User:Tillman/FMCG History
History
[edit]The company was founded as the Freeport Sulphur Company in 1912, and the company founded Freeport, Texas that same year, near its new sulphur mines, then the largest in the world[1] . Freeport pioneered mining sulphur by the Frasch Process at mines along the US Gulf Coast. Freeport Sulphur began to diversify in 1931, purchasing maganese deposits in Oriente Province, Cuba. The company produced nickel during WW2, and potash in the 1950s. In 1955, Freeport invested $119 million in constructing a nickel -cobalt mine at Moa Bay, Cuba and a refinery at Port Nickel, Louisiana. In 1960 the Castro government nationalized the Cuban facility.[2]
In 1956, the company formed Freeport Oil Company, and sold a Louisiana oil discovery for $100 million in 1958. In 1961, the company entered the kaolin business, and in 1964 formed Freeport of Australia to pursue mining opportunities there and in the surrounding Pacific Ocean region. In 1960, a team of Freeport geologists confirmed the Dutch discovery of the rich Ertsberg copper and gold discovery, located in extremely rugged, remote country in the Jayawijaya Mountains, in then-Netherlands New Guinea. In 1966, Freeport founded Freeport Indonesia, Inc. and negotiated a contract with the Indonesian government, which had taken over the former Dutch colony in 1963, to develop the Ertsberg deposit. In their feasibilty study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper. The Ertsberg was the largest above-ground copper deposit ever discovered. [3]
Construction of an open pit mine began in May 1970, and in mid-1973 the new Ertsberg mine was declared fully operational. Officials at Bechtel, the primary contractor on the project,called mine development at Ertsberg "the most difficult engineering project they had ever undertaken." The many challenges included building a 101 kilometer long access road (a project that required boring kilometer long tunnels through two mountains) and constructing the world's longest single span aerial tramway. Aerial tramways were needed to move people, supplies, and ore because a 2,000 foot cliff separates the Ertsberg mine (at 12,000 feet elevation) from the mill (at 10,000 feet). Getting copper concentrate from that mill to the shipping port required installation of a 109-kilometer long slurry pipeline - then the world's longest.
Mine startup cost about $200 million. The development of the Ertsberg District was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept the operation marginal during the 1970s. [4]
In 1971 the company changed its name to Freeport Minerals Company (FMC) to reflect its role as a diversified mineral producer. FMC formed Freeport Gold Company in 1981 to operate a rich new gold discovery at Jerrit Canyon, Nevada.
McMoRan Oil & Gas was formed in 1967 by three partners, including James R. (Jim Bob) Moffett, the present CEO of FMCG. During the 1970s, the company acquired a reputation as an aggressive petroleum explorer with cost-efficient drilling programs. It formed drilling partnerships with several companies, including Freeport. In 1981 Freeport Minerals merged with McMoRan Oil & Gas to form Freeport-McMoRan Inc.
In 1982 Freeport Gold Company was the world's largest gold producer, producing 196,000 ounces of gold in its first full year of operation.
By 1989 Freeport-McMoRan had two world-class mines to develop: the new discovery at Grasberg, Indonesia, with the world's largest gold ore reserve, and one of the world's largest copper reserves; and the Main Pass sulfur-oil-gas deposit offshore from Louisiana, with estimated reserves totalling 67 million tonnes of sulfur, 39 million barrels of oil, and seven billion cubic feet of natural gas. These were rich deposits, but would be very expensive to develop. Freeport's CEO, James Moffett, sold about $1.5 billion in assets to finance the development of these two projects.[5]
By 1991, Freeport-McMoRan Inc. was basically a holding company for its two principal assets, Freeport-McMoRan Copper & Gold (FMCG) and Freeport-McMoRan Resource Partners, which ran the sulphur and fertilizer business. Freeport's focus was was to raise enough cash to finance the development of the huge finds at Irian Jaya and Main Pass. Both of these assets got better the more they were studied. Main Pass was the second largest recoverable sulphur reserve then known, and the Grasberg's ore reserves continued to grow.
In 1994 Freeport-McMoRan spun off its entire interest in Freeport-McMoRan Copper & Gold, which became an independent company, fully focussed on the Indonesian operation. In 1997 Freeport-McMoRan Inc., the former parent company, was itself acquired by IMC Global, a large fertilizer producer.
The Grasberg mine, FMCG'S crown jewel, soon became a source of violent trouble and terrible publicity [6], which continues today. It is also the world's most profitable mine. [7]
In 1997 the company exposed the Bre-X Gold Scandal. Brought in by the Indonesian government, Freeport was not able to correlate Bre-X's fraudulent claims to finding the largest gold mine ever discovered; Bre-X subsequently went bankrupt.
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