Freeport-McMoRan

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Freeport-McMoRan Copper & Gold Inc.
TypePublic
Traded asNYSEFCX
S&P 500 Component
IndustryMetals and Mining
Founded1912
HeadquartersPhoenix, Arizona, USA
Area servedWorldwide
Key peopleJim Bob Moffett
(Chairman of the Board)
Richard C. Adkerson
(President) (CEO) (Director) William Kennon McWilliams, Jr'
(Founder)
ProductsCopper
Gold
Molybdenum
RevenueIncrease $ 18.982 billion (2010)
Operating incomeIncrease $ 8.987 billion (2010)
ProfitIncrease $ 4.336 billion (2010)
Total assetsIncrease $ 29.386 billion (2010)
Total equityIncrease $ 12.504 billion (2010)
Employees29,700 - June 2011
WebsiteFCX.com
 
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Freeport-McMoRan Copper & Gold Inc.
TypePublic
Traded asNYSEFCX
S&P 500 Component
IndustryMetals and Mining
Founded1912
HeadquartersPhoenix, Arizona, USA
Area servedWorldwide
Key peopleJim Bob Moffett
(Chairman of the Board)
Richard C. Adkerson
(President) (CEO) (Director) William Kennon McWilliams, Jr'
(Founder)
ProductsCopper
Gold
Molybdenum
RevenueIncrease $ 18.982 billion (2010)
Operating incomeIncrease $ 8.987 billion (2010)
ProfitIncrease $ 4.336 billion (2010)
Total assetsIncrease $ 29.386 billion (2010)
Total equityIncrease $ 12.504 billion (2010)
Employees29,700 - June 2011
WebsiteFCX.com

Freeport-McMoRan Copper & Gold Inc., (FMCG) often called simply Freeport, is one of the world's largest producers of copper and gold. Its headquarters are located in the Freeport-McMoRan Center in downtown Phoenix, Arizona. Freeport is the largest publicly traded copper and molybdenum producer in the world. It mines and mills ores containing copper, gold, molybdenum and silver for the world market. Richard C. Adkerson is President and Chief Executive Officer of Freeport and James R. Moffett is the company's Chairman.

The company was formerly based in New Orleans, Louisiana before moving to Phoenix, Arizona, after acquiring copper producer Phelps Dodge in 2007. In addition to Phelps Dodge, its subsidiaries include PT Freeport Indonesia, PT Irja Eastern Minerals and Atlantic Copper, S.A.

Contents

Exploration company[edit]

McMoRan Exploration Company (NYSEMMR) is a separately traded firm with some shared management with Freeport-McMoRan Copper & Gold Inc.[1] Richard C. Adkerson and James R. Moffett are co-chairmen of McMoRan Exploration. McMoRan Exploration, an oil and gas exploration and production firm based in New Orleans, Louisiana, was created in 1998 by the merger of McMoRan Oil & Gas and Freeport-McMoRan Sulphur. In 2008, McMoRan Exploration acquired the Blackbeard offshore prospect in the Gulf of Mexico that Exxon Mobil Corp. had abandoned in 2006 after drilling a 30,000-foot (9,100 m) dry hole. As of mid-2008, McMoRan Exploration's Blackbeard well reached below 32,550 feet (9,920 m), the deepest oil exploration well ever recorded.[2]

History[edit]

Freeport Sulphur No.6 entering Freeport, Texas, harbor, 1923

The company was founded as the Freeport Sulphur Company in 1912. The company founded Freeport, Texas, that same year, near its new sulphur mines, then the largest in the world.[3] Freeport pioneered mining sulphur at mines along the US Gulf Coast using the Frasch Process. Freeport Sulphur began to diversify in 1931, purchasing manganese deposits in Oriente Province, Cuba. The company produced nickel during World War 2 and potash in the 1950s.

1950s[edit]

In 1955, Freeport invested $119 million in constructing a nickel-cobalt mine at Moa Bay, Cuba, and a refinery at Port Nickel, Louisiana. On March 11, 1957, the US government announced a contract to buy Freeport nickel and cobalt from Cuba until June 30, 1965, as strategic commodities. In July 1957 the House Committee referred charges against Freeport to the Justice Department for investigation.[citation needed] The Castro government nationalized the Cuban facility in 1960.[4]

In 1956, the company formed Freeport Oil Company. It sold a Louisiana oil discovery for $100 million in 1958.

1960s[edit]

In 1961, the company entered the kaolin business. and in 1964 formed Freeport of Australia to pursue mining opportunities there and in the surrounding Pacific Ocean region. In 1960 Freeport geologists confirmed the Dutch discovery of the rich Ertsberg copper and gold deposits, located in extremely rugged, remote country in the Jayawijaya Mountains, in then-Netherlands New Guinea. In 1966, Freeport founded Freeport Indonesia, Inc. The subsidiary negotiated a contract with the Indonesian government to develop the Ertsberg deposit. In their feasibilty study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper. The Ertsberg was the largest above-ground copper deposit ever discovered.[5]

Construction of an open pit mine began in May 1970 and in mid-1973 the mine was declared fully operational. Officials at Bechtel, the primary project contractor, called mine development at Ertsberg "the most difficult engineering project they had ever undertaken." The challenges included building a 101 kilometres (63 mi) long access road (a project that required boring kilometer long tunnels through two mountains) and constructing the world's longest single span aerial tramway. The tramways were needed to move people, supplies and ore because a 2,000 feet (610 m) cliff separates the Ertsberg mine (at 12,000 feet (3,700 m) elevation) from the mill (at 10,000 feet). Moving copper concentrate from that mill to the shipping port required installation of a 109 kilometres (68 mi) slurry pipeline - then the world's longest.

Mine construction and startup cost about US$200 million. The Ertsberg project was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept profits marginal during the 1970s.[5] McMoRan Oil & Gas was formed in 1967 by three partners, William Kennon McWilliams Jr. ("Mc"), James R. (Jim Bob) Moffett ("Mo"), who were both petroleum geologists and B.M. Rankin, Jr. ("Ran"), "a specialist in land-leasing and sales operations."[4]

1970s[edit]

In 1971 the company changed its name to Freeport Minerals Company (FMC) to reflect its role as a diversified mineral producer. FMC formed Freeport Gold Company in 1981 to operate a rich new gold discovery at Jerrit Canyon, Nevada.

McMoRan acquired a reputation as an aggressive petroleum explorer with cost-efficient drilling programs. It formed drilling partnerships with several companies, including Freeport. In 1981 Freeport Minerals merged with McMoRan Oil & Gas to form Freeport-McMoRan Inc.

Since 1973, Freeport has operated the world's largest gold mine, located in Indonesia's Papua province.

1980s[edit]

In 1982 Freeport Gold Company was the world's largest gold producer, producing 196,000 troy ounces (6,100 kg) of gold in its first full year of operation.

By 1989 Freeport-McMoRan had two world-class mines to develop: the new discovery at Grasberg, Indonesia, with the world's largest gold ore reserve and one of the world's largest copper reserves; and the Main Pass sulfur-oil-gas deposit offshore from Louisiana, with estimated reserves totalling 67 million tonnes of sulfur, 39 million barrels (6,200,000 m3) of oil and 7,000,000,000 cubic feet (0.20 km3) of natural gas. These were rich deposits, but would be very expensive to develop. Freeport sold about $1.5 billion in assets to finance the development of these two projects.[4]

1990s[edit]

By 1991, Freeport-McMoRan Inc. was basically a holding company for its two principal assets, Freeport-McMoRan Copper & Gold (FMCG) and Freeport-McMoRan Resource Partners, which ran the sulphur and fertilizer businesses. Freeport's focus was to raise enough cash to finance the development of the huge finds at Grasberg and Main Pass. Both of these assets looked better the more they were studied: Main Pass was the second largest recoverable sulphur reserve then known and Grasberg's ore reserves—and profit potential—were truly enormous.

In 1994 Freeport-McMoRan spun off its entire interest in Freeport-McMoRan Copper & Gold, which became an independent company, fully focused on the Indonesian operation. In 1997 Freeport-McMoRan Inc., the former parent company, was acquired by IMC Global, a large fertilizer producer.

In 1997 the company exposed the Bre-X Gold Scandal. Brought in by the Indonesian government, Freeport was not able to substantiate Bre-X's claims to having found the largest gold mine ever discovered; Bre-X subsequently was exposed as a fraud and went bankrupt.

2000s[edit]

The Grasberg mine, FMCG'S crown jewel, soon became a source of violent trouble and terrible publicity,[6] that continues today. It is also the world's most profitable mine.[7] The Grasberg mine's tailings "severely impacted" more than 11 square miles (28 km2) of rainforest, according to a 1996 Dames & Moore environmental audit[citation needed]. The report, endorsed by Freeport, also estimates that during the life of the mine 3.2 billion tons of waste rock—a great part of which generates acid—will be dumped into the local river system. Overburden (waste rock) from the mine has polluted a nearby lake due to acid mine drainage.[8]

Freeport-McMoRan is a signatory participant of the Voluntary Principles on Security and Human Rights.

Grasberg mine controversy[edit]

In 2003 Freeport acknowledged paying local Indonesian military and police officials to secure the Grasberg mine. Freeport argued that this was necessary to protect its employees.[citation needed] The United States severed relations between 1998 and 2005, alleging human rights violations. particularly against environmental groups and supporters of a return to West Papuan independence as before the Indonesian military seized power in 1969.[9]

In 2005, the New York Times reported that company records showed the total amount paid between 1998 and 2004 amounted to nearly US$20 million, distributed among both officers and units, with one individual receiving up to US$150,000. The company response was that there was "no alternative to our reliance on the Indonesian military and police in this regard" and that the support provided was not for individuals, but rather for infrastructure, food, housing, fuel, travel, vehicle repairs and allowances to cover incidental and administrative costs.[citation needed]

On October 17, 2011 the company halted operations in Papua amid a strike that led to a deteriorating security situation and intensified calls for Papuan independence. Seventy percent of workers joined the strike, appealing for higher pay September 15, 2011, blocking roads, clashing with police and cutting the pipeline in several places. Three people were killed by unidentified gunmen.[10]

Claims of severe environmental damages led The Government Pension Fund of Norway, the world's largest pension fund,[11] to exclude Freeport-McMoRan from its investment portfolio, following a recommendation from the fund's ethical council.[12]

Operations[edit]

The company lists its operations as follows:[13]

North America[edit]

South America[edit]

Europe[edit]

Africa[edit]

Indonesia[edit]

Environmental record[edit]

The Political Economy Research Institute ranks Freeport-McMoRan 22nd among corporations emitting airborne pollutants in the US. The ranking is based on emission quantities (4 million pounds in 2005) and toxicity.[15]

Directors[edit]

The company was founded by Langbourne Williams Snr. as Freeport Texas in 1912 in the sulphur mining industry, in 1929 Langbourne Williams Jnr. collaborated with Payne Whitney to regain control of the company.

In 1935 the Board of Directors included chairman John Hay Whitney, Kidder, Peabody & Co., Eugene L. Norton, Langbourne M. Williams Jr. (president), Monro B. Lanier, Chauncey Stillman, Godfrey Stillman Rockefeller, David M. Goodrich. The company name was changed to Freeport Sulphur in December 1936.

Other directors included Augustus Long, Robert A. Lovett, Charles Wight from 1947, Benno Schmidt 1954-1997, Jean Mauzé, Robert W. Bruce III, Robert C. Hills, Paul W. Douglas 1981-1983 after serving on Freeport Minerals 1975-1981, Henry Kissinger 1988-1995, George Putnam, Mikhael Yosia and J. Taylor Wharton. As of 2013, the board members are James R. Moffett, Richard C. Adkerson, Robert Allison Jr., Robert A. Day, Gerald J. Ford, H. Devon Graham Jr., Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy, B. M. Rankin Jr. and Stephen Siegele.[16] According to a study by Project Censored, "These men represent a portion of the global 1% who not only control the largest gold and copper mining company in the world, but who are also interconnected by board membership with over two dozen major multinational corporations, banks, foundations, military and policy groups. This 12-member board is a tight network of individuals who are interlocked with--and influence the policies of--other major companies controlling about $200 billion in annual revenues."[17]

References[edit]

Company publications[edit]

External links[edit]