum mine in Colorado and related
conversion facilities. The Henderson underground mine produces
high-purity, chemical-grade molybdenum concentrates, which are
typically further processed into value-added molybdenum chemical