Freeport-McMoRan Copper & Gold Inc.’s acquisition of Phelps Dodge Corporation combined two companies with strong core values concerning environmental protection and mitigation and the support of local communities where we operate.

The new Freeport-McMoRan Copper & Gold Inc. – created by our acquisition in March 2007 of Phelps Dodge Corporation – is the world’s largest publicly traded copper company. We now have major mining operations in North America, South America and Indonesia, and a development project in Africa. We also have significant, geographically diverse reserves and development projects. This is reflected in our 2007 Freeport-McMoRan Copper & Gold Inc. Annual Report, titled “A World of Assets/A World of Opportunities.”

We recognize that success in our global operations and development projects is dependent on attaining a “social license” – our ability to earn and maintain the goodwill of local communities wherever we operate. To accomplish this, we engage with local communities to identify their needs and concerns and commit to programs to help address them. Some of these commitments are site-specific, while others are global. For that reason, we have titled this report, “A World of Commitments.”

The world needs the metals we produce to sustain and expand economies and to build infrastructure in developing nations. Fulfilling this need for our products must be balanced with the social and environmental concerns of the local communities so that, in meeting the needs of the current generation, we do not compromise the ability of future generations to meet their own needs. This is the core concept of “sustainable development” and the underlying premise of our commitments.

We are dedicated to working toward sustainable development by mitigating our environmental impacts and providing beneficial economic and social results wherever we operate. We realize that sustainable development is particularly challenging for the mining industry because mining operations have significant environmental and social impacts and are focused on a finite resource at each location that will eventually be depleted, although in some cases this would be in the distant future. We embrace sustainable development as our duty as a responsible corporate citizen and because we consider it a prudent business practice.

We have in place Environmental and Social, Employment & Human Rights policies. We have updated and broadened our Principles of Business Conduct – a system of shared values and consistent principles that guides our management and employees in the conduct of our business. We are taking steps to ensure that our commitments detailed in these policies are fully implemented throughout our worldwide operations. As part of the integration of the two companies, we have set in motion a management review of our sustainable development programs and performance to identify an effective management structure to fulfill our commitments.

The integration of our combined companies provides the opportunity to draw upon the strengths of both. For example, the lessons Freeport-McMoRan Copper & Gold Inc. learned about dealing with complex social issues at its Grasberg mine in Papua, Indonesia, are being applied to the development of community programs at the new Tenke Fungurume mine in the Democratic Republic of Congo (DRC). The cutting-edge scientific work under way at the Freeport-McMoRan Process Technology Center in Arizona is now helping develop cost-effective, environmentally sound and less energy intensive processes we can apply company-wide.

Our efforts to fulfill our commitment to sustainable development are carried out through numerous programs globally. Examples include assisting communities in economic development and capacity building, facilitating open dialogue to solve problems, and supporting schools and scholarships; training the first female heavy equipment operators in Papua and training Congolese engineers at our U.S. and South American mining operations; applying the human rights training, health care and small business development programs we established in Papua to our operations in the DRC; bringing entrepreneurial training to members of 11 indigenous communities near our El Abra operations in Chile; assisting with a water treatment plant for communities in Peru, and helping build bridges and airstrips to end the isolation of remote communities in Papua; protecting and repatriating threatened land kangaroos in Papua and bighorn sheep in Arizona; abiding by environmental regulations, including long-term reclamation projects, wherever we operate; and shouldering the responsibility of environmental remediation at legacy U.S. sites that ceased operations long before these companies were acquired by Freeport-McMoRan Copper & Gold Inc.

Ours is not a static commitment through rigid programs. We are committed to continuous improvement in our sustainable development performance. We assess our programs annually in search of better ways to achieve our goals and conduct recurring third-party audits to gain fresh insight and ideas.

One of the most important areas where we seek continual improvement is the safety of our employees. We know that the strength of our operations and programs depends on the hard work of our employees and their safety is our highest priority. Our 2007 safety statistics are better than the U.S. average, but, regrettably, our company recorded five worker fatalities during the year. Our commitment is to zero workplace fatalities. We have ordered a top-to-bottom review of our safety programs globally to find ways to improve our performance. Partly as a result of this refocus and recommitment, PT Freeport Indonesia achieved its first-ever company-wide 5-Star Rating for 2007, the highest rating achievable under the National Occupational Safety Association (NOSA) standards. Despite this fine achievement, we are saddened by the loss of co-workers and are committed more strongly than ever to our goal of zero workplace fatalities.

This 2007 Working Toward Sustainable Development Report is the first such report for the new Freeport-McMoRan Copper & Gold Inc., reflecting the combination of Freeport-McMoRan and Phelps Dodge. Similarly, our 2007 Global Reporting Initiative Report – which will be posted on our web site, www.fcx.com, when it has been completed and undergone third-party verification – will be the first GRI report as a combined company.

We look forward to bringing you many such reports as the new Freeport-McMoRan Copper & Gold Inc. continues on the path to sustainable development and a promising future.

Respectfully yours,

James R. Moffett
Chairman of the Board

Richard C. Adkerson
President and Chief Executive Officer

 

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