ICMM
Principle

Description of Indicator

2

1. Sustainable Development Vision and Strategy

On March 19, 2007, Freeport-McMoRan Copper & Gold Inc. completed its acquisition of Phelps Dodge Corporation, creating the world’s largest publicly traded copper company. The new Freeport-McMoRan Copper & Gold Inc. is an international mining industry leader with its corporate headquarters in North America with large, long-lived, geographically diverse assets and significant proven and probable reserves of copper, gold, and molybdenum. The world requires the metals we produce to sustain and expand economies and to build infrastructure in developing nations.

While this is a dramatic change within our Company, it neither alters our commitments nor our longstanding, mutually beneficial partnerships with our stakeholders in Indonesia and Spain. Through our Indonesian mining affiliate, PT Freeport Indonesia, we have long been a major producer of copper from mineral ore containing significant amounts of gold. Additionally, we continue to produce copper products from our wholly owned Atlantic Copper, S.A. smelter in Spain and our 25-percent-owned Gresik smelter in Indonesia, which are essential for the construction, communications, transportation, electronics, energy transmission and other industries on which the world relies. Because the acquisition of Phelps Dodge was not completed until March 19, 2007, this report focuses on the activities of Freeport-McMoRan Copper & Gold Inc., its affiliates and subsidiaries during 2006.

This report reviews our sustainable development programs, which are based on our underlying commitments that help build the foundation for vibrant communities. We recognize that the economic need for our products must be balanced with social and environmental considerations so that, in meeting the demands of the present generation, we do not compromise the ability of future generations to meet their own needs. This is the core concept of sustainable development. We embrace this responsibility both as one of our principal duties as a corporate citizen and as a sound and prudent business practice. Working toward sustainable development in our business operations and programs helps ensure healthy environments for our workforce and the communities in our areas of operation, which are vital to our on-going success.

We have an Environmental Policy and a Social, Employment, and Human Rights Policy which guide us on the path toward sustainable development. We recognize the significant challenges we must overcome to stay on that path and are cognizant that our mining operations have impacts on the surrounding environment and neighboring communities. Our responsibility and commitment is to minimize and mitigate environmental impacts and to maximize the beneficial economic and social results of our operations. This is not a static commitment expressed through rigid programs. We are committed to continuous improvement in our sustainable development performance. Accordingly, we assess our environmental management and social development programs annually in a constant search for better ways of achieving our sustainable development goals. In this regard, we do not rely solely on our own judgment, having learned from experience the value of looking at our programs through independent audits. During 2006, the International Center for Corporate Accountability team visited our operations site in Indonesia for a follow-up to its 2004 independent audit of our social and human rights programs. In addition, the International Certification Services Division of Société Générale de Surveillance (SGS), an International Standardization Organization (ISO) 14001 registration and certification organization based in Geneva, Switzerland, with offices in Indonesia, performed a surveillance audit on PT Freeport Indonesia’s environmental management system. PT Freeport Indonesia also participated in the environmental management performance assessments organized by the Indonesian Ministry of Environment. These outside audits provide us with invaluable insights and recommendations are now being implemented to improve our sustainable development performance.

In Papua, Indonesia, we are mining the world’s largest reserve of copper and gold and our planning horizons extend decades into the future. We do not make these plans alone. Our operations, projects, and programs are carried out in partnership with the Government of Indonesia, the Province of Papua, Mimika Regency, and neighboring communities — all of whom have a stake in seeing that our contributions result in a sustainable future that benefits all. We maintain a regular dialogue with our stakeholders.  Our commitment to sustainable development is significant. We invested over $100 million in sustainable development programs during 2006 in Papua, including $27 million on environmental management and $77 million on social development. But monetary amounts fail to convey the significance of our environmental programs or the beneficial impacts of our educational, healthcare, social, and economic development programs on neighboring communities in Papua. This report documents these efforts.

 

James R. Moffett Chairman of the Board

Richard C. Adkerson Chief Executive Officer

Name of Reporting Organization: Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX).
 

In 1996, we established joint ventures with Rio Tinto, an international mining company with headquarters in London, England (See Section 2.9, below).
 

Nature of ownership; legal form: FCX is a publicly traded company that owns directly and indirectly:
 

2.6.1   90.64% of the outstanding stock of PT-FI; and
 

2.6.2   100% of the outstanding stock of PT Indocopper Investama
 

2.6.3   100% of the outstanding stock of Atlantic Copper, S.A.
 

2.6.4    25% of the outstanding stock of PT Smelting.
 

Scale of the reporting organization:
 

2.8.1   Number of employees: As of December 31, 2006:  PT-FI (Indonesia) had nearly 9,000 employees, and 10,720 contract workers. Atlantic Copper (Spain) had 550 employees. FCX and FM Services had 9 and 145 employees respectively in the US.
 

2.8.1   Products produced/services offered (quantity or volume): In 2006, PT-FI (net of Rio Tinto’s interest) produced 1.2 billion pounds of recoverable copper, 1.7 million ounces of recoverable gold, and 3.8 million ounces of recoverable silver. Atlantic Copper produced 27,152 metric tons of anodes and 235,386 metric tons of cathodes (Link to page 22 of 2006 Annual Report, Operating Data).
 

2.8.2   Net sales: FCX revenues for 2006 were $5.791 billion (Link to page 22 of 2006 Annual Report, Revenues).
 

2.8.3   Total capitalization broken down in terms of debt and equity: Debt as of December 31, 2006, was $680 million; equity as of December 31, 2006, was $2.445 billion (Link to page 57 of 2006 Annual Report).
 

2.8.4   Value added: In 2006, Value Added was approximately $3.5 billion, approximately 90% in Indonesia. Link to page 80 of 2006 Annual Report. Total Assets: FCX assets as of December 31, 2006, were $5.39 billion (Link to page 57 of 2006 Annual Report).
 

2.8.5   Sales/Revenues by countries: FCX revenues attributable to various countries based on the location of the customer were: Spain $1.38 billion, Japan $1.24 billion, Indonesia $1.2 billion, India $388 million, Korea $377 million, Belgium $215 million, Switzerland $177 million, and others $810 million (Link to page 81 of 2006 Annual Report).
 

Costs by country/region: FCX Site Production and Delivery costs in 2006 were $1.28 billion  in Indonesia and $2.12 billion  in Spain before consolidated eliminations. After these eliminations FCX total costs were $2.525 billion (Link to page 80 of 2006 Annual Report). 2.8.9 Employees by country/regions: As of December 31, 2006:  PT-FI (Indonesia) had nearly 9,000 employees, and 10,720 contract workers. Atlantic Copper (Spain) had 550 employees. FCX and FM Services had 9 and 145 employees respectively in the US.
 

List of stakeholders, key attributes of each, and relationship to the reporting organization:
 

2.9.1   Shareholders and providers of capital – As of December 31, 2006, we had 197 million shares of FCX Class B Common Stock outstanding. Three organizations owned 5% or more of FCX Common Stock as of December 31, 2006: Barclays Global Investors, N.A., Capital Research and Management Company, and Wellington Management Company, LLP (Link to page 14 of 2006 Proxy).
 

During 2006, FCX engaged in a number of financing activities (Link to page 40 of 2006 Annual Report). In July 2006, FCX entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as Administrative Agent, Issuing Bank, Security Agent, JAA Security Agent and Syndication Agent; Citibank, N.A., Merrill Lynch Pierce, Fenner & Smith Incorporated and The Bank of Nova Scotia, as Co-Documentation Agents, U.S. Bank National Association, as FI Trustee, J.P. Morgan Securities Inc., as Sole Lead Arranger and Sole Bookrunner (Link to Exhibit 10.1 to the Current Report on Form 8-K of FCX dated July 25, 2006).

Trustees for various issues in 2006 were The Chase Manhattan Bank, The Bank of New York, ChaseMellon Shareholder Services, L.L.C., and Mellon Investor Services,
 

2.9.2   Joint Venture Partner – In 1996, we established joint ventures with Rio Tinto, an international mining company with headquarters in London, England. One joint venture covers PT-FI’s mining operations in Block A and gives Rio Tinto, through 2021, a 40 percent interest in certain assets and future production exceeding specified annual amounts of copper, gold and silver in Block A and, after 2021, a 40 percent interest in all production from Block A (Link to page 66 of 2006 Annual Report)
 

2.9.3   Communities – FCX and PT-FI are committed to building and maintaining positive relationships with our Papuan neighbors, in particular the indigenous communities closest to our area of operation. Several recent initiatives have focused on improving relationships with the local communities, including a Memorandum of Understanding (MOU) with the two primary indigenous landowning tribes; MOU’s between PT-FI, LPMAK (the Amungme and Kamoro Community Development Organization), and local government Departments of Education and Health to improve facilities and quality of services in these two areas  in the Mimika area; and agreements with three major local foundations to address gender and human rights issues.
 

2.9.4   Suppliers – FCX, primarily through its PT-FI and Atlantic Copper affiliates, does business with over 2,000 suppliers.  These suppliers are broken down by country as follows: Australia 33%; Singapore 32%; United States 15%; Indonesia 13%; Other 7%.

2.9.5   Trade unions – Through its operating subsidiaries, PT-FI and Atlantic Copper, FCX strives to maintain harmonious working relationships with its workers. PT-FI workers are represented by a government-sanctioned union, the All Indonesia Chemical, Energy and Mining Workers Union Unit (PUK SP KEP SPSI). Atlantic Copper workers are represented by a committee of 17 members, nine from the Comisiones Obreras (Workers Commission) and eight from the Union General de Trabajadores (General Workers Union). Both unions operate at national level. Management in both companies work closely with labor representatives on an ongoing basis to discuss matters of importance and resolve issues.

2.9.6   Workforce –As of December 31, 2006:  PT-FI (Indonesia) had nearly 9,000 employees, and 10,720 contract workers. Atlantic Copper (Spain) had 550 employees. FCX and FM Services had 9 and 145 employees respectively in the US. 

2.9.7   Government Organizations – As a contractor to the Government of Indonesia, PT-FI is regulated by various government agencies, including the Ministry of Mines and Energy, the Ministry of Environment, and others. Non-Governmental Organizations – PT-FI strives to work harmoniously with various non-governmental organizations and to respond to questions and criticisms appropriately. FCX maintains ongoing dialogue with a number of international and local NGOs.

Report Scope

10
 

2.10




 

Contact Person for the report: Bill_Collier@fmi.com   
             William L. Collier

            1615 Poydras Street

            New Orleans, Louisiana, 70112, USA
 

            Telephone: 504-582-1750       Fax: 504-582-4936

Reporting Period: January 1, 2006-December 31, 2006

Boundaries of report: This report matches the full range of economic, environmental, and social impacts of the FCX organization. However, certain sales and revenue data is reported as “net of Rio Tinto’s interest”.
 

Explanation of the nature and effect of any re-statements of information provided in earlier reports and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods): FCX has not restated any information provided in a prior report, therefore this is not applicable.
 

Report Profile

Criteria/definitions used in any accounting for economic, environmental, and social costs and benefits: Accounting for economic, environmental, and social costs and benefits is in compliance with all legally applicable standards and regulations.
 

Means by which report users can obtain additional information and reports about economic, environmental, and social aspects of the organization’s activities, including facility-specific information (if available): Additional information is available through the Company’s web site: www.fcx.com, which also contains information on contacting Company representatives.
 

1

3

Governance Structure and Management Systems
 

Structure and Governance
 

Governance structure of the organization, including major committees under the board of directors that are responsible for setting strategy and for oversight of the organization. Describe the scope of responsibility of any major committees and indicate any direct responsibility for economic, social, and environmental performance: As of December 31, 2006, the FCX Board of Directors consisted of 13 members We also have one emeritus director who does not vote. Our board held eight meetings during 2006. In accordance with our corporate governance guidelines, non-management directors met in executive session at the end of each regularly scheduled board meeting. The chair of executive session meetings rotates among the chairpersons of the four standing committees (discussed below), except as the non-management directors may otherwise determine for a specific meeting.
 

Our board has four standing committees: an Audit Committee, a Corporate Personnel Committee, a Nominating and Corporate Governance Committee, and a Public Policy Committee. Each committee operates under a written charter adopted by the board. Our committee charters are available on our web site at www.fcx.com. During 2006, each of our directors attended at least 75% of the aggregate number of board and applicable committee meetings. Directors are invited but not required to attend annual meetings of our stockholders. None of the directors attended the last annual meeting of stockholders (Link to page 3 of 2007 Proxy).
 

Process for determining the expertise board members need to guide the strategic direction of the organization, including issues related to environmental and social risks and opportunities: In evaluating nominees for membership on the board, the Nominating and Corporate Governance Committee applies the board membership criteria set forth in our corporate governance guidelines. Under these criteria, the committees take into account many factors, including personal and professional integrity, general understanding of our industry, corporate finance and other matters relevant to the successful management of a large publicly traded company in today’s business environment, educational and professional background, independence, and the ability and willingness to work cooperatively with other members of the board and with senior management. The committee evaluates each individual in the context of the board as a whole, with the objective of recommending nominees who can best perpetuate the success of the business, be an effective director in conjunction with the full board, and represent stockholder interests through the exercise of sound judgment using their diversity of experience in these various areas.
 

3.3.1  Board-level processes for overseeing the organization’s identification and management of economic, environmental, and social risks and opportunities. The Public Policy Committee (PPC) has primary responsibility for assisting the Board of Directors in fulfilling the Board’s oversight responsibilities with respect to the Company’s (1) environmental policy and implementation programs, (2) governmental and community relations and information programs, (3) social, employment, and human rights policies and practices, (4) health and safety programs, and (5) charitable and philanthropic contributions.
 

The PPC meets at least three times annually or more frequently if deemed appropriate. The chairperson of the PPC presides at each meeting and, in consultation with the other members of the PPC and management, sets the agenda for each meeting. The PPC may request that any directors, officers, or employees of the Company, or other persons whose advice and counsel are sought by the PPC, attend any meeting of the PPC to provide information as the PPC requests, but the PPC reserves the right in its discretion to meet at any time in executive session. The Committee delivers regular reports of its activities to the Board. The Committee keeps written minutes of its meetings, which minutes are available to every member of the Board of Directors. The full scope and charter of the Public Policy Committee is available on our web site: www.fcx.com. (Link to page 3 of 2007 Proxy).
 

Linkage between executive compensation and achievement of the organization’s financial and non-financial goals (e.g., environmental performance, labor practices): The Corporate Personnel Committee, which is composed of four independent directors, determines the compensation of our executive officers and administers our annual incentive, long-term incentive, and stock option plans. The committee met four times during 2006.
 

The committee’s executive compensation philosophy is to:
 

 •  Emphasize performance-based compensation that balances rewards for both short- and long-term results and provide high reward opportunities for high performing individuals
 

 •  Tie compensation to the interests of stockholders

 •  Provide a competitive level of total compensation that will attract and retain talented executives.
 

A primary goal of the committee is to position us to attract and retain the highest level of executive talent. To accomplish this goal, the committee has traditionally targeted our total executive compensation levels in the top quartile of comparable companies, including companies in other industries whose operational, corporate financing, and other activities are considered comparable to those activities in which we have engaged in recent years (Link to page 14 of 2007 Proxy).
 

Organizational structure and key individuals responsible for oversight, implementation, and audit of economic, environmental, social, and related policies. Include identification of the highest level of management below the board level directly responsible for setting and implementing environmental and social policies, as well as general organizational structure below the board level: The organizational structure and key individuals responsible for oversight, implementation, and audit of economic, environmental, social, and related policies are described in detail in the 2006 Annual Report and on the FCX Web Site (Link to Executive Management Section of FCX web site).
 

Mission and values statements, internally developed codes of conduct or principles, and policies relevant to economic, environmental, and social performance and the status of implementation. Describe the status of implementation in terms of degree to which the code is applied across the organization in different regions and departments/units. “Policies” refers to those that apply to the organization as a whole, but may not necessarily provide substantial detail on the specific aspects listed under the performance indicators in Part C, Section 5 of the Guidelines.
 

We recognize that economic need must be balanced with responsible social and environmental management so that, in meeting the demands of the present generation, we do not compromise the ability of future generations to meet their own needs. This is the core concept of sustainable development. At FCX, we embrace this responsibility both as our duty as corporate citizens and as a sound and prudent business practice. Working toward sustainable development in our business operations and programs helps ensure a healthy environment and communities in our areas of operation, which is vital to our future success.
 

We have Environmental and Social, Employment, and Human Rights Policies that guide us on the path toward sustainable development. As operators of one of the world’s greatest mines, we recognize the significant challenges we must overcome to stay on that path. Our mining operations impact the surrounding environment and neighboring communities. It is our responsibility and commitment to minimize and mitigate environmental impacts and to maximize the beneficial economic and social results of our operations.
 

This is not a static commitment expressed through rigid programs. We are committed to continuous improvement in our sustainable development performance. This means we assess our environmental management and social development programs annually in a constant search for better ways of doing things. In this regard, we do not rely solely on our own judgment; rather we gain the value of looking at our programs through a “fresh set of eyes” with independent audits. In 2005, we voluntarily submitted to an independent audit of our environmental management systems by the internationally recognized firm of Montgomery Watson Harza. In 2005 and 2006, we underwent an independent audit of our social and human rights programs by the International Center for Corporate Accountability. The results of these audits, which were made public, provided us with invaluable insights and numerous recommendations, now being implemented, that will improve our sustainable development performance.

FCX, PT-FI and Atlantic Copper, S.A. have established a comprehensive Ethics and Business Conduct Policy, which requires all employees to adhere to ethical standards established by the company and consistent with applicable laws, including the U.S. Foreign Corrupt Practices Act (FCPA) and the Sarbanes-Oxley Act. All appropriate company personnel are required to certify annually their adherence to this policy. In addition, employees are required to notify the company compliance officer of any activity, transaction or other information involving a suspected violation of the policy. Any reported incidents or concerns about violations or potential violations are investigated and resolved appropriately.

We conduct periodic training sessions for our managers, supervisors and other personnel so they can identify potential issues and know how to respond appropriately. We also periodically review our policies and procedures to ensure that applicable legal requirements and expectations regarding corporate responsibility are met.
 

See our corporate policies on our web site.
 

We are mining the world’s largest known reserve of copper and gold and our planning horizons extend decades into the future. But we do not make these plans alone. Our operations, projects, and programs are carried out in partnership with the Government of Indonesia, Papua Province, Mimika Regency, and neighboring communities – all of whom have a stake in seeing that ours is a sustainable future that benefits all. We maintain a constant dialogue with our stakeholders.
 

Mechanisms for shareholders to provide recommendations or direction to the board of directors. Include reference to any policies or processes regarding the use of shareholder resolutions or other mechanisms for enabling minority shareholders to express opinions to management: Shareholders may deliver proposals for inclusion in the proxy statement to the Corporate Secretary, Freeport-McMoRan Copper & Gold Inc., One North Central Avenue, Phoenix, Arizona 85004. Shareholders may also present proposals at the annual meeting by submitting them in writing to our Corporate Secretary, at the above address, in accordance with the specific procedural requirements in our by-laws. The by-laws are accessible on our web site at: Corporate Governance/Bylaws. (Link to page 2 of 2007 Proxy).

Stakeholder Engagement
 

Use of information resulting from stakeholder engagements. For example, this could include selecting performance benchmarks or influencing specific decisions on policy or operations. FCX takes seriously all legitimate concerns and issues raised by its stakeholders. In 2006, PT-FI met with government agencies to answer questions about its work practices, hosted over 1,000 visitors from government, community, academia, and other agencies to its Jobsite, participated in industry meetings and conferences, worked cooperatively with local government on infrastructure development and gold panning related issues, and launched new communication programs designed to help employees learn more about the business.

Overarching Policies and Management Systems
 

Explanation of whether and how the precautionary approach or principle is addressed by the organization. This could include an example that illustrates the organization’s approach to risk management in the operational planning or the development and introduction of new products. For reference, see the glossary for text of Article 15 of the Rio Principles on the precautionary approach.
 

As a member of ICMM, FCX is  implementing the ICMM Sustainable Development Framework. Principle 4 in the Framework calls for implementing risk management strategies. FCX conducts formal risk assessments relating to operations. For example, formal risk assessments are held relating to structural stability and potential acid rock drainage generation from overburden stockpiles. Identified risks are controlled through the development of Standard Operating Procedures or structural modifications.

All operating facilities have environmental management systems certified to ISO 14001. This certification requires that all environmental aspects of the operations be identified and the potential impacts evaluated. Those aspects that have higher degrees of probability and potential damage are addressed in formal Action Plans to reduce or eliminate the impact.
 

Principal memberships in industry and business associations, and/or national/international advocacy organizations. FCX is a member of the International Council on Mining and Metals, the US-ASEAN Business Council, the American Indonesian Chamber of Commerce (New York), the National Mining Association, the National Association of Manufacturers, the United States Chamber of Commerce, the Asia Society, the US-Indonesia Society, and the International Copper Association. FCX is also an Associate Member of the Australian Minerals Council. Through its Indonesian subsidiary, PT-FI, FCX is a member of APINDO, the Indonesian Mining Association, and others.
 

Policies and/or systems for managing upstream and downstream impacts, including:
 

 •  Supply chain management as it pertains to outsourcing and

 •  Supplier environmental and social performance; and

 •  Product and service stewardship initiatives.

FCX requires all of its subsidiaries, affiliates and on-site contractors to comply with FCX’s Environmental and Social, Employment, and Human Rights Policies or to develop substantively similar policies of their own.
 

Reporting organization’s approach to managing indirect economic, environmental, and social impacts resulting from its activities. See below (under Economic Performance Indicators) for a discussion of indirect economic impacts. FCX is fully committed to minimizing and mitigating negative environmental impacts while maximizing the social and economic benefits of its operations.  (Link to 2006 WTSD).
 

Major decisions during the reporting period regarding the location of, or changes in, operations. Explain major decisions such as facility or plant openings, closings, expansions, and contractions. There were no significant changes in operations during the reporting period.
 

Programs and procedures pertaining to economic, environmental, and social performance. Include discussion of:

 •  Priority and target setting

 •  Major programs to improve performance

 •  Internal communication and training

 •  Performance monitoring

 •  Internal and external auditing

 •  Senior management review.
 

The 2006 Working Toward Sustainable Development Report contains detailed information about our programs and procedures pertaining to economic, environmental, and social performance.  (Link to 2006 WTSD).
 

Status of certification pertaining to economic, environmental, and social management systems. Include adherence to environmental management standards, labor, or social accountability management systems, or other management systems for which formal certification is available. In our Environmental Policy, we commit to regular internal and external environmental audits to assess our environmental compliance, management systems and practices. In 2006, three environmental audits were conducted:
 

 •  Crescent Technology Inc., representing the Freeport-McMoRan Copper & Gold Inc. Board of Directors and senior management, audited PT-FI’s operations as part of the annual corporate internal auditing program.
 

 •  The International Certification Services Division of Société Générale de Surveillance (SGS), an International Standardization Organization (ISO) 14001 registration and certification organization based in Geneva, Switzerland, with offices in Indonesia, performed a surveillance audit on PT-FI’s environmental management system, a requirement for maintaining our ISO 14001 certification.
 

 •  FCX is committed to independent, external environmental audits every three years, the results of which are made public.  External independent environmental audits were conducted in 1996, 1999, 2002 and 2005. (Link to 2005 Montgomery Watson Harza Audit on www.fcx.com).
 

 •  PT-FI participated in the environmental management performance rating program, known as PROPER, conducted by the Indonesian Ministry of Environment. A number of recommendations resulted from the PROPER review and these are being implemented.

 •  In December, the Minister of Energy and Minerals Resources presented PT-FI with the Gold Environmental Award. This award is recognition for PT-FI’s environmental effort in erosion and sediment management in mining activities.
 

In our Social, Employment, and Human Rights Policy, we commit to periodically engaging an independent firm to audit the Company’s implementation of the Policy to assess its effectiveness and the extent of the Company’s compliance. We engaged the International Center for Corporate Accountability to conduct this audit in 2004, the results of which are available on FCX’s web site.
 

In 2006, FCX engaged ICCA to conduct a follow-up to the original audit. This included assessment of our implementation of recommended changes identified in the first phase of the audit, as well as assessing company-funded healthcare programs and the compliance of major contractors and privatized partners with the company’s Social, Employment, and Human Rights Policy. The follow-up report is to be issued in 2007.

Section 4
 

On November 19, 2006, FCX and Phelps Dodge Corporation announced that they had signed a definitive merger agreement whereby FCX would acquire Phelps Dodge for approximately $25.9 billion in cash and stock. The shareholders of both companies approved the transaction on March 13 and 14, 2007, and the transaction was completed on March 19, 2007. The information contained in this report, which covers the reporting period
January 1, 2006, through December 31, 2006, does not reflect the impact of this transaction.

ICMM
Principle

Description of Indicator

2005 Response

2006 Response

EC2
Economic breakdown of markets.

EC3
Cost of all goods, materials, and services purchased.

EC4
Percentage of contracts that were paid in accordance with agreed terms, excluding agreed penalty arrangements.

EC5
Total payroll and benefits (including wages, pension, other benefits, and redundancy payments) broken down by country or region.

EC6
Distribution to providers of capital broken down by interest on debt and borrowings, and dividends on all classes of shares, with any arrears of preferred dividends to be disclosed.

Net interest expenses in 2006 were $75.6 million.
Link to page 55 of 2006 Annual Report, Interest Expense.
FCX paid regular dividends on its common stock in the amount of $1.25 per share in 2006. In addition, FCX paid supplemental dividends on its common stock in the amount of $3.50 per share in 2006.
Link to page 85 of 2006 Annual Report, Common Share Dividends.

9

EC7
Increase/decrease in retained earnings at end of period.

EC8
Total sum of taxes of all types broken down by country or region.

Indonesian Income Taxes $1.035 billion Indonesian Deferred Income Taxes $166 million. Indonesian Royalties $144 million US and Other Income Taxes ($0.257 million). Total Income Taxes and Royalties $1.345 billion.
Link to page 72 of 2006 Annual Report, Note 8, Income Taxes.

EC9
Subsidies received and broken down by country or region.

EC10
Donations to community, civil society, and other groups broken down in terms of cash and in-kind donations per type of group.

In 2006, FCX contributed donations of $58.9 million in cash to various communities, civil, society, and other groups, an increase of 23% over 2005.
Community Development (Papua) $51.8 million.
General Indonesia $1.8 million. General US $4.3 million.
US Educational Institution $1 million.

EC11
Supplier breakdown by organisation and country.

EC12
Total spent on non-core business infrastructure development.

EC13
The organisation’s indirect economic impacts.

FCX’s subsidiary PT-FI provides substantial indirect economic benefits for the central, provincial, and local governments of Indonesia, for the region of Papua, and for the Indonesian nation as a whole. accounted for 2.49 percent of the gross domestic product (GDP) for the country of Indonesia; 56.48 percent of GRDP of Papua Province and 94.18 percent of GRDP of Kabupaten Mimika in 2006;
  • contributed 83.2 trillion rupiah to the national GDP in 2006, or approximately $9 billion at current exchange rates;
  • paid taxes that accounted for 2.23 percent of the national revenue of the Indonesian budget;
  • accounted for 1.3 percent of all household income in Indonesia and 34 percent of the household income in the Papua province and 94% of household income of Kabupaten Mimika; and
   • created 283,000 indirect jobs or 31 additional indirect jobs for each direct employee of the company in 2006.

MM1
Identify those sites where the local economic contribution and development impact is of particular significance and interest to stakeholders (e.g., remote sites) and outline policies with respect to assessing this contribution. Relevant information includes: Percentage of goods, materials, and services purchased locally Percentage of workforce from local communities; Investment in public infrastructure and its maintenance; and compensation payments.

FCX’s subsidiary PT-FI operates in Papua, Indonesia, and the economic contribution and impact is significant to the local, regional, and central government. PTFI donated $51.8 million to the Freeport Partnership Fund for Community Development (LPMAK) in 2006. The fund supports education, health, and economic development in the local communities.
 
  • In 2006, 21.5% of goods purchased were purchased within Indonesia.
  • As of the end of 2006, PTFI directly employed nearly 9,000 workers. Of these, approximately 2,400 (27 percent) were Papuans. Another 10,700 workers were employed by contractors serving PTFI. Approximately 19,700 workers were employed at PT FI operations at the end of 2006. (Source: Annual Report p.16).

MM2
Value added disaggregated to country levels.

Link to page 87 of 2005 Annual Report.

$3.5 billion (estimated over 90% in Indonesia)

EN1
Total materials used other than water, by type: metric tonnes, except where noted

Copper Concentrates: 970,278

Ore: 78,907,000

Overburden: 186,000,000

Raw Materials
Ore: 83,716,000
Copper Concentrate: 952,694|Scrap Copper: 976

Major Consumables
Explosives: 51,393
Purchased Lime: 18,404
Produced Lime: 79,888
Sulphuric Acid: 685
Flotation Reagents: 6102
Grinding Balls: 44,977
Coal: 634,959
Silica Flux: 118,638
Coke: 3198
Diesel, kiloliters: 395,817
Lubricants, kiloliters: 8,651

6

EN2
Percentage of materials used that are wastes (processed or unprocessed) from sources external to the reporting organization.

EN3
Direct energy use segmented by primary source: gigajoules.

Grid Electricity: 1,085,000
Diesel Fuel:13,309,000
Coal: 16,930,000
Natural Gas: 1,297,932
Fuel Oil: 351,900
Coke: 94,600
Gasoline: 40,000
Aviation Gas: 473,000
Total: 33,581,432

Grid Electricity: 1,080,350
Diesel Fuel:14,431,000
Coal: 16,509,000
Natural Gas: 1,247,689
Fuel Oil: 268,950
Coke: 99,100
Gasoline: 44,000
Aviation Gas: 452,000
Total: 34,132,089

6

EN4
Indirect energy use.

Not tracked at this time.

6

EN5
Total water use: cubic meters

Surface Water: 64,369,000
Groundwater: 1,169,000
Municipal Water: 31,000
Total: 65,569,000

EN6
Location and size of land owned, leased, or managed in biodiversity-rich habitats.

EN7
Description of the major impacts on biodiversity associated with activities and/or products and services in terrestrial, freshwater, or marine environments.

Link to page 44-46 of 2005 WTSD.

EN8
Greenhouse gas emissions: metric tonnes.

EN9
Use and emissions of ozone-depleting substances: metric tonnes.

ODS: 0.68
CFC-11 Equivalents: 0.04

ODS:  1.22
CFC-11 Equivalents: 0.07

6

EN10
NOx, SOx, and other significant air emissions by type: metric tonnes.

NO_x: 12,700
SO₂: 10,700

NO_x: 13,967
SO₂: 11,518

6

EN12
Significant discharges to water by type: cubic meters.

Cooling Water: 35,373,496
Process Water: 3,104,023

BOD5: 49,148 kilograms
COD: 311,023 kilograms

EN13
Significant spills of chemicals, oils, and fuels in terms of total number and total volume (liters)

Product: 6 for 7,500
Hydrocarbons: 9 for 39,800
Other: 1 for 5,700

Product: 24 for 67,850
Hydrocarbons: 12 for 7,200
Other: 4 for 241,000

EN14
Significant environmental impacts of principal products and services.

EN15
Percentage of the weight of products sold that is reclaimable at the end of the products’ useful life and percentage that is actually reclaimed.

EN16
Incidents of and fines for noncompliance with all applicable international declarations/ conventions/treaties, and national, sub-national, regional, and local regulations associated with environmental issues. Explain in terms of countries of operations.

EN17
Initiatives to use renewable energy sources and to increase energy efficiency.

Energy costs for mining and smelting operations are significant. Our plant utilizing waste heat from fusion of copper concentrates produces steam and electric power for use within the smelter. Studies are underway to determine the viability of additional heat recovery from acid plants, slag granulation circuit, refinery furnaces and other sources. High pressure grinding roll are being installed at the concentrator in Indonesia to reduce the energy consumed per unit of concentrate.

EN18
Energy consumption footprint (i.e. annualized lifetime energy requirement) of major products.

Information is not available at this time

EN19
Other indirect (upstream/downstream) energy use and implications, such as organizational travel, product lifecycle management, and use of energy intensive materials.

Information is not available at this time.

EN22
Total recycling and reuse of water.

At the smelter, the company is installing a reverse osmosis plant and effluent recovery system to facilitate reuse of the water exiting the effluent treatment plant. Additional water recovery projects are also in progress. At the Indonesian concentrator, approximately 55% of the process water requirement is from recycled water.

EN23
Total amount of land owned, leased, or managed for production activities or extractive use.

EN24
Amount of impermeable surface as a percentage of land purchased or leased.

EN25
Impacts of activities and operations on protected and sensitive areas.

EN26
Changes to natural habitats resulting from activities and operations and percentage of habitat protected or restored.

Only about 9% of the COW is utilized for production activities and extractive use. The mine closure plan directs restoration as areas become available. The first large scale restoration will be triggered by the closure of the Grasberg open pit in approximately 2015.

EN27
Objectives, programmes, and targets for protecting and restoring native ecosystems and species in degraded areas.

Large scale restoration will begin as areas become available.

Link to page 39 of the 2006 WTSD.

EN28
Number of IUCN Red List species with habitats in areas affected by operations.

EN29
Business units currently operating or planning operations in or around protected or sensitive areas.

EN30
Other relevant indirect greenhouse gas emissions.

Information is not available at this time.

EN31
All production, transport, import, or export of any waste deemed “hazardous” under the terms of the Basel Convention Annex I, II, III, and VIII.

EN32
Water sources and related ecosystems/habitats significantly affected by discharges of water and runoff.

EN33
Performance of suppliers relative to environmental components of programmes and procedures described inresponse to Governance Structure and Management Systems section (Section 3.16).

EN34
Significant environmental impacts of transportation used for logistical purposes.

EN35
Total Environmental expenditures by type Explain definitions used for types of expenditures.

Activities: $45,890,720
Capital: $16,821,282
Total: $62,712,002
Link to page 43 of the 2006 Annual Report.

MM3
The number/percentage of sites identified and requiring biodiversity management plans, and the number/percentage of sites with plans in place. Also include criteria for deciding that a biodiversity management plan is required and the key components of a plan.

MM4
Percentage of products derived from secondary materials.

MM5
Describe policies for assessing the eco-efficiency and sustainability attributes of products (e.g., recyclability, material use, energy use, toxicity, etc).

MM6
Describe approach to management of overburden, rocks, tailings, and sludges or residues including: assessment of risks, structural stability of storage facilities, metal leaching potential, and hazardous properties.

Link to pages 35-46 of 2005 WTSD Report
and page 48 of 2005 Annual Report.

Link to Riverine Tailings Transport booklet

LA1
Breakdown of workforce, where possible, by region/country, status (employee/non employees, employment type (full time/part time), and by employment contract (indefinite or permanent/fixed term or temporary). Also identify workforce retained in conjunction with other employers (temporary agency workers or workers in co-employment relationships), segmented by region/country.

Link to 2005 10-K. See page 35.

As of December 31, 2006:PT-FI (Indonesia) had nearly 9,000 employees, approximately 98 percent Indonesian and 10,720 contract workers, the vast majority of whom were Indonesian. Atlantic Copper (Spain) had 550 employees.

FCX and FM Services had 9 and 145 employees respectively in the US.

Link to 2006 10-K. See page 39.

LA2
Net employment creation and average turnover segmented by region/county.

LA3
Percentage of employees represented by independent trade union organizations or other bona fide employee representatives broken down geographically OR percentage of employees covered by collective bargaining agreements broken down by region/country.

LA4
Policy and procedures involving information, consultation, and negotiation with employees over changes in the reporting organization’s operations (e.g., restructuring).

FCX’s subsidiary PT-FI has a Position Management Policy which provides guidelines for managing jobs throughout the organization, organization structure, and a consistent basis for promotion, recruiting, and career planning.

PT-FI’s Collective Labor Agreement specifies the rights of the Company and its employees with regard to all employment matters.

Atlantic Copper has written procedures on organization, labor staff modification, personnel recruitment, employee social security registration, responsibilities, and the like, in accordance with ISO 9002 Norm Quality Management System. In addition, all workers’ rights and duties are covered and labor and trade union relations are regulated in Atlantic Copper’s IV Collective Agreement for 2005-2007.

5

LA5
Practices on recording and notification of occupational accidents and diseases, and how they relate to the ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases.

FCX subsidiary PT-FI’s recording and notification of occupational accidents and diseases conforms to the ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases. All incidents are reported (including near-misses, dangerous occurrences, and property damage) and classified according to MSHA standards. Incident rates are calculated and reported routinely to all levels of management and to the Public Policy Committee of the FCX Board of Directors, and all serious accidents or potentially serious incidents are fully investigated.
Link to safety information on Page 50 of WTSD.

Atlantic Copper complies with the regulations of notification of work related accidents and illnesses. Also, all of the notifications are sent electronically to the corresponding organizations (Delta Systems for accidents and RED systems for illnesses).

LA6
Description of formal joint health and safety committees comprising management and worker representatives and proportion of workforce covered by any such committees.

PT-FI has a Safety, Health & Environment (SHE) Steering Committee chaired by the Senior Vice President of Operations and comprised of all PT-FI Division Heads and representatives of major contractors. PT-FI also has SHE Steering Committees at each division and department level.
In Atlantic Copper, a Committee of Directors of Security (CDSH) is made up of director-level personnel and presided over by the General Director of Metallurgy.

PT-FI has a Safety, Health & Environment (SHE) Steering Committee chaired by the Senior Vice President of Operations and comprised of all PT-FI Division Heads and representatives of major contractors. PT-FI also has SHE Steering Committees at each division and department level.

In Atlantic Copper, a Committee of Directors of Security (CDSH) is made up of director-level personnel and presided over by the General Director of Metallurgy.

LA7
Standard injury lost day, and absentee rates and numbers of work-related fatalities (including sub-contracted workers).

Lost Time Incident Rate: 0.12
Total Reportable Incident Rate: 0.34
Number of work-related fatalities: 3

LA8
Description of policies or programs (for the workplace and beyond) on HIV/AIDS.

FCX is aware of and concerned about the incidence and prevalence of HIV and AIDS, particularly in the community within PT-FI’s Contract of Work area. The Company recognizes that HIV and AIDS are medical illnesses and must be addressed with standard medical approaches and cognizance of the social aspects of the problem. PT-FI’s HIV and AIDS Statement of Policy, published in January 2004, clarifies the Company’s policy and procedures on the medical, social, and employment issues surrounding HIV and AIDS.

PT-FI recognizes the serious implications of HIV and AIDS to the workforce and to the local community and endeavors to control the transmission of the diseases in accordance with regulations of the Government of Indonesia (GOI) and recommendations of the World Health Organization (WHO), the International Labor Organization (ILO), the Center for Communicable Diseases (CDC), and other relevant international health organizations.

In accordance with the Company policies of non-discrimination, government regulations regarding HIV and AIDS, and the tenets of the ILO, PT-FI maintains a nondiscriminatory and fair approach to people with HIV or AIDS.

FCX is aware of and concerned about the incidence and prevalence of HIV and AIDS, particularly in the community within PT-FI’s Contract of Work area. The Company recognizes that HIV and AIDS are medical illnesses and must be addressed with standard medical approaches and cognizance of the social aspects of the problem. PT-FI’s HIV and AIDS Statement of Policy, published in January 2004, clarifies the Company’s policy and procedures on the medical, social, and employment issues surrounding HIV and AIDS.

PT-FI recognizes the serious implications of HIV and AIDS to the workforce and to the local community and endeavors to control the transmission of the diseases in accordance with regulations of the Government of Indonesia (GOI) and recommendations of the World Health Organization (WHO), the International Labor Organization (ILO), the Center for Communicable Diseases (CDC), and other relevant international health organizations.

In accordance with the Company policies of non-discrimination, government regulations regarding HIV and AIDS, and the tenets of the ILO, PT-FI maintains a nondiscriminatory and fair approach to people with HIV or AIDS.

Atlantic Copper has annual Health Vigilance plans in accordance with regulations on this matter. The impact of HIV/AIDS in Spain as well as in the Atlantic Copper working areas is not significant, as no HIV or AIDS cases have been detected in more than 15 years. Atlantic Copper, in coordination with the Health Authorities, has established written protocols for action if such a case were to occur.

LA9
Average hours of training per year per employee by category of employee. (e.g., senior management, middle management, professional, technical, administrative, production, and maintenance).

LA10
Description of equal opportunity policies or programs, as well as monitoring systems to ensure compliance and results of monitoring. Equal opportunity policies may address workplace harassment and affirmative action relative to historical patterns of discrimination.

Link to FCX Social, Employment, and Human Rights Policy.

FCX is unequivocally committed to supporting certain fundamental principles within the area of employment and employee relations, including the elimination of discrimination in the workplace. FCX is determined to ensure that all of its activities have the full support of senior management and employees. FCX also wishes to engender public confidence and trust in the Company’s compliance its policies. To achieve these goals, FCX and its affiliated organizations will undergo regular audits of all activities covered under the Social, Employment, and Human Rights Policy and will engage an independent monitoring organization to conduct periodic verification audits to assess compliance with the Social, Employment, and Human Rights Policy.

Link to FCX Social, Employment, and Human Rights Policy.

LA11
Composition of senior management and corporate governance bodies (including the board of directors), including female/male ratio and other indicators of diversity as culturally appropriate.

Link to page 3 of 2005 Proxy.

The FCX Board of Directors is comprised of 13 members, including one member who is an African American woman. FCX’s senior management team of five includes one woman. The PT-FI Board of Commissioners consists of 21 members (including two vacant positions as of this report date) eight of whom are Indonesian and three of whom are women. The Atlantic Copper board consists of three directors, one of whom is a woman.

LA12
Employee benefits beyond those legally mandated.

LA13
Provision for formal worker representation in decision making or management, including corporate governance.

While FCX welcomes input from workers in decision making or management, including corporate governance, there is not a formal corporate provision for this.

LA14
Evidence of substantial compliance with the ILO Guidelines for Occupational Health Management Systems.

FCX’s safety programs are in compliance with the ILO Guidelines and are designed so that all employees have a safe environment in which to work. In Indonesia, the program is based on an approach called FRESH (Freeport Safety and Health) that seeks continuous improvement. Toward that end, we have:

• Developed standards that apply project-wide and that refer to the NOSA Five Star System framework: Premises and Housekeeping; Mechanical, Electrical and Personal Safeguarding; Management of Fire and Other Emergency Risks; Occupational Health and Safety Recording and Investigation; and Occupational Health and Safety Management.

• Ensure compliance with Government Indonesia regulations on Occupational Health, such as:
   • Periodic employee medical check-ups
   • Reporting standards for occupational
      illness.
   • Health care services for employees
     and families
   • Ensuring protection of employees
     against health risks caused by
     airborne and solid contaminants,
     hazardous chemicals, and hazards
     from noise, illumination, and
     vibration.

• Demonstrated occupational incident rate trends which show significantly decreasing Lost Time Incidents.

• Explored tools to strengthen further our safety culture, to achieve injury and illness rate goals for Five Star Grading in Safety and Health.

LA15
Description of formal agreements with trade unions or other bona fide employee representatives covering health and safety at work and proportion of the workforce covered by any such agreements.

The Collective Labor Agreement between FCX’s Indonesian subsidiary PT-FI and the labor union, which represents all non-staff (hourly) workers, address industrial health and safety. It states that:

 1.  The Company is obliged to comply with mining safety and health regulations and laws of the Republic of Indonesia and commits to prevent work accidents and maintain employees work health by conducting safety training and meetings as well as providing work safety equipment.

 2.  Employees shall abide by the safety and health regulations in the implementation of duties, prevent unsafe acts or conditions, and report them immediately to the Supervisor to prevent employee injury or damage to Company property.

The Industrial Relations Guidebook, which applies to all employees, both staff and non-staff (hourly), also addresses industrial health and safety, specifically, they stipulate that the Company:

 1. Shall conduct OSH education and training for employees

 2. Shall ensure that employees obtain periodic health examinations

 3. Shall provide all tools, equipment, personal protective equipment, and facilities required by employees in order to work safely and securely

 4. Shall install, provide, and maintain adequate traffic signs and other OSH signs in the workplace, according to prevailing regulations and legislation

 5. Shall provide adequate emergency equipment and emergency system

 6. Shall develop safe work procedures, socialize the procedures, and conduct sufficient training to create a safe and secure work atmosphere in Company operations

 7. Shall provide a Company manual on “Procedural Regulations to Prevent Accidents.”

Employees also have roles and responsibilities, including the obligation to:

 1. Understand and comply with Company policies and all occupational safety and health regulations

 2. Undergo Health Examination scheduled by the Company

 3. Work according to OSH procedures to prevent injuries and accidents

 4. Perform a pre-operation inspection of equipment, tools and work area, and make repairs or report unsafe conditions to the Supervisor for immediate rectification

 5. Not perform particular work, including operating equipment, if they have not been trained and/or have no license for the equipment in question

 6. Wear and maintain personal protective equipment assigned to them, according to the area and type of work done, for their own safety

 7. Stop unsafe acts in the workplace and report them to the supervisor

 8. Immediately report all accidents or incidents (including near-miss incidents) to the supervisor

 9. Attend Safety Meetings and Safety Training as required.

LA16
Description of programmes to support the continued employability of employees and to manage career endings.

LA17
Specific policies and programmes for skills management or for lifelong learning.

HR1
Description of policies, guidelines, corporate structure, and procedures to deal with all aspects of human rights relevant to operations, including monitoring mechanisms and results. State how policies relate to existing international standards such as the Universal Declaration and the Fundamental Human Rights Conventions of the ILO.

FCX, its affiliates, and its employees are dedicated to the promotion of the rule of law and protection of human rights at all operational sites. The Company is committed to ensuring that its operations are conducted in a manner that respects the Universal Declaration of Human Rights, the Voluntary Principles on Security and Human Rights, other applicable international standards of human rights, the laws and regulations of the host country, and the culture of the people who are indigenous to the areas in which the Company operates. 

FCX has instituted several methods of accountability, including an annual certification process and the engagement of an independent firm to audit the Company’s implementation of the Social, Employment, and Human Rights Policy. Employees are expected to respect human rights principles and to report any acts that may constitute violations of human rights. Link to FCX Social, Employment, and Human Rights Policy.
Link to page 10 of 2006 WTSD Report.

HR2
Evidence of consideration of human rights impacts as part of investment and procurement decisions, including selection of suppliers/contractors.

Link to FCX Social, Employment, and Human Rights Policy.

Link to page 10 of 2005 WTSD Report.

FCX expects all of its subsidiaries, affiliates, and partners to comply with its Social, Employment, and Human Rights Policy or to implement similar policies for their organizations. Link to FCX Social, Employment, and Human Rights Policy.
Link to page 10 of 2006 WTSD Report.

HR3
Description of policies and procedures to evaluate and address human rights performance within the supply chain and contractors, including monitoring systems and results of monitoring.

Link to FCX Social, Employment, and Human Rights Policy.

Link to pages 9-10 of 2005 WTSD Report.

FCX expects all of its subsidiaries, affiliates, and partners to comply with its Social, Employment, and Human Rights Policy or to implement similar policies for their organizations. Link to FCX Social, Employment, and Human Rights Policy. Link to FCX Social, Employment, and Human Rights Policy.  |

Link to pages 10-15 of 2006 WTSD Report.

Link to FCX Social, Employment, and Human Rights Policy.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the elimination of discrimination in the workplace.

FCX’s Social, Employment, and Human Rights Policy states our unequivocal commitment to supporting fundamental principles within the area of employment and employee relations, including the elimination of discrimination in the workplace. Hiring, promotion, and termination data are reviewed regularly by senior management in order to ensure that discrimination is prevented. In addition, FCX engages an independent organization to conduct audits of its employment practices.
Link to FCX Social, Employment, and Human Rights Policy.

HR5
Description of freedom of association policy and extent to which this policy is universally applied independent of local laws, as well as description of procedures/programs to address this issue.

Link to FCX Social, Employment, and Human Rights Policy.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the freedom of association.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the freedom of association. In addition, freedom of association is covered in the PT-FI Collective Labor Agreement and is addressed in the Indonesian and European labor laws, with which FCX and its affiliates comply.
Link to FCX Social, Employment, and Human Rights Policy.

3

HR6
Description of policy excluding child labor as defined by the ILO Convention 138 and extent to which this policy is visibly stated and applied, as well as description of procedures /programs to address this issue, including monitoring systems and results of monitoring.

FCX excludes child labor without exception.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the abolition of child labor.

FCX does not permit child labor under any circumstances.

FCX’s Social, Employment, and Human Rights Policy state our commitment to supporting fundamental principles within the area of employment and employee relations, including the abolition of child labor.

HR7
Description of policy to prevent forced and compulsory labor and extent of which this policy is visibly stated and applied as well as description of procedures /programs to address this.

FCX excludes forced and compulsory labor without exception.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the elimination of forced and compulsory labor.

FCX does not permit forced or compulsory labor under any circumstances.

FCX’s Social, Employment, and Human Rights Policy states our commitment to supporting fundamental principles within the area of employment and employee relations, including the elimination of forced and compulsory labor.

HR8
Employee training on policies and practices concerning all aspects of human rights relevant to operations.

HR9
Description of appeal practices, including, but not limited to, human rights issues.

The Employee Grievance component of the Industrial Relations Guidebook addresses appeals practices, including:

 • The Company and the employees agree that observing and following the grievance procedure is in the interests of both parties

 • An employee may submit a grievance to the Company through the direct supervisor without any prejudice whatsoever

 • The grievance shall, to the extent possible, be settled in the first step of the procedure in the least amount of time

 • Employees are entitled to be accompanied by another employee or a representative from the Workers Union when submitting their grievance.

 • The Industrial Relations Officer shall give advice to all parties and assist them at all levels of the process.

 • A grievance in connection with the quality of living, including accommodation, food, and travel must be submitted to the officer responsible for handling grievances through the Department or Division Head in the presence of the representative of the Company.

In addition, the  Social, Employment, and Human Rights Policy refers to the Human Rights Implementation Guide and Action Plan, which describes the procedure for initiating a complaint.

HR10
Description of non-retaliation policy and effective, confidential employee grievance system (including, but not limited to, its impact on human rights).

The Human Rights Implementation Guide and Action Plan describes the Company’s policy for non-retaliation and the confidential employee grievance system as follows:

 • Any member of the PT-FI community may issue a complaint

 • All information reported will remain confidential

 • An employee’s department will be contacted only with the employee’s express consent

 • Anonymous complaints are accepted

 • Any employee who engages in discrimination or harassment or who is in a supervisory position and fails to take action when advised of discrimination or harassment will be subject to appropriate disciplinary action

 • If a supervisor uses his or her position to retaliate against any employee who has initiated a complaint, the Company will conduct an investigation, which may end in termination

HR11
Human rights training for security personnel.

FCX, through its Indonesian mining operation PT-FI, conducts an ongoing and extensive human rights training for all of its employees, including employees of contractor companies serving the PT-FI project. Security personnel participate in human rights training twice annually, participate in our annual human rights certification, and receive ongoing communication about the application of human rights within our Company.

HR12
Description of policies, guidelines, and procedures to address the needs of indigenous people.

FCX and its affiliate PT-FI have a wide range of policies, guidelines, and procedures that address the needs of the indigenous people. These include the Social, Employment, and Human Rights Policy, our extensive community outreach and development programs (as described in the 2006 WTSD report), and our Guiding Principles for Indonesian Operations – People and the Community.

HR13
Description of jointly managed community grievance mechanisms/authority.

HR14
Share of operating revenues from the area of operations that are redistributed to local communities.

Approximately 1% of annual FCX gross revenues were re-distributed to local communities in 2006.

SO1
Description of policies to manage impacts on communities in areas affected by activities, as well as description of procedures/programs to address this issue, including monitoring systems and results of monitoring.

Link to FCX Social, Employment, and Human Rights Policy.

Link to Environmental Policy.

Link to 2005 WTSD Report.

Link to Environmental Policy.

Link to 2006 WTSD Report.

SO2
Description of the policy, procedures/ management systems, and compliance mechanisms for organizations and employees addressing bribery and corruption.

FCX is committed to conducting business in accordance with high ethical standards and in compliance with both the letter and the spirit of all applicable laws. FCX has a comprehensive Ethics and Business Conduct Policy. which applies to the parent company, all subsidiaries and affiliates, and associated contractors, and which clearly establishes the Company’s policy on appropriate Business Conduct.

FCX is committed to conducting business in accordance with high ethical standards and in compliance with both the letter and the spirit of all applicable laws. FCX has a comprehensive Ethics and Business Conduct Policy. which applies to the parent company, all subsidiaries and affiliates, and associated contractors, and which clearly establishes the Company’s policy on appropriate Business Conduct.

SO3
Description of policy, procedures/ management systems, and compliance mechanisms for managing political lobbying and contributions.

As stated in FCX’s Ethics and Business Conduct Policy, “it is FCX’s policy not to contribute any funds to any candidate for political office, official of a political party, or committee or organization for the election of a particular candidate to any political office (federal, state, or local) in the United States or in foreign countries.”

As stated in FCX’s Ethics and Business Conduct Policy, “it is FCX’s policy not to contribute any funds to any candidate for political office, official of a political party, or committee or organization for the election of a particular candidate to any political office (federal, state, or local) in the United States or in foreign countries.”

SO4
Awards received relevant to social, ethical, and environmental performance.

PT Freeport Indonesia received a Golden Environmental Award and a Silver Safety Award from the Indonesian Minister of Energy and Mineral Resources in 2006.

FCX does not make any payments to political parties or institutions whose prime function is to fund political parties or their candidates.

SO6
Court decisions regarding cases pertaining to anti-trust and monopoly regulations.

There were no court decisions regarding cases pertaining to anti-trust and monopoly regulations that impacted FCX in 2006.

SO7
Description of policy, procedures/management systems, and compliance mechanisms for preventing anti-competitive behavior.

FCX’s Ethics and Business Conduct Policy addresses Conflicts of Interest, Trade Secrets and Fair Dealing, and Antitrust Matters.
Link to Ethics and Business Conduct Policy.

     Social Performance Indicators: Product Responsibility

8

PR1
Description of policy for preserving customer health and safety during use of products and services, and extent to which this policy is visibly stated and applied, as well as description of procedures/programs to address this issue, including monitoring systems and results of monitoring.

FCX products are all covered by Material Safety Data Sheets.

FCX products are all covered by Material Safety Data Sheets.

PR2
Description of policy, procedures/ management systems, and compliance mechanisms related to product information and labeling.

FCX and its operating affiliates comply with the appropriate product information and labeling requirements. Compliance is assured through the environmental auditing process.

FCX and its operating affiliates comply with the appropriate product information and labeling requirements. Compliance is assured through the environmental auditing process.

8

PR3
Description of policy, procedure, management systems, and compliance mechanisms for consumer privacy.

Not applicable.

This indicator is not applicable 

PR4
Number and type of instances of noncompliance with regulations concerning customer health and safety, including the penalties and fines assessed for these breaches.

There have been no instances of noncompliance with regulations concerning customer health and safety, therefore no fines or penalties have been assessed.

PR5
Number of complaints upheld by regulatory or similar official bodies to oversee or regulate the health and safety of products and services.

There have been no complaints upheld by regulatory or similar official bodies to oversee or regulate the health and safety of products and services.

PR6
Voluntary code compliance, product labels or awards with respect to social and/or environmental responsibility that the reporter is qualified to use or has received.

FCX is committed to quality assurance. At Atlantic Copper, a total quality management program has been implemented based on the most up-to-date control technology, with laboratories that cater to customer requirements. The quality system is certified by AENOR, who in 1994 registered the Company under number ER 0128/94 based on UNE-EN-ISO 9002. As a consequence, Atlantic’s FMS Cathode is registered as Grade A on the LME and Grade 1 on the COMEX.

PT-FI received a Golden Environmental Award and a Silver Safety Award from the Indonesian Minister of Energy and Mineral Resources in 2006

FCX is committed to quality assurance. At Atlantic Copper, a total quality management program has been implemented based on the most up-to-date control technology, with laboratories that cater to customer requirements. The quality system is certified by AENOR, who in 1994 registered the Company under number ER 0128/94 based on UNE-EN-ISO 9002. As a consequence, Atlantic’s FMS Cathode is registered as Grade A on the LME and Grade 1 on the COMEX.

PR7
Number and type of instances of noncompliance with regulations concerning product information and labeling, including any penalties or fines assessed for these breaches.

There were no instances of non-compliance with regulations concerning product information and labeling.

PR8
Description of policy, procedures/management systems, and compliance mechanisms related to customer satisfaction, including results of surveys measuring customer satisfaction.

Due to the nature of FCX’s main products, which are copper concentrate, copper, gold and silver, customer satisfaction is not an applicable metric.

PR9
Description of policies, procedures/management systems, and compliance mechanisms for adherence to standards and voluntary codes related to advertising.

FCX’s practice is to ensure that all advertising undergoes extensive internal review for technical accuracy and legal compliance.

PR10
Number and types of breaches of advertising and marketing regulations.

There have been no breaches of advertising or marketing regulations.

PR11
Number of substantiated complaints regarding breaches of consumer privacy.

There have been no complaints regarding breaches of consumer privacy.

MM7
Describe significant incidents affecting communities during the reporting period, and grievance mechanisms used to resolve the incidents and their outcomes.

There were no significant incidents in 2005.

In February 2006, a group of illegal gold panners engaged in conflict with Indonesian police and PT-FI security personnel when they were requested to leave an area near our milling facilities. Following the incident, the illegal panners blocked the road leading to the Grasberg mine and mill in protest and we temporarily suspended mining and milling operations as precautionary measure. The panners also vandalized some of our facilities and equipment, causing approximately $2 million in damages. Mining and milling operations resumed after an approximate four-day outage. We are cooperating with local authorities to ensure the ongoing safety of our people and facilities and to address the aspirations of the illegal gold panners.

MM8
Describe programs in which the reporting organization has been involved that addressed artisanal and small-scale mining (ASM) within company areas of operation.

In 2005, FCX, through its Indonesian subsidiary PT-FI, supported local government authorities in educating and communicating with artisinal miners on the dangers and illegality of artisinal mining in the Company’s work area.

In 2006, FCX, through its Indonesian subsidiary PT-FI, supported local government authorities in educating and communicating with artisinal miners on the dangers and illegality of artisinal mining in the Company’s work area.

MM9
Describe resettlement policies and activities.

There were no resettlement activities in 2005.

There were no resettlement activities in 2006.

MM10
Number of operations with closure plans covering social, stakeholder engagement processes, frequency of plan review, and amount and type of financial provisions for closure.

Link to page 83 of 2005 Annual Report.

FCX’s subsidiaries PT-FI and Atlantic Copper both have closure plans which are reviewed periodically. The ultimate amount of reclamation and closure costs to be incurred will be determined based on applicable laws and regulations at the time of closure. In 1996, PT-FI began contributing to a cash fund ($8.5 million balance at December 31, 2006) designed to accumulate at least $100 million (including interest) by the end of its Indonesian mining activities.
Link to page 76-77 of 2006 Annual Report.

MM11
Describe processes for identifying local communities’ land and customary rights, including those of indigenous peoples, and grievance mechanisms used to resolve any disputes.

Under the Indonesian Constitution, all unimproved land is, by law, owned by the Government of Indonesia. PTFI’s “January Agreement” of 1974 with the Amungme was the first recognition of the right of traditional people to land used for hunting and gathering.
Link to page 27 of 2006 WTSD Report.

MM12
Describe approach to identifying, preparing for, and responding to emergency situation affecting employees, communities, or the environment. Include a description of the nature of existing skills, teams who respond to emergency situations, training drills, review processes, and community involvement.

FCX and its subsidiaries have in place comprehensive Emergency Response Plans, which are reviewed and updated at least annually. The plans provide for regular drills in order to prepare for a potential emergency.

FCX and its subsidiaries have in place comprehensive Emergency Response Plans, which are reviewed and updated at least annually. The plans provide for regular drills in order to prepare for a potential emergency.

MM13
Number of new cases of occupational disease by type. Describe programs to prevent occupational disease.

In 2005, two cases of occupational disease (pneumoconiosis and noise induced hearing loss) were diagnosed.

PT-FI’s Safety & Industrial Health Department has in place a program to prevent occupational disease. The program includes surveys and samples of potential risks in all project areas. The results are analyzed and communicated to area owners and Industrial Health training focuses on risk and disease prevention.

In 2006, one case of occupational disease (noise induced hearing loss) was diagnosed.

PT-FI’s Safety & Industrial Health Department has in place a program to prevent occupational disease. The program includes surveys and samples of potential risks in all project areas. The results are analyzed and communicated to area owners and Industrial Health training focuses on risk and disease prevention.

There were no new cases of occupational illnesses in Atlantic Copper in 2006.  The Health Vigilance Unit, coordinating with the Atlantic Copper Prevention Service, is developing annual prevention programs on labor risks, safety, security, and health for our employees.