

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 ~~September 30, 2012~~March 31, 2013
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: 001-11307-01

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)

333 North Central Avenue
Phoenix, AZ	85004-2189
(Address of principal executive offices)	(Zip Code)
(602) 366-8100
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes þ No

On ~~October 31, 2012~~April 30, 2013, there were issued and outstanding ~~949,318,834~~949,742,416 shares of the registrant’s common stock, par value $0.10 per share.

FREEPORT-McMoRan COPPER & GOLD INC.

TABLE OF CONTENTS




	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 Comprehensive Income (Unaudited)	5

Consolidated Statements of Cash Flows (Unaudited)	6

Consolidated Statement of Equity (Unaudited)	7

Notes to Consolidated Financial Statements (Unaudited)	8

Report of Independent Registered Public Accounting Firm	21

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	6856

Item 4. Controls and Procedures	6856

Part II. Other Information	6856

Item 1. Legal Proceedings	6856

Item 1A. Risk Factors	6957

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	6957

Item 4. Mine Safety Disclosures	6957

Item 6. Exhibits	6957

Signature	7058

Exhibit Index	E-1

Table of Contents


Part I.	FINANCIAL INFORMATION


Item 1.	Financial Statements.

FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2012			December 31, 2011			March 31, 2013			December 31, 2012
	(In millions)						(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	3,727		$	4,822		$	9,595		$	3,705
Trade accounts receivable	1,424			892			1,082			927
Other accounts receivable	242			250			687			702
Inventories:
Mill and leach stockpiles	1,595			1,289			1,698			1,672
Materials and supplies, net	1,465			1,354			1,575			1,504
Product	1,374			1,226			1,536			1,400
Other current assets	353			214			410			387
Total current assets	10,180			10,047			16,583			10,297
Property, plant, equipment and development costs, net	20,294			18,449			21,689			20,999
Long-term mill and leach stockpiles	1,871			1,686			2,081			1,955
Long-term receivables	1,004			675
Intangible assets, net	321			325
Other assets	847			888			2,235			2,189
Total assets	$	34,517		$	32,070		$	42,588		$	35,440

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,531		$	2,297		$	2,892		$	3,007
Dividends payable	299			240
Current portion of reclamation and environmental obligations	259			236			254			241
Accrued income taxes	59			163			125			93
Current portion of debt	2			4			4			2
Total current liabilities	3,150			2,940			3,275			3,343
Long-term debt, less current portion	3,521			3,533			10,088			3,525
Deferred income taxes	3,378			3,255			3,580			3,490
Reclamation and environmental obligations, less current portion	2,194			2,138			2,130			2,127
Other liabilities	1,531			1,651			1,666			1,644
Total liabilities	13,774			13,517			20,739			14,129
Equity:
FCX stockholders’ equity:
Common stock	107			107			107			107
Capital in excess of par value	19,094			19,007			19,163			19,119
Retained earnings	1,953			546			2,750			2,399
Accumulated other comprehensive loss	(439		)	(465		)	(500		)	(506		)
Common stock held in treasury	(3,576		)	(3,553		)	(3,580		)	(3,576		)
Total FCX stockholders’ equity	17,139			15,642			17,940			17,543
Noncontrolling interests	3,604			2,911			3,909			3,768
Total equity	20,743			18,553			21,849			21,311
Total liabilities and equity	$	34,517		$	32,070		$	42,588		$	35,440

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

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FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2012			2011			2012			2011			2013			2012
	(In millions, except per share amounts)												(In millions, except per share amounts)
Revenues	$	4,417		$	5,195		$	13,497		$	16,718		$	4,583		$	4,605
Cost of sales:
Production and delivery	2,592			2,570			7,642			7,504			2,719			2,428
Depreciation, depletion and amortization	298			257			856			756			329			267
Total cost of sales	2,890			2,827			8,498			8,260			3,048			2,695
Selling, general and administrative expenses	110			102			311			323			113			104
Exploration and research expenses	79			78			214			194			52			62
Environmental obligations and shutdown costs	(73		)	38			18			98			15			10
Total costs and expenses	3,006			3,045			9,041			8,875			3,228			2,871
Operating income	1,411			2,150			4,456			7,843			1,355			1,734
Interest expense, net	(42		)	(78		)	(148		)	(250		)	(57		)	(63		)
Losses on early extinguishment of debt	—			—			(168		)	(68		)	(45		)	(168		)
Other (expense) income, net	(15		)	28			23			40
Income before income taxes and equity in affiliated
companies’ net earnings	1,354			2,100			4,163			7,565
Other expense, net													(3		)	(13		)
Income before income taxes and equity in affiliated companies' net earnings													1,250			1,490
Provision for income taxes	(215		)	(808		)	(1,128		)	(2,698		)	(428		)	(491		)
Equity in affiliated companies’ net earnings	1			2			—			14			2			2
Net income	1,140			1,294			3,035			4,881			824			1,001
Net income attributable to noncontrolling interests	(316		)	(241		)	(737		)	(961		)	(176		)	(237		)
Net income attributable to FCX common stockholders	$	824		$	1,053		$	2,298		$	3,920		$	648		$	764

Net income per share attributable to FCX common stockholders:
Basic	$	0.87		$	1.11		$	2.42		$	4.14		$	0.68		$	0.81
Diluted	$	0.86		$	1.10		$	2.41		$	4.10		$	0.68		$	0.80

Weighted-average common shares outstanding:
Basic	949			948			949			947			950			949
Diluted	953			955			953			955			953			955

Dividends declared per share of common stock	$	0.3125		$	0.25		$	0.9375		$	1.25		$	0.3125		$	0.3125

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

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FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2012			2011			2012			2011			2013			2012
	(In millions)												(In millions)

Net income	$	1,140		$	1,294		$	3,035		$	4,881		$	824		$	1,001

Other comprehensive income, net of taxes:
Unrealized gains (losses) on securities arising during the period	1			(1		)	—			(1		)
Translation adjustments arising during the period	—			(2		)	(1		)	(1		)
Defined benefit plans:
Amortization of unrecognized amounts included in net
periodic benefit costs	7			5			22			11			7			7
Adjustment to deferred tax valuation allowance	—			—			5			—			—			5
Unrealized losses on securities arising during the period													(1		)	—
Other comprehensive income	8			2			26			9			6			12

Total comprehensive income	1,148			1,296			3,061			4,890			830			1,013
Total comprehensive income attributable to noncontrolling
interests	(315		)	(241		)	(737		)	(961		)
Total comprehensive income attributable to FCX common
stockholders	$	833		$	1,055		$	2,324		$	3,929
Total comprehensive income attributable to noncontrolling interests													(176		)	(237		)
Total comprehensive income attributable to FCX common stockholders													$	654		$	776

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

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FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2012			2011			2013			2012
	(In millions)						(In millions)
Cash flow from operating activities:
Net income	$	3,035		$	4,881		$	824		$	1,001
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	856			756			329			267
Stock-based compensation	77			92			41			32
Pension plans contributions	(114		)	(29		)	(22		)	(52		)
Net charges for reclamation and environmental obligations, including accretion	64			144			34			35
Payments for reclamation and environmental obligations	(148		)	(131		)	(36		)	(45		)
Losses on early extinguishment of debt	168			68			45			168
Deferred income taxes	223			419			136			168
Increase in long-term mill and leach stockpiles	(184		)	(174		)	(126		)	(61		)
Other, net	71			(26		)	36			8
(Increases) decreases in working capital and other tax payments:
Accounts receivable	(603		)	1,034			(113		)	(482		)
Inventories	(581		)	(266		)	(67		)	(248		)
Other current assets	(33		)	(152		)	(48		)	40
Accounts payable and accrued liabilities	78			(101		)	(201		)	(64		)
Accrued income taxes and other tax payments	(400		)	(641		)	(1		)	34
Net cash provided by operating activities	2,509			5,874			831			801

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(569		)	(342		)	(258		)	(143		)
South America	(659		)	(431		)	(226		)	(152		)
Indonesia	(624		)	(463		)	(191		)	(182		)
Africa	(428		)	(89		)	(57		)	(127		)
Molybdenum	(197		)	(317		)
Molybdenum mines							(40		)	(93		)
Other	(41		)	(107		)	(33		)	(10		)
Acquisition of cobalt chemical business, net of cash acquired							(321		)	—
Other, net	(19		)	24			14			(7		)
Net cash used in investing activities	(2,537		)	(1,725		)	(1,112		)	(714		)

Cash flow from financing activities:
Proceeds from debt	3,023			37			6,615			3,004
Repayments of debt	(3,179		)	(1,303		)	(39		)	(3,159		)
Cash dividends paid:
Common stock	(832		)	(1,186		)	(297		)	(238		)
Noncontrolling interests	(76		)	(350		)	(35		)	(1		)
Contributions from noncontrolling interests	15			27
Net (payments for) proceeds from stock-based awards	(3		)	2
Debt financing costs							(72		)	(22		)
Net payments for stock-based awards							(2		)	(4		)
Excess tax benefit from stock-based awards	7			23			1			7
Other, net	(22		)	(9		)
Net cash used in financing activities	(1,067		)	(2,759		)
Net cash provided by (used in) financing activities							6,171			(413		)

Net (decrease) increase in cash and cash equivalents	(1,095		)	1,390
Net increase (decrease) in cash and cash equivalents							5,890			(326		)
Cash and cash equivalents at beginning of year	4,822			3,738			3,705			4,822
Cash and cash equivalents at end of period	$	3,727		$	5,128		$	9,595		$	4,496

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

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FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)


	FCX Stockholders’ Equity																																	FCX Stockholders’ Equity
	Common Stock								Retained Earnings				Accumu- lated Other Compre- hensive Loss				Common Stock Held in Treasury						Total FCX Stock-holders' Equity											Common Stock											Retained Earnings				Accumu- lated Other Compre- hensive Loss				Common Stock Held in Treasury						Total FCX Stock-holders' Equity
	Number of Shares	At Par Value			Capital in Excess of Par Value							Number of Shares					At Cost					Non- controlling Interests					Total Equity			Number of Shares			At Par Value				Capital in Excess of Par Value						Number of Shares									At Cost				Non- controlling Interests							Total Equity
	Number of Shares			Retained Earnings				Accumu- lated Other Compre- hensive Loss				Number of Shares				Total FCX Stock-holders' Equity										Retained Earnings				Number of Shares		Accumu- lated Other Compre- hensive Loss	At Par Value			Total FCX Stock-holders' Equity							Number of Shares									At Cost				Non- controlling Interests							Total Equity
	(In millions)																												(In millions)
		At Par Value																				Non- controlling Interests
Balance at December 31, 2011	1,071	$	107				$		19,007			$	546					$	(465	)		123		$	(3,553			)		$	15,642				$			2,911			$	18,553
Balance at December 31, 2012																																		1,073					$	107			$	19,119			$	2,399			$	(506	)	124			$	(3,576	)		$	17,543			$	3,768			$	21,311
Exercised and issued stock-based awards	2	—			14					—				—				—			—			14				—					14			1			—				2				—				—			—			—				2				—				2
Stock-based compensation	—	—			77				—				—				—			—			77				—				77			—			—				41				—				—				—		—				41				—				41
Tax benefit for stock-based awards	—	—			6				—				—				—			—			6				—				6			—			—				1				—				—				—		—				1				—				1
Tender of shares for stock-based awards	—	—			7				—				—				1			(23		)	(16		)		—				(16		)	—			—				—				—				—				—		(4		)		(4		)		—				(4		)
Dividends on common stock	—	—			—				(891		)		—				—			—			(891		)		—				(891		)	—			—				—				(297		)		—				—		—				(297		)		—				(297		)
Dividends to noncontrolling interests	—	—			—				—				—				—			—			—				(76		)		(76		)	—			—				—				—				—				—		—				—				(35		)		(35		)
Change in ownership interests	—	—			(17		)		—				—				—			—			(17		)		17				—
Contributions from noncontrolling interests	—	—			—				—				—				—			—			—				15				15
Total comprehensive income	—	—			—				2,298				26				—			—			2,324				737				3,061			—			—				—				648				6				—		—				654				176				830
Balance at September 30, 2012	1,073	$	107		$	19,094			$	1,953			$	(439	)		124			$	(3,576	)	$	17,139			$	3,604			$	20,743
Balance at March 31, 2013																																		1,074			$	107			$	19,163			$	2,750			$	(500	)		124		$	(3,580	)		$	17,940			$	3,909			$	21,849

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

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FREEPORT-McMoRan COPPER & GOLD INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.	~~GENERAL INFORMATION~~

1. GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.). Therefore, this information should be read in conjunction with Freeport-McMoRan Copper & Gold Inc.’s (FCX) consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, ~~2011 (2011 Annual Report).~~2012. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month ~~and~~ ~~nine-month periods~~period ended ~~September 30, 2012~~March 31, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2012~~2013.


2.	~~EARNINGS PER SHARE~~

2. ACQUISITIONS

Cobalt Chemical Refinery Business. On March 29, 2013, FCX, through a newly formed consolidated joint venture, completed the acquisition of a cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition provides direct end-market access for the cobalt hydroxide production at Tenke Fungurume Mining S.A.R.L. (TFM or Tenke). The joint venture operates under the name Freeport Cobalt, and FCX is the operator with an effective 56 percent ownership interest. The remaining effective ownership interest is held by its partners in TFM, including 24 percent by Lundin Mining Corporation (Lundin) and 20 percent by La Générale des Carrières et des Mines (Gécamines). Initial consideration paid was $355 million, which included $34 million for cash acquired and is subject to a working capital adjustment, and was funded 70 percent by FCX and 30 percent by Lundin. Under the terms of the acquisition agreement, there is also the potential for additional consideration of up to $110 million over a period of three years, contingent upon the achievement of revenue-based performance targets. The initial estimates of the fair value of assets acquired and liabilities assumed are included in FCX's consolidated financial statements as of March 31, 2013.

Pending Acquisitions. On December 5, 2012, FCX announced definitive agreements to acquire, in separate transactions, Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR). PXP per-share consideration is equivalent to 0.6531 shares of FCX's common stock and $25.00 in cash (approximately $3.4 billion in cash and 91 million shares of FCX common stock). MMR per-share consideration consists of $14.75 in cash (approximately $3.4 billion in cash, or $2.1 billion net of MMR interests owned by FCX and PXP) and 1.15 units of a royalty trust, which will hold a five percent overriding royalty interest in future production from MMR's existing shallow water ultra-deep prospects. As further discussed in Note 6, in March 2013, FCX issued $6.5 billion of senior notes for net proceeds of $6.4 billion, which will be used, together with a five-year bank term loan that provides for borrowings up to $4.0 billion, to fund the cash portion of the merger consideration for both transactions and the repayment of certain indebtedness of PXP and MMR.

Completion of each transaction is subject to receipt of PXP and MMR stockholder approval of their respective transactions. The PXP transaction is not conditioned on the closing of the MMR transaction, and the MMR transaction is not conditioned on the closing of the PXP transaction. On April 18, 2013, PXP announced that it will hold a special meeting of its stockholders on May 20, 2013, to vote on the proposed acquisition of PXP by FCX. On May 3, 2013, MMR announced it will hold a special meeting of its stockholders on June 3, 2013, to vote on the proposed acquisition of MMR by FCX. Both transactions are expected to close in second-quarter 2013, subject to satisfaction of all conditions to closing.

The information contained in the consolidated financial statements and the notes herein does not reflect FCX's pending acquisitions of PXP or MMR.

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3. EARNINGS PER SHARE

FCX’s basic net income per share of common stock was calculated by dividing net income attributable to FCX common stockholders by the weighted-average shares of common stock outstanding during the period. Following is a reconciliation of net income and weighted-average shares of common stock outstanding for purposes of calculating diluted net income per share (in millions, except per share amounts):


	Three Months Ended							Nine Months Ended								Three Months Ended
	September 30,							September 30,								March 31,
	2012			2011				2012				2011				2013			2012
Net income	$	1,140		$	1,294			$	3,035			$	4,881			$	824		$	1,001
Net income attributable to noncontrolling interests	(316		)	(241		)		(737		)		(961		)		(176		)	(237		)
Net income attributable to FCX common stockholders	$	824		$	1,053			$	2,298			$	3,920			$	648		$	764

Weighted-average shares of common stock outstanding	949			948				949				947				950			949
Add shares issuable upon exercise or vesting of:
Dilutive stock options	3			6			^a	3			^a	7			^a
Restricted stock units	1			1				1				1
Add shares issuable upon exercise or vesting of
dilutive stock options and restricted stock units																3			6			^a
Weighted-average shares of common stock outstanding
for purposes of calculating diluted net income per share	953			955				953				955				953			955

Diluted net income per share attributable to FCX common stockholders	$	0.86		$	1.10			$	2.41			$	4.10			$	0.68		$	0.80

Excluded shares of common stock associated with outstanding stock options with exercise prices less than the average market price of FCX's common stock that were anti-dilutive based on the treasury stock method of approximately three million for ~~the third-quarter 2011,~~ ~~one million~~first-quarter ~~for the~~ ~~nine~~ ~~months ended~~ ~~September 30,~~ 2012~~, and~~ ~~two million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2011~~.

Outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net income per share of common stock. Excluded amounts were ~~approximately~~ 2429 million stock options with a weighted-average exercise price of $~~42.52~~41.35 per option for ~~third-quarter~~first-quarter ~~2012~~2013 and ~~approximately~~ 199 million stock options with a weighted-average exercise price of $~~43.80~~50.63 per option for ~~the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2012. Approximately~~ ~~5 million~~ ~~stock options with a weighted-average exercise price of~~ ~~$55.57~~ ~~per option were excluded for~~ ~~third-quarter~~first-quarter ~~2011, and approximately~~ ~~3 million~~ ~~stock options with a weighted-average exercise price of~~ ~~$55.74~~ ~~per option were excluded for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2011~~2012.

~~Table of Contents~~


3.	~~INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES~~

4. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

September 30,
2012 December 31, 2011
Mining operations:^a

Raw materials $ 2
$ 1
Finished goods^b
820
769
Atlantic Copper, S.L.U. (Atlantic Copper):
Raw materials (concentrates) 339
260
Work-in-process 191
187
Finished goods 22
9
Total product inventories 1,374
1,226
Total materials and supplies, net^c
1,465
1,354
Total inventories, excluding mill and leach stockpiles $ 2,839
$ 2,580



	March 31, 2013		December 31, 2012
Raw materials (primarily concentrates)	$	171	$	237
Work-in-process^a	237		252
Finished goods^b	1,128		911
Total product inventories	$	1,536	$	1,400

Total materials and supplies, net^c	$	1,575	$	1,504


a.	FCX's mining operations also have work-in-process inventories (~~i.e~~.,that are included in mill and leach ~~stockpiles), which are summarized below.~~ stockpiles.


b.	Primarily included molybdenum concentrates and copper concentrates, anodes, cathodes and rod.


c.	Materials and supplies inventory was net of obsolescence reserves totaling $2627 million at ~~September 30, 2012~~March 31, 2013, and December 31, ~~2011~~2012.

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A summary of mill and leach stockpiles follows (in millions):


	September 30, 2012		December 31, 2011		March 31, 2013		December 31, 2012
Current:
Mill stockpiles	$	97	$	69	$	112	$	104
Leach stockpiles	1,498		1,220		1,586		1,568
Total current mill and leach stockpiles	$	1,595	$	1,289	$	1,698	$	1,672
Long-term:^a
Mill stockpiles	$	595	$	535	$	627	$	615
Leach stockpiles	1,276		1,151		1,454		1,340
Total long-term mill and leach stockpiles	$	1,871	$	1,686	$	2,081	$	1,955


a.	Metals in stockpiles not expected to be recovered within the next 12 months.


4.	~~INCOME TAXES~~

5. INCOME TAXES

Geographic sources of FCX's provision for income taxes follow (in millions):


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
	2012			2011		2012			2011		2013		2012
United States operations	$	98		$	163	$	291		$	421	$	71	$	83
International operations	117		^a	645		837		^a	2,277		357		408
Total	$	215		$	808	$	1,128		$	2,698	$	428	$	491


a.	~~Included a net tax benefit of~~ ~~$234 million~~ ~~associated with an adjustment to Cerro Verde's deferred income tax liability.~~

FCX’s consolidated effective income tax rate was 2734 percent (for first-quarter2013 and 33 percent ~~excluding Cerro Verde's~~for ~~$234 million~~first-quarter ~~net deferred tax liability adjustment) for the first~~ ~~nine~~ ~~months of~~ 2012 ~~and~~ ~~36 percent~~ ~~for the first~~ ~~nine~~ ~~months of~~ ~~2011~~. Variations in the relative proportions of jurisdictional income can result in fluctuations to FCX’s consolidated effective income tax rate.

6. DEBT AND EQUITY TRANSACTIONS

On February 14, 2013, FCX entered into an agreement for a $4.0 billion bank term loan (the Term Loan) in connection with the pending acquisitions of PXP and MMR. Borrowings of up to $4.0 billion under the Term Loan will become available to FCX upon the closing of the PXP and/or the MMR acquisitions to fund the cash portion of the merger consideration for both transactions, to refinance certain of PXP's and MMR's outstanding debt, or for general corporate purposes. At the time the PXP transaction closes, PXP will join the Term Loan as a borrower.

The Term Loan will amortize in equal quarterly installments during the second, third and fourth years of the Term Loan in annual amounts equal to 10 percent, 15 percent and 20 percent, respectively, of the original aggregate principal amount, and the remainder will mature five years from the date of the first borrowing. At FCX's option, the Term Loan will bear interest at either an adjusted London Interbank Offered Rate (LIBOR) or an alternate-based rate (as defined under the Term Loan agreement) plus a spread to be determined by reference to FCX's credit ratings (currently LIBOR plus 1.50 percent or the alternate-based rate plus 50 basis points). FCX expects to select LIBOR for amounts borrowed at closing.

Also on February 14, 2013, FCX and PT Freeport Indonesia entered into a new senior unsecured $3.0 billion revolving credit facility, which will refinance and replace FCX's existing revolving credit facility (scheduled to mature on March 30, 2016) upon completion of the pending acquisition of PXP. Interest on the new revolving credit facility will be determined by reference to FCX's credit rating (currently LIBOR plus 1.50 percent). At the time the PXP acquisition closes, PXP will join the revolving credit facility as a borrower. No amounts are currently available to FCX under the new revolving credit facility. At the closing of the acquisition of PXP, the new revolving credit facility will be available for five years in an aggregate principal amount of $3.0 billion, with $500 million available to PT Freeport Indonesia.

910

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~~With~~The Term Loan and new revolving credit facility both contain customary affirmative covenants and representations, and also contain a number of negative covenants that, among other things, restrict, subject to certain exceptions, the ~~exception~~ability of ~~Tenke Fungurume S.A.R.L. (TFM)~~FCX's subsidiaries that are not borrowers or guarantors to incur additional indebtedness (including guarantee obligations) and FCX's ability or the ability of FCX's subsidiaries to: create liens on assets; enter into sale and leaseback transactions; engage in mergers, liquidations and dissolutions; and sell assets. The Term Loan and new revolving credit facility also contain financial ratios governing maximum total leverage and minimum interest coverage.

On March 7, 2013, in connection with the financing of FCX's pending acquisitions of PXP and MMR, FCX ~~has not elected~~issued $6.5 billion of senior notes in four tranches. FCX sold $1.5 billion of 2.375% Senior Notes due March 2018 (5-year notes), $1.0 billion of 3.100% Senior Notes due March 2020 (7-year notes), $2.0 billion of 3.875% Senior Notes due March 2023 (10-year notes) and $2.0 billion of 5.450% Senior Notes due March 2043 (30-year notes) for total net proceeds of $6.4 billion. Interest on these notes is payable semiannually on March 15 and September 15, commencing on September 15, 2013. FCX expects to ~~permanently reinvest earnings~~use the proceeds from the senior notes, together with available funds from its foreign subsidiaries and has recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. Cerro Verde previously recorded deferred Peruvian income tax liabilities for income taxes that would become payable if the reinvested profits usedTerm Loan, to fund the ~~initial Cerro Verde sulfide expansion are distributed prior~~acquisitions of PXP and MMR, including the payment of cash consideration for the acquisitions and the repayment of certain indebtedness. If the PXP acquisition does not close, FCX will be required to redeem all the ~~expiration~~outstanding 7-year, 10-year and 30-year notes at 101 percent plus accrued and unpaid interest.

FCX recorded a loss on early extinguishment of ~~Cerro Verde's current stability agreement on December 31, 2013. Reinvested profits are not expected to be distributed prior to December 31, 2013. Accordingly, a net deferred income tax liability~~debt of $~~234~~45 million ($~~123~~40 million to net income attributable to FCX common stockholders) in first-quarter 2013 for financing costs incurred for the terminated $9.5 billion acquisition bridge loan facility, which was entered into in December 2012 to provide interim financing for the acquisitions of ~~noncontrolling interests) was reversed~~PXP and ~~recognized as an income tax benefit in third-quarter 2012.~~MMR.

~~In July 2012, Sociedad Minera Cerro Verde S.A.A. (Cerro Verde) signed a new~~ 15~~-year mining stability agreement with the Peruvian government, which is expected to become effective~~ ~~January 1, 2014, after the current mining stability agreement expires on December 31, 2013. In connection with the new mining stability agreement, Cerro Verde's income tax rate will increase from~~ ~~30 percent~~ to ~~32 percent. As a result of the change in the income tax rate, FCX recognized additional deferred tax expense of~~ ~~$26 million~~ (~~$23 million~~ ~~net of noncontrolling interests) in third-quarter 2012, which relates primarily to the assets recorded in connection with the 2007 acquisition of Freeport-McMoRan Corporation (FMC).~~

In September 2011, Peru enacted a new mining tax and royalty regime and also created a special mining burden that companies with stability agreements could elect to pay. Cerro Verde elected to pay this special mining burden during the remaining term of its stability agreement. As a result, Cerro Verde recognized additional current and deferred tax expense of ~~$57 million~~ (~~$50 million~~ ~~net of noncontrolling interests) in third-quarter 2011. The deferred portion of this accrual related primarily to the assets recorded in connection with the 2007 acquisition of FMC.~~


5.	~~DEBT AND EQUITY TRANSACTIONS~~

In February 2012, FCX sold $500 million of 1.40% Senior Notes due 2015, $500 million of 2.15% Senior Notes due 2017 and $2.0 billion of 3.55% Senior Notes due 2022 for total net proceeds of $2.97 billion. ~~Interest on the~~ ~~1.40%~~ ~~Senior Notes is~~These notes bear interest payable ~~semiannually on~~ ~~February 13 and August 13, which commenced on August 13, 2012. Interest on the~~ ~~2.15%~~ ~~Senior Notes and the~~ ~~3.55%~~ ~~Senior Notes is payable semiannually on~~ ~~March 1 and September 1, which commenced on September 1, 2012. These unsecured senior notes rank equally with FCX's other existing and future unsecured and unsubordinated indebtedness.~~semiannually.

On March 14, 2012, FCX redeemed the remaining $3.0 billion of its outstanding 8.375% Senior Notes due 2017, for which holders received 104.553 percent of the principal amount together with the accrued and unpaid interest. As a result of this redemption, FCX recorded a loss on early extinguishment of debt of $168 million ($149 million to net income attributable to FCX common ~~stockholders or~~stockholders) in ~~$0.16~~first-quarter ~~per diluted share) for the first~~ ~~nine~~ ~~months of~~ 2012.

During the first quarter of 2011, FCX entered into a new senior unsecured revolving credit facility, which replaced the revolving credit facilities that were scheduled to mature on March 19, 2012. FCX recognized a loss on early extinguishment of debt totaling ~~$7 million~~ (~~$6 million~~ ~~to net income attributable to FCX common shareholders or~~ ~~$0.01~~ ~~per diluted share) for the first~~ ~~nine~~ ~~months of 2011 associated with this transaction.~~

On ~~April 1, 2011, FCX redeemed its remaining~~ ~~$1.1 billion~~ ~~of outstanding~~ ~~8.25%~~ ~~Senior Notes due 2015, for which holders received~~ ~~104.125~~ ~~percent of the principal amount together with accrued and unpaid interest. As a result of this redemption, FCX recorded a loss on early extinguishment of debt totaling~~ ~~$55 million~~ (~~$49 million~~ ~~to net income attributable to FCX common stockholders or~~ ~~$0.05~~ ~~per diluted share) for the first~~ ~~nine~~ ~~months of 2011.~~

~~During the second quarter of 2011, FCX purchased in the open market~~ ~~$35 million~~ ~~of its~~ ~~9.5%~~ ~~Senior Notes due 2031 for~~ ~~$49 million, which resulted in losses on early extinguishment of debt totaling~~ ~~$6 million~~ (~~$5 million~~ ~~to net income attributable to FCX common stockholders or~~ ~~$0.01~~ ~~per diluted share) for the first~~ ~~nine~~ ~~months of 2011.~~

Consolidated interest expense (excluding capitalized interest) totaled $5675 million in ~~third-quarter~~first-quarter ~~2012~~2013, and $~~105~~99 million in ~~third-quarter~~first-quarter ~~2011~~, ~~$210 million~~ ~~for the first~~ ~~nine~~ ~~months of~~ 2012 ~~and~~ ~~$325 million~~ ~~for the first~~ ~~nine~~ ~~months of~~ ~~2011~~. Capitalized interest totaled $1418 million in ~~third-quarter~~first-quarter ~~2012~~2013, and $2736 million in ~~third-quarter~~first-quarter ~~2011~~, ~~$62 million~~ ~~for the first~~ ~~nine~~ ~~months of~~ 2012 ~~and~~ ~~$75 million~~ ~~for the first nine months of~~ ~~2011~~.

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On ~~February 7, 2012, the Board of Directors authorized an increase in the cash dividend on FCX's common stock from an annual rate of~~ ~~$1.00~~ ~~per share to~~ ~~$1.25~~ ~~per share. On~~ ~~September 26, 2012~~March 27, 2013, FCX's Board of Directors declared a quarterly dividend of $0.3125 per share, which was paid on ~~November~~May 1, ~~2012~~2013, to common shareholders of record at the close of business on ~~October~~April 15, ~~2012~~2013.

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6. 7. FINANCIAL INSTRUMENTS	~~FINANCIAL INSTRUMENTS~~

FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates.

Commodity Contracts. From time to time, FCX has entered into forward, futures and swap contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions. As of ~~September 30, 2012~~March 31, 2013, FCX had no price protection contracts relating to its mine production. A discussion of FCX’s derivative commodity contracts and programs follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX's U.S. copper rod customers request a fixed market price instead of the New York Mercantile Exchange (COMEX) average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes 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, which generally results in FCX receiving the COMEX average copper price in the month of shipment. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses during the three-month ~~and~~ ~~nine-month~~ periods ended ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012, resulting from hedge ineffectiveness. At ~~September 30, 2012~~March 31, 2013, FCX held copper futures and swap contracts that qualified for hedge accounting for 5357 million pounds at an average contract price of $~~3.59~~3.54 per pound, with maturities through ~~December 2013~~March 2014.

A summary of gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, along with the unrealized gains (losses) on the related hedged item (firm sales commitments) follows (in millions):


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2012			2011			2012			2011			2013			2012
Copper futures and swap contracts:
Unrealized gains (losses):
Unrealized (losses) gains:
Derivative financial instruments	$	13		$	(62	)	$	20		$	(72	)	$	(12	)	$	18
Hedged item	(13		)	62			(20		)	72			12			(18		)

Realized gains (losses):
Realized (losses) gains:
Matured derivative financial instruments	1			(10		)	(3		)	(4		)	(2		)	10

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. As described in Note 1 to FCX’s ~~2011 Annual Report~~annual report on Form 10-K for the year ended December 31, 2012, under “Revenue Recognition,” certain FCX copper concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) price (copper) or the COMEX price (copper) and the London Bullion Market Association (London PM) price (gold) at the time of shipment as specified in the contract. Similarly, FCX purchases copper ~~and molybdenum~~ under contracts that provide for provisional ~~pricing (molybdenum purchases are generally based on an average~~ ~~Metals Week~~ ~~Molybdenum Dealer Oxide price).~~pricing. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host sales agreements since the contracts do not allow for net settlement and always result in physical delivery. Sales and purchases with a provisional sales price contain an embedded derivative (i.e., the price settlement mechanism that is settled after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale or purchase of the metals contained in the concentrates or cathodes at the then-current LME or COMEX price

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(copper), or the London PM price (gold) ~~or the average~~ ~~Metals Week~~ ~~Molybdenum Dealer Oxide price (molybdenum)~~ as defined in the contract. Mark-to-market price fluctuations recorded through the settlement date are reflected in revenues for sales contracts and in cost of sales as production and delivery costs for purchase contracts.

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A summary of FCX’s embedded derivatives at ~~September 30, 2012~~March 31, 2013, follows:


	Open Positions	Average Price Per Unit				Maturities Through	Open Positions	Average Price Per Unit				Maturities Through
	Open Positions	Contract		Market		Maturities Through	Open Positions	Contract		Market		Maturities Through
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	557	$	3.49	$	3.72	March 2013	491	$	3.57	$	3.41	August 2013
Gold (thousands of ounces)	67	1,698		1,781		December 2012	105	1,606		1,601		July 2013
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	326	3.50		3.72		January 2013	124	3.57		3.42		July 2013

Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into forward copper contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in cost of sales. At ~~September 30, 2012~~March 31, 2013, Atlantic Copper held net forward copper ~~purchase~~sales contracts for 3116 million pounds at an average contract price of $~~3.71~~3.48 per pound, with maturities through ~~December 2012~~June 2013.

A summary of the realized and unrealized gains (losses) recognized in income before income taxes and equity in affiliated companies’ net earnings for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
	2012		2011			2012		2011			2013			2012
Embedded derivatives in provisional sales contracts^a	$	164	$	(657	)	$	188	$	(682	)	$	(83	)	$	184
Copper forward contracts^b	5		4			17		(2		)	3			11


a.	Amounts recorded in revenues.


b.	Amounts recorded in cost of sales as production and delivery costs.

Unsettled Derivative Financial Instruments

A summary of the fair values of unsettled derivative financial instruments recorded on the consolidated balance sheets follows (in millions):


	September 30, 2012		December 31, 2011		March 31, 2013		December 31, 2012
Derivatives designated as hedging instruments
Commodity contracts:
Copper futures and swap contracts:^a
Asset position^b	$	11	$	3	$	—	$	5
Liability position^c	1		13		8		1

Derivatives not designated as hedging instruments
Commodity contracts:
Embedded derivatives in provisional sales/purchase contracts:^d
Asset position	$	131	$	72
Liability position	74		82
Gross amounts in an asset position					$	19	$	36
Less gross amounts offset in the balance sheet					—		8
Net amounts in an asset position					$	19	$	28

Gross amounts in a liability position					$	79	$	27
Less gross amounts offset in the balance sheet					—		8
Net amounts in a liability position					$	79	$	19

Copper forward contracts:
Asset position^b	1		2		$	1	$	—
Liability position^c	1		—

FCX ~~received~~paid $110 million ~~from~~to brokers ~~associated with margin requirements (recorded in accounts payable and accrued liabilities) as of~~at ~~September 30, 2012~~March 31, 2013, and ~~FCX paid~~ $317 million at December 31, 2012, for margin requirements (recorded in other current assets) ~~as of~~ ~~December 31, 2011. In addition, FCX held~~ ~~$3 million~~ ~~in margin funding from customers as of~~ ~~December 31, 2011, associated with margin requirements (recorded in accounts payable and accrued liabilities)~~.


b.	Amounts recorded in other current assets.


c.	Amounts recorded in accounts payable and accrued liabilities.

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~~Amounts recorded either as~~

These derivatives are the only derivatives that are offset in the balance sheet in accordance with accounting guidance. Based on the respective contract, embedded derivatives on provisional sales/purchases are netted with the corresponding outstanding receivable/payable balances. At March 31, 2013, the net amounts were in a net liability position of $60 million, of which a credit of $43 million was netted against trade accounts receivable, orand a credit of $17 million was included in accounts payable and accrued liabilities. At December 31, 2012, the net amounts were in a net asset position of $9 million, of which a debit of $15 million was included in trade accounts ~~payable.~~receivable, and a credit of $6 million was included in accounts payable and accrued liabilities.

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~~Foreign Currency Exchange Contracts.~~ As a global company, FCX transacts business in many countries and in many currencies. Foreign currency transactions of FCX’s international subsidiaries increase its risks because exchange rates can change between the time agreements are made and the time foreign currency transactions are settled. FCX may hedge or protect its international subsidiaries’ foreign currency transactions from time to time by entering into forward exchange contracts to lock in or minimize the effects of fluctuations in exchange rates. FCX had no outstanding foreign currency exchange contracts at ~~September 30, 2012~~.

~~Interest Rate Swap Contracts.~~ From time to time, FCX or its subsidiaries may enter into interest rate swaps to manage its exposure to interest rate changes and to achieve a desired proportion of fixed-rate versus floating-rate debt based on current and projected market conditions. FCX may enter into fixed-to-floating interest rate swap contracts to protect against changes in the fair value of the underlying fixed-rate debt that result from market interest rate changes and to take advantage of lower interest rates. FCX had no outstanding interest rate swap contracts at ~~September 30, 2012~~.

Credit Risk. FCX is exposed to credit loss when financial institutions with which FCX has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties. FCX does not anticipate that any of the counterparties it deals with will default on their obligations. As of ~~September 30, 2012~~March 31, 2013, FCX did not have ~~any~~ significant credit exposure associated with derivative transactions.

Other Financial Instruments. Other financial instruments include cash and cash equivalents, accounts receivable, investment securities, trust assets, ~~investment securities,~~ accounts payable and accrued liabilities, ~~dividends payable~~ and long-term debt. ~~Refer~~The carrying value for cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 78 for the fair values of ~~these financial instruments.~~

~~Cash~~investment securities, trust assets and ~~Cash Equivalents, Accounts Receivable, Accounts Payable and Accrued Liabilities, and Dividends Payable.~~ ~~The financial statement amount is a reasonable estimate of the fair value because of the short maturity of these instruments and generally negligible credit losses~~long-term debt).

~~Trust Assets~~A summary of cash and ~~Investment Securities.~~ The financial statement amount represents the fair value of trust assets and investment securities except for the investment in McMoRan Exploration Co.'s (MMR) 5¾% Convertible Perpetual Preferred Stock, which is recorded at cost.cash equivalents follows (in millions):

~~Long-Term Debt.~~ ~~The financial statement amount represents cost except for long-term debt acquired in the FMC acquisition, which was recorded at fair value at the acquisition date.~~



	March 31, 2013		December 31, 2012
Money market funds	$	8,367	$	2,991
Time deposits	697		514
Overnight repurchase agreement^a	300		—
Cash in banks	231		200
Total cash and cash equivalents	$	9,595	$	3,705

7.a.

~~FAIR VALUE MEASUREMENT~~In the first quarter of 2013, FCX entered into an overnight repurchase agreement with a financial institution. In connection with the agreement, FCX purchases an undivided interest in U.S. government treasury and/or agency securities at market value, and the financial institution agrees to repurchase the securities on demand (the following business day) at the original purchase price plus a designated interest rate. FCX does not participate in the actual return on the underlying securities. Because of its short-term, highly liquid nature, and the insignificant risk of changes in value, FCX considers this financial instrument a cash equivalent.

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8. FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). FCX did not have any significant transfers in or out of Levels 1, 2 or 3 for ~~the~~ ~~third~~first ~~quarter of~~-quarter ~~2012~~2013.

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~~The carrying value for certain FCX financial instruments (i.e.,~~ ~~cash, accounts receivable, accounts payable and accrued liabilities, and dividends payable) approximate fair value because of their short-term nature and generally negligible credit losses.~~ A summary of the carrying amount and fair value of FCX’s ~~other~~ financial instruments other than cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities follows (in millions):


	At September 30, 2012										At March 31, 2013
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
Assets
Cash equivalents:^a
Money market funds	$	3,053	$	3,053	$	3,053	$	—	$	—

Investment securities (current and long-term):
MMR investment^b	453		436		—		436		—		$	439	$	592	$	—	$	592	$	—
U.S. core fixed income fund^a,c											22		22		—		22		—
Money market funds^{a, c}	47		47		47		—		—		16		16		16		—		—
Equity securities^{a, c}	8		8		8		—		—		7		7		7		—		—
Total investment securities	508		491		55		436		—		484		637		23		614		—

Trust assets (long-term):^{a, c}
U.S. core fixed income fund	49		49		—		49		—		49		49		—		49		—
Government mortgage-backed securities	41		41		—		41		—		40		40		—		40		—
Corporate bonds	30		30		—		30		—		28		28		—		28		—
Government bonds and notes	21		21		—		21		—		19		19		—		19		—
Asset-backed securities	13		13		—		13		—		18		18		—		18		—
Money market funds	6		6		6		—		—		7		7		7		—		—
Municipal bonds	1		1		—		1		—		1		1		—		1		—
Total trust assets	161		161		6		155		—		162		162		7		155		—

Derivatives:^a
Embedded derivatives in provisional sales/purchase
contracts in an asset position^d	131		131		—		131		—
Copper futures and swap contracts^e	11		11		10		1		—
contracts in a gross asset position^d											19		19		—		19		—
Copper forward contracts^e	1		1		1		—		—		1		1		1		—		—
Total derivative assets	143		143		11		132		—		20		20		1		19		—

Total assets			$	3,848	$	3,125	$	723	$	—			$	819	$	31	$	788	$	—

Liabilities
Derivatives:^a
Embedded derivatives in provisional sales/purchase
contracts in a liability position^d	$	74	$	74	$	—	$	74	$	—
contracts in a gross liability position^d											$	79	$	79	$	—	$	79	$	—
Copper futures and swap contracts^f	1		1		1		—		—		8		8		6		2		—
Copper forward contracts^f	1		1		1		—		—
Total derivative liabilities	76		76		2		74		—		87		87		6		81		—

Long-term debt, including current portion^g	3,523		3,632		—		3,632		—		10,092		10,129		—		10,129		—

Total liabilities			$	3,708	$	2	$	3,706	$	—			$	10,216	$	6	$	10,210	$	—

1415

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	At December 31, 2011										At December 31, 2012
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
Assets
Cash equivalents:^a
Money market funds	$	4,007	$	4,007	$	4,007	$	—	$	—

Investment securities (current and long-term):
MMR investment^b	475		507		—		507		—		$	446	$	539	$	—	$	539	$	—
U.S. core fixed income fund^a,c											22		22		—		22		—
Money market funds^{a, c}											16		16		16		—		—
Equity securities^{a, c}	9		9		9		—		—		8		8		8		—		—
Money market funds^{a, c}	2		2		2		—		—
Total investment securities	486		518		11		507		—		492		585		24		561		—

Trust assets (long-term):^{a, c}
U.S. core fixed income fund											50		50		—		50		—
Government mortgage-backed securities	47		47		—		47		—		36		36		—		36		—
U.S. core fixed income fund	46		46		—		46		—
Corporate bonds											30		30		—		30		—
Government bonds and notes	21		21		—		21		—		24		24		—		24		—
Corporate bonds	19		19		—		19		—
Asset-backed securities											15		15		—		15		—
Money market funds	9		9		9		—		—		7		7		7		—		—
Asset-backed securities	9		9		—		9		—
Municipal bonds	1		1		—		1		—		1		1		—		1		—
Total trust assets	152		152		9		143		—		163		163		7		156		—

Derivatives:^a
Embedded derivatives in provisional sales/purchase
contracts in an asset position^d	72		72		—		72		—
contracts in a gross asset position^d											36		36		—		36		—
Copper futures and swaps contracts^e	3		3		3		—		—		5		5		5		—		—
Copper forward contracts^e	2		2		1		1		—
Total derivative assets	77		77		4		73		—		41		41		5		36		—

Total assets			$	4,754	$	4,031	$	723	$	—			$	789	$	36	$	753	$	—

Liabilities
Derivatives:^a
Embedded derivatives in provisional sales/purchase
contracts in a liability position^d	$	82	$	82	$	—	$	82	$	—
contracts in a gross liability position^d											$	27	$	27	$	—	$	27	$	—
Copper futures and swap contracts^f	13		13		11		2		—		1		1		1		—		—
Total derivative liabilities	95		95		11		84		—		28		28		1		27		—

Long-term debt, including current portion^g	3,537		3,797		—		3,797		—		3,527		3,589		—		3,589		—

Total liabilities			$	3,892	$	11	$	3,881	$	—			$	3,617	$	1	$	3,616	$	—


a.	Recorded at fair value.


b.	Recorded at cost and included in other assets.


c.	Current portion included in other current assets and long-term portion included in other assets.


d.	Embedded derivatives are recorded in trade accounts receivable and/or accounts payable and accrued ~~liabilities.~~liabilities (refer to Note 7 for further discussion).


e.	Included in other current assets.


f.	Included in accounts payable and accrued liabilities.


g.	Recorded at cost except for long-term debt acquired in the FMC acquisition, which was recorded at fair value at the acquisition date.

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Valuation Techniques

Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

FCX's investment in MMR's ~~5¾%~~5.75% Convertible Perpetual Preferred Stock (MMR investment) is not actively ~~traded; therefore, FCX's investment in the MMR 5¾% Convertible Perpetual Preferred Stock is valued based on~~traded. Historically, FCX used a pricing simulation model in determining fair value of the MMR investment; however, because of the definitive agreement to acquire MMR (refer to Note 2), FCX incorporated a discounted cash flow model in determining fair value of the MMR investment at March 31, 2013. Accordingly, FCX primarily valued its MMR investment based on a discounted cash flow model that uses ~~the quoted market prices of MMR's publicly traded common stock~~risk-adjusted discount rates as the most

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significant observable input and ~~other inputs, such as expected volatility,~~an expected settlement ~~date, and risk-free interest rate. Therefore,~~date. FCX continues to classify this ~~investment is classified~~valuation within Level 2 of the fair value hierarchy.

Fixed income securities ~~(government and agency securities, U.S.~~(U.S. core fixed income funds, government securities, corporate bonds, asset-backed securities and ~~asset-backed securities)~~municipal bonds) are valued using a bid evaluation or a mid evaluation. A bid evaluation is an estimated price at which a dealer would pay for a security. A mid evaluation is the average of the estimated price at which a

dealer would sell a security and the estimated price at which a dealer would pay for a security. These evaluations are based on quoted prices, if available, or models that use observable inputs and, as such, are classified within Level 2 of the fair value hierarchy.

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded and, as such, are classified within Level 1 of the fair value hierarchy.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales have critical inputs of quoted monthly LME or COMEX copper forward prices and the London PM gold forward price at each reporting date based on the month of maturity; however, FCX's contracts themselves are not traded on an exchange. ~~Likewise, FCX’s embedded derivatives on provisional molybdenum purchases have critical inputs based on the latest average weekly~~ ~~Metals Week~~ ~~Molybdenum Dealer Oxide prices; however, FCX's contracts themselves are not traded on an exchange.~~ As a result, these derivatives are classified within Level 2 of the fair value hierarchy.

FCX’s derivative financial instruments for copper futures and swap contracts and copper forward contracts that are traded on the respective exchanges are classified within Level 1 of the fair value hierarchy because they are valued using quoted monthly COMEX or LME forward prices at each reporting date based on the month of maturity (refer to Note 67 for further discussion). Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy.

Long-term debt, including the current portion, ~~is not actively traded and~~ is valued using prices obtained from a readily available pricing source and, as such, is classified within Level 2 of the fair value hierarchy.

The techniques described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the techniques used at ~~September 30, 2012~~March 31, 2013., except as otherwise described above.


8.	9. CONTINGENCIES AND COMMITMENTS

~~Environmental.~~ FCX's mining, exploration, production and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. FCX reviews changes in facts and circumstances associated with its environmental and reclamation obligations at least quarterly. There have been no material changes to FCX's environmental and reclamation obligations since year-end ~~2011~~. However, updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities and settlement of environmental matters may result in revisions to certain environmental obligations. As a result, FCX recorded adjustments to environmental obligations totaling net credits of ~~$82 million~~ in ~~third-quarter2012~~ ~~and~~ ~~$36 million~~ ~~during the~~ ~~first nine months of2012, and net charges of~~ ~~$31 million~~ in ~~third-quarter2011~~ ~~and~~ ~~$35 million~~ ~~during the~~ ~~first nine months of2011~~.

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~~Gilt Edge Mine Site.~~ On July 12, 2010, FCX was notified by the U.S. Department of Justice, acting at the request of the U.S. Environmental Protection Agency (EPA), that it was preparing to file suit in federal court against two of its wholly owned subsidiaries (Cyprus Mines Corporation and Cyprus Amax Minerals Company) and several other parties to recover costs incurred or to be incurred by the U.S. in remediating hazardous substances at the Gilt Edge mine site in Lawrence County, South Dakota. In September 2011, FCX reached an agreement in principle to settle this matter for an amount that is not material to FCX and less than the amount included for this matter in FCX's aggregate environmental obligations. The consent decree was finalized and approved by the court on October 10, 2012.

~~Asset Retirement Obligations (AROs).~~ ~~During third-quarter 2012, Cerro Verde updated its closure plan and increased its ARO by~~ ~~$77 million~~ ~~to reflect revised cost estimates and accelerated timing of certain closure activities.~~

Litigation.~~There have been no material~~ The following information includes a discussion of updates to previously reported legal proceedings included in Note 13 of FCX's ~~2011 Annual Report and in Note 8 of FCX's quarterly reports~~annual report on Form ~~10-Q~~10-K for the ~~periods~~year ended ~~March~~December 31, 2012 ~~and June 30, 2012.~~.

~~Other Contingencies.~~Shareholder Litigation ~~The Indonesian tax authorities issued assessments for various audit exceptions~~. In re Freeport-McMoRan Copper & Gold Inc. Derivative Litigation, No. 8145-VCN, consolidated in the Delaware Court of Chancery on January 25, 2013. On March 18, 2013, the Delaware Court of Chancery granted the stipulation made by the parties to allow the plaintiffs in In re Freeport-McMoRan Derivative Litigation, No. CV2012-018351, consolidated in the Arizona Superior Court on February 6, 2013, to intervene in the consolidated Delaware action. On March 18, 2013, the Arizona plaintiffs agreed to seek a permanent stay of the Arizona actions, and on March 20, 2013, the Arizona Superior Court extended the stay until June 7, 2013. On March 21, 2013, the plaintiffs in the consolidated Delaware action informed the Delaware Court of Chancery that they will not seek a preliminary injunction barring either the PXP merger or the MMR merger.

~~PT Freeport Indonesia's income tax returns~~Stephen Blau MD Money Purchase Pension Plan Trust v. Moffett et al., No. 8384-VCN, Delaware Court of Chancery, filed March 5, 2013. On March 5, 2013, an additional derivative action challenging the MMR merger and the PXP merger was filed on behalf of FCX by a purported FCX stockholder in the Delaware Court of Chancery. The action names some or all of the following as ~~follows (in millions):~~defendants: the directors and certain officers of FCX, two FCX subsidiaries, PXP and certain of its directors, and MMR and certain of its directors and officers. The action alleges, among other things, that the FCX directors breached their fiduciary duties to FCX stockholders because they, among other things, pursued their own interests at the expense of stockholders in approving the PXP and MMR mergers. The complaint also alleges that some or all of the following parties aided and abetted the wrongful acts allegedly committed by the directors and certain officers of FCX, two FCX subsidiaries, PXP and certain of its directors, and MMR and certain of its directors and officers. The action seeks as relief, among other things, enjoining defendants temporarily and permanently from taking any steps to accomplish or implement the proposed PXP and MMR mergers under the terms proposed and requiring submission of the proposed PXP and MMR

Date of assessment Tax return year Tax assessment Interest assessment Total
October 2010 2005 $ 106
$ 52
$ 158
November 2011 2006 22
10
32
March 2012 2007 91
44
135
Total $ 219
$ 106
$ 325

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mergers to a vote of FCX stockholders, damages, and attorneys' fees and costs. This action has not yet been consolidated into the Delaware action.

In re Plains Exploration & Production Company Stockholder Litigation, No. 8090-VCN, consolidated in the Delaware Court of Chancery on January 15, 2013. On March 22, 2013, the plaintiffs filed a brief in support of their motion for preliminary injunction which was filed on February 15, 2013. The Delaware Court of Chancery held a hearing on May 1, 2013, regarding the plaintiffs' motion for preliminary injunction. A ruling is expected in the near future.

In re McMoRan Exploration Co. Stockholder Litigation, No. 8132-VCN, consolidated in the Delaware Court of Chancery on January 25, 2013. On March 21, 2013, the plaintiffs filed a brief in support of their motion for preliminary injunction which was filed on December 20, 2012.

Langley v. Moffett et al., No. 2012-11904, Civil District Court for the Parish of Orleans of the State of Louisiana, filed December 19, 2012. On April 19, 2013, the Louisiana Civil District Court granted defendants' motion to stay the action pending the resolution of the consolidated action brought by MMR stockholders in the Delaware Court of Chancery.

FCX intends to defend itself vigorously in these matters.

Tax Matters. As reported in Note 13 of FCX's annual report on Form 10-K for the year ended December 31, 2012, PT Freeport Indonesia has ~~filed objections to the assessments. During first-quarter 2012, PT Freeport Indonesia's objections to the~~received assessments ~~related to 2005 were substantially all rejected by~~from the Indonesian tax authorities for additional taxes and ~~in May 2012, appeals were filed with~~interest related to various audit exceptions for the years 2005, 2006 and 2007. During first-quarter 2013, PT Freeport Indonesia also received assessments from the Indonesian ~~Tax Court.~~tax authorities for additional taxes of $59 million and interest of $55 million related to various audit exceptions for 2008. As of ~~September 30, 2012~~March 31, 2013, PT Freeport Indonesia has paid $~~158~~190 million (of which $~~124~~148 million is included in ~~long-term receivables)~~other assets) for the ~~disputed~~ tax ~~assessments related~~assessments. PT Freeport Indonesia has filed objections to the 2005, 2006 and ~~2007.~~

~~Mining Contracts.~~ Effective March 26, 2012, the Democratic Republic of Congo (DRC) government issued a Presidential Decree approving the modifications to TFM's bylaws. As a result, FCX's effective ownership interest in TFM was reduced from ~~57.75 percent~~ to ~~56.0 percent~~2007 assessments because it believes it has properly determined and ~~$50 million~~ ~~of TFM's intercompany loans payable to FMC were converted to equity.~~paid its taxes.


9.	~~NEW ACCOUNTING STANDARDS~~

10. NEW ACCOUNTING STANDARDS

In ~~May~~December 2011, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that requires companies to disclose information regarding offsetting and other arrangements for derivatives and other financial instruments. Additionally, in ~~connection with guidance for fair value measurements~~January 2013, FASB issued an ASU that limited the scope of the balance sheet offsetting disclosures to derivatives, repurchase agreements and ~~disclosures. This ASU clarifies~~securities lending transactions to the ~~FASB's intent on current guidance, modifies and changes certain guidance and principles, and expands disclosures concerning Level 3 fair value measurements~~extent that they are (i) offset in the fair value hierarchy (including quantitative information about significant unobservable inputs within Level 3 of the fair value hierarchy). In addition, this ASU requires disclosure of the fair value hierarchy for assets and liabilities not measured at fair value in the statement of financial ~~position, but whose fair value is required~~statements or (ii) subject to ~~be disclosed. This ASU became effective for interim and annual reporting periods beginning after December 15, 2011.~~an enforceable master netting arrangement or similar arrangement. FCX adopted this guidance effective January 1, ~~2012.~~2013.

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In ~~June 2011,~~February 2013, FASB issued an ASU ~~in connection with guidance on~~that clarified the ~~presentation of~~reclassification requirements from accumulated other comprehensive ~~income. The objective of this ASU is~~income to ~~improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive~~net income. This ASU requires ~~an entity to present the components~~disclosure of net income and other comprehensive income and total comprehensive income (includes net income) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of equity, but does not change the items that must be reported in other comprehensive income. This ASU became effective for interim and annual reporting periods beginning after December 15, 2011. Effective January 1, 2012, FCX adopted this ASU and presented total comprehensive income in a separate statement. Additionally, in December 2011, FASB deferred the effective date in this ASU for presenting reclassification adjustments for each componentamounts reclassified out of accumulated other comprehensive income ~~in both net income and other comprehensive income~~by component. In addition, an entity is required to present either on the face of the financial ~~statements.~~statements or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount is reclassified in its entirety to net income in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to the related note on the face of the financial statements for additional information. FCX adopted this guidance effective January 1, 2013.


~~10.~~	~~SUBSEQUENT EVENTS~~

11. SUBSEQUENT EVENTS

FCX evaluated events after ~~September 30, 2012~~March 31, 2013, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.


~~11.~~	~~BUSINESS SEGMENTS~~

12. BUSINESS SEGMENTS

FCX has organized its operations into five primary divisions – North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum ~~operations.~~mines. Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis. Therefore, FCX concluded that its operating segments include individual mines or operations. Operating segments that meet certain thresholds are reportable segments. Beginning in first-quarter 2013, the Molybdenum operations division was revised to only report FCX's two molybdenum mines in North America - the Henderson underground mine and the Climax open-pit mine, both in Colorado - as a division (i.e. Molybdenum mines). The molybdenum sales company and related conversion facilities are included with Corporate, Other & Eliminations in the following segment tables. In addition, FCX revised its segment disclosures for the three months ended March 31, 2012, to conform with the current period presentation.

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Intersegment Sales. Intersegment sales between FCX’s operations are based on similar arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 25 percent of Indonesia mining sales to PT Smelting until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX's net deferred profits and quarterly earnings.

Allocations. FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to a mine or operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level, whereas foreign income taxes are recorded and managed at the applicable country. In addition, most exploration and research activities are managed at the corporate level, and those costs along with some selling, general and administrative costs are not allocated to the operating divisions or segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

1819

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Business Segments


(In millions)	North America Copper Mines								South America										Indonesia			Africa															North America Copper Mines								South America						Indonesia				Africa
																												Atlantic			Corporate,																														Atlantic			Corporate,
																												Copper			Other &																										Molyb-				Copper			Other &
			Other						Cerro				Other											Molyb-		Rod &		Smelting			Elimi-			FCX					Other						Cerro		Other										denum		Rod &		Smelting			Elimi-				FCX
	Morenci		Mines			Total			Verde				Mines			Total			Grasberg			Tenke		denum		Refining		& Refining			nations			Total			Morenci		Mines			Total			Verde		Mines		Total		Grasberg				Tenke		MInes		Refining		& Refining			nations				Total
Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
Revenues:
Unaffiliated customers	$	39	$	10		$	49		$	504			$	491		$	995		$	845	^a	$	365	$	308	$	1,221	$	633		$	1		$	4,417		$	80	$	49		$	129		$	290	$	560	$	850	$	864		^a	$	438	$	—	$	1,330	$	633		$	339		^b	$	4,583
Intersegment	456		811			1,267			71				126			197			146			2		—		7		5			(1,624		)	—			436		824			1,260			109		55		164		67				—		143		7		6			(1,647		)		—
Production and delivery	268		492			760			197				333			530			587			172		273		1,222		624			(1,576		)	2,592			297		514			811			171		304		475		563				185		80		1,328		628			(1,351		)		2,719
Depreciation, depletion and amortization	31		57			88			39				35			74			54			42		18		2		11			9			298			33		69			102			33		38		71		55				58		20		3		10			10				329
Selling, general and administrative expenses	—		1			1			1				1			2			31			2		3		—		4			67			110			—		1			1			—		1		1		26				3		—		—		5			77				113
Exploration and research expenses	1		—			1			—				—			—			—			—		—		—		—			78			79			—		—			—			—		—		—		—				—		—		—		—			52				52
Environmental obligations and shutdown costs	—		—			—			—				—			—			—			—		—		—		—			(73		)	(73		)	—		(4		)	(4		)	—		—		—		—				—		—		—		—			19				15
Operating income (loss)	195		271			466			338				248			586			319			151		14		4		(1		)	(128		)	1,411			186		293			479			195		272		467		287				192		43		6		(4		)	(115		)		1,355

Interest expense, net	1		1			2			—				—			—			3			—		—		—		3			34			42			1		1			2			—		—		—		2				—		—		—		4			49				57
Provision for (benefit from) income taxes	—		—			—			(88		)	^b	72			(16		)	111			28		—		—		—			92			215			—		—			—			64		87		151		120				44		—		—		—			113				428
Total assets at September 30, 2012	2,297		5,528			7,825			5,704				4,232			9,936			6,393			4,490		2,580		330		1,192			1,771			34,517
Total assets at March 31, 2013																																					2,589		5,917			8,506			5,968		4,359		10,327		6,862				4,894		2,033		316		918			8,732			^c	42,588
Capital expenditures	108		164			272			180				87			267			237			131		44		2		4			14			971			153		105			258			164		62		226		191				57		40		1		8			24				805

Three Months Ended September 30, 2011
Three Months Ended March 31, 2012
Revenues:
Unaffiliated customers	$	78	$	44		$	122		$	396			$	570		$	966		$	1,275	^a	$	275	$	332	$	1,389	$	834		$	2		$	5,195		$	13	$	17		$	30		$	449	$	526	$	975	$	953		^a	$	303	$	—	$	1,298	$	704		$	342		^b	$	4,605
Intersegment	450		847			1,297			105				(18		)	87			87			1		—		7		3			(1,482		)	—			513		913			1,426			127		152		279		(3		)		2		126		6		8			(1,844		)		—
Production and delivery	252		412			664			196				282			478			503			142		260		1,390		826			(1,693		)	2,570			256		451			707			193		270		463		515				132		70		1,297		695			(1,451		)		2,428
Depreciation, depletion and amortization	27		40			67			32				32			64			62			32		14		2		11			5			257			31		62			93			30		32		62		46				32		11		2		10			11				267
Selling, general and administrative expenses	—		1			1			1				1			2			29			1		3		—		5			61			102			—		1			1			1		1		2		33				2		—		—		5			61				104
Exploration and research expenses	3		—			3			—				—			—			—			—		1		—		—			74			78			—		—			—			—		—		—		—				—		—		—		—			62				62
Environmental obligations and shutdown costs	1		(15		)	(14		)	—				—			—			—			��		—		—		—			52			38			—		—			—			—		—		—		—				—		—		—		—			10				10
Operating income (loss)	245		453			698			272				237			509			768			101		54		4		(5		)	21			2,150			239		416			655			352		375		727		356				139		45		5		2			(195		)		1,734

Interest expense, net	—		1			1			—				—			—			7			2		—		—		4			64			78			—		1			1			5		—		5		—				—		—		—		3			54				63
Provision for income taxes	—		—			—			154				48			202			333			20		—		—		—			253			808			—		—			—			123		117		240		150				29		—		—		—			72				491
Total assets at September 30, 2011	1,981		4,966			6,947			4,886				3,475			8,361			5,437			3,791		2,342		323		955			3,552			31,708
Total assets at March 31, 2012																																					2,146		5,255			7,401			5,300		4,127		9,427		5,613				4,138		1,906		328		1,033			3,059				32,905
Capital expenditures	21		117			138			64				110			174			162			49		155		2		5			32			717			44		99			143			69		83		152		182				127		93		3		3			4				707


a.	Included PT Freeport Indonesia’s sales to PT Smelting totaling $~~520~~430 million in ~~third-quarter~~first-quarter ~~2012~~2013 and $~~665~~589 million in ~~third-quarter~~first-quarter ~~2011~~2012.


b.	Included ~~a net credit~~revenues from FCX's molybdenum sales company, which included sales of ~~$234 million~~ ~~for~~molybdenum produced by the ~~reversal~~molybdenum mines and by certain of ~~a net deferred tax liability (refer to Note 4 for further discussion).~~

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(In millions) North America Copper Mines South America Indonesia Africa
Atlantic Corporate,
Copper Other &
Other Cerro Other Molyb- Rod & Smelting Elimi- FCX
Morenci Mines Total Verde Mines Total Grasberg Tenke denum Refining & Refining nations Total
Nine Months Ended September 30, 2012
Revenues:
Unaffiliated customers $ 157
$ 22
$ 179
$ 1,285
$ 1,563
$ 2,848
$ 2,673
^a
$ 985
$ 982
$ 3,802
$ 2,023
$ 5
$ 13,497
Intersegment 1,374
2,646
4,020
349
265
614
224
9
—
20
22
(4,909 ) —
Production and delivery 803
1,446
2,249
575
908
1,483
1,676
456
812
3,800
1,988
(4,822 ) 7,642
Depreciation, depletion and amortization 95
180
275
102
106
208
153
114
47
7
31
21
856
Selling, general and administrative expenses 1
2
3
2
3
5
91
5
9
—
14
184
311
Exploration and research expenses 1
—
1
—
—
—
—
—
2
—
—
211
214
Environmental obligations and shutdown costs —
42
42
—
—
—
—
—
—
—
—
(24 ) 18
Operating income (loss) 631
998
1,629
955
811
1,766
977
419
112
15
12
(474 ) 4,456

Interest expense, net 1
3
4
5
—
5
6
—
—
—
9
124
148
Provision for income taxes —
—
—
131
^b
244
375
387
79
—
—
—
287
1,128
Capital expenditures 204
365
569
365
294
659
624
428
197
5
11
25
2,518

Nine Months Ended September 30, 2011
Revenues:
Unaffiliated customers $ 371
$ 154
$ 525
$ 1,662
$ 1,803
$ 3,465
$ 4,112
^a
$ 959
$ 1,119
$ 4,291
$ 2,241
$ 6
$ 16,718
Intersegment 1,274
2,540
3,814
303
135
438
544
4
—
19
11
(4,830 ) —
Production and delivery 719
1,204
1,923
569
761
1,330
1,547
422
786
4,292
2,274
(5,070 ) 7,504
Depreciation, depletion and amortization 85
111
196
102
85
187
179
98
44
6
30
16
756
Selling, general and administrative expenses 1
2
3
3
2
5
100
6
11
—
18
180
323
Exploration and research expenses 4
—
4
—
—
—
—
—
3
—
—
187
194
Environmental obligations and shutdown costs 4
(15 ) (11 ) —
—
—
—
—
—
1
—
108
98
Operating income (loss) 832
1,392
2,224
1,291
1,090
2,381
2,830
437
275
11
(70 ) (245 ) 7,843

Interest expense, net 2
4
6
1
—
1
9
5
—
—
12
217
250
Provision for income taxes —
—
—
476
353
829
1,234
100
—
—
—
535
2,698
Capital expenditures 69
273
342
120
311
431
463
89
317
7
29
71
1,749


a.	~~Included PT Freeport Indonesia’s sales to PT Smelting totaling~~ ~~$1.5 billion~~ ~~for~~ the ~~first~~ ~~nine~~ ~~months of~~ ~~2012~~North and ~~$2.0 billion~~ ~~for the first~~ ~~nine~~ ~~months of~~ ~~2011~~. South America copper mines.


b.c.	Included ~~a net credit~~$7.0 billion of cash and cash equivalents at the parent company and $~~234~~477 million ~~for the reversal~~ of ~~a net deferred tax liability (refer~~total assets related to ~~Note 4 for further discussion).~~Freeport Cobalt.

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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 ~~September 30, 2012~~March 31, 2013, and the related consolidated statements of income, ~~and~~ comprehensive income, and cash flows for the three~~- and~~ ~~nine~~-month periods ended ~~September 30, 2012~~March 31, 2013 and ~~2011, the consolidated statements of cash flows for the~~ ~~nine-month periods ended~~ ~~September 30,~~ 2012 ~~and~~ ~~2011~~, and the consolidated statement of equity for the ~~nine~~three-month period ended ~~September 30, 2012~~March 31, 2013. 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, ~~2011~~2012, and the related consolidated statements of income, comprehensive income, cash flows, and equity for the year then ended (not presented herein), and in our report dated February ~~27, 2012,~~22, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2011~~2012, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ ERNST & YOUNG LLP

Phoenix, Arizona

~~November 2, 2012~~May 6, 2013

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

~~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. 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 annual report on Form 10-K for the year ended December 31, ~~2011~~2012, filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to "Cautionary Statement" for further discussion). 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.

PENDING ACQUISTIONS

In December 2012, we announced definitive agreements to acquire, in separate transactions, Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR). Completion of each transaction is subject to receipt of PXP and MMR stockholder approval of their respective transaction. The PXP transaction is not conditioned on the closing of the MMR transaction, and the MMR transaction is not conditioned on the closing of the PXP transaction. On April 18, 2013, PXP announced that it will hold a special meeting of its stockholders on May 20, 2013, to vote on the proposed acquisition of PXP by FCX. On May 3, 2013, MMR announced it will hold a special meeting of its stockholders on June 3, 2013, to vote on the proposed acquisition of MMR by FCX. Both transactions are expected to close in second-quarter 2013, subject to satisfaction of all conditions to closing. Refer to Note 2 for further discussion of these pending acquisitions.

The information contained in Management's Discussion and Analysis of Financial Condition and Results of Operations does not reflect the pending acquisitions of PXP or MMR.

OVERVIEW

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, one of the world's largest copper and gold deposits in terms of recoverable reserves, significant mining operations in North and South America, and the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC). The Grasberg minerals district 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. We also operate Atlantic Copper, our wholly owned copper smelting and refining unit in Spain.

~~Our results~~On March 29, 2013, through a newly formed joint venture, we acquired a large-scale cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The joint venture operates under the name Freeport Cobalt, and we are the operator of the joint venture with an effective 56 percent ownership interest. The remaining ownership interest is held by our partners in Tenke Fungurume Mining S.A.R.L. (TFM), including 24 percent by Lundin Mining Corporation (Lundin) and 20 percent by La Générale des Carrières et des Mines (Gécamines). This acquisition enhances our cobalt marketing position, product portfolio and product development capabilities and provides direct end-market access for the cobalt hydroxide production by TFM. Initial consideration paid was ~~third quarter~~$355 million, including $34 million of acquired cash. Under the terms of the agreement, there is the potential for additional consideration of up to $110 million over a period of three years, contingent upon the achievement of revenue-based performance targets. The acquisition was funded 70 percent by us and ~~first nine months of2012, compared with the~~ ~~2011~~30 percent ~~periods, primarily reflected lower copper and gold sales volumes. Results for the first nine months of 2012 were also impacted~~ by ~~lower copper prices. Our net income attributable~~Lundin, which amounts will be repaid prior to ~~common stockholders also includes net credits for adjustments~~any shareholder distributions. Refer to ~~Cerro Verde's deferred income taxes and to our environmental and related litigation reserves totaling~~Note ~~$168 million~~2 for further discussion.~~third-quarter2012~~

We are progressing on major development projects, including the development of the underground ore bodies at Grasberg, and ~~$116 million~~ ~~for~~ the ~~first nine months~~expansion projects at Morenci and Cerro Verde. Studies are also under way to evaluate a major mill project at El Abra and various mill projects to process significant sulfide ore in North America. The advancement of~~2012, compared with net charges totaling~~ ~~$73 million~~ ~~for~~ ~~third-quarter2011~~ ~~and~~ ~~$113 million~~ ~~for the~~ ~~first nine months~~ these studies is designed to position us to invest in production growth within our existing portfolio of~~2011~~. assets. Refer to ~~“Consolidated Results”~~“Operations” for further discussion of our ~~consolidated financial results for the~~ ~~three~~-current operating and ~~nine-month periods ended~~ ~~September 30, 2012~~ ~~and~~ ~~2011~~.

In May 2012, our Climax molybdenum mine began commercial production. Depending on market conditions, production from the Climax mine may ramp up to a rate of 20 million pounds of molybdenum per year during 2013, with the potential to produce 30 million pounds of molybdenum per year.development activities.

At ~~September 30, 2012~~March 31, 2013, we had $~~3.7~~9.6 billion in consolidated cash and cash equivalents and $~~3.5~~10.1 billion in total debt. ~~In February~~During first-quarter 2013, we completed $10.5 billion in debt financings associated with the pending acquisitions of PXP and MMR consisting of ~~2012~~$6.5 billion~~, we sold $3.0 billion~~ of senior notes ~~in three tranches with~~and a ~~weighted average~~$4.0 billion bank term loan (the Term Loan). No amounts are currently available to FCX under the Term Loan, which will be funded at closing of the acquisitions.

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The weighted-average interest rate of ~~approximately three~~these financings approximates 3.1 percent. ~~We used the proceeds from this offering, plus cash on hand, to redeem the remaining $3.0 billion of our 8.375% Senior Notes.~~ Refer to "Capital Resources and Liquidity" and Note 5 ~~and “Capital Resources and Liquidity – Financing Activities” for further discussion.~~

~~In February 2012, our Board of Directors (the Board) authorized an increase in the cash dividend on our common stock to an annual rate of $1.25 per share ($0.3125 per share quarterly). Refer to Note~~ 56 for further discussion.

At current copper prices, we expect to produce significant operating cash flows, and to use our cash to invest in our development projects ~~including the underground development projects at Grasberg~~ and ~~the expansion projects at Morenci, Cerro Verde and Tenke, as well as to~~ return cash to shareholders through dividends on our common ~~stock dividends and/or share repurchases.~~stock.

22Refer to "Consolidated Results" for discussion of items impacting our consolidated results for the first quarters of 2013 and 2012.

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OUTLOOK

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. In recent weeks, the price of copper and other commodities have declined as a result of slowing growth in China and weakness in other global economies. We will continue to monitor market developments and adjust our operating strategy as ~~market~~ conditions change. Our financial results vary ~~with~~as a result of fluctuations in market prices for copper, gold and molybdenum and other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs and operating cash flow. Discussion of the outlook for each of these measures follows.

Sales Volumes. Following are our projected consolidated sales volumes for the year 2013:



Copper (millions of recoverable pounds):
North America copper mines	1,445
South America mining	1,335
Indonesia mining	1,085
Africa mining	435
	4,300
Gold (thousands of recoverable ounces):
Indonesia mining	1,245
North and South America mining	130
	1,375
Molybdenum (millions of recoverable pounds)^a	92


a.	Projected molybdenum sales include 52 million pounds produced at our molybdenum mines and 40 million pounds produced at our North and South America copper mines.

Consolidated sales from mines for ~~the year~~ ~~2012~~second-quarter2013 are expected to approximate ~~3.6~~1.0 billion pounds of copper, ~~1.0 million~~ ~~ounces of gold and~~ ~~82 million~~ ~~pounds of molybdenum, including~~ ~~930 million~~ ~~pounds of copper,~~ ~~255~~295 thousand ounces of gold and ~~20 million~~ ~~pounds of molybdenum for~~ ~~fourth-quarter2012. Expected gold sales for~~ ~~2012~~ are approximately 50,000 ounces less than the estimates provided in our quarterly report on Form 10-Q for the period ended June 30, 2012, because of lower gold production at Grasberg. Consolidated sales from mines for the year 2013 are expected to total ~~4.3 billion~~ ~~pounds of copper,~~ ~~1.4 million~~ ~~ounces of gold and~~ 9023 million pounds of molybdenum. Projected sales volumes are dependent on a number of factors, including achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors.

Unit Net Cash Costs. ~~Quarterly unit net cash costs will vary with fluctuations in sales volumes and average realized prices for gold and molybdenum.~~ Assuming average prices of $~~1,700~~1,400 per ounce of gold and $11 per pound of molybdenum for ~~fourth-quarter~~the remainder of ~~2012~~2013, and achievement of current~~2012~~ sales volume and cost estimates, consolidated unit ~~site production and delivery~~net cash costs ~~before net noncash and other costs,~~(net of by-product credits) for our copper mining operations are expected to average ~~$2.03 per pound of copper and unit net cash costs (net of by-product credits) are expected to average~~ $~~1.50~~1.45 per pound of copper for ~~the year~~ ~~2012~~2013 ~~(fourth-quarter 2012 consolidated site production and delivery costs are expected to average $2.11 per pound of copper and~~. Projected unit net cash costs ~~(net~~for 2013 are higher than previous estimates primarily because of ~~by-product credits) are expected to average $1.62 per pound of copper).~~lower gold credits. The impact of price changes ~~during~~for ~~fourth-quarter~~the remainder of ~~2012~~2013 on consolidated unit net cash costs ~~for the year 2012~~ would approximate $~~0.004~~0.015 per pound for each $50 per ounce change in the average price of gold and $~~0.004~~0.01 per pound for each $2 per pound change in the average price of molybdenum. ~~Assuming consistent commodity price assumptions,~~Quarterly unit net cash costs ~~for 2013~~vary with fluctuations in sales volumes and average realized prices (primarily gold and molybdenum prices), and are expected to ~~be lower than 2012 because~~decline in the second half of 2013 as we gain access to higher grade ore at Grasberg (54 percent of our projected ~~increased~~consolidated copper sales volumes and 63 percent of our projected consolidated gold sales volumes ~~at Grasberg.~~are expected in the second half of 2013). Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production and delivery costs.

Operating Cash Flows. Our operating cash flows vary with prices realized from copper, gold and molybdenum sales, our sales volumes, production costs, income taxes and other working capital changes and other factors. Based on current ~~2012~~ sales volume and cost estimates and assuming average prices of $~~3.70~~3.25 per pound of copper, $~~1,700~~1,400 per ounce of gold and $11 per pound of molybdenum for ~~fourth-quarter~~the remainder of ~~2012~~2013, consolidated operating

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cash flows (excluding results of the pending PXP and MMR acquisitions) are estimated to approximate $~~4.0~~5.5 billion for the year ~~2012~~2013 ~~(net of an estimated~~(including $~~1.4~~0.4 billion in net working capital ~~uses~~sources and changes in other tax payments). Projected operating cash flows for the year ~~2012~~2013 also reflect estimated taxes of ~~$1.6~~$1.9 billion (refer to “Consolidated Results – Provision for Income Taxes” for further discussion of our projected consolidated effective annual tax rate for ~~2012~~2013). The impact of price changes for ~~fourth-quarter~~the remainder of ~~2012~~2013 on operating cash flows would approximate $80270 million for each $0.10 per pound change in the average price of copper, $2050 million for each $~~100~~50 per ounce change in the average price of gold and $1080 million for each $2 per pound change in the average price of molybdenum.

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COPPER, GOLD AND MOLYBDENUM MARKETS

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January ~~2002~~2003 through ~~October~~April ~~2012~~2013, the London Metal Exchange (LME) spot copper price varied from a low of $~~0.64~~0.70 per pound in ~~2002~~2003 to a record high of $4.60 per pound in ~~February~~ 2011, the London Bullion Market Association (London) gold price fluctuated from a low of $~~278~~320 per ounce in ~~2002~~2003 to a record high of $1,895 per ounce in ~~September~~ 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $~~2.43~~3.28 per pound in ~~2002~~2003 to a record high of $39.25 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 annual report on Form 10-K for the year ended December 31, ~~2011~~2012.

This graph presents LME spot copper prices and the combined reported stocks of copper at the LME, the New York Mercantile Exchange (COMEX) and the Shanghai Futures Exchange from January ~~2002~~2003 through ~~October~~April ~~2012~~2013. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories. In late 2008, slowing consumption, turmoil in the U.S. financial markets and concerns about the global economy led to a sharp decline in copper prices, which reached a low of $1.26 per pound in December 2008. Higher copper prices since ~~the 2008 low~~that time are attributable to a combination of demand from ~~emerging markets~~developing economies and ~~limitations on available supply.~~pro-growth monetary and fiscal policy decisions in Europe, China and the U.S. During ~~third-quarter~~first-quarter ~~2012~~2013, LME spot copper prices ranged from $~~3.32~~3.42 per pound to $~~3.81~~3.74 per pound, averaged $~~3.50~~3.60 per pound, and ~~closed at~~was $~~3.75~~3.44 per pound on ~~September~~March 31, 2013.

Subsequent to March 31, 2013, copper prices have been impacted by demand related concerns, with LME spot copper prices closing at $3.21 per pound on April 30, ~~2012~~2013. ~~While global economic concerns continue to influence~~Despite the decline in copper prices and increases in global exchange inventories, ~~have declined, representing less than two weeks of global demand.~~

Wewe believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and ~~limited supplies.~~ a challenging supply environment.

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Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters. ~~The LME spot copper price closed at~~ ~~$3.55~~ ~~per pound on~~ ~~October 31, 2012~~.

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This graph presents London ~~p.m.~~PM gold prices from January ~~2002~~2003 through ~~October~~April ~~2012~~2013. During ~~third-quarter~~first-quarter ~~2012~~2013, gold prices ranged from $~~1,556~~1,574 per ounce to $~~1,785~~1,694 per ounce, averaged $~~1,652~~1,632 per ounce and ~~closed at~~was $~~1,776~~1,598 per ounce on ~~September 30, 2012~~March 31, 2013. ~~Gold~~Subsequent to March 31, 2013, gold prices ~~closed~~have declined with the London PM gold price closing at $~~1,719~~1,469 per ounce on ~~October 31, 2012~~April 30, 2013. Many analysts believe the outlook for gold is positive amid an uncertain outlook for global growth and the prospects for future inflation associated with accommodative monetary policies and elevated sovereign debt levels.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January ~~2002~~2003 through ~~October~~April ~~2012~~2013. ~~In late 2008, molybdenum prices declined significantly as a result of the financial market turmoil and a decline in demand.~~ During ~~third-quarter~~first-quarter ~~2012~~2013, the weekly average price of molybdenum ranged from $~~10.90~~10.75 per pound to $~~12.95~~11.95 per pound, averaged $~~11.93~~11.35 per pound and ~~closed at~~was $~~11.65~~10.78 on ~~September 30, 2012~~March 31, 2013. ~~Average Metals Week Molybdenum Dealer Oxide prices were lower in~~ ~~third-quarter2012, compared with second-quarter 2012, reflecting weaker demand and cautious buying activity in response to the global economic situation.~~ The Metals Week Molybdenum Dealer Oxide weekly average price was $~~11.05~~11.20 per pound on ~~October 31, 2012~~April 30, 2013.

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CONSOLIDATED RESULTS


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2012			2011			2012			2011			2013			2012
Financial Data (in millions, except per share amounts)
Revenues^a,b	$	4,417		$	5,195		$	13,497		$	16,718		$	4,583		$	4,605
Operating income^a,c	$	1,411	^d	$	2,150	^d	$	4,456	^d	$	7,843	^d
Net income attributable to FCX common stockholders	$	824	^d,e	$	1,053	^d,e	$	2,298	^d,e,f	$	3,920	^d,e,f
Operating income^a													$	1,355	^c	$	1,734
Net income attributable to FCX common stockholders^d													$	648	^c,e	$	764	^e
Diluted net income per share attributable to FCX common stockholders	$	0.86	^d,e	$	1.10	^d,e	$	2.41	^d,e,f	$	4.10	^d,e,f	$	0.68	^c,e	$	0.80	^e
Diluted weighted-average common shares outstanding	953			955			953			955			953			955
Operating cash flows													$	831	^f	$	801	^f
Capital expenditures													$	805		$	707

Mining Operating Data
Copper (millions of recoverable pounds)
Production	938			951			2,658			2,868			980			833
Sales, excluding purchases	922			947			2,676			2,875			954			827
Average realized price per pound	$	3.64		$	3.60		$	3.63		$	3.94		$	3.51		$	3.82
Site production and delivery costs per pound^g	$	2.03		$	1.71		$	2.00		$	1.65		$	1.94		$	1.96
Unit net cash costs per pound^g	$	1.62		$	0.80		$	1.46		$	0.84		$	1.57		$	1.26
Gold (thousands of recoverable ounces)
Production	204			385			707			1,202			235			252
Sales, excluding purchases	202			409			756			1,245			214			288
Average realized price per ounce	$	1,728		$	1,693		$	1,666		$	1,565		$	1,606		$	1,694
Molybdenum (millions of recoverable pounds)
Production	20			23			61			65			22			21
Sales, excluding purchases	21			19			62			60			25			21
Average realized price per pound	$	13.62		$	16.34		$	14.79		$	17.57		$	12.75		$	15.34


a.	Refer to Note 1112 for a summary of revenues and operating income by business segment.


b.	Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods (refer to “Revenues” ~~below~~ for further discussion).


c.	Includes charges of $14 million ($10 million to net income attributable to FCX common stockholders or $0.01 per share) for costs associated with the pending acquisitions of PXP and MMR and for the March 2013 acquisition of a cobalt chemical refinery business.


d.	We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to "Operations - Atlantic Copper Smelting & Refining" for a summary of net impacts from changes in these deferrals.

~~Includes net (credits) charges for adjustments to environmental obligations and related litigation reserves totaling~~ ~~$(85) million~~ (~~$(68) million~~ ~~to net income attributable to common stockholders or~~ ~~$(0.07)~~ ~~per share) for third-quarter~~ ~~2012~~, ~~$29 million~~ (~~$23 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.02~~ ~~per share) for~~ ~~third-quarter2011~~, ~~$(19) million~~ (~~$(16) million~~ ~~to net income attributable to common stockholders or~~ ~~$(0.02)~~ ~~per share) for the~~ ~~first nine months of2012~~ ~~and~~ ~~$78 million~~ (~~$63 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.07~~ ~~per share) for the~~ ~~first nine months of2011~~.

~~The 2012 periods include a net tax credit of~~ ~~$100 million, net of noncontrolling interests ($0.11~~ ~~per share), associated with adjustments to Cerro Verde's deferred income taxes. The 2011 periods include a tax charge of~~ ~~$50 million, net of noncontrolling interests ($0.05~~ per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its stability agreement. Refer to Note 4 and "Provision for Income Taxes" below for further discussion of these amounts.


f.	Includes losses on early extinguishment of debt totaling $40 million ($0.04 per share) for first-quarter2013 related to the termination of the acquisition bridge loan facilities and $149 million ($0.16 per share) for ~~the~~ ~~first nine months of~~first-quarter 2012 associated with the redemption of our remaining 8.375% senior notes. Refer to Note 6 for further discussion.


f.	Net of working capital uses and changes in other tax payments of $430 million for first-quarter2013 and $60720 million (for ~~$0.06~~ ~~per share) for the~~ ~~first nine months of~~first-quarter ~~2011~~2012 ~~(refer to Note~~ 5 ~~for further discussion)~~.

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

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Revenues

Consolidated revenues totaled $~~4.4~~4.6 billion in both the ~~third-quarter~~first quarters~~2012~~ of 2013 and ~~$13.5 billion~~ ~~for the~~ ~~first nine months of~~2012, ~~compared with~~ ~~$5.2 billion~~ in ~~third-quarter2011~~and ~~$16.7 billion~~ ~~for the~~ ~~first nine months of2011. Consolidated revenues include~~primarily included the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum, and other metals by our North and South America copper mines, the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operations, the sale of copper cathodessilver and cobalt hydroxide by our Africa mining operations, the sale of molybdenum in various forms by our Molybdenum operations, and the sale of copper cathodes, copper anodes, and gold in anodes and slimes by Atlantic Copper.

hydroxide. Following is a summary of changes in our consolidated revenues between periods (in millions):


	Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended March 31,

Consolidated revenues - 2011 periods	$	5,195		$	16,718
Higher (lower) price realizations from mining operations:
Consolidated revenues - first-quarter 2012							$	4,605
Higher (lower) sales volumes from mining operations:
Copper	37			(830		)	488
Gold	7			76			(125		)
Molybdenum	(57		)	(174		)	59
Silver	(16		)	(40		)	10
Cobalt	(14		)	(44		)	5
(Lower) higher sales volumes from mining operations:
(Lower) higher price realizations from mining operations:
Copper	(89		)	(783		)	(296		)
Gold	(351		)	(765		)	(19		)
Molybdenum	33			38			(64		)
Silver	(27		)	(60		)	1
Cobalt	23			—			(7		)
Favorable impact of net adjustments to prior period provisionally priced sales	216			132
Lower purchased copper	(51		)	(437		)
Lower Atlantic Copper revenues	(199		)	(207		)
Unfavorable impact of net adjustments for prior period provisionally priced sales							(127		)
Other, including intercompany eliminations	(290		)	(127		)	53
Consolidated revenues - 2012 periods	$	4,417		$	13,497
Consolidated revenues - first-quarter 2013							$	4,583

~~Price Realizations~~

~~Our consolidated revenues vary as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. Realized copper prices averaged~~ ~~$3.64~~ ~~per pound in~~ ~~third-quarter2012~~ ~~(compared with~~ ~~$3.60~~ ~~per pound in~~ ~~third-quarter2011) and~~ ~~$3.63~~ ~~per pound for the~~ ~~first nine months of2012~~ ~~(compared with~~ ~~$3.94~~ ~~for the~~ ~~first nine months of2011). Realized gold prices averaged~~ ~~$1,728~~ ~~per ounce in~~ ~~third-quarter2012~~ ~~(compared with~~ ~~$1,693~~ ~~per ounce in~~ ~~third-quarter2011) and~~ ~~$1,666~~ ~~per ounce for the~~ ~~first nine months of2012~~ ~~(compared with~~ ~~$1,565~~ ~~per ounce for the~~ ~~first nine months of2011). Realized molybdenum prices averaged~~ ~~$13.62~~ ~~per pound in~~ ~~third-quarter2012~~ ~~(compared with~~ ~~$16.34~~ ~~per pound in~~ ~~third-quarter2011) and~~ ~~$14.79~~ ~~per pound for the~~ ~~first nine months of2012~~ ~~(compared with~~ ~~$17.57~~ ~~per pound for the~~ ~~first nine months of2011~~).

Sales Volumes

Consolidated copper sales volumes ~~totaled~~increased to ~~922~~954 million pounds ~~of copper,~~in ~~202~~first-quarter2013, compared with 827 million pounds in first-quarter2012, primarily reflecting higher production from Indonesia and Africa. Consolidated gold sales volumes decreased to 214 thousand ounces ~~of gold and~~in first-quarter2013, compared with 288 thousand ounces in first-quarter2012, primarily reflecting anticipated lower ore grades in Indonesia. Consolidated molybdenum sales volumes increased to 25 million pounds in first-quarter2013, compared with 21 million pounds ~~of molybdenum~~ in ~~third-quarter~~first-quarter 2012, ~~compared with~~ ~~947 million~~ ~~pounds of copper,~~ ~~409 thousand~~ ~~ounces of gold and~~ ~~19 million~~ ~~pounds of molybdenum in~~ ~~third-quarter2011. For the~~ ~~first nine months of2012, consolidated~~primarily reflecting stronger sales ~~volumes totaled~~ ~~2.7 billion~~ ~~pounds of copper,~~ ~~756 thousand~~ ~~ounces of gold and~~ ~~62 million~~ ~~pounds of molybdenum, compared with~~ ~~2.9 billion~~ ~~pounds of copper,~~ ~~1.2 million~~ ~~ounces of gold and~~ ~~60 million~~ ~~pounds of molybdenum for the~~ ~~first nine months of2011. Lower consolidated copper and gold sales volumes~~ in the ~~2012 periods primarily reflected lower ore grades in Indonesia, partly offset by increased production in North America~~metallurgical and Africa. Lower copper and gold sales volumes for the first nine months of 2012 also reflected lower production rates in Indonesia resulting from the first-quarter 2012 work interruptions and related temporary suspension of operations, and lower copper volumes in South America.chemical sectors. Refer to “Operations” for further discussion of sales volumes at our operating divisions.

Price Realizations

Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. Following is a summary of our average realized prices for the first quarters of2013 and 2012:



	Three Months Ended
	March 31,
	2013		2012
Copper (per pound)	$	3.51	$	3.82
Gold (per ounce)	$	1,606	$	1,694
Molybdenum (per pound)	$	12.75	$	15.34
Silver (per ounce)	$	30.01	$	29.45
Cobalt (per pound)	$	7.28	$	8.46

~~Table of Contents~~

Provisionally Priced Copper Sales

During ~~the first~~ ~~nine~~first-quarter ~~months of~~ ~~2012~~2013, 4546 percent of our mined copper was sold in concentrate, 28 percent as cathode and 2726 percent as rod from our North America operations. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. 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 provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of ~~final pricing.~~settlement. 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

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rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

Following are the (unfavorable) favorable impacts of net adjustments to the prior years' provisionally priced copper sales for the first quarters of2013 and 2012 (in millions, except per share amounts):



	Three Months Ended
	March 31,
	2013			2012
Revenues	$	(11	)	$	109
Net income attributable to FCX common stockholders	$	(5	)	$	47
Net income per share attributable to FCX common stockholders	$	(0.01	)	$	0.05

At ~~June 30, 2012~~March 31, 2013, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling ~~329~~340 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $~~3.49~~ ~~per pound. Higher prices during~~ ~~third-quarter2012~~ ~~resulted in adjustments to these provisionally priced copper sales that favorably impacted consolidated revenues by~~ ~~$24 million~~ (~~$12 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.01~~ ~~per share) in~~ ~~third-quarter2012, compared with adjustments to the~~ ~~June 30, 2011, provisionally priced copper sales that unfavorably impacted~~ ~~third-quarter2011~~ ~~revenues by~~ ~~$213 million~~ (~~$100 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.11~~ ~~per share). Adjustments to the~~ ~~December 31, 2011, provisionally priced copper sales favorably impacted consolidated revenues by~~ ~~$101 million~~ (~~$43 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.05~~ ~~per share) for the~~ ~~first nine months of2012, compared with adjustments to the~~ ~~December 31, 2010, provisionally priced copper sales that unfavorably impacted consolidated revenues by~~ ~~$12 million~~ (~~$5 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.01~~ ~~per share) for the~~ ~~first nine months of2011~~.

At ~~September 30, 2012, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling~~ ~~325 million~~ ~~pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of~~ ~~$3.72~~3.41 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the ~~September 30, 2012~~March 31, 2013, provisional price recorded would have a net impact on our ~~2012~~2013 consolidated revenues of approximately $23 million ($1112 million to net income attributable to common stockholders). The LME spot copper price closed at $~~3.55~~3.21 per pound on ~~October 31, 2012~~April 30, 2013.

~~Purchased Copper~~

~~From time to time, we purchase copper cathode to be processed by our Rod & Refining operations when production from our North America copper mines does not meet customer demand.~~

~~Atlantic Copper Revenues~~

~~The decrease in Atlantic Copper's revenues in the 2012 periods, compared with the~~ ~~2011~~ ~~periods, primarily reflected lower production in~~ ~~third-quarter2012~~ ~~and lower copper realizations for the~~ ~~first nine months of2012. Refer to "Operations - Atlantic Copper Smelting & Refining" for further discussion.~~

Production and Delivery Costs

Consolidated production and delivery costs ~~totaled~~increased to $~~2.6~~2.7 billion in ~~both the~~ ~~third quarter~~first-quarter~~s of~~ ~~2012~~ ~~and~~ ~~2011~~2013, compared with $~~7.6~~2.4 billion ~~for the~~in ~~first nine months of~~first-quarter 2012, primarily reflecting higher production in Indonesia and ~~$7.5 billion~~ ~~for the~~ ~~first nine months of2011~~.Africa and higher costs in North and South America.

Consolidated unit site production and delivery costs ~~before~~(before net noncash and other ~~costs,~~costs) for our copper mining operations averaged $~~2.03~~1.94 per pound of copper in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~$2.00~~ ~~per pound of copper for the~~ ~~first nine months of2012~~2013, compared with $~~1.71~~1.96 per pound of copper in ~~third-quarter~~first-quarter ~~2011~~2012 ~~and~~ ~~$1.65~~ ~~per pound of copper for the~~ ~~first nine months of2011. Higher unit site production and delivery costs in the 2012 periods~~, primarily ~~reflected lower~~reflecting higher copper sales volumes in Indonesia and Africa, partly offset by higher ~~mining costs.~~costs in North and South America. Assuming ~~average prices of~~ ~~$1,700~~ ~~per ounce of gold and~~ ~~$11~~ ~~per pound of molybdenum for~~ ~~fourth-quarter2012, and~~ achievement of current ~~2012~~volume and cost estimates, consolidated unit site production and delivery costs are expected to average ~~$2.03~~$1.89 per pound of copper for the year ~~2012~~2013 ~~($2.11 for fourth-quarter 2012)~~. ~~Consolidated unit net cash costs for 2013 are expected to be lower than 2012 because of projected increased copper and gold volumes at Grasberg.~~ Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

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Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas. ~~For the year~~ ~~2012, energy~~Energy costs ~~are expected to approximate~~approximated 21 percent of our consolidated copper production costs ~~which reflects projected~~in 2012 and are expected to approximate 21 percent for the year 2013, including purchases of approximately ~~255~~270 million gallons of diesel fuel; ~~6,900~~7,500 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); ~~700~~760 thousand metric tons of coal for our coal power plant in Indonesia; and 1 million MMBTU (million ~~british~~British thermal units) of natural gas at certain of our North America mines. ~~Energy costs for 2011 approximated 21 percent of our consolidated copper production costs.~~

Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization expense totaled $~~298~~329 million in ~~third-quarter~~first-quarter ~~2012~~2013, and $~~856 million~~ ~~for the~~ ~~first nine months of2012~~, ~~$257~~267 million in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$756 million~~ ~~for the~~ ~~first nine months of2011~~2012. Depreciation will vary under the unit of production (UOP) method as a result of ~~increases and decreases~~changes in sales volumes and the related UOP rates at our ~~mining operations. Higher depreciation, depletion and amortization expense for the~~ ~~2012~~ ~~periods, compared with the~~ ~~2011~~ ~~periods, primarily reflected higher production and~~individual mines, which have increased because of asset ~~additions in North America, partly offset by lower production in Indonesia.~~additions.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses ~~totaled~~increased to $~~110~~113 million in ~~third-quarter~~first-quarter2013, compared with $104 million in first-quarter 2012, ~~$102 million~~primarily reflecting costs recorded in ~~third-quarter~~first-quarter ~~2011~~2013, associated with the pending acquisitions of PXP and MMR and for the March 2013 acquisition of the cobalt chemical refinery business. Refer to Note ~~$311 million~~2 for ~~the~~ ~~first nine months~~further discussion of~~2012~~ ~~and~~ ~~$323 million~~ ~~for the~~ ~~first nine months of2011~~. these acquisitions.

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Exploration and Research Expenses

Consolidated exploration and research expenses totaled $7952 million in ~~third-quarter~~first-quarter ~~2012~~2013 and $~~214 million~~ ~~for the~~ ~~first nine months of2012, compared with~~ ~~$78~~62 million in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$194 million~~ ~~for the~~ ~~first nine months of2011~~2012. We are actively 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. ~~Exploration~~Favorable exploration results indicate opportunities for what we believe could be significant future potential reserve additions in North and South America and in the Tenke minerals district. The drilling data in North America continues to indicate the potential for expanded sulfide production.

For the year ~~2012~~2013, exploration and research expenditures are expected to ~~total approximately~~approximate $~~290~~280 million, including ~~approximately~~ $~~255~~235 million for exploration. Exploration activities will continue to focus primarily on the potential for future reserve additions in our existing mineral districts. Approximately one-third of the 2013 budget is associated with global greenfield exploration projects.

Environmental Obligations and Shutdown Costs

Environmental obligation costs ~~(credits)~~ reflect net revisions to our long-term environmental obligations, which will vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates. Shutdown costs include care and maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations.

~~Environmental~~Net charges for environmental obligations and shutdown costs totaled ~~a net credit of~~ $7315 million in ~~third-quarter~~first-quarter ~~2012~~2013, ~~and net charges of~~compared with $~~18 million~~ ~~for the~~ ~~first nine months of2012~~, ~~$38~~10 million in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$98 million~~ ~~for the~~ ~~first nine months of2011~~2012. Refer to Note 89 and "Contingencies" for further discussion of environmental obligations and litigation matters associated with closed facilities or operations.

Interest Expense, Net

Consolidated interest expense (excluding capitalized interest) ~~totaled~~decreased to $5675 million in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~$210 million~~ ~~for the~~ ~~first nine months of2012~~2013, compared with $~~105~~99 million in ~~third-quarter~~first-quarter ~~2011~~2012, primarily reflecting lower interest related to the February 2012 refinancing transaction, partly offset by $17 million of additional interest expense related to the March 2013 sale of $6.5 billion ~~and~~of senior notes. Refer to Note ~~$325 million~~6 for ~~the~~ ~~first nine months of2011. Lower interest expense for the 2012 periods primarily reflected the impact of the first-quarter 2012 refinancing transaction.~~further discussion.

Capitalized interest is primarily related to the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $1418 million in ~~third-quarter~~first-quarter ~~2012~~2013 and $~~62 million~~ ~~for the~~ ~~first nine months of2012, compared with~~ ~~$27~~36 million in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$75 million~~ ~~for the~~ ~~first nine months of2011~~2012. Refer to “Operations” for further discussion of current development projects.

Losses on Early Extinguishment of Debt

~~We recorded losses~~Losses on early extinguishment of debt ~~totaling~~were $45 million in first-quarter2013 related to the termination of the bridge loan facilities for the pending PXP and MMR acquisitions, and $168 million ~~for the~~in ~~first nine months of~~first-quarter 2012 ~~associated with~~related to the redemption of our remaining outstanding 8.375% ~~Senior Notes.~~ senior notes. Refer to Note 6 for further discussion.

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~~We recorded losses on early extinguishment of debt totaling~~ ~~$68 million~~ ~~for the~~ ~~first nine months of2011~~ associated with the redemption of our 8.25% Senior Notes, the revolving credit facilities that were replaced in March 2011 by a new senior unsecured revolving credit facility and open-market purchases of our 9.5% Senior Notes.

~~Refer to Note~~ 5 ~~for further discussion of these transactions.~~

Provision for Income Taxes

Following is a summary of the approximate amounts in the calculation of our consolidated provision for income taxes for the ~~2012~~first quarters of2013 and ~~2011~~2012 ~~periods~~ (in millions, except percentages):


	Nine Months Ended								Nine Months Ended							Three Months Ended							Three Months Ended
	September 30, 2012								September 30, 2011							March 31, 2013							March 31, 2012
	Income^a		Effective Tax Rate		Income Tax (Provision) Benefit				Income^a		Effective Tax Rate	Income Tax (Provision) Benefit				Income^a		Effective Tax Rate		Income Tax Provision			Income^a		Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	1,231	24%		$	(291	)		$	1,772	24%	$	(421	)		$	325	22%		$	(71	)	$	339	24%	$	(83	)
South America	1,675		36%		(609		)	^b	2,326		36%	(829		)	^c	443		34%		(151		)	691		35%	(240		)
Indonesia	940		41%		(387		)		2,870		43%	(1,234		)		279		43%		(120		)	351		43%	(150		)
Africa	263		30%		(79		)		293		34%	(100		)		143		31%		(44		)	89		33%	(29		)
Eliminations and other	54		N/A		10				304		N/A	(127		)		60		N/A		(10		)	20		N/A	9
Annualized rate adjustment^d	N/A		N/A		(6		)		N/A		N/A	13
	4,163		33%	^f	(1,362		)		7,565		36%	(2,698		)
Deferred tax liability adjustment^e	—		N/A		234				—		N/A	—
Annualized rate adjustment^b																—		N/A		(32		)	—		N/A	2
Consolidated FCX	$	4,163	27%		$	(1,128	)		$	7,565	36%	$	(2,698	)		$	1,250	34%	^c	$	(428	)	$	1,490	33%	$	(491	)


a.	Represents income by geographic location before income taxes and equity in affiliated companies’ net earnings.

In July 2012, Sociedad Minera Cerro Verde S.A.A. (Cerro Verde) signed a new 15-year mining stability agreement with the Peruvian government, which is expected to become effective after the current mining stability agreement expires on December 31, 2013. In connection with the new mining stability agreement, Cerro Verde's income tax rate will increase from 30 percent to 32 percent. As a result of the change in the income tax rate, we recognized additional deferred tax expense of ~~$26 million~~ (~~$23 million~~ ~~net of noncontrolling interest) in third-quarter 2012, which relates primarily to the assets recorded in connection with the 2007 acquisition of Freeport-McMoRan Corporation (FMC).~~

In September 2011, Peru enacted a new mining tax and royalty regime and also created a special mining burden that companies with stability agreements could elect to pay. Cerro Verde elected to pay this special mining burden during the remaining term of its stability agreement. As a result, Cerro Verde recognized additional current and deferred tax expense of ~~$57 million~~ (~~$50 million~~ ~~net of noncontrolling interest) in third-quarter 2011. The deferred portion of this accrual relates primarily to the assets recorded in connection with the 2007 acquisition of FMC.~~


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

With the exception of Tenke Fungurume S.A.R.L. (TFM), we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. Cerro Verde previously recorded deferred Peruvian income tax liabilities for income taxes that would become payable if the reinvested profits used to fund the initial Cerro Verde sulfide expansion are distributed prior to the expiration of Cerro Verde's current stability agreement on December 31, 2013. Reinvested profits are not expected to be distributed prior to December 31, 2013. Accordingly, a net deferred tax liability totaling ~~$234 million~~ (~~$123~~ ~~net of noncontrolling interest) was reversed and recognized as an income tax benefit in third-quarter 2012.~~

f.c.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. Accordingly, variations in the relative proportions of jurisdictional income can result in fluctuations to our consolidated effective income tax rate. Assuming average prices of $~~3.70~~3.25 per pound for copper, $~~1,700~~1,400 per ounce for gold and $11 per pound for molybdenum for ~~for fourth-quarter~~the remainder of ~~2012~~2013 and achievement of current sales volume and cost estimates, we estimate our consolidated effective tax rate ~~excluding~~for the ~~impact~~year 2013 (excluding impacts from the pending acquisitions of ~~the deferred tax liability adjustment in note e,~~PXP and MMR) will approximate 3334 percent ~~for the fourth quarter and the year 2012.~~to 35 percent.

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OPERATIONS

North America Copper Mines

We ~~currently~~ operate seven copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and ~~Tyrone~~Chino and ~~Chino~~Tyrone in New Mexico. All of these mining operations are wholly owned, except for Morenci, an unincorporated joint venture in which we own an 85 percent undivided interest.

The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. ~~Molybdenum concentrate is also produced by certain of our North America copper mines (Sierrita, Bagdad, Morenci and Chino)~~. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining ~~operations.~~segment. The remainder of our North America copper sales is in the form of copper cathode or copper ~~concentrate.~~concentrate, a portion of which is shipped to Atlantic Copper. Molybdenum concentrate is also produced by certain of our North America copper mines (Sierrita, Bagdad, Morenci and Chino), which is sold to our molybdenum sales company at market-based pricing.

Operating and Development Activities. We have ~~completed projects to increase~~increased production atfrom our North America copper mines ~~including restarting certain mining~~in recent years and milling operations and increasing mining rates at Morenci and Chino. Ramp up activities at Chino are continuing, with annual production of approximately 250 million pounds of copper targeted in 2014. We continue to evaluate ~~a number of~~ opportunities to invest in additional production capacity at ~~several of~~ our North America copper ~~mines. Exploration~~mines in response to positive exploration results in recent ~~years indicate the potential for significant additional sulfide development in North America.~~years.

Morenci Mill Expansion. We are ~~engaged in a project to expand~~expanding mining and milling capacity at Morenci to process additional sulfide ores identified through exploratory drilling. The approximate $1.4 billion project is targeting incremental annual production of approximately 225 million pounds of copper in 2014 (an approximate 40 percent increase from 2012) through an increase in milling rates from ~~the current level of~~ 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day, and mining rates from ~~the current level of~~ 700,000 short tons per day to 900,000 short tons per day. ~~We have received material permits~~The targeted increase in mining rates has been achieved, engineering activities are nearing completion and ~~have commenced engineering~~construction activities for the new mill and ~~initial construction, and procurement activities~~related facilities are in progress. ~~Project~~We have incurred project costs of ~~$211~~$441 million ~~have been incurred~~ as of ~~September 30, 2012~~March 31, 2013 ~~($184~~($147 million during ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013). ~~Considering the large size of this project, actual costs could differ materially from these estimates.~~

~~Other Matters.~~ ~~As described further in “Critical Accounting Estimates” contained in Part II, Items 7. and 7A of our annual report on Form 10-K for the year ended~~ ~~December 31, 2011~~, we record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing techniques. Processes and recovery rates are monitored regularly, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes. During ~~third-quarter2012~~, we completed an assessment of recovery rates at our Chino leaching operations resulting in a downward revision of those rates and a corresponding reduction of 594 million pounds of estimated recoverable copper in leach stockpiles at Chino.

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Operating Data. Following is summary operating data for the North America copper mines for the ~~third~~first quarters ~~and first~~ of~~nine~~ ~~months of~~ ~~2012~~2013 and ~~2011~~2012:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2012		2011		2012		2011		2013		2012
Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production	337		322		1,005		917		343		337
Sales, excluding purchases	331		307		1,030		914		353		338
Average realized price per pound	$	3.58	$	4.05	$	3.66	$	4.19	$	3.60	$	3.82

Molybdenum (millions of recoverable pounds)
Production^a	8		10		27		27		8		10

100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	922,100		872,200		967,700		841,700		1,000,100		1,032,900
Average copper ore grade (percent)	0.22		0.25		0.22		0.25		0.22		0.23
Copper production (millions of recoverable pounds)	211		199		639		582		209		218

Mill operations
Ore milled (metric tons per day)	242,700		225,800		235,700		220,100		250,600		236,000
Average ore grade (percent):
Copper	0.37		0.38		0.37		0.37		0.39		0.37
Molybdenum	0.03		0.03		0.03		0.03		0.03		0.03
Copper recovery rate (percent)	85.4		84.5		83.5		83.5		84.3		80.0
Copper production (millions of recoverable pounds)	150		146		436		404		158		142


a.	~~Reflects~~Refer to "Consolidated Results" for our consolidated molybdenum ~~production from certain~~sales volumes, which includes sales of molybdenum produced at the North America copper mines. ~~Sales of molybdenum are reflected in the Molybdenum division.~~

Copper sales volumes from our North America copper mines ~~increased to~~of ~~331~~353 million pounds in ~~third-quarter~~first-quarter2013 were higher than first-quarter 2012 ~~and~~sales of ~~1.0 billion~~ ~~pounds for the~~ ~~first nine months of2012, compared with~~ ~~307~~338 million pounds in ~~third-quarter2011~~ ~~and~~ ~~914 million~~ ~~pounds for the~~ ~~first nine months of2011~~, primarily reflecting increased production at the Chino mine. ~~The~~ ~~first nine months of2012~~ ~~also reflect increases in production at the Safford and Miami mines and timing of shipments at Morenci.~~

For the year ~~2012~~2013, copper sales volumes from our North America copper mines are expected to approximate ~~1.3~~1.45 billion pounds, compared with ~~1.2~~1.35 billion pounds in ~~2011. Molybdenum production from our North America copper mines is expected to approximate~~ ~~35 million~~ ~~pounds for the year~~ 2012, ~~compared with~~ ~~35 million~~ ~~pounds in~~ ~~2011~~.primarily reflecting higher production at Morenci and Chino. Refer to "Outlook" for projected molybdenum sales volumes.

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 generally accepted accounting principles ~~(GAAP)~~ in the U.S. (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 metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

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Gross Profit per Pound of Copper and Molybdenum

The following tables summarize unit net cash costs and gross profit per pound at our North America copper mines for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012. 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.


	Three Months Ended							Three Months Ended											Three Months Ended											Three Months Ended
	September 30, 2012							September 30, 2011											March 31, 2013											March 31, 2012
	By- Product Method			Co-Product Method				By- Product Method				Co-Product Method							By- Product Method				Co-Product Method							By- Product Method				Co-Product Method
				Copper		Molyb- denum^a					Copper				Molyb- denum^a							Copper				Molyb- denum							Copper				Molyb- denum
Revenues, excluding adjustments	$	3.58		$	3.58	$	12.58		$	4.05			$	4.05			$	15.22		$	3.60			$	3.60			$	11.75		$	3.82			$	3.82			$	14.16

Site production and delivery, before net noncash and other costs shown below	1.97			1.77		8.60		1.86				1.65				6.68			1.99				1.94				3.27			1.80				1.74				3.04
By-product credits^a	(0.32		)	—		—		(0.55		)		—				—
By-product credits																			(0.26		)		—				—			(0.41		)		—				—
Treatment charges	0.12			0.12		—		0.11				0.11				—			0.13				0.13				—			0.12				0.11				—
Unit net cash costs	1.77			1.89		8.60		1.42				1.76				6.68			1.86				2.07				3.27			1.51				1.85				3.04
Depreciation, depletion and amortization	0.25			0.23		0.63		0.21				0.19				0.34			0.28				0.27				0.20			0.27				0.26				0.18
Noncash and other costs, net	0.12			0.11		0.15		0.10				0.10				0.06			0.09				0.09				0.03			0.06				0.06				0.01
Total unit costs	2.14			2.23		9.38		1.73				2.05				7.08			2.23				2.43				3.50			1.84				2.17				3.23
Revenue adjustments, primarily for pricing on prior period open sales	0.01			0.01		—		(0.04		)		(0.04		)		—			—				—				—			0.03				0.03				—
Gross profit per pound	$	1.45		$	1.36	$	3.20	$	2.28			$	1.96			$	8.14		$	1.37			$	1.17			$	8.25		$	2.01			$	1.68			$	10.93

Copper sales (millions of recoverable pounds)	330			330				307				307							352				352							337				337
Molybdenum sales (millions of recoverable pounds)^b						8										10
Molybdenum sales (millions of recoverable pounds)^a																											8											10

Nine Months Ended Nine Months Ended
September 30, 2012 September 30, 2011
By- Product Method Co-Product Method By- Product Method Co-Product Method
Copper
Molyb-
denum^a
Copper
Molyb-
denum^a
Revenues, excluding adjustments $ 3.66
$ 3.66
$ 13.58
$ 4.19
$ 4.19
$ 16.30

Site production and delivery, before net noncash and other costs shown below 1.88
1.74
6.18
1.80
1.61
6.77
By-product credits^a
(0.37 ) —
—
(0.52 ) —
—
Treatment charges 0.12
0.11
—
0.10
0.10
—
Unit net cash costs 1.63
1.85
6.18
1.38
1.71
6.77
Depreciation, depletion and amortization 0.26
0.24
0.45
0.20
0.19
0.38
Noncash and other costs, net 0.10
0.09
0.07
0.13
0.12
0.07
Total unit costs 1.99
2.18
6.70
1.71
2.02
7.22
Revenue adjustments, primarily for pricing on prior period open sales 0.01
—
—
—
—
—
Gross profit per pound $ 1.68
$ 1.48
$ 6.88
$ 2.48
$ 2.17
$ 9.08

Copper sales (millions of recoverable pounds) 1,027
1,027
912
912

Molybdenum sales (millions of recoverable pounds)^b
27 27


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


b.	Reflects sales of molybdenum produced by certain of ~~our~~the North America copper ~~mines.~~mines to our molybdenum sales company at market-based pricing.

Our ~~operating~~ North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, ~~by-products~~by-product credits and other factors. ~~Unit~~Higher average unit net cash costs (net of by-product credits) ~~for our North America copper mines averaged~~of $~~1.77~~1.86 per pound of copper in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~$1.63~~ ~~per pound of copper for the~~ ~~first nine months of2012~~2013, compared with $~~1.42~~1.51 per pound ~~of copper~~ in ~~the~~ ~~third quarter~~ ~~and~~ ~~$1.38~~ ~~in the~~ ~~first nine months of~~first-quarter ~~2011~~2012~~. Higher average unit net cash costs in the 2012 periods~~, primarily reflected higher mining rates and lower molybdenum ~~credits and increased mining rates, partly offset by higher copper sales volumes.~~credits.

~~Table of Contents~~

Because certain assets are depreciated on a straight-line basis, North America's average unit depreciation rate ~~varies~~may vary with asset additions and the level of copper production and sales.

Assuming achievement of current sales volume and cost estimates and an average price of $11 per pound of molybdenum for ~~for fourth-quarter~~the remainder of ~~2012~~2013, we estimate that ~~average unit site production and delivery costs for our North America copper mines would approximate $1.90 per pound of copper and~~ average unit net cash costs (net of by-product credits) for our North America copper mines would approximate $~~1.67~~1.89 per pound of copper for the year ~~2012~~2013, compared with $~~1.41~~1.67 per pound ~~of copper~~ in ~~2011~~2012 (fourth-quarter 2012 site production and delivery costs are expected to average $1.96 per pound of copper and unit net cash costs (net of by-product credits) are expected to average $1.77 per pound of copper). North America's projected average unit net cash costs ~~for~~ ~~2012~~would change by approximately $~~0.01~~0.025 per pound for each $2 per pound change in the average price of molybdenum during ~~fourth-quarter~~the remainder of ~~2012~~2013.

South America Mining

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

South America mining includes open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or copper cathode under long-term contracts. Our South America mines ship a portion of their copper concentrate ~~and cathode~~ inventories to Atlantic Copper ~~an affiliated smelter.~~(our wholly owned copper smelter). In addition to copper, ~~the Cerro Verde mine produces molybdenum concentrates, and~~ the Candelaria and Ojos del Salado mines produce gold and ~~silver.~~silver, and the Cerro Verde mine produces molybdenum concentrates that are sold to our molybdenum sales company at market-based pricing.

Table of Contents

Operating and Development Activities. ~~Considering the long-term nature and large size of our South America development projects, actual costs could differ materially from the below estimates.~~

Cerro Verde Expansion. ~~At Cerro Verde, we are engaged in~~We have commenced initial construction activities associated with a large-scale ~~concentrator expansion.~~expansion at Cerro Verde. The ~~approximate~~project, with an estimated cost of $4.4 billion, ~~project would~~will expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. ~~An environmental impact assessment was filed in fourth-quarter 2011. Permitting is in an advanced stage~~Considering the long-term nature and ~~engineering and procurement~~large size of ~~long-lead items is in progress. We expect to commence construction in 2013.~~the project, actual costs could vary from these estimates. Project costs of $641 million have been incurred as of March 31, 2013 ($149 million during first-quarter2013).

An agreement has been reached with the Regional Government of Arequipa, the National Government, Servicio de Agua Potable y Alcantarillado de Arequipa S.A. (SEDAPAR) and other local institutions to allow Cerro Verde to finance the engineering and construction of a wastewater treatment plant for ~~Arequipa, should Cerro Verde proceed with the expansion.~~Arequipa. Once Cerro Verde obtains a license for the treated water it would be used to supplement ~~its~~ existing water supplies to support the concentrator expansion.

El Abra Sulfide. ~~During 2011, we commenced production from El Abra’s sulfide ores. Production from the sulfide ore is expected~~We continue to ~~approximate 300 million pounds of copper per year, replacing the currently depleting oxide copper production. The aggregate capital investment for this project is expected~~engage in studies to ~~approximate $800 million through 2015, which included approximately $580 million for the initial phase of the project.~~

~~We are also engaged in pre-feasibility studies for~~evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results at El Abra ~~indicate the potential for~~have identified a significant sulfide resource.

~~Candelaria Water.~~ As part of our overall strategy to supply water to the Candelaria mine, we completed construction of a pipeline to bring water from a nearby water treatment facility. In addition, we are constructing a desalination plant and pipeline that will supply Candelaria’s longer term water needs. The plant is expected to be completed in early 2013 at a cost of approximately $310 million. Project costs of $278 million have been incurred as of ~~September 30, 2012~~ ~~($152 million during the~~ ~~first nine months of2012~~).

~~Other Matters.~~ In July 2012, Cerro Verde signed a new 15-year mining stability agreement with the Peruvian government, which is expected to become effective after the current mining stability agreement expires on December 31, 2013. See Note 10 ~~and "Consolidated Results - Provision for Income Taxes" for further discussion.~~

~~Table of Contents~~

Operating Data. Following is summary operating data for our South America mining operations for the ~~third~~first quarters ~~and first~~ of~~nine~~ ~~months of~~ ~~2012~~2013 and ~~2011~~2012:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2012		2011		2012		2011		2013		2012
Copper (millions of recoverable pounds)
Production	311		325		908		969		298		293
Sales	308		322		895		965		285		286
Average realized price per pound	$	3.68	$	3.45	$	3.63	$	3.82	$	3.48	$	3.83

Gold (thousands of recoverable ounces)
Production	20		25		57		73		21		19
Sales	21		23		56		72		21		19
Average realized price per ounce	$	1,736	$	1,664	$	1,678	$	1,556	$	1,617	$	1,680

Molybdenum (millions of recoverable pounds)
Production^a	2		2		6		8		2		2

SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	248,100		244,100		229,100		249,500		262,800		196,300
Average copper ore grade (percent)	0.55		0.54		0.55		0.48		0.50		0.55
Copper production (millions of recoverable pounds)	115		111		346		314		109		118

Mill operations
Ore milled (metric tons per day)	191,400		185,700		190,000		192,300		188,600		186,000
Average ore grade:
Copper (percent)	0.59		0.66		0.58		0.66		0.58		0.55
Gold (grams per metric ton)	0.09		0.12		0.09		0.12		0.11		0.09
Molybdenum (percent)	0.02		0.02		0.02		0.02		0.02		0.02
Copper recovery rate (percent)	90.7		89.1		89.5		90.0		90.8		89.2
Copper production (millions of recoverable pounds)	196		214		562		655		189		175


a.	~~Reflects~~Refer to "Consolidated Results" for our consolidated molybdenum ~~production from Cerro Verde. Sales~~sales volumes, which includes sales of molybdenum ~~are reflected in the Molybdenum division.~~produced at Cerro Verde.

~~Copper~~Consolidated copper sales volumes from ~~our~~ South America ~~mining operations declined to~~of ~~308~~285 million pounds in ~~third-quarter~~first-quarter2013 approximated first-quarter 2012~~, compared with~~ sales of ~~322~~286 million pounds in ~~third-quarter2011, primarily reflecting lower~~as higher grade ore ~~grades~~ at Candelaria ~~and timing of shipments. Lower copper sales volumes of~~ ~~895 million~~ ~~pounds for the~~ ~~first nine months of2012, compared with~~ ~~965 million~~ ~~pounds for the~~ ~~first nine months of2011, primarily reflected~~offset lower grade ore ~~grades~~ at ~~Candelaria and~~ Cerro ~~Verde, partly offset by increased production at El Abra.~~Verde.

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For the year ~~2012~~2013, consolidated sales volumes from ~~our~~ South America ~~mining operations~~mines are expected to approximate ~~1.2~~1.34 billion pounds of copper ~~and~~ ~~95 thousand~~ ~~ounces of gold,~~ compared with~~2011~~ sales of ~~1.3~~1.25 billion pounds of copper ~~and~~ ~~101 thousand~~ ~~ounces of gold. Molybdenum production from Cerro Verde is expected to approximate~~ ~~8 million~~ ~~pounds for the year~~in 2012, ~~compared with~~ ~~10 million~~ ~~pounds in~~ ~~2011~~.primarily reflect the mining of higher grade ore at Candelaria. Refer to "Outlook" for projected gold and molybdenum sales volumes.

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 metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

~~Table of Contents~~

Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound at the South America mining operations for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had small amounts of molybdenum, gold and silver sales. 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.


	Three Months Ended					Three Months Ended						Three Months Ended						Three Months Ended
	September 30, 2012					September 30, 2011						March 31, 2013						March 31, 2012
	By-Product Method			Co-Product Method		By-Product Method			Co-Product Method			By-Product Method			Co-Product Method			By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	3.68		$	3.68	$	3.45		$	3.45		$	3.48		$	3.48		$	3.83		$	3.83

Site production and delivery, before net noncash and other costs shown below	1.63			1.51		1.38			1.25			1.62			1.49			1.53			1.42
By-product credits	(0.25		)	—		(0.36		)	—			(0.29		)	—			(0.29		)	—
Treatment charges	0.17			0.17		0.13			0.13			0.18			0.18			0.16			0.16
Unit net cash costs	1.55			1.68		1.15			1.38			1.51			1.67			1.40			1.58
Depreciation, depletion and amortization	0.24			0.23		0.20			0.19			0.25			0.23			0.22			0.21
Noncash and other costs, net	0.07			0.04		0.09			0.07			0.05			0.03			0.07			0.04
Total unit costs	1.86			1.95		1.44			1.64			1.81			1.93			1.69			1.83
Revenue adjustments, primarily for pricing on prior period open sales	0.07			0.07		(0.45		)	(0.45		)	(0.05		)	(0.05		)	0.38			0.38
Gross profit per pound	$	1.89		$	1.80	$	1.56		$	1.36		$	1.62		$	1.50		$	2.52		$	2.38

Copper sales (millions of recoverable pounds)	308			308		322			322			285			285			286			286

Nine Months Ended Nine Months Ended
September 30, 2012 September 30, 2011

By-Product
Method

Co-Product
Method

By-Product
Method

Co-Product
Method
Revenues, excluding adjustments $ 3.63
$ 3.63
$ 3.82
$ 3.82

Site production and delivery, before net noncash and other costs shown below 1.58
1.46
1.31
1.20
By-product credits (0.26 ) —
(0.36 ) —
Treatment charges 0.16
0.16
0.17
0.17
Unit net cash costs 1.48
1.62
1.12
1.37
Depreciation, depletion and amortization 0.24
0.22
0.19
0.18
Noncash and other costs, net 0.07
0.05
0.07
0.06
Total unit costs 1.79
1.89
1.38
1.61
Revenue adjustments, primarily for pricing on prior period open sales 0.12
0.12
0.01
(0.01 )
Gross profit per pound $ 1.96
$ 1.86
$ 2.45
$ 2.20

Copper sales (millions of recoverable pounds) 895
895
965
965

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, ~~by-products~~by-product credits and other factors. ~~Unit~~Higher average unit net cash costs (net of by-product credits) ~~for our South America mining operations averaged~~of $~~1.55~~1.51 per pound of copper in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~$1.48~~ ~~per pound for the~~ ~~first nine months of2012~~2013, compared with $~~1.15~~1.40 per pound in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$1.12~~ ~~per pound for the~~ ~~first nine months of2011. Higher average unit net cash costs in the~~ 2012 ~~periods~~, primarily reflected higher ~~mining~~costs for maintenance and ~~input costs, including energy, and lower by-product credits. Unit net cash cost were also impacted by the timing of profit sharing in~~ ~~third-quarter2012~~ ~~and lower sales volumes for the~~ ~~first nine months of2012~~.repairs.

Because certain assets are depreciated on a straight-line basis, South America's unit depreciation rate ~~varies~~may vary with asset additions and the level of copper production and sales.

~~Table of Contents~~

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. ~~To the extent 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.~~ Refer to “Consolidated Results - Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Assuming achievement of current sales volume and cost estimates and average prices of $~~1,700~~1,400 per ounce of gold and $11 per pound of molybdenum for ~~fourth-quarter~~the remainder of ~~2012~~2013, we estimate that ~~average unit site production and delivery costs for our South America mining operations would approximate $1.61 per pound of copper and~~ average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $~~1.50~~1.44 per pound of copper for the year ~~2012~~2013, compared with $~~1.20~~1.50 per pound in ~~2011~~2012 (fourth-quarter 2012 site production and delivery costs are expected to average $1.70 per pound of copper and unit net cash costs (net of by-product credits) are expected to average $1.53 per pound of copper).

Table of Contents

Indonesia Mining

Indonesia mining includes PT Freeport Indonesia’s Grasberg minerals district. We own 90.64 percent of PT Freeport Indonesia, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama. As previously reported ~~because of the potential benefits of having additional Indonesian ownership~~ in ~~PT Freeport Indonesia's operations, we have agreed to consider a potential sale of a 9.36 percent interest in PT Freeport Indonesia at fair market value (refer to~~ Note 14 inof our annual report on Form 10-K for the year ended December 31, ~~2011~~2012, ~~for further discussion). We are also considering~~we have agreed to consider a potential ~~offering~~sale of our interest in PT Freeport Indocopper Investama at fair market value. PT Freeport Indonesia ~~shares on~~is currently engaged in discussions with the ~~Indonesia stock exchange.~~Indonesian government related to its Contract of Work (COW) and intends to conclude that process before proceeding with any further discussions about the potential sale of an interest in PT Indocopper Investama.

PT Freeport Indonesia produces copper concentrates, which contain significant quantities of gold and silver. Substantially all of PT Freeport Indonesia’s copper concentrates are sold under long-term contracts, of which approximately one-half is ~~generally~~ sold to ~~affiliated smelters,~~ Atlantic Copper (our wholly owned copper smelter) and PT Smelting (PT Freeport Indonesia’s 25-percent owned copper smelter and refinery in Indonesia) and the remainder to other third-party customers.

We have established certain unincorporated joint ventures with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and future production exceeding specified annual amounts of copper, gold and silver. Refer to Note 2 in our annual report on Form 10-K for the year ended December 31, ~~2011~~2012, for discussion of our joint ventures with Rio Tinto.

For additional discussion of risks associated with our operations in Indonesia, including labor matters, refer to “Risk Factors” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2012.

Operating and Development Activities. We have several projects in progress in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore ~~bodies located beneath and nearby the Grasberg open pit.~~bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to produce approximately 240,000 metric tons of ore per day following the currently anticipated transition from the Grasberg open pit in ~~2016.~~2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average ~~$700~~$735 million per year ($~~550~~585 million per year net to PT Freeport Indonesia). Considering the long-term nature and large size of these projects, actual costs could ~~differ materially~~vary from these estimates.

The following provides additional information on ~~these projects, including~~ the continued development of the Common Infrastructure project, the Grasberg Block Cave ~~and Big Gossan~~ underground ~~mines,~~mine and development of the Deep Mill Level Zone (DMLZ) ore body that lies below the Deep Ore Zone (DOZ) underground mine.

Common Infrastructure and Grasberg Block Cave. In 2004, PT Freeport Indonesia commenced its Common Infrastructure project to provide access to its large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT Freeport Indonesia to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in fourth-quarter 2010. Development of ~~both~~ the DMLZ and Grasberg Block Cave mines is ~~advancing, and access to these underground ore bodies is complete.~~advancing.

The Grasberg Block Cave underground mine accounts for ~~over one-third~~more than 40 percent of our recoverable proven and probable reserves in Indonesia. Production at the Grasberg Block Cave mine is currently scheduled to commence in 2017, at the end of mining the Grasberg open pit ~~which is currently~~(currently expected to ~~continue until 2016. The timing~~occur at the end of ~~the transition to the underground Grasberg Block Cave mine will continue to be assessed.~~2016). Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 160,000 metric tons of ore per day.

~~Table of Contents~~

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate ~~$4.2~~$4.4 billion (incurred between 2008 and 2021), with PT Freeport Indonesia’s share totaling approximately ~~$3.8~~$4.1 billion. Aggregate project costs totaling ~~$788~~$941 million have been incurred through ~~September 30, 2012~~March 31, 2013 ~~($219~~($81 million during ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013).

~~Big Gossan.~~ ~~The Big Gossan underground mine is a high-grade deposit located near PT Freeport Indonesia’s existing milling complex. Production, which began in fourth-quarter 2010, averaged~~ ~~1,900~~ ~~metric tons of ore per day in~~ ~~third-quarter2012. Full rates of 7,000 metric tons of ore per day are expected in 2014 (equal to average annual aggregate incremental production of 125 million pounds of copper and 65,000 ounces of gold)~~.

DMLZ. The DMLZ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. We plan to mine the ore body using a block-cave method with production beginning in ~~2015, near completion~~2015. Targeted production rates once the DMLZ mining operation reaches full capacity are expected to approximate 80,000 metric tons of ~~mining at the DOZ mine.~~ ore per day.

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Drilling efforts continue to determine the extent of this ore body. Aggregate mine development capital costs for the DMLZ mine are expected to approximate ~~$2.2~~$2.3 billion (incurred ~~from~~between 2009 to 2020), with PT Freeport Indonesia’s share totaling approximately ~~$1.3~~$1.4 billion. Aggregate project costs totaling ~~$451~~$583 million have been incurred through ~~September 30, 2012~~March 31, 2013 ~~($182~~($73 million during ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013). ~~Targeted production rates once the DMLZ mining operation reaches full capacity are expected to approximate 80,000 metric tons of ore per day.~~

~~Other Matters.~~ PT Freeport Indonesia is engaged in discussions with the Indonesian government on its operations, future plans and Contract of Work (COW). We are working cooperatively with the government in its review of PT Freeport Indonesia's COW and to seek an extension of our COW to 2041, pursuant to the terms of the contract. Refer to Note 14 of our annual report on Form 10-K for the year ended ~~December 31, 2011, for further discussion of PT Freeport Indonesia's COW.~~

Between July 2009 and October 2012, there were 37 shooting incidents in and around the Grasberg minerals district, including along the road leading to our mining and milling operations, which resulted in 15 fatalities and 57 injuries. The investigation of these matters is continuing. We have taken precautionary measures, including limiting use of the road to secured convoys. The Indonesian government has responded with additional security forces and expressed a commitment to protect the safety of the community and our operations. Prolonged limitations on access to the road could adversely affect operations at the mine. The safety of our workforce is a critical concern, and PT Freeport Indonesia is working cooperatively with the Government of Indonesia to address security issues. Refer to "Risk Factors" contained in Part I, Item 1A of our annual report on Form 10-K for the year ended ~~December 31, 2011, for further discussion.~~

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Operating Data. Following is summary operating data for our Indonesia mining operations for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2012		2011		2012		2011		2013		2012
Operating Data, Net of Joint Venture Interest
Copper (millions of recoverable pounds)
Production	199		233		495		778		219		123
Sales	195		253		512		796		198		134
Average realized price per pound	$	3.72	$	3.29	$	3.64	$	3.82	$	3.43	$	3.81

Gold (thousands of recoverable ounces)
Production	182		357		641		1,123		212		229
Sales	178		384		691		1,168		191		266
Average realized price per ounce	$	1,728	$	1,695	$	1,665	$	1,565	$	1,604	$	1,695

100% Operating Data
Ore milled (metric tons per day):^a
Grasberg open pit	136,500		107,000		116,700		137,200		137,400		80,500
DOZ underground mine	48,300		43,900		42,300		58,900
Big Gossan underground mine	1,900		1,300		1,400		1,800
DOZ underground mine^b									59,000		33,100
Big Gossan underground mine^c									3,000		1,200
Total	186,700		152,200		160,400		197,900		199,400		114,800
Average ore grades:
Copper (percent)	0.63		0.90		0.61		0.80		0.66		0.64
Gold (grams per metric ton)	0.46		1.14		0.60		0.92		0.52		0.84
Recovery rates (percent):
Copper	87.7		89.8		88.6		88.2		88.5		89.6
Gold	71.4		82.4		76.7		81.3		71.8		82.1
Production (recoverable):
Copper (millions of pounds)	199		237		495		803		219		123
Gold (thousands of ounces)	182		408		641		1,261		212		229


a.	Amounts represent the approximate average daily throughput processed at PT Freeport Indonesia’s mill facilities from each producing mine.


b.	Production from the DOZ underground mine is expected to ramp up to the design rate of 80,000 metric tons of ore per day by the end of 2013.


c.	Production from the Big Gossan underground mine is expected to ramp up to 7,000 metric tons of ore per day in 2014.

~~Sales~~Copper sales volumes from our Indonesia mining operations ~~declined~~increased to ~~195~~198 million pounds ~~of copper and~~ ~~178 thousand~~ ~~ounces of gold~~ in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~512 million~~ ~~pounds of copper and~~ ~~691 thousand~~ ~~ounces of gold for the~~ ~~first nine months of2012~~2013, compared with ~~253~~134 million pounds in first-quarter2012 when labor related disruptions affected operations. Productivity measures have continued to improve resulting in first-quarter 2013 daily mill throughput averaging 199,400 metric tons per day, including 59,000 metric tons per day from the DOZ underground mine.

As expected, Indonesia's first-quarter2013 gold sales of ~~copper and~~ ~~384~~191 thousand ounces ~~of gold in~~were lower than ~~third-quarter2011~~ ~~and~~ ~~796 million~~ ~~pounds of copper and~~ ~~1.2 million~~ ~~ounces of gold for the~~ ~~first nine months of2011, primarily reflecting anticipated lower ore grades. The~~ ~~first nine months of~~first-quarter 2012 ~~were also impacted by~~gold sales of 266 thousand ounces primarily as a result of lower ~~production rates associated with the first-quarter 2012 work interruptions and the related temporary suspension of operations.~~ore grades from mine sequencing.

At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in varying quarterly and annual sales of copper and gold. Consolidated sales volumes from our Indonesia mining operations are expected to approximate ~~0.7~~1.1 billion pounds of copper and ~~0.9~~1.25 million ounces of gold for ~~2012~~2013, compared with ~~846~~716 million pounds of copper and ~~1.3 million~~915 thousand ounces of gold in ~~2011~~2012. Indonesia's current sales volume estimates for 2012 are approximately 40 million pounds of copper and 45,000 ounces of gold lower than the estimates provided in our quarterly report on Form 10-Q for the period ended June 30, 2012, because of mine plan changes in the Grasberg open pit, which delayed access to higher grade material, and a slower ramp-up of the DOZ mine. The slower than anticipated ramp-up reflects more extensive repairs required following the 2011 suspension of operations. The DOZ mine is expected to ramp up to 80,000 metric tons of ore per day in 2013. FCX expectsWe expect sales from Indonesia to increase in the second half of 2013 as PT Freeport Indonesia gains access to higher ore ~~grades.~~grades and achieves the targeted ramp up in production from the DOZ underground mine to approximately 80,000

3936

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metric tons per day (57 percent of Indonesia's projected copper sales and 63 percent of Indonesia's projected gold sales are expected in the second half of 2013).

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 metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and per Ounce of Gold

The following tables summarize the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012. Refer to “Production Revenues and Production Costs” for an explanation of “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.


	Three Months Ended							Three Months Ended											Three Months Ended											Three Months Ended
	September 30, 2012							September 30, 2011											March 31, 2013											March 31, 2012
	By-Product Method			Co-Product Method				By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
				Copper		Gold					Copper				Gold							Copper				Gold							Copper				Gold
Revenues, excluding adjustments	$	3.72		$	3.72	$	1,728		$	3.29			$	3.29			$	1,695		$	3.43			$	3.43			$	1,604		$	3.81			$	3.81			$	1,695

Site production and delivery, before net noncash and other costs shown below	2.96			2.05		951		1.98				1.09				561			2.61				1.77				826			3.51				1.83				814
Gold and silver credits	(1.66		)	—		—		(2.80		)		—				—			(1.63		)		—				—			(3.51		)		—				—
Treatment charges	0.22			0.15		72		0.18				0.10				53			0.23				0.15				71			0.19				0.10				44
Royalty on metals	0.13			0.09		42		0.16				0.09				46			0.13				0.09				42			0.14				0.07				32
Unit net cash costs (credits)	1.65			2.29		1,065		(0.48		)		1.28				660
Unit net cash costs																			1.34				2.01				939			0.33				2.00				890
Depreciation and amortization	0.27			0.19		88		0.25				0.13				69			0.28				0.19				88			0.34				0.18				80
Noncash and other costs, net	0.05			0.04		15		0.01				0.01				4			0.26				0.18				83			0.18				0.10				43
Total unit costs (credits)	1.97			2.52		1,168		(0.22		)		1.42				733
Total unit costs																			1.88				2.38				1,110			0.85				2.28				1,013
Revenue adjustments, primarily for pricing on prior period open sales	0.04			0.04		11		(0.35		)		(0.35		)		74			0.01				0.01				(8		)	0.10				0.10				10
PT Smelting intercompany profit																			0.02				0.02				8			(0.16		)		(0.08		)		(36		)
Gross profit per pound/ounce	$	1.79		$	1.24	$	571	$	3.16			$	1.52			$	1,036		$	1.58			$	1.08			$	494		$	2.90			$	1.55			$	656

Copper sales (millions of recoverable pounds)	195			195				253				253							198				198							134				134
Gold sales (thousands of recoverable ounces)						178										384											191											266

Nine Months Ended Nine Months Ended
September 30, 2012 September 30, 2011
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Gold Copper Gold
Revenues, excluding adjustments $ 3.64
$ 3.64
$ 1,665
$ 3.82
$ 3.82
$ 1,565

Site production and delivery, before net noncash and other costs shown below 3.20
1.95
892
1.91
1.17
480
Gold and silver credits (2.34 ) —
—
(2.39 ) —
—
Treatment charges 0.21
0.13
58
0.18
0.11
46
Royalty on metals 0.13
0.08
37
0.16
0.10
41
Unit net cash costs (credits) 1.20
2.16
987
(0.14 ) 1.38
567
Depreciation and amortization 0.30
0.18
83
0.23
0.14
56
Noncash and other costs, net 0.08
0.05
22
0.04
0.02
8
Total unit costs 1.58
2.39
1,092
0.13
1.54
631
Revenue adjustments, primarily for pricing on prior period open sales 0.03
0.03
4
(0.01 ) (0.01 ) (15 )
Gross profit per pound/ounce $ 2.09
$ 1.28
$ 577
$ 3.68
$ 2.27
$ 919

Copper sales (millions of recoverable pounds) 512
512
796
796

Gold sales (thousands of recoverable ounces) 691
1,168

~~Table of Contents~~

~~Because of the fixed nature of a large portion of PT Freeport Indonesia’s costs,~~Indonesia's unit ~~costs vary from period to period depending on volumes of copper and gold sold, as well as average realized gold prices during the period. Unit~~ net cash costs (net of gold and silver credits) ~~for our Indonesia mining operations totaled~~increased to $~~1.65~~1.34 per pound of copper in ~~third-quarter~~first-quarter ~~2012~~2013 ~~and~~, compared with $~~1.20~~0.33 per pound ~~of copper for the~~in ~~first nine months of~~first-quarter 2012, ~~compared with net~~primarily reflecting lower gold credits, of ~~$0.48~~ ~~per pound of~~partly offset by higher copper in ~~third-quarter2011~~ ~~and~~ ~~$0.14~~ ~~per pound of copper for the~~ ~~first nine months of2011. Higher unit net cash costs in the 2012 periods primarily reflected lower~~ sales volumes.

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.

Because certain assets are depreciated on a straight-line basis, PT Freeport Indonesia’s unit depreciation rate

varies with the level of copper production and sales.

~~Quarterly unit net cash costs are expected to vary significantly with variations in quarterly metal sales volumes, as well as average realized gold prices during the period.~~ Assuming achievement of current sales volume and cost estimates, and an average gold price of $~~1,700~~1,400 per ounce for ~~fourth-quarter~~the remainder of ~~2012~~2013, we estimate that ~~average unit site production and delivery costs for Indonesia would approximate $3.24 per pound of copper and average~~Indonesia's unit net cash costs (net of gold and silver credits) would approximate $~~1.34~~1.00 per pound of copper for the year ~~2012~~2013, ~~compared with~~ ~~$0.09~~ ~~per pound in~~ ~~2011~~ ~~(fourth-quarter 2012 site production~~ and delivery costs are expected to average $3.35 per pound of copper and unit net cash costs (net of by-product credits) are expected to average $1.70 per pound of copper). Indonesia's unit net cash costs for ~~2012~~ would change by $~~0.02~~0.05 per pound for each $50 per

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ounce change in the average price of gold ~~during~~for ~~fourth-quarter~~the remainder of ~~2012~~2013. ~~Assuming consistent commodity price assumptions,~~Indonesia's projected unit net cash costs for 2013 are higher than previous estimates primarily because of lower gold credits. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold sales volumes, as well as average realized gold prices for the quarterly period. Indonesia's unit net cash costs ~~for future periods~~ are expected to ~~be lower than 2012, as PT Freeport Indonesia accesses higher grade ore beginning in~~decline during the second half of ~~2013.~~2013 as it gains access to higher grade ore.

Africa Mining

Africa mining includes ~~the~~TFM's Tenke copper and cobalt mining concessions in the Katanga province of the DRC. The Tenke mine includes surface mining, leaching and SX/EW operations. Copper production from the Tenke mine is sold as copper cathode. In addition to copper, the Tenke mine produces cobalt hydroxide.

minerals district. We hold an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Katanga province of the DRC and are the operator of ~~Tenke. Effective March 26,~~TFM.

The Tenke operation includes surface mining, leaching and SX/EW operations. Copper production from the Tenke minerals district is sold as copper cathode. In addition to copper, the Tenke minerals district produces cobalt hydroxide.

For additional discussion of risks associated with our operations in Africa, refer to “Risk Factors” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2012 the DRC government issued a Presidential Decree approving modifications to TFM's bylaws. As a result, our and Lundin Mining Corporation's ownership interest in Tenke totals 80 percent (previously 82.5 percent) and Gecamines' ownership interest totals 20 percent (previously 17.5 percent).

Operating and Development Activities. Our investment in the initial project approximated $2 billion, and as of March 31, 2013, we have received intercompany loan repayments ~~including interest,~~(including interest) of approximately ~~$840 million through~~ ~~September 30, 2012~~.$946 million.

~~We are nearing completion of a~~TFM has completed its second phase ~~of the~~expansion project, which ~~includes~~included optimizing the current plant and increasing mine, mill and processing capacity. ~~We are expanding the~~The expanded mill ~~rate to~~is capable of throughput of 14,000 metric tons of ore per day ~~and are completing construction of the related processing facilities that target the addition of approximately~~to enable increasing copper production by 150 million pounds ~~of copper~~to over 430 million pounds per ~~year in 2013. The approximate $850~~year. Costs incurred to date total approximately $615 million ~~project includes~~and included mill upgrades, additional mining equipment and a new ~~tankhouse and a sulphuric acid plant expansion. Construction activities are progressing well and are expected to be substantially complete by year-end 2012. The addition of a~~tankhouse. A second sulphuric acid plant, which was included in the $850 million total estimated project capital cost, is expected to be ~~completed~~installed in 2015. The ~~second phase of the project~~expanded mill facility is ~~being funded primarily~~performing well, with ~~cash generated from operations, and for additional required funds, we are funding 70 percent and Lundin Mining Corporation is funding 30 percent. Project costs of $535 million have been incurred as~~first-quarter2013 average throughput rates of ~~September 30, 2012~~14,600 ~~($367 million during the~~ ~~first nine months of2012~~).metric tons per day.

~~During~~ ~~third-quarter2012~~, Tenke achieved record mining, milling and copper production rates. Improved performance and the second phase expansion are expected to enable copper production to exceed 400 million pounds for the year 2013, compared with initial design capacity of 250 million pounds per year.

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We continue to engage in drilling activities, exploration analyses and metallurgical testing to evaluate the potential of the highly prospective Tenke minerals ~~district at Tenke.~~district. These analyses are being incorporated in future plans to evaluate opportunities for expansion. Future expansions are subject to a number of factors, including economic and market conditions, and the business and investment climate in the DRC.

~~Other Matters.~~ Salary scale for TFM's union-represented employees is negotiated outside of the Collective Labor Agreement. In September 2012, TFM successfully renegotiated a 4-year salary scale with union-represented employees.

Operating Data. Following is summary operating data for our Africa mining operations for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2012		2011		2012		2011		2013		2012
Copper (millions of recoverable pounds)
Production	91		71		250		204		120		80
Sales	88		65		239		200		118		69
Average realized price per pound^a	$	3.55	$	3.46	$	3.54	$	3.89	$	3.40	$	3.74

Cobalt (millions of contained pounds)
Production	8		6		20		18		6		6
Sales	8		6		19		19		6		5
Average realized price per pound	$	8.24	$	10.05	$	8.36	$	10.71	$	7.28	$	8.46

Ore milled (metric tons per day)	13,600		12,000		12,900		10,800		14,600		12,200
Average ore grades (percent):
Copper	3.60		3.21		3.56		3.42		4.44		3.61
Cobalt	0.38		0.41		0.37		0.40		0.32		0.38
Copper recovery rate (percent)	92.9		91.4		91.6		92.0		93.7		91.2


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.

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Copper sales ~~volumes~~ from ~~our~~ Africa ~~mining operations increased to~~of ~~88 million~~ ~~pounds of copper in~~ ~~third-quarter2012~~ ~~and~~ ~~239 million~~ ~~pounds of copper for the~~ ~~first nine months of2012, compared with~~ 65118 million pounds in ~~third-quarter~~first-quarter ~~2011~~2013 ~~and~~were higher than ~~200~~first-quarter2012 copper sales of 69 million pounds, ~~of copper for the~~ ~~first nine months of2011~~, primarily reflecting higher mining and milling rates principally related to the ~~ramp-up~~ramp up of the ~~second phase expansion.~~expansion project and higher ore grades.

For the year ~~2012~~2013, we expect sales volumes from our Africa mining operations to approximate ~~330~~435 million pounds of copper and 2528 million pounds of cobalt, compared with ~~283~~336 million pounds of copper and 25 million pounds of cobalt in ~~2011~~2012.

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 metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

~~Table of Contents~~

Gross Profit per Pound of Copper and Cobalt

The following tables summarize the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012. Refer to “Production Revenues and Production Costs” for an explanation of “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.


	Three Months Ended								Three Months Ended											Three Months Ended											Three Months Ended
	September 30, 2012								September 30, 2011											March 31, 2013											March 31, 2012
	By-Product Method			Co-Product Method					By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
				Copper			Cobalt					Copper				Cobalt							Copper				Cobalt							Copper				Cobalt
Revenues, excluding adjustments^a	$	3.55		$	3.55		$	8.24		$	3.46			$	3.46			$	10.05		$	3.40			$	3.40			$	7.28		$	3.74			$	3.74			$	8.46

Site production and delivery, before net noncash and other costs shown below	1.63			1.45			4.96		1.55				1.40				5.71			1.39				1.33				4.18			1.50				1.44				5.14
Cobalt credits^b	(0.48		)	—			—		(0.51		)		—				—			(0.23		)		—				—			(0.33		)		—				—
Royalty on metals	0.08			0.07			0.14		0.08				0.06				0.15			0.07				0.06				0.13			0.08				0.07				0.13
Unit net cash costs	1.23			1.52			5.10		1.12				1.46				5.86			1.23				1.39				4.31			1.25				1.51				5.27
Depreciation, depletion and amortization	0.49			0.43			0.64		0.48				0.41				0.88			0.49				0.46				0.69			0.46				0.42				0.66
Noncash and other costs, net	0.07			0.06			0.08		0.29				0.25				0.53			0.04				0.04				0.06			0.11				0.10				0.15
Total unit costs	1.79			2.01			5.82		1.89				2.12				7.27			1.76				1.89				5.06			1.82				2.03				6.08
Revenue adjustments, primarily for pricing on prior period open sales	(0.02		)	(0.02		)	0.05		(0.01		)		(0.01		)		(0.10		)	0.01				0.01				0.38			0.12				0.12				0.46
Gross profit per pound	$	1.74		$	1.52		$	2.47	$	1.56			$	1.33			$	2.68		$	1.65			$	1.52			$	2.60		$	2.04			$	1.83			$	2.84

Copper sales (millions of recoverable pounds)	88			88					65				65							118				118							69				69
Cobalt sales (millions of contained pounds)							8										6											6											5

Nine Months Ended Nine Months Ended
September 30, 2012 September 30, 2011
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Cobalt Copper Cobalt
Revenues, excluding adjustments^a
$ 3.54
$ 3.54
$ 8.36
$ 3.89
$ 3.89
$ 10.71

Site production and delivery, before net noncash and other costs shown below 1.54
1.43
5.05
1.57
1.37
5.62
Cobalt credits^b
(0.39 ) —
—
(0.68 ) —
—
Royalty on metals 0.08
0.06
0.13
0.09
0.07
0.18
Unit net cash costs 1.23
1.49
5.18
0.98
1.44
5.80
Depreciation, depletion and amortization 0.48
0.42
0.68
0.49
0.41
0.82
Noncash and other costs, net 0.09
0.08
0.12
0.20
0.18
0.36
Total unit costs 1.80
1.99
5.98
1.67
2.03
6.98
Revenue adjustments, primarily for pricing on prior period open sales 0.03
0.03
0.12
(0.01 ) (0.01 ) 0.12
Gross profit per pound $ 1.77
$ 1.58
$ 2.50
$ 2.21
$ 1.85
$ 3.85

Copper sales (millions of recoverable pounds) 239
239
200
200

Cobalt sales (millions of contained pounds) 19
19


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

~~Africa's unit~~Unit net cash costs (net of cobalt credits) for our Africa operations of $1.23 per pound of copper in ~~third-quarter~~first-quarter2013 were slightly lower than first-quarter 2012 ~~and for the~~ ~~first nine months of2012, were higher than~~ unit net cash costs of $~~1.12~~1.25 per pound of copper, in ~~third-quarter2011~~ ~~and~~ ~~$0.98~~ ~~per pound~~primarily reflecting the benefit of ~~copper for the~~ ~~first nine months of2011. Higher unit net cash costs in third-quarter 2012 primarily reflected~~ higher ~~mining and input costs, including sulphuric acid and energy. Higher unit net cash costs in the first nine months of 2012 primarily reflected~~sales volumes, partly offset by lower cobalt credits.

Assuming achievement of current sales volume and cost estimates, and an average cobalt market ~~cobalt~~ price of $12 per pound for ~~fourth-quarter~~the remainder of ~~2012~~2013, we estimate that ~~average unit site production and delivery costs for Africa would~~

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~~approximate $1.53 per pound of copper and~~ average unit net cash costs (net of cobalt credits) would approximate $~~1.25~~1.18 per pound of copper for the year ~~2012~~2013, compared with $~~1.07~~1.23 per pound in ~~2011~~2012 ~~(fourth-quarter 2012 site production and delivery costs are expected to average $1.50 per pound of copper and~~. Africa's projected unit net cash costs ~~(net of by-product credits) are expected to average $1.28 per pound of copper). Africa's unit net cash costs for~~ ~~2012~~would change by $~~0.025~~0.065 per pound for each $2 per pound change in the average price of cobalt during ~~fourth-quarter~~the remainder of ~~2012~~2013.

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Molybdenum Mines

We ~~are an integrated producer of~~have two wholly owned molybdenum with mining, sulfide ore concentrating, roasting and processing facilities that produce high-purity, molybdenum-based chemicals, molybdenum metal powder and metallurgical products, which are sold to customers aroundmines in North America – the ~~world. Our molybdenum operations include the wholly owned~~ Henderson underground mine and the Climax open-pit mine, both in ~~Colorado and related conversion facilities.~~Colorado. The Henderson ~~underground mine produces~~and Climax mines produce high-purity, chemical-grade molybdenum concentrates, which are typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrates produced at the Henderson and Climax ~~mine also produces high quality molybdenum concentrates. The Molybdenum operations include a sales company that purchases and sells molybdenum from our primary molybdenum~~ mines, ~~and~~as well as from certain of our North and South America copper mines, ~~that also produce molybdenum; and related~~are processed at our own conversion ~~facilities that, at times, roast and/or process material on a toll basis for third-parties.~~

~~Operating and Development Activities.~~ The newly commissioned Climax molybdenum mine, which includes a new 25,000 metric ton per day mill facility, began commercial production in May 2012. Depending on market conditions, production from Climax may ramp up to a rate of 20 million pounds of molybdenum per year during 2013, with the potential to produce 30 million pounds of molybdenum per year. We intend to operate our Climax and Henderson mines in a flexible manner to meet market requirements. The cost of the initial phase of the project approximated $760 million.facilities.

Operating Data. Following is summary operating data for the ~~Molybdenum operations~~molybdenum mines for the ~~third~~first quarters ~~and~~ ~~first nine months~~ of ~~2012~~2013 and ~~2011~~2012:

Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Molybdenum (millions of recoverable pounds)

Production 10
^a
11
28
^a
30
Sales, excluding purchases^b
21
19
62
60
Average realized price per pound $ 13.62
$ 16.34
$ 14.79
$ 17.57

Henderson molybdenum mine
Ore milled (metric tons per day) 21,400
24,500
21,100
23,300
Average molybdenum ore grade (percent) 0.23
0.24
0.23
0.24
Molybdenum production (millions of recoverable pounds) 9
11
26
30



	Three Months Ended
	March 31,
	2013^a	2012^a
Molybdenum mines operating data
Molybdenum production (millions of recoverable pounds)^b	12	9
Ore milled (metric tons per day)	35,900	19,900
Average molybdenum ore grade (percent)	0.20	0.25

~~The 2012 periods include production from~~Reflects operating data for the Henderson and Climax ~~molybdenum~~mines for first-quarter2013, and operating data only for the Henderson mine ~~totaling~~for ~~1 million~~ ~~pounds in~~ ~~third-quarter~~first-quarter 2012 ~~and~~ ~~2 million~~ ~~pounds for the~~ ~~first nine months of2012~~ ~~reflecting production since the start of commercial operations in May 2012 (the 2011 periods only reflect production from the Henderson molybdenum mine)~~.


b.	~~Includes~~Refer to "Consolidated Results" for our consolidated molybdenum sales, which includes sales of molybdenum produced at the molybdenum mines, as well as from certain of our North and South America copper mines.

~~Consolidated~~The Climax molybdenum ~~sales volumes~~mine, which was commissioned in second-quarter 2012 includes a new 25,000 metric ton per day mill facility. Molybdenum production from the Climax mine totaled 215 million pounds in ~~third-quarter~~first-quarter ~~2012~~2013 and 62is targeted to produce 20 million pounds for the ~~first nine months of2012, compared with~~ 19year 2013 (with potential to produce up to approximately 30 million pounds per year depending on market conditions). We intend to operate the Climax and Henderson mines in a flexible manner to meet market requirements.~~third-quarter2011~~

Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our molybdenum mines and ~~60 million~~ ~~pounds for the~~ ~~first nine months of2011. For the year~~ ~~2012, we expect molybdenum sales volumes to approximate~~ ~~82 million~~ ~~pounds (of which approximately~~ ~~43 million~~ ~~pounds represents molybdenum production from~~at our North and South America copper ~~mines), compared with~~ ~~79 million~~ ~~pounds in~~ ~~2011~~ ~~(of which~~ ~~45 million~~ ~~pounds represented~~mines, and refer to "Outlook" for projected consolidated molybdenum ~~production from our North and South America copper mines).~~sales volumes.

Unit Net Cash Costs. Unit net cash costs per pound of molybdenum 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

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performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

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Gross Profit per Pound of Molybdenum

The following table summarizes the average unit net cash costs and gross profit per pound of molybdenum at ~~our Henderson~~the molybdenum ~~mine for the~~ ~~third~~ ~~quarters and~~ ~~first nine months of2012~~ ~~and~~ ~~2011~~.mines. 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.


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2012		2011		2012		2011		2013^a		2012^a
Revenues, excluding adjustments	$	13.69	$	15.38	$	14.61	$	16.66
Revenues, excluding adjustments^b									$	12.55	$	15.03

Site production and delivery, before net noncash and other costs shown below	6.23		5.21		6.06		5.26		6.37		6.00
Treatment charges and other	0.88		1.03		0.88		0.93		0.95		0.88
Unit net cash costs	7.11		6.24		6.94		6.19		7.32		6.88
Depreciation, depletion and amortization	1.00		0.94		0.95		0.90		1.62		0.90
Noncash and other costs, net	0.52		0.03		0.21		0.04		0.15		0.05
Total unit costs	8.63		7.21		8.10		7.13		9.09		7.83
Gross profit^a	$	5.06	$	8.17	$	6.51	$	9.53
Gross profit									$	3.46	$	7.20

Molybdenum sales (millions of recoverable pounds)^b	9		11		26		30
Molybdenum production (millions of recoverable pounds)^b									12		9


a.	~~Gross profit reflects~~ Reflects the results of the Henderson and Climax mines for first-quarter2013, and the results of only the Henderson mine for first-quarter2012.

Revenues reflect sales of ~~Henderson~~the molybdenum mines' production to our ~~Molybdenum~~molybdenum sales company ~~based on volumes produced~~ at market-based pricing. On a consolidated basis, ~~the Molybdenum division includes profits on sales as they~~realizations are ~~made to third parties and realizations~~ based on actual contract ~~terms.~~terms of sales made to third parties. As a result, ~~the actual gross profit~~our consolidated average realized price per pound of molybdenum (refer to "Consolidated Results") will differ from the amounts reported in this table.


b.	~~Reflects production at the Henderson molybdenum mine.~~

~~Henderson’s higher~~Average unit net cash costs offor our molybdenum mines was $~~7.11~~7.32 per pound of molybdenum in ~~third-quarter~~first-quarter ~~2012~~ ~~and~~ ~~$6.94~~ ~~per pound of molybdenum for the~~ ~~first nine months of2012~~2013, compared with $~~6.24~~6.88 per pound ~~of molybdenum~~ in ~~third-quarter~~first-quarter ~~2011~~ ~~and~~ ~~$6.19~~ ~~per pound of molybdenum for the~~ ~~first nine months of2011~~2012, ~~primarily reflected lower~~reflecting higher input costs at Henderson and the addition of production ~~volumes.~~from Climax.

Assuming achievement of current ~~2012~~sales volume and cost estimates, we estimate average unit net cash costs for ~~Henderson~~our molybdenum mines to ~~approximate~~average approximately $~~7.00~~7.25 per pound of molybdenum for the year ~~2012~~2013~~, compared with~~ ~~$6.34~~ (reflecting approximately $7.50 per pound in ~~2011~~for Henderson and $6.90 per pound for Climax).

Atlantic Copper Smelting & Refining

Atlantic Copper, our wholly owned subsidiary located in Spain, smelts and refines copper concentrates and markets refined copper and precious metals in slimes. During ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013, Atlantic Copper purchased ~~approximately 31~~34 percent of its concentrate requirements from our South America mining operations, ~~approximately 15~~21 percent from our North America copper mines and ~~approximately 8~~14 percent from our Indonesia mining operations. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Smelting and refining charges consist of a base rate and, in certain contracts, price participation based on copper prices. Treatment charges for smelting and refining copper concentrates represent a cost to our mining operations, and income to Atlantic Copper and PT ~~Smelting, PT Freeport Indonesia's 25 percent owned smelter and refinery.~~Smelting. Thus, higher treatment and refining charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment and refining charges because these operations are largely integrated with our wholly owned smelter located in Miami, Arizona.

~~Atlantic Copper had an operating loss of~~ ~~$1 million~~ in ~~third-quarter2012~~ ~~and operating income of~~ ~~$12 million~~ ~~for the~~ ~~first nine months of2012, compared with operating losses of~~ ~~$5 million~~ in ~~third-quarter2011~~ ~~and~~ ~~$70 million~~ ~~for the~~ ~~first nine months of2011. Atlantic Copper’s improved operating results in the~~ ~~2012~~ ~~periods, compared with the~~ ~~2011~~ ~~periods, primarily reflected higher gold credits. Atlantic Copper's operating results for the~~ ~~first nine months of2011~~

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~~also reflected higher operating costs primarily associated with the April 2011 scheduled shutdown.~~

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of Indonesia mining sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions (reductions) to net income attributable to common stockholders totaling $25 million ($0.03 per share) in first-quarter2013 and $(32) million ($(0.03) per share) in first-quarter2012. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income ~~after taxes and noncontrolling interests~~attributable to common stockholders totaled $~~105~~85 million at ~~September 30, 2012. Changes in these deferrals attributable to variability in intercompany volumes resulted in~~ ~~net reductions~~ ~~to net income attributable to common stockholders totaling~~ ~~$34 million~~ (~~$0.04~~ ~~per share) in~~ ~~third-quarter2012~~ ~~and~~ ~~$69 million~~ (~~$0.07~~ ~~per share) for the~~ ~~first nine months of2012, compared with~~ ~~net additions~~ of ~~$99 million~~ (~~$0.10~~ ~~per share) in~~ ~~third-quarter2011~~ ~~and~~ ~~$116 million~~ (~~$0.12~~ ~~per share) for the~~ ~~first nine months of2011~~March 31, 2013. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.

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CAPITAL RESOURCES AND LIQUIDITY

Our operating cash flows vary with prices realized from copper, gold and molybdenum sales, our sales volumes, production costs, income taxes, other working capital changes and other factors. ~~Strong~~In recent years, strong operating performance and favorable copper and gold prices have enabled us to enhance our financial and liquidity position, reduce debt and pay cash dividends to shareholders, while pursuing growth opportunities. 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, and will continue to adjust our operating strategy as market conditions change.

Cash and ~~Cash Equivalents~~Debt

At ~~September 30, 2012, we had consolidated cash and cash equivalents~~Following is a summary of~~$3.7 billion. The following table reflects~~ the U.S. and international components of consolidated cash and cash equivalents, including cash available to the parent company, net of noncontrolling interests' share, taxes and other costs at ~~September 30, 2012~~March 31, 2013, and December 31, ~~2011~~2012 (in billions):


	September 30, 2012			December 31, 2011			March 31, 2013				December 31, 2012
Cash at domestic companies^a	$	1.2		$	2.4
Cash at domestic companies							$	7.0		^a	$	1.3
Cash at international operations	2.5			2.4			2.6				2.4
Total consolidated cash and cash equivalents	3.7			4.8			9.6				3.7
Less: Noncontrolling interests’ share	(0.8		)	(0.8		)	(0.9		)		(0.8		)
Cash, net of noncontrolling interests’ share	2.9			4.0			8.7				2.9
Less: Withholding taxes and other	(0.2		)	(0.1		)	(0.2		)		(0.2		)
Net cash available to FCX	$	2.7		$	3.9
Net cash available							$	8.5			$	2.7


a.	Includes ~~cash at our parent company~~net proceeds from the March 2013 sale of $6.5 billion of senior notes that will be used to fund a portion of the pending acquisitions of PXP and ~~other North America operations.~~MMR.

Cash held at our international operations is generally used to support our foreign operations' capital expenditures, operating expenses, working capital and other tax payments, or other cash needs. At ~~September 30, 2012~~March 31, 2013, management believed that sufficient liquidity was available in the U.S. With the exception of ~~Tenke,~~TFM, we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends, which are subject to applicable withholding taxes and noncontrolling interests' share.

Total debt was $10.1 billion at March 31, 2013, and $3.5 billion at December 31, 2012. During first-quarter 2013, we sold $6.5 billion of senior notes (refer to "Financing Activities" below for further discussion) and also entered into an agreement for a Term Loan for up to $4.0 billion to be used for the pending acquisitions of PXP and MMR. No amounts are currently available to us under the Term Loan, which will be funded at the closing of the pending acquisitions of PXP and MMR. The weighted average interest rate of these financings approximates 3.1 percent. Refer to Note 6 for further discussion.

At March 31, 2013, we had no borrowings and $43 million of letters of credit issued under our revolving credit facility, resulting in availability of $1.5 billion. In February 2013, we entered into a new $3.0 billion senior unsecured revolving credit facility, which will refinance and replace our existing revolving credit facility upon completion of the pending acquisition of PXP. Refer to Note 6 for further discussion.

Operating Activities

WeDuring first-quarter2013, we generated operating cash flows totaling $~~2.5 billion~~ ~~for the~~ ~~first nine months of2012~~831 million, net of $~~1.5 billion~~ ~~for working capital uses and other tax payments, compared with operating cash flows totaling~~ ~~$5.9 billion~~ ~~for the~~ ~~first nine months of2011, net of~~ ~~$126~~430 million for working capital uses and changes in other tax payments. ~~Lower operating~~Operating cash flows for ~~the~~ ~~first nine months of~~first-quarter 2012~~, compared with the~~ totaled ~~first nine months of2011~~$801 million, ~~primarily reflected lower copper and gold sales volumes, lower copper price realizations and an increase in~~net of $720 million for working capital uses and changes in other tax payments, primarily associated with changes in accounts receivable. As discussed in "Consolidated Results - Revenues," substantially all of our copper concentrate and cathode sales contracts are provisionally priced; accordingly, the quarter-end forward price is a major determinate of recorded revenues and the resulting receivables. At September 30, 2012, our provisionally priced copper sales we recorded at an average of $3.72 per pound of copper, compared with $3.18 per pound at September 30, 2011.payments.

~~Based~~Excluding impacts for pending acquisitions, and based on current mine plans and subject to future copper, gold and molybdenum prices, we expect estimated operating cash flows for the year ~~2012~~2013 plus available cash to be sufficient to fund our budgeted capital expenditures, dividends, noncontrolling interest distributions and other cash requirements for the year. Refer to

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~~“Outlook”~~ “Outlook” for further discussion of projected operating cash flows for the year ~~2012~~2013.

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Investing Activities

Capital Expenditures.Capital expenditures, including capitalized interest, totaled $~~2.5 billion~~805 million for ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013, compared with $~~1.7 billion~~707 million for ~~the~~ ~~first nine months of~~first-quarter ~~2011~~2012,. Higher capital expenditures in first-quarter 2013 primarily ~~reflecting higher~~reflected increased capital spending associated with the expansion projects at ~~Tenke,~~ Cerro Verde and ~~Morenci.~~Morenci, partly offset by decreased spending at Tenke related to the second phase expansion. Refer to “Operations” for further discussion.

~~Capital~~Excluding amounts for pending acquisitions, capital expenditures for the year ~~2012~~2013 are expected to approximate $~~3.6~~4.4 billion, including $~~2.2~~2.6 billion for major ~~projects and~~ ~~$1.4 billion~~ ~~for sustaining capital.~~projects. Major projects for ~~2012~~2013 primarily include the expansion projects at Cerro Verde and Morenci and underground development activities at ~~Grasberg and the expansion projects at Tenke, Cerro Verde and Morenci.~~Grasberg. We are also considering additional investments at several of our sites. Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors. Refer to "Operations" for further discussion.

Acquisition. Other investing activities in first-quarter 2013 included $321 million (which was net of $34 million of cash acquired) to fund the acquisition of a large-scale cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition was funded 70 percent by us and 30 percent by Lundin, which amounts will be repaid prior to any shareholder distributions. Refer to Note 2 for further discussion.

Financing Activities

Debt ~~and Equity~~ Transactions. AtIn March 2013, we sold ~~September 30, 2012, debt totaled~~ $~~3.5~~6.5 billion~~, and we have no significant debt maturities through 2014. At~~ ~~September 30, 2012, we had no borrowings and~~ ~~$44 million~~ of ~~letters~~senior notes in four tranches with a weighted average interest rate of ~~credit issued under our revolving credit facility, resulting in availability of approximately~~ ~~$1.5 billion~~3.9 percent (~~$956 million~~ ~~of which could~~. Net proceeds from this offering will be used to fund the pending acquisitions of PXP and MMR. If the acquisition of PXP is not completed, we will be required to redeem all of the outstanding 7-year, 10-year and 30-year notes (which total $5 billion) at 101 percent plus accrued and unpaid interest. Refer to Note 6for ~~additional letters of credit).~~further discussion.

In February 2012, we sold ~~$3.0~~$3.0 billion of senior notes in three tranches with a weighted-average interest rate of approximately ~~three~~3.0 percent. Net proceeds from this offering, plus cash on hand, were used to redeem the remaining ~~$3.0~~$3.0 billion of our 8.375% Senior Notes. Refer to Note 56 for further discussion.

In April 2011, we redeemed the remaining $1.1 billion of our outstanding 8.25% Senior Notes. In addition, during second-quarter 2011, we made open-market purchases of $35 million of our 9.5% Senior NotesDividends and ~~repaid the remaining $85 million of our 8.75% Senior Notes, which matured in June 2011 (refer to Note 5 for further discussion).~~

~~Annual interest cost savings associated with debt repayments since January 1, 2009, including the first-quarter 2012 refinancing transaction, approximate~~ ~~$415 million~~Other Equity Transactions. ~~per year, based~~We paid dividends on ~~current interest rates.~~

~~We have an open-market share purchase program for up to 30 million shares, of which 23.7 million shares remain available. There have been no purchases since 2008. The timing of future purchases of~~ our common stock is dependent on many factors, including our operating results, cash flows and financial position; copper, gold and molybdenum prices; the price of our common shares; future development and expansion opportunities; and general economic and market conditions.

~~Dividends.~~ ~~We paid common stock dividends~~ totaling $~~832~~297 million for ~~the~~ ~~first nine months of~~first-quarter ~~2012~~2013 and $~~1.2 billion~~238 million for ~~the~~ ~~first nine months of~~first-quarter ~~2011~~2012 ~~(which included $474 million for a supplemental common stock dividend paid in June 2011)~~.

The current annual dividend rate for our common stock is ~~$1.25~~$1.25 per share ($0.3125 per share quarterly). Refer to Note 56 for further discussion. The declaration of dividends is at the discretion of the Board and will depend upon our financial results, cash requirements, future prospects, the impact of pending acquisitions and other factors deemed relevant by the Board. The Board will continue to review our financial policy on an ongoing basis.

Cash dividends and other distributions paid to noncontrolling interests ~~primarily include the noncontrolling interest owners of PT Freeport Indonesia and our South America mines, and~~ totaled $7635 million ~~for the~~in ~~first nine months of~~first-quarter ~~2012~~2013 and $~~350~~1 million ~~for~~in first-quarter2012. Higher noncontrolling interest payments in first-quarter2013, compared with first-quarter2012, primarily reflected higher dividends to the ~~first nine months~~noncontrolling interest holders of~~2011~~. our South America mining operations.

CONTRACTUAL OBLIGATIONS

~~There~~Except for the issuance of our $6.5 billion senior notes in March 2013, there have been no material changes in our contractual obligations since ~~year-end~~the end of ~~2011~~2012. Refer to Item 7 in our annual report on Form 10-K for the year ended December 31, ~~2011~~2012, for further information regarding our contractual obligations.

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CONTINGENCIES

Environmental and Reclamation Matters

Our mining, exploration, production and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and reclamation obligations and also review changes in facts and circumstances associated with ~~our environmental and reclamation~~these obligations at least quarterly. There have been no material changes to our environmental and reclamation obligations since ~~year-end~~the end of ~~2011~~2012~~. However,~~; however, updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities and settlement of environmental matters may result in revisions to certain of our environmental obligations. ~~As a result, we~~We recorded adjustments to environmental obligations totaling a net ~~credits~~credit of $821 million in ~~third-quarter~~first-quarter2013, and there were no adjustments to environmental obligations in first-quarter 2012 ~~and~~ .~~$36 million~~ ~~during the~~ ~~first nine months of2012, compared with net charges~~

Table of ~~$31 million~~ in ~~third-quarter2011~~ ~~and~~ ~~$35 million~~ ~~during the~~ ~~first nine months of2011~~.Contents

~~Refer to Note 13 in our annual report on Form 10-K for the year ended December 31, 2011, for further information regarding our environmental and reclamation obligations.~~

~~Litigation and Other Contingencies~~

~~Other than as disclosed in Note~~ 8 and Part II, Item 1. "Legal Proceedings" of our quarterly reports on Form 10-Q for the periods ended June 30, 2012, and March 31, 2012, there have been no material changes to our contingencies associated with legal proceedings and other matters since year-end ~~2011~~. Refer to Note 13 in our annual report on Form 10-K for the year ended December 31, ~~2011~~2012, for further information regarding our environmental and reclamation obligations.

Litigation and Other Contingencies

Other than as disclosed in Note 9 and contained in "Legal Proceedings" in Part II, Item 1. of this quarterly report, there have been no material changes to our contingencies associated with legal proceedings and other matters since the end of 2012. Refer to Note 13 and "Legal Proceedings" contained in Part I, Item 3. of our annual report on Form 10-K for the year ended December 31, 2012, for further information regarding legal proceedings and other matters.

NEW ACCOUNTING STANDARDS

We do not expect the impact of recently issued accounting standards to have a significant impact on our future financial statements and disclosures.

PRODUCT REVENUES AND PRODUCTION 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 the 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 metals mining

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companies, although our measures may not be comparable to similarly titled measures reported by other companies.

We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by our management and the Board to monitor operations. In the co-product method presentation below, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.

We show revenue adjustments for prior period open sales as separate line items. Because these adjustments do not result from current period sales, we have reflected these separately from revenues on current period sales. Noncash and other costs consist of items such as stock-based compensation costs, start-up costs, write-offs of equipment and/or unusual charges. They are removed from site production and delivery costs in the calculation of unit net cash costs. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. Following are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

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North America Copper Mines Product Revenues and Production Costs


Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total		Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	1,183		$	1,183		$	103	$	21	$	1,307	$	1,270		$	1,270		$	93	$	20	$	1,383

Site production and delivery, before net noncash and other costs shown below	649			584			71		13		668		703			685			26		12		723
By-product credits^a	(105		)	—			—		—		—		(93		)	—			—		—		—
Treatment charges	40			39			—		1		40		45			44			—		1		45
Net cash costs	584			623			71		14		708		655			729			26		13		768
Depreciation, depletion and amortization	84			78			5		1		84		98			95			1		2		98
Noncash and other costs, net	40			38			1		1		40		33			32			1		—		33
Total costs	708			739			77		16		832		786			856			28		15		899
Revenue adjustments, primarily for pricing on prior period open sales	5			5			—		—		5		(2		)	(2		)	—		—		(2		)
Gross profit	$	480		$	449		$	26	$	5	$	480	$	482		$	412		$	65	$	5	$	482

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,307		$	668		$	84					$	1,383		$	723		$	98
Treatment charges	N/A			40			N/A						—			45			—
Net noncash and other costs	N/A			40			N/A						—			33			—
Revenue adjustments, primarily for pricing on prior period open sales	5			N/A			N/A						(2		)	—			—
Eliminations and other	4			12			4						8			10			4
North America copper mines	1,316			760			88						1,389			811			102
South America mining	1,192			530			74						1,014			475			71
Indonesia mining	991			587			54						931			563			55
Africa mining	367			172			42						438			185			58
Molybdenum	308			273			18
Molybdenum mines													143			80			20
Rod & Refining	1,228			1,222			2						1,337			1,328			3
Atlantic Copper Smelting & Refining	638			624			11						639			628			10
Corporate, other & eliminations	(1,623		)	(1,576		)	9						(1,308		)	(1,351		)	10
As reported in FCX’s consolidated financial statements	$	4,417		$	2,592		$	298					$	4,583		$	2,719		$	329


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


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

4946

Table of Contents

North America Copper Mines Product Revenues and Production Costs (continued)


Three Months Ended September 30, 2011
Three Months Ended March 31, 2012
(In millions)	By-Product			Co-Product Method										By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total			Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	1,240		$	1,240		$	146	$	40	$	1,426		$	1,287		$	1,287		$	136	$	21	$	1,444

Site production and delivery, before net noncash and other costs shown below	569			506			64		15		585			607			584			29		12		625
By-product credits^a	(170		)	—			—		—		—			(139		)	—			—		—		—
Treatment charges	36			34			—		2		36			41			39			—		2		41
Net cash costs	435			540			64		17		621			509			623			29		14		666
Depreciation, depletion and amortization	64			59			4		1		64			89			86			2		1		89
Noncash and other costs, net	31			31			—		—		31			21			21			—		—		21
Total costs	530			630			68		18		716			619			730			31		15		776
Revenue adjustments, primarily for pricing on prior period open sales	(11		)	(11		)	—		—		(11		)	9			9			—		—		9
Gross profit	$	699		$	599		$	78	$	22	$	699		$	677		$	566		$	105	$	6	$	677

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization							Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,426		$	585		$	64						$	1,444		$	625		$	89
Treatment charges	N/A			36			N/A							—			41			—
Net noncash and other costs	N/A			31			N/A							—			21			—
Revenue adjustments, primarily for pricing on prior period open sales	(11		)	N/A			N/A							9			—			—
Eliminations and other	4			12			3							3			20			4
North America copper mines	1,419			664			67							1,456			707			93
South America mining	1,053			478			64							1,254			463			62
Indonesia mining	1,362			503			62							950			515			46
Africa mining	276			142			32							305			132			32
Molybdenum	332			260			14
Molybdenum mines														126			70			11
Rod & Refining	1,396			1,390			2							1,304			1,297			2
Atlantic Copper Smelting & Refining	837			826			11							712			695			10
Corporate, other & eliminations	(1,480		)	(1,693		)	5							(1,502		)	(1,451		)	11
As reported in FCX’s consolidated financial statements	$	5,195		$	2,570		$	257						$	4,605		$	2,428		$	267


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


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

5047

Table of Contents

~~North America Copper Mines Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2012
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 3,755
$ 3,755
$ 363
$ 63
$ 4,181

Site production and delivery, before net noncash and other costs shown below 1,932
1,782
165
37
1,984
By-product credits^a
(374 ) —
—
—
—
Treatment charges 120
115
—
5
120
Net cash costs 1,678
1,897
165
42
2,104
Depreciation, depletion and amortization 262
247
12
3
262
Noncash and other costs, net 98
95
2
1
98
Total costs 2,038
2,239
179
46
2,464
Revenue adjustments, primarily for pricing on prior period open sales 6
6
—
—
6
Gross profit $ 1,723
$ 1,522
$ 184
$ 17
$ 1,723

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 4,181
$ 1,984
$ 262

Treatment charges N/A
120
N/A

Net noncash and other costs N/A
98
N/A

Revenue adjustments, primarily for pricing on prior period open sales 6
N/A
N/A

Eliminations and other 12
47
13

North America copper mines 4,199
2,249
275

South America mining 3,462
1,483
208

Indonesia mining 2,897
1,676
153

Africa mining 994
456
114

Molybdenum 982
812
47

Rod & Refining 3,822
3,800
7

Atlantic Copper Smelting & Refining 2,045
1,988
31

Corporate, other & eliminations (4,904 ) (4,822 ) 21

As reported in FCX’s consolidated financial statements $ 13,497
$ 7,642
$ 856


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


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

~~Table of Contents~~

~~North America Copper Mines Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2011
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 3,820
$ 3,820
$ 429
$ 84
$ 4,333

Site production and delivery, before net noncash and other costs shown below 1,637
1,466
178
33
1,677
By-product credits^a
(473 ) —
—
—
—
Treatment charges 97
93
—
4
97
Net cash costs 1,261
1,559
178
37
1,774
Depreciation, depletion and amortization 185
173
10
2
185
Noncash and other costs, net 117
114
2
1
117
Total costs 1,563
1,846
190
40
2,076
Revenue adjustments, primarily for pricing on prior period open sales (1 ) (1 ) —
—
(1 )
Gross profit $ 2,256
$ 1,973
$ 239
$ 44
$ 2,256

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 4,333
$ 1,677
$ 185

Treatment charges N/A
97
N/A

Net noncash and other costs N/A
117
N/A

Revenue adjustments, primarily for pricing on prior period open sales (1 ) N/A
N/A

Eliminations and other 7
32
11

North America copper mines 4,339
1,923
196

South America mining 3,903
1,330
187

Indonesia mining 4,656
1,547
179

Africa mining 963
422
98

Molybdenum 1,119
786
44

Rod & Refining 4,310
4,292
6

Atlantic Copper Smelting & Refining 2,252
2,274
30

Corporate, other & eliminations (4,824 ) (5,070 ) 16

As reported in FCX’s consolidated financial statements $ 16,718
$ 7,504
$ 756


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


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

~~Table of Contents~~

South America Mining Product Revenues and Production Costs


Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
(In millions)	By-Product			Co-Product Method								By-Product			Co-Product Method
	Method			Copper			Other			Total		Method			Copper			Other			Total
Revenues, excluding adjustments	$	1,132		$	1,132		$	84	^a	$	1,216	$	993		$	993		$	87	^a	$	1,080

Site production and delivery, before net noncash and other costs shown below	503			464			45			509		462			425			41			466
By-product credits	(78		)	—			—			—		(83		)	—			—			—
Treatment charges	52			52			—			52		50			50			—			50
Net cash costs	477			516			45			561		429			475			41			516
Depreciation, depletion and amortization	74			71			3			74		71			67			4			71
Noncash and other costs, net	22			14			8			22		16			8			8			16
Total costs	573			601			56			657		516			550			53			603
Revenue adjustments, primarily for pricing on prior period open sales	23			23			—			23		(15		)	(15		)	—			(15		)
Gross profit	$	582		$	554		$	28		$	582	$	462		$	428		$	34		$	462

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization					Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,216		$	509		$	74				$	1,080		$	466		$	71
Treatment charges	(52		)	N/A			N/A					(50		)	—			—
Net noncash and other costs	N/A			22			N/A					—			16			—
Revenue adjustments, primarily for pricing on prior period open sales	23			N/A			N/A					(15		)	—			—
Eliminations and other	5			(1		)	—					(1		)	(7		)	—
South America mining	1,192			530			74					1,014			475			71
North America copper mines	1,316			760			88					1,389			811			102
Indonesia mining	991			587			54					931			563			55
Africa mining	367			172			42					438			185			58
Molybdenum	308			273			18
Molybdenum mines												143			80			20
Rod & Refining	1,228			1,222			2					1,337			1,328			3
Atlantic Copper Smelting & Refining	638			624			11					639			628			10
Corporate, other & eliminations	(1,623		)	(1,576		)	9					(1,308		)	(1,351		)	10
As reported in FCX’s consolidated financial statements	$	4,417		$	2,592		$	298				$	4,583		$	2,719		$	329

Includes gold sales of 21 thousand ounces ($~~1,736~~1,617 per ounce average realized price), silver sales of ~~811~~988 thousand ounces ($~~27.99~~30.45 per ounce average realized price) ~~and~~; also includes sales of Cerro Verde production to our molybdenum sales of 2 million pounds ($~~9.71~~9.74 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.

5348

Table of Contents

South America Mining Product Revenues and Production Costs (continued)


Three Months Ended September 30, 2011
Three Months Ended March 31, 2012
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Other			Total			Method			Copper			Other			Total
Revenues, excluding adjustments	$	1,112		$	1,112		$	124	^a	$	1,236		$	1,098		$	1,098		$	90	^a	$	1,188

Site production and delivery, before net noncash and other costs shown below	445			402			50			452			439			405			40			445
By-product credits	(117		)	—			—			—			(84		)	—			—			—
Treatment charges	43			43			—			43			47			47			—			47
Net cash costs	371			445			50			495			402			452			40			492
Depreciation, depletion and amortization	64			60			4			64			62			59			3			62
Noncash and other costs, net	27			22			5			27			21			13			8			21
Total costs	462			527			59			586			485			524			51			575
Revenue adjustments, primarily for pricing on prior period open sales	(147		)	(147		)	—			(147		)	110			109			1			110
Gross profit	$	503		$	438		$	65		$	503		$	723		$	683		$	40		$	723

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,236		$	452		$	64					$	1,188		$	445		$	62
Treatment charges	(43		)	N/A			N/A						(47		)	—			—
Net noncash and other costs	N/A			27			N/A						—			21			—
Revenue adjustments, primarily for pricing on prior period open sales	(147		)	N/A			N/A						110			—			—
Eliminations and other	7			(1		)	—						3			(3		)	—
South America mining	1,053			478			64						1,254			463			62
North America copper mines	1,419			664			67						1,456			707			93
Indonesia mining	1,362			503			62						950			515			46
Africa mining	276			142			32						305			132			32
Molybdenum	332			260			14
Molybdenum mines													126			70			11
Rod & Refining	1,396			1,390			2						1,304			1,297			2
Atlantic Copper Smelting & Refining	837			826			11						712			695			10
Corporate, other & eliminations	(1,480		)	(1,693		)	5						(1,502		)	(1,451		)	11
As reported in FCX’s consolidated financial statements	$	5,195		$	2,570		$	257					$	4,605		$	2,428		$	267

Includes gold sales of 2319 thousand ounces ($~~1,664~~1,680 per ounce average realized price), silver sales of ~~834~~698 thousand ounces ($~~40.75~~30.32 per ounce average realized price) ~~and~~; also includes sales of Cerro Verde production to our molybdenum sales company of 2 million pounds ($~~13.53~~ ~~per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.~~

~~Table of Contents~~

~~South America Mining Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2012
(In millions) By-Product Co-Product Method
Method Copper Other Total
Revenues, excluding adjustments $ 3,247
$ 3,247
$ 249
^a
$ 3,496

Site production and delivery, before net noncash and other costs shown below 1,411
1,307
122
1,429
By-product credits (231 ) —
—
—
Treatment charges 147
147
—
147
Net cash costs 1,327
1,454
122
1,576
Depreciation, depletion and amortization 208
197
11
208
Noncash and other costs, net 63
41
22
63
Total costs 1,598
1,692
155
1,847
Revenue adjustments, primarily for pricing on prior period open sales 105
105
—
105
Gross profit $ 1,754
$ 1,660
$ 94
$ 1,754

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 3,496
$ 1,429
$ 208

Treatment charges (147 ) N/A
N/A

Net noncash and other costs N/A
63
N/A

Revenue adjustments, primarily for pricing on prior period open sales 105
N/A
N/A

Eliminations and other 8
(9 ) —

South America mining 3,462
1,483
208

North America copper mines 4,199
2,249
275

Indonesia mining 2,897
1,676
153

Africa mining 994
456
114

Molybdenum 982
812
47

Rod & Refining 3,822
3,800
7

Atlantic Copper Smelting & Refining 2,045
1,988
31

Corporate, other & eliminations (4,904 ) (4,822 ) 21

As reported in FCX’s consolidated financial statements $ 13,497
$ 7,642
$ 856


a.	~~Includes gold sales of~~ ~~56 thousand~~ ~~ounces ($1,678~~ ~~per ounce average realized price), silver sales of~~ ~~2.2 million~~ ~~ounces ($28.84~~ ~~per ounce average realized price) and molybdenum sales of~~ ~~6 million~~ ~~pounds ($11.26~~12.35 per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.

5549

Table of Contents

~~South America Mining Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2011
(In millions) By-Product Co-Product Method
Method Copper Other Total
Revenues, excluding adjustments $ 3,688
$ 3,688
$ 372
^a
$ 4,060

Site production and delivery, before net noncash and other costs shown below 1,268
1,159
128
1,287
By-product credits (353 ) —
—
—
Treatment charges 164
164
—
164
Net cash costs 1,079
1,323
128
1,451
Depreciation, depletion and amortization 187
175
12
187
Noncash and other costs, net 68
60
8
68
Total costs 1,334
1,558
148
1,706
Revenue adjustments, primarily for pricing on prior period open sales 14
(6 ) 20
14
Gross profit $ 2,368
$ 2,124
$ 244
$ 2,368

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 4,060
$ 1,287
$ 187

Treatment charges (164 ) N/A
N/A

Net noncash and other costs N/A
68
N/A

Revenue adjustments, primarily for pricing on prior period open sales 14
N/A
N/A

Eliminations and other (7 ) (25 ) —

South America mining 3,903
1,330
187

North America copper mines 4,339
1,923
196

Indonesia mining 4,656
1,547
179

Africa mining 963
422
98

Molybdenum 1,119
786
44

Rod & Refining 4,310
4,292
6

Atlantic Copper Smelting & Refining 2,252
2,274
30

Corporate, other & eliminations (4,824 ) (5,070 ) 16

As reported in FCX’s consolidated financial statements $ 16,718
$ 7,504
$ 756


a.	~~Includes gold sales of~~ ~~72 thousand~~ ~~ounces ($1,556~~ ~~per ounce average realized price), silver sales of~~ ~~2.3 million~~ ~~ounces ($38.70~~ ~~per ounce average realized price) and molybdenum sales of~~ ~~8 million~~ ~~pounds ($14.59~~ ~~per pound average realized price), which reflects molybdenum produced by Cerro Verde at market-based pricing.~~

~~Table of Contents~~

Indonesia Mining Product Revenues and Production Costs


Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
(In millions)	By-Product			Co-Product Method										By-Product			Co-Product Method
	Method			Copper			Gold		Silver			Total		Method			Copper			Gold			Silver			Total
Revenues, excluding adjustments	$	729		$	729		$	307	$	15	^a	$	1,051	$	680		$	680		$	307		$	16	^a	$	1,003

Site production and delivery, before net noncash and other costs shown below	578			401			169		8			578		516			350			158			8			516
Gold and silver credits	(324		)	—			—		—			—		(322		)	—			—			—			—
Treatment charges	44			30			13		1			44		45			30			14			1			45
Royalty on metals	25			18			7		—			25		26			18			8			—			26
Net cash costs	323			449			189		9			647		265			398			180			9			587
Depreciation and amortization	54			37			16		1			54		55			37			17			1			55
Noncash and other costs, net	9			7			2		—			9		52			35			16			1			52
Total costs	386			493			207		10			710		372			470			213			11			694
Revenue adjustments, primarily for pricing on prior period open sales	7			7			2		—			9		—			—			(1		)	—			(1		)
PT Smelting intercompany profit														5			3			2			—			5
Gross profit	$	350		$	243		$	102	$	5		$	350	$	313		$	213		$	95		$	5		$	313

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization							Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,051		$	578		$	54						$	1,003		$	516		$	55
Treatment charges	(44		)	N/A			N/A							(45		)	—			—
Royalty on metals	(25		)	N/A			N/A							(26		)	—			—
Net noncash and other costs	N/A			9			N/A							—			52			—
Revenue adjustments, primarily for pricing on prior period open sales	9			N/A			N/A							(1		)	—			—
PT Smelting intercompany profit														—			(5		)	—
Indonesia mining	991			587			54							931			563			55
North America copper mines	1,316			760			88							1,389			811			102
South America mining	1,192			530			74							1,014			475			71
Africa mining	367			172			42							438			185			58
Molybdenum	308			273			18
Molybdenum mines														143			80			20
Rod & Refining	1,228			1,222			2							1,337			1,328			3
Atlantic Copper Smelting & Refining	638			624			11							639			628			10
Corporate, other & eliminations	(1,623		)	(1,576		)	9							(1,308		)	(1,351		)	10
As reported in FCX’s consolidated financial statements	$	4,417		$	2,592		$	298						$	4,583		$	2,719		$	329


a.	Includes silver sales of ~~469~~563 thousand ounces ($~~33.04~~28.49 per ounce average realized price).

5750

Table of Contents

Indonesia Mining Product Revenues and Production Costs (continued)


Three Months Ended September 30, 2011
Three Months Ended March 31, 2012
(In millions)	By-Product			Co-Product Method											By-Product			Co-Product Method
	Method			Copper			Gold		Silver			Total			Method			Copper			Gold			Silver			Total
Revenues, excluding adjustments	$	831		$	831		$	650	$	27	^a	$	1,508		$	511		$	511		$	451		$	15	^a	$	977

Site production and delivery, before net noncash and other costs shown below	499			275			215		9			499			470			245			217			8			470
Gold and silver credits	(707		)	—			—		—			—			(469		)	—			—			—			—
Treatment charges	47			26			20		1			47			25			13			12			—			25
Royalty on metals	41			23			17		1			41			18			10			8			—			18
Net cash (credits) costs	(120		)	324			252		11			587			44			268			237			8			513
Depreciation and amortization	62			34			27		1			62			46			24			21			1			46
Noncash and other costs, net	4			2			2		—			4			25			13			12			—			25
Total (credits) costs	(54		)	360			281		12			653			115			305			270			9			584
Revenue adjustments, primarily for pricing on prior period open sales	(88		)	(88		)	28		2			(58		)	13			13			3			—			16
PT Smelting intercompany loss															(20		)	(11		)	(9		)	—			(20		)
Gross profit	$	797		$	383		$	397	$	17		$	797		$	389		$	208		$	175		$	6		$	389

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization								Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,508		$	499		$	62							$	977		$	470		$	46
Treatment charges	(47		)	N/A			N/A								(25		)	—			—
Royalty on metals	(41		)	N/A			N/A								(18		)	—			—
Net noncash and other costs	N/A			4			N/A								—			25			—
Revenue adjustments, primarily for pricing on prior period open sales	(58		)	N/A			N/A								16			—			—
PT Smelting intercompany loss															—			20			—
Indonesia mining	1,362			503			62								950			515			46
North America copper mines	1,419			664			67								1,456			707			93
South America mining	1,053			478			64								1,254			463			62
Africa mining	276			142			32								305			132			32
Molybdenum	332			260			14
Molybdenum mines															126			70			11
Rod & Refining	1,396			1,390			2								1,304			1,297			2
Atlantic Copper Smelting & Refining	837			826			11								712			695			10
Corporate, other & eliminations	(1,480		)	(1,693		)	5								(1,502		)	(1,451		)	11
As reported in FCX’s consolidated financial statements	$	5,195		$	2,570		$	257							$	4,605		$	2,428		$	267


a.	Includes silver sales of ~~807~~449 thousand ounces ($~~34.05~~ ~~per ounce average realized price).~~

~~Table of Contents~~

~~Indonesia Mining Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2012
(In millions) By-Product Co-Product Method
Method Copper Gold Silver Total
Revenues, excluding adjustments $ 1,863
$ 1,863
$ 1,150
$ 43
^a
$ 3,056

Site production and delivery, before net noncash and other costs shown below 1,637
998
616
23
1,637
Gold and silver credits (1,196 ) —
—
—
—
Treatment charges 107
65
40
2
107
Royalty on metals 68
42
25
1
68
Net cash costs 616
1,105
681
26
1,812
Depreciation and amortization 153
93
58
2
153
Noncash and other costs, net 39
24
15
—
39
Total costs 808
1,222
754
28
2,004
Revenue adjustments, primarily for pricing on prior period open sales 13
13
3
—
16
Gross profit $ 1,068
$ 654
$ 399
$ 15
$ 1,068

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 3,056
$ 1,637
$ 153

Treatment charges (107 ) N/A
N/A

Royalty on metals (68 ) N/A
N/A

Net noncash and other costs N/A
39
N/A

Revenue adjustments, primarily for pricing on prior period open sales 16
N/A
N/A

Indonesia mining 2,897
1,676
153

North America copper mines 4,199
2,249
275

South America mining 3,462
1,483
208

Africa mining 994
456
114

Molybdenum 982
812
47

Rod & Refining 3,822
3,800
7

Atlantic Copper Smelting & Refining 2,045
1,988
31

Corporate, other & eliminations (4,904 ) (4,822 ) 21

As reported in FCX’s consolidated financial statements $ 13,497
$ 7,642
$ 856


a.	~~Includes silver sales of~~ ~~1.4 million~~ ~~ounces ($31.04~~33.08 per ounce average realized price).

5951

Table of Contents

~~Indonesia Mining Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2011
(In millions) By-Product Co-Product Method
Method Copper Gold Silver Total
Revenues, excluding adjustments $ 3,040
$ 3,040
$ 1,829
$ 92
^a
$ 4,961

Site production and delivery, before net noncash and other costs shown below 1,521
932
561
28
1,521
Gold and silver credits (1,903 ) —
—
—
—
Treatment charges 145
89
53
3
145
Royalty on metals 130
79
48
3
130
Net cash (credits) costs (107 ) 1,100
662
34
1,796
Depreciation and amortization 179
110
66
3
179
Noncash and other costs, net 26
16
10
—
26
Total costs 98
1,226
738
37
2,001
Revenue adjustments, primarily for pricing on prior period open sales (12 ) (12 ) (17 ) (1 ) (30 )
Gross profit $ 2,930
$ 1,802
$ 1,074
$ 54
$ 2,930

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 4,961
$ 1,521
$ 179

Treatment charges (145 ) N/A
N/A

Royalty on metals (130 ) N/A
N/A

Net noncash and other costs N/A
26
N/A

Revenue adjustments, primarily for pricing on prior period open sales (30 ) N/A
N/A

Indonesia mining 4,656
1,547
179

North America copper mines 4,339
1,923
196

South America mining 3,903
1,330
187

Africa mining 963
422
98

Molybdenum 1,119
786
44

Rod & Refining 4,310
4,292
6

Atlantic Copper Smelting & Refining 2,252
2,274
30

Corporate, other & eliminations (4,824 ) (5,070 ) 16

As reported in FCX’s consolidated financial statements $ 16,718
$ 7,504
$ 756


a.	~~Includes silver sales of~~ ~~2.5 million~~ ~~ounces ($36.44~~ ~~per ounce average realized price).~~

~~Table of Contents~~

Africa Mining Product Revenues and Production Costs


Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
(In millions)	By-Product			Co-Product Method								By-Product			Co-Product Method
	Method			Copper			Cobalt		Total			Method			Copper			Cobalt		Total
Revenues, excluding adjustments^a	$	312		$	312		$	64	$	376		$	401		$	401		$	41	$	442

Site production and delivery, before net noncash and other costs shown below	143			127			39		166			164			157			23		180
Cobalt credits^b	(41		)	—			—		—			(27		)	—			—		—
Royalty on metals	7			6			1		7			8			7			1		8
Net cash costs	109			133			40		173			145			164			24		188
Depreciation, depletion and amortization	42			38			4		42			58			54			4		58
Noncash and other costs, net	6			5			1		6			5			5			—		5
Total costs	157			176			45		221			208			223			28		251
Revenue adjustments, primarily for pricing on prior period open sales	(2		)	(2		)	—		(2		)	2			2			2		4
Gross profit	$	153		$	134		$	19	$	153		$	195		$	180		$	15	$	195

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization					Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	376		$	166		$	42				$	442		$	180		$	58
Royalty on metals	(7		)	N/A			N/A					(8		)	—			—
Net noncash and other costs	N/A			6			N/A					—			5			—
Revenue adjustments, primarily for pricing on prior period open sales	(2		)	N/A			N/A					4			—			—
Africa mining	367			172			42					438			185			58
North America copper mines	1,316			760			88					1,389			811			102
South America mining	1,192			530			74					1,014			475			71
Indonesia mining	991			587			54					931			563			55
Molybdenum	308			273			18
Molybdenum mines												143			80			20
Rod & Refining	1,228			1,222			2					1,337			1,328			3
Atlantic Copper Smelting & Refining	638			624			11					639			628			10
Corporate, other & eliminations	(1,623		)	(1,576		)	9					(1,308		)	(1,351		)	10
As reported in FCX’s consolidated financial statements	$	4,417		$	2,592		$	298				$	4,583		$	2,719		$	329


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

6152

Table of Contents

Africa Mining Product Revenues and Production Costs (continued)

Three Months Ended September 30, 2011
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 226
$ 226
$ 56
$ 282

Site production and delivery, before net noncash and other costs shown below 101
92
31
123
Cobalt credits^b
(34 ) —
—
—
Royalty on metals 5
4
1
5
Net cash costs 72
96
32
128
Depreciation, depletion and amortization 32
27
5
32
Noncash and other costs, net 19
15
4
19
Total costs 123
138
41
179
Revenue adjustments, primarily for pricing on prior period open sales (1 ) (1 ) —
(1 )
Gross profit $ 102
$ 87
$ 15
$ 102

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 282
$ 123
$ 32

Royalty on metals (5 ) N/A
N/A

Net noncash and other costs N/A
19
N/A

Revenue adjustments, primarily for pricing on prior period open sales (1 ) N/A
N/A

Africa mining 276
142
32

North America copper mines 1,419
664
67

South America mining 1,053
478
64

Indonesia mining 1,362
503
62

Molybdenum 332
260
14

Rod & Refining 1,396
1,390
2

Atlantic Copper Smelting & Refining 837
826
11

Corporate, other & eliminations (1,480 ) (1,693 ) 5

As reported in FCX’s consolidated financial statements $ 5,195
$ 2,570
$ 257


a.	~~Includes point-of-sale transportation costs as negotiated in customer contracts.~~


b.	~~Net of cobalt downstream processing and freight costs.~~

~~Table of Contents~~

~~Africa Mining Product Revenues and Production Costs (continued)~~


Nine Months Ended September 30, 2012
Three Months Ended March 31, 2012
(In millions)	By-Product			Co-Product Method							By-Product			Co-Product Method
	Method			Copper			Cobalt		Total		Method			Copper			Cobalt		Total
Revenues, excluding adjustments^a	$	845		$	845		$	157	$	1,002	$	257		$	257		$	43	$	300

Site production and delivery, before net noncash and other costs shown below	368			341			95		436		103			99			26		125
Cobalt credits^b	(91		)	—			—		—		(23		)	—			—		—
Royalty on metals	18			16			2		18		5			5			—		5
Net cash costs	295			357			97		454		85			104			26		130
Depreciation, depletion and amortization	114			101			13		114		32			29			3		32
Noncash and other costs, net	20			18			2		20		7			6			1		7
Total costs	429			476			112		588		124			139			30		169
Revenue adjustments, primarily for pricing on prior period open sales	8			8			2		10		8			8			2		10
Gross profit	$	424		$	377		$	47	$	424	$	141		$	126		$	15	$	141

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization				Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,002		$	436		$	114			$	300		$	125		$	32
Royalty on metals	(18		)	N/A			N/A				(5		)	—			—
Net noncash and other costs	N/A			20			N/A				—			7			—
Revenue adjustments, primarily for pricing on prior period open sales	10			N/A			N/A				10			—			—
Africa mining	994			456			114				305			132			32
North America copper mines	4,199			2,249			275				1,456			707			93
South America mining	3,462			1,483			208				1,254			463			62
Indonesia mining	2,897			1,676			153				950			515			46
Molybdenum	982			812			47
Molybdenum mines											126			70			11
Rod & Refining	3,822			3,800			7				1,304			1,297			2
Atlantic Copper Smelting & Refining	2,045			1,988			31				712			695			10
Corporate, other & eliminations	(4,904		)	(4,822		)	21				(1,502		)	(1,451		)	11
As reported in FCX’s consolidated financial statements	$	13,497		$	7,642		$	856			$	4,605		$	2,428		$	267


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

6353

Table of Contents

~~Africa Mining Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30, 2011
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 779
$ 779
$ 201
$ 980

Site production and delivery, before net noncash and other costs shown below 313
275
105
380
Cobalt credits^b
(136 ) —
—
—
Royalty on metals 18
14
4
18
Net cash costs 195
289
109
398
Depreciation, depletion and amortization 98
83
15
98
Noncash and other costs, net 42
35
7
42
Total costs 335
407
131
538
Revenue adjustments, primarily for pricing on prior period open sales (1 ) (1 ) 2
1
Gross profit $ 443
$ 371
$ 72
$ 443

Reconciliation to Amounts Reported
Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 980
$ 380
$ 98

Royalty on metals (18 ) N/A
N/A

Net noncash and other costs N/A
42
N/A

Revenue adjustments, primarily for pricing on prior period open sales 1
N/A
N/A

Africa mining 963
422
98

North America copper mines 4,339
1,923
196

South America mining 3,903
1,330
187

Indonesia mining 4,656
1,547
179

Molybdenum 1,119
786
44

Rod & Refining 4,310
4,292
6

Atlantic Copper Smelting & Refining 2,252
2,274
30

Corporate, other & eliminations (4,824 ) (5,070 ) 16

As reported in FCX’s consolidated financial statements $ 16,718
$ 7,504
$ 756


a.	~~Includes point-of-sale transportation costs as negotiated in customer contracts.~~


b.	~~Net of cobalt downstream processing and freight costs.~~

~~Table of Contents~~

~~Henderson~~ Molybdenum ~~Mine~~Mines Product Revenues and Production Costs


	Three Months Ended September 30,								Three Months Ended March 31,
(In millions)	2012			2011					2013^a			2012^a
Revenues, excluding adjustments	$	119		$	163				$	155		$	134

Site production and delivery, before net noncash and other costs shown below	54			55					78			53
Treatment charges and other	8			11					12			8
Net cash costs	62			66					90			61
Depreciation, depletion and amortization	9			10					20			8
Noncash and other costs, net	4			—					2			1
Total costs	75			76					112			70
Gross profit^a	$	44		$	87
Gross profit									$	43		$	64

Reconciliation to Amounts Reported	Revenues			Production and Delivery			Depreciation, Depletion and Amortization		Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Three Months Ended September 30, 2012
Three Months Ended March 31, 2013
Totals presented above	$	119		$	54		$	9	$	155		$	78		$	20
Treatment charges and other	(8		)	N/A			N/A		(12		)	—			—
Net noncash and other costs	N/A			4			N/A		—			2			—
Henderson mine	111			58			9
Other molybdenum operations and eliminations^b	197			215			9
Molybdenum	308			273			18
Molybdenum mines									143			80			20
North America copper mines	1,316			760			88		1,389			811			102
South America mining	1,192			530			74		1,014			475			71
Indonesia mining	991			587			54		931			563			55
Africa mining	367			172			42		438			185			58
Rod & Refining	1,228			1,222			2		1,337			1,328			3
Atlantic Copper Smelting & Refining	638			624			11		639			628			10
Corporate, other & eliminations	(1,623		)	(1,576		)	9
Corporate, other & eliminations^b									(1,308		)	(1,351		)	10
As reported in FCX’s consolidated financial statements	$	4,417		$	2,592		$	298	$	4,583		$	2,719		$	329

Three Months Ended September 30, 2011
Three Months Ended March 31, 2012
Totals presented above	$	163		$	55		$	10	$	134		$	53		$	8
Treatment charges and other	(11		)	N/A			N/A		(8		)	—			—
Net noncash and other costs	N/A			—			N/A		—			1			—
Henderson mine	152			55			10		126			54			8
Other molybdenum operations and eliminations^b	180			205			4
Molybdenum	332			260			14
Climax mine									—			16			3
Molybdenum mines									126			70			11
North America copper mines	1,419			664			67		1,456			707			93
South America mining	1,053			478			64		1,254			463			62
Indonesia mining	1,362			503			62		950			515			46
Africa mining	276			142			32		305			132			32
Rod & Refining	1,396			1,390			2		1,304			1,297			2
Atlantic Copper Smelting & Refining	837			826			11		712			695			10
Corporate, other & eliminations	(1,480		)	(1,693		)	5
Corporate, other & eliminations^b									(1,502		)	(1,451		)	11
As reported in FCX’s consolidated financial statements	$	5,195		$	2,570		$	257	$	4,605		$	2,428		$	267

~~Gross profit~~

First-quarter2013 includes the results of the Henderson and Climax mines; first-quarter2012 reflects ~~sales~~the results of only the Henderson production to our Molybdenum sales company based on volumes produced at market-based pricing. On a consolidated basis, the Molybdenum division 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.mine.


b.	~~Primarily includes~~Includes amounts associated with ~~the~~our molybdenum sales company, which includes sales of molybdenum produced by the molybdenum mines and by certain of our North and South America copper mines. ~~Also includes the results of the Climax molybdenum mine, which commenced commercial production in May 2012.~~

6554

Table of Contents

~~Henderson Molybdenum Mine Product Revenues and Production Costs (continued)~~

Nine Months Ended September 30,
(In millions) 2012 2011
Revenues, excluding adjustments $ 383
$ 499

Site production and delivery, before net noncash and other costs shown below 159
158

Treatment charges and other 23
28

Net cash costs 182
186

Depreciation, depletion and amortization 25
27

Noncash and other costs, net 5
1

Total costs 212
214

Gross profit^a
$ 171
$ 285

Reconciliation to Amounts Reported Revenues Production and Delivery Depreciation, Depletion and Amortization
Nine Months Ended September 30, 2012
Totals presented above $ 383
$ 159
$ 25
Treatment charges and other (23 ) N/A
N/A
Net noncash and other costs N/A
5
N/A
Henderson mine 360
164
25
Other molybdenum operations and eliminations^b
622
648
22
Molybdenum 982
812
47
North America copper mines 4,199
2,249
275
South America mining 3,462
1,483
208
Indonesia mining 2,897
1,676
153
Africa mining 994
456
114
Rod & Refining 3,822
3,800
7
Atlantic Copper Smelting & Refining 2,045
1,988
31
Corporate, other & eliminations (4,904 ) (4,822 ) 21
As reported in FCX’s consolidated financial statements $ 13,497
$ 7,642
$ 856

Nine Months Ended September 30, 2011
Totals presented above $ 499
$ 158
$ 27
Treatment charges and other (28 ) N/A
N/A
Net noncash and other costs N/A
1
N/A
Henderson mine 471
159
27
Other molybdenum operations and eliminations^b
648
627
17
Molybdenum 1,119
786
44
North America copper mines 4,339
1,923
196
South America mining 3,903
1,330
187
Indonesia mining 4,656
1,547
179
Africa mining 963
422
98
Rod & Refining 4,310
4,292
6
Atlantic Copper Smelting & Refining 2,252
2,274
30
Corporate, other & eliminations (4,824 ) (5,070 ) 16
As reported in FCX’s consolidated financial statements $ 16,718
$ 7,504
$ 756


a.	Gross profit reflects sales of Henderson production to our Molybdenum sales company based on volumes produced at market-based pricing. On a consolidated basis, the Molybdenum division 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.


b.	Primarily includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced by our North and South America copper mines. Also includes the results of the Climax molybdenum mine, which commenced commercial production in May 2012.

~~Table of Contents~~

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss factors we believe may affect our future performance. Forward-looking statements are all statements other than statements of historical facts, such as those statements regarding projected ore grades and milling rates, projected production and sales volumes, projected unit net cash costs, projected operating cash flows, projected capital expenditures, exploration efforts and results, mine production and development plans, the impact of deferred intercompany profits on earnings, liquidity, other financial commitments and tax rates, the impact of copper, gold, molybdenum and cobalt price changes, future dividend payments and potential share purchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of our Board ~~of Directors~~ and will depend on our financial results, cash requirements, future prospects, the impact of pending acquisitions and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include commodity prices, mine sequencing, production rates, industry risks, regulatory changes, political risks, the outcome of ongoing discussions with the Indonesian government, the potential effects of violence in Indonesia, the resolution of administrative disputes in the DRC, weather- and climate-related risks, labor relations, environmental risks, litigation results, currency translation risks, risks associated with the completion of pending acquisitions and other factors described in more detail under the heading “Risk Factors” in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2011~~2012, filed with the SEC as updated by our subsequent filings with the SEC.

Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after our forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. We caution investors that we do not intend to update our forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes, and we undertake no obligation to update any forward-looking statements.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risks during the three-month period ended ~~September 30, 2012~~March 31, 2013. For additional information on market risks, refer to “Disclosures About Market Risks” included in Part II, Item 7A. of our annual report on Form 10-K for the year ended December 31, ~~2011~~2012. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~September 30, 2012~~March 31, 2013; for projected sensitivities of our provisionally priced copper sales to changes in commodity prices refer to “Consolidated Results – Revenues” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~September 30, 2012~~March 31, 2013.


Item 4.	Controls and Procedures.

(a)

Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on their evaluation, they have concluded that our disclosure controls and procedures are effective as of ~~September 30, 2012~~March 31, 2013.

(b)

Changes in internal control over financial reporting. During second-quarter 2011, we began a phased implementation of a new enterprise resource planning (ERP) information technology system to upgrade our information technology infrastructure and enhance operating efficiency and effectiveness. Implementation has been completed at our North America, South America, Africa and ~~Africa~~Indonesia mining operations, and ~~has recently commenced at our Indonesia mining operations. We~~we expect the initial implementation of the ERP system to be completed at all of our operations ~~over an approximate two-year period.~~in 2013. During each phase of the implementation, an appropriate level of training of employees, testing of the system and monitoring of the financial results recorded in the system is conducted. Management has updated our system of internal control over financial reporting for the impacted operating business units.

With the exception of the ERP implementation described above, there has been no change in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2012~~March 31, 2013, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Part II.	OTHER INFORMATION


Item 1.	Legal Proceedings.

We are involved in numerous legal proceedings that arise in the ordinary course of our business or are associated with environmental issues arising from legacy operations conducted over the years by Freeport-McMoRan Corporation (FMC - formerly Phelps Dodge Corporation) and its affiliates. We are also involved from time to time in other reviews, investigations and proceedings by government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

Management does not believe, based on currently available information, that the outcome of any proceeding reported in Note 13 and incorporated by reference into Part I, Item 3. “Legal Proceedings” of our annual report on Form 10-K for the year ended December 31, ~~2011~~2012 ~~(as updated by our quarterly reports on Form 10-Q)~~ will have a material adverse effect on our financial condition; although individual outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period. Refer to Note 89 for discussion of updates to previously reported legal proceedings.

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Item 1A. Risk Factors.

There have been no material changes to our risk factors during the three-month period ended ~~September 30, 2012~~March 31, 2013. For additional information on risk factors, refer to Part I, Item 1A. "Risk Factors" of our annual report on Form 10-K for the year ended December 31, ~~2011~~2012~~, as updated by Part II, Item 1A. "Risk Factors" of our quarterly report on Form 10-Q for the period ended June 30, 2012.~~.


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


(c)	The following table sets forth information with respect to shares of Freeport-McMoRan Copper & Gold Inc. (FCX) common stock purchased by us during the three months ended ~~September 30, 2012~~March 31, 2013:

~~Period~~

~~(a) Total Number~~

~~of Shares Purchased~~

~~(b) Average~~

~~Price Paid Per Share~~

~~(c) Total Number of~~

~~Shares Purchased as Part~~

~~of Publicly Announced Plans or Programs~~^a

~~(d) Maximum Number~~

~~of Shares That May~~

~~Yet Be Purchased Under the Plans or Programs~~^a

~~July 1-31, 2012~~

—

~~23,685,500~~

~~August 1-31, 2012~~

—

~~23,685,500~~

~~September 1-30, 2012~~

—

~~23,685,500~~

~~Total~~

—

~~23,685,500~~



Period	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^b	(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs^b
Period	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share
January 1-31, 2013	—		$	—	—	23,685,500
February 1-28, 2013	15,000	^a	$	35.16	—	23,685,500
March 1-31, 2013	—		$	—	—	23,685,500
Total	15,000		$	35.16	—	23,685,500


a.	Consists of shares acquired in connection with stock option exercises.


b.	On July 21, 2008, our Board of Directors approved an increase in our open-market share purchase program for up to 30 million ~~shares, of which 23.7 million shares remain available for purchase.~~shares. There have been no purchases under this program since 2008. This program does not have an expiration date.


Item 4.	Mine Safety Disclosure.

The safety and health of all employees is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. Our approach towards the safety and health of our workforce is to continuously improve performance through implementing robust management systems and providing adequate training, safety incentive and occupational health programs. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this quarterly report on Form 10-Q.


Item 6.	Exhibits.

The exhibits to this report are listed in the Exhibit Index beginning on Page E-1 hereof.

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FREEPORT-McMoRan COPPER & GOLD INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	FREEPORT-McMoRan COPPER & GOLD INC.

	By:	/s/ ~~Kathleen L. Quirk~~C. Donald Whitmire, Jr.
		~~Kathleen L. Quirk~~C. Donald Whitmire, Jr.
		~~Executive~~ Vice President and
		~~Chief~~Controller - Financial ~~Officer & Treasurer~~Reporting
		(authorized signatory
		and Principal ~~Financial~~Accounting Officer)

Date: ~~November 2, 2012~~May 6, 2013

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FREEPORT-McMoRan COPPER & GOLD INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
3.1	Composite Certificate of Incorporation of FCX.		10-Q	001-11307-01	8/6/2010
3.2	Amended and Restated By-Laws of FCX, as amended through ~~February 2, 2010.~~April 17, 2013		8-K	001-11307-01	~~2/5/2010~~4/17/2013
4.1	Indenture dated as of March 19, 2007, from FCX to The Bank of New York, as Trustee, with respect to the Senior Floating Rate Notes due 2015.		8-K	001-11307-01	3/19/2007
4.2	Indenture dated as of February 13, 2012 between ~~FCX and U.S. Bank National Association, as trustee.~~		~~8-K~~	~~001-11307-01~~	~~2/13/2012~~
~~4.2~~	~~First Supplemental Indenture dated as of February 13, 2012, between FCX~~Freeport-McMoRan Copper & Gold Inc. and U.S. Bank National Association, as trustee.		8-K	001-11307-01	2/13/2012
4.3	~~Second~~First Supplemental Indenture dated as of February 13, 2012 between ~~FCX~~Freeport-McMoRan Copper & Gold Inc. and U.S. Bank National Association, as trustee.		8-K	001-11307-01	2/13/2012
4.4	~~Third~~Second Supplemental Indenture dated as of February 13, 2012 between ~~FCX~~Freeport-McMoRan Copper & Gold Inc. and U.S. Bank National Association, as trustee.		8-K	001-11307-01	2/13/2012
4.5	Third Supplemental Indenture dated as of February 13, 2012 between Freeport-McMoRan Copper & Gold Inc. and U.S. Bank National Association, as trustee.		8-K	001-11307-01	2/13/2012
4.6	Indenture, dated as of March 7, 2013, between Freeport McMoRan Copper & Gold Inc. and U.S. Bank National Association, as trustee.		8-K	001-11307-01	3/7/2013
4.7	Registration Rights Agreement dated as of March 7, 2013, among Freeport McMoRan Copper & Gold Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers, relating to the 2.375% Senior Notes due 2018.		8-K	001-11307-01	3/7/2013
4.8	Registration Rights Agreement dated as of March 7, 2013, among Freeport McMoRan Copper & Gold Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers, relating to the 3.100% Senior Notes due 2020.		8-K	001-11307-01	3/7/2013
4.9	Registration Rights Agreement dated as of March 7, 2013, among Freeport McMoRan Copper & Gold Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers, relating to the 3.875% Senior Notes due 2023.		8-K	001-11307-01	3/7/2013
4.1	Registration Rights Agreement dated as of March 7, 2013, among Freeport McMoRan Copper & Gold Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers, relating to the 5.450% Senior Notes due 2043.		8-K	001-11307-01	3/7/2013
10.1	Purchase Agreement dated as of February 28, 2013 among Freeport-McMoRan Copper & Gold Inc. and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several initial purchasers named in Schedule 1 thereto.		8-K	001-11307-01	3/5/2013
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

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FREEPORT-McMoRan COPPER & GOLD INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350.	X
95.1	Mine Safety and Health Administration Safety Data.	X
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.	X

~~E-1~~E-2



	September 30, 2012		December 31, 2011
Mining operations:^a
Raw materials	$	2	$	1
Finished goods^b	820		769
Atlantic Copper, S.L.U. (Atlantic Copper):
Raw materials (concentrates)	339		260
Work-in-process	191		187
Finished goods	22		9
Total product inventories	1,374		1,226
Total materials and supplies, net^c	1,465		1,354
Total inventories, excluding mill and leach stockpiles	$	2,839	$	2,580



Date of assessment	Tax return year	Tax assessment		Interest assessment		Total
October 2010	2005	$	106	$	52	$	158
November 2011	2006	22		10		32
March 2012	2007	91		44		135
Total		$	219	$	106	$	325



Nine Months Ended September 30, 2011
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	3,820		$	3,820		$	429	$	84	$	4,333

Site production and delivery, before net noncash and other costs shown below	1,637			1,466			178		33		1,677
By-product credits^a	(473		)	—			—		—		—
Treatment charges	97			93			—		4		97
Net cash costs	1,261			1,559			178		37		1,774
Depreciation, depletion and amortization	185			173			10		2		185
Noncash and other costs, net	117			114			2		1		117
Total costs	1,563			1,846			190		40		2,076
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	(1		)	—		—		(1		)
Gross profit	$	2,256		$	1,973		$	239	$	44	$	2,256

Reconciliation to Amounts Reported
	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	4,333		$	1,677		$	185
Treatment charges	N/A			97			N/A
Net noncash and other costs	N/A			117			N/A
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	N/A			N/A
Eliminations and other	7			32			11
North America copper mines	4,339			1,923			196
South America mining	3,903			1,330			187
Indonesia mining	4,656			1,547			179
Africa mining	963			422			98
Molybdenum	1,119			786			44
Rod & Refining	4,310			4,292			6
Atlantic Copper Smelting & Refining	2,252			2,274			30
Corporate, other & eliminations	(4,824		)	(5,070		)	16
As reported in FCX’s consolidated financial statements	$	16,718		$	7,504		$	756