Expansion at Cerro Verde Mine in Peru Begins Copper Concentrate Production

(official press release issued by Phelps Dodge Corp.)

PHOENIX, Jan. 2 — The expansion at the Cerro Verde Mine near Arequipa, Peru, has begun producing copper concentrate from the mine’s primary sulfide ore body, Phelps Dodge Corp.  announced today. The first product shipment, approximately 9,500 dry metric tons of copper concentrate manufactured during pre-operational trials, was disclosed today in regulatory filings with CONASEV, the government agency that oversees publicly traded companies in Peru. The concentrate was sold for processing to Sumitomo Metal Mining Co. Ltd., one of the major shareholders of the Cerro Verde Mine.

The new concentrator associated with the expansion is operating but is not yet at full capacity. The concentrator continues to work through normal adjustments associated with the start-up of a major operation. Full production is expected to be achieved during the first half of 2007.

Once it reaches full production, the expansion will allow the mine to triple annual production from approximately 100,000 tons of copper to 300,000 tons. In addition, the expansion is expected to produce more than 2,000 tons of molybdenum per year. Cerro Verde estimates that the expansion will extend the mine’s life by approximately 26 years. Through the expansion, approximately 1 billion tons of sulfide ore reserves averaging 0.51 percent copper will be processed through the new concentrator.

Phelps Dodge owns 53.6 percent of the Cerro Verde Mine. Sumitomo Metal Mining and Sumitomo Corp. together own 21 percent. Compania de Minas Buenaventura owns 18.5 percent, and common shareholders own 6.9 percent.

Phelps Dodge is one of the world’s leading producers of copper and molybdenum and is the largest producer of molybdenum-based chemicals and continuous-cast copper rod. The company employs more than 15,000 people worldwide.

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