Freeport-McMoRan: Demonizing the Foundation

Even in the sustainable future, you can’t grow a Prius.

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 “Strip the mines, not the earth.” Mark sighs. It’s just another day.1

In the United States, where the President declares climate change an immediate risk to national security2, 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.

Copper Production at Freeport-McMoRan

Founded in 1912, Freeport-McMoRan (FCX) is the world’s second largest copper producer producing an estimated 8% of the world’s total mined copper.3 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

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.

Copper Production Process
Copper Production Process

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

Table 1: Energy consumption for Freeport (2015)

Resource Type Quantity
Diesel Fuel 250 Million Gallons
Electricity 7,600 GW Hours*
Coal** 800,000 Metric Tons
Natural Gas 1 million British thermal units
* Equivalent consumption of approximately 650,000 U.S. single family homes

** Freeport runs its own coal power plant for production in Indonesia

 

Renewable Energy and Freeport

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 Renewable energy systems are fundamentally designed in large part around copper’s 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

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. “There are only 3 active copper smelters in the U.S. anymore,” said Mark Elliott. “The 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.”1

The Conclusion

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’s 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, “I don’t know what you want, I can’t grow you that Prius.”1

 

(Word Count: 696)

 

 

 

References

  1. Interview with Mark Elliott [Telephone interview]. (2016, November 3).
  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
  3. Freeport-McMoRan – Our Company: Who We Are. Retrieved November 3, 2016, from Freeport-McMoRan Company Website, http://www.fcx.com/company/who.htm
  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
  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
  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
  7. Mineral Commodity Summaries 2016. (2016, January 28). S. Geological Survey, 56-56. Retrieved November 3, 2016, from http://minerals.usgs.gov/minerals/pubs/mcs/2016/mcs2016.pdf

 

 

 

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5 thoughts on “Freeport-McMoRan: Demonizing the Foundation

  1. JP,

    This was most definitely an interesting perspective to read. It raises a very relevant and important issue all too often overlooked in the Climate Change discussion. The roadmap to sustainability is not so seamless. It would be impossible to turn off the faucet overnight of the necessary inputs required for these “more sustainable” solutions. It is a unique perspective to have; it is rarely recognized and brought to the climate change table. I believe this oversight is the cause of the demonization of the mining industry and not exhaustive of only the copper industry. I would be interested in hearing if there are industries, other than the mining of copper, that are facing related issues. From my experience, I believe gas stations are faced with much of the same negative scrutiny.

    Additionally, I believe your use of the interview as a source was very powerful. Giving your blog the voice of someone directly tied to the issue at hand. Whether I agree, or disagree, it was a compelling read.

  2. JP,

    This was a great read. Until now I had never really considered the Catch-22 of how making one operation more sustainable may require increasing the emissions from another operation. I also agree with Garet’s comment that the oversight of what inputs go into producing sustainable products or renewable energy machinery is a cornerstone for the demonization of mining industry. I wonder though if in many ways this is a necessary oversight. Climate change has proven to be a controversial topic over the past number of decades. Only recently with new insights thanks to research have we as a society begun to take climate change seriously. As with any good marketing campaign you want to make your message as clear and simplistic as possible. Accounting for the waste and emissions that are produced in producing sustainable machinery may be too complex of a task for the general public. In this light I think it makes sense that the general public sees cooper mining as all bad and Tesla as all good given they do not see the connection between the two.

    Very interesting piece!

  3. Thanks JP for this post. It is very easy avoid digging in the implications of climate change oriented regulations. This is one more case in which just doing the “double-click” creates a conflict. We do not like mining because it contributes to climate change but we need it to adapt to climate change.
    I think that moving forward there must be a way to refine our regulations to account for this conflict. What would you think about a policy that, on top of requiring very environmentally friendly processes, gives benefits to copper companies like Freeport for providing inputs for climate-change oriented products? (Most of the usage is industrial, not for transportation/infrastructure: http://copperalliance.org/wordpress/wp-content/uploads/2012/01/ICSG-Factbook-2014.pdf)

    I would also disagree on the “transporting the heavy ore” point, as the US is also one of the major copper exporters in the world and it is moving it anyways.

  4. JP,

    This is a very interesting post. As you pointed out, it’s difficult to try to fix something (i.e. work toward sustainability in the automobile industry) without making something else worse.

    I wonder what other solutions there might be; perhaps there could be ways to more effectively recycle the massive amounts of copper that have already been mined, in order to supplement what the mining industry produces.

    In any case, it’s imperative that governments take account of the second- and third- order effects of regulations: in order to make long-term sustainability a feasible option, all of the inputs for necessary mechanical devices/plants need to be considered–including copper.

  5. You bring up several valid points- especially challenging readers to look behind the shiny Tesla to the resources that were utilized in order to mine the raw materials to create it. While I do not know much about the mining industry, I wonder whether companies are restoring the land where older mines that have been stripped of all resources used to be. While this does not completely eliminate the impact mining has on climate change, I think restoring the environment can send a signal of corporate responsibility to the public that demonizes the industry.

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