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Sustainable Development > Environmental Performance > Legacy Liabilities & Environmental Expenditures

Legacy Liabilities & Environmental Expenditures

Phelps Dodge Corporation and many of its affiliates and predecessor companies have been involved in mining, milling, smelting and manufacturing in the United States for more than a century, prior to the advent of modern environmental laws and the understanding of the potential long-term effects of these operations on the surrounding environment. With the passage of the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 1980, companies like Phelps Dodge Corporation became legally responsible for environmental remediation on properties previously owned or operated by them, irrespective of when the damage to the environment occurred or who caused it. As a result, after the 2007 acquisition, many of the subsidiary companies that Freeport-McMoRan Copper & Gold Inc. now owns are responsible for a wide variety of environmental remediation projects. As of December 31, 2007, we had more than 100 active remediation projects in the United States in 26 states, and environmental reserves recorded on our consolidated balance sheets totaled $1.3 billion.

In 2007, we incurred aggregate environmental capital expenditures, remediation, reclamation and other environmental costs of $320 million. In 2008, we expect to incur approximately $520 million of aggregate environmental capital expenditures, remediation, reclamation and other environmental costs, which are part of our overall 2008 operating budget.

Cleaning and Restoring Historical Operations Sites Across the U.S.

The value of environmental remediation is far reaching and can help to restore valuable habitat, improve safety and return economic value to a region. In 2007, we completed a five-year project along the Mississippi riverfront near New Orleans, which prepared a company-owned property to return to economic use in an area still recovering from Hurricane Katrina. The Amax Metals Recovery (AMRI) site has been idle since 2000 and was previously used to process nickel, copper and cobalt ores. It also recycled spent petroleum catalyst from the many oil refineries in the area.

To prepare the 975-acre site for reuse and sale, we participated in the Louisiana Department of Environmental Quality’s voluntary remediation program and the “Ready for Reuse” brownfields cleanup program of the U.S. Environmental Protection Agency (EPA). About 215 acres of the site were cleaned up for the potential to be used as a deepwater port facility. The cleanup is a significant accomplishment that will have far-reaching economic impact for this community.

In 2007, we also completed the first-ever, public-private partnership between our company, the Michigan Department of Environmental Quality and EPA’s Great Lakes Legacy Act program to clean up sediments in Tannery Bay. Funding for the $8.5 million project was provided by all three parties. The Tannery Bay contamination resulted from the former Northwestern Leather Company tannery in Sault Ste. Marie, Michigan, which operated through the first half of the 1900s and burned to the ground in 1958. The Bay is located on the St. Marys River, an international waterway that borders the United States and Canada and connects Lake Superior and Lake Huron in Michigan’s Upper Peninsula.

The year-long environmental remediation project removed 44,000 cubic yards (2,500 truckloads) of sediment that contained about 1 million pounds of chromium and 70 pounds of mercury. In an effort to preserve more than half a mile of shoreline, a biodegradable filter-sock containing native vegetation and seeds was installed.

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