In Management's Discussion and Analysis of Financial Condition and Results of Operations, "we," "us" and "our" refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries, including, except as otherwise stated, Phelps Dodge Corporation (Phelps Dodge) and its subsidiaries, which we acquired on March 19, 2007. You should read this discussion in conjunction with our financial statements, the related Management's Discussion and Analysis of Financial Condition and Results of Operations and the discussion of our "Business and Properties" in our Form 10-K for the year ended December 31, 2008, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results. References to "Notes" are Notes included in our "Notes to Consolidated Financial Statements." Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations all references to earnings or losses per share are on a diluted basis, unless otherwise noted. FCX changed Phelps Dodge's legal name to Freeport-McMoRan Corporation (FMC) in 2008; therefore, references to FMC and Phelps Dodge represent the same entity.

We are one of the world's largest copper, gold and molybdenum mining companies in terms of reserves and production. Our portfolio of assets includes the Grasberg minerals district in Indonesia, which contains the largest single recoverable copper reserve and the largest single gold reserve of any mine in the world based on the latest available reserve data provided by third-party industry consultants; significant mining operations in North and South America; and the Tenke Fungurume minerals district in the Democratic Republic of Congo (DRC), which we believe is one of the world's highest potential copper and cobalt concessions. We also operate Atlantic Copper, our wholly owned copper smelting and refining operation in Spain. Refer to "Operations" for further discussion.

Our mining revenues for first-quarter 2009 include sales of copper (approximately 71 percent), gold (approximately 17 percent) and molybdenum (approximately 5 percent). We currently have five operating copper mines in North America, four in South America, the Grasberg minerals district in Indonesia, and in late March 2009, the first copper cathode was produced at the Tenke Fungurume minerals district in the DRC as the project entered the commissioning and start-up phase. We also have one operating primary molybdenum mine in North America. During first-quarter 2009, approximately 66 percent of our consolidated copper production was from our Grasberg, Cerro Verde and Morenci mines, and approximately 57 percent of our mined copper was sold in concentrate, approximately 23 percent as rod (principally from our North America operations) and approximately 20 percent as cathodes. We produce gold as a by-product at our copper mines, primarily at the Grasberg minerals district in Indonesia, which accounted for approximately 96 percent of our consolidated gold production in first-quarter 2009. During first-quarter 2009, approximately half of our consolidated molybdenum production was from our Henderson molybdenum mine and half was produced as a by-product primarily at our North America copper mines. Refer to "Operations" for further discussion of our mining operations.

Because of the significant reduction in debt following our March 2007 acquisition of Phelps Dodge and historically high prices for copper, molybdenum and gold, our financial policy during most of 2008 was designed to use our cash flow to invest in growth projects with anticipated high rates of return and to return excess cash flows to shareholders in the form of dividends and share purchases. However, the dramatic declines in copper and molybdenum prices and the deterioration of the economic and credit environment have limited our ability to invest in growth projects and required us to make adjustments to our near-term plans. Our near-term strategy has been designed to protect liquidity while preserving our large mineral resources and growth options for the longer term. Revisions made to our operating and financial plans in late 2008 and early 2009 include:

· Curtailment of copper production at higher cost North America operations and of molybdenum production at the Henderson molybdenum mine (refer to "Operations" for further discussion);

· Capital cost reductions, including deferral of most of our project development activities and also reduced capital spending on the remaining development projects in the Grasberg minerals district and at Tenke Fungurume (refer to "Development Projects" for further discussion);

· Aggressive cost control, including workforce reductions, reduced equipment purchases that were planned to support expansion projects, a reduction in material and supplies inventory and reductions in exploration, research and administrative costs; and

· The suspension of our annual common stock dividend.

The completion in February 2009 of a public offering of 26.8 million shares of FCX common stock at an average price of $28.00 per share generated total proceeds of $750 million (net proceeds of $740 million after fees and expenses). Refer to "Capital Resources and Liquidity - Financing Activities" for further discussion.

While we view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world's economy, we have responded to the sudden downturn and uncertain near-term outlook and will continue to adjust our operating strategy as market conditions change.

At March 31, 2009, we had $644 million in consolidated cash ($445 million of which was available to our parent company). We also had no borrowings and $74 million of letters of credit issued under our $1.5 billion revolving credit facilities, resulting in availability of approximately $1.4 billion. From time to time we may use the facilities for working capital and short-term funding requirements.

The sharp declines in copper and molybdenum prices have significantly impacted our consolidated financial results in first-quarter 2009, compared to first-quarter 2008. Refer to "Consolidated Results" for further discussion of our consolidated financial results for the three month periods ended March 31, 2009 and 2008.

Outlook
Consolidated sales from mines are expected to approximate 3.9 billion pounds of copper, 2.3 million ounces of gold and 50 million pounds of molybdenum for 2009, including 955 million pounds of copper, 650 thousand ounces of gold and 11 million pounds of molybdenum for second-quarter 2009. Achievement of these sales volume estimates is dependent on the achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors.

Consolidated revenues, operating cash flows and net income vary significantly with fluctuations in the market prices of copper, gold and molybdenum, sales volumes and other factors. Based on the above projected consolidated sales volumes for 2009 and assuming average prices of $2.00 per pound of copper, $900 per ounce of gold and $8 per pound of molybdenum for the remainder of 2009, our consolidated operating cash flows would approximate $2.5 billion in 2009, net of an estimated $0.6 billion for working capital requirements principally reflecting settlements with customers in first-quarter 2009 of prior year provisionally priced sales. Operating cash flows for 2009 would be impacted by approximately $240 million for each $0.10 per pound change in copper prices, $75 million for each $50 per ounce change in gold prices and $30 million for each $1 per pound change in molybdenum prices.

Assuming average prices of $2.00 per pound of copper, $900 per ounce of gold and $8.00 per pound of molybdenum for the remainder of 2009, and using recent prices for commodity-based input costs, we estimate our consolidated unit net cash costs related to our copper mining operations (after by-product credits) would average approximately $0.70 per pound of copper in 2009, compared with $1.16 per pound of copper in 2008. Estimated consolidated unit net cash costs for 2009 are lower when compared to 2008 primarily because of the effects of lower operating rates and reduced energy prices and other commodity-based input costs. Refer to "Consolidated Results - Production and Delivery Costs" for further discussion of consolidated unit net cash costs.

The graphs below illustrate the movements in metals prices from January 1993 through April 2009. World prices for copper, gold and molybdenum have fluctuated significantly during this period. The London Metal Exchange (LME) spot copper price varied from a low of $0.60 per pound in 2001 to a high of $4.08 per pound in July 2008, the London gold price fluctuated from a low of approximately $250 per ounce in 1999 to a high of $1,011 per ounce in March 2008, and the average weekly Metals Week Molybdenum Dealer Oxide price ranged from $1.87 per pound in January 1993 to a high of $39.25 per pound in June 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our "Risk Factors" contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2008.

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* Excludes Shanghai stocks, producer, consumer and merchant stocks.

The graph above presents LME spot copper prices and reported stocks of copper at the LME and the New York Mercantile Exchange (COMEX) from January 1993 through April 2009. During the period 2003 to 2006, global consumption exceeded production, evidenced by the decline in exchange warehouse inventories. Disruptions associated with strikes and other operational issues, combined with growing demand from China and other emerging economies resulted in low levels of inventory from 2006 through most of 2008. However, slowing consumption has led to increases in inventory levels, with combined LME and COMEX stocks rising to approximately 540 thousand metric tons at March 31, 2009.

During first-quarter 2009, LME spot copper prices ranged from $1.38 per pound to $1.85 per pound and averaged $1.56 per pound. Turmoil in the United States (U.S.) financial markets and concerns about the global economy negatively impacted copper prices in fourth-quarter 2008; however, copper prices have improved in 2009 because of increased Chinese buying activity, less bearish economic sentiment and production and supply issues. While the near-term outlook is uncertain, we believe the underlying fundamentals of the copper business remain positive, supported by supply side constraints and the absence of significant new development projects. Future copper prices may continue to be volatile and are expected to be influenced by demand from China, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters. During April 2009, copper prices rose as declines in inventory levels signaled an increase in demand; the LME spot copper price closed at $2.05 per pound on April 30, 2009.

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The graph above presents London gold prices from January 1993 through April 2009. During first-quarter 2009, the environment for gold was positive, but volatile, with gold prices ranging from approximately $810 per ounce to $989 per ounce and averaging approximately $908 per ounce. Growing investment demand, economic uncertainty and a weak U.S. dollar are continuing to support gold prices. London gold prices closed at approximately $883 per ounce on April 30, 2009.

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The graph above presents the Metals Week Molybdenum Dealer Oxide price from January 1993 through April 2009. Molybdenum prices have declined significantly as a result of the financial market turmoil and a decline in demand. During first-quarter 2009, the weekly average price of molybdenum ranged from approximately $8.13 per pound to approximately $9.50 per pound and averaged $8.91 per pound. The weekly average Metals Week Molybdenum Dealer Oxide price was $8.00 per pound on April 30, 2009.

                              CONSOLIDATED RESULTS

                                                     First-Quarter
                                                2009              2008
      Financial Data (in millions, except per
      share amounts)
      Revenues                                 $ 2,602 a,b,c     $ 5,672 a,b,c
      Operating income                         $   672 a,b,c,d,e $ 2,396 a,b,c,e
      Net income                               $   207 b,c,d,e   $ 1,505 b,c,e
      Net income applicable to common stockf   $    43 b,c,d,e   $ 1,122 b,c,e
      Diluted net income per share of common   $  0.11 b,c,d,e   $       b,c,e
      stock                                                         2.64
      Diluted average common shares                401
      outstanding g                                                  449

      FCX Mining Operating Data
      Copper (millions of recoverable pounds)
      Production                                 1,041               880
      Sales, excluding purchases                 1,020               911
      Average realized price per pound         $  1.72           $  3.69
      Site production and delivery costs per   $  1.07           $
      poundh                                                        1.47
      Unit net cash costs per poundh           $  0.66           $  1.06
      Gold (thousands of recoverable ounces)
      Production                                   595               275
      Sales, excluding purchases                   545               280
      Average realized price per ounce         $   904           $   933
      Molybdenum (millions of recoverable
      pounds)
      Production                                    14                18
      Sales, excluding purchases                    10                20
      Average realized price per pound         $ 11.52           $ 31.67

a. As discussed in Note 10, during 2008 we revised the presentation of our operating divisions to better reflect management's view of our consolidated operations, and have also reclassified amounts for first-quarter 2008 to conform to the current period presentation. Following is a summary of revenues and operating income (loss) by operating division (in millions):

                                        First-Quarter 2009         First-Quarter 2008
                                                    Operating                  Operating
                                                     Income                     Income
                                       Revenues      (Loss)       Revenues      (Loss)
 North America copper mines          $      618   $       (32 ) $    1,496   $       666
 South America copper mines                 702           264        1,607         1,045
 Indonesia mining                         1,122           689        1,052           571
 Africa mining                                -           (19 )          -            (4 )
 Molybdenum                                 146            (4 )        719           214
 Rod & Refining                             619             5        1,688            10
 Atlantic Copper Smelting & Refining        292           (11 )        665            (3 )
 Corporate, other & eliminations           (897 )        (220 )     (1,555 )        (103 )
 Total                               $    2,602   $       672   $    5,672   $     2,396

b. Includes impacts of adjustments to provisionally priced prior year copper sales. Refer to "Revenues" for further discussion.

c. Includes unrealized gains on copper derivative contracts entered into in connection with certain of our sales contracts with U.S. copper rod customers totaling $19 million ($19 million to net income applicable to common stock or $0.05 per share) in first-quarter 2009 and $19 million ($12 million to net income applicable to common stock or $0.03 per share) in first-quarter 2008. These contracts allow us to receive market prices in the month of shipment while the customer pays the fixed price they requested. Refer to Note 8 for further discussion.

d. First-quarter 2009 includes charges totaling $25 million to operating income ($22 million to net income applicable to common stock or $0.05 per share) for restructuring and other charges associated with our revised operating plans. Refer to Note 2 for further discussion.

e. First-quarter 2009 includes charges of $31 million ($31 million to net income applicable to common stock or $0.08 per share) associated with adjustments to environmental obligations, and $19 million ($19 million to net income applicable to common stock or $0.05 per share) for lower of cost or market (LCM) molybdenum inventory adjustments.

Also includes a reduction in compensation expense attributable to the prior years' financial results totaling $33 million ($29 million to net income applicable to common stock or $0.07 per share) for first-quarter 2009 and $40 million ($23 million to net income applicable to common stock or $0.05 per share) for first-quarter 2008.

f. After net income attributable to noncontrolling interests in subsidiaries and preferred dividends.

g. Reflects assumed conversion of our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock in first-quarter 2008. These securities were not dilutive in first-quarter 2009.

h. Reflects per pound weighted average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines. For reconciliations of the per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to "Operations - Unit Net Cash Costs" and to "Product Revenues and Production Costs."

Revenues
Consolidated revenues include the sale of copper rod, copper cathodes, copper concentrates, molybdenum, gold and other metals by our North and South America copper mines, the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operation, the sale of molybdenum in various forms by our Molybdenum operations, and the sale of copper anodes, copper cathodes, and gold in anodes and slimes by Atlantic Copper. Consolidated revenues totaled $2.6 billion in first-quarter 2009, compared with $5.7 billion in first-quarter 2008, primarily because of the sharp declines in the price of copper. Following is a summary of changes in our consolidated revenues between periods (in millions):