

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~June~~September 30, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from		To
Commission File Number: 1-9916



Freeport-McMoRan Copper & Gold Inc.
(Exact name of registrant as specified in its charter)

Delaware	74-2480931
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

One North Central Avenue
Phoenix, AZ	85004-4414
(Address of principal executive offices)	(Zip Code)

(602) 366-8100
(Registrant's telephone number, including area code)

The accompanying notes are an integral part of these consolidated financial statements.

Recent Events. During September and October 2008, global economic conditions weakened and markets experienced a sharp decline in commodity prices. Copper prices fell from $3.98 per pound at June 30, 2008, to $2.91 per pound at September 30, 2008, and further to $1.81 per pound at October 31, 2008.

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cash flows; current replacement cost for similar capacity for certain fixed assets; market rate assumptions for contractual obligations; and appropriate discount rates and growth rates. A decline in copper or molybdenum prices from those used to estimate the fair values of the acquired assets could result in impairment to the carrying amounts assigned to inventories; mill and leach stockpiles; property, plant and equipment; and goodwill. At the date of acquisition of Phelps Dodge, price projections used to value the assets acquired ranged from a near-term ~~price~~prices of $2.98 per pound for copper and $26.20 per pound for molybdenum to a long-term average ~~price~~prices of $1.20 per pound for copper and $8.00 per pound for molybdenum.

~~Table of Contents~~

A summary of the final purchase price allocation as of March 19, 2007, follows (in billions):

							Purchase
	Historical			Fair Value			Price
	Balances			Adjustments			Allocation
Cash and cash equivalents	$	4.2		$	–		$	4.2
Inventories, including mill and leach stockpiles		0.9			2.8			3.7
Property, plant and equipmenta		6.0			16.2			22.2
Other assets		3.1			0.2			3.3
Allocation to goodwill		–			6.2			6.2	b
Total assets		14.2			25.4			39.6
Deferred income taxes (current and long-term)c		(0.7	)		(6.3	)		(7.0	)
Other liabilities		(4.1	)		(1.5	)		(5.6	)
Minority interests		(1.2	)		–			(1.2	)
Total	$	8.2		$	17.6		$	25.8

a.	Includes amounts for proven and probable reserves and values assigned to value beyond proven and probable reserves (VBPP).

b.	Includes $160 million of goodwill associated with PDIC, which was sold in the fourth quarter of 2007.

c.	Deferred income taxes have been recognized based on the difference between the tax basis and the fair values assigned to net assets.

Goodwill arising from the acquisition of Phelps Dodge was $6.2 billion, which primarily related to the requirement to recognize a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in a business combination. FCX allocated goodwill to the individual mines it believes have contributed to the excess purchase price and also included consideration of the mines’ potential for future growth (see Note 10 for the allocation of goodwill to FCX’s reportable segments).

Pro Forma Financial Information. The following pro forma information assumes that FCX acquired Phelps Dodge effective January 1, 2007. The most significant adjustments relate to the purchase accounting impacts on the carrying values of acquired metal inventories (including mill and leach stockpiles) and property, plant and equipment using March 19, 2007, metal prices and assumptions (in millions, except per share data):

	Historical										Historical
			Phelps		Pro Forma			Pro Forma					Phelps		Pro Forma			Pro Forma
Six months ended June 30, 2007	FCX		Dodgea		Adjustments			Consolidated
Nine months ended September 30, 2007											FCX		Dodgea		Adjustments			Consolidated
Revenues	$	7,689	$	2,294	$	60		$	10,043	b	$	12,755	$	2,294	$	90		$	15,139	b
Operating income	$	3,526	$	793	$	(356	)	$	3,963	b,c	$	5,403	$	793	$	(131	)	$	6,065	b,c
Income from continuing operations before
income taxes and minority interests	$	3,272	$	837	$	(472	)	$	3,637	b,c,d,e
income taxes, minority interests and equity
in affiliated companies’ net earnings											$	5,041	$	836	$	(271	)	$	5,606	b,c,d,e
Net income from continuing operations
applicable to common stock	$	1,548	$	493	$	(346	)	$	1,695	b,c,d,e	$	2,311	$	493	$	(224	)	$	2,580	b,c,d,e
Diluted net income per share of common
stock from continuing operations	$	4.71		N/A		N/A		$	4.08	b,c,d,e	$	6.46		N/A		N/A		$	6.20	b,c,d,e
Diluted weighted-average shares of
common stock outstanding		346		N/A		N/A			446	f		380		N/A		N/A			447	f

Additionally, for comparative purposes, the historical Phelps Dodge financial information for the ~~six~~nine months ended ~~June~~September 30, 2007, represents results from continuing operations, and therefore, excludes the results of PDIC (i.e., discontinued operations).

Average number of basic shares of FCX common stock
outstanding prior to the acquisition of Phelps Dodge		198
Shares of FCX common stock issued in the acquisition		137
Sale of shares of FCX common stock		47
Assumed conversion of Mandatory Convertible Preferred Stock		39
Assumed conversion of other dilutive securities		2526
Pro forma weighted-average shares of FCX common stock outstanding		~~446~~447

4.	PENSION AND POSTRETIREMENT BENEFITS

		��
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Income from continuing operations	$	587		$	826		$	2,783		$	2,455
Preferred dividends		(64	)		(63	)		(191	)		(144	)
Income from continuing operations applicable
to common stock		523			763			2,592			2,311
Plus income impact of assumed conversion of:
6¾% Mandatory Convertible Preferred Stock		49			48			146			99
5½% Convertible Perpetual Preferred Stock		15			15			45			45
Diluted net income from continuing operations
applicable to common stock		587			826			2,783			2,455
Income from discontinued operations		–			12			–			44
Diluted net income applicable to common stock	$	587		$	838		$	2,783		$	2,499

Weighted-average shares of common stock outstanding:		382			382			383			327
Add stock issuable upon conversion, exercise or
vesting of:
6¾% Mandatory Convertible Preferred Stocka		39			39			39			27
5½% Convertible Perpetual Preferred Stock		24			23			24			23
Dilutive stock options		1	b		2			2			2
Restricted stock		1			1			1			1
Weighted-average shares of common stock outstanding
for purposes of calculating diluted net income per share		447			447			449			380

Diluted net income per share of common stock:
Continuing operations	$	1.31		$	1.85		$	6.20		$	6.46
Discontinued operations		–			0.02			–			0.12
Diluted net income per share of common stock	$	1.31		$	1.87		$	6.20		$	6.58

stock price or other certain events. Prior to May 10, 2010, holders may convert at a conversion rate of 1.3605 or approximately 39 million shares.

b.	Potential additional shares of common stock of approximately 1 million were anti-dilutive in the three months ended September 30, 2008.

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convertible instruments are also excluded when including the conversion of these instruments increases reported diluted net income per share. Excluded amounts were approximately 299,000 stock options with a weighted-average exercise price of $113.44 for third-quarter 2008 and approximately 150,000 stock options with a weighted-average exercise price of ~~$112.82~~$113.23 for ~~second-quarter 2008~~the nine months ended September 30, 2008. No stock options were excluded for third-quarter 2007, and approximately ~~75,000~~389,000 stock options with a weighted-average exercise price of ~~$112.82~~$65.96 were excluded for the ~~six~~nine months ended June 30, 2008. Excluded amounts were approximately 169,000 stock options with a weighted-average exercise price of $78.92 for second-quarter 2007 and approximately 568,000 stock options with a weighted-average exercise price of $67.71 for the six months ended JuneSeptember 30, 2007.

6.	INVENTORIES, AND MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

	September 30,		December 31,
	2008		2007
Mining Operations:
Raw materials	$	1	$	1
Work-in-process		148		71
Finished goodsa		919		898
Atlantic Copper:
Raw materials (concentrates)		184		164
Work-in-process		123		220
Finished goods		7		6
Total product inventories		1,382		1,360
Total materials and supplies, netb		1,138		818
Total inventories	$	2,520	$	2,178

June 30, December 31,
2008 2007
Mining Operations:
Raw materials $ 20 $ 1
Work-in-process 111 71
Finished goodsa
813 898
Atlantic Copper:
Raw materials (concentrates) 212 164
Work-in-process 215 220
Finished goods 9 6
Total product inventories 1,380 1,360
Total materials and supplies, netb
985 818
Total inventories $ 2,365 $ 2,178

a.	Primarily includes copper concentrates, anodes, cathodes and rod, and molybdenum.

b.	Materials and supplies inventory is net of obsolescence reserves totaling $18 million at ~~June~~September 30, 2008, and $16 million at December 31, 2007.

The following is a detail of mill and leach stockpiles (in millions):

	June 30,		December 31,		September 30,		December 31,
	2008		2007		2008		2007
Current:
Mill stockpiles	$	4	$	6	$	2	$	6
Leach stockpiles		862		701		908		701
Total current mill and leach stockpiles	$	866	$	707	$	910	$	707

Long-terma:
Mill stockpiles	$	314	$	248	$	332	$	248
Leach stockpiles		901		858		928		858
Total long-term mill and leach stockpiles	$	1,215	$	1,106	$	1,260	$	1,106

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~~Other North America.~~ Other North America operations include FCX’s other operating southwestern U.S. copper mines – Bagdad, Sierrita, Safford, Miami, Chino and Tyrone. In addition to copper, the Bagdad, Sierrita and Chino mines produce molybdenum, gold and silver. Other North America operations also include the Miami smelter, which processes our North America concentrates and provides a significant source of sulfuric acid for the various North America leaching operations; and a sales company, which functions as an agent to purchase metals, primarily copper from the North and South America operations, and sells to Atlantic Copper, S.A. (Atlantic Copper) and third parties.

(In Millions)	North America Copper Mines						South America Copper Mines						Indonesia
																				Atlantic		Corporate,
																				Copper		Other &
			Other				Cerro		Other							Molyb-		Rod &		Smelting		Elimi-			FCX
Third-Quarter 2008	Morenci		Mines		Total		Verde		Mines		Total		Grasberg			denum		Refining		& Refining		nations			Total
Revenues:
Unaffiliated customersb	$	86	$	97	$	183	$	315	$	578	$	893	$	754	a	$	683	$	1,477	$	625	$	1		$	4,616
Intersegment		425	794		1,219		94		21		115		48			–		8		–		(1,390		)	–
Production and deliveryb		347	500		847		161		336		497		470			417		1,478		611		(1,446		)	2,874
Depreciation, depletion and amortizationb		81	113		194		42		81		123		52			52		2		9		10			442
Selling, general and administrative expenses		–	–		–		–		–		–		20			3		–		4		63			90
Exploration and research expenses		–	–		–		–		–		–		–			–		–		–		77			77
Operating income (loss)b		83	278		361		206		182		388		260			211		5		1		(93		)	1,133

Interest expense, net		1	3		4		–		4		4		(1		)	–		1		3		128			139
Provision for income taxes		–	–		–		56		53		109		114			–		–		–		17			240
Goodwill at September 30, 2008		1,912	2,299		4,211		763		366		1,129		–			703		–		–		5			6,048
Total assets at September 30, 2008		7,130	12,222		19,352		4,933		4,350		9,283		4,121			4,181		493		856		3,720			42,006
Capital expenditures		85	110		195		26		37		63		109			60		2		7		330			766

Third-Quarter 2007
Revenues:
Unaffiliated customers		145	113		258		555		724		1,279		570		a	519		1,725		688		27			5,066
Intersegment		544	724		1,268		66		23		89		267			–		11		–		(1,635		)	–
Production and deliveryb		379	408		787		199		256		455		351			380		1,726		674		(1,711		)	2,662
Depreciation, depletion and amortizationb		92	86		178		41		53		94		43			22		3		8		8			356
Selling, general and administrative expenses		–	–		–		–		–		–		44			4		–		5		78			131
Exploration and research expenses		–	–		–		–		–		–		–			1		–		–		39			40
Operating income (loss)b		218	343		561		381		438		819		399			112		7		1		(22		)	1,877

Interest expense, net		–	–		–		3		–		3		3			–		2		6		141			155
Provision for income taxes		–	–		–		121		143		264		254			–		–		–		135			653
Total assets at September 30, 2007		4,804	8,795		13,599		4,660		4,546		9,206		3,968			1,944		640		1,104		10,928		c	41,389
Capital expenditures		81	153		234		13		16		29		98			8		2		10		85			466

Unaffiliated customersb

(In Millions) North America South America Indonesia
Atlantic Corporate,
Other Total Other Total Copper Other &
Rod & Molyb- North Elimi- North Cerro South South Smelting Elimi- FCX
Six Months Ended June 30, 2008 Morenci Refining denum America nations America Verde America America Grasberg & Refining nations Total
Revenues:
Unaffiliated customersb
$ 96 $ 3,355 $ 1,434 $ 1,276 $ – $ 6,161 $ 890 $ 971 $ 1,861 $ 1,698 a $ 1,389 $ 4 $ 11,113
Intersegment 1,110 16 – 2,199 (3,068 ) 257 515 626 1,141 370 – (1,768 ) –
Production and deliveryb
566 3,353 881 2,378 (3,077 ) 4,101 368 526 894 838 1,349 (1,740 ) 5,442
Depreciation, depletion and amortizationb
160 3 108 227 – 498 89 168 257 93 18 14 880
Selling, general and administrative expenses – – 11 6 – 17 – – – 84 14 95 210
Exploration and research expenses – – 1 – – 1 – – – – – 131 132
Operating incomeb
480 15 433 864 9 1,801 948 903 1,851 1,053 8 (264 ) 4,449

Interest expense, net 1 2 – 21 (2 ) 22 2 (2 ) – 3 6 274 305
Provision for income taxes – – – – – – 327 281 608 444 – 335 1,387
Capital expenditures 159 4 44 160 – 367 62 104 166 223 12 395 1,163

Six Months Ended June 30, 2007
Revenues:
Unaffiliated customers 23 2,032 515 428 – 2,998 171 698 869 2,747 a 1,073 2 7,689
Intersegment 540 13 – 787 (1,336 ) 4 395 230 625 724 – (1,353 ) –
Production and deliveryb
333 2,031 458 876 (1,267 ) 2,431 144 275 419 713 1,035 (1,155 ) 3,443
Depreciation, depletion and amortizationb
74 3 25 80 – 182 44 120 164 115 19 10 490
Selling, general and administrative expenses – – 5 3 – 8 – – – 89 10 76 183
Exploration and research expenses – – – – – – – – – – – 47 47
Operating incomeb
156 11 27 256 (69 ) 381 378 533 911 2,554 9 (329 ) 3,526

Interest expense, net – 1 – 1 (1 ) 1 4 (1 ) 3 7 14 206 231
Provision for income taxes – – – – – – 145 175 320 1,021 – (119 ) 1,222
Capital expenditures 75 2 13 263 – 353 18 18 36 175 21 87 672

Business Segments (continued)

(In Millions)	North America Copper Mines						South America Copper Mines							Indonesia
																					Atlantic		Corporate,
																					Copper		Other &
			Other				Cerro		Other								Molyb-		Rod &		Smelting		Elimi-			FCX
Nine Months Ended September 30, 2008	Morenci		Mines		Total		Verde		Mines			Total		Grasberg			denum		Refining		& Refining		nations			Total
Revenues:
Unaffiliated customersb	$	343	$	314	$	657	$	1,572	$	2,078		$	3,650	$	2,452	a	$	2,117	$	4,832	$	2,014	$	7		$	15,729
Intersegment		1,391	2,421		3,812		275		118			393		418			–		24		–		(4,647		)	–
Production and deliveryb		929	1,287		2,216		530		861			1,391		1,308			1,298		4,831		1,960		(4,688		)	8,316
Depreciation, depletion and amortizationb		242	323		565		131		249			380		145			160		5		27		40			1,322
Selling, general and administrative expenses		–	–		–		–		–			–		104			14		–		18		164			300
Exploration and research expenses		–	–		–		–		–			–		–			1		–		–		208			209
Operating income (loss)b		563	1,125		1,688		1,186		1,086			2,272		1,313			644		20		9		(364		)	5,582

Interest expense, net		2	8		10		2		2			4		2			–		3		9		416			444
Provision for income taxes		–	–		–		383		334			717		558			–		–		–		352			1,627
Capital expenditures		244	254		498		88		141			229		332			104		6		19		741			1,929

Nine Months Ended September 30, 2007
Revenues:
Unaffiliated customers		181	141		322		861		1,658			2,519		3,317		a	1,034		3,757		1,761		45			12,755
Intersegment		1,080	1,433		2,513		333		17			350		991			–		24		–		(3,878		)	–
Production and deliveryb		720	832		1,552		343		531			874		1,064			838		3,757		1,709		(3,689		)	6,105
Depreciation, depletion and amortizationb		166	162		328		85		173			258		158			47		6		27		22			846
Selling, general and administrative expenses		–	–		–		–		–			–		133			9		–		15		157			314
Exploration and research expenses		–	–		–		–		–			–		–			1		–		–		86			87
Operating income (loss)b		375	580		955		766		971			1,737		2,953			139		18		10		(409		)	5,403

Interest expense, net		–	–		–		7		(1		)	6		10			–		3		20		347			386
Provision for income taxes		–	–		–		266		318			584		1,275			–		–		–		16			1,875
Capital expenditures		156	413		569		31		34			65		273			21		4		31		175			1,138

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF

FREEPORT-McMoRan COPPER & GOLD INC.

We have reviewed the condensed consolidated balance sheet of Freeport-McMoRan Copper & Gold Inc. as of ~~June~~September 30, 2008, and the related consolidated statements of income for the three-month and ~~six-month~~nine-month periods ended ~~June~~September 30, 2008 and 2007, the consolidated statements of cash flows for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2008 and 2007, and the consolidated statement of stockholders’ equity for the ~~six-month~~nine-month period ended ~~June~~September 30, 2008. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Freeport-McMoRan Copper & Gold Inc. as of December 31, 2007, and the related consolidated statements of income, cash flows, and stockholders’ equity for the year then ended (not presented herein), and in our report dated February 29, 2008, we expressed an unqualified opinion on those consolidated financial statements and which report included an explanatory paragraph for the Company’s adoption of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109,” effective January 1, 2007; Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), “Share-Based Payment,” effective January 1, 2006; Emerging Issues Task Force Issue No. 04-6, “Accounting for Stripping Costs Incurred during Production in the Mining Industry,” effective January 1, 2006; and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132R,” effective December 31, 2006. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2007, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

ERNST & YOUNG LLP

Phoenix, Arizona

~~August 8,~~November 4, 2008

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

COMPANY OVERVIEW

In Management’s Discussion and Analysis of Financial Condition and Results of Operations, “we,” “us” and “our” refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries, including, except as otherwise stated, Phelps Dodge Corporation (Phelps Dodge) and its subsidiaries, which we acquired on March 19, 2007. You should read this discussion in conjunction with our financial statements, the related Management’s Discussion and Analysis of Financial Condition and Results of Operations and the discussion of our “Business and Properties” in our Form 10-K for the year ended December 31, 2007, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results. In particular, the financial results included for the first ~~six~~nine months of 2007 include the operations of Phelps Dodge only since March 20, 2007, not the full ~~six-month~~nine-month period because of the accounting treatment for the acquisition. References to “Notes” are Notes included in our “Notes to Consolidated Financial Statements.” Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations, all references to earnings or losses per share are on a diluted basis, unless otherwise noted.

We are one of the world’s largest copper, gold and molybdenum mining companies in terms of reserves and production. Our portfolio of assets includes the Grasberg minerals district in Indonesia, which contains the largest single recoverable copper reserve and the largest single gold reserve of any mine in the world based on the latest available reserve data provided by third-party industry consultants; significant mining operations in North and South America; and the Tenke Fungurume development project in the Democratic Republic of Congo (DRC).

In North America, we have ~~seven~~six operating copper mines – Morenci, Bagdad, Sierrita ~~Safford~~ and ~~Miami~~Safford in Arizona and Chino and Tyrone in New ~~Mexico, as well as one operating molybdenum mine – Henderson in Colorado. In addition, we are restarting the Climax molybdenum mine in Colorado.~~Mexico. All of these mining operations are wholly owned, except for Morenci. We have an 85 percent undivided interest in Morenci, an unincorporated joint venture. ~~The North America operations are operated in an integrated fashion and have long-lived reserves with additional development potential.~~

In South America, we have four operating copper mines – Cerro Verde in Peru, and Candelaria, Ojos del Salado and El Abra in Chile. We own a 53.56 percent interest in Cerro Verde, an 80 percent interest in both Candelaria and Ojos del Salado and a 51 percent interest in El Abra.

We own 90.64 percent of PT Freeport Indonesia, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama. PT Freeport Indonesia operates under an agreement, called a Contract of Work, with the Government of Indonesia that allows us to conduct exploration, mining and production activities in a 24,700-acre area called Block A located in Papua, Indonesia. Under the Contract of Work, PT Freeport Indonesia also conducts exploration activities in an approximate 500,000-acre area called Block B in Papua. All of PT Freeport Indonesia’s proven and probable mineral reserves and current mining operations, including the Grasberg minerals district, are located in Block A.

Our Molybdenum operations include our wholly owned Henderson mine in Colorado, and also includes our wholly owned Climax mine in Colorado, which has been on care-and-maintenance status since 1995. On November 10, 2008, we announced the suspension of construction activities associated with the restart of the Climax molybdenum mine (refer to “Development Projects” for further discussion).

We also operate Atlantic Copper S.A. (Atlantic Copper), a wholly owned subsidiary, located in Spain. Atlantic Copper’s operations involve the smelting and refining of copper concentrates and the marketing of refined copper and precious metals in slimes. Additionally, PT Freeport Indonesia owns a 25 percent interest in PT Smelting, an Indonesian company, which operates a copper smelter and refinery in Gresik, Indonesia.

Phelps Dodge also had an international manufacturing division, Phelps Dodge International Corporation (PDIC), which manufactured engineered wire and cable products principally for the global energy sector. On October 31, 2007, we sold PDIC, and as a result, the operating results of PDIC have been ~~removed from continuing operations and~~ reported as discontinued operations in the consolidated statements of income.

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RECENT EVENTS

~~ACQUISITION OF PHELPS DODGE~~Since completion of the Phelps Dodge acquisition in March 2007, our business strategy has been focused on defining the potential of our resources and developing expansion and growth plans to deliver additional volumes to a growing marketplace. Following the achievement of $10 billion in debt reduction during 2007, our financial policy was designed to use our cash flows to invest in growth projects with high rates of return and return excess cash flows to shareholders in the form of dividends and share purchases.

In response to the dramatic shift in global economic conditions that occurred in September and October 2008, we are revising our near-term business strategy. The sudden downturn in global economic and credit conditions and accompanying financial market turmoil has resulted in a sharp decline in commodity prices. Copper prices fell from $3.98 per pound at June 30, 2008, to $2.91 per pound at September 30, 2008, and further to $1.82 per pound at November 10, 2008. While our long-term strategy of developing our resources to their full potential remains in place, the severity of the decline in prices and the present economic and credit environment will limit our ability to invest in growth projects and require us to make adjustments to our near-term plans.

~~Phelps Dodge became~~While we view the long-term outlook for our ~~wholly owned subsidiary~~business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy, we are responding aggressively to the sudden downturn and uncertain near-term outlook. Operating plans are being revised to target reductions in costs, defer or eliminate capital projects, defer exploration expenditures and potentially curtail production at high-cost operations. Our near-term strategy will be designed to protect liquidity while preserving our large mineral resources and growth options for the longer term.

As an initial step, we announced in October 2008 a total of $500 million of capital cost reductions in 2008 and 2009, which included a decision to defer incremental expansion projects at Sierrita and Bagdad and the planned restart of the Miami mine. We are targeting additional capital cost reductions and will defer discretionary spending pending improvement in market conditions. Spending on projects in the early stages of planning and construction are being reviewed. On November 10, 2008, we announced plans to defer start-up of the Climax molybdenum mine, previously expected to restart in 2010. We are also considering the timing of the development of the $450 million El Abra sulfide project. In addition, we are reducing equipment purchases which were previously planned to support expansion plans. Refer to “Development Projects” and “Capital Resources and Liquidity – Investing Activities” for further discussion.

We are preparing revised plans at each of our operations to establish lower operating and administrative costs, reflect lower commodity-based input costs and reduced capital spending budgets. Certain operations may be curtailed in response to market conditions and exploration spending will also be reduced. We expect to provide an update on our revised operating plans in December 2008.

We have a $1.5 billion revolving credit facility which matures in March ~~19, 2007. In~~2012. At September 30, 2008, no amounts were drawn and availability totaled approximately $1.4 billion after considering outstanding letters of credit. We plan to use the ~~acquisition, each~~facility from time to time for working capital and short term funding requirements but do not intend to use the facility for long-term funding items. We will continue to monitor the capital markets for additional long-term funding opportunities but under current conditions, such opportunities are costly and limited.

Additionally, in mid-September 2008, we suspended our share purchase program in response to financial market turmoil. The Board of ~~Phelps Dodge common stock was exchanged for 0.67 of a~~Directors reviews our dividend, which is currently $2.00 per share ~~of FCX~~on our common stock, and ~~$88.00 in cash. As a result, we issued 136.9 million shares~~financial policy on an ongoing basis and paid $18.0 billion in cash to Phelps Dodge shareholders for total consideration of $25.8 billion. The results of Phelps Dodge’s operations are included in our consolidated financial statements beginning March 20, 2007.

~~Accounting for~~will be considering the ~~Acquisition.~~ The acquisition of Phelps Dodge was accounted for under the purchase method as required by Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations,” with FCX as the accounting acquirer. In accordance with the purchase method of accounting, the purchase price has been allocated to the assets acquired and liabilities assumed based upon their fair values on the acquisition date of March 19, 2007. In valuing acquired assets and assumed liabilities, fair values were based on, but were not limited to: quoted market prices, where available; our intent with respect to whether the assets purchased were to be held, sold or abandoned; expected future cash flows; current replacement cost for similar capacity for certain fixed assets; market rate assumptions for contractual obligations; and appropriate discount rates and growth rates.

At June 30, 2008, the carrying value of goodwill associated with our acquisition of Phelps Dodge totaled approximately $6.0 billion, which primarily related to the requirement to recognize a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in the business combination. FCX has allocated goodwill to the individual mines it believes have contributed to the excess purchase price and also included considerationimpact of the ~~mines’ potential for future growth (refer to Note 10 for the allocation of goodwill to~~recent decline in commodity prices on our ~~reportable segments).~~

~~The following table summarizes the impacts of purchase accounting fair value adjustments on~~ operating ~~income~~ and income from continuing operations for the three and six month periods ended June 30, 2008, and 2007. These impacts are primarily associated with fair value adjustments that increased the carrying values of Phelps Dodge’s property, plant and equipment and metal inventories, including mill and leach stockpiles (in millions):

Six Months Ended
Second-Quarter June 30,
2008 2007 2008
2007a

Purchase accounting impacts:
Revenues $ 3 $ – $ 3 $ –
Production and delivery costs (12 ) (269 ) (84 ) (365 )
Depreciation, depletion and amortization (230 ) (186 ) (437 ) (214 )
Reduction of operating income $ (239 ) $ (455 ) $ (518 ) $ (579 )

Reduction of income from continuing operations $ (163
)b
$ (284 ) $ (347
)b
$ (363 )

a.	~~Represents purchase accounting impacts for the period March 20, 2007, through June 30, 2007.~~

Includes net purchase accounting fair value adjustments related to non-operating income and expenses of $22 million ($13 million to net income) in second-quarter 2008 and $37 million ($22 million to net income) for the first six months of 2008 primarily related to accretion of the fair values determined on a discounted cash flow basis for environmental liabilities assumed in the acquisition of Phelps Dodge.

financial plans.

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COPPER, GOLD AND MOLYBDENUM MARKETS

The graphs below ~~are intended to~~ illustrate the movements in metals prices from 1992 through ~~July~~November 10, 2008. World prices for copper, gold and molybdenum have fluctuated significantly during this period. The London Metal Exchange (LME) ~~spot~~ copper price varied from a low of $0.60 per pound in 2001 to record highs above $4.00 per pound in July 2008, the London gold price fluctuated from a low of approximately $250 per ounce in 1999 to record highs above $1,000 per ounce in March 2008, and the Metals Week Molybdenum Dealer Oxide prices ranged from a low of $1.82 per pound in 1992 to a high of $40.00 per pound in 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2007.

* Excludes Shanghai stocks, producer, consumer and merchant stocks.

The graph above presents LME ~~spot~~ copper prices and reported stocks of copper at the LME and New York Mercantile Exchange and Commodity Exchange (COMEX) through ~~July 31,~~November 10, 2008. ~~Since~~During the period 2003 to 2006, global consumption ~~has~~ exceeded production, evidenced by the decline in exchange warehouse inventories. ~~Combined~~During the last few years, combined LME and COMEX stocks ofremained at low levels and totaled approximately ~~132,600~~208 thousand metric tons at ~~June~~September 30, 2008, ~~remain at historically low levels, representing less than three~~which represented approximately four days of global consumption. Disruptions associated with strikes and other operational issues, combined with growing demand from China and other emerging economies resulted in low levels of inventory in 2006, 2007 and during the first ~~half~~nine months of 2008. The recent turmoil in the United States (U.S.) banking and financial markets and concerns about the global economy negatively impacted copper prices late in the third quarter of 2008. During ~~second-quarter~~third-quarter 2008, LME copper prices were volatile ranging from $2.91 per pound to $4.08 per pound, averaging $3.49 per pound and closing at $2.91 per pound on September 30, 2008. Subsequent to September 30, 2008, copper prices ~~continued to be strong, with~~have been significantly impacted as a result of heightened financial market turmoil and demand related concerns. During October 2008, LME copper prices ~~ranging~~ranged from ~~$3.59~~$1.67 per pound to ~~$4.03~~$2.89 per pound, and ~~averaging $3.83~~closed at $1.82 per ~~pound.~~pound on November 10, 2008. Despite the significant decline in copper prices, global inventories remain at low levels and supply issues continue. While the near-term outlook is weak and uncertain, we believe the underlying fundamentals of the copper business remain positive supported by supply side constraints and the absence of significant new development projects. Future copper prices may continue to be volatile and are expected to be influenced by demand from China, economic activity in the ~~United States (U.S.)~~U.S. and other industrialized countries, the timing of the development of new supplies of copper, production levels of mines and copper smelters and the level of direct participation by investors. We consider the current underlying supply and demand conditions in the global copper markets to be positive for our company and continue to pursue opportunities to expand production. The LME spot price closed at $3.75 per pound on July 31, 2008; however, prices declined in early August 2008 with the LME spot price closing at $3.41 per pound on August 8, 2008.

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~~Gold prices continue to be supported by increased investment demand for gold, ongoing geopolitical tensions, a weak~~

The strengthening of the U.S. dollar ~~inflationary pressures and reduced mine supply.~~in recent months resulted in lower gold prices. During ~~second-quarter~~third-quarter 2008 gold prices ranged from approximately ~~$853~~$741 per ounce to ~~$946~~$986 per ounce and averaged approximately ~~$896~~$872 per ounce. ~~On July 31,~~The U.S. dollar continued to strengthen during October 2008, and on November 10, 2008, London gold prices closed at approximately ~~$918~~$753 per ~~ounce; however, prices declined in early August 2008 with the London gold price closing at $853 per ounce on August 8, 2008.~~ounce.

Molybdenum markets have been strong in recent years with growing demand and limited supply. During ~~second-quarter~~third-quarter 2008, molybdenum prices ranged from ~~$32.20~~$32.25 per pound to ~~$33.50~~$33.88 per pound and averaged ~~$32.93~~$33.50 per pound. ~~The~~While molybdenum prices have been relatively stable during the first nine months of 2008, prices have declined recently as a result of the financial market turmoil and demand-related concerns. During October 2008, the Metals Week Molybdenum Dealer Oxide price ranged from $24.25 per pound to $31.40 per pound, and was ~~$33.75~~$12.00 per pound on ~~July 28, 2008 and August 4,~~November 10, 2008.

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CONSOLIDATED RESULTS and OUTLOOK

~~Consolidated sales volumes (excluding sales~~

							Nine Months Ended
	Third-Quarter						September 30,
	2008			2007			2008			2007
Financial Data (in millions, except per share amounts)
Revenues	$	4,616	a,b	$	5,066	a,c	$	15,729	a,b	$	12,755	a,c
Operating income		1,133	a,b,d,e		1,877	a,c,d		5,582	a,b,d,e		5,403	a,c,d
Income from continuing operations applicable
to common stockf		523			763			2,592			2,311
Net income applicable to common stockf		523	b,d,e		775	c,d,g		2,592	b,d,e,g		2,355	c,d,g
Diluted net income per share of common stockh:
Continuing operations	$	1.31		$	1.85		$	6.20		$	6.46
Discontinued operations		–			0.02			–			0.12
Diluted net income per share of common stock	$	1.31	b,d,e	$	1.87	c,d,g	$	6.20	b,d,e,g	$	6.58	c,d,g
Diluted average common shares outstandingh,i		447			447			449			380

Operating Data - Sales from Mines, Excluding Sales
of Purchased Metal
Copper
Consolidated share (millions of recoverable pounds)		1,016			949			2,869			2,479
Average realized price per pound	$	3.14		$	3.53	c	$	3.43		$	3.43	c
Site production and delivery costs per poundj	$	1.66		$	1.31		$	1.58		$	1.21
Unit net cash costs per poundj	$	1.29		$	1.05		$	1.21		$	0.57
Gold
Consolidated share (thousands of recoverable ounces)		307			269			852			2,137
Average realized price per ounce	$	869		$	695		$	897		$	669
Molybdenum
Consolidated share (millions of recoverable pounds)		19			16			59			33
Average realized price per pound	$	32.11		$	27.89		$	31.78		$	26.22

As discussed in Note 10, we have revised the presentation of our operating divisions to better reflect management’s view of the consolidated FCX operations, and have also reclassified amounts for the 2007 periods to conform with the current period presentation. Following is a summary of revenues and operating income by operating division for the third quarters and first nine months of 2008 and 2007 (in millions):

	Third-Quarter 2008						Third-Quarter 2007
				Operating						Operating
	Revenues			Income			Revenues			Income
North America copper mines	$	1,402		$	361		$	1,526		$	561
South America copper mines		1,008			388			1,368			819
Indonesia		802			260			837			399
Molybdenum		683			211			519			112
Rod & Refining		1,485			5			1,736			7
Atlantic Copper Smelting & Refining		625			1			688			1
Corporate, other & eliminations		(1,389	)		(93	)		(1,608	)		(22	)
Total FCX	$	4,616		$	1,133		$	5,066		$	1,877

	Nine Months Ended						Nine Months Ended
	September 30, 2008						September 30, 2007
				Operating						Operating
	Revenues			Income			Revenues			Income
North America copper mines	$	4,469		$	1,688		$	2,835		$	955
South America copper mines		4,043			2,272			2,869			1,737
Indonesia		2,870			1,313			4,308			2,953
Molybdenum		2,117			644			1,034			139
Rod & Refining		4,856			20			3,781			18
Atlantic Copper Smelting & Refining		2,014			9			1,761			10
Corporate, other & eliminations		(4,640	)		(364	)		(3,833	)		(409	)
Total FCX	$	15,729		$	5,582		$	12,755		$	5,403

Includes charges totaling $66 million ($40 million to net income or $0.09 per share) in third-quarter 2008 and $35 million ($21 million to net income or $0.05 per share) for the first nine months of 2008 for unrealized losses on copper derivative contracts entered into with our U.S. copper rod customers, which will allow FCX to receive market prices in the month of shipment while the customer pays the fixed price they requested.

Table of ~~purchased metal)~~Contents

Includes charges to revenues for mark-to-market accounting adjustments on the 2007 copper price protection program totaling $44 million ($26 million to net income or $0.06 per share) and a reduction in average realized copper prices of $0.04 per pound in third-quarter 2007, and $212 million ($129 million to net income or $0.34 per share) and a reduction in average realized copper prices of $0.08 per pound for the first nine months of 2007.

Includes the impacts of purchase accounting fair value adjustments associated with the acquisition of Phelps Dodge, which are primarily because of increased carrying values of acquired property, plant and equipment and metal inventories, including mill and leach stockpiles, and also includes amounts for non-operating income and expense mostly related to accretion of the fair values of assumed environmental liabilities (determined on a discounted cash flow basis). These impacts totaled $293 million, $263 million to operating income and $30 million for non-operating income and expenses, ($183 million to net income or $0.41 per share) in third-quarter 2008 and $849 million, $781 million to operating income and $68 million for non-operating income and expenses, ($530 million to net income or $1.18 per share) for the first nine months of 2008.

The impact of purchase accounting fair value adjustments associated with the acquisition of Phelps Dodge totaled $449 million, $445 million to operating income and $4 million for ~~second-quarter 2008 totaled 942~~non-operating income and expenses, ($279 million ~~pounds of copper, 265 thousand ounces of gold~~to net income or $0.62 per share) in third-quarter 2007 and 20$1.0 billion, $1.0 billion to operating income and $4 million ~~pounds of molybdenum, compared with approximately 1.0 billion pounds of copper, 913 thousand ounces of gold~~for non-operating income and 15expenses, ($642 million ~~pounds of molybdenum for second-quarter 2007. Consolidated sales volumes (excluding sales of purchased metal)~~to net income or $1.69 per share) for the first ~~six~~nine months of 2007.

(Refer to Note 10 for a summary of the impacts of purchase accounting fair value adjustments on our business segments for the three-month and nine-month periods ended September 30, 2008 and 2007.)

Includes charges for lower-of-cost or market (LCM) inventory adjustments at certain of our North America copper mines totaling $16 million ($11 million to net income or $0.02 per share) in third-quarter 2008 and $22 million ($14 million to net income or $0.03 per share) for the first nine months of 2008.

f.	After preferred dividends.

Includes net losses on early extinguishment of debt totaling $6 million ($5 million to net income or $0.01 per share) for the first nine months of 2008 associated with an open-market purchase of our 9.5% Senior Notes. The first nine months of 2008 also includes gains on the sales of assets totaling $13 million ($8 million to net income or $0.02 per share).

Net losses on early extinguishment of debt totaling $36 million ($31 million to net income or $0.07 per share) in third-quarter 2007 and $171 million ($141 million to net income or $0.37 per share) for the first nine months of 2007 primarily related to premiums paid and the accelerated recognition of deferred financing costs associated with early repayments of debt. Also includes gains on the sales of assets totaling $47 million ($29 million to net income or $0.06 per share) for third-quarter 2007 and $85 million ($52 million to net income or $0.14 per share) for the first nine months of 2007.

h.	Reflects assumed conversion of our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock.

On March 19, 2007, we issued 137 million common shares to acquire Phelps Dodge, and on March 28, 2007, we sold 47 million common shares. Common shares outstanding on September 30, 2008, totaled 378 million. Assuming conversion of the instruments discussed in Note h above and including dilutive stock options and restricted stock units, total common shares outstanding would approximate 444 million at September 30, 2008.

Reflects per pound weighted average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines. For reconciliations of the actual and pro forma per pound costs by operating division to production and delivery costs applicable to actual or pro forma sales reported in our consolidated financial statements or pro forma consolidated financial results, refer to “Unit Net Cash Costs” included in “Operations” and to “Product Revenues and Production Costs.”

Outlook

During September and October 2008, global economic conditions weakened dramatically and there is significant uncertainty about the near-term price outlook for our principal products. While we view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy, we are responding to the sudden downturn and uncertain near-term outlook. Operating plans are being revised to target reductions in costs, defer or eliminate capital projects, defer exploration expenditures and potentially curtail production at high-cost operations. Refer to “Recent Events” for further discussion.

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Following is a summary of our actual consolidated sales volumes for the first nine months of 2008 ~~totaled approximately 1.9 billion pounds of copper, 545 thousand ounces of gold~~ and 40 million pounds of molybdenum, compared with approximately 1.5 billion pounds of copper, 1.9 million ounces of gold and 17 million pounds of molybdenum for the first six months of 2007. Pro forma sales volumes (excluding sales of purchased metal) for the first six months of 2007, including Phelps Dodge sales volumes prior to the acquisition, totaled approximately 2.0 billion pounds of copper, 1.9 million ounces of gold and 34 million pounds of molybdenum.

~~Because of mine sequencing at Grasberg and the ramp up of production at the Safford mine, second-half 2008 production and sales are expected to be higher than the first half of 2008. Projected~~projected consolidated sales volumes (excluding sales of purchased metal) for the ~~full~~year 2008:

	2008
	First
	Nine Months		Full-Year
	(Actual)		(Estimate)
Copper (billions of recoverable pounds):
North America copper mines		1.1		1.4
South America copper mines		1.1		1.5
Indonesia		0.7		1.1
		2.9		4.0
Gold (millions of recoverable ounces)
Indonesia		0.7		1.1
Other		0.1		0.1
		0.8		1.2

Molybdenum (millions of recoverable pounds)a		59		74

a.	Includes sales of molybdenum produced as a by-product at our North America and South America copper mines.

Copper sales of approximately 4.0 billion pounds for the year 2008 are estimated to be 4.1 billion pounds of copper, 1.4 million ounces of gold and 75 million pounds of molybdenum, including 2.2 billion pounds of copper, 890 thousand ounces of gold and 35 million pounds of molybdenum in the second half of 2008. Copper sales are expected to be approximately 100 million pounds lower than ~~previous~~July estimates and 2008 gold sales of approximately 1.2 million ounces are expected to be approximately 200 thousand ounces lower than July estimates primarily because of ~~delays in achieving full production~~a small scale failure at the new Safford mine and lower than expected production at Morenci. Achievement of the above sales estimates depends on the achievement of targeted mining rates and expansion plans, the successful operation of production facilities, the impact of weather conditions and other factors. Additionally, sales volumes may vary from these estimates depending on the areas being mined within the Grasberg open pit ~~with quarterly sales volumes expected~~in early September 2008, which limited access to ~~vary significantly.~~a high grade section of the Grasberg open pit. Remediation activities at Grasberg have been substantially completed and we regained access in October 2008 to the high-grade material previously restricted. Refer to “Operations” for further discussion of sales volumes at our North America and South America copper mines, Indonesia operations and ~~Indonesia~~Molybdenum operations.

Consolidated revenues, operating cash flows and net income vary significantly with fluctuations in the market prices of copper, gold and molybdenum, sales volumes and other factors. Based on projected consolidated sales volumes (excluding sales of purchased metal) for 2008 and assuming an average price of $3.75 per pound of copper, $900 per ounce of gold and $30 per pound of molybdenum for the remainder of 2008, our consolidated operating cash flow would approximate $6.0 billion in 2008, including net reductions totaling $1.8 billion for estimated working capital requirements. Each $0.20 per pound change in copper prices for the balance of the year would have an approximate $300 million impact on 2008 operating cash flows.

~~We continue to experience increases in our worldwide copper production costs.~~ Consolidated unit net cash costs ~~for the second quarter of 2008 increased to $1.25 per pound of copper, compared to $1.06~~were $1.29 per pound of copper in third-quarter 2008 and $1.21 per pound of copper for the first ~~quarter~~nine months of 2008, compared to $1.05 per pound of copper in third-quarter 2007 and $0.57 per pound of copper for the first nine months of 2007. The increase in cash costs over the year ago periods primarily ~~because of~~reflects higher ~~commodity~~commodity-based input costs, ~~mostly~~principally related to energy and ~~lower by-product credits, partly offset by higher~~sulfuric acid. Energy costs, which are expected to approximate 25 percent of our consolidated copper ~~volumes.~~production costs for 2008, include annual purchases of approximately 230 million gallons of diesel fuel, 800 thousand metric tons of coal, 6,600 gigawatt hours of electricity and 2 million MMBTU of natural gas. Because energy is a significant portion of our production costs, we have been negatively impacted by ~~rising~~higher energy ~~prices and could continue to be impacted by future energy availability issues and/or additional increases~~prices. However, as a result of the recent declines in energy, ~~prices. Energy~~steel and sulfuric acid prices, we expect commodity-based input costs ~~which are expected~~will begin to ~~approximate 30 percent~~decline from the levels experienced in third-quarter 2008. Assuming average prices of our consolidated copper production costs for 2008, include purchases of approximately 225 million gallons of diesel fuel per year, 800 thousand metric tons of coal per year, seven thousand gigawatt hours of electricity and 1.5 million british thermal units of natural gas. Assuming an average price of $3.75$2.15 per pound of copper, ~~$900~~$800 per ounce of gold and ~~$30~~$27 per pound of molybdenum for ~~the remainder of~~fourth-quarter 2008, and using recent prices for commodity-based input costs, we estimate our consolidated unit net cash costs would average approximately $1.07 per pound for fourth-quarter 2008 and approximately $1.17 per pound for the ~~year~~year. Projected unit net cash costs for 2008 ~~would approximate~~are higher than the July estimate of $1.10 per pound ~~which is higher than previous estimates~~ primarily because of ~~increases in energy and other input costs.~~the impact of lower volumes at Grasberg.

We ~~also have significant development activities under way~~are engaged in capital projects to expand our production volumes, extend our mine lives and develop large-scale underground ore bodies. Capital costs associated with these development activities have also been affected by rising input costs, including equipment, materials and supplies and labor. Additionally, our development of large-scale underground ore bodies in Indonesia ~~are~~is more sensitive to labor costs than our large-scale open pit and mill processing operations. Accordingly, increasing labor costs without corresponding productivity gains will adversely impact our current and future underground development and operations. ~~For~~Future capital spending plans are being reviewed in response to the impact of recent changes in global economic conditions on commodity prices. Refer to “Development Projects” for further ~~discussion~~discussion.

In connection with our March 2007 acquisition of Phelps Dodge, acquired inventories, including mill and leach stockpiles, were recorded at fair value based on market prices and the outlook for future prices at the acquisition date. Accounting rules require that inventories be recorded at the lower of cost or market. As a result of declines in copper prices and increased input costs, we recorded charges to operating income for LCM inventory adjustments at certain of our ~~significant development projects refer~~North America copper mines totaling $16 million ($11 million to ~~“Development Projects.”~~

net income or $0.02 per share) in third-quarter 2008 and $22 million ($14 million to net income or $0.03 per share) for the first nine months of 2008. Subsequent to September 30, 2008, copper prices have fallen dramatically during a time of economic uncertainty

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~~CONSOLIDATED RESULTS~~

Six Months Ended
Second-Quarter June 30,
2008 2007 2008 2007
Financial Data (in millions, except per share amounts)

Revenues $ 5,441 a $ 5,443 a,b $ 11,113 a $ 7,689 a,b
Operating income 2,053 a,c 2,354 a,b 4,449 a,c 3,526 a,b
Income from continuing operations applicable 947 c,e,f 1,076 b,e,f 2,069 c,e,f 1,548 b,e,f
to common stockd

Net income applicable to common stockd
947 c,e,f 1,104 b,e,f 2,069 c,e,f 1,580 b,e,f
Diluted net income per share of common stockg:

Continuing operations $ 2.25 $ 2.56 $ 4.89 $ 4.71
Discontinued operations – 0.06 – 0.09
Diluted net income per share of common stock $ 2.25 c,e,f $ 2.62 b,e,f $ 4.89 c,e,f $ 4.80 b,e,f
Diluted average common shares outstandingg,h
450 446 449 346

Operating Data - Sales from Mines, Excluding Sales
of Purchased Metal
Copper
Consolidated share (millions of recoverable pounds) 942 1,010 1,853 1,530
Average realized price per pound $ 3.85 $ 3.34 b $ 3.77 $ 3.32 b
Site production and delivery costs per poundi
$ 1.59 $ 1.13 $ 1.53 $ 1.04
Unit net cash costs per poundi
$ 1.25 $ 0.53 $ 1.16 $ 0.47
Gold
Consolidated share (thousands of recoverable ounces) 265 913 545 1,869
Average realized price per ounce $ 911.98 $ 658.51 $ 917.37 $ 659.61
Molybdenum
Consolidated share (millions of recoverable pounds) 20 15 40 17
Average realized price per pound $ 31.59 $ 24.83 $ 31.63 $ 24.68

a.	~~A summary of revenues and operating income (loss) by operating division for the second quarters and first six months of 2008 and 2007 follow (in millions):~~

Second-Quarter 2008 Second-Quarter 2007
Operating Operating
Income Income
Revenues (Loss) Revenues (Loss)
North America $ 3,145 $ 903 $ 2,683 $ 404
South America 1,409 820 1,232 793
Indonesia 1,016 482 1,762 1,271
Atlantic Copper smelting & refining 724 11 619 (4 )
Corporate, other & eliminations (853 ) (163 ) (853 ) (110 )
Total FCX $ 5,441 $ 2,053 $ 5,443 $ 2,354

Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
Operating Operating
Income Income
Revenues (Loss) Revenues (Loss)
North America $ 6,418 $ 1,801 $ 3,002 $ 381
South America 3,002 1,851 1,494 911
Indonesia 2,068 1,053 3,471 2,554
Atlantic Copper smelting & refining 1,389 8 1,073 9
Corporate, other & eliminations (1,764 ) (264 ) (1,351 ) (329 )
Total FCX $ 11,113 $ 4,449 $ 7,689 $ 3,526

~~Refer to Note 10 for further discussion of our operating divisions.~~

b.	Includes charges to revenues for mark-to-market accounting adjustments on the 2007 copper price protection program totaling $130 million ($80 million to net income or $0.18 per share) and a reduction in

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and financial market turmoil. If current weak economic conditions continue, additional charges for LCM inventory adjustments are likely to be recorded in fourth-quarter 2008.

~~average realized copper prices~~Additionally, during fourth-quarter 2008, we will undertake a review of ~~$0.13 per pound in second-quarter 2007, and $168 million ($103 million to net income or $0.30 per share) and a reduction in average realized prices~~the carrying values of ~~$0.11 per pound for the first six months of 2007.~~

c.	~~Includes costs totaling approximately $25 million ($13 million to net income or $0.03 per share) in the second quarter and first six months of 2008 for local infrastructure projects in South America.~~

d.	~~After preferred dividends.~~

Includes the impact of purchase accounting fair value adjustments associated with the acquisition of Phelps Dodge totaling $262 million ($163 million to net income or $0.36 per share) in second-quarter 2008 and $556 million ($347 million to net income or $0.77 per share) for the first six months of 2008. These purchase accounting fair value adjustments include amounts for non-operating income and expenses totaling $22 million ($13 million to net income or $0.03 per share) in second-quarter 2008 and $37 million ($22 million to net income or $0.05 per share) for the first six months of 2008 primarily related to accretion of the fair values determined on a discounted cash flow basis for environmental liabilities assumed in the acquisition of Phelps Dodge.

~~Includes the impact of purchase accounting fair value adjustments~~our long-lived assets, including goodwill associated with the acquisition of Phelps Dodge. If current weak economic conditions continue, we may be required to record charges to income during fourth-quarter 2008. At September 30, 2008, the carrying value of goodwill associated with our acquisition of Phelps Dodge ~~totaling $456 million ($284 million~~totaled approximately $6.0 billion, which primarily relates to ~~net income or $0.64 per share) in second-quarter 2007 and $579 million ($363 million~~the requirement to ~~net income or $1.05 per share)~~recognize a deferred tax liability for the ~~first six months~~difference between assigned values and the tax bases of ~~2007.~~

Includes a loss on early extinguishment of debt totaling $6 million ($5 million to net income or $0.01 per share) for the first six months of 2008 associated with an open-market purchase of our 9.5% Senior Notes. The second quarterassets acquired and liabilities assumed. This amount has been allocated to the individual mines we believe have contributed to the excess purchase price and ~~first six months of 2008~~ also ~~include gains on the sales of assets totaling $13 million ($8 million to net income or $0.02 per share).~~

~~Includes net losses~~ on ~~early extinguishment~~the basis of ~~debt totaling $47 million ($35 million~~the mines’ potential for future growth (refer to ~~net income or $0.08 per share) in second-quarter 2007 and $135 million ($110 million to net income or $0.32 per share)~~Note 10 for the ~~first six months~~allocation of ~~2007 primarily~~goodwill to our reportable segments). At the acquisition date, metal price projections used to value the net assets acquired ranged from near-term prices of $2.98 per pound of copper and $26.20 per pound of molybdenum to long-term average prices of $1.20 per pound of copper and $8.00 per pound of molybdenum). Goodwill has an indefinite useful life and is not amortized, but rather is tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of a related reporting unit below its carrying amount. We will perform our next annual impairment test of goodwill in fourth-quarter 2008. Our impairment test for goodwill requires us to ~~premiums paid~~make several assumptions in determining the fair value of reporting units to which we have allocated goodwill, including near and long-term metal price assumptions (primarily for copper and molybdenum); estimates of commodity-based input costs such as energy, labor and sulfuric acid; proven and probable reserve estimates, including any costs to develop the reserves and the ~~accelerated recognition~~timing of ~~deferred financing costs associated with prepayments~~producing the reserves; and the use of ~~debt. The second quarter and first six months~~appropriate current discount rates. If current weak economic conditions continue, we may be required to record significant impairments of ~~2007 also include gains on the sales of assets totaling $38 million ($23 million~~goodwill in fourth-quarter 2008. Refer to ~~net income or $0.05 per share~~Item “Risk Factors” contained in Part II, Item 1A for ~~second-quarter 2007 and $0.07 per share for the first six months of 2007).~~

g.	~~Reflects assumed conversion of our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock.~~

On March 19, 2007, we issued 137 million common shares to acquire Phelps Dodge, and on March 28, 2007, we sold 47 million common shares. Common shares outstanding on June 30, 2008, totaled 384 million. Assuming conversion of the instruments discussed in Note g above and including dilutive stock options and restricted stock units, total common shares outstanding would approximate 450 million at June 30, 2008.

Reflects per pound weighted average production and delivery costs and unit net cash costs (net of by-product credits) for all mines. For reconciliations of the actual and pro forma per pound costs by geographic region to production and delivery costs applicable to actual or pro forma sales reported in our consolidated financial statements or pro forma consolidated financial results, refer to “Unit Net Cash Costs” included in “Operations” and to “Product Revenues and Production Costs.”

further discussion.

Revenues

Consolidated revenues include the sales of copper, copper concentrates, molybdenum, gold ~~molybdenum~~ and other metals ~~and metal-related products~~ by our North America and South America copper mines and Molybdenum operations, our Indonesia operation’s sale of copper concentrates (which also contain significant quantities of gold and silver), and the sale by Atlantic Copper of copper anodes, copper cathodes, and gold in anodes and slimes. Consolidated revenues totaled approximately $4.6 billion in ~~both second-quarter~~third-quarter 2008 and ~~2007 totaled approximately $5.4 billion. Consolidated revenues~~$15.7 billion for ~~second-quarter~~the first nine months of 2008, compared with second-quarter 2007, reflected lower copper and gold sales volumes at our Indonesia operations associated with mining lower-grade ore during second-quarter 2008, offset by higher copper, gold and molybdenum prices.

~~Revenues~~approximately $5.1 billion in third-quarter 2007and $12.8 billion for the first ~~six~~nine months of ~~2008 were approximately $3.4 billion higher than~~2007. Following is a summary of changes in ~~the comparable 2007 period reflecting higher overall copper and molybdenum sales volumes because of a full six months of activity from~~ our ~~North and South America operations in 2008, partly offset by lower sales volumes at our Indonesia~~ ~~operations associated with mining lower-grade ore during the first six months of 2008. Higher~~consolidated revenues ~~for the first six months of 2008 also reflected higher copper, gold and molybdenum prices.~~between periods (in millions):

	Third			Nine
	Quarter			Months
Consolidated revenues – prior year period	$	5,066		$	12,755
Sales volumes:
Copper		242			1,370	a
Gold		26			(860	)
Molybdenum		70			674	a
Price realizations:
Copper		(436	)		(224	)
Gold		53			194
Molybdenum		78			327
Purchased copper and molybdenum		(165	)		324
Adjustments, primarily for copper pricing on prior period/year open sales		(172	)		310
Unrealized losses on derivative contracts		(67	)		(39	)
Treatment charges		40			110
Impact of the 2007 copper price protection program		44			212
Atlantic Copper revenues		(63	)		253
Other, net		(100	)		323
Consolidated revenues – current year period	$	4,616		$	15,729

Reflects a full nine months of sales for 2008 at our North America and South America copper mines and Molybdenum operations, compared with the first nine months of 2007, which included sales beginning March 20, 2007, for these operations. Refer to “Operations” for further discussion of copper sales volumes at our North America copper mines, South America copper mines, Indonesia operation and Molybdenum operations.

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For the third quarter and first ~~six~~nine months of 2008, approximately half of our mined copper was sold in concentrate, 30 percent as rod (principally from our North America operations) and ~~the remaining~~ 20 percent as cathodes. Substantially all of our concentrate sales contracts and some of our cathode sales contracts provide final copper pricing in a specified future period (generally one to four months from the shipment date) based primarily on quoted LME prices. We ultimately receive market prices based on prices in the specified future period; however, the accounting rules applied to these sales result in changes recorded to revenues until the specified future period. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our provisional priced concentrate and cathode sales that is adjusted to fair value through earnings each period until the date of final pricing. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues during a quarter benefit from higher prices received for contracts priced at current market rates and also from an increase related to the final pricing of provisionally priced contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

~~Second-quarter~~Third-quarter 2008 LME copper prices averaged ~~$3.83~~$3.49 per pound, compared with our average recorded price of ~~$3.85~~$3.14 per pound. The applicable forward curve price at the end of the quarter was ~~$3.88~~$2.89 per pound. Approximately half of our consolidated copper sales during ~~second-quarter~~third-quarter 2008 were provisionally priced at the time of shipment and are subject to final pricing ~~later~~ in ~~2008.~~fourth-quarter 2008 and into early 2009.

At ~~June~~September 30, 2008, our copper sales included ~~369~~467 million pounds of copper (net of minority interests) priced at an average of ~~$3.88~~$2.89 per pound and subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the ~~June~~September 30, 2008, provisional price recorded would impact our 2008 consolidated revenues by ~~$25~~$31 million ($~~11 million to net income).~~ Prices have declined significantly from the June 30, 2008, price used to determine provisional pricing for our open copper sales. Assuming the settlement price for these sales was the quarter-to-date average price through August 8, 2008, of $3.76 per pound, our third-quarter 2008 revenues would be reduced approximately $60 million (approximately $2615 million to net income). The LME closing spot price for copper on ~~August 8,~~October 31, 2008, was ~~$3.41~~$1.81 per pound. Assuming that the October 31, 2008, quarter-to-date average LME price of $2.23 per pound and forward curve prices of $1.86 per pound were applied to the ~~final pricing for the June~~September 30, 2008, provisionally priced ~~open~~sales, the weighted average prices for these sales would be approximately $1.98 per pound, resulting in a reduction to fourth-quarter 2008 revenues of approximately $560 million ($280 million to net income). We estimate that each $0.05 change in the copper ~~sales will be determined based~~forward curve price on ~~actual settlements occurring throughout the quarter.~~
October 31, 2008, would impact fourth-quarter 2008 net income by approximately $11 million.

At ~~March 31,~~June 30, 2008, ~~362~~369 million pounds of copper (net of minority interests) were provisionally priced at ~~$3.82~~$3.88 per pound. ~~Higher~~Lower prices in ~~second-quarter~~third-quarter 2008 resulted in adjustments to these prior period copper sales and ~~increased~~decreased consolidated revenues by $5$282 million ($3127 million to net income or ~~$0.01~~$0.28 per share), compared with ~~an increase~~a decrease of ~~$188~~$54 million ($9527 million to net income or ~~$0.21~~$0.06 per share) in ~~second-quarter~~third-quarter 2007 related to prior period copper sales. ~~Additionally, adjustments~~Adjustments to prior year copper sales resulted in an increase in consolidated revenues of ~~$267~~$268 million ($~~126~~114 million to net income or ~~$0.28~~$0.25 per share) for the first ~~six~~nine months of 2008, compared with ~~an increase~~a decrease of ~~$90~~$42 million ($4318 million to net income or ~~$0.12~~$0.05 per share) for the first ~~six~~nine months of 2007.

Some of our U.S. copper rod customers request a fixed market price instead of the COMEX average price in the month of shipment. We hedge this price exposure in a manner that allows us to receive the COMEX average price in the month of shipment, while the customer pays the fixed price they requested. We accomplish this by entering into copper futures and swap contracts and then liquidating the copper futures contracts and settling the copper swap contracts during the month of shipment. Currently, these transactions do not meet all the criteria under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, to qualify as a hedge transaction. Consolidated revenues include charges for unrealized losses on copper derivative contracts entered into with our U.S. copper rod customers totaling $66 million ($40 million to net income or $0.09 per share) in third-quarter 2008 and $35 million ($21 million to net income or $0.05 per share) for the first nine months of 2008, compared with gains of $1 million (less than $1 million to net income) in third-quarter 2007 and $4 million ($2 million to net income or $0.01 per share) for the first nine months of 2007.

On limited past occasions, in response to market conditions, we have entered into copper and gold price protection contracts for a portion of our expected future mine production to mitigate the risk of adverse price fluctuations. Also, in connection with the Phelps Dodge acquisition, ~~FCX~~we assumed the 2007 copper price protection program, which resulted in charges to revenues for ~~second-quarter~~third-quarter 2007 totaling ~~$130~~$44 million ($8026 million to net income or ~~$0.18~~$0.06 per share), and ~~$168~~$212 million ($~~103~~129 million to net income or ~~$0.30~~$0.34 per share) for the first ~~six~~nine months of 2007. The 2007 copper price protection program matured on December 31, 2007, and in January 2008, we made a $598 million payment upon the settlement of the related contracts. We do not intend to enter into similar hedging programs in the future.

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Production and Delivery Costs

Consolidated production and delivery costs ~~for second-quarter~~totaled approximately $2.9 billion in third-quarter 2008 ~~were~~and approximately ~~$180 million~~$2.7 billion in third-quarter 2007. Higher production and delivery costs in third-quarter 2008 primarily reflect higher ~~than second-quarter 2007 reflecting increases in our worldwide copper production~~commodity-based input costs ~~including higher~~principally related to energy ~~costs~~and sulfuric acid (refer to “Outlook” ~~and “Operations”~~ for further discussion)~~, and also included higher costs of concentrate purchases at Atlantic Copper associated with higher copper and gold prices.~~. Higher costs were partly offset by ~~$257~~$262 million of lower purchase accounting impacts ~~as impacts~~ associated with increased inventory values that were mostly realized in 2007.

Consolidated production and delivery costs totaled approximately $8.3 billion for the first nine months of 2008 and approximately $6.1 billion for the first nine months of 2007. Higher production and delivery costs for the first ~~six~~nine months of 2008 ~~were approximately $2.0 billion higher than the first six months of 2007, reflecting~~primarily reflect a full ~~six~~nine months of costs associated with our acquired copper and molybdenum operations in North America and South America, ~~operations in 2008~~ as well as the impact of ~~increased worldwide copper production~~higher commodity-based input costs ~~including~~

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~~higher~~principally related to energy ~~costs~~and sulfuric acid (refer to “Outlook” ~~and “Operations”~~ for further discussion). Higher production and delivery costs for the first ~~six~~nine months of 2008 also reflected higher costs of concentrate purchases at Atlantic ~~Copper associated with higher copper and gold prices.~~Copper. Higher costs were partly offset by ~~$281~~$543 million of lower purchase accounting impacts ~~as impacts~~ associated with increased inventory values that were mostly realized in 2007.

As a result of declines in copper prices and increases in input costs, current period production and delivery costs include LCM inventory adjustments at certain of our North America copper mines totaling $16 million ($11 million to net income or $0.02 per share) in third-quarter 2008 and $22 million ($14 million to net income or $0.03 per share) for the first nine months of 2008. Refer to “Outlook” for further discussion.

Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization expense ~~of $462~~totaled $442 million ~~for second-quarter~~in third-quarter 2008 ~~was $88~~and $356 million ~~higher than second-quarter~~in third-quarter 2007. The increase in depreciation, depletion and amortization expense in third-quarter 2008 primarily reflected ~~$44~~$83 million of higher purchase accounting impacts related to the increase in the carrying values of acquired property, plant and equipment resulting from revised valuations of acquired assets that were finalized in first-quarter ~~2008, and also included higher depreciation expense under the unit-of-production method resulting from higher copper production at our North and South America mines in second-quarter~~ 2008.

Consolidated depreciation, depletion and amortization expense totaled $1.3 billion for the first nine months of ~~$880~~2008 and $846 million for the ~~six months of 2008 was $390 million higher than the~~ first ~~six~~nine months of 2007. The increase in depreciation, depletion and amortization expense in the 2008 period primarily reflected ~~$223~~$306 million of higher purchase accounting impacts related to a full ~~six~~nine months of purchase accounting impacts in the 2008 period, combined with increases in the carrying values of acquired property, plant and equipment resulting from revised valuations of acquired assets that were finalized in first-quarter 2008. Higher depreciation, depletion and amortization expense also reflected higher depreciation expense under the unit-of-production method resulting from a full ~~six~~nine months of production from our North America and South America ~~operations~~copper mines in 2008.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses ~~totaled $126~~decreased to $90 million in ~~second-quarter~~third-quarter 2008 and ~~$210~~$300 million for the first ~~six~~nine months of 2008, compared with ~~$135~~$131 million in ~~second-quarter~~third-quarter 2007 and ~~$183~~$314 million for the first ~~six~~nine months of ~~2007. The $27 million increase for the first six months of 2008 reflected a full six months of expense associated with Phelps Dodge operations in 2008, partly offset by reductions to adjust~~ 2007, primarily reflecting lower incentive compensation ~~to actual cash and stock-based awards approved by~~costs in the ~~Corporate Personnel Committee of our Board of Directors in January 2008.~~2008 periods.

Exploration and Research Expenses

Consolidated exploration and research expenses totaled ~~$80~~$77 million for ~~second-quarter~~third-quarter 2008 and $209 million for the first nine months of 2008, compared with $40 million for ~~second-quarter~~third-quarter 2007 and $87 million for the first nine months of 2007. Higher expenditures in ~~second-quarter~~the 2008 periods primarily ~~reflects~~reflected increased exploration efforts in North America, mostly in the Safford ~~Morenci,~~ and ~~Bagdad~~Morenci districts, and also in Africa, including targets outside the area of initial development at Tenke Fungurume. ~~(Refer to “Exploration Activities” for further discussion of our exploration activities.)~~

~~Consolidated exploration and research expenses totaled $132 million~~The increase in expenditures for the first ~~six~~nine months of 2008, compared with ~~$47 million for~~ the ~~first six months of 2007. The increase in expenditures for first six months of 2008 primarily~~2007 period, also reflected a full ~~six~~nine months of exploration and research expenses associated with Phelps Dodge operations in 2008. As a result of recent weak market conditions we are revising our operating plans and expect to reduce our exploration and research expenses in future periods. (Refer to “Exploration Activities” for further discussion.)

Interest Expense, Net

Consolidated interest expense (before capitalization) decreased to ~~$173~~$174 million in ~~second-quarter~~third-quarter 2008, compared with ~~$230~~$206 million in ~~second-quarter~~third-quarter 2007, ~~primarily~~ reflecting 2007 net repayments of debt incurred in connection with the acquisition of Phelps Dodge, partly offset by net purchase accounting impacts of ~~$22~~$29 million recorded in ~~second-quarter~~third-quarter 2008 primarily ~~related to~~associated with accretion of the fair values ~~determined~~of environmental liabilities (determined on a discounted cash flow ~~basis for environmental liabilities~~basis) assumed in the acquisition of Phelps Dodge.

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Consolidated interest expense (before capitalization) increased to ~~$360~~$534 million for the first ~~six~~nine months of 2008, compared with ~~$289~~$494 million for the first ~~six~~nine months of 2007, ~~primarily~~ reflecting ~~a full six~~net purchase accounting impacts of $70 million recorded in the first nine months of ~~interest~~2008 primarily associated with accretion of the fair values of environmental liabilities (determined on a discounted cash flow basis) assumed in ~~2008 on debt related to~~ the acquisition of Phelps Dodge, ~~and also included~~partly offset by lower interest expense because of 2007 net ~~purchase accounting impacts~~repayments of ~~$41 million recorded during the first six months of 2008 primarily for accretion of the fair values determined on a discounted cash flow basis for environmental liabilities assumed~~debt incurred in connection with the acquisition of Phelps Dodge.

Capitalized interest totaled ~~$33~~$35 million in ~~second-quarter~~third-quarter 2008 and ~~$55~~$90 million for the first ~~six~~nine months of 2008, compared with ~~$50~~$51 million in ~~second-quarter~~third-quarter 2007 and ~~$57~~$108 million for the first ~~six~~nine months of 2007. Capitalized interest is primarily related to our development projects (refer to “Development Projects” for further discussion), which included Tenke Fungurume during the 2008 and 2007 periods, and also included Safford during 2007.

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Losses on Early Extinguishment of Debt

For the first ~~six~~nine months of 2008, we recorded net charges totaling $6 million ($5 million to net income or $0.01 per share) for early extinguishment of debt associated with an ~~open market~~open-market purchase of $33 million of our 9.5% Senior Notes in first-quarter 2008.

For the first ~~six~~nine months of 2007, we recorded net charges totaling ~~$135~~$171 million ($~~110~~141 million to net income or ~~$0.32~~$0.37 per share) for early extinguishment of debt. These net charges include ~~$88~~$154 million ($75131 million to net income) ~~recorded in first-quarter 2007 and $30 million ($25 million to net income) recorded in second-quarter 2007~~ related to the accelerated recognition of deferred financing costs associated with early repayment of amounts under the $11.5 billion senior credit ~~facility.~~facility, including the refinancing of the Tranche B term loan. Also included iswas $17 million ($10 million to net income) recorded in second-quarter 2007 related to premiums paid and the accelerated recognition of deferred financing costs associated with the May 2007 redemption of our 10⅛% Senior Notes.

Gains on Sales of Assets

Gains on sales of assets totaled $13 million ($8 million to net ~~income)~~income or $0.02 per share) for ~~both~~ the ~~second quarter and~~ first ~~six~~nine months of ~~2008, compared with $38~~2008. Gains on sales of assets totaled $47 million ($2329 million to net ~~income)~~income or $0.06 per share) for ~~both~~third-quarter 2007 and $85 million ($52 million to net income or $0.14 per share) for the ~~second quarter and~~ first ~~six~~nine months of 2007 primarily associated with the ~~sale~~sales of marketable securities.

~~Other Income, Net~~

Other income, net, totaled $9 million in second-quarter 2008 and $11 million for the first six months of 2008, compared with $38 million in second-quarter 2007 and $62 million for the first six months of 2007. The decrease in other income, net, in the 2008 periods primarily reflected lower interest income associated with lower average cash balances and higher foreign currency exchange losses related to a weaker U.S. dollar.

Provision for Income Taxes

Our ~~second-quarter~~third-quarter 2008 income tax provision ~~from continuing operations~~ resulted from taxes on international operations ($~~546~~268 million) ~~and~~, partly offset by a benefit on U.S. ~~taxes~~operations ($~~112~~28 million). Because of the recent decline in copper prices and changes in PT Freeport Indonesia’s sales projections, our projected consolidated annual tax rate for 2008 has decreased from approximately 34 percent to approximately 32 percent. Our third-quarter 2008 effective tax rate of approximately 24 percent reflects the cumulative impact of this reduced annual tax rate.

Our income tax provision for the first ~~six~~nine months of 2008 ~~included~~resulted from taxes on international operations ($~~1.1~~1.4 billion) and U.S. ~~taxes~~operations ($~~262~~234 million). The difference between our consolidated effective income tax rate of approximately 3332 percent for the first ~~six~~nine months of 2008 and the U.S. federal statutory rate of 35 percent primarily was attributable to a U.S. benefit for percentage depletion, partly offset by withholding taxes and incremental U.S. income tax accrued on foreign earnings.

Our ~~second-quarter~~third-quarter 2007 income tax provision from continuing operations resulted from taxes on ~~earnings at~~ international operations ($~~626~~584 million) and U.S. ~~taxes~~operations ($~~138~~69 million). Our income tax provision from continuing operations for the first ~~six~~nine months of 2007 ~~included~~resulted from taxes on international operations ($~~1.1~~1.7 billion) and U.S. ~~taxes~~operations ($92161 million). The difference between our consolidated effective income tax rate of approximately 37 percent for the first ~~six~~nine months of 2007 and the U.S. federal statutory rate of 35 percent primarily was attributable to ~~(i)~~ withholding taxes related to earnings from Indonesia and South America operations ~~(ii) income taxes incurred by PT Indocopper Investama, a wholly owned subsidiary of FCX whose only asset is its investment in PT Freeport Indonesia,~~ and ~~(iii)~~ a U.S. foreign tax credit limitation, partly offset by a U.S. benefit for percentage depletion.

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A summary of the approximate amounts in the calculation of our consolidated provision for income taxes for the first ~~six~~nine months of 2008 and 2007 follows (in millions, except percentages):

	Six Months Ended							Six Months Ended							Nine Months Ended							Nine Months Ended
	June 30, 2008							June 30, 2007							September 30, 2008							September 30, 2007
				Effective	Provision for						Effective	Provision for						Effective	Provision for						Effective	Provision for
	Incomea			Tax Rate	Income Tax			Incomea			Tax Rate	Income Tax			Incomea			Tax Rate	Income Tax			Incomea			Tax Rate	Income Tax
U.S.	$	1,686		27%	$	452		$	408		30%	$	122		$	2,254		24%	$	544		$	1,076		32%	$	339
South America		1,999		33%		663			1,076		35%		374			2,469		33%		800			2,006		34%		676
Indonesia		1,064		42%		444			2,365		43%		1,021			1,324		42%		558			2,947		43%		1,275
Eliminations and other		(17	)	N/A		19			2		N/A		(1	)		(56	)	N/A		(15	)		40		N/A		21
Purchase accounting adjustments		(556	)	37%		(209	)		(579	)	37%		(216	)		(849	)	37%		(319	)		(1,028	)	37%		(386	)
Annualized rate adjustmentb		N/A		N/A		18			N/A		N/A		(78	)		N/A		N/A		59			N/A		N/A		(50	)
Consolidated FCX	$	4,176		33%	$	1,387		$	3,272		37%	$	1,222		$	5,142		32%	$	1,627		$	5,041		37%	$	1,875

a.	Represents income from continuing operations before income taxes, minority interests and ~~minority interests.~~equity in affiliated companies’ net earnings.

b.	In accordance with applicable accounting rules, we adjust our interim provision for income taxes to equal our estimated annualized tax rate.

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Minority Interests in Net Income of Consolidated Subsidiaries

Minority interests in net income of consolidated subsidiaries ~~of $274~~was $155 million in ~~second-quarter~~third-quarter 2008, ~~was $33~~compared with $307 million ~~lower than second-quarter 2007 because of~~in third-quarter 2007. Lower minority interests in third-quarter 2008 primarily reflected a lower minority interest share of PT Freeport ~~Indonesia~~Indonesia’s net income ~~associated with lower second-quarter 2008 earnings, partly offset by greater minority interest shares~~and in ~~our~~the South America ~~operations’~~copper mines’ net income ~~associated with higher second-quarter~~because of lower third-quarter 2008 earnings.

Minority interests in net income of consolidated subsidiaries ~~of $593~~was $748 million for the first ~~six~~nine months of 2008, ~~was $172~~compared with $728 million ~~higher than~~for the first ~~six~~nine months of ~~2007 because of~~2007. Higher minority interests in the 2008 period primarily reflected greater minority interest shares in ~~our~~the South America ~~operations’~~copper mines’ net income ~~reflecting~~because of a full ~~six~~nine months of operations in 2008, partly offset by a lower minority interest share of PT Freeport ~~Indonesia~~Indonesia’s net income related to lower earnings for the first ~~six~~nine months of 2008.

OPERATIONS

Certain of the operating data included in this section for our North America and South America copper mines, Molybdenum and Rod & Refining operations for the nine month period ended September 30, 2007, combine our historical data with the Phelps Dodge pre-acquisition results for the period January 1, 2007, through March 19, 2007, for comparative purposes only. As the pre-acquisition data represent the results of these operations under Phelps Dodge management, such combined results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

North America Copper Mines

Our North America operations include copper operations from mining through rod production, molybdenum operations from mining through conversion to chemical and metallurgical products, and the marketing and sale of both product lines. We have ~~seven~~six operating copper mines in North America – Morenci, Bagdad, Sierrita, Safford, ~~Miami,~~ Chino and ~~Tyrone, and one operating molybdenum mine – Henderson.~~

Tyrone. The North America copper mines division includes the Morenci copper mine ~~Rod & Refining operations and Molybdenum operations~~ as a reportable ~~segments.~~segment. Following is further discussion of ~~these~~this reportable ~~segments,~~segment, as well as the other ~~operations~~operating copper mines that are included in the North America copper mines division.

Morenci. ~~We have an 85 percent undivided interest in the~~The Morenci open-pit mine, located in southeastern Arizona, ~~which~~ primarily produces copper cathodes and copper concentrates. In addition to copper, Morenci produces a small amount of molybdenum concentrates as a by-product. The ~~concentrate-leach, direct-electrowinning~~Morenci complex includes a concentrate pressure leaching facility ~~at Morenci is ramping up production following its commissioning~~to convert copper concentrates to copper cathode, which was commissioned in third-quarter 2007. ~~The~~In third-quarter 2008, this facility ~~uses FCX’s proprietary~~was converted from a medium-temperature, pressure-leaching ~~and direct-electrowinning technology, which enhances cost savings by processing concentrates on-site instead~~operation to high-temperature to maximize the amount of ~~shipping concentrates to smelters~~acid available for ~~treatment and by providing acid for~~stockpile leaching operations.

~~Rod & Refining.~~ The Rod & Refining segment consists of copper conversion facilities, including a refinery, rod mills and a specialty copper products facility. This segment processes copper produced at our North America mines and purchased copper into copper anode, cathode, rod and custom copper shapes. At times this segment refines copper and produces copper rod and shapes for customers on a toll basis. Toll arrangements require the tolling customer to deliver appropriate copper-bearing material to our facilities for processing into a product that is returned to the customer, who pays us for processing their material into the specified products.

~~Molybdenum.~~ The Molybdenum segment includes our 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 products. This segment is an integrated producer of molybdenum, with mining, 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. The Molybdenum segment also includes a sales company that purchases and sells molybdenum from Henderson as well as from our North America and South America copper mines that produce molybdenum as a by-product. In addition, at times this segment roasts and/or processes material on a toll basis. Toll arrangements require the tolling customer to deliver appropriate molybdenum-bearing material to our facilities for processing into a product that is returned to the customer, who pays us for processing their material into the specified products.

The Molybdenum segment also includes our wholly owned Climax molybdenum mine in Colorado, which has been on care-and-maintenance status since 1995. In December 2007, we announced a project to restart the Climax mine, which is believed to be the largest, highest-grade and lowest-cost undeveloped molybdenum ore body in the world (refer to “Development Projects” for further discussion).

In March 2008, the labor agreement covering employees of the Rotterdam conversion plant expired, and we successfully negotiated a new three-year agreement effective April 1, 2008. Additionally, in May 2008, the labor

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~~agreement covering employees of the Stowmarket conversion plant expired, and we successfully negotiated a new three-year agreement effective June 1, 2008.~~

Other ~~North America operations.~~Mines. Other ~~North America operations~~mines include our other operating southwestern U.S. copper mines – Bagdad, Sierrita, Safford, ~~Miami,~~ Chino and Tyrone. In addition to copper, the Bagdad, Sierrita and Chino mines produce molybdenum, gold and silver. Other North America operations also include the Miami smelter, which processes our North America concentrates and provides a significant source of sulfuric acid for the various North America leaching operations; and a sales company, which functionssilver as ~~an agent to purchase metals, primarily copper, from the North America and South America operations and sells to Atlantic Copper and third parties.~~by-products.

~~North America Revenues~~. ~~A summary of changes in revenues at our North America operations between periods follows (in millions):~~

Second Six
Quarter Months
North America revenues – prior year period $ 2,683 $ 3,002
Sales volumes:
Copper 47 1,116 a
Molybdenum 109 572 a
Price realizations:
Copper 132 185
Molybdenum 135 281
Purchased copper and molybdenum (100
)b
1,005 b
Impact of the 2007 copper price protection program 130 168
Adjustments, primarily for copper pricing on prior period/year open sales (1 ) 80
Other, net 10 9
North America revenues – current year period $ 3,145 $ 6,418

a.	~~The increase in sales volumes primarily reflected a full six months of sales for 2008, compared with the first six months of 2007, which included sales beginning March 20, 2007.~~

b.	Includes changes of $11 million for the second quarter periods and $516 million for the six month periods related to revenues associated with purchases of copper and molybdenum from our South America mines, which is sold to third parties by the North America copper and molybdenum sales companies.

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~~North America~~ Operating ~~Results~~.Results. The following discussion of our North America ~~operations includes pro forma~~copper mines for the nine-month period ended September 30, 2007, combines our historical results with the Phelps Dodge pre-acquisition results for the ~~six-month~~ period ~~ended June 30,~~January 1, 2007, through March 19, 2007, to reflect a full comparative nine-month period in 2007. As the ~~period prior to our acquisition~~pre-acquisition results represent the results of these ~~operations:~~operations under Phelps Dodge management, such combined results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

						Six Months Ended
	Second-Quarter					June 30,										Nine Months Ended
	2008		2007			2008		2007			Third-Quarter					September 30,
	(Actual)		(Actual)			(Actual)		(Pro Forma)			2008		2007			2008		2007a
Consolidated Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production		350		335			677		636			374		357			1,051		993
Sales, excluding purchases		347		333			686		640			361		376			1,047		1,016
Average realized price per pound	$	3.82	$	3.05	a	$	3.66	$	2.79	a	$	3.42	$	3.37	b	$	3.56	$	3.00	b

Molybdenum (millions of recoverable pounds)
Production		18		18			35		35
Sales, excluding purchases		20		15			40		34
Average realized price per pound	$	31.59	$	24.83		$	31.63	$	23.83
Productionc												7		8			22		23

100% Operating Data, Including Joint Venture Interest
Solution extraction/electrowinning (SX/EW) operations
Leach ore placed in stockpiles (metric tons per day)		1,099,500		743,100			1,117,200		710,400			1,067,000		797,600			1,100,300		739,800
Average copper ore grade (percent)		0.23		0.25			0.21		0.27			0.23		0.21			0.22		0.25
Copper production (millions of recoverable pounds)		215		248			432		476			251		246			683		722

Mill operations
Ore milled (metric tons per day)		257,600		227,300			250,800		218,200			247,900		226,400			249,800		221,000
Average ore grade (percent):
Copper		0.40		0.34			0.39		0.32			0.40		0.36			0.40		0.34
Molybdenum		0.02		0.03			0.02		0.02			0.02		0.03			0.02		0.02
Recovery rate (percent):
Copper		84.6		84.4			82.9		84.6
Copper recovery rate (percent)												83.5		86.4			83.1		85.4
Production (millions of recoverable pounds):
Copper		163		119			299		220			151		144			450		364
Molybdenum (by-product)		7		8			15		15			7		8			22		23

Molybdenum operations (Henderson)
Ore milled (metric tons per day)		26,800		25,400			25,900		25,000
Average molybdenum ore grade (percent)		0.23		0.22			0.22		0.22
Molybdenum production (millions of recoverable pounds)		11		10			20		20

~~Amounts were $3.44 per pound for second-quarter 2007 and $3.08 per pound~~The North America copper mines’ operating data for the ~~first six months~~nine-month period ended September 30, 2007, combines our historical results with the Phelps Dodge pre-acquisition results for the period January 1, 2007, through March 19, 2007. As the pre-acquisition results represent the results of ~~2007 before~~these operations under Phelps Dodge management, such combined results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

b.	Before charges for mark-to-market accounting adjustments on the 2007 copper price protection ~~program.~~program, amounts were $3.48 per pound for third-quarter 2007 and $3.23 per pound for the first nine months of 2007.

c.	Reflects by-product molybdenum production from our North America copper mines. Sales of by-product molybdenum are reflected in the Molybdenum segment.

Consolidated copper sales from the North America ~~operations increased to 347~~mines totaled 361 million pounds in ~~second-quarter~~third-quarter 2008 and ~~686 million~~approximately 1.0 billion pounds for the first ~~six~~nine months of 2008, compared with ~~333~~376 million pounds in ~~second-quarter~~third-quarter 2007 and ~~640 million~~approximately 1.0 billion pounds for the first ~~six~~nine months of 2007. ~~Higher copper~~Copper sales volumes for the third quarter and first nine months of 2008 were not significantly different than the comparable 2007 periods. Increases in ~~the 2008 periods primarily reflected an increase in~~North America production from the recently commissioned Safford mine ~~and also included higher production from mill operations resulting from higher grades, partly~~was offset by lower ~~production~~sales volumes resulting from ~~SX/EW operations because~~timing of ~~lower grades.~~shipments.

Consolidated copper sales volumes from our North America ~~operations~~copper mines are expected to total approximately 1.4 billion pounds in 2008, compared with 1.3 billion pounds of copper for the ~~pro forma~~combined year 2007. North America’s copper sales are expected to be approximately 100 million pounds lower than previous estimates primarily because of delays in achieving full production at the recently commissioned Safford mine and lower than expected production at Morenci; efforts are under way to offset these shortfalls.

Consolidated molybdenum sales volumes increased to 20 million pounds in second-quarter 2008 and 40 million pounds for the first six months of 2008, compared with 15 million pounds in second-quarter 2007 and 34 million

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~~pounds for the first six months of 2007. The increase in molybdenum sales volumes in the 2008 periods was primarily because of improved market conditions.~~

Consolidated molybdenum sales volumes are expected to approximate 75 million pounds in 2008, compared with 69 pounds of molybdenum for the pro forma year 2007. Approximately 85 percent of our expected 2008 molybdenum production is committed for sale throughout the world pursuant to annual or quarterly agreements based primarily on prevailing market prices one month prior to the time of sale.

Unit Net Cash Costs. Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.

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The following tables summarize the unit net cash costs at our North America copper mines. Gross profit per pound for the nine-month period ended September 30, 2007, has been presented on a pro forma basis, which combines our historical results with the Phelps Dodge pre-acquisition results for the period January 1, 2007, through March 19, 2007, and also includes certain pro forma adjustments for the North America copper mines, ~~including pro forma unit net cash costs for~~which assume the ~~six-month period ended June 30, 2007, which includes the period prior to our~~ acquisition of these operations. Henderson, our operating molybdenum mine, is not included in these tables – see “Henderson Unit Net Cash Costs.” We have included the impacts of purchase accounting fair value adjustments as additional depreciation, depletion and amortization and noncash and nonrecurring costs. Accordingly, we have revised the previously reported disclosures for the 2007 periods to conform to the current period presentation.Phelps Dodge was effective January 1, 2007. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements orand in our consolidated pro forma financial information for the nine months ended September 30, 2007 (see Note 2 for consolidated pro forma financial ~~results.~~information).

Gross Profit per Pound of Copper and Molybdenum for North America Copper Mines

Three Months Ended June 30, 2008
										Third-Quarter 2008									Third-Quarter 2007
		By-Product		Co-Product Method						By-			Co-Product Method						By-			Co-Product Method
		Method			Copper			Molybdenum	a	Product						Molyb-			Product						Molyb-
										Method			Copper			denum a			Method			Copper			denum a
Revenues, after adjustments shown below	$	3.82		$	3.82		$	32.85		$	3.42		$	3.42		$	33.47		$	3.48		$	3.48		$	31.80

Site production and delivery, before net noncash and
nonrecurring costs shown below		1.84			1.60			11.70
Site production and delivery, before net noncash
and nonrecurring costs shown below											2.07			1.79			15.30			1.41			1.22			9.69
By-product creditsa		(0.70	)		–			–			(0.65	)		–			–			(0.66	)		–			–
Treatment charges		0.10			0.10			–			0.09			0.09			–			0.09			0.09			–
Unit net cash costs		1.24			1.70			11.70			1.51			1.88			15.30			0.84			1.31			9.69
Depreciation, depletion and amortization		0.53			0.47			2.54			0.52			0.46			2.75			0.46			0.41			2.46
Noncash and nonrecurring costs, net		0.06			0.06			0.19			0.09	b		0.09	b		0.14			0.44			0.43			0.22
Total unit costs		1.83			2.23			14.43			2.12			2.43			18.19			1.74			2.15			12.37
Revenue adjustments, primarily for pricing on prior period
open sales		(0.01	)		(0.01	)		–
Revenue adjustments, primarily for pricing on
prior period open sales and hedging											(0.23	)		(0.23	)		–			(0.12	)		(0.12	)		–
Idle facility and other non-inventoriable costs		(0.04	)		(0.04	)		(0.02	)		(0.04	)		(0.04	)		(0.03	)		(0.02	)		(0.02	)		–
Gross profit	$	1.94		$	1.54		$	18.40		$	1.03		$	0.72		$	15.25		$	1.60		$	1.19		$	19.43

Consolidated sales (millions of recoverable pounds)
Copper		346			346
Molybdenum								7
Consolidated sales
Copper (millions of recoverable pounds)											361			361						376			376
Molybdenum (millions of recoverable pounds)																	7									8

a.	Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.

b.	Includes charges of $0.04 per pound for LCM inventory adjustments primarily at our Tyrone mine.

	Nine Months Ended									Nine Months Ended
	September 30, 2008									September 20, 2007a
	By-			Co-Product Method						By-			Co-Product Method
	Product						Molyb-			Product						Molyb-
	Method			Copper			denum b			Method			Copper			denum b
Revenues, after adjustments shown below	$	3.56		$	3.56		$	33.01		$	3.23		$	3.23		$	28.57

Site production and delivery, before net noncash
and nonrecurring costs shown below		1.86			1.61			12.14			1.39			1.20			9.83
By-product creditsb		(0.71	)		–			–			(0.65	)		–			–
Treatment charges		0.09			0.09			–			0.09			0.08			–
Unit net cash costs		1.24			1.70			12.14			0.83			1.28			9.83
Depreciation, depletion and amortization		0.53			0.47			2.57			0.47	c		0.40	c		2.96	c
Noncash and nonrecurring costs, net		0.08	d		0.08	d		0.15			0.39	e		0.37	e		0.54	e
Total unit costs		1.85			2.25			14.86			1.69			2.05			13.33
Revenue adjustments, primarily for pricing on
prior period open sales and hedging		(0.03	)		(0.03	)		–			(0.17	)		(0.17	)		–
Idle facility and other non-inventoriable costs		(0.04	)		(0.04	)		(0.03	)		(0.03	)		(0.03	)		–
Gross profit	$	1.64		$	1.24		$	18.12		$	1.34		$	0.98		$	15.24

Consolidated sales
Copper (millions of recoverable pounds)		1,044			1,044						1,004			1,004
Molybdenum (millions of recoverable pounds)								22									23

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Three Months Ended June 30, 2007
By-Product Co-Product Method
Method Copper Molybdenum a

Revenues, after adjustments shown below $ 3.44 $ 3.44 $ 28.52

Site production and delivery, before net noncash and
nonrecurring costs shown below 1.46 1.21 10.04
By-product creditsa
(0.74 ) – –
Treatment charges 0.09 0.09 –
Unit net cash costs 0.81 1.30 10.04
Depreciation, depletion and amortization 0.40 0.33 2.58
Noncash and nonrecurring costs, net 0.44 0.40 (0.12 )
Total unit costs 1.65 2.03 12.50
Revenue adjustments, primarily for pricing on prior period
open sales and hedging (0.43 ) (0.43 ) –
Idle facility and other non-inventoriable costs (0.02 ) (0.02 ) –
Gross profit $ 1.34 $ 0.96 $ 16.02

Consolidated sales (millions of recoverable pounds)
Copper 327 327
Molybdenum 8

For comparative purposes, the nine-month period ended September 30, 2007, has been presented on a pro forma basis, which combines our historical results with the Phelps Dodge pre-acquisition results for the period January 1, 2007, through March 19, 2007, and also includes certain pro forma adjustments, which assume the acquisition of Phelps Dodge was effective January 1, 2007 (Refer to notes c and e below for further discussion of the pro forma adjustments). As the pre-acquisition results represent the results of the North America copper mines under Phelps Dodge management, such results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

b.	Molybdenum by-product credits and revenues reflect volumes produced at market-based pricing and also include tolling revenues at Sierrita.

Six Months Ended June 30, 2008
By-Product Co-Product Method
Method Copper Molybdenum a

Revenues, after adjustments shown below $ 3.66 $ 3.66 $ 32.80

Site production and delivery, before net noncash and
nonrecurring costs shown below 1.74 1.52 10.68
By-product creditsa
(0.74 ) – –
Treatment charges 0.10 0.10 –
Unit net cash costs 1.10 1.62 10.68
Depreciation, depletion and amortization 0.53 0.47 2.50
Noncash and nonrecurring costs, net 0.08 0.07 0.15
Total unit costs 1.71 2.16 13.33
Revenue adjustments, primarily for pricing on prior period
open sales 0.06 0.06 –
Idle facility and other non-inventoriable costs (0.04 ) (0.04 ) (0.02 )
Gross profit $ 1.97 $ 1.52 $ 19.45

Consolidated sales (millions of recoverable pounds)
Copper 683 683
Molybdenum 15

a.c.

~~Molybdenum~~Includes pro forma adjustments of $0.11 per pound of copper on a by-product ~~credits~~basis, $0.09 per pound of copper on a co-product basis and ~~revenues reflect volumes produced~~$0.90 per pound of molybdenum on a co-product basis associated with the impact of increased carrying values for acquired property, plant and equipment at ~~market-based pricing and also include tolling revenues at Sierrita.~~the North America copper mines.

d.	Includes charges of $0.02 per pound for LCM inventory adjustments primarily at our Tyrone mine.

Six Months Ended June 30, 2007 (Pro Forma)
By-Product Co-Product Method
Method Copper Molybdenum a

Revenues, after adjustments shown below $ 3.08 $ 3.08 $ 26.95

Site production and delivery, before net noncash and
nonrecurring costs shown below 1.39 1.19 9.90
By-product creditsa
(0.64 ) – –
Treatment charges 0.08 0.08 –
Unit net cash costs 0.83 1.27 9.90
Depreciation, depletion and amortization 0.45 0.38 3.06
Noncash and nonrecurring costs, net 0.66 0.57 2.81
Total unit costs 1.94 2.22 15.77
Revenue adjustments, primarily for pricing on prior period
open sales and hedging (0.21 ) (0.21 ) –
Idle facility and other non-inventoriable costs (0.02 ) (0.02 ) –
Gross profit $ 0.91 $ 0.63 $ 11.18

Consolidated sales (millions of recoverable pounds)
Copper 628 628
Molybdenum 15

The North America ~~mining operations~~mines have experienced production cost increases in recent years primarily as a result of higher energy costs and costs of other consumables, higher mining and milling rates, labor costs and other factors. ~~Higher unit~~Unit net cash costs, ~~for the second quarter and first six months~~after by-product credits, increased to $1.51 per pound of copper in third-quarter 2008, compared with ~~the~~$0.84 per pound in third-quarter 2007, ~~periods,~~ primarily ~~reflected increases in energy costs, labor, sulfuric acid and other~~reflecting higher input costs ~~increases in~~($0.59 per pound increase, including $0.20 per pound for higher mining rates, ~~and lower grades at Morenci, and also reflected higher unit net cash~~$0.18 per pound for energy, $0.15 per pound for costs atassociated with Safford as the mine ramps up to full production ~~rates. Partly offsetting these higher~~rates and $0.11 per pound for increased acid costs). Higher unit net cash costs in third-quarter 2008 also reflected lower volumes ($0.08 per pound increase). Commodity-based input costs, principally energy, declined in September and October 2008, and are expected to result in lower costs than the levels experienced in third-quarter 2008.

Unit net cash costs, after by-product ~~calculation~~credits, increased to $1.24 per pound of copper for the first ~~six~~nine months of 2008, compared with $0.83 per pound for the first nine months of 2007, primarily reflecting higher input costs ($0.53 per pound increase, including $0.17 per pound for higher mining rates, $0.17 per pound for energy and $0.13 per pound for costs associated with the Safford mine). Partly offsetting higher input costs for the first nine months of 2008 were higher volumes ($0.07 per pound decrease) and higher molybdenum credits ~~resulting~~($0.06 per pound decrease).

Our six operating North America copper mines have varying cost structures because of differences in ore grades and ore characteristics, processing costs, by-products and other factors. During third-quarter 2008, North America’s costs ranged from ~~higher average~~a net credit of $0.73 per pound at one mine to $2.12 per pound at another operation. Approximately ten percent of North America’s production had cash costs above $2.00 per pound in third-quarter 2008 and approximately 45 percent had cash costs between $1.90 per pound and $2.00 per pound. We are currently undertaking a review of our operations, taking into consideration reduced copper prices and ~~production.~~recent declines in commodity-based input costs, to seek cost reductions and determine whether certain operations should be curtailed.

The ~~estimated~~ fair values of acquired inventory and property, plant and equipment were based on preliminary estimates for the 2007 periods, with adjustments made until such values were finalized in first-quarter 2008; accordingly, depreciation, depletion and amortization reflect changes in purchase accounting impacts associated with adjustments to the carrying values of these assets. ~~Additionally, noncash~~Noncash and nonrecurring costs for the 2008 periods reflect lower purchase accounting impacts ~~as impacts~~ related to increased carrying values of acquired inventory that were mostly realized in 2007. Also impacting noncash and nonrecurring costs in the third quarter and first nine months of 2008 were charges for LCM inventory adjustments totaling $16 million ($0.04 per pound) in third-quarter 2008 and $22 million ($0.02 per pound) for the first nine months of 2008.

Assuming average prices of ~~$3.75~~$2.15 per pound of copper and ~~$30~~$27 per pound of molybdenum for ~~the remainder of~~fourth-quarter 2008 and achievement of current 2008 sales estimates, we estimate that ~~the 2008~~ average unit net cash costs, including molybdenum credits, for our North America copper mines ~~including molybdenum credits,~~ would approximate ~~$1.29~~$1.39 per pound of ~~copper.~~copper for fourth-quarter 2008 and $1.28 per pound of copper for the year. Each $2 per pound change in the average price of molybdenum in fourth-quarter 2008 would impact 2008 unit net cash costs by approximately $0.01 per pound.

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~~Henderson Unit Net Cash Costs.~~ The following table summarizes the unit net cash costs at our Henderson operation, including pro forma unit net cash costs for the six-month period ended June 30, 2007, which includes the period prior to our acquisition of these operations. We have included the impacts of purchase accounting fair value adjustments as additional depreciation and amortization. Accordingly, we have revised the previously reported disclosures for the 2007 periods to conform to the current period presentation. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements or pro forma consolidated financial results.

~~Gross Profit per Pound of Molybdenum for Henderson Molybdenum Mine~~

Six Months Ended
Second-Quarter June 30,
2008 2007 2008 2007
(Actual) (Actual) (Actual) (Pro forma)
Revenues $ 30.05 $ 25.12 $ 29.76 $ 23.70
Site production and delivery, before net noncash
and nonrecurring costs shown below 4.96 4.38 5.06 4.27
Unit net cash costs 4.96 4.38 5.06 4.27
Depreciation, depletion and amortization 4.24 1.77 4.25 3.93
Noncash and nonrecurring costs, net 0.02 0.01 0.02 0.01
Total unit costs 9.22 6.16 9.33 8.21
Gross profita
$ 20.83 $ 18.96 $ 20.43 $ 15.49

Consolidated molybdenum sales (millions of recoverable
pounds) 11 10 20 20

Gross profit reflects sales of Henderson products based on volumes produced at market-based pricing. On a consolidated basis, the Molybdenum segment includes profits on sales as they are made to third parties and realizations based on actual contract terms. As a result, the actual gross profit realized will differ from the amounts reported in this table.

Henderson’s unit net cash costs per pound of molybdenum for the second quarter and first six months of 2008 were higher than the comparable 2007 periods primarily because of higher input costs, including labor, maintenance, supplies and energy.

The estimated fair values of acquired property, plant and equipment were based on preliminary estimates for the 2007 periods, with adjustments made until such values were finalized in first-quarter 2008; accordingly, depreciation, depletion and amortization reflect changes in purchase accounting impacts associated with adjustments to the carrying values of these assets.

~~Assuming achievement of current sales estimates, we estimate that the 2008 average unit net cash costs for Henderson would approximate $5.00 per pound of molybdenum.~~

South America Copper Mines

We have four operating copper mines in South America – 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.~~EW operations.

The South America copper mines division includes the Cerro Verde copper mine as a reportable segment. Following is further discussion of this reportable segment, as well as the other copper mining operations included in the South America copper mines division.

Cerro Verde. ~~We own a 53.56 percent interest in Cerro Verde.~~ The Cerro Verde open-pit mine, located near Arequipa, Peru, produces copper cathodes and copper concentrates. In addition to copper, the Cerro Verde mine produces molybdenum ~~concentrates.~~concentrates as a by-product. In mid-2007, the recently expanded mill at Cerro Verde reached design capacity of 108,000 metric tons of ore per day. The expansion enables Cerro Verde to produce approximately 650 million pounds of copper per year (approximately 348 million pounds per year for our share) and approximately 8 million pounds of molybdenum per year (approximately 4 million pounds per year for our share) ~~for the next several years.~~.

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Cerro Verde has provided a variety of community support projects over the years. During 2006, as a result of discussions with local mayors in the Arequipa region, Cerro Verde agreed to contribute to the design and construction of domestic water and sewage treatment plants for the benefit of the region. These facilities are being designed in a modular fashion so that initial installations can be readily expanded in the future. The cost associated with the construction of these facilities, which will be split equally between Cerro Verde and local municipalities, is currently under review. We have designated approximately $50 million of cash for financing Cerro Verde’s share of the construction costs of these facilities.

During 2006, the Peruvian government announced that all mining companies operating in Peru will make annual contributions to local development funds for a five-year period. The contribution is equal to 3.75 percent of after-tax profits, of which 2.75 percent is contributed to a local mining fund and 1.00 percent to a regional mining fund. As the contribution program was being established, Cerro Verde negotiated an agreement that allowed a credit against contributions to the local mining fund for Cerro Verde’s contributions made to the Arequipa region for construction of local water and sewage treatment facilities. During third-quarter 2007, the agreement with the government was modified to exclude this credit. A charge to production and delivery costs ~~totaling $13~~for these local mining fund contributions totaled $5 million ~~was recorded~~ in ~~second-quarter~~third-quarter 2008 and ~~$27~~$33 million for the first ~~six~~nine months of 2008, ~~related to these local mining fund contributions.~~compared with charges of $33 million in third-quarter 2007 and $41 million for the first nine months of 2007.

We are currently negotiating the labor agreement covering certain employees at our Cerro Verde mine, which expires in December 2008.

Other ~~South America Operations.~~Mines. Other ~~South America operations~~mines include our Chilean copper mines – Candelaria, Ojos del Salado and El Abra – which include open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. In addition to copper, the Candelaria and Ojos del Salado mines produce gold and ~~silver. We own an 80 percent interest in both the Candelaria and Ojos del Salado mines, and own a 51 percent interest in the El Abra mine.~~silver as by-products.

~~El Abra had a labor agreement covering certain of its employees, which expired July 2008.~~ In April 2008, El Abra and its workers successfully negotiated a new four-year agreement effective August 1, 2008, to replace the previous agreement that was scheduled to expire October 2008. The new agreement provides for an increase in base wages, bonuses and an employee loan program. The estimated total cost of the increased wages and bonuses over the ~~four year~~four-year term is approximately $40 million.

~~South America Revenues~~. ~~A summary of changes in revenues at our South America operations between periods follows (in millions):~~

Second Six
Quarter Months
South America revenues – prior year period $ 1,232 $ 1,494
Sales volumes:
Copper 86 1,076 a
Gold (1 ) 12 a
Price realizations:
Copper 117 263
Gold 6 13
Treatment charges (1 ) (52 )
Adjustments, primarily for copper pricing on prior period/year open sales (51 ) 155
Other, net 21 41
South America revenues – current year period $ 1,409 $ 3,002

a.	~~The increase in sales volumes primarily reflected a full six months of sales for 2008, compared with the first six months of 2007, which included sales beginning March 20, 2007.~~

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~~South America~~ Operating ~~Results~~.Results. The following discussion of our South America ~~operations includes pro forma~~copper mines for the nine-month period ended September 30, 2007, combines our historical results with the Phelps Dodge pre-acquisition results for the ~~six-month~~ period ~~ended June 30,~~January 1, 2007, through March 19, 2007, to reflect a full comparative nine-month period in 2007. As the ~~period prior to our acquisition~~pre-acquisition results represent the results of these ~~operations:~~operations under Phelps Dodge management, such combined results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

	Second-Quarter					Six Months Ended June 30,									Nine Months Ended
	2008			2007		2008		2007		Third-Quarter					September 30,
	(Actual)			(Actual)		(Actual)		(Pro Forma)		2008		2007			2008		2007a
Copper (millions of recoverable pounds)
Production		369			338		722		645		394		377			1,116		1,022
Sales		366			343		731		644		391		376			1,122		1,020
Average realized price per pound	$	3.86		$	3.54	$	3.84	$	3.33	$	3.02	$	3.63		$	3.38	$	3.48

Gold (thousands of recoverable ounces)
Production		25			28		51		52		32		31			83		83
Sales		26			28		53		53		30		31			83		84
Average realized price per ounce	$	910.19		$	674.01	$	914.41	$	608.79	$	856	$	704		$	891	$	644

Molybdenum (millions of recoverable pounds)
Production		–	a		–		1		–
Productionb											1		–	c		2		–	c

SX/EW operations
Leach ore placed in stockpiles (metric tons per day)		291,500			305,200		282,800		290,700		273,400		285,400			279,600		288,900
Average copper ore grade (percent)		0.42			0.42		0.41		0.40		0.45		0.45			0.44		0.42
Copper production (millions of recoverable pounds)		144			142		279		291		139		139			418		430

Mill operations
Ore milled (metric tons per day)		177,200			168,000		173,900		154,700		189,800		181,400			179,300		163,700
Average copper ore grade (percent):
Copper		0.72			0.72		0.73		0.70		0.78		0.76			0.75		0.72
Molybdenum		0.02			–		0.02		–		0.02		0.02			0.02		0.01
Recovery rate (percent):
Copper		89.7			84.1		90.2		85.3
Production (millions of recoverable pounds):
Copper recovery rate (percent)											87.8		88.4			89.5		87.3
Production (millions of recoverable pound):
Copper		225			196		443		354		255		238			698		592
Molybdenum		–	a		–		1		–		1		–	c		2		–	c

Consolidated copper sales from the South America ~~operations increased to approximately 366~~mines totaled 391 million pounds in ~~second-quarter~~third-quarter 2008 and ~~731 million~~approximately 1.1 billion pounds for the first ~~six~~nine months of 2008, compared with ~~343~~376 million pounds in ~~second-quarter~~third-quarter 2007 and ~~644 million~~approximately 1.0 billion for the first ~~six~~nine months of 2007. Higher copper sales volumes in third-quarter 2008 were primarily because of the timing of shipments at El Abra, and also reflected increased production at Candelaria and Ojos del Salado resulting from improved milling rates. The increase in consolidated copper sales volumes for the first nine months of 2008 ~~periods~~ primarily reflected ~~increased~~higher production from Cerro Verde’s new concentrator, which reached design capacity in mid-2007.

Consolidated sales volumes from our South America ~~operations~~mines are expected to approximate 1.5 billion pounds of copper and ~~100~~110 thousand ounces of gold in 2008, compared with 1.4 billion pounds of copper and 114 thousand ounces of gold for the ~~pro forma~~combined year 2007. In addition, ~~in 2008~~ Cerro Verde expects to produce three million pounds of molybdenum in 2008, compared with one million pounds for the ~~pro forma~~combined year 2007.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for

monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.

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acquisition of ~~these operations.~~ The below tables reflect unit net cash costs per pound of copper under the by-product and co-product methods as the South America mines also had small amounts of gold and silver sales. We have included the impacts of purchase accounting fair value adjustments as additional depreciation, depletion and amortization, and noncash and nonrecurring costs. Accordingly, we have revised the previously reported disclosures for the 2007 periods to conform to the current period presentation.Phelps Dodge was effective January 1, 2007. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements orand in our consolidated pro forma financial information for the nine months ended September 30, 2007 (see Note 2 for consolidated pro forma financial ~~results.~~

information).

Gross Profit per Pound of Copper for South America Copper Mines

Six Months Ended June 30, 2008
By-Product Co-Product
Method Method
Revenues, after adjustments shown below $ 3.84 $ 3.84
Site production and delivery, before net noncash and
nonrecurring costs shown below 1.12 1.08
By-product credits (0.13 ) –
Treatment charges 0.19 0.19
Unit net cash costs 1.18 1.27
Depreciation, depletion and amortization 0.35 0.34
Noncash and nonrecurring costs, net 0.08 0.08
Total unit costs 1.61 1.69
Revenue adjustments, primarily for pricing on prior period
open sales 0.32 0.32
Other non-inventoriable costs (0.03 ) (0.03 )
Gross profit $ 2.52 $ 2.44

Consolidated sales
Copper (millions of recoverable pounds) 731 731

management, such results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

Six Months Ended June 30, 2007 (Pro Forma)
By-Product Co-Product
Method Method
Revenues, after adjustments shown below $ 3.33 $ 3.33
Site production and delivery, before net noncash and
nonrecurring costs shown below 0.83 0.81
By-product credits (0.07 ) –
Treatment charges 0.19 0.19
Unit net cash costs 0.95 1.00
Depreciation, depletion and amortization 0.35 0.34
Noncash and nonrecurring costs, net 0.21 0.20
Total unit costs 1.51 1.54
Revenue adjustments, primarily for pricing on prior period
open sales 0.02 0.02
Other non-inventoriable costs (0.02 ) (0.02 )
Gross profit $ 1.82 $ 1.79

Consolidated sales
Copper (millions of recoverable pounds) 644 644

The South America ~~mining operations~~copper mines also have experienced production cost increases in recent years primarily as a result of higher energy costs and costs of other consumables, higher mining costs and milling rates, labor costs and other factors. ~~Higher unit~~Unit net cash costs, ~~for the second quarter and first six months~~after by-product credits, increased to $1.16 per pound of copper in third-quarter 2008, compared with ~~the~~$1.14 per pound in third-quarter 2007, ~~periods, primarily reflected~~reflecting higher input costs ($0.29 per pound increase, including $0.12 per pound for energy, $0.12 per pound for increased acid and other commodity-based input costs and $0.08 per pound for higher mining ~~rates at Candelaria and higher milling~~rates). The increase in input costs ~~at Cerro Verde and Candelaria. Other~~for third-quarter 2008 ~~increases included local mining fund contributions at Cerro Verde,~~was partly offset by ~~increased production from the expanded mill at Cerro Verde. Also offsetting these factors in the by-product calculation were~~lower treatment charges ($0.15 per pound decrease), higher by-product credits ($0.07 per pound decrease) reflecting higher average gold prices and molybdenum production at Cerro Verde in third-quarter 2008 and higher volumes ($0.04 per pound decrease). Commodity-based input costs, principally energy, declined in September and October 2008, and are expected to result in lower costs than the levels experienced in third-quarter 2008.

Unit net cash costs, after by-product credits, increased to $1.18 per pound of copper for the first nine months of 2008, ~~periods.~~compared with $1.02 per pound for the first nine months of 2007, reflecting higher input costs ($0.38 per pound increase, including $0.13 per pound for energy, $0.13 per pound for increased acid and other commodity-based input costs and $0.09 per pound for higher mining rates). The increase in input costs for the first nine months of 2008 was partly offset by higher volumes ($0.11 per pound decrease), higher by-product credits ($0.05 per pound decrease) and lower treatment charges ($0.05 per pound decrease).

During third-quarter 2008, unit net cash costs for our South America copper mines ranged from $0.88 per pound to $1.83 per pound of copper, and approximately 25 percent of South America’s production had cash costs above $1.80 per pound. As a result of changing market conditions, we are reviewing our South America operations to determine if any changes to capital spending and operating plans are warranted.

The estimated fair values of acquired inventory and property, plant and equipment were based on preliminary estimates for the 2007 periods, with adjustments made until such values were finalized in first-quarter 2008; accordingly, depreciation, depletion and amortization reflect changes in purchase accounting impacts associated with adjustments to the carrying values of property, plant and equipment. Additionally, the inventory impacts on noncash and nonrecurring costs were mostly realized in 2007.

Assuming average prices of ~~$3.75~~$2.15 per pound of copper for ~~the remainder of~~fourth-quarter 2008 and achievement of current 2008 sales estimates, we estimate that ~~2008~~ average unit net cash costs for our South America copper mines, including gold and molybdenum credits, would approximate ~~$1.18~~$1.07 per pound of ~~copper.~~copper for fourth-quarter 2008 and $1.15 per pound of copper for the year.

Operating, nonexpansion capital and administrative costs are shared proportionately between PT Freeport Indonesia and Rio Tinto based on the ratio of the incremental revenues from production from our expansion completed in 1998 to total revenues from Block A, including production from PT Freeport Indonesia’s previously existing reserves. PT Freeport Indonesia receives 100 percent of the cash flow from specified annual amounts of copper, gold and silver through 2021, calculated by reference to its proven and probable reserves as of December 31, 1994, and 60 percent of all remaining cash flow.

Second Six
Quarter Months
PT Freeport Indonesia revenues – prior year period $ 1,762 $ 3,471
Sales volumes:
Copper (362 ) (1,073 )
Gold (424 ) (884 )
Price realizations:
Copper 103 192
Gold 60 125
Treatment charges 47 141
Adjustments, primarily for copper pricing on prior period/year open sales (158 ) 66
Other, net (12 ) 30
PT Freeport Indonesia revenues – current year period $ 1,016 $ 2,068

~~Indonesia~~ Operating ~~Results~~.Results. Following is a discussion of our Indonesia mining operations:

Deep Ore Zone (DOZ) underground minea

Gross Profit per Pound of Copper/per Ounce of Gold for PT Freeport Indonesia

Three Months Ended June 30, 2008
By-Product Co-Product Method
Method Copper Gold
Revenues, after adjustments shown below $ 3.88 $ 3.88 $ 911.84

Site production and delivery, before net noncash and
nonrecurring costs shown below 1.90 1.51 346.42
Gold and silver credits (0.99 ) – –
Treatment charges 0.28 0.23 51.35
Royalty on metals 0.13 0.11 23.96
Unit net cash costs 1.32 1.85 421.73
Depreciation and amortization 0.22 0.17 37.89
Noncash and nonrecurring costs, net 0.02 0.02 3.76
Total unit costs 1.56 2.04 463.38
Revenue adjustments, primarily for pricing on prior
period open sales (0.01 ) (0.01 ) (9.80 )
PT Smelting intercompany profit – – (0.47 )
Gross profit $ 2.31 $ 1.83 $ 438.19

Consolidated sales
Copper (millions of recoverable pounds) 229 229
Gold (thousands of recoverable ounces) 235

Six Months Ended June 30, 2008
By-Product Co-Product Method
Method Copper Gold
Revenues, after adjustments shown below $ 3.84 $ 3.84 $ 917.31

Site production and delivery, before net noncash and
nonrecurring costs shown below 1.88 1.46 351.21
Gold and silver credits (1.11 ) – –
Treatment charges 0.31 0.24 56.77
Royalty on metals 0.13 0.10 23.60
Unit net cash costs 1.21 1.80 431.58
Depreciation and amortization 0.21 0.17 39.66
Noncash and nonrecurring costs, net 0.04 0.03 8.06
Total unit costs 1.46 2.00 479.30
Revenue adjustments, primarily for pricing on prior
period open sales 0.23 0.23 14.13
PT Smelting intercompany profit (0.01 ) (0.01 ) (2.27 )
Gross profit $ 2.60 $ 2.06 $ 449.87

Consolidated sales
Copper (millions of recoverable pounds) 436 436
Gold (thousands of recoverable ounces) 486

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Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold. Market rates for treatment charges have decreased since 2006 and will vary based on PT Freeport Indonesia’s customer mix. Royalties ~~decreased to $30~~totaled $32 million in ~~second-quarter~~third-quarter 2008 and ~~$55~~$87 million for the first ~~six~~nine months of 2008, compared with ~~$48~~$20 million in ~~second-quarter~~third-quarter 2007 and ~~$97~~$117 million for the first ~~six~~nine months of 2007. The reduction in royalties primarily reflects lower copper and gold sales ~~volumes;~~volumes, partly offset by higher metal prices. Assuming average prices of ~~$3.75~~$2.15 per pound of copper and ~~$900~~$800 per ounce of gold for ~~the remainder of~~fourth-quarter 2008 and achievement of current 2008 sales estimates for PT Freeport Indonesia, royalty costs would total approximately ~~$155~~$117 million ($~~0.13~~0.11 per pound of copper) in 2008.

							Nine Months Ended
	Third-Quarter						September 30,
	2008			2007			2008			2007a
Consolidated Operating Data
Molybdenum (millions of recoverable pounds)
Production		13			10			33			30
Sales, excluding purchases		19	b		16	b		59	b		50	b
Average realized price per pound	$	32.11		$	27.89		$	31.78		$	25.12

Henderson Molybdenum Operations
Ore milled (metric tons per day)		27,800			22,300			26,500			24,000
Average molybdenum ore grade (percent)		0.25			0.25			0.23			0.23
Molybdenum production (millions of recoverable pounds)		13			10			33			30

Consolidated molybdenum sales volumes increased to 19 million pounds in third-quarter 2008 and 59 million pounds for the first nine months of 2008, compared with 16 million pounds in third-quarter 2007 and 50 million pounds for the first nine months of 2007. Consolidated molybdenum sales volumes are expected to approximate 74 million pounds in 2008, compared with 69 million pounds of molybdenum for the combined year 2007. Approximately 85 percent of our expected 2008 molybdenum production is committed for sale throughout the world pursuant to annual or quarterly agreements based primarily on prevailing market prices one month prior to

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the time of sale. For 2009, approximately 90 percent of our projected molybdenum sales are expected to be priced at prevailing market prices.

Molybdenum markets have been strong in recent years, averaging approximately $30 per pound in 2007 and $33 per pound for the first nine months of 2008. Slowing demand for molybdenum in the metallurgical and chemicals sectors during October 2008 combined with weak global economic conditions and turmoil in credit and financial markets has resulted in a sudden and sharp decline in molybdenum prices in recent weeks. The Metals Week Molybdenum Dealer Oxide price declined from approximately $30 per pound in mid-October 2008 to $12.00 per pound on November 10, 2008. In response to these conditions, on November 10, 2008, we announced that we have revised our mine plans at the Henderson molybdenum mine to operate at a reduced rate. This will result in a reduction in expected annual molybdenum production of approximately 10 million pounds, reflecting a 25 percent reduction in Henderson's approximate annual production. We are also assessing the potential to curtail by-product molybdenum production at our copper mines.

Gross Profit per Pound of Molybdenum for Henderson

					Nine Months Ended
	Third-Quarter				September 30,
	2008		2007		2008		2007
	(Actual)		(Actual)		(Actual)		(Pro forma)a
Revenues	$	31.21	$	28.22	$	30.32	$	25.22
Site production and delivery, before net noncash
and nonrecurring costs shown below		4.90		4.34		4.99		4.20
Unit net cash costs		4.90		4.34		4.99		4.20
Depreciation, depletion and amortization		4.20		1.83		4.23		3.92	b
Noncash and nonrecurring costs, net		0.39		0.53		0.17		0.29
Total unit costs		9.49		6.70		9.39		8.41
Gross profitc	$	21.72	$	21.52	$	20.93	$	16.81

Consolidated molybdenum sales (millions of
recoverable pounds)		13		10		33		30

Henderson’s unit net cash costs per pound of molybdenum for the third quarter and first nine months of 2008 were higher than the comparable 2007 periods primarily because of higher input costs, including outside services, supplies and energy.

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depreciation, depletion and amortization reflect changes in purchase accounting impacts associated with adjustments to the carrying values of these assets.

Assuming achievement of current 2008 sales estimates, we estimate that the 2008 average unit net cash costs for Henderson would approximate $5.00 per pound of molybdenum.

Rod & Refining

The Rod & Refining segment consists of copper conversion facilities, including a refinery, four rod mills and a specialty copper products facility. This segment processes copper produced at our North America mines and purchased copper into copper anode, cathode, rod and custom copper shapes. At times this segment refines copper and produces copper rod and shapes for customers on a toll basis. Toll arrangements require the tolling customer to deliver appropriate copper-bearing material to our facilities for processing into a product that is returned to the customer, who pays us for processing their material into the specified products.

Atlantic Copper Smelting & Refining

Atlantic Copper has a labor contract covering certain employees, which expired in December 2007. The contract has been provisionally extended until a further extension is negotiated.

DEVELOPMENT PROJECTS

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El Abra. We ~~are advancing the development of~~have plans to develop a large sulfide deposit at El Abra that will extend the mine life by over 10 years. Copper production from the sulfides ~~is targeted to begin in 2010 and is~~would be expected to average approximately 325 million pounds of copper per year, ~~beginning in 2012,~~ replacing depleting oxide production. Certain of the existing facilities at El Abra ~~will~~would be used to process the additional sulfide reserves. In March 2008, we received approval of the environmental impact study associated with this project. Total initial capital for the project is estimated to approximate $450 ~~million,~~million. We had previously planned to begin development of this project in 2009 to reach full production in 2012. Because of current market conditions, we are assessing the ~~majority~~timing of ~~which will be spent between 2008 and 2011.~~

~~Incremental Expansions.~~ As an initial step in evaluating our potential for expansion opportunities associated with existing ore bodies, we have initiated plans for incremental expansions at the Morenci, Sierrita and Bagdad mines in Arizona and the Cerro Verde mine in Peru. Based on scoping level estimates, these projects are expected to provide incremental production ramping up to over 200 million pounds of copper per year and 7 million pounds of molybdenum per year by 2011 with preliminary capital costs estimated to approximate $400 million. Detailed engineering for these projects is under way, which is expected to result in revised capital estimates and potential project scope changes.this project.

DOZ Expansion. In mid-2007, PT Freeport Indonesia completed the expansion of the capacity of the DOZ underground operation to allow a sustained rate of 50,000 metric tons per day. PT Freeport Indonesia’s further expansion of the DOZ mine to 80,000 metric tons of ore per day is under way with completion targeted by 2010. The capital cost for this expansion is expected to approximate $100 million, with PT Freeport Indonesia’s 60 percent share totaling approximately $60 million. The success of the development of the DOZ mine, one of the world’s largest underground mines, provides confidence in the future development of PT Freeport Indonesia’s large-scale undeveloped underground ore bodies.

Tenke Fungurume. We hold an effective 57.75 percent interest in the Tenke Fungurume copper and cobalt mining concessions in the Katanga province of the DRC and are the operator of the project. The initial project at Tenke Fungurume is based on mining and processing ore reserves approximating 100 million metric tons with average ore grades of 2.3 percent copper and 0.3 percent cobalt. We are currently engaged in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of this highly prospective district and expect ~~the~~its ore reserves to increase significantly over time.

Approximately ~~$700 million~~$1.0 billion in aggregate project costs have been incurred to date. Construction activities are being advanced with current activities focused on concrete placement, steel tank erection, structural steel and infrastructure development, including shops, warehouses and extensive social and regional infrastructure programs. All long ~~lead-time~~lead-

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time equipment has been ordered, and initial production is targeted during the second half of 2009. Annual production in the initial years is expected to approximate 250 million pounds of copper and 18 million pounds of cobalt. We expect the results of drilling activities will enable significant future expansion of initial production rates.

~~Table~~ The timing of ~~Contents~~

these expansions will depend on a number of factors, including general economic and market conditions.

We are responsible for funding 70 percent of project development costs and are also responsible for financing our partner’s share of certain project overruns. A capital cost review prepared in April 2008 indicated estimated capital costs of approximately $1.75 billion for this project (approximately $1.9 billion including loans to a third-party government agency for power development). These estimates include substantial amounts for infrastructure to support a ~~larger scale~~larger-scale operation than the initial phase of the project, including the provision for expanded electrical power-generating capacity and improved power reliability for the region. The regional power infrastructure investment is estimated at approximately $175 million, the majority of which is expected to be funded through a loan to the DRC state power authority.

WeIn response to recent global economic conditions, we are ~~continuing~~seeking opportunities to ~~develop plans~~defer certain expenditures not required for the initial project. This may affect the timing of near-term expenditures although we continue to ~~enhance the economic returns of the project, including expansion~~expect that development of this high-potential ~~resource. We~~resource will ~~continue to review and, as necessary, update our capital cost estimate as project development progresses.~~require substantial additional investments.

In February 2008, Tenke Fungurume Mining (TFM), in which we own a 57.75 percent interest, received a letter from the Ministry of Mines, Government of the DRC, seeking ~~our~~ comment on proposed material modifications to ~~our~~the mining ~~contract~~contracts for the ~~Tenke Fungurume~~TFM concession, including the amount of transfer payments payable to the government, the government’s percentage ownership and involvement in the management of the mine, regularization of certain matters under Congolese law and the implementation of social plans. ~~Our~~We responded to this letter indicating that our mining ~~contract was~~contracts were negotiated transparently and approved by the Government of the DRC following extended negotiations, and we believe ~~it complies~~they are fair and equitable, comply with Congolese law and isare enforceable without modifications. ~~We are working~~As part of the mining contract review process, we met with a representative of La Generale des Carrieres et des Mines (Gecamines), which is wholly owned by the DRC government and owns a 17.5 percent interest in TFM, and a representative of the DRC government in October 2008 to discuss the proposed modifications. Our response at that meeting was consistent with our response to the February letter, and we will continue to work cooperatively with the government to resolve these matters while continuing with our project development activities.

EXPLORATION ACTIVITIES

We are conducting exploration activities near our existing mines with a focus on opportunities to expand reserves that will support additional future production capacity in the large mineral districts where we currently operate. Drilling activities have been significantly expanded over the last 12 months and involve drilling adjacent to existing ore bodies. The number of drill rigs has been expanded from 26 in March 2007 to 80approximately 100 currently. Aggregate exploration expenditures for the full year 2008 are expected to approximate ~~$240~~$275 million. In response to market conditions, we expect to reduce exploration expenditures in future periods. The information obtained in the 2008 program will allow us to better evaluate our ore bodies and develop plans for the future.

Results to date have been positive, providing opportunities for significant potential reserve additions at ~~Morenci, Bagdad and Sierrita in~~our North ~~America;~~America sites, at Cerro Verde in South America and in the high potential Tenke ~~district. Drilling also continues at the Lone Star deposit in the Safford~~ district.

In Indonesia, we have continued to pursue exploration, including testing extensions of the Deep Grasberg and Kucing Liar mine complex, evaluating the resource below the ~~old~~depleted Ertsberg pit for potential resumption of open pit mining and evaluating targets in the area between the Ertsberg East and Grasberg mineral systems from the new Common Infrastructure tunnels. ~~We have also resumed exploration activities in certain prospective areas in Papua, outside Block A (the Grasberg contract area).~~

~~ATLANTIC COPPER SMELTING & REFINING~~

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Table of Contents

~~mining operations are not significantly affected by changes in treatment and refining charges because these operations are fully integrated.~~

~~Atlantic Copper has a labor contract covering certain employees, which expired in December 2007. The contract has been provisionally extended until a further extension is negotiated.~~

~~The following discussion of Atlantic Copper’s operations covers the three and six months ended June 30, 2008 and 2007:~~

Six Months Ended
Second-Quarter June 30,
2008 2007 2008 2007
Gross profit (in millions) $ 17 $ 2 $ 22 $ 19
Add depreciation and amortization expense (in millions) 9 9 18 19
Other (5 ) – (5 ) –
Cash margin (in millions) $ 21 $ 11 $ 35 $ 38

Operating income (loss) (in millions) $ 11 $ (4 ) $ 8 $ 9
Concentrate and scrap treated (thousands of metric tons) 268 181 529 424
Anodes production (millions of pounds) 152 112 294 261
Treatment rates per pound $ 0.18 $ 0.31 $ 0.21 $ 0.33
Cathodes sales (millions of pounds) 152 134 294 269
Gold sales in anodes and slimes (thousands of ounces) 100 174 210 288

Atlantic Copper’s operating cash margin was $21 million in second-quarter 2008 and $35 million for the first six months of 2008, compared with $11 million in second-quarter 2007 and $38 million for the first six months of 2007. Operating income totaled $11 million in second-quarter 2008 and $8 million for the first six months of 2008, compared with an operating loss of $4 million in second-quarter 2007 and operating income of $9 million for the first six months of 2007. Atlantic Copper’s operating results for the second quarter and first six months of 2007 included a $23 million impact from its scheduled 23-day maintenance turnaround completed in June 2007. Excluding the impact of the scheduled maintenance turnaround on the 2007 periods, Atlantic Copper’s cash margin and operating income in the second quarter and first six months 2008, compared with the 2007 periods, reflected the impact of lower treatment rates, and higher costs associated with a stronger euro and increased energy costs, partly offset by lower unit costs primarily resulting from higher recoveries, combined with higher sulfuric acid and gold credits.

Atlantic Copper’s treatment charges, including price participation, which are what PT Freeport Indonesia, our South America mines and third parties pay Atlantic Copper to smelt and refine concentrates, averaged $0.18 per pound in second-quarter 2008 and $0.21 per pound for the first six months of 2008, compared with $0.31 per pound in second-quarter 2007 and $0.33 per pound in the first six months of 2007. Market treatment rates have been volatile in recent years. Rates began declining in 2006 as a result of limited concentrate availability, and this has continued into 2008. Assuming average copper prices of $3.75 per pound for the remainder of 2008, we expect these rates to average approximately $0.19 per pound in 2008.

We defer recognizing profits on PT Freeport Indonesia’s and our South America mines’ sales to Atlantic Copper and on 25 percent of PT Freeport Indonesia’s sales to PT Smelting until final sales to third parties occur. Changes in these net deferrals resulted in net reductions to net income totaling $6 million ($0.01 per share) in second-quarter 2008 and additions of less than $1 million for the first six months of 2008, compared with additions to net income totaling $7 million to net income ($0.02 per share) in second-quarter 2007 and reductions to net income of $103 million ($0.30 per share) in the first six months of 2007. At June 30, 2008, our net deferred profits on PT Freeport Indonesia’s and the South America mines’ inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income after taxes and minority interests totaled $93 million.

~~Table of Contents~~

CAPITAL RESOURCES AND LIQUIDITY

Our operating cash flows vary with prices realized from copper, gold and molybdenum sales, our production levels, production costs, cash payments for income taxes and interest, other working capital changes and other factors. ~~Based~~With weakened economic conditions in September and October 2008, there is significant uncertainty about the near-term price outlook for our principal products. While we view the long-term outlook for our business positively, supported by limitations on ~~current mine~~supplies of copper and by the requirements for copper in the world’s economy, we are responding to the sudden downturn and uncertain near-term outlook. Operating plans are being revised to target reductions in costs, defer or eliminate capital projects, defer exploration expenditures and ~~subject~~potentially curtail production at high-cost operations. Refer to future copper, gold and molybdenum prices, during 2008 we expect to generate cash flows greater than our budgeted capital expenditures, minority interest distributions, dividends and other cash requirements.“Recent Events” for further discussion.

We have a $1.5 billion revolving credit facility which matures in March 2012. At September 30, 2008, no amounts were drawn and availability totaled approximately $1.4 billion after considering outstanding letters of credit. We plan to use the facility from time to time for working capital and short term funding requirements but do not intend to use the facility for long-term funding items. We will continue to monitor the capital markets for additional long-term funding opportunities but under current conditions, such opportunities are costly and limited.

Cash and Cash Equivalents

Operating Activities

Investing Activities

Capital expenditures are expected to approximate ~~$3.0~~$2.7 billion for 2008, including ~~$1.8~~$1.6 billion for major projects. ~~Following is a summary of capital expenditures (excluding capitalized interest) for~~In response to the ~~first six months of 2008~~recent significant change in economic conditions and projected capital expenditures (excluding capitalized interest) for the full year 2008 associated with major projects (refer to “Development Projects” for further discussion of these projects) (in millions):

Six Months Ended Full Year
June 30, 2008 2008
(Actual) (Estimate)
Tenke Fungurume mine development $ 342 $ 1,000
Climax molybdenum mine restart 25 160
Incremental expansions 76 170
Big Gossan mine development 75 160
El Abra sulfide mine 22 70
Grasberg Block Cave/Common Infrastructure 21 75
Other major projects 77 165
$ 638 $ 1,800

Financing Activities

During first-quarter 2008, we purchased in the open market $33 million of our 9.5% Senior Notes for $46 million.

For the first ~~six~~nine months of 2008, preferred stock dividends paid totaled ~~$127~~$191 million representing dividends on our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock. Annual preferred stock dividends on our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock total approximately $255 million.

CONTRACTUAL OBLIGATIONS

ENVIRONMENTAL AND RECLAMATION MATTERS

NEW ACCOUNTING STANDARDS

~~Table of Contents~~

~~postretirement related financial assets and on nonfinancial assets or liabilities that are not required or permitted to be measured at fair value on a recurring basis.~~

PRODUCT REVENUES AND PRODUCTION COSTS

~~North America Copper Mining Product Revenues and Production Costs~~

Three Months Ended June 30, 2008

By-Product Co-Product Method
(In millions) Method Copper
Molybdenum a

Other b
Total
Revenues, after adjustments shown below $ 1,323 $ 1,323 $ 234 $ 20 $ 1,577

Site production and delivery, before net noncash
and nonrecurring costs shown below 636 555 84 8 647
By-product creditsa
(243 ) – – – –
Treatment charges 37 35 – 2 37
Net cash costs 430 590 84 10 684
Depreciation, depletion and amortization 183 164 18 1 183
Noncash and nonrecurring costs, net 20 19 1 – 20
Total costs 633 773 103 11 887
Revenue adjustments, primarily for pricing on prior
period open sales (4 ) (4 ) – – (4 )
Idle facility and other non-inventoriable costs (14 ) (14 ) – – (14 )
Gross profit $ 672 $ 532 $ 131 $ 9 $ 672

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 1,577 $ 647 $ 183
Net noncash and nonrecurring costs per above N/A 20 N/A
Treatment charges per above N/A 37 N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above (4 ) N/A N/A
North America copper mines 1,573 704 183
Henderson molybdenum operations 321 53 45
Other operations and eliminationsc
1,251 1,206 43
Total North America operations 3,145 1,963 271
South America operations 1,409 462 127
Indonesia operations 1,016 439 48
Atlantic Copper smelting & refining 724 698 9
Corporate, other & eliminations (853 ) (842 ) 7
As reported in FCX’s consolidated financial statements $ 5,441 $ 2,720 $ 462

Three Months Ended June 30, 2007
By-Product Co-Product Method
(In millions) Method Copper
Molybdenum a

Other b
Total
Revenues, after adjustments shown below $ 1,126 $ 1,126 $ 235 $ 19 $ 1,380

Site production and delivery, before net noncash
and nonrecurring costs shown below 476 397 83 9 489
By-product creditsa
(241 ) – – – –
Treatment charges 29 28 – 1 29
Net cash costs 264 425 83 10 518
Depreciation, depletion and amortizationc
131 109 21 1 131
Noncash and nonrecurring costs, netc
144 132 (1 ) 13 144
Total costs 539 666 103 24 793
Revenue adjustments, primarily for pricing on prior
period open sales and hedging (139 ) (139 ) – – (139 )
Idle facility and other non-inventoriable costs (8 ) (8 ) – – (8 )
Gross profit (loss) $ 440 $ 313 $ 132 $ (5 ) $ 440

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 1,380 $ 489 $ 131
Net noncash and nonrecurring costs per above N/A 144 N/A
Treatment charges per above N/A 29 N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above (139 ) N/A N/A
North America copper mines 1,241 662 131
Henderson molybdenum operations 255 45 18
Other operations and eliminationsd
1,187 1,397 19
Total North America operations 2,683 2,104 168
South America operations 1,232 303 136
Indonesia operations 1,762 390 56
Atlantic Copper smelting & refining 619 608 9
Corporate, other & eliminations (853 ) (865 ) 5
As reported in FCX’s consolidated financial statements $ 5,443 $ 2,540 $ 374
North America Copper Mines Product Revenues and Production Costs

Three Months Ended September 30, 2008
	By-Product			Co-Product Method
(In millions)	Method			Copper			Molybdenum a			Other b		Total
Revenues, after adjustments shown below	$	1,236		$	1,236		$	231		$	22	$	1,489

Site production and delivery, before net noncash
and nonrecurring costs shown below		747			648			105			11		764
By-product creditsa		(236	)		–			–			–		–
Treatment charges		32			31			–			1		32
Net cash costs		543			679			105			12		796
Depreciation, depletion and amortization		188			167			19			2		188
Noncash and nonrecurring costs, net		33	c		31	c		1			1		33
Total costs		764			877			125			15		1,017
Revenue adjustments, primarily for pricing on prior
period open sales and hedging		(83	)		(83	)		–			–		(83	)
Idle facility and other non-inventoriable costs		(16	)		(15	)		(1	)		–		(16	)
Gross profit	$	373		$	261		$	105		$	7	$	373

Reconciliation to Amounts Reported
(In millions)				Production				Depreciation,
				and				Depletion and
	Revenues			Delivery				Amortization
Totals presented above	$	1,489		$	764		$	188
Net noncash and nonrecurring costs per above		N/A			33			N/A
Treatment charges per above		N/A			32			N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above		(83	)		N/A			N/A
Eliminations and other		(4	)		18			6
North America copper mines		1,402			847			194
South America copper mines		1,008			497			123
Indonesia mining		802			470			52
Molybdenum		683			417			52
Rod & Refining		1,485			1,478			2
Atlantic Copper Smelting & Refining		625			611			9
Corporate, other & eliminations		(1,389	)		(1,446	)		10
As reported in FCX’s consolidated financial statements	$	4,616		$	2,874		$	442

Three Months Ended September 30, 2007
	By-Product			Co-Product Method
(In millions)	Method			Copper			Molybdenum a		Other b		Total
Revenues, after adjustments shown below	$	1,307		$	1,307		$	245	$	14	$	1,566

Site production and delivery, before net noncash
and nonrecurring costs shown below		528			459			74		7		540
By-product creditsa		(247	)		–			–		–		–
Treatment charges		34			33			–		1		34
Net cash costs		315			492			74		8		574
Depreciation, depletion and amortizationc		175			155			19		1		175
Noncash and nonrecurring costs, netc		166			161			2		3		166
Total costs		656			808			95		12		915
Revenue adjustments, primarily for pricing on prior
period open sales and hedging		(43	)		(43	)		–		–		(43	)
Idle facility and other non-inventoriable costs		(8	)		(9	)		–		1		(8	)
Gross profit	$	600		$	447		$	150	$	3	$	600

Reconciliation to Amounts Reported
(In millions)				Production					Depreciation,
				and					Depletion and
	Revenues			Delivery					Amortization
Totals presented above	$	1,566		$	540			$	175
Net noncash and nonrecurring costs per above		N/A			166				N/A
Treatment charges per above		N/A			34				N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above		(43	)		N/A				N/A
Eliminations and other		3				47			3
North America copper mines		1,526				787			178
South America copper mines		1,368				455			94
Indonesia mining		837				351			43
Molybdenum		519				380			22
Rod & Refining		1,736				1,726			3
Atlantic Copper Smelting & Refining		688				674			8
Corporate, other & eliminations		(1,608	)			(1,711	)		8
As reported in FCX’s consolidated financial statements	$	5,066		$		2,662		$	356

c.	~~Includes amounts associated with Rod & Refining operations, the copper and molybdenum sales companies and related eliminations.~~

Six Months Ended June 30, 2007 (Pro Forma)
By-Product Co-Product Method
(In millions) Method Copper
Molybdenum a

Other b
Total
Revenues, after adjustments shown below $ 1,938 $ 1,938 $ 413 $ 29 $ 2,380

Site production and delivery, before net noncash
and nonrecurring costs shown below 870 745 152 12 909
By-product creditsa
(403 ) – – – –
Treatment charges 51 50 – 1 51
Net cash costs 518 795 152 13 960
Depreciation, depletion and amortizationc
287 239 47 1 287
Noncash and nonrecurring costs, netc
415 358 43 14 415
Total costs 1,220 1,392 242 28 1,662
Revenue adjustments, primarily for pricing on prior
period open sales and hedging (131 ) (131 ) – – (131 )
Idle facility and other non-inventoriable costs (18 ) (18 ) – – (18 )
Gross profit $ 569 $ 397 $ 171 $ 1 $ 569

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 2,380 $ 909 $ 287
Net noncash and nonrecurring costs per above N/A 415 N/A
Treatment charges per above N/A 51 N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above (131 ) N/A N/A
Eliminations and other 7,794 3,651 477
As reported in FCX’s pro forma consolidated
financial results $ 10,043 $ 5,026 $ 764

b.	~~Includes gold and silver product revenues and production costs.~~

Nine Months Ended September 30, 2008
	By-Product			Co-Product Method
(In millions)	Method			Copper			Molybdenum a			Other b		Total
Revenues, after adjustments shown below	$	3,721		$	3,721		$	720		$	59	$	4,500

Site production and delivery, before net noncash
and nonrecurring costs shown below		1,936			1,684			265			26		1,975
By-product creditsa		(740	)		–			–			–		–
Treatment charges		100			97			–			3		100
Net cash costs		1,296			1,781			265			29		2,075
Depreciation, depletion and amortization		551			490			56			5		551
Noncash and nonrecurring costs, net		83	c		79	c		3			1		83
Total costs		1,930			2,350			324			35		2,709
Revenue adjustments, primarily for pricing on prior
period open sales and hedging		(28	)		(28	)		–			–		(28	)
Idle facility and other non-inventoriable costs		(43	)		(42	)		(1	)		–		(43	)
Gross profit	$	1,720		$	1,301		$	395		$	24	$	1,720

Reconciliation to Amounts Reported
(In millions)				Production				Depreciation,
				and				Depletion and
	Revenues			Delivery				Amortization
Totals presented above	$	4,500		$	1,975		$	551
Net noncash and nonrecurring costs per above		N/A			83			N/A
Treatment charges per above		N/A			100			N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above		(28	)		N/A			N/A
Eliminations and other		(3	)		58			14
North America copper mines		4,469			2,216			565
South America copper mines		4,043			1,391			380
Indonesia mining		2,870			1,308			145
Molybdenum		2,117			1,298			160
Rod & Refining		4,856			4,831			5
Atlantic Copper Smelting & Refining		2,014			1,960			27
Corporate, other & eliminations		(4,640	)		(4,688	)		40
As reported in FCX’s consolidated financial statements	$	15,729		$	8,316		$	1,322

Nine Months Ended September 30, 2007 (Pro Forma)a
	By-Product			Co-Product Method
(In millions)	Method			Copper			Molybdenum b			Other c		Total
Revenues, after adjustments shown below	$	3,244		$	3,244		$	658		$	43	$	3,945

Site production and delivery, before net noncash
and nonrecurring costs shown below		1,398			1,204			226			19		1,449
By-product creditsb		(650	)		–			–			–		–
Treatment charges		85			83			–			2		85
Net cash costs		833			1,287			226			21		1,534
Depreciation, depletion and amortization		475	d		404	d		68	d		3		475
Noncash and nonrecurring costs, net		400	e		372	e		13	e		15		400
Total costs		1,708			2,063			307			39		2,409
Revenue adjustments, primarily for pricing on prior
period open sales and hedging		(173	)		(173	)		–			–		(173	)
Idle facility and other non-inventoriable costs		(26	)		(26	)		–			–		(26	)
Gross profit	$	1,337		$	982		$	351		$	4	$	1,337

Reconciliation to Amounts Reported
(In millions)				Production				Depreciation,
				and				Depletion and
	Revenues			Delivery				Amortization
Totals presented above	$	3,945		$	1,449		$	475
Net noncash and nonrecurring costs per above		N/A			400			N/A
Treatment charges per above		N/A			85			N/A
Revenue adjustments, primarily for pricing on prior
period open sales and hedging per above		(173	)		N/A			N/A
North America copper mines		3,772			1,934			475
South America copper mines		3,622			1,248			347
Indonesia mining		4,308			1,064			158
Molybdenum		1,481			1,143			127
Rod & Refining		5,078			5,049			8
Atlantic Copper Smelting & Refining		1,761			1,709			27
Eliminations and other		(4,883	)		(4,716	)		40
As reported in FCX’s pro forma consolidated
financial resultsf	$	15,139		$	7,431		$	1,182

South America Copper Mines Product Revenues and Production Costs

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Three Months Ended June 30, 2008

Totals presented above $ 321 $ 53 $ 45
Net noncash and nonrecurring costs per above N/A – N/A
Other molybdenum operations and eliminationsc
394 368 24
Total Molybdenum operations 715 421 69
North America copper mines, other operations and eliminations 2,430 1,542 202
Total North America operations 3,145 1,963 271
South America operations 1,409 462 127
Indonesia operations 1,016 439 48
Atlantic Copper smelting & refining 724 698 9
Corporate, other & eliminations (853 ) (842 ) 7
As reported in FCX’s consolidated financial statements $ 5,441 $ 2,720 $ 462

Three Months Ended June 30, 2007
Totals presented above $ 255 $ 45 $ 18
Net noncash and nonrecurring costs per above N/A – N/A
Other molybdenum operations and eliminationsc
208 361 4
Total Molybdenum operations 463 406 22
North America copper mines, other operations and eliminations 2,220 1,698 146
Total North America operations 2,683 2,104 168
South America operations 1,232 303 136
Indonesia operations 1,762 390 56
Atlantic Copper smelting & refining 619 608 9
Corporate, other & eliminations (853 ) (865 ) 5
As reported in FCX’s consolidated financial statements $ 5,443 $ 2,540 $ 374

a.	~~The estimated fair values of acquired property, plant and equipment were based on preliminary estimates during 2007, with adjustments made until such values were finalized in first-quarter 2008.~~

c.	~~Primarily includes amounts associated with the molybdenum sales company that are included in Molybdenum operations.~~

~~Table of Contents~~

Six Months Ended
June 30,
2008 2007
(In millions) (Actual) (Pro Forma)
Revenues $ 603 $ 463

Site production and delivery, before net noncash
and nonrecurring costs shown below 102 83
Net cash costs 102 83
Depreciation, depletion and amortizationa
86 77
Noncash and nonrecurring costs, net 1 –
Total costs 189 160
Gross profitb
$ 414 $ 303

Reconciliation to Amounts Reported Production Depreciation,
(In millions) and Depletion and
Revenues Delivery Amortization
Six Months Ended June 30, 2008
Totals presented above $ 603 $ 102 $ 86
Net noncash and nonrecurring costs per above N/A 1 N/A
Other molybdenum operations and eliminationsc
831 778 22
Total Molybdenum operations 1,434 881 108
North America copper mines, other operations and eliminations 4,984 3,220 390
Total North America operations 6,418 4,101 498
South America operations 3,002 894 257
Indonesia operations 2,068 838 93
Atlantic Copper smelting & refining 1,389 1,349 18
Corporate, other & eliminations (1,764 ) (1,740 ) 14
As reported in FCX’s consolidated financial statements $ 11,113 $ 5,442 $ 880

Six Months Ended June 30, 2007
Totals presented above $ 463 $ 83 $ 77
Eliminations and other 9,580 4,943 687
As reported in FCX’s pro forma consolidated financial results $ 10,043 $ 5,026 $ 764

a.	~~The estimated fair values of acquired property, plant and equipment were based on preliminary estimates during 2007, with adjustments made until such values were finalized in first-quarter 2008.~~

c.	~~Primarily includes amounts associated with the molybdenum sales company that are included in Molybdenum operations.~~

~~Table of Contents~~

~~South America Mining Product Revenues and Production Costs~~

Three Months Ended June 30, 2008
By-Product Co-Product Method
(In millions) Method Copper
Other a
Total
Revenues, after adjustments shown below $ 1,417 $ 1,417 $ 46 $ 1,463

Site production and delivery, before net noncash
nonrecurring costs shown below 423 409 17 426
By-product credits (43 ) – – –
Treatment charges 68 68 – 68
Net cash costs 448 477 17 494
Depreciation, depletion and amortization 127 122 5 127
Noncash and nonrecurring costs, net 31 31 – 31
Total costs 606 630 22 652
Revenue adjustments, primarily for pricing on prior
period open sales 16 16 – 16
Other non-inventoriable costs (10 ) (10 ) – (10 )
Gross profit $ 817 $ 793 $ 24 $ 817

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 1,463 $ 426 $ 127
Net noncash and nonrecurring costs per above N/A 31 N/A
Less: Treatment charges per above (68 ) N/A N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above 16 N/A N/A
Purchased metal 91 91 N/A
Eliminations and other (93 ) (86 ) –
Total South America operations 1,409 462 127
North America operations 3,145 1,963 271
Indonesia operations 1,016 439 48
Atlantic Copper smelting & refining 724 698 9
Corporate, other & eliminations (853 ) (842 ) 7
As reported in FCX’s consolidated financial statements $ 5,441 $ 2,720 $ 462

a.	Includes gold, silver and molybdenum product revenues and production costs.

5853

Table of Contents

Three Months Ended June 30, 2007
Three Months Ended September 30, 2007
	By-Product			Co-Product Method									By-Product			Co-Product Method
(In millions)	Method			Copper			Other a			Total			Method			Copper			Other a			Total
Revenues, after adjustments shown below	$	1,210		$	1,210		$	26		$	1,236		$	1,361		$	1,361		$	36		$	1,397

Site production and delivery, before net noncash
nonrecurring costs shown below		281			276			8			284			369			359			15			374
By-product credits		(23	)		–			–			–			(31	)		–			–			–
Treatment charges		70			70			–			70			90			87			3			90
Net cash costs		328			346			8			354			428			446			18			464
Depreciation, depletion and amortizationb		141			138			3			141			94			91			3			94
Noncash and nonrecurring costs, netb		8			8			–			8			77			79			(2	)		77
Total costs		477			492			11			503			599			616			19			635
Revenue adjustments, primarily for pricing on prior
period open sales		62			62			–			62			41			41			–			41
Other non-inventoriable costs		(7	)		(7	)		–			(7	)		(7	)		(7	)		–			(7	)
Gross profit	$	788		$	773		$	15		$	788		$	796		$	779		$	17		$	796

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,									Production			Depreciation,
				and			Depletion and									and			Depletion and
	Revenues			Delivery			Amortization						Revenues			Delivery			Amortization
Totals presented above	$	1,236		$	284		$	141					$	1,397		$	374		$	94
Net noncash and nonrecurring costs per above		N/A			8			N/A						N/A			77			N/A
Less: Treatment charges per above		(70	)		N/A			N/A						(90	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		62			N/A			N/A						41			N/A			N/A
Purchased metal		81			81			N/A						43			43			N/A
Eliminations and other		(77	)		(70	)		(5	)					(23	)		(39	)		–
Total South America operations		1,232			303			136
North America operations		2,683			2,104			168
Indonesia operations		1,762			390			56
Atlantic Copper smelting & refining		619			608			9
South America copper mines														1,368			455			94
North America copper mines														1,526			787			178
Indonesia mining														837			351			43
Molybdenum														519			380			22
Rod & Refining														1,736			1,726			3
Atlantic Copper Smelting & Refining														688			674			8
Corporate, other & eliminations		(853	)		(865	)		5						(1,608	)		(1,711	)		8
As reported in FCX’s consolidated financial statements	$	5,443		$	2,540		$	374					$	5,066		$	2,662		$	356

a.	Includes gold and silver product revenues and production costs.

b.	The estimated fair values of acquired inventory and property, plant and equipment were based on preliminary estimates during 2007, with adjustments made until such values were finalized in first-quarter 2008.

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Six Months Ended June 30, 2008
Nine Months Ended September 30, 2008
	By-Product			Co-Product Method									By-Product			Co-Product Method
(In millions)	Method			Copper			Other a			Total			Method			Copper			Other a			Total
Revenues, after adjustments shown below	$	2,806		$	2,806		$	105		$	2,911		$	3,794		$	3,794		$	167		$	3,961

Site production and delivery, before net noncash
nonrecurring costs shown below		818			790			37			827			1,294			1,247			65			1,312
By-product credits		(96	)		–			–			–			(154	)		–			–			–
Treatment charges		144			144			–			144			180			180			–			180
Net cash costs		866			934			37			971			1,320			1,427			65			1,492
Depreciation, depletion and amortization		257			248			9			257			379			365			14			379
Noncash and nonrecurring costs, net		56			56			–			56			69			64			–			64
Total costs		1,179			1,238			46			1,284			1,768			1,856			79			1,935
Revenue adjustments, primarily for pricing on prior
period open sales		237			237			–			237			232			232			–			232
Other non-inventoriable costs		(19	)		(18	)		(1	)		(19	)		(24	)		(22	)		(2	)		(24	)
Gross profit	$	1,845		$	1,787		$	58		$	1,845		$	2,234		$	2,148		$	86		$	2,234

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,									Production			Depreciation,
				and			Depletion and									and			Depletion and
	Revenues			Delivery			Amortization						Revenues			Delivery			Amortization
Totals presented above	$	2,911		$	827		$	257					$	3,961		$	1,312		$	379
Net noncash and nonrecurring costs per above		N/A			56			N/A						N/A			64			N/A
Less: Treatment charges per above		(144	)		N/A			N/A						(180	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		237			N/A			N/A						232			N/A			N/A
Purchased metal		165			165			N/A						191			188			N/A
Eliminations and other		(167	)		(154	)		–						(161	)		(173	)		1
Total South America operations		3,002			894			257
North America operations		6,418			4,101			498
Indonesia operations		2,068			838			93
Atlantic Copper smelting & refining		1,389			1,349			18
South America copper mines														4,043			1,391			380
North America copper mines														4,469			2,216			565
Indonesia mining														2,870			1,308			145
Molybdenum														2,117			1,298			160
Rod & Refining														4,856			4,831			5
Atlantic Copper Smelting & Refining														2,014			1,960			27
Corporate, other & eliminations		(1,764	)		(1,740	)		14						(4,640	)		(4,688	)		40
As reported in FCX’s consolidated financial statements	$	11,113		$	5,442		$	880					$	15,729		$	8,316		$	1,322

a.	Includes gold, silver and molybdenum product revenues and production costs.

6055

Table of Contents

Six Months Ended June 30, 2007 (Pro Forma)
Nine Months Ended September 30, 2007 (Pro Forma)a
	By-Product			Co-Product Method									By-Product			Co-Product Method
(In millions)	Method			Copper			Other a			Total			Method			Copper			Other b			Total
Revenues, after adjustments shown below	$	2,141		$	2,141		$	50		$	2,191		$	3,544		$	3,544		$	86		$	3,630

Site production and delivery, before net noncash
nonrecurring costs shown below		534			518			19			537			903			877			34			911
By-product credits		(47	)		–			–			–			(78	)		–			–			–
Treatment charges		125			125			–			125			215			212			3			215
Net cash costs		612			643			19			662			1,040			1,089			37			1,126
Depreciation, depletion and amortizationb		224			219			5			224
Noncash and nonrecurring costs, netb		133			130			3			133
Depreciation, depletion and amortization														347	c		338	c		9			347
Noncash and nonrecurring costs, net														146	d		147	d		(1	)		146
Total costs		969			992			27			1,019			1,533			1,574			45			1,619
Revenue adjustments, primarily for pricing on prior
period open sales		16			17			(1	)		16			16			17			(1	)		16
Other non-inventoriable costs		(14	)		(14	)		–			(14	)		(21	)		(20	)		(1	)		(21	)
Gross profit	$	1,174		$	1,152		$	22		$	1,174		$	2,006		$	1,967		$	39		$	2,006

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,									Production			Depreciation,
				and			Depletion and									and			Depletion and
	Revenues			Delivery			Amortization						Revenues			Delivery			Amortization
Totals presented above	$	2,191		$	537		$	224					$	3,630		$	911		$	347
Net noncash and nonrecurring costs per above		N/A			133			N/A						N/A			146			N/A
Less: Treatment charges per above		(125	)		N/A			N/A						(215	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		16			N/A			N/A						16			N/A			N/A
Purchased metal		148			148			N/A						191			191			N/A
South America copper mines														3,622			1,248			347
North America copper mines														3,772			1,934			475
Indonesia mining														4,308			1,064			158
Molybdenum														1,481			1,143			127
Rod & Refining														5,078			5,049			8
Atlantic Copper Smelting & Refining														1,761			1,709			27
Eliminations and other		7,813			4,208			540						(4,883	)		(4,716	)		40
As reported in FCX’s pro forma consolidated financial results	$	10,043		$	5,026		$	764
As reported in FCX’s pro forma consolidated financial resultse													$	15,139		$	7,431		$	1,182

For comparative purposes, the nine-month period ended September 30, 2007, has been presented on a pro forma basis, which combines our historical results with the Phelps Dodge pre-acquisition results for the period January 1, 2007, through March 19, 2007, and also includes certain pro forma adjustments, which assume the acquisition of Phelps Dodge was effective January 1, 2007 (refer to notes c and d below for further discussion of the pro forma adjustments). As the pre-acquisition results represent the results of the South America copper mines under Phelps Dodge management, such results are not necessarily indicative of what past results would have been under FCX management or of future operating results.

b.	Includes gold and silver product revenues and production costs.

b.c.

~~The estimated fair~~Includes pro forma adjustments of $56 million for copper on a by-product basis and $54 million for copper on a co-product basis associated with the impact of increased carrying values offor acquired ~~inventory and~~ property, plant and equipment ~~were based~~at the South America copper mines.

Includes pro forma adjustments of $2 million for copper on ~~preliminary estimates during 2007,~~both a by-product and co-product basis associated with ~~adjustments made until such~~the impact of increased carrying values ~~were finalized in first-quarter 2008. Additionally,~~for acquired metal inventories at the ~~inventory impacts on noncash and nonrecurring costs were mostly realized during 2007~~South America copper mines.

e.	Refer to Note 2 for consolidated pro forma financial information for the nine months ended September 30, 2007.

6156

Table of Contents

Indonesia Mining Product Revenues and Production Costs

Three Months Ended June 30, 2008
Three Months Ended September 30, 2008
	By-Product			Co-Product Method										By-Product			Co-Product Method
(In millions)	Method			Copper			Gold		Silver		Total			Method			Copper			Gold		Silver		Total
Revenues, after adjustments shown below	$	896		$	896		$	212	$	15	$	1,123		$	783		$	783		$	233	$	11	$	1,027

Site production and delivery, before net noncash
and nonrecurring costs shown below		434			345			83		6		434			466			355			106		5		466
Gold and silver credits		(227	)		–			–		–		–			(244	)		–			–		–		–
Treatment charges		64			51			13		–		64			63			48			14		1		63
Royalty on metals		30			24			5		1		30			32			24			8		–		32
Net cash costs		301			420			101		7		528			317			427			128		6		561
Depreciation and amortization		48			38			9		1		48			52			40			12		–		52
Noncash and nonrecurring costs, net		5			4			1		–		5			4			3			1		–		4
Total costs		354			462			111		8		581			373			470			141		6		617
Revenue adjustments, primarily for pricing on prior
period open sales		(13	)		(13	)		–		–		(13	)		(130	)		(130	)		–		–		(130	)
PT Smelting intercompany profit		–			(1	)		1		–		–			10			8			2		–		10
Gross profit	$	529		$	420		$	102	$	7	$	529		$	290		$	191		$	94	$	5	$	290

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,										Production			Depreciation,
				and			Depletion and										and			Depletion and
	Revenues			Delivery			Amortization							Revenues			Delivery			Amortization
Totals presented above	$	1,123		$	434		$	48						$	1,027		$	466		$	52
Net noncash and nonrecurring costs per above		N/A			5			N/A							N/A			4			N/A
Less: Treatment charges per above		(64	)		N/A			N/A							(63	)		N/A			N/A
Less: Royalty per above		(30	)		N/A			N/A							(32	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		(13	)		N/A			N/A							(130	)		N/A			N/A
Total Indonesia operations		1,016			439			48
North America operations		3,145			1,963			271
South America operations		1,409			462			127
Atlantic Copper smelting & refining		724			698			9
Indonesia mining															802			470			52
North America copper mines															1,402			847			194
South America copper mines															1,008			497			123
Molybdenum															683			417			52
Rod & Refining															1,485			1,478			2
Atlantic Copper Smelting & Refining															625			611			9
Corporate, other & eliminations		(853	)		(842	)		7							(1,389	)		(1,446	)		10
As reported in FCX’s consolidated financial statements	$	5,441		$	2,720		$	462						$	4,616		$	2,874		$	442

Three Months Ended September 30, 2007
	By-Product			Co-Product Method
(In millions)	Method			Copper			Gold		Silver		Total
Revenues, after adjustments shown below	$	769		$	769		$	173	$	5	$	947

Site production and delivery, before net noncash
and nonrecurring costs shown below		347			282			63		2		347
Gold and silver credits		(178	)		–			–		–		–
Treatment charges		67			55			12		–		67
Royalty on metals		20			16			4		–		20
Net cash costs		256			353			79		2		434
Depreciation and amortization		43			35			8		–		43
Noncash and nonrecurring costs, net		4			3			1		–		4
Total costs		303			391			88		2		481
Revenue adjustments, primarily for pricing on prior
period open sales		(23	)		(23	)		–		–		(23	)
PT Smelting intercompany profit		47			38			9		–		47
Gross profit	$	490		$	393		$	94	$	3	$	490

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,
				and			Depletion and
	Revenues			Delivery			Amortization
Totals presented above	$	947		$	347		$	43
Net noncash and nonrecurring costs per above		N/A			4			N/A
Less: Treatment charges per above		(67	)		N/A			N/A
Less: Royalty per above		(20	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		(23	)		N/A			N/A
Indonesia mining		837			351			43
North America copper mines		1,526			787			178
South America copper mines		1,368			455			94
Molybdenum		519			380			22
Rod & Refining		1,736			1,726			3
Atlantic Copper Smelting & Refining		688			674			8
Corporate, other & eliminations		(1,608	)		(1,711	)		8
As reported in FCX’s consolidated financial statements	$	5,066		$	2,662		$	356

Nine Months Ended September 30, 2008
	By-Product			Co-Product Method
(In millions)	Method			Copper			Gold		Silver		Total
Revenues, after adjustments shown below	$	2,344		$	2,344		$	686	$	40	$	3,070

Site production and delivery, before net noncash
and nonrecurring costs shown below		1,285			981			287		17		1,285
Gold and silver credits		(726	)		–			–		–		–
Treatment charges		195			149			44		2		195
Royalty on metals		87			67			19		1		87
Net cash costs		841			1,197			350		20		1,567
Depreciation and amortization		145			110			33		2		145
Noncash and nonrecurring costs, net		23			18			5		–		23
Total costs		1,009			1,325			388		22		1,735
Revenue adjustments, primarily for pricing on prior
period open sales		82			82			–		–		82
PT Smelting intercompany profit		5			4			1		–		5
Gross profit	$	1,422		$	1,105		$	299	$	18	$	1,422

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,
				and			Depletion and
	Revenues			Delivery			Amortization
Totals presented above	$	3,070		$	1,285		$	145
Net noncash and nonrecurring costs per above		N/A			23			N/A
Less: Treatment charges per above		(195	)		N/A			N/A
Less: Royalty per above		(87	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		82			N/A			N/A
Indonesia mining		2,870			1,308			145
North America copper mines		4,469			2,216			565
South America copper mines		4,043			1,391			380
Molybdenum		2,117			1,298			160
Rod & Refining		4,856			4,831			5
Atlantic Copper Smelting & Refining		2,014			1,960			27
Corporate, other & eliminations		(4,640	)		(4,688	)		40
As reported in FCX’s consolidated financial statements	$	15,729		$	8,316		$	1,322

Nine Months Ended September 30, 2007
	By-Product			Co-Product Method
(In millions)	Method			Copper			Gold		Silver		Total
Revenues, after adjustments shown below	$	3,325		$	3,325		$	1,380	$	41	$	4,746

Site production and delivery, before net noncash
and nonrecurring costs shown below		1,040			729			302		9		1,040
Gold and silver credits		(1,421	)		–			–		–		–
Treatment charges		332			232			97		3		332
Royalty on metals		117			82			34		1		117
Net cash costs		68			1,043			433		13		1,489
Depreciation and amortization		158			111			46		1		158
Noncash and nonrecurring costs, net		24			17			7		–		24
Total costs		250			1,171			486		14		1,671
Revenue adjustments, primarily for pricing on prior
period open sales		11			11			–		–		11
PT Smelting intercompany profit		11			8			3		–		11
Gross profit	$	3,097		$	2,173		$	897	$	27	$	3,097

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,
				and			Depletion and
	Revenues			Delivery			Amortization
Totals presented above	$	4,746		$	1,040		$	158
Net noncash and nonrecurring costs per above		N/A			24			N/A
Less: Treatment charges per above		(332	)		N/A			N/A
Less: Royalty per above		(117	)		N/A			N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above		11			N/A			N/A
Indonesia mining		4,308			1,064			158
North America copper mines		2,835			1,552			328
South America copper mines		2,869			874			258
Molybdenum		1,034			838			47
Rod & Refining		3,781			3,757			6
Atlantic Copper Smelting & Refining		1,761			1,709			27
Corporate, other & eliminations		(3,833	)		(3,689	)		22
As reported in FCX’s consolidated financial statements	$	12,755		$	6,105		$	846

Henderson Molybdenum Mine Product Revenues and Production Costs

	Three Months Ended
	September 30,
(In millions)	2008		2007
Revenues	$	394	$	278

Site production and delivery, before net noncash
and nonrecurring costs shown below		62		43
Net cash costs		62		43
Depreciation, depletion and amortizationa		53		18
Noncash and nonrecurring costs, net		5		5
Total costs		120		66
Gross profitb	$	274	$	212

Reconciliation to Amounts Reported
(In millions)				Production			Depreciation,
				and			Depletion and
	Revenues			Delivery			Amortization
Three Months Ended September 30, 2008
Totals presented above	$	394		$	62		$	53
Net noncash and nonrecurring costs per above		N/A			5			N/A
Henderson mine		394			67			53
Other molybdenum operations and eliminationsc		289			350			(1	)
Molybdenum		683			417			52
North America copper mines		1,402			847			194
South America copper mines		1,008			497			123
Indonesia mining		802			470			52
Rod & Refining		1,485			1,478			2
Atlantic Copper Smelting & Refining		625			611			9
Corporate, other & eliminations		(1,389	)		(1,446	)		10
As reported in FCX’s consolidated financial statements	$	4,616		$	2,874		$	442

Three Months Ended September 30, 2007
Totals presented above	$	278		$	43		$	18
Net noncash and nonrecurring costs per above		N/A			5			N/A
Henderson mine		278			48			18
Other molybdenum operations and eliminationsc		241			332			4
Molybdenum		519			380			22
North America copper mines		1,526			787			178
South America copper mines		1,368			455			94
Indonesia mining		837			351			43
Rod & Refining		1,736			1,726			3
Atlantic Copper Smelting & Refining		688			674			8
Corporate, other & eliminations		(1,608	)		(1,711	)		8
As reported in FCX’s consolidated financial statements	$	5,066		$	2,662		$	356

	Nine Months Ended
	September 30,
	2008		2007
(In millions)	(Actual)		(Pro Forma)a
Revenues	$	997	$	741

Site production and delivery, before net noncash
and nonrecurring costs shown below		164		123
Net cash costs		164		123
Depreciation, depletion and amortization		139		116	b
Noncash and nonrecurring costs, net		6		8
Total costs		309		247
Gross profitc	$	688	$	494

Reconciliation to Amounts Reported				Production			Depreciation,
(In millions)				and			Depletion and
		Revenues		Delivery			Amortization
Nine Months Ended September 30, 2008
Totals presented above	$	997		$	164		$	139
Net noncash and nonrecurring costs per above		N/A			6			N/A
Henderson mine		997			170			139
Other molybdenum operations and eliminationsd		1,120			1,128			21
Molybdenum		2,117			1,298			160
North America copper mines		4,469			2,216			565
South America copper mines		4,043			1,391			380
Indonesia mining		2,870			1,308			145
Rod & Refining		4,856			4,831			5
Atlantic Copper Smelting & Refining		2,014			1,960			27
Corporate, other & eliminations		(4,640	)		(4,688	)		40
As reported in FCX’s consolidated financial statements	$	15,729		$	8,316		$	1,322

Nine Months Ended September 30, 2007 (Pro Forma)a
Totals presented above	$	741		$	123		$	116
Net noncash and nonrecurring costs per above		N/A			8			N/A
Henderson mine		741			131			116
Other molybdenum operations and eliminationsd		740			1,012			11
Molybdenum		1,481			1,143			127
North America copper mines		3,772			1,934			475
South America copper mines		3,622			1,248			347
Indonesia mining		4,308			1,064			158
Rod & Refining		5,078			5,049			8
Atlantic Copper Smelting & Refining		1,761			1,709			27
Eliminations and other		(4,883	)		(4,716	)		40
As reported in FCX’s pro forma consolidated financial resultse	$	15,139		$	7,431		$	1,182

Three Months Ended June 30, 2007
By-Product Co-Product Method
(In millions) Method Copper Gold Silver Total
Revenues, after adjustments shown below $ 1,169 $ 1,169 $ 584 $ 15 $ 1,768

Site production and delivery, before net noncash
and nonrecurring costs shown below 379 251 125 3 379
Gold and silver credits (599 ) – – – –
Treatment charges 111 73 37 1 111
Royalty on metals 48 32 16 – 48
Net cash costs (credits) (61 ) 356 178 4 538
Depreciation and amortization 56 37 18 1 56
Noncash and nonrecurring costs, net 11 8 3 – 11
Total costs 6 401 199 5 605
Revenue adjustments, primarily for pricing on prior
period open sales 153 153 – – 153
PT Smelting intercompany profit – – – – –
Gross profit $ 1,316 $ 921 $ 385 $ 10 $ 1,316

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 1,768 $ 379 $ 56
Net noncash and nonrecurring costs per above N/A 11 N/A
Less: Treatment charges per above (111 ) N/A N/A
Less: Royalty per above (48 ) N/A N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above 153 N/A N/A
Total Indonesia operations 1,762 390 56
North America operations 2,683 2,104 168
South America operations 1,232 303 136
Atlantic Copper smelting & refining 619 608 9
Corporate, other & eliminations (853 ) (865 ) 5
As reported in FCX’s consolidated financial statements $ 5,443 $ 2,540 $ 374

Six Months Ended June 30, 2008
By-Product Co-Product Method
(In millions) Method Copper Gold Silver Total
Revenues, after adjustments shown below $ 1,691 $ 1,691 $ 453 $ 29 $ 2,173

Site production and delivery, before net noncash
and nonrecurring costs shown below 819 637 171 11 819
Gold and silver credits (482 ) – – – –
Treatment charges 132 103 28 1 132
Royalty on metals 55 43 11 1 55
Net cash costs 524 783 210 13 1,006
Depreciation and amortization 93 72 19 2 93
Noncash and nonrecurring costs, net 19 15 4 – 19
Total costs 636 870 233 15 1,118
Revenue adjustments, primarily for pricing on prior
period open sales 82 82 – – 82
PT Smelting intercompany profit (5 ) (4 ) (1 ) – (5 )
Gross profit $ 1,132 $ 899 $ 219 $ 14 $ 1,132

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 2,173 $ 819 $ 93
Net noncash and nonrecurring costs per above N/A 19 N/A
Less: Treatment charges per above (132 ) N/A N/A
Less: Royalty per above (55 ) N/A N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above 82 N/A N/A
Total Indonesia operations 2,068 838 93
North America operations 6,418 4,101 498
South America operations 3,002 894 257
Atlantic Copper smelting & refining 1,389 1,349 18
Corporate, other & eliminations (1,764 ) (1,740 ) 14
As reported in FCX’s consolidated financial statements $ 11,113 $ 5,442 $ 880

Six Months Ended June 30, 2007

By-Product Co-Product Method
(In millions) Method Copper Gold Silver Total
Revenues, after adjustments shown below $ 2,578 $ 2,578 $ 1,207 $ 36 $ 3,821

Site production and delivery, before net noncash
and nonrecurring costs shown below 693 468 219 6 693
Gold and silver credits (1,243 ) – – – –
Treatment charges 265 178 84 3 265
Royalty on metals 97 66 30 1 97
Net cash costs (credits) (188 ) 712 333 10 1,055
Depreciation and amortization 115 78 36 1 115
Noncash and nonrecurring costs, net 20 14 6 – 20
Total costs (credits) (53 ) 804 375 11 1,190
Revenue adjustments, primarily for pricing on prior
period open sales 12 12 – – 12
PT Smelting intercompany profit (36 ) (24 ) (11 ) (1 ) (36 )
Gross profit $ 2,607 $ 1,762 $ 821 $ 24 $ 2,607

Reconciliation to Amounts Reported
(In millions) Production Depreciation,
and Depletion and
Revenues Delivery Amortization
Totals presented above $ 3,821 $ 693 $ 115
Net noncash and nonrecurring costs per above N/A 20 N/A
Less: Treatment charges per above (265 ) N/A N/A
Less: Royalty per above (97 ) N/A N/A
Revenue adjustments, primarily for pricing on prior
period open sales per above 12 N/A N/A
Total Indonesia operations 3,471 713 115
North America operations 3,002 2,431 182
South America operations 1,494 419 164
Atlantic Copper smelting & refining 1,073 1,035 19
Corporate, other & eliminations (1,351 ) (1,155 ) 10
As reported in FCX’s consolidated financial statements $ 7,689 $ 3,443 $ 490

CAUTIONARY STATEMENT

Environmental Proceedings

If forward market prices do not improve, the carrying values of inventories and long-lived assets, including goodwill associated with our acquisition of Phelps Dodge, may be impaired, which would require charges to operating income that could be material.

(c) Total Number of (d) Maximum Number
(a) Total Number (b) Average Shares Purchased as Part of Shares That May
of Shares Price Paid of Publicly Announced Yet Be Purchased Under
Period
Purchaseda
Per Share
Plans or Programsb

the Plans or Programsb
April 1-30, 2008 313 $ 107.29 – 20,000,000
May 1-31, 2008 233,037 $ 117.36 – 20,000,000
June 1-30, 2008 99 $ 120.60 – 20,000,000
Total 233,449 $ 117.35 – 20,000,000


				(c) Total Number of	(d) Maximum Number
	(a) Total Number	(b) Average		Shares Purchased as Part	of Shares That May
	of Shares	Price Paid		of Publicly Announced	Yet Be Purchased Under
Period	Purchaseda	Per Share		Plans or Programsb	the Plans or Programsb
July 1-31, 2008	336	$	96.97	–	30,000,000
August 1-31, 2008	3,279,377	$	85.06	3,279,200	26,720,800
Sept 1-30, 2008	3,035,300	$	72.78	3,035,300	23,685,500
Total	6,315,013	$	79.16	6,314,500	23,685,500

Name For Withheld
1. Election of Directors:
Richard C. Adkerson 299,451,161 32,885,004
Robert J. Allison, Jr. 216,801,157 115,535,008
Robert A. Day 300,339,483 31,996,682
Gerald J. Ford 302,333,890 30,002,275
H. Devon Graham, Jr. 221,720,278 110,615,887
J. Bennett Johnston 291,275,614 41,060,551
Charles C. Krulak 302,605,979 29,730,186
Bobby Lee Lackey 221,948,443 110,387,722
Jon C. Madonna 302,539,484 29,796,681
Dustan E. McCoy 265,163,590 67,172,575
Gabrielle K. McDonald 291,406,778 40,929,387
James R. Moffett 297,090,275 35,245,890
B.M. Rankin, Jr. 291,311,652 41,024,513
J. Stapleton Roy 291,433,835 40,902,330
Stephen H. Siegele 302,649,402 29,686,763
J. Taylor Wharton 291,337,381 40,998,784

For
Against Abstentions
2. Ratification of Ernst & Young LLP as independent auditors. 329,016,916 430,300 2,888,949
3. Proposal to increase authorized shares of common stock. 260,444,605 68,836,142 3,055,418

FREEPORT-McMoRan COPPER & GOLD INC.

By: ~~/s/~~ /s/ C. Donald Whitmire, Jr.

C. Donald Whitmire, Jr.

Controller-Financial Reporting

(authorized signatory and

Principal Accounting Officer)

FREEPORT-McMoRan COPPER & GOLD INC.

		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
2.1	Agreement and Plan of Merger dated as of November 18, 2006, by and among Freeport-McMoRan Copper & Gold Inc. (FCX), Phelps Dodge Corporation and Panther Acquisition Corporation.		S-4	333-139252	12/11/2006
3.1	Amended and Restated Certificate of Incorporation of FCX.		8-K	001-11307-01	03/19/2007
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of FCX.	X	10-Q	001-11307-01	8/11/2008
3.3	Amended and Restated By-Laws of FCX, as amended through May 1, 2007.		8-K	001-11307-01	05/04/2007
4.1	Certificate of Designations of 5½% Convertible Perpetual Preferred Stock of FCX.		8-K	001-11307-01	03/31/2004
4.2	Certificate of Designations of 6¾% Mandatory Convertible Preferred Stock of FCX.		8-K	001-11307-01	03/27/2007
4.3	Rights Agreement dated as of May 3, 2000, between FCX and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.		10-Q	001-09916	05/15/2000
4.4	Amendment No. 1 to Rights Agreement dated as of February 26, 2002, between FCX and Mellon Investor Services.		10-Q	001-09916	05/07/2002
4.5	Indenture dated as of February 11, 2003, from FCX to The Bank of New York, as Trustee, with respect to the 7% Convertible Senior Notes due 2011.		8-K	001-09916	02/25/2003
4.6	Indenture dated as of March 19, 2007, from FCX to The Bank of New York, as Trustee, with respect to the 8.25% Senior Notes due 2015, 8.375% Senior Notes due 2017, and the Senior Floating Rate Notes due 2015.		8-K	001-11307-01	03/19/2007
4.7	Credit Agreement dated as of March 19, 2007, by and among FCX, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent.		8-K	001-11307-01	03/19/2007
4.8	Amendment Agreement dated as of July 3, 2007, amending the Credit Agreement dated as of March 19, 2007, among FCX, the Lenders party thereto, the Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and as Collateral Agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent.		8-K	001-11307-01	07/11/2007
4.9	Amended and Restated Credit Agreement dated as of March 19, 2007, by and among FCX, PT Freeport Indonesia, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A. as administrative agent, collateral agent, security agent and JAA security agent, U.S. Bank National Association, as FI trustee, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent.		8-K	001-11307-01	03/19/2007

4.10	Amendment Agreement dated as of July 3, 2007, amending the Amended and Restated Credit Agreement dated as of March 19, 2007, which amended and restated the Amended and Restated Credit Agreement, dated as of July 25, 2006, which amended and restated the Amended and Restated Credit Agreement, dated as of September 30, 2003, which amended and restated the Amended and Restated Credit Agreement, dated as of October 19, 2001, which amended and restated both the Credit Agreement, originally dated as of October 27, 1989 and amended and restated as of June 1, 1993 and the Credit Agreement, originally dated as of June 30, 1995, among FCX, PT Freeport Indonesia, U.S. Bank National Association, as trustee for the Lenders and certain other lenders under the FI Trust Agreement, the Lenders party thereto, the Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, Security Agent, JAA Security Agent and Collateral Agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent.		8-K	001-11307-01	07/11/2007
10.1	Contract of Work dated December 30, 1991, between the Government of the Republic of Indonesia and PT Freeport Indonesia.		S-3	333-72760	11/05/2001
10.2	Contract of Work dated August 15, 1994, between the Government of the Republic of Indonesia and PT Irja Eastern Minerals Corporation.		S-3	333-72760	11/05/2001
10.3	Participation Agreement dated as of October 11, 1996, between PT Freeport Indonesia and P.T. RTZ-CRA Indonesia (a subsidiary of Rio Tinto PLC) with respect to a certain contract of work.		S-3	333-72760	11/05/2001
10.4	Agreement dated as of October 11, 1996, to Amend and Restate Trust Agreement among PT Freeport Indonesia, FCX, the RTZ Corporation PLC (now Rio Tinto PLC), P.T. RTZ-CRA Indonesia, RTZ Indonesian Finance Limited and First Trust of New York, National Association, and The Chase Manhattan Bank, as Administrative Agent, JAA Security Agent and Security Agent.		8-K	001-09916	11/13/1996
10.5	Concentrate Purchase and Sales Agreement dated effective December 11, 1996, between PT Freeport Indonesia and PT Smelting.		S-3	333-72760	11/05/2001
10.6	Second Amended and Restated Joint Venture and Shareholders’ Agreement dated as of December 11, 1996, among Mitsubishi Materials Corporation, Nippon Mining and Metals Company, Limited and PT Freeport Indonesia.		S-3	333-72760	11/05/2001
10.7	Participation Agreement, dated as of March 16, 2005, among Phelps Dodge Corporation, Cyprus Amax Minerals Company, a Delaware corporation, Cyprus Metals Company, a Delaware corporation, Cyprus Climax Metals Company, a Delaware corporation, Sumitomo Corporation, a Japanese corporation, Summit Global Management, B.V., a Dutch corporation, Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Compañia de Minas Buenaventura S.A.A., a Peruvian sociedad anonima abierta, and Sociedad Minera Cerro Verde S.A.A., a Peruvian sociedad anonima abierta.		8-K	001-00082	03/22/2005
10.8	Shareholders Agreement, dated as of June 1, 2005, among Phelps Dodge Corporation, Cyprus Climax Metals Company, a Delaware corporation, Sumitomo Corporation, a Japanese corporation, Sumitomo Metal Mining Co., Ltd., a Japanese corporation, Summit Global Management B.V., a Dutch corporation, SMM Cerro Verde Netherlands, B.V., a Dutch corporation, Compañia de Minas Buenaventura S.A.A., a Peruvian sociedad anonima abierta, and Sociedad Minera Cerro Verde S.A.A., a Peruvian sociedad anonima abierta.		8-K	001-00082	06/07/2005
10.9	Master Agreement and Plan of Merger between Columbian Chemicals Company, Columbian Chemicals Acquisition LLC and Columbian Chemicals Merger Sub, Inc., dated November 15, 2005.		10-K	001-00082	02/27/2006
10.10	Reclamation and Remediation Trust Agreement between Phelps Dodge Corporation and Wells Fargo Delaware Trust Company, dated December 22, 2005.		10-K	001-00082	02/27/2006
10.11*	FCX Director ~~Compensation~~	XCompensation.		10-Q	001-11307-01	8/11/2008

10.12*	Consulting Agreement dated December 22, 1988, with Kissinger Associates, Inc. (Kissinger Associates).		10-K405	001-09916	03/31/1998
10.13*	Letter Agreement dated May 1, 1989, with Kent Associates, Inc. (Kent Associates, predecessor in interest to Kissinger Associates).		10-K405	001-09916	03/31/1998
10.14*	Letter Agreement dated January 27, 1997, among Kissinger Associates, Kent Associates, FCX, Freeport-McMoRan Inc. (FTX), and FM Services Company (FMS).		10-K405	001-09916	03/08/2002
10.15* 10.15*	Supplemental Agreement with Kissinger Associates and Kent Associates, effective as of January 1, ~~2008.~~2009.	X		~~10-Q~~	~~001-11307-01~~	~~11/07/2007~~
10.16*	Agreement for Consulting Services between FTX and B. M. Rankin, Jr. effective as of January 1, 1990 (assigned to FMS as of January 1, 1996).		10-K405	001-09916	03/31/1998
10.17*	Supplemental Agreement dated December 15, 1997, between FMS and B. M. Rankin, Jr.		10-K405	001-09916	03/31/1998
10.18*	Supplemental Letter Agreement between FMS and B. M. Rankin, Jr., effective as of January 1, 2008.		10-K	001-11307-01	02/29/2008
10.19*	Letter Agreement effective as of January 7, 1997, between Senator J. Bennett Johnston, Jr. and FMS.		10-K405	001-09916	03/08/2002
10.20*	Supplemental Letter Agreement between FMS and J. Bennett Johnston, Jr., dated January 18, 2005.		10-K	001-11307-01	03/16/2005
10.21*	Supplemental Agreement between FMS and J. Bennett Johnston, Jr., effective as of ~~January~~May 1, 2008.		10-Q	001-11307-01	8/11/~~07/2007~~2008
10.2210.22	Supplemental Agreement between FMS and J. Bennett Johnston, Jr., effective as of ~~May~~January 1, ~~2008.~~2009.	X
10.23*	Letter Agreement dated November 1, 1999, between FMS and Gabrielle K. McDonald.		10-K405	001-09916	03/20/2000
10.24*	Supplemental Letter Agreement between FMS and Gabrielle K. McDonald, effective as of ~~January~~May 1, 2008.		10-Q	001-11307-01	8/11/~~07/2007~~2008
10.2510.25	Supplemental Letter Agreement between FMS and Gabrielle K. McDonald, effective as of ~~May~~January 1, ~~2008.~~2009.	X
10.26*	Agreement for Consulting Services between FMS and Dr. J. Taylor Wharton, effective as of January 11, 2008.		10-K	001-11307-01	02/29/2008
10.27*	Executive Employment Agreement dated April 30, 2001, between FCX and James R. Moffett.		10-Q	001-09916	07/30/2001
10.28*	Change of Control Agreement dated April 30, 2001, between FCX and James R. Moffett.		10-Q	001-09916	07/30/2001
10.29*	First Amendment to Executive Employment Agreement dated December 10, 2003, between FCX and James R. Moffett.		10-K	001-11307-01	03/10/2004
10.30*	First Amendment to Change of Control Agreement dated December 10, 2003, between FCX and James R. Moffett.		10-K	001-11307-01	03/10/2004
10.31*	Change of Control Agreement dated February 3, 2004, between FCX and Michael J. Arnold.		10-K	001-11307-01	03/10/2004
10.32*	Executive Employment Agreement effective January 29, 2008, between FCX and Richard C. Adkerson.		10-K	001-11307-01	02/29/2008
10.33*	Executive Employment Agreement effective January 29, 2008, between FCX and Kathleen L. Quirk.		10-K	001-11307-01	02/29/2008
10.34*	Form of Change of Control Agreement (amended and restated effective January 1, 2005), adopted by Phelps Dodge Corporation for agreements entered into between Phelps Dodge Corporation and other of its executive officers and other members of its senior management team.		~~10-K/A~~	~~001-00082~~	~~03/19/2007~~
10.35*	~~Form of Severance Agreement (as amended and restated effective January 1, 2005) adopted by Phelps Dodge Corporation and entered into between Phelps Dodge Corporation and certain of its executives.~~		~~10-K/A~~	~~001-00082~~	~~03/19/2007~~

10.36*	FCX Executive Services Program.	8-K	001-11307-01	05/05/2006
10.3710.35	FCX Supplemental Executive Retirement Plan, as amended and restated.	8-K	001-11307-01	02/05/2007
10.3810.36	FCX President’s Award Program.	S-3	333-72760	11/05/2001
10.3910.37	FCX Supplemental Executive Capital Accumulation Plan.	10-Q	001-11307-01	05/12/2008
10.4010.38	FCX Supplemental Executive Capital Accumulation Plan Amendment One.	10-Q	001-11307-01	05/12/2008

10.4110.39	FCX 1995 Stock Option Plan, as amended and restated.	10-Q	001-11307-01	05/10/2007
10.4210.40	FCX 1995 Stock Option Plan for Non-Employee Directors, as amended and restated.	10-Q	001-11307-01	05/10/2007
10.4310.41	FCX Amended and Restated 1999 Stock Incentive Plan, as amended and restated.	10-Q	001-11307-01	05/10/2007
10.4410.42	FCX 1999 Long-Term Performance Incentive Plan.	10-K	001-09916	03/20/2000
10.45*	~~FM Services Company Performance Incentive Awards Program, as amended effective February 2, 1999.~~	~~10-K~~	~~001-09916~~	~~03/19/1999~~
10.4610.43	FCX Stock Appreciation Rights Plan dated May 2, 2000.	10-Q	001-09916	07/30/2001
10.4710.44	FCX 2003 Stock Incentive Plan, as amended and restated.	10-Q	001-11307-01	05/10/2007
10.4810.45	Phelps Dodge 2003 Stock Option and Restricted Stock Plan, as amended.	S-8	333-141358	03/16/2007
10.49*	~~FCX 2004 Director Compensation Plan.~~	~~10-K~~	~~001-11307-01~~	~~03/16/2005~~
10.5010.46	Form of Amendment No. 1 to Notice of Grant of Nonqualified Stock Options and Stock Appreciation Rights under the 2004 Director Compensation Plan.	8-K	001-11307-01	05/05/2006
10.5110.47	FCX 2004 Director Compensation Plan, as amended and restated.	10-Q	001-11307-01	05/10/2007
10.5210.48	FCX 2005 Annual Incentive Plan.	8-K	001-11307-01	05/06/2005
10.5310.49	The Phelps Dodge Corporation Supplemental Retirement Plan, amended and restated effective January 1, 2005 and adopted on March 16, 2007.	10-Q	001-11307-01	05/10/2007
10.5410.50	First Amendment to the Phelps Dodge Corporation Supplemental Retirement Plan, dated as of November 9, 2007.	10-Q	001-11307-01	05/12/2008
10.5510.51	The Phelps Dodge Corporation Supplemental Savings Plan, amended and restated effective January 1, 2005, and adopted on March 16, 2007.	10-Q	001-11307-01	05/10/2007
10.5610.52	First Amendment to the Phelps Dodge Corporation Supplemental Savings Plan, dated March 16, 2007.	10-Q	001-11307-01	05/10/2007
10.5710.53	Second Amendment to the Phelps Dodge Corporation Supplemental Savings Plan, dated as of March 16, 2007.	10-Q	001-11307-01	05/10/2007
10.5810.54	Third Amendment to the Phelps Dodge Corporation Supplemental Savings Plan, dated as of November 14, 2007.	10-Q	001-11307-01	05/12/2008
10.5910.55	FCX Amended and Restated 2006 Stock Incentive Plan.	8-K	001-11307-01	07/13/2007
10.60*	~~FCX Performance Incentive Awards Program, as amended effective December 4, 2007.~~	~~10-K~~	~~001-11307-01~~	~~02/29/2008~~
10.6110.56	Form of Notice of Grant of Nonqualified Stock Options for grants under the FCX 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2006 Stock Incentive Plan.	10-K	001-11307-01	02/29/2008
10.6210.57	Form of Restricted Stock Unit Agreement for grants under the FCX 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2006 Stock Incentive Plan.	10-K	001-11307-01	02/29/2008
10.6310.58	Form of Performance-Based Restricted Stock Unit Agreement for grants under the FCX 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2006 Stock Incentive Plan.	10-K	001-11307-01	02/29/2008

10.6410.59	Form of Restricted Stock Unit Agreement (form used in connection with participant elections) for grants under the FCX 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2006 Stock Incentive Plan.		10-K	001-11307-01	02/29/2008
10.6510.60	Form of Performance-Based Restricted Stock Unit Agreement (form used in connection with participant elections) for grants under the FCX 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2006 Stock Incentive Plan.		10-K	001-11307-01	02/29/2008
10.6610.61	Form of Amendment to the ELIP Split Dollar Life Insurance Agreement (Endorsement Method) adopted by Phelps Dodge Corporation and entered into by and between Phelps Dodge and certain of its executives.		10-Q	001-11307-01	05/10/2007
15.1	Letter from Ernst & Young LLP regarding unaudited interim financial statements.	X

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350.	X
99.1	Amended and Restated Mining Convention dated as of September 28, 2005, among the Democratic Republic of Congo, La Générale des Carrières et des Mines, Lundin Holdings Ltd (now called TF Holdings Limited) and Tenke Fungurume Mining S.A.R.L.		8-K	001-11307-01	09/02/2008
99.2	Amended and Restated Shareholders Agreement dated as of September 28, 2005, by and between La Générale des Carrières et des Mines and TF Holdings Limited and its subsidiaries.		8-K	001-11307-01	09/02/2008


	Page
Part I. Financial Information	3

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Income (Unaudited)	4

Consolidated Statements of Cash Flows (Unaudited)	5

Consolidated Statement of Stockholders’ Equity (Unaudited)	6

Notes to Consolidated Financial Statements (Unaudited)	7

Report of Independent Registered Public Accounting Firm	17

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk	6663

Item 4. Controls and Procedures	6663

Part II. Other Information	6663

Item 1. Legal Proceedings	6663

Item 1A. Risk Factors	6664

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	67

~~Item 4. Submission of Matters to a Vote of Security Holders~~	6764

Item 6. Exhibits	6764

Signature	6865

Exhibit Index	E-1

	June 30,			December 31,			September 30,			December 31,
	2008			2007			2008			2007
	(In Millions)						(In Millions)

ASSETS
Current assets:
Cash and cash equivalents	$	1,648		$	1,626		$	1,202		$	1,626
Trade accounts receivable		1,964			1,099			1,236			1,099
Other accounts receivable		247			196			427			196
Product inventories and materials and supplies, net		2,365			2,178			2,520			2,178
Mill and leach stockpiles		866			707			910			707
Prepaid expenses and other current assets		81			97
Other current assets								153			97
Total current assets		7,171			5,903			6,448			5,903
Property, plant, equipment and development costs, net		26,129			25,715			26,482			25,715
Goodwill		6,048			6,105			6,048			6,105
Long-term mill and leach stockpiles		1,215			1,106			1,260			1,106
Trust assets		598			606			549			606
Intangible assets, net		448			472			447			472
Other assets and deferred charges		739			754
Other assets								772			754
Total assets	$	42,348		$	40,661		$	42,006		$	40,661

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,405		$	2,345		$	2,739		$	2,345
Current portion of reclamation and environmental liabilities								282			263
Accrued income taxes		288			420			261			420
Current portion of reclamation and environmental liabilities		247			263
Dividends payable		213			212			235			212
Current portion of long-term debt and short-term borrowings		31			31			23			31
Copper price protection program		–			598			–			598
Total current liabilities		3,184			3,869			3,540			3,869
Long-term debt, less current portion:
Senior notes		6,886			6,928			6,885			6,928
Project financing, equipment loans and other		357			252			301			252
Revolving credit facility		90			–
Total long-term debt, less current portion		7,333			7,180			7,186			7,180
Deferred income taxes		6,986			7,300			6,757			7,300
Reclamation and environmental liabilities, less current portion		1,937			1,733			1,974			1,733
Other liabilities		1,120			1,106			1,093			1,106
Total liabilities		20,560			21,188			20,550			21,188
Minority interests in consolidated subsidiaries		1,616			1,239			1,429			1,239
Stockholders’ equity:
5½% Convertible Perpetual Preferred Stock		1,100			1,100			1,100			1,100
6¾% Mandatory Convertible Preferred Stock		2,875			2,875			2,875			2,875
Common stock		50			50			50			50
Capital in excess of par value		13,675			13,407			13,697			13,407
Retained earnings		5,332			3,601			5,666			3,601
Accumulated other comprehensive income		42			42			41			42
Common stock held in treasury		(2,902	)		(2,841	)		(3,402	)		(2,841	)
Total stockholders’ equity		20,172			18,234			20,027			18,234
Total liabilities and stockholders’ equity	$	42,348		$	40,661		$	42,006		$	40,661

	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2008			2007			2008			2007
	(In Millions)						(In Millions)
Cash flow from operating activities:
Net income	$	2,196		$	1,661		$	2,783		$	2,499
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization		880			495			1,322			864
Minority interests in net income of consolidated subsidiaries		593			427			748			738
Stock-based compensation		92			80			113			115
Accretion of reclamation and environmental liabilities		74			12
Charges for reclamation and environmental liabilities, including accretion								141			22
Unrealized losses on copper price protection program		–			168			–			212
Losses on early extinguishment of debt		6			135			6			171
Gain on sales of assets								(13	)		(85	)
Deferred income taxes		(114	)		(102	)		(347	)		(279	)
Increase in long-term mill and leach stockpiles		(109	)		(101	)		(154	)		(23	)
Increase in other long-term liabilities		71			68			78			64
Other, net		41			(4	)		24			1
(Increases) decreases in working capital, excluding amounts
acquired from Phelps Dodge:
Accounts receivable		(921	)		(557	)		(198	)		(299	)
Inventories		(371	)		298			(558	)		358
Prepaid expenses and other		9			16
Other current assets								(58	)		–
Accounts payable and accrued liabilities		(525	)		210			(152	)		427
Accrued income taxes		(212	)		(20	)		(424	)		215
Settlement of reclamation and environmental liabilities		(86	)		(36	)		(142	)		(73	)
Net cash provided by operating activities		1,624			2,750			3,169			4,927

Cash flow from investing activities:
North America capital expenditures		(367	)		(353	)		(648	)		(601	)
South America capital expenditures		(166	)		(36	)		(229	)		(65	)
Indonesia capital expenditures		(223	)		(175	)		(332	)		(273	)
Africa capital expenditures		(384	)		(76	)		(699	)		(151	)
Other capital expenditures		(23	)		(32	)		(21	)		(48	)
Acquisition of Phelps Dodge, net of cash acquired		(1	)		(13,906	)		(1	)		(13,907	)
Proceeds from the sale of assets and other, net		56			90			59			79
Net cash used in investing activities		(1,108	)		(14,488	)		(1,871	)		(14,966	)

Cash flow from financing activities:
Proceeds from term loans under bank credit facility		–			10,000			–			12,450
Repayments of term loans under bank credit facility		–			(7,550	)		–			(10,900	)
Net proceeds from sales of senior notes		–			5,880			–			5,880
Net proceeds from sale of common stock		–			2,816			–			2,816
Net proceeds from sale of 6¾% Mandatory Convertible Preferred Stock		–			2,803			–			2,803
Proceeds from revolving credit facility and other debt		524			227
Repayments of revolving credit facility and other debt		(384	)		(481	)
Proceeds from other debt								183			412
Repayments of other debt								(198	)		(752	)
Purchases of FCX common stock								(500	)		–
Cash dividends paid:
Common stock		(337	)		(182	)		(504	)		(301	)
Preferred stock		(127	)		(30	)		(191	)		(112	)
Minority interests		(280	)		(314	)		(714	)		(440	)
Net proceeds from (payments for) exercised stock options		22			(24	)		22			(15	)
Excess tax benefit from exercised stock options		25			7			25			9
Bank credit facilities fees and other, net		63			(243	)		155			(250	)
Net cash (used in) provided by financing activities		(494	)		12,909			(1,722	)		11,600

Net increase in cash and cash equivalents		22			1,171
Cash included with assets held for sale								–			(91	)

Net (decrease) increase in cash and cash equivalents								(424	)		1,470
Cash and cash equivalents at beginning of year		1,626			907			1,626			907
Cash and cash equivalents at end of period	$	1,648		$	2,078		$	1,202		$	2,377

					Three Months		March 20, 2007
	Three Months		March 20, 2007		Ended		Through
	Ended		Through		September 30,		September 30,
	June 30, 2007		June 30, 2007		2007		2007
Revenues	$	364	$	421	$	376	$	797
Operating income		45		52		18		70
Provision for income taxes		13		15		5		20
Income from discontinued operations		28		32		12		44

(In Millions)	North America													South America								Indonesia
																									Atlantic			Corporate,
							Other					Total				Other			Total						Copper			Other &
			Rod &		Molyb-		North		Elimi-			North		Cerro		South			South						Smelting			Elimi-			FCX
Second-Quarter 2008	Morenci		Refining		denum		America		nations			America		Verde		America			America			Grasberg			& Refining			nations			Total
Revenues:
Unaffiliated customersb	$	46	$	1,675	$	715	$	572	$	–		$	3,008	$	428	$	468		$	896		$	811	a	$	724		$	2		$	5,441
Intersegment		569	8		–		1,131		(1,571		)	137		262		251			513			205			–			(855		)	–
Production and deliveryb		294	1,677		421		1,161		(1,590		)	1,963		206		256			462			439			698			(842		)	2,720
Depreciation, depletion and amortizationb		79	1		69		122		–			271		46		81			127			48			9			7			462
Selling, general and administrative expenses		–	–		5		2		–			7		–		–			–			47			6			66			126
Exploration and research expenses		–	–		1		–		–			1		–		–			–			–			–			79			80
Operating incomeb		242	5		219		418		19			903		438		382			820			482			11			(163		)	2,053

Interest expense, net		–	1		–		10		(1		)	10		1		(2		)	(1		)	2			2			127			140
Provision for income taxes		–	–		–		–		–			–		154		121			275			205			–			178			658
Goodwill at June 30, 2008		1,912	–		703		2,299		–			4,914		763		366			1,129			–			–			5			6,048
Total assets at June 30, 2008		7,000	605		4,156		13,712		(805		)	24,668		5,247		4,967			10,214			4,066			1,059			2,341			42,348
Capital expenditures		82	1		32		77		–			192		45		58			103			108			7			245			655

Second-Quarter 2007
Revenues:
Unaffiliated customers		23	1,826		463		367		–			2,679		157		572			729			1,415		a	619			1			5,443
Intersegment		519	11		–		733		(1,259		)	4		298		205			503			347			–			(854		)	–
Production and deliveryb		304	1,825		406		763		(1,194		)	2,104		100		203			303			390			608			(865		)	2,540
Depreciation, depletion and amortizationb		69	3		22		74		–			168		35		101			136			56			9			5			374
Selling, general and administrative expenses		–	–		5		2		–			7		–		–			–			45			6			77			135
Exploration and research expenses		–	–		–		–		–			–		–		–			–			–			–			40			40
Operating income (loss)b		169	9		30		261		(65		)	404		320		473			793			1,271			(4		)	(110		)	2,354

Interest expense, net		–	1		–		1		(1		)	1		4		(1		)	3			3			7			165			179
Provision for income taxes		–	–		–		–		–			–		123		156			279			559			–			(74		)	764
Total assets at June 30, 2007		4,737	670		1,894		9,462		(736		)	16,027		4,294		4,339			8,633			4,352			1,062			10,560		c	40,634
Capital expenditures		60	1		11		228		–			300		17		17			34			101			14			81			530

Second-Quarter 2007
Third-Quarter 2007
Production and delivery	$	(68	)	$	–	$	(67	)	$	(59	)	$	(57	)	$	(251	)	$	–		$	(18	)	$	(18	)	N/A	N/A	$	–	$	(269	)	$	(112	)	$	(49	)	$	(161	)	$	(42	)	$	(34	)	$	(76	)	N/A	$	(40	)	$	–	N/A	$	(13	)	$	(290	)
Depreciation, depletion and amortization		(60	)	–		(10		)	(47		)	–			(117		)	(15		)	(55		)	(70		)	N/A	N/A	1		(186		)		(58	)	(48		)	(106		)	(21		)	(19		)	(40		)	N/A	(9		)	–		N/A	–			(155		)
Reduction of operating income	$	(128	)	$	–	$	(77	)	$	(106	)	$	(57	)	$	(368	)	$	(15	)	$	(73	)	$	(88	)	N/A	N/A	$	1	$	(455	)	$	(170	)	$	(97	)	$	(267	)	$	(63	)	$	(53	)	$	(116	)	N/A	$	(49	)	$	–	N/A	$	(13	)	$	(445	)

	Second			Six
	Quarter			Months
North America revenues – prior year period	$	2,683		$	3,002
Sales volumes:
Copper		47			1,116	a
Molybdenum		109			572	a
Price realizations:
Copper		132			185
Molybdenum		135			281
Purchased copper and molybdenum		(100	)b		1,005	b
Impact of the 2007 copper price protection program		130			168
Adjustments, primarily for copper pricing on prior period/year open sales		(1	)		80
Other, net		10			9
North America revenues – current year period	$	3,145		$	6,418

Six Months Ended June 30, 2008
	By-Product			Co-Product
	Method			Method
Revenues, after adjustments shown below	$	3.84		$	3.84
Site production and delivery, before net noncash and
nonrecurring costs shown below		1.12			1.08
By-product credits		(0.13	)		–
Treatment charges		0.19			0.19
Unit net cash costs		1.18			1.27
Depreciation, depletion and amortization		0.35			0.34
Noncash and nonrecurring costs, net		0.08			0.08
Total unit costs		1.61			1.69
Revenue adjustments, primarily for pricing on prior period
open sales		0.32			0.32
Other non-inventoriable costs		(0.03	)		(0.03	)
Gross profit	$	2.52		$	2.44

Consolidated sales
Copper (millions of recoverable pounds)		731			731

	Six Months Ended		Full Year
	June 30, 2008		2008
	(Actual)		(Estimate)
Tenke Fungurume mine development	$	342	$	1,000
Climax molybdenum mine restart		25		160
Incremental expansions		76		170
Big Gossan mine development		75		160
El Abra sulfide mine		22		70
Grasberg Block Cave/Common Infrastructure		21		75
Other major projects		77		165
	$	638	$	1,800

Name	For	Withheld
1. Election of Directors:
Richard C. Adkerson	299,451,161	32,885,004
Robert J. Allison, Jr.	216,801,157	115,535,008
Robert A. Day	300,339,483	31,996,682
Gerald J. Ford	302,333,890	30,002,275
H. Devon Graham, Jr.	221,720,278	110,615,887
J. Bennett Johnston	291,275,614	41,060,551
Charles C. Krulak	302,605,979	29,730,186
Bobby Lee Lackey	221,948,443	110,387,722
Jon C. Madonna	302,539,484	29,796,681
Dustan E. McCoy	265,163,590	67,172,575
Gabrielle K. McDonald	291,406,778	40,929,387
James R. Moffett	297,090,275	35,245,890
B.M. Rankin, Jr.	291,311,652	41,024,513
J. Stapleton Roy	291,433,835	40,902,330
Stephen H. Siegele	302,649,402	29,686,763
J. Taylor Wharton	291,337,381	40,998,784

	For	Against	Abstentions
2. Ratification of Ernst & Young LLP as independent auditors.	329,016,916	430,300	2,888,949
3. Proposal to increase authorized shares of common stock.	260,444,605	68,836,142	3,055,418