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Global
Reporting Initiative
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Reporting Period:
January 1, 2006-December 31,
2006
In January of 2005, 16 leading mining and metals companies
comprising the International Council on Mining and Metals (ICMM)
agreed to report on their sustainable development performance
using the GRI Sustainability Reporting Framework, including the
Mining and Metals Sector Supplement.
The Global Reporting Initiative (GRI) is a multi-stakeholder
process and independent institution whose mission is to develop
and disseminate globally applicable Sustainability Reporting
Guidelines.
The International Council on Mining and Metals (ICMM) is a
CEO-led organization dedicated to sustainable development and to
the vision of a viable mining, minerals and metals industry
widely recognized as essential for modern living and a key
contributor to sustainable development.
FCX’s
report is based on GRI requirements.
Freeport-McMoRan Copper & Gold Inc. (FCX) is a company
incorporated in the state of Delaware, U.S.A. where its common
stock, preferred stock and senior notes are publicly traded on
the New York Stock Exchange. Our common stock symbol is FCX. Our
Indonesian mining affiliate, PT Freeport Indonesia (PT-FI), is a
major producer of copper from mineral ore containing significant
amounts of gold. The world requires the copper we produce to
sustain and expand economies and for infrastructure development.
The copper concentrate from our mining complex in Papua,
Indonesia, and the copper products from our wholly owned
Atlantic Copper, S.A. smelter in Spain and our 25-percent-owned
smelter in Indonesia, PT Smelting, are essential for the
communications, transportation, electronics and other industries
on which the world relies.
Note: FCX, as a founding member of ICMM, is committed to
superior business practices in sustainable development. We have
committed to implement the ICMM Sustainable Development
Framework and comply with policy statements of the ICMM Council;
details are given in our Working Toward Sustainable Development
report. The ICMM Sustainable Development Framework comprises
four elements: a set of 10 Principles, supported by public
reporting in accordance with Global Reporting Initiative (GRI)
guidelines, independent assurance, and a commitment to sharing
good practice. FCX is fully committed to the Global Reporting
Initiative (GRI).
The left-hand column of the report indicates which of the 10
ICMM Principles corresponds to each item within the GRI report.
On November 19, 2006,
Freeport-McMoRan Copper & Gold Inc. (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 14, 2007,
and the transaction was completed on March 19, 2007. The
information contained in this report, which covers the reporting
period of January 1, 2006, through December 31, 2006, does not
reflect the impact of this transaction.
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Verification Statement |
| Matrix+ Consulting UK
Limited was commissioned by Freeport-McMoRan Copper &
Gold Inc. (FCX) to verify claims made in Sections 1 to 3
as well as quantitative information for selected
indicators included in the GRI Indicators Table in
section 4 of the company’s Global Reporting Initiative
2006 report to be posted on the FCX web site.
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Scope |
Regarding Sections
1-3, the scope of work comprised a review of statements
made in respect of policies and processes that are being
used to manage FCX’s sustainable development agenda.
With respect to section 4, the scope of work comprised a
desk top and site assessment of 29 core indicators and 4
additional indicators of the GRI 2002 Sustainability
Reporting Guidelines and Mining and Metals Supplement,
including: Economic (14), Environment (12), Labour
Practices and Decent Work (6), and Human Rights (1).
For
some economic Indicators, FCX aggregate data was
verified by Matrix+ Consulting UK. For all other
indicators, only data pertaining to PT Freeport
Indonesia (PTFI) was verified at site level by Matrix+
Consulting UK (see Table 1 below). An independent review
of Atlantic Copper S.A. was not undertaken by Matrix+
Consulting, as this operation was subject to a separate
verification process. |
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Table
I - GRI Indicators Verified by Matrix+ Consulting
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Indicator Category
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FCX |
PTFI |
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Economic
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EC1; EC2; EC3;
EC6; EC7; EC 8; EC11; MM2 |
EC4; EC5; EC10;
EC12; EC13; MM1 |
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Environmental |
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EN1; EN3; EN5;
EN6; EN8-13; EN16; MM4 |
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Labour practices |
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LA1-3; LA7; LA9;
MM13 |
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Human Rights |
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HR14
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Methodology |
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Regarding Sections
1-3, a desktop assessment was carried out to
evaluate the extent to which company statements
could be upheld in the context of FCX’s operational
and governance activities. This included a review of
key documents requested by Matrix+ Consulting UK and
provided by FCX, some of which had to be translated
from Indonesian or Spanish into English.
No site based
assessments were carried out.
Regarding Section 4,
a desktop assessment was carried out to evaluate the
risk of incompleteness and inaccuracy, based on the
mode of collecting information relating to each GRI
Indicator in Table 1 above, using the AS/NZS
4360:2004 Risk Management standard.
A 3-day site assessment was then carried out at PTFI
by a senior auditor. Auditing priority was applied
to the parameters with a higher risk ranking, and
supplemented by sampling of parameters with a lower
risk ranking. Calculations and spreadsheets were
viewed and interrogated to obtain an understanding
of the consistency of the reporting processes and to
test the accuracy of the aggregation processes for
high priority indicators. Interviews were held with
various representatives of FCX and PTFI.
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Limitations of the Verification |
This verification has been carried out by checking
samples of information and documents that have been made
available during the period of verification activity by
FCX and PTFI. Information provided that has been deemed
to be independently verified by other third parties has
been considered to be appropriately verified, and was
not subjected to re-auditing by Matrix+ Consulting.
Accordingly, Matrix+ Consulting has not checked or
reviewed all of FCX’s and PTFI’s information and
documents and related data collection and management
systems.
This verification applies to selected information
reported in Sections 1 to 3 inclusive as well as
quantitative information reported on selected indicators
in the GRI Indicators Table in section 4 of FCX’s
Global Reporting Initiative 2006 report
and posted on the
company’s website. It does not extend to any updates
that may be posted after this date. The verification
statement provided by Matrix+ Consulting is not intended
to be used as advice or as the basis for any decisions,
including, without limitation, financial or investment
decisions.
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Key Findings |
| Based on our review: |
- • We are not aware of any misstatements made in
respect of the information provided by FCX in
Sections 1-3. We have no cause to believe that
claims placed on the website cannot be supported.
- • We have no cause to believe that GRI Indicator
data verified by Matrix+ Consulting UK has not been
properly collated from information reported at an
operational level or transcribed from independent
studies of the economic impacts of PTFI.
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The audit identified
a number of areas in PTFI's reporting process that could
be enhanced and underpin the transparent, accurate and
complete reporting of performance.
- • The transparency associated with Indicator
EC13, Indirect Economic Impacts, could be improved.
This Indicator has been reported using authoritative
information from an independent analysis of the
economic impacts of the PT Freeport Indonesia
operation and represents diligent application of
available data. A review of the methodology and data
bases used to undertake this analysis could be
undertaken to support the magnitude of the Indirect
Impact claim.
- • The size and scope of PTFI has resulted in
several decentralized processes of data capture and
analysis for the various Indicators, particularly
environmental Indicators. Greater control on the
accuracy and completeness of data could be achieved
by consolidating various processes on site to form a
more streamlined approach to data capture. It was
noted that some consolidation processes were already
being instituted in 2007.
- • A systematic, continuous and retrospective
process for internal testing of data has not been
implemented uniformly across the site for all
parameters reported. A systematic process for
identifying material inconsistencies would benefit
the reporting activity, reduce the risk of
collecting and collating erroneous data, and promote
early management intervention on negative trends.
- • Clearer on-site definitions of Indicators
pursued for reporting, Standard Operating Procedures
for capturing relevant information and additional
training of personnel charged with capturing this
information would further improve the reporting
process.
- • Further detailed findings for each Indica
tor
examined by Matrix+ Consulting are presented in a
Management Report to FCX.
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Statement of Independence |
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The
independence of our team has been reviewed and none of
the Matrix+ Consulting assessors involved in this
project presents a conflict of interest to the integrity
of this verification statement.
Matrix+ International
Matrix+ International
Brisbane – Johannesburg –
London

December 2007
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Verification Statement
(pdf version) |
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ICMM
Principle |
Description of Indicator |
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2
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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.
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James R.
Moffett
Chairman
of the Board |
Richard
C. Adkerson
Chief
Executive Officer |
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2 |
Profile for 2006
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2.1 |
Name of Reporting Organization:
Freeport-McMoRan Copper & Gold Inc. (NYSE:
FCX).
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2.2 |
Major products and/or services: FCX
explores for, develops, mines, and processes
ore containing copper, gold, and silver in
Indonesia, and smelts and refines copper
concentrates in Spain and Indonesia.
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2.3 |
Operational structure of the
organization: The FCX Corporate
Headquarters is based in New Orleans,
Louisiana. Each major operating subsidiary
has an on-site management team (Link to page
20 of 2006 Annual Report).
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2.4 |
Operational structure of the
organization: FCX conducts its
operations through its subsidiaries, PT
Freeport Indonesia (PT-FI), PT Puncakjaya
Power, PT Irja Eastern Minerals, and
Atlantic Copper, S.A. PT-FI’s operations in
the Indonesian province of Papua include
exploration and development, mining and
milling of ore containing copper, gold, and
silver, and the worldwide marketing of
concentrates containing those minerals. PT
Puncakjaya Power supplies power to PT-FI’s
operations. PT Irja Eastern Minerals
conducts mineral exploration activities in
Papua. Atlantic Copper, FCX’s wholly owned
subsidiary in Huelva, Spain, and PT
Smelting, PT-FI’s 25-percent-owned smelter
facility in the Indonesian province of East
Java, are engaged in the smelting and
refining of copper concentrates.
In 1996, we established joint ventures with
Rio Tinto, an international mining company
with headquarters in London, England (See
Section 2.9, below).
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2.5 |
Countries in which the organization’s
operations are located: FCX operated in
2006 in the United States, Indonesia, and
Spain.
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2.6 |
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.
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2.7 |
Nature of markets served: Smelters and
refineries worldwide.
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2.8 |
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
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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
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2.11 |
Reporting Period: January 1,
2006-December 31, 2006
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2.12 |
Date of most recent previous report:
In 2005, FCX filed an “informally
conformant” report on the 2005 reporting
year; however, this report did not include
Sections 1 through 4. Therefore, this item
is not applicable.
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2.13 |
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”.
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2.14 |
Significant changes in size, structure,
ownership, or products/services that have
occurred since the previous report:
Since the acquisition of Phelps Dodge did
not close until March 2007, and this report
covers only the reporting period of 2006,
there have been no significant changes since
the previous report.
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2.15 |
Basis for reporting on joint ventures,
partially owned subsidiaries, leased
facilities, outsourced operations, and other
situations, that can significantly affect
comparability from period to period and/or
between reporting organizations: This
report provides information net of our Joint
Venture partner’s interest unless otherwise
specifically stated. FCX reports on a
consolidated level which includes all
subsidiaries (wholly and partially owned).
FCX does not report on outsourced
operations, nor does it lease any
facilities, and as of December 31, 2006,
there are no situations that would
significantly affect comparability from
period to period.
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2.16 |
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
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2.17 |
Decisions not to apply GRI principles or
protocols in the preparation of the report:
FCX applied GRI principles and protocols in
the preparation of this report.
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2.18 |
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.
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2.19 |
Significant changes from previous years
in the measurement methods applied to key
economic, environmental, and social
information: There were no significant
changes from prior years in the measurement
methods applied to key economic,
environmental, and social information.
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2.20 |
Policies and
internal practices to enhance and provide
assurance about the accuracy, completeness,
and reliability that can be placed on the
sustainability report. This includes
internal management systems, processes, and
audits that management relies on to ensure
that reported data are reliable and complete
with regard to the scope of the report:
FCX engages both internal and external
auditors to ensure financial responsibility
and robust controls. In addition, in FCX’s
Environmental Policy and in our Social,
Employment, and Human Rights Policy, we
commit to regular audits to assess our
compliance, management systems, and
practices. These audits have taken place and
the results of external audits have been
reported publicly. Additionally, FCX has
engaged a third party consultant to verify
that a number of the key reported data
elements are reliable and complete with
regard to the scope of this report.
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2.21 |
Policy and
current practice with regard to providing
independent assurance for the full report:
This report has been prepared based on the
Global Reporting Initiative's (GRI) 2002
Sustainability Reporting Guidelines. For
this year's report, certain critical data
and assertions made in the report have been
subject to independent assurance as defined
in the assurance statement (see
beginning of report).
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2.22 |
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.
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3 |
Governance Structure and Management Systems
Structure and Governance
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1 |
3.1 |
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).
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3.2 |
Percentage of the board of directors that
are independent, non-executive directors.
State how the board determines
“independence:” On the basis of
information solicited from each director,
and upon the advice and recommendation of
the Nominating and Corporate Governance
Committee, the board has affirmatively
determined that seven of its thirteen
members as of December 31, 2006 had no
material relationship with the company and
are thus independent within the meaning of
our corporate governance guidelines, which
comply with the New York Stock Exchange
(NYSE) director independence standards as
currently in effect. Further, the board has
determined that each of the members of the
audit, corporate personnel, and nominating
and corporate governance committees has no
material relationship with the company and
is independent within the meaning of our
corporate governance guidelines, which adopt
the heightened statutory and NYSE
independence standards applicable to audit
committee members (Link
to page 5 of 2007 Proxy).
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3.3 |
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).
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3.4 |
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).
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3.5 |
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).
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3.6 |
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.
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3.7 |
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
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3.8 |
Basis for identification and selection of
major stakeholders. This includes the
processes for defining an organization's
stakeholders and for determining which
groups to engage. FCX, as one of the
largest publicly traded mining companies
world-wide, engages with a wide variety of
stakeholders, including shareholders,
employees, government officials, media,
community members, and non-governmental
organizations. All of these stakeholders are
important to us, and we strive to engage all
of them so that they have accurate
information on our Company.
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3.9 |
Approaches to stakeholder consultation
reported in terms of frequency of
consultations by type and by stakeholder
group. This could include surveys, focus
groups, community panels, corporate advisory
panels, written communication,
management/union structures, and other
vehicles. FCX regularly undertakes a
wide variety of stakeholder communication
and engagement activities, depending on the
specific stakeholders involved and the
nature and frequency of information to be
communicated. These include surveys, focus
groups, community panels, print
communication, audio and video broadcasts,
informal discussions, and other mechanisms.
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3.10 |
Type of information generated by
stakeholder consultations. Include a list of
key issues and concerns raised by
stakeholders and identify any indicators
specifically developed as a result of
stakeholder consultation. Key issues
raised by stakeholders include environmental
management, social development, revenues,
employee relations, transparency and illegal
gold panning.
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3.11 |
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.
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3.12 |
Externally developed, voluntary economic,
environmental, and social charters, sets of
principles, or other initiatives to which
the organization subscribes or which it
endorses. Include date of adoption and
countries/operations where applied: FCX
is committed to ensuring that its operations
are conducted in a manner consistent with
the
Universal Declaration of Human Rights
and other applicable international standards
of human rights, the laws and regulations of
the host countries in which FCX operates,
and the culture of the people who are
indigenous to the Company’s operational
areas. FCX is a signatory to the U.S. State
Department-British Foreign Office
Voluntary Principles on Security and Human
Rights. As a member of the
International Council on Mining and Metals,
FCX is committed to implementing the ICMM’s
Sustainable Development Framework.
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3.13 |
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.
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3.14 |
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.
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3.15 |
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).
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3.16 |
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.
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3.17 |
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).
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3.18 |
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. |
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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. |
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|
ICMM
Principle |
Description of Indicator |
2005
Response |
2006
Response |
|
Economic Performance Indicators |
|
9 |
EC1
Net sales. |
Link to page 60 of 2005 Annual Report,
Revenues. |
Revenues for 2006 were $5.791 billion. Link
to page 22 of 2006 Annual Report,
Revenues. |
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9 |
EC2
Economic breakdown of markets.
|
Link to page 88 of 2005 Annual Report,
Chart. |
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 80 of 2006
Annual Report, Chart. |
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9 |
EC3
Cost of all goods, materials, and services
purchased. |
Link to page 60 of 2005 Annual Report,
Production and Delivery. |
Production and delivery costs in 2006 were
$2.53 billion.
Link to page 55 of 2006 Annual Report,
Production and Delivery. |
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9 |
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