Freeport-McMoRan 2011 Annual Report Download - page 34

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32 | FREEPORT-McMoRan COPPER & GOLD INC.
Following is a summary of year-to-year changes in our
consolidated revenues (in millions):
2011 2010
Consolidated revenues – prior year $ 18,982 $ 15 , 040
Higher (lower) price realizations from
mining operations:
Copper 999 3,779
Gold 430 517
Molybdenum 39 273
Silver 121 44
Cobalt (24) —
(Lower) higher sales volumes from
mining operations:
Copper (711) (563)
Gold (616) (771)
Molybdenum 206 105
Silver 27 (15)
Cobalt 59 195
Unfavorable impacts of net adjustments
for prior year provisionally priced sales (4) (155)
Higher purchased copper, net of lower
purchased molybdenum 258 188
Higher Atlantic Copper revenues 493 599
Other, including intercompany eliminations 621 (254)
Consolidated revenues – current year $ 20,880 $ 18,982
Price Realizations
Our consolidated revenues can vary signicantly as a result of
uctuations in the market prices of copper, gold, molybdenum,
silver and cobalt. Realized copper prices averaged $3.86 per pound
in 2011, $3.59 per pound in 2010 and $2.60 per pound in 2009.
Realized gold prices averaged $1,583 per ounce in 2011, $1,271 per
ounce in 2010 and $993 per ounce in 2009. Realized molybdenum
prices averaged $16.98 per pound in 2011, $16.47 per pound in 2010
and $12.36 per pound in 2009.
Sales Volumes
2011 compared with 2010. Consolidated sales volumes totaled
3.7 billion pounds of copper, 1.4 million ounces of gold and 79 million
pounds of molybdenum in 2011, compared with 3.9 billion pounds
of copper, 1.9 million ounces of gold and 67 million pounds of
molybdenum in 2010. Lower consolidated copper sales volumes in
2011 primarily reect lower sales volumes in Indonesia, partly
oset by higher sales volumes in North America. Lower
consolidated gold sales volumes in 2011 primarily reect lower
Grasberg production. Sales of copper and gold in 2011 were
adversely aected by labor disruptions and the temporary
suspension of milling operations at PT Freeport Indonesia from
damage to the concentrate and fuel pipelines. e estimated
impact of the labor and pipeline disruptions totaled 235 million
pounds of copper and 275 thousand ounces of gold in 2011. Higher
consolidated molybdenum sales volumes in 2011 primarily
reected improved demand. Refer to “Operations” for further
discussion of sales volumes at our operating divisions.
2010 compared with 2009. Consolidated sales volumes
totaled 3.9 billion pounds of copper, 1.9 million ounces of gold
and 67 million pounds of molybdenum in 2010, compared with
4.1 billion pounds of copper, 2.6 million ounces of gold and
58 million pounds of molybdenum in 2009. Lower consolidated
copper sales volumes in 2010 primarily resulted from lower ore
grades at Grasberg and lower volumes at our North America
copper mines, partly oset by additional volumes provided by our
Tenke mine in Africa. Lower consolidated gold sales volumes in
2010 primarily reected lower ore grades at Grasberg from planned
mine sequencing. Higher consolidated molybdenum sales
volumes in 2010 reected improved demand.
Provisionally Priced Sales
Substantially all of our copper concentrate and cathode sales
contracts provide nal copper pricing in a specied future month
(generally one to four months from the shipment date) based
primarily on quoted LME monthly average spot copper
prices (refer to “Disclosures About Market Risks — Commodity
Price Risk” for further discussion). Adjustments to the
December31,2010, provisionally priced copper sales resulted in
unfavorable impacts to consolidated revenues of $12 million
($5 million to net income attributable to common stockholders or
$0.01 per share) in 2011. Adjustments to the December31,2009,
provisionally priced copper sales resulted in unfavorable impacts
to consolidated revenues of $24 million ($10 million to net income
attributable to common stockholders or $0.01 per share) in 2010.
Adjustments to the December31,2008, provisionally priced copper
sales resulted in favorable impacts to consolidated revenues of
$132 million ($61 million to net income attributable to common
stockholders or $0.07 per share) in 2009.
e year 2011 also reected unfavorable impacts of $13 million
from adjustments to December 31, 2010, provisionally priced
gold sales.
Purchased Copper and Molybdenum
From time to time, we purchase copper cathode to be processed by
our Rod & Rening segment when production from our North
America copper mines does not meet customer demand. e
increases in purchased copper in 2011 and 2010, compared with
prior years, resulted from higher customer demand and higher
copper prices. We also purchase molybdenum concentrates when
customer demand requires it. Partly osetting increases in
purchased copper were decreases in purchased molybdenum in
2011 and 2010, compared with prior years.
MANAGEMENT’S DISCUSSION AND ANALYSIS