{"id":9279,"date":"2016-11-03T20:43:07","date_gmt":"2016-11-04T00:43:07","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/freeport-mcmoran-demonizing-the-foundation\/"},"modified":"2016-11-03T20:47:16","modified_gmt":"2016-11-04T00:47:16","slug":"freeport-mcmoran-demonizing-the-foundation","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/freeport-mcmoran-demonizing-the-foundation\/","title":{"rendered":"Freeport-McMoRan: Demonizing the Foundation"},"content":{"rendered":"

Mark Elliott, a mining engineer for Freeport-McMoRan, pulls up to an empty pump at a Tucson, Arizona gas station. The sun has just risen and he is on his way to work at a nearby open-pit mine. As he fills up his truck, a Toyota Prius pulls up to the pump in front of him. Affixed to its bumper is a sticker that reads \u201cStrip the mines, not the earth.\u201d Mark sighs. It\u2019s just another day.1<\/sup><\/p>\n

In the United States, where the President declares climate change an immediate risk to national security2<\/sup>, strong reactions to companies like Freeport are hardly surprising. Open pit mines and huge Caterpillar 793 trucks burning 70 gallons of diesel fuel per hour seem to be diametrically opposed putting the climate and environment first. Ironically, renewable energy is extremely dependent on companies like Freeport. Renewable energy is dependent on copper.<\/p>\n

Copper Production at Freeport-McMoRan<\/h1>\n

Founded in 1912, Freeport-McMoRan (FCX) is the world\u2019s second largest copper producer producing an estimated 8% of the world\u2019s total mined copper.3<\/sup> The company operates copper mining operations in 10 mining regions across the world. Additionally, Freeport owns and operates one smelter in Miami, Arizona (Miami Smelter), a smelting and refinery in Spain (Atlantic Copper), and a 25% stake in a smelter in Indonesia.3<\/sup><\/p>\n

Freeport is vertically integrated mining company. It mines, crushes, smelts, and refines copper metal. Throughout each stage in this process, Freeport sells some of the material off to purchasers while the majority of it continues to the next stage of the process.<\/p>\n

\"Copper
Copper Production Process<\/figcaption><\/figure>\n

Copper production is very resource intensive. Energy resources represented 17% of copper production costs in 2015 are estimated to represent 20% of costs in 2016. Additionally, copper production is highly dependent on large amounts of water. 4<\/sup><\/p>\n

Table 1: Energy consumption for Freeport (2015)<\/p>\n

\n\n\n\n\n\n\n\n\n
Resource Type<\/strong><\/td>\nQuantity<\/strong><\/td>\n<\/tr>\n
Diesel Fuel<\/strong><\/td>\n250 Million Gallons<\/td>\n<\/tr>\n
Electricity<\/strong><\/td>\n7,600 GW Hours*<\/td>\n<\/tr>\n
Coal**<\/strong><\/td>\n800,000 Metric Tons<\/td>\n<\/tr>\n
Natural Gas<\/strong><\/td>\n1 million British thermal units<\/td>\n<\/tr>\n
* Equivalent consumption of approximately 650,000 U.S. single family homes<\/p>\n

** Freeport runs its own coal power plant for production in Indonesia<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

 <\/p>\n

Renewable Energy and Freeport<\/h1>\n

Renewable energy plants require substantially more copper than their traditional counterparts. Compared to fossil fuel plants, renewable energy plants require 2 to 10 times the amount of copper per installed megawatt.5<\/sup> Renewable energy systems are fundamentally designed in large part around copper\u2019s conductive properties. Additionally, electric vehicles use 3-5 times more copper than traditional ones. These two markets alone are expected to grow significantly in the coming decades resulting in a large increase in demand for copper metal.6<\/sup><\/p>\n

The increase in demand for copper and the growing coper market clearly benefits Freeport and other large copper producers. However, since Freeport is primarily based in the U.S., it faces extensive regulatory challenges in participating in the growing market. Obtaining mining permits and meeting new regulatory challenges is as time insensitive as it is expensive. In 2016 the EPA required Freeport to invest $250 million into new pollution control equipment at their Miami Smelter. The work, scheduled for completion in 2018, presents major financial and technical risks for the company. \u201cThere are only 3 active copper smelters in the U.S. anymore,\u201d said Mark Elliott. \u201cThe risk of shutting them down and outsourcing processing is real. Ironically, closing a U.S. smelter will actually increase the total amount of resources used in copper production. The most economically and environmentally efficient way for copper to end up in all these new technologies is not to transport the heavy ore all around the world.\u201d1<\/sup><\/p>\n

The Conclusion<\/h1>\n

In the sustainable future the devices we use, the cars that transport us, and the wind and solar plants that power our lives will still be made from material taken out of the earth. In some part, they will still be mined from the ground. The more we demonize the mining industry, the more we demonize the very foundation on which our sustainable future is built. It\u2019s easy to forget that behind the shiny, efficient Tesla is a dirty, power-intensive copper mine. Mark reflected on the bumper sticker he saw earlier that morning, \u201cI don\u2019t know what you want, I can\u2019t grow you that Prius.\u201d1<\/sup><\/p>\n

 <\/p>\n

(Word Count: 696)<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

References<\/h1>\n
    \n
  1. Interview with Mark Elliott [Telephone interview]. (2016, November 3).<\/li>\n
  2. Park, M. (2015, January 21). Obama: No greater threat to future than climate change. Retrieved November 03, 2016, from http:\/\/www.cnn.com\/2015\/01\/21\/us\/climate-change-us-obama\/index.html<\/a><\/li>\n
  3. Freeport-McMoRan – Our Company: Who We Are. Retrieved November 3, 2016, from Freeport-McMoRan Company Website, http:\/\/www.fcx.com\/company\/who.htm<\/a><\/li>\n
  4. 2015 Form 10-K. (2015, December 31). Retrieved November 3, 2016, from https:\/\/www.sec.gov\/Archives\/edgar\/data\/831259\/000083125916000062\/a2015form10-k.htm<\/a><\/li>\n
  5. Multi-Year Global Copper Market Outlook. (2014, June 19). Retrieved November 03, 2016, from http:\/\/www.kitco.com\/ind\/Hamil\/2014-06-19-Multi-Year-Global-Copper-Market-Outlook.html<\/a><\/li>\n
  6. Why Electric Cars Excite the World’s Biggest Mining Company. (2016, November 1). Retrieved November 03, 2016, from http:\/\/www.bloomberg.com\/news\/articles\/2016-11-01\/why-electric-cars-excite-the-world-s-biggest-mining-company<\/a><\/li>\n
  7. Mineral Commodity Summaries 2016. (2016, January 28). S. Geological Survey,<\/em> 56-56. Retrieved November 3, 2016, from http:\/\/minerals.usgs.gov\/minerals\/pubs\/mcs\/2016\/mcs2016.pdf<\/a><\/li>\n<\/ol>\n

     <\/p>\n

     <\/p>\n

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