FREEPORT-MCMORAN INC

The Freeport Sulphur Company was founded July 12, 1912, by the eldest son of Swante M. Swenson, banker Eric Pierson Swenson, with a group of investors, to develop sulfur mining at Bryan Mound salt dome, along the U.S. Gulf Coast. Freeport, Texas was also established in Nov. 1912 to house workers, and serve as a port for Houston, rivaling Galveston and Corpus Christi.

Freeport mined sulfur along the Gulf Coast using the Frasch process, the patents for which had expired in 1908, a disruptive innovation for the automated mining of previously inaccessible sulphur deposits at a cost lower than that of established mines, where manual labor gained the mineral under the most appalling conditions. Previously, Union Sulphur Company founder and patent-holder Herman Frasch had enjoyed a monopoly on the process. The Bryan Mound salt dome just south of Freeport became the second Frasch sulphur mine in the world in 1912.

Freeport Texas Company

Enterprise to support Freeport Sulphur's business and the new town's infrastructure led to the incorporation of a holding company on September 30, 1913, to join the newer assets with Freeport Sulphur and create a vertically integrated mining company around, at first, a single sulphur mine. Officers of the new holding company, Freeport Texas Company, were:

Eric. P. Swenson, President and Director (Freeport Sulphur founder, son of Swante M. Swenson )

Edward E. Dickinson, vice-president and Director

F.M. Altz, Secretary

Swante M. Swenson, Treasurer (son of Eric P. Swenson)

Charles H. Findlay, Auditor (son of Hugh Findlay and his third wife, Mary Ellen Smith)

Directors Eric P. Swenson

Edward E. Dickinson

Richard H. Williams (son of Richard H. Williams )

Harry K. Knapp

Samuel McRoberts

Charles P. Northrop

Charles A. Stone

Frank A. Vanderlip

Sidell Tilghman (son of General Lloyd Tilghman )

Eppa Hunton Jr. (son of late Virginia Senator, Brig. Gen. Eppa Hunton )

Charles E. Herrmann

On May 7, 1917, all 35,000 outstanding shares were exchanged for 500,000 new shares of no par value (at a rate of 14 + 2 ⁄ 7:1). The stock was listed on the NYSE since 1919. Freeport raised an additional $4 million with an April 1, 1922 issue of convertible bonds, almost all of which were converted to common stock right away. Of the new total of 732,000 authorized shares 729,844 were then outstanding. In 1933, the no par common stock was exchanged for $10 par common and $2,500,000 convertible preferred were issued to finance the development of Grande Ecaille, about half of which was converted, the remainder called for redemption in 1938 at the end of which 796,380 common shares were outstanding. To raise general working capital Freeport Sulphur in 1939 sold $3,000,000 in 3% 20-year private debentures to Metropolitan Life Insurance Co. and Sun Life Insurance Co. of Canada. On September 1, 1951, the 99th consecutive quarterly dividend was paid. Effective September 21, 1951 the 800,000 outstanding common shares were split 3-for-1 and the authorized capital was increased from 850,000 to 3,000,000 shares. On March 2, 1959, the 129th consecutive quarterly dividend was paid and effective May 5, 1959 the 2,504,850 outstanding shares were once again split 3-for-1 and the authorized capital was increased from 3,000,000 to 10,000,000 shares.

Freeport Sulphur was on the Fortune 500 in 1955, 1956, 1957, 1967, 1968, 1969, 1970.

Acquired 1,111 acres of real estate. Paved roads and sidewalks, provided water, electric lights and parks and built the Tarpon Inn hotel. By the end of 1918 had sold 550 lots (avg. $385.50 per lot).

In early 1914 a sulphur conveyor to and 3,600 tons per day loading devices at the pier of the Seaboard & Gulf Steamship Co in the Freeport ship channel were completed.

The Seaboard & Gulf steamer Honduras was the first to make use of it and on April 8 was the first outbound heavy cargo to leave the mouth of the Brazos River for nearly 20 years. These 2,000 tons to Baltimore and New York were the second sulphur shipment made by Freeport Sulpher Co.

The company was also responsible for new railroad construction to the port facilities.

See map:

A special engineering feature was a 4.5 mile, 1,500-p.s.i., 8-inch heated pipeline from the dock to the Bryan Mound plant, which enclosed a 2-inch steam line to allow the movement of the heavy and viscous crude oil. The pipe was especially curved to allow for thermal expansion and was the third iteration of attempts to solve the problem, a prior 4-inch and an 8-inch line having been salvaged.

In 1924 the properties were transferred to the Freeport Sulphur subsidiary and the Terminal Co. was dissolved.

The capacity of the loading dock was for many years not sufficient and a good portion of the sulphur was moved by rail for loading at Texas City. The mouth of the Brazos was diverted (at 28°57′47″N 95°22′26″W / 28.963°N 95.374°W / 28.963; -95.374 ) in 1929 and Freeport became a proper tidewater port.

At the end of 1918, distributed water to 326 and electricity (bought from Freeport Sulphur Co.) to 243 customers.

The properties were sold to the Houston Lighting & Power Co. and the company liquidated in 1927. Freeport was connected to Houston Lighting's transmission system and Freeport Sulphur contracted to supply surplus current from its local power plant to Houston Lighting.

Managed the shipping of oil from Mexico to Freeport to satisfy Freeport Sulphur Co.'s demand for 4,000 barrels per day. Mexico was at the time on the upward slope of an oil boom which peaked in 1921 and the world's second largest producer behind the United States from 1918 until 1926. The heavy Panuco field oil was bought from the East Coast Oil Co. at their Torres terminal at Tampico. The company owned several ships:

Freeport Sulphur No. 1: 2,588gt (21,000 barrels) tanker, 1,500 hp, 10.5knots, sold during 1927.

Freeport Sulphur No. 2: 488gt steel tug, 1,200 hp, 7.5knots, sold for $47,500 on Apr 3, 1930

Freeport Sulphur No. 3 and 4: identical tank barges, 1,166gt (15,000 barrels), former coal barges bought in 1916 from the Shawmut Steamship Co. for $100k each.

Freeport Sulphur No. 6: 40,000bbl tanker, sold for $270,000 on Dec. 2, 1929

Freeport Sulphur No. 5: not a tanker, but a 4,127 ton (6,600 dwt. ) sulphur carrying bulk freighter sold in February 1940 amidst World War II to William Reardon-Smith Ltd, Cardiff.

Freeport had received its first shipment of Mexican oil in February 1914: 9,753 bbl. originating from Tampico on the barge General Pettibone towed by tug Senator Baily.

At the end of 1925 the company set plans in motion to convert its plants to use natural gas. The Houston Pipe Line Company completed a 54 mile 16-inch pipe line to supply Bryan and Hoskins Mound in October 1926 and laid more 16-inch pipe in 1930 (or applied asphalt coating to the excavated exiting line ). The contract called for delivery of 30mmcfd, as replacement for a consumption of 6,000bpd of oil. This company also served Texas Gulf 's Big Hill sulphur mine and many other industrial sites in Texas. See 1927 maps: This changeover saved the company some $2,000 per day on their principal cost contributor. Freeport spent $125,277.20 on boiler conversion and made available $750,000 in short-term loans out of its cash reserve to help finance the pipeline (i.e. paid an advance on their gas bill). Natural gas was regularly flared off at the time as a byproduct of oil production, difficult to transport to consumers far away and therefore very cheap in the oil producing Gulf Coast region.

completed a refinery at Bryanmound in 1919 to extract gasoline from the company's fuel oil supply.

The company changed its name to Freeport Asphalt Co at the end of 1922 at which time it had 300 asphalt tank cars.

The 5,000bpd skimming+asphalt refinery at Bryanmound was not in operation after Dec 31, 1927 and in 1930 entirely dismantled and the company was dissolved. Natural gas was now used to power the sulphur mines.

Incorporated as successor to the Velasco, Brazos & Northern Railway and was owner of a 23.6 mile line from Light House to Anchor, Texas (see map: ). Owned trackage rights for 5 years from Nov 10, 1912 over 40 miles of International-Great Northern system to Houston and at Angleton the line crossed the St. Louis, Brownsville & Mexico. Had $420,000 30-year 5% bonds dated July 1, 1907 and $24k stock issued out of an authorized $120k. 50% of the stock and $79,000 of the bonds were owned by the Freeport Texas Co., 50% by the Missouri, Kansas & Texas Railway Company of Kansas (since Apr 1913 ), which also owned $93,000 and guaranteed $210,000 of the bonds. Freeport Sulphur probably bought its interest early in 1913.

The extension from Velasco to Bryan Mound was built by this company, including the 500 ft steel+concrete bridge ( 28°57′18″N 95°21′15″W / 28.95489°N 95.35415°W / 28.95489; -95.35415 ) to connect Velasco with Freeport, built at a cost of ca. $120,000 jointly with the county, contracted to Midland Bridge Co. of Kansas City. A structural failure in May 1915 delayed the bridge. The railroad had however already crossed the Brazos river before 1913 by means of a car float. The railroad company went into receivership on October 28, 1915, which lasted till 1924 when it changed hands again. On Dec 31, 1923 there were still $420k bonds and $24k stock outstanding.

In 1922 a 13-mile extension was built from Hoskins Junction to Hoskins Mound. The first train to run over the tracks on October 7, 1922, brought construction material to the new plant site.

On February 1, 1924, the New Orleans, Texas and Mexico Railway bought all of the stock and assumed all liabilities for a purchase price of $1,600,000. Included were 2.07 miles from Dock Junction to the Freeport Sulphur dock, 3.12 miles industrial tracks on Bryan Mound and 12.56 miles from Hoskins Junction to H. Mound. all of which were transferred to the company and combined into a total of 43.03 miles.

Freeport Texas owned 500,000 francs (25%) of the stock.

Translates to: Company for the Import and Sale of American Sulphur.

In 1919 Freeport Sulphur Co. acquired from the Pan-American Petroleum Co. land in the Panuco field near Tampico, including the 1,500bpd Don Juan No. 1 well discovered in 1915 and ever since shut-in. The East Coast Oil Co. (owner of a pipeline from Panuco to Tampico) received the oil henceforth produced. Espuela Oil shared its official office with the East Coast Oil Company.

The company began the delivery of oil in March 1920. Until the end of the year production totaled 562,768 barrels.

As of Jan 31, 1921, the company had three productive wells:

Robles No. 1 (1,006bpd)

Robles No. 2 (1,000bpd)

Don Juan No. 1 (2,075bpd)

and struck oil flowing at ca. 1,500bpd with Don Juan No. 2 on Jan 20, 1921 and at ca. 5,000bpd with Sobrevilla No. 2 on Feb 22, 1921.

Actual production was much lower than potential production. Espuela produced 931,027bbl (2,550bpd) in 1921, ranked #25 out of 50 companies and produced 0.5% of Mexico's total of 194,755,712bbl in the country's most productive year of the period. Production in 1922 was 1,383,498bbl (3,790bpd), #16 out of 88 companies and 0.75% of the total.

Freeport Texas owned stock in this company organized under the Webb–Pomerene Act of 1918 as a monopolistic Export Association. Other members were Union Sulphur Company and Texas Gulf Sulphur Company, i.e. essentially the entire U.S. industry.

In 1920 a total of 1,517,625 long tons of sulphur valued at $30m was produced in the United States (of which 262,376 long tons were from extensive stockpiles mined in previous years), principally from four mines in Nevada (not a Frasch mine), Louisiana (Union's) and Texas (Bryan Mound and Texas Gulf's Big Hill ) and 477,450 long tons valued at $8,994,350 were exported. Other important exporters were Italy, Japan and Chile, their importance on the decline.

With the application of the Frasch process the world sulphur market was turned on its head in the first two decades of the 20th century and was now clearly dominated by the United States.

Freeport Texas Co. held 50% of the stock in 1930 and the export company sold to 35 countries.

In 1952 the company was dissolved and in 1958 a new Sulphur Export Corp, nicknamed Sulexco was formed and now included

37% Texas Gulf Sulphur Co.

37% Freeport Sulphur Co.

18% Jefferson Lake Sulphur Co.

8% Duval Sulphur and Potash Co.

In 1961 the companies had a combined production capacity of 7 million tons per year from 13 domes, (still) more than the rest of the world combined.

In 1919, minority stockholders John R. Williams & Sons, First National Bank of Richmond, Virginia vice-president, W. M. Addison, Benjamin P Alsopp, E. L. Norton, and Samuel W. Travers solicited proxies to use at the April 5th annual stockholders' meeting, claiming, according to reports, that "management has refused them adequate information regarding the property. President E.P. Swenson denies that information has been thus withheld and states that the board, which represents the dominant interests, has no vacancies at the present time." [ importance? ]

1928–1931 shareholder proxy fight

In 1928, shareholder and scion of one of the founding investment firms, John Langbourne Williams & Sons, Langbourne Meade Williams, Jr. launched a proxy fight for control of the company. In 1929, he then sought help from his former supervisor at Lee, Higginson & Co., J.T. Claiborne, who then enlisted clerk John Hay Whitney – who had become one of the wealthiest men in America following the 1927 death of his father, Payne Whitney. Williams eventually gained control of the company from founder Swenson, becoming its president in 1931, with Claiborne as a vice-president, and Whitney as chairman. Williams also served as chairman during 1958–1967.

1930s

Williams led the company's diversification, beginning with the purchase of manganese deposits in Oriente Province, Cuba.

The company announced on February 19, 1931, the acquisition of a controlling interest in the Cuban American Manganese Corporation. Most of the metal was gained by concentration of low grade ore. The company benefited from (was subsidized by) zero import duty at a time when duties were high despite the United States reliance on imports for most of its supply of manganese. The deposit was depleted and the company dissolved in 1947.

In 1932, Freeport Sulphur Company acquired the sulfur rights for Lake Grande Ecaille and vicinity in Plaquemines Parish, Louisiana, and escalated the development of sulfur deposits in the Grand Ecaille dome in 1933, still using the Frasch Process developed by Dr. Herman Frasch, who had, in 1895, enjoined the American Sulphur Company into a partnership, forming the Union Sulphur Company, to initiate the first successful sulfur mining at Grand Ecaille, with which Freeport, like other competitors, would compete upon expiry of the Frasch patents in 1908. From its earliest inception, sulfur mining was the catalyst that developed Port Sulphur, Louisiana.

Effective January 1, 1937 the Freeport Texas Company changed its name to Freeport Sulphur Company (the old one was dissolved) and its character from a holding company to an operating company, likely as a response to the Revenue Act of 1936 to avoid double taxation. On this occasion all active subsidiaries except the Cuban-American Manganese Corp were liquidated.

1950s

Freeport announced on March 7, 1952, the development of 3 new sulphur mines at an estimated cost of $20 million, to be financed from accrued cash reserves, as part of the national defense industrial mobilization program ( Korea War ). The effort grew into a $25 million program covering 4 new mines, one major (Garden Isle Bay) and 3 minor (Bay Ste. Elaine, Nash, Chacahoula) with a combined new capacity of 750,000 long tons per year, in addition to the existing Hoskins Mound (closed in 1955) and Grand Ecaille mines.

The company produced nickel during World War II and potash in the 1950s. In 1955, Freeport Nickel invested $119 million, of which $100 million came from the U.S. government, into construction of a nickel- cobalt mine at Moa Bay, Cuba, and a refinery at Port Nickel, Louisiana. On March 11, 1957, the U.S. government announced a contract to buy nickel and cobalt from the company.

In 1956, the company formed the Freeport Oil Company. In 1958, the company sold an oil discovery near Lake Washington in Louisiana for approximately $100 million to Magnolia Petroleum Company.

In 1959, Freeport geologists confirmed the 1936 Dutch discovery of the rich Ertsberg copper and gold deposits, now known as the Grasberg mine, in extremely rugged, remote country in the Jayawijaya Mountains in what was then called the Netherlands New Guinea.

1960s

In 1960, Fidel Castro implemented a 25% ore tax, effectively nationalizing and seizing Freeport's nickel-mining operations in Cuba. In 1961, the company entered the kaolin business after purchasing the assets of Southern Clays Inc. In 1964, the company formed Freeport of Australia to pursue mining opportunities there and in the surrounding Pacific Ocean region.

Development of the Ertsberg deposit

In 1967, the company negotiated a contract with the Indonesian government to develop the Ertsberg deposit. In their feasibility study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper, making it the largest above-ground copper deposit ever discovered. Construction of an open pit mine began in May 1970 and in mid-1973 the mine was declared fully operational. Officials at Bechtel, the primary project contractor, called mine development at Ertsberg "the most difficult engineering project they had ever undertaken." The challenges included building a 101-kilometre (63 mi) long access road (a project that required boring kilometer long tunnels through two mountains) and constructing the world's longest single span aerial tramway. The tramways were needed to move people, supplies and ore because a 2,000-foot (610 m) cliff separates the Ertsberg mine (at 12,000 feet (3,700 m) elevation) from the mill (at 10,000 feet). Moving copper concentrate from that mill to the shipping port required installation of a 109-kilometre (68 mi) slurry pipeline – then the world's longest. Mine construction and startup cost about US$200 million. The Ertsberg project was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept profits marginal during the 1970s.

In 1967 The McMoRan Oil and Gas Company was founded by three partners, William Kennon McWilliams Jr. ("Mc"), James Robert (Jim Bob) Moffett ("Mo"), who were both petroleum geologists, and Mack Rankin ("Ran"), a specialist in land-leasing and sales operations. In 1981, McMoRan would merge with Freeport Minerals, formerly Freeport Sulphur, to form Freeport-McMoRan.

1970s

In 1971, the company changed its name to Freeport Minerals Company, (not to be confused with Freeport Minerals Corporation, founded in 1834).

1980s

On April 7, 1981, Freeport Minerals Company merged with the McMoRan Oil and Gas Company.

In 1981, the company formed a 70/30 joint venture with an affiliate of FMC Corporation to operate the Jerritt Canyon gold mine near Elko, Nevada. In 1985, the company headquarters moved to New Orleans, Louisiana. The company also sold a 25% interest in oil and gas assets primarily in the western United States to Britoil for $73.5 million.

In 1989, the company sold about $1.5 billion in assets to finance development of the Grasberg mine and the Main Pass offshore sulfur-oil-gas deposit off Louisiana.

1990s

In July 1995, the company completed the corporate spin-off, first announced in May 1994, of its entire interest in Freeport-McMoRan Copper & Gold, which owned the Grasberg mine.

In 1995, RTZ, a predecessor of Rio Tinto Group, made a $450 million investment in the company.

In 1997, IMC Global, a large fertilizer producer, acquired Freeport-McMoRan Inc., the former parent company that now owned the sulfur and fertilizer businesses, in a $750 million transaction. Shareholders of Freeport-McMoRan received shares of IMC Global.

In 1997, the Indonesian government asked Freeport-McMoRan to substantiate the Canadian mining company Bre-X 's claims of having found the largest gold mine ever discovered, in Borneo. Freeport announced that its prospective partner Bre-X did not have gold reserves at its Indonesian mine, as it had reported. Bre-X subsequently was exposed as a fraud and went bankrupt.

In 1998, low commodity prices forced the company to suspend its dividend.

2000s

In 2003, the company was subpoenaed as part of an investigation by anti-trust authorities in the United States, Canada, and Europe into price fixing in the copper industry.

On March 19, 2007, the company acquired Phelps Dodge (for $25.9 Billion) and became the largest copper producer of any public company in the world. The corporate headquarters was moved from New Orleans, Louisiana to Phoenix, Arizona.

2010s

In 2012, the company announced agreements to acquire affiliated companies McMoRan Exploration Company and Plains Exploration & Production Company for a total enterprise value of over $20 billion. The transaction added significantly to the company's petroleum assets. The transaction was criticized as a conflict of interest due to the common ownership of the companies. In 2015, the company paid a $137.5 million settlement to resolve claims that executives and directors had conflicts of interest that resulted in the company overpaying in that transaction.

In 2014, the company sold its assets in the Eagle Ford shale to Encana for $3.1 billion. In 2015, the company announced job cuts at its Sierrita Mine in Arizona due to low copper and molybdenum prices.

On December 28, 2015, the company announced that James R. Moffett would resign as chairman of the company and be replaced by Gerald J. Ford. Moffett received $16.1 million in severance pay and cash retirement plans totaling more than $63 million. Moffett continued to consult for the company for annual fees of $1.5 million.

In May 2016, the company sold a 13% interest in its Morenci Mine to Sumitomo Group for $1 billion in cash.

In 2016, Freeport sold its deepwater assets, including the Marlin TLP, and the Holstein and Horn Mountain spars, to Anadarko Petroleum.

In August 2017, the company agreed to give a 51% interest in the Grasberg mine to the Government of Indonesia and build a smelter in exchange for a special permit to operate the mine until 2041.

In 2018, the company ranked at number 176 on the Fortune 500 list. During this year, Indonesian President Joko Widodo also planned to take control of 51% of Freeport Indonesia's equity, effectively handing over Freeport control to the Indonesian government. The Indonesian government planned to settle payments of $3.85 billion during the takeover process and finalized the process on December 21, 2018.

During 2018 Freeport-McMoRan Copper & Gold along with 90 additional Fortune 500 companies "paid an effective federal tax rate of 0% or less" as a result of the Tax Cuts and Jobs Act of 2017.