Slide 1: Goldman Sachs Basic Materials Conference 2008
Goldman Sachs Basic Materials Conference 2008 Richard C. Adkerson President & CEO New York City www.fcx.com May 20, 2008
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements in which we discuss factors we believe may affect our performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding pro
Slide 3: A World of Assets, A World of Opportunities
A World of Assets A World of Opportunities 2007 Annual Report Highlights Strong Portfolio of Global Producing Operations Opportunities to Expand Current Production Capacity Add Reserves to Extend Lives of Our Mines Develop Significant New Ore Bodies 3
Slide 4: Geographically Diverse...
Geographically Diverse... Major Mine Operations & Development Projects All major assets majority-controlled and operated North North America America11 Copper Reserves Cu 25.8 billion lbs Copper/Gold/Silver Mo 1.8 billion lbs Molybdenum Production Grasberg (90.64%) Cu 1.7 billion lbs Reserves Mo 77 m
Slide 5: ...Long-Lived Asset Base
...Long-Lived Asset Base Net Net Consolidated Consolidated Interest Interest Reserves 12/31/07 (1) Copper (billion lbs) 93.2 77.0 Molybdenum (billion lbs) 2.0 1.9 Gold (million ozs) 41.0 37.0 Average Sales Volumes (2008-2010) Copper (billion lbs) 4.5 3.8 Molybdenum (million lbs) 85 81 Gold (million
Slide 6: Revenue / Production Mix
Revenue / Production Mix Mining Revenue by Commodity Copper Production by Method 2007 Pro Forma 2007 Pro Forma Gold 10% SX/EW SX/EW Concentrate Concentrate Molybdenum 35% 35% 65% 65% 12% Copper 78% 6
Slide 7: Strong Markets
Strong Markets 2,000 400 1,750 350 1,500 300 000’s Metric Tons Cents Per Pound 1,250 250 LME Copper Price 1,000 200 750 150 500 100 250 50 LME & COMEX Exchange Stocks* 0 0 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Ja
Slide 8: Factors Driving Copper Price Performance
Factors Driving Copper Price Performance Actual Copper Prices Have Been Significantly Higher Than Analysts’ Forecast - In Each of the Last Three Years, Copper Prices Have Been 30 – 65% Higher Than Consultant Estimates At Start of Year Sharp Rise in Forward Prices 2009 Average Forward Copper Pric
Slide 9: Copper Supply Side Challenges – Production Has Not Met Expectations
Copper Supply Side Challenges – Production Has Not Met Expectations Production Shortfalls Have Averaged Almost 800 kt Per Year 0 -250 Annual Shortfalls (kt) -500 -3.0% -750 -5.0% -4.9% 3-Year Average -1,000 2005 2006 2007 Note: Based on Brook Hunt estimates per January report for given year, which i
Slide 10: The China Factor
The China Factor China’s Copper Consumption Has Doubled Since 2001 While the U.S. Has Declined 12 Estimated Estimated +10% Refined Copper Consumption (bn lbs) 10 +10% Annual Annual Growth Growth 8 6 4 Estimated Estimated -2% -2% Annual Annual 2 Decline Decline 2001 2001 2007 2007 2008e 2008e 2001 20
Slide 11: Challenges of New Copper Project Development
Challenges of New Copper Project Development Relatively Few Major Projects Lower Quality than Past Delays Being Encountered - Technical Factors – Complex Underground Development - Environmental - Geopolitical – Resource Nationalism Escalating Construction Costs Evolving Industry Structure
Slide 12: 1Q08 Highlights
1Q08 Highlights Sales Data 1Q08 1Q07 (1) Copper Consolidated Volumes (mm lbs) 911 520 Average Realization (per lb) $3.69 $3.00 Gold Consolidated Volumes (000’s ozs) 280 956 Realization (per oz) $933 $655 Molybdenum Consolidated Volumes (mm lbs) 20 2 Realization (per lb) $31.67 $23.26 Financial Resul
Slide 13: 2008 Outlook
2008 Outlook ¾ Sales Outlook: • Copper: 4.2 Billion lbs. • Gold: 1.4 Million ozs. • Molybdenum: 75 Million lbs. ¾ Modeled Operating Cash Flows (1): Exceeds $6.5 Billion for 2008 Significant Working Capital Requirements in First Half Expect Working Capital Use in 2008 of ~ $1.1 Billion, Including
Slide 14: Development Project Update: North America – Copper
Development Project Update North America – Copper Safford Mine Development Miami Mine Restart • Major new mine in Arizona • Restart of the Miami mine completed • 100MM lbs Cu/year by 2010 • SX/EW facility continues to • ~$100MM project, primarily mining ramp-up to full rates; produced equipment 22MM
Slide 15: Development Project Update: North America – Molybdenum
Development Project Update North America – Molybdenum Climax Primary Moly Mine Restart • ~$500MM “brownfield” project Primary crusher Open-pit operation Construction of new mill with Covered ore stockpile Pebble crusher restart by 2010 Air permit received in 1Q08 SAG & Ball mills Flotation • I
Slide 16: Development Project Update: South America
Development Project Update South America El Abra Sulfide • Large sulfide mineral deposit El Abra underlying current oxide pit E-W Section Original Topography • Environmental impact study Current Pit approved by Chilean Government Legend Oxide Final Pit in 1Q08 Sulfide Final Pit • Extends mine life 1
Slide 17: Development Project Update: Indonesia
Development Project Update Indonesia Underground Mine Development • DOZ Expansion - Operated at record 61K mt*/d in 1Q08 - Further expansion to 80K under way with targeted completion by 2010 • Initiating mine development activities at Grasberg Block Cave • Big Gossan to reach full rates in 2011 (agg
Slide 18: Development Project Update: Democratic Republic of Congo
Development Project Update Democratic Republic of Congo Tenke Fungurume Mine Development • Engineering, procurement & construction activities continue; concrete work, steel tank erection, structural steel & infrastructure development • Revised aggregate capital cost estimate of $1.75 billion* Octobe
Slide 19: Development Project Update: Democratic Republic of Congo
Development Project Update Democratic Republic of Congo Leach Tanks & CCD Stockpile & Heavy Duty Shop Dump Pocket Reagent Storage SAG Mill Leach & CCD Cobalt Precipitation Electrowinning Electrical Substation Construction Camp Tenke Fungurume Construction Site 19
Slide 20: Copper Reserves & Mineralized Material
Copper Reserves & Mineralized Material Estimates as of 12/31/07 93 100 Incremental at $1.20 at $1.50 copper price copper price Reserves (a) Mineralized (billion lbs of Material (b) recoverable copper) (billion lbs of contained copper) (a) Consolidated copper reserves using a long-term copper price o
Slide 21: A World of Opportunities
A World of Opportunities Exploration Targets in Major Mineral Districts 80 drill rigs operating around the world Safford/Lone Star/Morenci Cerro Verde Tenke Fungurume Grasberg District SW US Indonesia Africa South America 21
Slide 22: Exploration Drives the Mine Plan
Exploration Drives the Mine Plan Aggregate 2008e Exploration: ~$180 million North America Lone Star, South America Morenci & Others 38% 14% Africa Indonesia Tenke 22% Deep Grasberg, 21% Fungurume Kucing Liar, & & Kisanfu other targets 5% outside of Block A Australasia & Other Areas 22 e = estimate.
Slide 23: Sales Profile 2006 - 2010e
Sales Profile 2006 - 2010e Gold Sales (million ozs) Copper Sales (billion lbs) 3 2.3 2.1 2.1 1.9 5 4.8 2 1.4 4.5 4.2 1 4 3.9 3.6 0 2006 2007 2008e 2009e 2010e Pro Pro Forma Forma* ____________________ 3 Note: Consolidated gold sales include approximately 185 k oz in 2006, 228 k oz in 2007, 145 k oz
Slide 24: 2008e Quarterly Payable Metal Sales
2008e Quarterly Payable Metal Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 1,250 1,250 750 Grasberg Grasberg currently mining mining in in lower lower grade grade section. section. 585 1,120 500 280 315 1,000 930 225 911 250 0 750 1Q08 2Q08e 3Q08e 4Q08e ____________________ Note: Conso
Slide 25: 2008e Sales and Unit Production Costs by Region
2008e Sales and Unit Production Costs by Region 2008e Sales by Region North America South America Indonesia 1,530 1,480 1.3 1,200 75 (1) 0.1 Cu Mo Cu Au Cu Au mm lbs mm lbs mm lbs mm ozs mm lbs mm ozs 2007e 1Q0 7 2008e 2007e 2007e 2007e North South (per pound of copper) America America Indonesia Con
Slide 26: EBITDA and Cash Flow at Various Copper Prices
EBITDA and Cash Flow at Various Copper Prices Average Annual EBITDA 2008e-2009e ($900 Gold & $30 Molybdenum) $17 (US$ billions) $15 $13 $11 $9 $7 $5 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Cu $4.50/lb Average Annual Operating Cash Flow 2008e-2009e ($900 Gold & $30 Molybdenum) $10 (US$ billions) $8 $6 $4
Slide 27: Sensitivity to Commodity Prices
Sensitivity to Commodity Prices Annual Annual Financial Financial Impact Impact Net Net Operating Operating Change Change EBITDA EBITDA Income Income Cash Cash Flow Flow (US$ millions) Copper: -/+ $0.20/lb $850 $490 $575 Molybdenum: -/+ $2.00/lb $140 $100 $100 Gold: -/+ $50/ounce $90 $45 $50 _______
Slide 28: Capital Expenditures
Capital Expenditures Major Projects All Other (US$ billions) $3.0 $3.0 $2.5 $2.4 1.2 $2.0 $1.8 1.1 $1.5 $1.3 1.0 $1.0 1.8 0.8 1.3 $0.5 0.8 0.5 $0.0 2007 * 2008e 2009e 2010e * Includes PD expenditures beginning March 20, 2007 Note: Includes capitalized interest. e = estimate. Please see cautionary st
Slide 29: Op. Cash Flow After CAPEX & MI Distributions
Average Annual Excess Cash Flow (1) 2008e – 2009e ($ in billions, except copper, gold and molybdenum prices) $6 Copper Sensitivities with $900 Gold/$30 Molybdenum Op. Cash Flow After CAPEX & MI Distributions $5 Available for investments/ $4 debt reduction/ shareholder $3 returns $2 $1 Annual Annual
Slide 30: Financial Policy
Financial Policy ¾ FCX is Committed to Maintaining a Strong Financial Position ¾ Continuation of Positive Copper Markets is Expected to Provide Substantial Cash Flows Investments in Projects With Attractive Returns Opportunistic Debt Reduction Shareholder Returns ¾ Committed to Long-Standing T
Slide 31: FCX Investment Summary
FCX Investment Summary World’s Premier Publicly Traded Copper Company World’s Largest Molybdenum Producer & Significant Gold Producer World Class, Long-lived, Geographically Diverse Operations Attractive Project Pipeline Supports Growing Production Profile Significant Exploration Potential