Investment Community Presentation 1 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Forward-Looking Statements and Supplemental Data • These materials include "forward-looking statements" (as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including statements regarding, among other things, the company’s business strategy and growth strategy • All statements other than historical information are forward-looking statements • These forward-looking statements are based on management’s current expectations, speak only as of the date made, and are subject to a number of risks and uncertainties that cannot be predicted or quantified and are beyond our control • Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements • Please refer to the Management’s Discussion and Analysis and Risk Factors sections of our most recent 10-K and 10-Q reports, as well as our other publicly available filings with the SEC for a discussion of risk factors and factors that could cause actual results to differ materially • These materials also include terms used to describe supplemental data • Any such data or terms are not a substitute for any U.S. generally accepted accounting principle measure and should be evaluated within the context of our U.S. GAAP results • Any such references may not be comparable to similarly titled measures reported by other companies • Unless otherwise indicated, all information in this presentation is on a post-FIN-46 basis (i.e., Candelaria and El Abra are fully consolidated with minority interests shown separately rather than a pro rata consolidation) 2 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Agenda • Introduction – Steve Whisler • Copper Market – Art Miele • Molybdenum Market – Dave Thornton • Operations Overview – Tim Snider • Mining Operations – David Naccarati • Project Overview – Tim Snider • Primary Molybdenum and Process Technology – John Marsden • Exploration – Rich Leveille • Financial Overview – Ramey Peru • Conclusion – Steve Whisler • Questions and Answers 3 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Introduction J. Steven Whisler Chairman and Chief Executive Officer 4 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Safety – A Key Indicator of Operating Excellence 12 10 8 TRIR 6 4 Total Recordable Injury Rate c 2 2001 was safest year in Phelps Dodge history 0 1987 1988 5 onsistently below 2 since 1997; 1989 2004 U.S. mining industry average TRIR = 4.1; 1990 U.S. manufacturing average TRIR = 5.9 1991 1992 ©2006 Phelps Dodge Corp.—Investment Community Presentation 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 March 16, 2006 2005 Phelps Dodge Today • A world leader in copper, moly production • Founded in 1834, headquartered Phoenix, AZ • 125th anniversary in copper mining • 2005 results • Sales = $8.3 billion • Record net income = $1.56 billion ($15.37 per share) • Record cash flow from operating activities = $2.22 billion (before contributions to pensions and trusts totaling $450 million) • Total assets = $10.4 billion (12/31/05) • Focused on shareholder value creation • ~$14 billion in market capitalization (3/10/06) • $1.5 billion capital return program under way 6 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Copper Market Arthur R. Miele Senior Vice President, Marketing 7 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 COMEX Copper Price (¢/lb.) (¢/lb.) Cycle high? = 234¢ 2006 YTD avg 225 225 222¢ 200 200 2005 avg 168¢ 175 175 2004 avg 150 150 129¢ 2004 presentation to investment community 125 125 100 100 Cycle low = 60¢ 75 75 50 50 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 8 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 2004 to 2006 – Higher Deficits, Lower Inventories March 2004 presentation 2004 2005 2006 Inventory change (kmt) (500) (140) 0 Weeks of consumption in 4.4 3.8 3.7 inventory Current view 2004 2005 2006 Inventory change (kmt) (800) (175) ~ Weeks of consumption in 3.4 < 3.0 ~ 3.0 inventory 9 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Inventories and Exchange Prices 220 (¢/lb) 170 120 70 20 Jan-98 Jun-98 10 Nov-98 – Inventories Centered in Asia Apr-99 Sep-99 Feb-00 Jul-00 ©2006 Phelps Dodge Corp.—Investment Community Presentation Dec-00 May-01 LME Oct-01 COMEX Price Mar-02 COMEX Aug-02 Jan-03 (kmt) SHFE Jun-03 Nov-03 1,600 Apr-04 1,200 Sep-04 Feb-05 800 Jul-05 400 Dec-05 0 March 16, 2006 Through 2/28/06 Chinese Consumption Outpaces Production (kmt) +15.3% 4,000 CAGR 3,500 3,000 2,500 +12.4% CAGR 2,000 1,500 +4.3% 1,000 CAGR 500 0 2000 2005 Source: Brook Hunt Mine Production Smelter Production Consumption 11 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Production Shortfalls in 2005 Throughout Production Chain December 2004 December 2005 (Kmt) Forecast Estimate Difference Concentrate production 13,241 12,310 (931) Smelter production 13,803 13,227 (576) Refinery production 17,504 16,694 (810) Lost refined production equals ~2.2 weeks of consumption Source: Brook Hunt 12 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 World Inventories Remain at 30-Year Lows (¢/lb) 250 14 13.0 12.6 12 200 10 8.1 8.3 8.0 150 7.6 7.6 7.5 7.3 8 6.0 6.2 6.3 6.3 5.7 5.4 6 100 5.0 COMEX Price 4.6 4.2 4.5 4.3 3.7 3.8 3.9 3.4 3.4 4 Weeks Consumption <3.0 50 2 0 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 13 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 World Inventories – Impact of Disruptions (¢/lb) 250 14 13.0 12.6 12 200 10 8.1 8.3 8.0 150 7.6 7.6 7.5 7.3 8 6.0 6.2 6.3 6.3 5.7 5.4 6 100 5.0 4.9 COMEX Price 4.6 4.2 4.5 4.3 3.7 3.8 3.9 3.4 3.4 4 Weeks Consumption 50 2 0 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 14 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Changing World Copper Trade Flows – 1990 vs. 2005 Regional mine production/scrap recovery compared to refined consumption Europe ’05 – Import 2.1 million tons ’90 – Import 2.2 million tons North America Asia ’05 – Import 0.8 million tons ’05 – Import 4.9 million tons ’90 – Export 0.6 million tons ’90 – Import 2.1 million tons Rest of World ’05 – Export 1.5 million tons Latin America ’90 – Export 1.9 million tons ’05 – Export 6.1 million tons ’90 – Export 1.7 million tons Source: WBMS and Phelps Dodge 15 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Index Funds Dramatically Increase Exposure to Commodities Investment in commodity indexes up $65 billion 2002 – 2005 $/mt $ billion 5000 80 Degree of fit, 1999 – 2005 4500 Copper Price R2 = 0.94 70 4000 Fund Investments 60 3500 3000 50 2500 40 2000 30 1500 20 1000 500 10 0 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Source: Bloomsbury Minerals Economics 16 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Cyclical Nature of the Copper Market – Uncharted Territory? (¢/lb) 250 Oct 01 – Feb 06 256% 200 Nov 86 – Dec 88 May 93 – Nov 72 – Oct 77 – 164% Apr 74 Feb 80 Aug 95 71% 150 174% 130% 100 50 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 17 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Price Cycle Evolution – Time From Cycle Lows to Highs (¢/lb) 250 52 months 200 25 150 months 17 17 15 months monthsm months 100 50 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 18 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Copper Market – Outlook 19 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 China Expected to Lead Projected Global IP to 2010 1500 1250 1000 750 500 250 Index: 1990 = 100 0 1990 1991 Source: Consensus19 Forecast92 20 1993 1994 1995 1996 ©2006 Phelps Dodge Corp.—Investment1997 Community Presentation 1998 1999 Global 2000 2001 India 2002 2003 China 2004 2005 2006e Source:200 Consensus7e 2008e 2009e March 16, 2006 2010e Opportunities and Threats Opportunities: Energy efficiency Motors and transformers, copper motor rotors Power quality Better grounding, circuitry, lightning protection, etc. Hybrid vehicles Toyota/Ford/Honda/GM/Gov. requirements Smart house technology Integrated systems Threats: Plumbing tube Plastics – lower installed cost Air conditioning tube Aluminum – thin-wall technology Power cable/magnet wire Aluminum – price related Source: Phelps Dodge 21 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 Upside Scenario Led by China and Other Developing Economies (CAGR) 5% Comparative Growth Rates 4% Range of estimated growth rate 3% 2% 1% 0% 1950-1960 1960-1970 1970-1980 1980-1990 1990-2000 2000-2005 2005-2010 Source: ABMS, WBMS and Phelps Dodge 22 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 World Copper Reserves as Years of Production (at current rate) 60 1.20 1.10 50 1.00 40 0.90 30 % CuT 50 0.80 48 45 46 47 46 47 Years of Production Years 45 43 43 44 43 44 43 44 44 42 20 41 38 35 34 0.70 32 33 32 32 32 10 0.60 0 0.50 1 2 3 4 5 9 9 9 9 9 9 9 9 9 9 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1 1 1 1 1 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 years of production reserve grade 1980-2003 Brook Hunt 2004,2005 USGS 23 ©2006 Phelps Dodge Corp.—Investment Community Presentation March 16, 2006 New Production Required