Freeport-McMoRan

Freeport-McMoRan Inc.
Public
Traded as NYSE: FCX
S&P 500 Component
Industry Metals and Mining
Founded 1912 (1912)
Headquarters Freeport-McMoRan Center
Phoenix, Arizona, USA
Area served
 Worldwide
Key people
 Gerald J. Ford
(Chairman of the Board)
Richard Adkerson
(President) (CEO) (Director)
Products Copper
Gold
Molybdenum
Revenue Increase $ 18.982 billion (2013)
Increase $ 8.987 billion (2013)
Profit Increase $ 4.336 billion (2013)
Total assets Increase $ 29.386 billion (2013)
Total equity Increase $ 12.504 billion (2013)
Number of employees
 29,700 - June 2013
Website FCX.com

Freeport-McMoRan Inc., (FMCG) often called Freeport, is one of the world's largest producers of copper and gold. Its headquarters are in the Freeport-McMoRan Center in downtown Phoenix, Arizona. Freeport is the largest copper and molybdenum producer in the world. It mines and mills ores containing copper, gold, molybdenum, cobalt[1] and silver for the world market. The company also has oil and gas interests.[1] Richard Adkerson is president and chief executive officer of Freeport and Gerald J. Ford is the company's chairman.

The company was 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.

History

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

The company was founded as the Freeport Sulphur Company in 1912 in Freeport, Texas, near its new sulphur mines, then the largest in the world.[2] 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 II and potash in the 1950s.

1950s

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 U.S. government announced a contract to buy Freeport nickel and cobalt from Cuba until June 30, 1965, as strategic commodities. Fidel Castro's government nationalized the Cuban facility in 1960.[3]

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

1960s

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 feasibility 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.[4]

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.[4] McMoRan Oil & Gas was formed in 1967 by three partners, William Kennon McWilliams Jr. ("Mc"), James Robert (Jim Bob) Moffett ("Mo"), who were both petroleum geologists, and Byron McLean Rankin, Jr. ("Ran"), "a specialist in land-leasing and sales operations."[3] Kent McWilliams (died 1997) was as knowledgeable of the micropaleontology of the Louisiana and Texas coasts as any geologist of the twentieth century. McMoRan's incredible record in hitting paydirt was based on the fundamental petro-geological learning of the founder and the young geologist he began mentoring in the early 1960s.

1970s

In 1971 the company changed its name to Freeport Minerals Company to reflect its role as a diversified mineral producer. Freeport Minerals Company formed Freeport Gold Company in 1981 to operate a rich new gold discovery at Jerrit Canyon, Nevada, a 60:40 joint venture with an FMC Corporation subsidiary, FMC Gold Co. (now part of Yamana Gold).

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

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.[3]

1990s

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. Main Pass was the second largest recoverable sulphur reserve then known and Grasberg's ore reserves—and profit potential—were 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

The Grasberg mine soon became a source of violent trouble and terrible publicity,[5] that continues today. It is also the world's most profitable mine.[6] The Grasberg mine's tailings "severely impacted" more than 11 square miles (28 km2) of rainforest, according to a 1996 Dames & Moore environmental audit. 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.[7]

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

Exploration company

McMoRan Exploration Company (NYSE: MMR) is a separately traded firm with some shared management with Freeport-McMoRan Copper & Gold Inc.[8] 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.[9]

Grasberg mine controversy

Main article: Grasberg mine

Freeport mines the world's largest gold reserve in the New Guinea Grasberg mine. In 2005, The New York Times reported that Freeport paid local military and police generals, colonels, majors and captains, and military units, in total nearly US$20 million between 1998 and 2004. One individual received up to US$150,000. The payments were meant to secure the reserve. Freeport responded that the payments were not for individuals, but rather for infrastructure, food, housing, fuel, travel, vehicle repairs and allowances to cover incidental and administrative costs. The Times' anonymous sources within the company also claimed that company chairman James R. Moffet courted Indonesia's dictator and "his cronies", cutting them in on deals. Another employee is said to have worked on a program to monitor environmentalists' e-mails and telephone conversations, in cooperation with Indonesian military intelligence officers.[10]

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 Grasberg workers joined the strike, appealing for higher pay September 15, 2011, blocking roads, clashing with police and cutting the pipeline in several places.[11]

Citing extensive, long-term and irreversible environmental damage in New Guinea, The Government Pension Fund of Norway excluded Freeport-McMoRan from its investment portfolio, following a recommendation from the fund's ethical council.[12]

Operations

The company lists its operations as follows:[13]

North America

South America

Europe

Africa

Indonesia

Environmental record

The Political Economy Research Institute ranks Freeport-McMoRan 22nd among corporations emitting airborne pollutants in the U.S. The ranking is based on emission quantities (4 million pounds in 2005) and toxicity.[24]

Directors

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.[25]

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."[26]

On December 28, 2015, it was announced that James R. Moffett would step down as chairman of the company.[27] Moffett will be replaced as chairman by Gerald J. Ford. It was reported that Moffett will earn a severance package that could total up to $83.3 million.[28] That includes $16.1 million in severance pay and cash retirement plans that total more than $63 million.

References

  1. 1 2 "Company website". Retrieved 9 August 2015.
  2. ↑ Freeport article, Handbook of Texas
  3. 1 2 3 Freeport-McMoRan history
  4. 1 2 OPENING THE ERTSBERG DISTRICT
  5. ↑ "Below a Mountain of Wealth, a River of Waste"
  6. ↑ "Papuan anger focuses on world's richest mine"
  7. ↑ "Spinning Gold by Robert Bryce". mother jones magazine. September 1996. Retrieved 4 April 2015.
  8. ↑ McMoRan Exploration Board of Directors
  9. ↑ "A Famed Dry Hole Gets a Second Shot"
  10. ↑ Perlez, Jane; Bonner, Raymond (December 27, 2005). "Below a Mountain of Wealth, a River of Waste". The New York Times.
  11. ↑ "Freeport halts work amid sabotage, separatist pleas". October 18, 2011.
  12. ↑ Norwegian Ministry of Finance (2006-06-06). "Two companies - Wal-Mart and Freeport - are being excluded from the Norwegian Government Pension Fund – Global’s investment universe".
  13. ↑ "FCX Copper, Gold and Molybdenum Producer, Copper Mining | Refining Company". Fcx.com. Retrieved 2013-01-16.
  14. ↑ Freeport-McMoRan Copper & Gold. "Morenci Mine". Retrieved 22 Jul 2013.
  15. ↑ Freeport-McMoRan Copper & Gold. "Bagdad Mine". Retrieved 22 Jul 2013.
  16. ↑ Freeport-McMoRan Copper & Gold. "Sierrita Mine". Retrieved 22 Jul 2013.
  17. ↑ Freeport-McMoRan Copper & Gold. "Miami Mine". Retrieved 22 Jul 2013.
  18. ↑ Freeport-McMoRan Copper & Gold. "Safford Mine". Retrieved 22 Jul 2013.
  19. ↑ Freeport-McMoRan Copper & Gold. "Chino Mine". Retrieved 22 Jul 2013.
  20. ↑ Freeport-McMoRan Copper & Gold. "Tyrone Mine". Retrieved 22 Jul 2013.
  21. ↑ Freeport-McMoRan Copper & Gold. "Henderson Mine". Retrieved 22 Jul 2013.
  22. ↑ Freeport-McMoRan Copper & Gold. "Climax Mine". Retrieved 22 Jul 2013.
  23. ↑ "Atlantic Copper". Atlantic-copper.es. Retrieved 2013-01-16.
  24. ↑ "PERI: Home". Peri.umass.edu. Retrieved 2013-01-16.
  25. ↑ "FCX_Freeport-McMoRan Copper & Gold Inc. - Investor Center, Executive Management". Fcx.com. Retrieved 2013-01-16.
  26. ↑ "The Global 1%: Exposing the Transnational Ruling Class". Retrieved 18 August 2012.
  27. ↑ "Chairman And Co-Founder James Moffett Departs Freeport-McMoRan Inc.". International Business Times. Retrieved 2015-12-29.
  28. ↑ Olson, Bradley; Dezember, Ryan; Lublin, Joann S. "Freeport-McMoRan Executive Chairman Moffett Resigns". Wall Street Journal. ISSN 0099-9660. Retrieved 2015-12-29.

Company publications

External links

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