By definition, sustainable development is about meeting the needs of the present without compromising the ability of future generations to meet their own needs. “Connecting the Future” captures this concept as the theme for both our 2011 Annual Report and our Working Toward Sustainable Development Report. Together they summarize our current programs and strategies to connect the present with the future.
First, we would like to reflect on the direct role of our products in a sustainable future. Worldwide attention has been drawn to the continuous advances in renewable energy technologies, electric vehicles, stronger and lighter alloys, and high-tech devices that capture the imagination. Essential to these applications are copper, molybdenum and cobalt, and we are a global leader in bringing these metals to market. Our attractive portfolio of long-lived assets and a growing production profile will enable us to play an increasing role in supplying materials necessary to sustain and expand the world’s economies and to “Connect the Future.” Our employees are proud of their contribution to societal advancements and to the economies of the regions where we operate.
Our approach to sustainable development combines three essential elements: continued economic success, building local community capacity and societal trust through stakeholder engagement, and improving environmental performance. Getting this wrong would jeopardize our position as a leading international mining company.
With respect to economic success, we achieved record financial performance during 2011 — our second consecutive year of record results. In the second half of the year, we faced a challenging labor situation at our Grasberg mine — the first work stoppage of its kind in our more than 40-year operating history in Papua, Indonesia. Despite the resulting shortfall in production, our global operations performed well and commodity prices were strong, culminating in record results. We are advancing expansion projects and our significant exploration drilling programs continue to identify opportunities for future reserve and production growth.
During 2011, a number of shooting incidents by unknown assailants occurred along the road leading to our PTFI operations resulting in nine fatalities, which regretfully included employees, contractors and community members. Maintaining security is a requirement for normal operations and it is a matter of grave concern for our management, our workforce and our community stakeholders. We are an active member of the Voluntary Principles on Security and Human Rights and continue to work cooperatively with government and non-governmental organization partners to call for transparent investigations and an end to this violence.
The safety of our workforce remains our number one priority. Sadly, five employees were lost to workplace fatalities at PTFI in 2011. Although we again improved our company-wide total recordable incident rate, one fatality is enough to eliminate our sense of accomplishment in improving our record. We need to do better and our corporate safety audits have been modified to provide additional focus on operational fatality prevention. The new audit protocol focuses heavily on the effectiveness of defining and maintaining controls for tasks with significant risk.
An example of our commitment to safety and employee development is the Freeport-McMoRan Mine Training Institute formed in 2011 near Tucson, Arizona. It now serves as the hub of the Company’s North American technical training program and supports our philosophy of safe production. This institute was modeled after our successful Nemangkawi Mining Institute in Papua, Indonesia.
Our operating and growth plans are not achievable without strong relationships with the communities in which we operate. Throughout our global operations, direct community engagement is the cornerstone of identifying social development priorities and developing stakeholder trust. Core to this process are the social investment funds managed with the participation of local leadership. In 2011, our operation in the DRC launched the first projects of the TFM Social Community Fund governed by a Board of Directors consisting of Company representatives and members independently appointed by the provincial government and the local community.
Our worldwide community investment contributions have totaled almost $900 million over the last five years. These voluntary contributions are among the highest in the mining industry and demonstrate our commitment to building sustainable communities. Our focus is on the long term as demonstrated by the new skills training program called “DreamBuilder,” developed in partnership with the Thunderbird School of Global Management, through which we aim to reach more than 3,000 women entrepreneurs in local communities in Peru and Chile. Through the Clinton Global Initiative, the Freeport-McMoRan Copper & Gold Foundation became part of an initiative called 100Kin10 — a multi-sector effort to prepare, deploy and support 100,000 excellent science, technology, engineering and mathematics (STEM) teachers in the United States over the next 10 years. As part of this initiative, we have pledged at least $1.5 million over the next three years to support teacher development programs near our operations in Arizona, Colorado and New Mexico.
We are continually evaluating the most effective ways to manage environmental aspects at all of our operations. Water is scarce in many regions where we operate. Partnership projects, such as the development of water supply and wastewater treatment plants in Peru, demonstrate our commitment to critical local infrastructure and efficient use of natural resources. Based on the current critical water situation near our Candelaria mine in Chile, and its influence on the socio-economic development of the region, we are constructing a seawater desalination plant for our future operational water supply.
Our reporting will help our readers better understand what we are doing to continue the former and overcome the latter. Our employees play a pivotal role in executing our sustainability programs, and the support of our communities makes it all possible. Our culture and values provide the overall guidance. And finally, stakeholders such as you provide us with fresh insight on how we can improve. We value your input on our report and our approach to working toward sustainable development.
| Respectfully yours, | |
| James R Moffet Chairman of the Board
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Richard C. Adkerson President and Chief Executive Officer
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June 14, 2012