Freeport-McMoRan Inc., (FMCG) often called Freeport, is a mining company based in the Freeport-McMoRan Center, in Phoenix, Arizona.
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Current operations
Freeport is the largest producer of molybdenum, and second largest copper producer in the world.
In 2015, 67% of revenues were from the sale of copper, 11% from the sale of petroleum, 10% from the sale of gold, and 5% from the sale of molybdenum.
In 2015, sales to Phillips 66 accounted for 7% of the total revenues of the company.
The company lists its mining operations as follows:
North America
- Morenci, Arizona - 72% owned by FMCG (copper)
- Bagdad, Arizona - 100% owned (copper, molybdenum)
- Sierrita Mine, Arizona (includes Twin Buttes & Esperanza) - 100% owned (copper, molybdenum)
- Miami, Arizona - 100% owned (copper)
- Safford Mine, Safford, Arizona - 100% owned (copper)
- Chino mine, Santa Rita, New Mexico - 100% owned (copper, molybdenum)
- Tyrone, New Mexico - 100% owned (copper)
- Henderson molybdenum mine, Empire, Colorado - 100% owned (molybdenum)
- Climax mine, Leadville, Colorado - 100% owned (molybdenum)
South America
- El Abra, Chile - 51% owned (copper)
- Cerro Verde, Peru - 53.6% owned (copper, molybdenum)
Europe
- Atlantic Copper, Huelva, Spain - copper refinery
Indonesia
- Grasberg, Papua province, Indonesia - 90.64% owned by FMCG (copper, gold, silver)
Maps Freeport-McMoRan
History
The company was created in 1981 through the merger of Freeport Minerals, formerly Texas Freeport Sulphur Company and McMoRan Oil & Gas Company, becoming Freeport-McMoRan Inc.
Early history
Texas Freeport Sulphur Company was founded July 12, 1912 by the eldest son of Svante Magnus "E.M." Swenson, banker Eric P. Swenson, with a group of investors, to develop sulfur mining along the US Gulf Coast. The company became known as Freeport Sulphur, later changing its corporate name to Freeport Minerals.
Freeport, Texas was also established in 1912 to house workers.
Freeport mined sulphur along the Gulf Coast using the Frasch Process, the patents for which had expired in 1908. Previously, Union Sulphur Company founder and patent-holder Herman Frasch had enjoyed a monopoly on the process.
In 1928, a shareholder and scion of one of a founding investors of John Langbourne Williams & Sons, Langbourne Meade Williams, Jr., collaborated with Payne Whitney to launch a proxy fight, eventually gaining control of the company from Swenson, then becoming its president in 1931, with John Hay Whitney stepping into the role of Chairman.
Williams led the company's diversification, beginning with the purchase of manganese deposits in Oriente Province, Cuba.
Board members
Past board members include Henry Kissinger, John Hay Whitney, Robert A. Lovett, Benno C. Schmidt Sr., Gus Long, Arleigh Burke, J. Stapleton Roy, Godfrey Rockefeller, and his cousin-in-law, Jean Mauzé.
1950s
The company produced nickel during World War II and potash in the 1950s.
In 1955, Freeport Nickel invested $119 million, of which $100 million came from the U.S. government, in constructing a nickel-cobalt mine at Moa Bay, Cuba, and a refinery at Port Nickel, Louisiana. On March 11, 1957, the U.S. government announced a contract with the company to buy nickel and cobalt.
In 1956, the company formed Freeport Oil Company.
In 1958, the company sold an oil discovery near Lake Washington in Louisiana for approximately $100 million to Magnolia Petroleum Company.
In 1959, Freeport geologists confirmed the 1936 Dutch discovery of the rich Ertsberg copper and gold deposits, now known as the Grasberg mine, in extremely rugged, remote country in the Jayawijaya Mountains in then-Netherlands New Guinea.
1960s
In 1960, Fidel Castro implemented a 25% ore tax, effectively nationalizing and seizing Freeport's nickel-mining operations in Cuba.
In 1961, the company entered the kaolin business after purchasing the assets of Southern Clays Inc.
In 1964, the company formed Freeport of Australia to pursue mining opportunities there and in the surrounding Pacific Ocean region.
Development of the Ertsberg deposit
In 1967, the company negotiated a contract with the Indonesian government to develop the Ertsberg deposit. In their feasibility study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper, making it the largest above-ground copper deposit ever discovered. Construction of an open pit mine began in May 1970 and in mid-1973 the mine was declared fully operational. Officials at Bechtel, the primary project contractor, called mine development at Ertsberg "the most difficult engineering project they had ever undertaken." The challenges included building a 101-kilometre (63 mi) long access road (a project that required boring kilometer long tunnels through two mountains) and constructing the world's longest single span aerial tramway. The tramways were needed to move people, supplies and ore because a 2,000-foot (610 m) cliff separates the Ertsberg mine (at 12,000 feet (3,700 m) elevation) from the mill (at 10,000 feet). Moving copper concentrate from that mill to the shipping port required installation of a 109-kilometre (68 mi) slurry pipeline -- then the world's longest. Mine construction and startup cost about US$200 million. The Ertsberg project was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept profits marginal during the 1970s.
In 1969, McMoRan Exploration Company was founded, which, in 1981, would merge with Freeport Minerals, formerly Freeport Sulphur, to form Freeport-McMoRan.
1970s
In 1971, the company changed its name to Freeport Minerals Company, (not to be confused with Freeport Minerals Corporation, founded in 1834).
1980s
In 1981, Freeport Minerals Company merged with the McMoRan Oil and Gas Company. The McMoRan Oil and Gas Company was founded in 1967 by three partners, William Kennon McWilliams Jr. ("Mc"), James Robert (Jim Bob) Moffett ("Mo"), who were both petroleum geologists, and Mack Rankin ("Ran"), "a specialist in land-leasing and sales operations." Kent McWilliams (died 1997) was extremely knowledgeable of the micro-paleontology of the Louisiana and Texas coasts. McMoRan's incredible record in hitting paydirt was based on the fundamental petro-geological learning of the founder and the young geologist he began mentoring in the early 1960s.
In 1981, the company formed a 70/30 joint venture with an affiliate of FMC Corporation to operate a gold mine in Jerrit Canyon, Nevada.
In 1982, Freeport Gold Company was the world's largest gold producer, producing 196,000 troy ounces (6,100 kg) of gold in its first full year of operation.
In 1985, the company headquarters were moved to New Orleans, Louisiana.
In 1985, the company sold a 25% interest in some oil and gas reserves to Britoil for $73.5 million.
In 1989, the company sold about $1.5 billion in assets to finance the development of the Grasberg mine and the Main Pass sulfur-oil-gas deposit offshore from Louisiana.
1990s
In 1994, the company completed the corporate spin-off of its entire interest in Freeport-McMoRan Copper & Gold, which owned the Grasberg mine.
In 1995, RTZ, a predecessor of Rio Tinto Group made a $450 million investment in the company.
In 1997, IMC Global, a large fertilizer producer, acquired Freeport-McMoRan Inc., the former parent company that now owned the sulfur and fertilizer businesses, in a $750 million transaction. Shareholders of Freeport-McMoRan received shares of IMC Global.
The Indonesian government asked Freeport to substantiate Bre-X's claims of having found the largest gold mine ever discovered. In 1997, the company announced that its prospective partner Bre-X did not have gold reserves at its Indonesian mine, as it had reported. Bre-X subsequently was exposed as a fraud and went bankrupt.
In 1998, low commodity prices forced the company to suspend its dividend.
2000s
In 2003, the company was subpoenaed as part of an investigation by anti-trust authorities in the United States, Canada, and Europe into price fixing in the copper industry.
In 2006, the company acquired Phelps Dodge and became the largest copper producer of any public company in the world. The corporate headquarters was moved from New Orleans, Louisiana to Phoenix, Arizona.
In 2012, the company announced agreements to acquire affiliated companies McMoRan Exploration Company and Plains Exploration & Production Company for a total enterprise value of over $20 billion. The transaction added significantly to the company's petroleum assets. The transactions were criticized as being a conflict of interest due to the common ownership of the companies. In 2015, the company paid $137.5 million in a settlement to resolve claims that executives and directors had conflicts of interest that resulted in the company overpaying in the transaction.
In 2014, the company sold assets in the Eagle Ford shale to Encana for $3.1 billion.
In 2015, the company announced job cuts at its Sierrita Mine in Arizona due to low copper and molybdenum prices.
On December 28, 2015, the company announced that James R. Moffett would resign as chairman of the company and would be replaced by Gerald J. Ford. Moffett received $16.1 million in severance pay and cash retirement plans totaling more than $63 million. Moffett continued to consult for the company for annual fees of $1.5 million.
In May 2016, the company sold a 13% interest in its Morenci Mine to Sumitomo Group for $1 billion in cash.
In August 2017, the company agreed to give a 51% interest in the Grasberg mine to the Government of Indonesia and agreed to build a smelter in exchange for receiving a special permit to operate the mine until 2041.
Environmental, human rights, and corruption controversies at the Grasberg Mine
The company operates the world's largest and most profitable gold mine, the Grasberg mine in Papua, Indonesia.
In 2005, The New York Times reported that the company paid local military and police generals, colonels, majors and captains, and military units, a total of nearly US$20 million between 1998 and 2004. One individual received up to US$150,000. The payments were meant to secure the reserve. The company responded that the payments were not for individuals, but rather for infrastructure, food, housing, fuel, travel, vehicle repairs and allowances to cover incidental and administrative costs. According to the report, anonymous sources within the company also claimed that company chairman James R. Moffet courted Indonesia's dictator and "his cronies", cutting them in on deals. Another employee is said to have worked on a program to monitor environmentalists' e-mails and telephone conversations, in cooperation with Indonesian military intelligence officers.
The Grasberg mine's tailings "severely impacted" more than 11 square miles (28 km2) of rainforest, according to a 1996 Dames & Moore environmental audit. The report, endorsed by Freeport, also estimated that during the life of the mine 3.2 billion tons of waste rock--a great part of which generates acid--will be dumped into the local river system. Overburden (waste rock) from the mine has polluted a nearby lake due to acid mine drainage.
Citing extensive, long-term and irreversible environmental damage in New Guinea, The Government Pension Fund of Norway has excluded Freeport-McMoRan from its investment portfolio, following a recommendation from the fund's ethical council.
Human rights record in Indonesia
The company is a signatory participant of the Voluntary Principles on Security and Human Rights. However, the company has been accused of funding the Indonesian government to secure its reserve through militaristic oppression of the native West Papuan people.
Strikes
Production at the mine has been affected by several strikes:
On October 17, 2011, the company halted operations in Papua amid a strike that led to a deteriorating security situation and intensified calls for Papuan independence. Seventy percent of Grasberg workers joined the strike, appealing for higher pay September 15, 2011, blocking roads, clashing with police and cutting the pipeline in several places.
In October 2014, around 1,000 workers stayed home and demanded the firing of 50 managers as a result of a fatal accident at the Grasberg mine. Production declined to 60-70% of normal levels as a result of the strike.
In 2017, 5,000 workers as the mine participated in a labor strike that lasted over 4 months.
Environmental record
Based on 2014 data, the Political Economy Research Institute ranked Freeport-McMoRan 13th among corporations emitting airborne pollutants in the U.S. The ranking is based on emission quantities and toxicity.
In 2012, the company paid $6.8 million to the United States Department of the Interior to settle pollution complaints involving the company's Morenci copper mine in southeastern Arizona.
References
External links
- Earth Observatory Satellite Picture of Grasberg Mine"
Source of the article : Wikipedia
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