Freeport-McMoRan


Freeport-McMoRan Inc., often called Freeport, is a mining company based in the Freeport-McMoRan Center, in Phoenix, Arizona.

History

The current company was created in 1981 through the merger of Freeport Minerals, formerly Texas Freeport Sulphur Company and McMoRan Oil & Gas Company, becoming Freeport-McMoRan Inc.

Early history

Freeport Sulphur Company was founded July 12, 1912 by the eldest son of Svante Magnus "E.M." Swenson, banker Eric Pierson Swenson, with a group of investors, to develop sulfur mining at Brian Mound salt dome, along the US Gulf Coast. Freeport, Texas was also established in Nov. 1912 to house workers, and serve as a port for Houston, rivaling Galveston and Corpus Christi.
Freeport mined sulphur along the Gulf Coast using the Frasch Process, the patents for which had expired in 1908. Previously, Union Sulphur Company founder and patent-holder Herman Frasch had enjoyed a monopoly on the process. The company became known as Freeport Sulphur, later changing its corporate name to Freeport Minerals.
In 1922, Freeport started producing sulphur from Hoskins Mound in Brazoria County, Texas.

Freeport Texas Company

Enterprise to support Freeport Sulphur's business and the new town's infrastructure led to the incorporation of a holding company on September 30, 1913, to join the newer assets with Freeport Sulphur. Officers of the new holding company, Freeport Texas Company, were:
The new corporation's principal assets were listed as:
In 1919, minority stockholders John R. Williams & Sons, First National Bank of Richmond, Virginia vice-president, W. M. Addison, Benjamin P Alsopp, E. L. Norton, and Samuel W. Travers solicited proxies to use at the April 5th annual stockholders' meeting, claiming, according to reports, that "management has refused them adequate information regarding the property. President E.P. Swenson denies that information has been thus withheld and states that the board, which represents the dominant interests, has no vacancies at the present time."

1928 - 1931 shareholder proxy fight

In 1928, shareholder and scion of one of the founding investment firms, John Langbourne Williams & Sons, Langbourne Meade Williams, Jr. launched a proxy fight for control of the company. In 1929, he then sought help from his former supervisor at Lee, Higginson & Co., J.T. Claiborne, who then enlisted clerk John Hay Whitney — who had become one of the wealthiest men in America following the 1927 death of his father, Payne Whitney. Williams eventually gained control of the company from founder Swenson, becoming its president in 1931, with Claiborne as a Vice-President, and Whitney as Chairman. Williams also served as Chairman during 1958 - 1967.
Williams led the company's diversification, beginning with the purchase of manganese deposits in Oriente Province, Cuba.

1930s

In 1932, Freeport Sulphur Company acquired the sulphur rights for Lake Grande Ecaille and vicinity in Plaquemines Parish, Louisiana, and escalated the development of sulphur deposits in the Grand Ecaille dome in 1933, still using the Frasch Process developed by Dr. Herman Frasch, who had, in 1895, enjoined the American Sulphur Company into a partnership, forming the Union Sulphur Company, to initiate the first successful sulphur mining at Grand Ecaille, with which Freeport, like other competitors, would compete upon expiry of the Frasch patents in 1908. From its earliest inception, sulphur mining was the catalyst that developed Port Sulphur, Louisiana.

1950s

The company produced nickel during World War II and potash in the 1950s. In 1955, Freeport Nickel invested $119 million, of which $100 million came from the U.S. government, into construction of a nickel-cobalt mine at Moa Bay, Cuba, and a refinery at Port Nickel, Louisiana. On March 11, 1957, the U.S. government announced a contract to buy nickel and cobalt from the company.
In 1956, the company formed the Freeport Oil Company. In 1958, the company sold an oil discovery near Lake Washington in Louisiana for approximately $100 million to Magnolia Petroleum Company.
In 1959, Freeport geologists confirmed the 1936 Dutch discovery of the rich Ertsberg copper and gold deposits, now known as the Grasberg mine, in extremely rugged, remote country in the Jayawijaya Mountains in what was then called the Netherlands New Guinea.

1960s

In 1967, the company negotiated a contract with the Indonesian government to develop the Ertsberg deposit. In their feasibility study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper, making it the largest above-ground copper deposit ever discovered. Construction of an open pit mine began in May 1970 and in mid-1973 the mine was declared fully operational. Officials at Bechtel, the primary project contractor, called mine development at Ertsberg "the most difficult engineering project they had ever undertaken." The challenges included building a long access road and constructing the world's longest single span aerial tramway. The tramways were needed to move people, supplies and ore because a cliff separates the Ertsberg mine from the mill. Moving copper concentrate from that mill to the shipping port required installation of a slurry pipeline — then the world's longest. Mine construction and startup cost about US$200 million. The Ertsberg project was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept profits marginal during the 1970s.
In 1969, McMoRan Exploration Company was founded, which, in 1981, would merge with Freeport Minerals, formerly Freeport Sulphur, to form Freeport-McMoRan.

1970s

In 1971, the company changed its name to Freeport Minerals Company,.

1980s

In 1981, Freeport Minerals Company merged with the McMoRan Oil and Gas Company. The McMoRan Oil and Gas Company was founded in 1967 by three partners, William Kennon McWilliams Jr., James Robert Moffett, who were both petroleum geologists, and Mack Rankin, "a specialist in land-leasing and sales operations."
In 1981, the company formed a 70/30 joint venture with an affiliate of FMC Corporation to operate the Jerritt Canyon gold mine near Elko, Nevada. In 1985, the company headquarters moved to New Orleans, Louisiana. The company also sold a 25% interest in oil and gas assets primarily in the western United States to Britoil for $73.5 million.
In 1989, the company sold about $1.5 billion in assets to finance development of the Grasberg mine and the Main Pass offshore sulfur-oil-gas deposit off Louisiana.

1990s

In 1994, the company completed the corporate spin-off of its entire interest in Freeport-McMoRan Copper & Gold, which owned the Grasberg mine.
In 1995, RTZ, a predecessor of Rio Tinto Group made a $450 million investment in the company.
In 1997, IMC Global, a large fertilizer producer, acquired Freeport-McMoRan Inc., the former parent company that now owned the sulfur and fertilizer businesses, in a $750 million transaction. Shareholders of Freeport-McMoRan received shares of IMC Global.
The Indonesian government asked Freeport to substantiate Bre-X's claims of having found the largest gold mine ever discovered. In 1997, the company announced that its prospective partner Bre-X did not have gold reserves at its Indonesian mine, as it had reported. Bre-X subsequently was exposed as a fraud and went bankrupt.
In 1998, low commodity prices forced the company to suspend its dividend.

2000s

In 2003, the company was subpoenaed as part of an investigation by anti-trust authorities in the United States, Canada, and Europe into price fixing in the copper industry.
On March 19, 2007, the company acquired Phelps Dodge and became the largest copper producer of any public company in the world. The corporate headquarters was moved from New Orleans, Louisiana to Phoenix, Arizona.

2010s

In 2012, the company announced agreements to acquire affiliated companies McMoRan Exploration Company and Plains Exploration & Production Company for a total enterprise value of over $20 billion. The transaction added significantly to the company's petroleum assets. The transaction was criticized as a conflict of interest due to the common ownership of the companies. In 2015, the company paid a $137.5 million settlement to resolve claims that executives and directors had conflicts of interest that resulted in the company overpaying in that transaction.
In 2014, the company sold its assets in the Eagle Ford shale to Encana for $3.1 billion. In 2015, the company announced job cuts at its Sierrita Mine in Arizona due to low copper and molybdenum prices.
On December 28, 2015, the company announced that James R. Moffett would resign as chairman of the company and be replaced by Gerald J. Ford. Moffett received $16.1 million in severance pay and cash retirement plans totaling more than $63 million. Moffett continued to consult for the company for annual fees of $1.5 million.
In May 2016, the company sold a 13% interest in its Morenci Mine to Sumitomo Group for $1 billion in cash.
Fourth qtr 2016, Freeport sold its deepwater assets, including the Marlin TLP, and the Holstein and Horn Mountain spars, to Anadarko Petroleum Corp.
In August 2017, the company agreed to give a 51% interest in the Grasberg mine to the Government of Indonesia and build a smelter in exchange for a special permit to operate the mine until 2041.
In 2018, the company ranked at number 176 on the Fortune 500 list. During this year, Indonesian President Joko Widodo also planned to take control of 51% of Freeport Indonesia's equity, effectively handing over control of Freeport Control to Indonesian government. The Indonesian government will need to settle payments of $3.85 billion during the takeover process. The Indonesian government finalized the process on December 21, 2018.

Current operations

Freeport is the world's largest producer of molybdenum, and one of the largest producers of copper. In 2015, 67% of its revenues were from the sale of copper, 11% from the sale of petroleum, 10% from the sale of gold, and 5% from the sale of molybdenum. In 2015, sales to Phillips 66 accounted for 7% of the total revenues of the company.
Some of the company's mining operations are as follows:

Africa

Freeport Cobalt holds a 100% interest in Kisanfu, a copper and cobalt exploration project located near Tenke. This subsidiary also owns a large cobalt refinery in Kokkola, Finland, along with a related sales and marketing business. FCX has an effective 56% of that enterprise. Negotiations in 2016 to include these cobalt projects in a sale to China Molybdenum of Tenke Fungurume Mine, a cobalt/copper mine in DRC Congo, were not successful.

Europe

In December 2019, Freeport Cobalt sold its cobalt refinery in Kokkola, Finland to Umicore. FCX held an effective 56% interest in that enterprise.

North America

Past board members include Henry Kissinger, John Hay Whitney, Robert A. Lovett, Benno C. Schmidt Sr., Gus Long, Arleigh Burke, J. Stapleton Roy, Godfrey Rockefeller and his cousin-in-law, Jean Mauzé.

Environmental, human rights, and corruption controversies

Grasberg Mine

The company operates the world's largest and most profitable gold mine, the Grasberg mine in Papua, Indonesia.
In 2005, The New York Times reported that the company paid local military and police generals, colonels, majors and captains, and military units, a total of nearly US$20 million between 1998 and 2004. One individual received up to US$150,000. The payments were meant to secure the reserve. The company responded that the payments were not for individuals, but rather for infrastructure, food, housing, fuel, travel, vehicle repairs and allowances to cover incidental and administrative costs. According to the report, anonymous sources within the company also claimed that company chairman James R. Moffet courted Indonesia's dictator Suharto and "his cronies", cutting them in on deals. Another employee is said to have worked on a program to monitor environmentalists' e-mails and telephone conversations, in cooperation with Indonesian military intelligence officers.
The Grasberg mine's tailings "severely impacted" more than of rainforest, according to a 1996 Dames & Moore environmental audit. The report, endorsed by Freeport, also estimated that during the life of the mine 3.2 billion tons of waste rock—a great part of which generates acid—will be dumped into the local river system. Overburden from the mine has polluted a nearby lake due to acid mine drainage.
Citing extensive, long-term and irreversible environmental damage in New Guinea, The Government Pension Fund of Norway has excluded Freeport-McMoRan from its investment portfolio, following a recommendation from the fund's ethical council.

Human rights record in Indonesia

The company is a signatory participant of the Voluntary Principles on Security and Human Rights. However, the company has been accused of funding the Indonesian government to secure its reserve through militaristic oppression of the native West Papuan people.

Environmental record

Based on 2014 data, the Political Economy Research Institute ranked Freeport-McMoRan 13th among corporations emitting airborne pollutants in the U.S. The ranking is based on emission quantities and toxicity. In 2012, the company paid a $6.8 million fine to the United States Department of the Interior for pollution at the company's Morenci copper mine in southeastern Arizona.