Release: Moody's affirms Freeport-McMoran Copper & Gold ratings

(NEW YORK, March 23)Moody's Investors Service affirmed Freeport McMoran's Copper & Gold Inc's B2 Senior Unsecured rating. Outlook stable. In addition, Moody's affirmed the rating on all Freeport debt securities that it rates, including the Caa2 rating on Freeport's existing preferreds. Freeport's SGL-1 rating is also affirmed.

Freeport is currently issuing $1 billion of perpetual preferred's (which are unrated). Proceeds from this issue will be used to purchase Rio Tinto's 12% shareholding in Freeport. The ratings reflect the substantial low cost, long life reserves at FCX's 90.6% owned subsidiary, PT Freeport Indonesia (PTFI), and also the challenging operating conditions at the company's Grasberg mine and the risk of political and economic uncertainty associated with operating in Indonesia.

The stable outlook reflects Moody's expectation that performance at PTFI will rebound in the second half of 2004 and beyond from anticipated weak results in the first half of 2004.

Ratings affirmed are:

Freeport-McMoRan Copper & Gold Inc.:

senior unsecured rating at B2,

senior implied rating at B2,

issuer rating at B2,

gold and silver denominated and convertible exchangeable preferred stock all at Caa2, and SGL-1 Speculative Grade Liquidity Rating.

The rating reflects the low cost and long life reserves at FCX's 90.6% owned subsidiary, PT Freeport Indonesia (PTFI) and considers the dividend stream available to FCX from PTFI. The rating also reflects the subordinated position of debt holders at the FCX holding company level to creditors at the operating company. The rating considers improved stability within the Indonesian operating environment, but continues to incorporate the still challenging conditions and risk of political and economic uncertainty associated with Indonesia. Although the rating is no longer viewed as technically constrained by Indonesia's country ceiling, given FCX's dependence upon the dividend stream from its Indonesian operating subsidiary, Indonesian economic and political issues remain critical factors in FCX's rating.

The stable outlook reflects Moody's expectation that performance at PTFI will rebound in the second half of 2004 and beyond from anticipated weak results in the first half of 2004 resulting from rock slides in the fourth quarter of 2003 at PTFI's Grasberg open pit mine. The company's 2004 operating cash flow, assuming copper and gold prices of $1.00 per pound and $400 per ounce, respectively, is estimated by the company to approximate $230 million, down from $572 million in 2003, as 2004 production, which was originally forecast to be weighted to the second half of the year, is delayed. The company anticipates that the 2004 production shortfalls will be made up in 2005.

PTFI has completed major capital programs which will result in lower levels of capital expenditures over the next several years. As a result, when the mine returns to normal operation, greater levels of free cash flow are expected to be available at PTFI for dividends to FCX and the Indonesian Government, which holds a 9.4% interest in PTFI. The rating could be raised if the company demonstrates that the Grasberg open pit mine has fully returned to normal operations and continues to focus on maintaining a reasonable leverage position. The rating could be lowered if the company's financial profile exhibits higher levels of leverage.

Headquartered in New Orleans, Louisiana, Freeport had revenues of $2.2 billion in 2003.(end of release)