Cerro Verde Facts

Cerro Verde Expansion

www.fcx.com July 2011

Cerro Verde is planning to triple its extraction and processing of sulfide ore, an estimated $3.5 billion project, with a projected
i
increase iin annuall production
d ti off approximately
i t l 600 million
illi pounds
d off copper iin concentrate
t t and d 17 million
illi poundsd off
molybdenum. Once completed, the new concentrating facilities at Cerro Verde will be one of the world’s largest concentrating
complexes. The expanded Cerro Verde operation will produce approximately 1.0 billion pounds of copper and 25 million
pounds of molybdenum per year, which would place Cerro Verde near the top five copper producers in the world. The project
will provide a significant positive economic impact to the Arequipa region and Peru, including increased employment
opportunities, business opportunities to local suppliers of products and services to the mining operations and revenues to the
governments and local communities. To address the environmental and social impacts of this project, an ESIA (Environmental
and Social Impact Assessment) is currently in development, with world-recognized leaders in the field performing the studies.
Key issues being addressed include access to additional water required to operate the expanded processing facilities
facilities,
potential social impacts to residents affected by the increased mining activities and local biodiversity.
Cerro Verde
 Sociedad Minera Cerro Verde (SMCV) is majority owned and operated by Freeport-McMoRan Copper & Gold, a leading
international mining company. The remainder is owned by SMM Cerro Verde Netherlands B.V., Compania de Minas
Buenaventura S.A.A., and other shareholders whose shares are publicly traded on the Lima Stock Exchange.
 SMCV produced 668 million pounds of copper and 7 million pounds of molybdenum generating over $2.4 billion in
revenues in
i 2010 ffrom itits mining
i i operations,
ti llocated
t d 20 miles
il southwest
th t off A
Arequipa.
i
 SMCV currently has approximately 2,000 employees and 1,800 contractors.
 In the period 2005-2010:
– SMCV’s operations and investments contributed an annual average of approximately $8.0 billion to the GDP of
Arequipa, or 18% of the region’s total and 1.2% of the Peruvian GDP.
– SMCV paid total taxes in Peru amounting to $1.7 billion, of which 50% was directed to the regional and local
governments as mining canon.
canon
– SMCV voluntarily contributed approximately $119 million to local social projects, including $80.5 million for the
design, construction and commissioning of a water treatment system to help address the need for clean water for
more than 1,000,000 people living in the city of Arequipa.
– SMCV funded approximately $160 million in Voluntary Social Contributions to the Cerro Verde Civil Association
which is administered by a board made up of community, government and company representatives to support
health, education, nutrition and infrastructure initiatives in the local area.
Cerro Verde Expansion Project
 Significant reserve additions in recent years at SMCV and expectations for positive markets for the company’s products
have provided opportunities to expand significantly the existing facility’s capacity. Current ore sulfide ore reserves
(processed in the concentrator) amount to 25.0 billion pounds of copper, with a life of 78 years at the current production
rate. Leach ore reserves (processed through SX-EW plant) amount to 1.6 billion pounds copper with a life of approximately
12 years.
 The SMCV project targets an increase in concentrator throughput from 120,000 to 360,000 metric tons per day, making
Cerro Verde one of the world’s
world s largest concentrating operations
operations.
 With the expansion, the mine life for the sulfide ore will be 30 years, and will enable the acceleration of production to meet
the world’s growing demand for copper. SMCV continues to conduct exploration at Cerro Verde and expects to further
expand ore reserves.
 The expansion will add approximately 600 million pounds of copper and 17 million pounds of molybdenum annually to
SMCV’s production capacity.
  The total cost of the expansion is estimated to be approximately $3.5 billion.
 SMCV expects to file an ESIA before the end of 2011.
 A construction period of approximately 2 ½ years is anticipated once the applicable permits have been obtained.
Economic Impact of Cerro Verde Expansion Project
 SMCV plans to add approximately 2
2,500
500 employees and contractors to operate the expanded operations
operations.
 The construction of the expansion project is estimated to add, directly and indirectly, approximately $5.4 billion to the Peru
economy, including $3.4 billion to the economy of Arequipa. At peak levels, approximately 5,000 people will be employed
for the construction.
 The annual direct and indirect economic impact of the expansion project is estimated to be $420 million to Peru, including
$275 million to Arequipa.

ESIA
 SMCV is preparing an Environmental and Social Impact Assessment (ESIA) that will comply with applicable Peruvian law.
The ESIA will also conform to the policies and guidelines of the World Bank Group and the Equator Principles, as well as to
practices recommended by the International Council on Mining and Minerals (ICMM).
 Through the ESIA process, SMCV will examine design and operations alternatives so as to minimize adverse effects of the
expansion while maximizing positive economic, social and environmental impacts.
 The process is highly participatory, with stakeholder engagement contributing to ESIA outcomes at critical junctures of
scoping impact assessment and environmental management planning
scoping, planning.
 The SMCV expansion project is located in an area characterized by arid climate, rapid urban population growth in close
proximity, and a long tradition of irrigation-based agriculture. As such the process will closely focus on key issues such as
water use, water and air quality, employment generation and demands on public infrastructure.

Water
 As is the case in all copper mining operations, SMCV requires water in its processing facilities: in the concentrator to
produce copper and molybdenum concentrates and in the oxide leach/SX-EW processing facilities to produce cathode
copper. Water is also used to control dust and maintain air quality around mining operations.
 Water for Cerro Verde’s current processing operations comes from renewable sources through the regulated Chili River
system, which is formed by a series of storage reservoirs on the Chili River watershed. The Pillones and Bamputañe
reservoirs on the Chili River watershed, constructed with the company’s participation, collect water from seasonal
precipitation and regulate its distribution during the dry season.
 Cerro Verde is a zero-discharge facility and recycles approximately
85-90% of the water used in the process.
 The Cerro Verde expansion project will require an approximate 85%
increase in its water requirements.
 The increase in water requirements is expected to be achieved from a
new wastewater treatment plant that SMCV plans to build for the benefit
of the local communities.
 SMCV is collaborating with the Regional Government of Arequipa, the
National Government, SEDAPAR and other local institutions on an
agreement to allow SMCV to finance the engineering and construction of
a wastewater treatment plant for Arequipa, should the company proceed
with the expansion, to be operated by SEDAPAR. The plant will be
located in the Enlozada Gorge in the district of Uchumayo.
 SMCV will use the treated wastewater, amounting to approximately 1
cubic meter per second, for the additional water requirements of
the expansion.

Photo: Cerro Verde has made significant Investments to improve drinking

water for the residents of Arequipa. The young girl pictured is Silvia
Chambi, a resident of Arequipa.