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. 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.

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). We also operate Atlantic Copper, our wholly owned copper smelting and refining operation in Spain. Refer to "Operations" for further discussion.

The dramatic declines in copper and molybdenum prices in fourth-quarter 2008 and the deterioration of the economic and credit environment limited our ability to invest in growth projects and required us to make adjustments to our near-term plans in late 2008 and early 2009 (refer to Note 2 for further discussion). Our near-term strategy is designed to protect liquidity while preserving our large mineral resources and growth options for the longer term. We will continue to review and adjust our operating strategy as market conditions change.

Net income attributable to common stock for second-quarter 2009 reflected improved copper prices, compared to first-quarter 2009, and strong operating performance; however, as expected, results for the second quarter and first six months of 2009 were below the 2008 periods because of lower copper and molybdenum prices. Refer to "Consolidated Results" for further discussion of our consolidated financial results for the three-month and six-month periods ended June 30, 2009 and 2008.

Outlook
Consolidated sales from mines are expected to approximate 3.9 billion pounds of copper, 2.4 million ounces of gold and 56 million pounds of molybdenum for 2009, including 910 million pounds of copper, 550 thousand ounces of gold and 15 million pounds of molybdenum in third-quarter 2009. These sales volume estimates are 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 $2.25 per pound of copper, $900 per ounce of gold and $8.00 per pound of molybdenum for the remainder of 2009, our consolidated operating cash flows are expected to approximate $3.0 billion in 2009, net of an estimated $0.5 billion for working capital requirements principally reflecting final settlements with customers in early 2009 of prior year provisionally priced sales. Operating cash flows for the remainder of 2009 would be impacted by approximately $200 million for each $0.10 per pound change in copper prices, $40 million for each $50 per ounce change in gold prices and $20 million for each $1 per pound change in molybdenum prices.

Assuming average prices of $2.25 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 mining in a higher grade section of the Grasberg open pit, lower operating rates and reduced energy prices and other commodity-based input costs. Because of the impact of lower projected copper and gold sales volumes from Grasberg in the second half of 2009, consolidated unit net cash costs for the second half of 2009 are expected to

be higher than in the first half of 2009. Refer to "Consolidated Results - Production and Delivery Costs" for further discussion of consolidated unit net cash costs.

Capital expenditures are expected to approximate $1.4 billion for the full year 2009, including $0.6 billion for sustaining capital and $0.8 billion for major projects (the Tenke Fungurume and Grasberg underground development projects). For 2008, capital expenditures totaled $2.7 billion, which included approximately $1.6 billion for major projects. Lower projected capital expenditures for 2009 are the result of deferring capital spending for most of our project development activities and reduced spending for sustaining capital. Capital spending plans continue to be reviewed and may be revised based on market conditions.

The graphs below illustrate the movements in metals prices from January 1993 through July 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 July 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. Slowing consumption led to increases in inventory levels in late 2008 and early 2009; however, China's increased buying activity has contributed to the recent decline in exchange inventories. Combined LME and COMEX stocks totaled approximately 320 thousand metric tons at June 30, 2009, which represents approximately one week of global consumption.

Turmoil in the United States (U.S.) financial markets and concerns about the global economy negatively impacted copper prices in late 2008 and in early 2009; however, copper prices improved during the first half of 2009 as a result of increased Chinese buying activity and improved prospects of global economic recovery. During second-quarter 2009, LME spot copper prices ranged from $1.80 per pound to $2.39 per pound and averaged $2.12 per pound. While the near-term outlook is uncertain, we believe the underlying fundamentals of the copper business remain positive, supported by limited supplies from existing mines and the absence of significant new development projects. Future copper prices are expected to be volatile and are likely 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. The LME spot copper price closed at $2.61 per pound on July 31, 2009.

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The graph above presents London gold prices from January 1993 through July 2009. During second-quarter 2009, the environment for gold was positive, but volatile, with gold prices ranging from approximately $870 per ounce to $982 per ounce and averaging approximately $922 per ounce. Growing investment demand and a weak U.S. dollar are continuing to support gold prices. London gold prices closed at approximately $939 per ounce on July 31, 2009.

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The graph above presents Metals Week Molybdenum Dealer Oxide prices from January 1993 through July 2009. Molybdenum prices have declined significantly from 2008 levels as a result of the financial market turmoil and a decline in demand. During second-quarter 2009, the weekly average price of molybdenum ranged from approximately $7.83 per pound to approximately $10.60 per pound and averaged $9.20 per pound. Molybdenum prices have steadily improved over the last several weeks, and the weekly average Metals Week Molybdenum Dealer Oxide price was $14.00 per pound on July 31, 2009. The recent increase in molybdenum prices was driven by increased buying activity, slightly improved metallurgical demand in Europe and the continuation of molybdenum production curtailments.

                              CONSOLIDATED RESULTS
                                                                     Six Months Ended
                                           Second-Quarter                June 30,
                                          2009        2008          2009          2008
Financial Data (in millions, except per
share amounts)
Revenuesa                               $  3,684 b   $ 5,441 b    $   6,286 b   $ 11,113 b
Operating income                        $  1,508 b   $ 2,053 b    $   2,180 b   $  4,449 b
Net income                              $    812     $ 1,284      $   1,019     $  2,789
Net income attributable to FCX common   $    588     $            $     631     $  2,069
stockholdersc                                            947
Diluted net income per share of common  $   1.38     $            $    1.54     $   4.89
stock                                                   2.25
Diluted weighted average common shares       471                        426          449
outstandingd                                             450

Mining Operating Data
Copper (millions of recoverable pounds)
Production                                 1,069         941          2,110        1,821
Sales, excluding purchases                 1,102         942          2,122        1,853
Average realized price per pound        $   2.22     $  3.85      $    2.03     $   3.77
Site production and delivery costs per  $   1.04     $            $    1.05     $   1.53
pounde                                                  1.59
Unit net cash costs per pounde          $   0.43     $  1.25      $    0.54     $   1.16
Gold (thousands of recoverable ounces)
Production                                   802         250          1,397          525
Sales, excluding purchases                   837         265          1,382          545
Average realized price per ounce        $    932     $   912      $     919     $    917
Molybdenum (millions of recoverable
pounds)
Production                                    13          18             27           36
Sales, excluding purchases                    16          20             26           40
Average realized price per pound        $  10.11     $ 31.59      $   10.65     $  31.63

a. Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods. Refer to "Revenues" for further discussion.

b. As discussed in Note 11, 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 the second quarter and first six months of 2008 to conform to the current period presentation. Following is a summary of revenues and operating income (loss) by operating division (in millions):

                                      Second-Quarter 2009        Second-Quarter 2008
                                                   Operating                  Operating
                                                    Income                     Income
                                      Revenues      (Loss)       Revenues      (Loss)
North America copper mines          $      703   $       176   $    1,571   $       661
South America copper mines                 884           455        1,428           839
Indonesia mining                         1,610         1,095        1,016           482
Africa mining                               57           (49 )          -           (10 )
Molybdenum                                 186             8          715           219
Rod & Refining                             747             2        1,683             5
Atlantic Copper Smelting & Refining        415           (18 )        724            11
Corporate, other & eliminations           (918 )        (161 )     (1,696 )        (154 )
Total                               $    3,684   $     1,508   $    5,441   $     2,053



                                        Six Months Ended           Six Months Ended
                                         June 30, 2009              June 30, 2008
                                                   Operating                  Operating
                                                    Income                     Income
                                      Revenues      (Loss)       Revenues      (Loss)
North America copper mines          $    1,321   $       144   $    3,067   $     1,327
South America copper mines               1,586           719        3,035         1,884
Indonesia mining                         2,732         1,784        2,068         1,053
Africa mining                               57           (68 )          -           (14 )
Molybdenum                                 332             4        1,434           433
Rod & Refining                           1,366             7        3,371            15
Atlantic Copper Smelting & Refining        707           (29 )      1,389             8
Corporate, other & eliminations         (1,815 )        (381 )     (3,251 )        (257 )
Total                               $    6,286   $     2,180   $   11,113   $     4,449

c. After net income attributable to noncontrolling interests and preferred dividends.

d. As applicable, reflects assumed conversion of our 5½% Convertible Perpetual Preferred Stock and 6¾% Mandatory Convertible Preferred Stock (refer to Note
3). In addition, the 2009 periods include the effect of 26.8 million shares of common stock sold in February 2009.

e. Reflects per pound weighted average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding Africa mining. 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 concentrates, copper cathodes, copper rod, 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 copper cathodes by our Africa mining operation, the sale of molybdenum in various forms by our Molybdenum operations, and the sale of copper cathodes, copper anodes, and gold in anodes and slimes by Atlantic Copper. Consolidated revenues totaled $3.7 billion in second-quarter 2009 and $6.3 billion for the first six months of 2009, compared with $5.4 billion in second-quarter 2008 and $11.1 billion for the first six months of 2008. Following is a summary of changes in our consolidated revenues between periods (in millions):