Freeport-McMoRan Copper & Gold Inc.’s operations contribute to host governments and communities substantially in many ways – through the payment of taxes, royalties, dividends and fees; through the employment of thousands of people, whose salaries stimulate secondary economic growth; through the purchase of goods and services; through the construction of infrastructure; and through the support of social development programs.

In Indonesia, we provide through our operating company, PT Freeport Indonesia, substantial direct benefits to the Indonesian economy. Freeport Indonesia is the largest private employer in Papua province and one of the largest taxpayers in Indonesia. In 2007, PT Freeport Indonesia paid direct benefits (taxes, royalties, dividends and fees) to the Indonesian government totaling $1.8 billion. We directly employed almost 9,800 people, of whom almost 28 percent are Papuan, plus an additional 9,500 contractors and service providers that supported our Indonesia operations in 2007. Our economic contributions to Indonesia include the following since the initiation of our current Contract of Work in 1992:

• Investment of over $5 billion to build company infrastructure in Papua including electricity generation facilities, seaports, airports, roads, bridges, tunnels, waste disposal facilities, modern communications systems and other infrastructure improvements, most of which will revert to the Indonesian government at the end of our contract term.
• Investment of over $600 million in social infrastructure directly benefiting the local people, such as schools, student dormitories, hospitals, health clinics, offices, places of worship, recreational facilities and the development of small and medium-sized businesses.
• Payroll payments to our direct employees of about $1.4 billion.

In 2003, we commissioned the Institute for Economics and Social Research, Faculty of Economics, University of Indonesia, to conduct an economic impact analysis on the multiplier effect on Papua and Indonesia from PT Freeport Indonesia’s operations since 1992. The study was last updated in 2007. The University’s economists found that PT Freeport Indonesia:

• Contributed approximately $10 billion to the national Gross Domestic Product (GDP) in 2007 and more than $54 billion in total since 1992.
• Accounted for 2.4 percent and 45 percent of the GDP in 2007 for the country of Indonesia and Papua province, respectively.
• During the same year, accounted for 96 percent of the GDP for Mimika Regency, Papua, one of the fastest-growing areas in the nation of Indonesia.
• Paid taxes that accounted for 2.34 percent of the Indonesian national budget.
• Accounted for 1.3 percent of all household income in Indonesia and 25 percent of the household income in Papua province.

Our direct economic impact during 2007 was also very significant in the Americas. In North America, we purchased over $5.7 billion in goods and services, and paid more than $500 million in salaries and benefits to our direct employees. In South America, we incurred over $1.1 billion on the purchase of goods and services in Chile and Peru, and paid $156 million in salaries and benefits to our direct employees. Additional economic information related to our operations, including taxes paid to the respective governments, will be included in our GRI report for 2007, which will be available on our web site.

Each year the Western Economic Analysis Center conducts an examination of the company’s indirect and direct economic impacts in its most significant areas of operation in North America, including Arizona, New Mexico, Colorado and Texas. The 2007 study measured the company’s total direct and indirect impact in the state of Arizona alone at approximately $6 billion, including combined direct and indirect impact of $1.7 billion in personal income, $3.9 billion in business income and $434 million in state and local government revenues. The 2007 study has not yet been completed for New Mexico, Colorado and Texas. The 2006 study measured the company’s total economic impact in the U.S. at $5.9 billion. In South America, the independent firm of Malthus conducted a study of direct and indirect economic impacts of our operations in Chile and Peru. The study conducted for the year 2007 concluded that our total economic impact was $3.7 billion in Chile and $2.7 billion in Peru. Out of the total impact of the company in South America ($6.4 billion), 51 percent is associated with business or business income (purchasing, operating expenses and realized investments), 7 percent is compensation (personal income) and 42 percent is direct and indirect taxes paid to governments.

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