Guest Comment: Phelps Dodge is no more!

Freeport McMoRan Copper & Gold is the new owner of Phelps Dodge.

Former PD Chairman Steve Whisler, an intelligent, soft-spoken, stoic yet friendly, polite, no-nonsense, family man, agreed to take very early retirement. Freeport McMoRan Chairman Richard Adkerson, takes over, bringing several of his top executives from New Orleans. The combined headquarters will be in Phoenix.

Many questions

Will this new management group from outside Arizona have any deep concern of the surrounding area’s infrastructure, schools, environment?

One might say, “Did PD?”

Probably yes, but probably not the same concern they had for long time ownership at Morenci, Ajo, Bisbee and others.

Remember, PD had no long-term roots here in Green Valley. That is important. PD has owned the Sierrita mine only since 2000. That was the same time period that Groupo Mexico bought the Asarco mine.

Two very senior PD executives are being asked to stay at Freeport headquarters in Phoenix: Chief Operating Officer Tim Snider and Chief Financial Officer Ramiro Peru. [Peru left the company last week.]

Both are from Arizona and both are University of Arizona graduates. Snider, an engineer from Bisbee and Peru from Morenci.

Item of interest: Peru’s son was a punter on the UA’s football team a few years ago.

Fortunately, the general manager here at the Sierrita Mine is another home-grown Arizona native.

All of these executives are good people.

There is a question in my mind whether those in the current PD headquarters in Phoenix have been serious about fixing current environmental situations in this area.

Also, do previous owners of mines have any responsibility or only the present owners for future environmental cleanup expense? Has Groupo Mexico (Asarco) contributed to any aquifer contamination?

I don’t know the answers to these and other questions herein stated.

New management’s focus?

With the new, non-Arizona native management, can we expect more or less attention, especially with a $17 billion debt to pay off?

Yes, I said a $17 billion debt.

Freeport paid $26 billion for PD with $17.5 billion borrowed. Stockholders approved the deal March 14, and it was finalized Monday, March 17.

It has been reported that the new chairman, Richard Adkerson, has said his first priority is paying off the loans.

I wonder where in the line of priority, environmental concerns will lie?

He is throwing the dice that copper prices will stay up.

If so, financial experts say he can pay the debt off in two to three years. It is a good bet that he will. However, if prices decline back to historic levels, Freeport McMoRan could go into bankruptcy.

That would not be good for this area.

It has been reported that Freeport McMoRan is more entrepreneurially aggressive than PD and intends to increase production at its mines, possibly reopening closed facilities and would consider selling assets to raise cash.

Would that mean selling Sierrita?

I believe that we in the Green Valley area have seen foot-dragging on the part of PD. They knew what was coming with the merger.

Does "Freeport" have any obligation to follow up on all environmental liabilities of PD. or previous ownership?

PD was a people company

PD’s roots go back to 1834 on the East Coast in non-mining enterprises. Messers Phelps and Dodge invested in Arizona mining in 1881 in Morenci.

Great leaders and community-minded citizens of Arizona were born and raised within the PD family in the small Arizona mining communities. PD cared about the mining families and communities that it started in Morenci, Ajo, Bisbee and Jerome.

Retired senior executives of PD like Art Himebaugh, President Len Judd and Nick Balich all were University of Arizona graduates. Himebaugh was born in Hayden; Balich in Bisbee. The Phelps Dodge CEO who brought PD headquarters to Arizona after 100 years in NYC in 1987 was Robert “Bull” Durham, who came from the small coal mining town of West Frankfort, Ill. The previous CEO, Douglas Yearley’s father-in-law, was one-time chairman of PD in New York.

These men all had a life time of PD history, culture and took pride in the small mining communities and the families.

One true story of the kind of people who have been in powerful positions at PD is about one of the above-mentioned individuals and his family who were living in Phoenix and working at PD headquarters.

It was in the 80s when there was the terrible strike at Morenci, and shooting had occurred. The National Guard had been called in. He and his wife were at our home for dinner one night during this time.

This man asked if he could say the blessing. He said the usual things, then added, “Dear Lord, please watch over the families in Morenci. They are very precious to us.”

The Sierrita Mine is different

Remember, PD bought the Sierrita Mine just a few years ago in 2000. PD may have known for some time that they would be leaving. Prices of moly and copper are now sky high.

Sierrita is a “cash cow” for now, but will it always be one? The break-even price used to be about 60 cents a pound. With the relatively new SX-EW process (solvent extraction-electrowinning) copper may be even less costly to produce.

Sierrita is small potatoes compared to the Morenci mine, the new operations in Safford and other Freeport worldwide copper and gold mines.

Make no mistake, PD is gone.

Even if a handful of outstanding Arizona-born executives remain, PD is gone. It leaves a fine corporation with a 126-year history of good management with morals and caring. Any number of times, PD could have thrown in the towel due to low prices or worse situations.

In the "old” days, they knew that hundreds of families and businesses depended on the mines.

True, the bottom line was to make money, but they did care about the people, especially in Morenci, Bisbee, Ajo, Miami and Jerome.

Arizona is better because PD was here. Additionally, over the years, countless scholarships were awarded to Arizona students by Phelps Dodge.

Hopefully, Freeport McMoRan will be as good, if not better. Then, everyone would win!

The future

Having said that, Green Valley residents must continue to keep open the lines of communication that existed with PD and insure that the new Freeport Phoenix management is not only aware of our concerns but will substantially increase its focus on eliminating the existing situations and stop what appears to be “Band-Aids” and "studies.”

Perhaps the recently introduced SX-EW process should be halted altogether. The geological situation locally may not be as amenable or as environmentally protective in this area as it is in other Arizona and New Mexico copper mines where the vast research and development work on the SX-EW process was conducted.

How was copper processed at Serrita before the SX-EW process was established? Will the proposed Rosemont mine east of Green Valley also use similar processes?

Caution, words have meaning

In closing, I appreciate all the hard work and time given by many Green Valley residents who have correctly spoken out in meetings and in the paper about mining issues.

In this regard, we all need to exercise caution in what terminology is used. Words have meaning, and words such as Superfund site have absolutely no place in our local discussions under the present situation, not even in the far distant future.

I lived adjacent to Scottsdale, where for over 40 years Motorola created a Superfund site in the huge Indian Bend Wash/aquifer area in Southeast Scottsdale.

Reportedly, extensive dumping of metallic residue from electronic manufacturing occurred and trichloro-ethylene was commonly used and released. There is no comparison!

We must make sure that what we say is appropriate and not overly stated to the detriment of the community.

As the old TV detective, Sgt. Friday on “Dragnet” used to say, “Just the facts, ma’am.”

Charles Field came to Tucson in 1955 and to Green Valley in 2001 after 33 years in Paradise Valley. He has a BS in Metallurgical Engineering with minors in chemistry and geology from the University of Arizona. He specialized in titanium and other advanced materials for aerospace and other high performance structures for the DOD. The views expressed are the author’s and not necessarily this newspaper’s.