The story
The Freeport Sulphur Company was founded July 12, 1912, by the eldest son of Swante M. Swenson, banker Eric Pierson Swenson, with a group of investors, to develop sulfur mining at Bryan Mound salt dome, along the U.S. Gulf Coast. Freeport, Texas was also established in Nov. 1912 to house workers, and serve as a port for Houston, rivaling Galveston and Corpus Christi.
Freeport mined sulfur along the Gulf Coast using the Frasch process, the patents for which had expired in 1908, a disruptive innovation for the automated mining of previously inaccessible sulphur deposits at a cost lower than that of established mines, where manual labor gained the mineral under the most appalling conditions. Previously, Union Sulphur Company founder and patent-holder Herman Frasch had enjoyed a monopoly on the process. The Bryan Mound salt dome just south of Freeport became the second Frasch sulphur mine in the world in 1912.
Freeport Texas Company
Enterprise to support Freeport Sulphur's business and the new town's infrastructure led to the incorporation of a holding company on September 30, 1913, to join the newer assets with Freeport Sulphur and create a vertically integrated mining company around, at first, a single sulphur mine. Officers of the new holding company, Freeport Texas Company, were:
Eric. P. Swenson, President and Director (Freeport Sulphur founder, son of Swante M. Swenson)
Edward E. Dickinson, vice-president and Director
F.M. Altz, Secretary
Swante M. Swenson, Treasurer (son of Eric P. Swenson)
Charles H. Findlay, Auditor (son of Hugh Findlay and his third wife, Mary Ellen Smith)
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Directors
Eric P. Swenson
Edward E. Dickinson
Richard H. Williams (son of Richard H. Williams)
Harry K. Knapp
Samuel McRoberts
Charles P. Northrop
Charles A. Stone
Frank A. Vanderlip
Sidell Tilghman (son of General Lloyd Tilghman)
Eppa Hunton Jr. (son of late Virginia Senator, Brig. Gen. Eppa Hunton)
Charles E. Herrmann
On May 7, 1917, all 35,000 outstanding shares were exchanged for 500,000 new shares of no par value (at a rate of 14+2⁄7:1). The stock was listed on the NYSE since 1919. Freeport raised an additional $4 million with an April 1, 1922 issue of convertible bonds, almost all of which were converted to common stock right away. Of the new total of 732,000 authorized shares 729,844 were then outstanding. In 1933, the no par common stock was exchanged for $10 par common and $2,500,000 convertible preferred were issued to finance the development of Grande Ecaille, about half of which was converted, the remainder called for redemption in 1938 at the end of which 796,380 common shares were outstanding. To raise general working capital Freeport Sulphur in 1939 sold $3,000,000 in 3% 20-year private debentures to Metropolitan Life Insurance Co. and Sun Life Insurance Co. of Canada. On September 1, 1951, the 99th consecutive quarterly dividend was paid. Effective September 21, 1951 the 800,000 outstanding common shares were split 3-for-1 and the authorized capital was increased from 850,000 to 3,000,000 shares. On March 2, 1959, the 129th consecutive quarterly dividend was paid and effective May 5, 1959 the 2,504,850 outstanding shares were once again split 3-for-1 and the authorized capital was increased from 3,000,000 to 10,000,000 shares.
Freeport Sulphur was on the Fortune 500 in 1955, 1956, 1957, 1967, 1968, 1969, 1970.
In 1919, minority stockholders John R. Williams & Sons, First National Bank of Richmond, Virginia vice-president, W. M. Addison, Benjamin P Alsopp, E. L. Norton, and Samuel W. Travers solicited proxies to use at the April 5th annual stockholders' meeting, claiming, according to reports, that "management has refused them adequate information regarding the property. President E.P. Swenson denies that information has been thus withheld and states that the board, which represents the dominant interests, has no vacancies at the present time."
1928–1931 shareholder proxy fight
In 1928, shareholder and scion of one of the founding investment firms, John Langbourne Williams & Sons, Langbourne Meade Williams, Jr. launched a proxy fight for control of the company. In 1929, he then sought help from his former supervisor at Lee, Higginson & Co., J.T. Claiborne, who then enlisted clerk John Hay Whitney – who had become one of the wealthiest men in America following the 1927 death of his father, Payne Whitney. Williams eventually gained control of the company from founder Swenson, becoming its president in 1931, with Claiborne as a vice-president, and Whitney as chairman. Williams also served as chairman during 1958–1967.
1930s
Williams led the company's diversification, beginning with the purchase of manganese deposits in Oriente Province, Cuba.
The company announced on February 19, 1931, the acquisition of a controlling interest in the Cuban American Manganese Corporation. Most of the metal was gained by concentration of low grade ore. The company benefited from (was subsidized by) zero import duty at a time when duties were high despite the United States reliance on imports for most of its supply of manganese. The deposit was depleted and the company dissolved in 1947.
In 1932, Freeport Sulphur Company acquired the sulfur rights for Lake Grande Ecaille and vicinity in Plaquemines Parish, Louisiana, and escalated the development of sulfur deposits in the Grand Ecaille dome in 1933, still using the Frasch Process developed by Dr. Herman Frasch, who had, in 1895, enjoined the American Sulphur Company into a partnership, forming the Union Sulphur Company, to initiate the first successful sulfur mining at Grand Ecaille, with which Freeport, like other competitors, would compete upon expiry of the Frasch patents in 1908. From its earliest inception, sulfur mining was the catalyst that developed Port Sulphur, Louisiana.
Effective January 1, 1937 the Freeport Texas Company changed its name to Freeport Sulphur Company (the old one was dissolved) and its character from a holding company to an operating company, likely as a response to the Revenue Act of 1936 to avoid double taxation. On this occasion all active subsidiaries except the Cuban-American Manganese Corp were liquidated.
1950s
Freeport announced on March 7, 1952, the development of 3 new sulphur mines at an estimated cost of $20 million, to be financed from accrued cash reserves, as part of the national defense industrial mobilization program (Korea War). The effort grew into a $25 million program covering 4 new mines, one major (Garden Isle Bay) and 3 minor (Bay Ste. Elaine, Nash, Chacahoula) with a combined new capacity of 750,000 long tons per year, in addition to the existing Hoskins Mound (closed in 1955) and Grand Ecaille mines.
The company produced nickel during World War II and potash in the 1950s. In 1955, Freeport Nickel invested $119 million, of which $100 million came from the U.S. government, into construction of a nickel-cobalt mine at Moa Bay, Cuba, and a refinery at Port Nickel, Louisiana. On March 11, 1957, the U.S. government announced a contract to buy nickel and cobalt from the company.
In 1956, the company formed the Freeport Oil Company. In 1958, the company sold an oil discovery near Lake Washington in Louisiana for approximately $100 million to Magnolia Petroleum Company.
In 1959, Freeport geologists confirmed the 1936 Dutch discovery of the rich Ertsberg copper and gold deposits, now known as the Grasberg mine, in extremely rugged, remote country in the Jayawijaya Mountains in what was then called the Netherlands New Guinea.
1960s
In 1960, Fidel Castro implemented a 25% ore tax, effectively nationalizing and seizing Freeport's nickel-mining operations in Cuba.
In 1961, the company entered the kaolin business after purchasing the assets of Southern Clays Inc. In 1964, the company formed Freeport of Australia to pursue mining opportunities there and in the surrounding Pacific Ocean region.
Development of the Ertsberg deposit
In 1967, the company negotiated a contract with the Indonesian government to develop the Ertsberg deposit. In their feasibility study, Freeport geologists estimated that the orebody totaled 33 million tons averaging 2.5% copper, making it the largest above-ground copper deposit ever discovered. Construction of an open pit mine began in May 1970 and in mid-1973 the mine was declared fully operational. Officials at Bechtel, the primary project contractor, called mine development at Ertsberg "the most difficult engineering project they had ever undertaken". The challenges included building a 101-kilometre (63 mi) long access road (a project that required boring kilometer long tunnels through two mountains) and constructing the world's longest single span aerial tramway. The tramways were needed to move people, supplies and ore because a 2,000-foot (610 m) cliff separates the Ertsberg mine (at 12,000 feet (3,700 m) elevation) from the mill (at 10,000 feet). Moving copper concentrate from that mill to the shipping port required installation of a 109-kilometre (68 mi) slurry pipeline – then the world's longest. Mine construction and startup cost about US$200 million. The Ertsberg project was an engineering marvel, but the mine's early financial performance was disappointing. Depressed copper prices and high operating costs kept profits marginal during the 1970s.
In 1967 The McMoRan Oil and Gas Company was founded by three partners, William Kennon McWilliams Jr. ("Mc"), James Robert (Jim Bob) Moffett ("Mo"), who were both petroleum geologists, and Mack Rankin ("Ran"), a specialist in land-leasing and sales operations. In 1981, McMoRan would merge with Freeport Minerals, formerly Freeport Sulphur, to form Freeport-McMoRan.
1970s
In 1971, the company changed its name to Freeport Minerals Company, (not to be confused with Freeport Minerals Corporation, founded in 1834).
1980s
On April 7, 1981, Freeport Minerals Company merged with the McMoRan Oil and Gas Company.
In 1981, the company formed a 70/30 joint venture with an affiliate of FMC Corporation to operate the Jerritt Canyon gold mine near Elko, Nevada. In 1985, the company headquarters moved to New Orleans, Louisiana. The company also sold a 25% interest in oil and gas assets primarily in the western United States to Britoil for $73.5 million.
In 1989, the company sold about $1.5 billion in assets to finance development of the Grasberg mine and the Main Pass offshore sulfur-oil-gas deposit off Louisiana.
1990s
In July 1995, the company completed the corporate spin-off, first announced in May 1994, of its entire interest in Freeport-McMoRan Copper & Gold, which owned the Grasberg mine.
In 1995, RTZ, a predecessor of Rio Tinto Group, made a $450 million investment in the company.
In 1997, IMC Global, a large fertilizer producer, acquired Freeport-McMoRan Inc., the former parent company that now owned the sulfur and fertilizer businesses, in a $750 million transaction. Shareholders of Freeport-McMoRan received shares of IMC Global.
In 1997, the Indonesian government asked Freeport-McMoRan to substantiate the Canadian mining company Bre-X's claims of having found the largest gold mine ever discovered, in Borneo. Freeport announced that its prospective partner Bre-X did not have gold reserves at its Indonesian mine, as it had reported. Bre-X subsequently was exposed as a fraud and went bankrupt.
In 1998, low commodity prices forced the company to suspend its dividend.
2000s
In 2003, the company was subpoenaed as part of an investigation by anti-trust authorities in the United States, Canada, and Europe into price fixing in the copper industry.
On March 19, 2007, the company acquired Phelps Dodge (for $25.9 Billion) and became the largest copper producer of any public company in the world. The corporate headquarters was moved from New Orleans, Louisiana to Phoenix, Arizona.
2010s
In 2012, the company announced agreements to acquire affiliated companies McMoRan Exploration Company and Plains Exploration & Production Company for a total enterprise value of over $20 billion. The transaction added significantly to the company's petroleum assets. The transaction was criticized as a conflict of interest due to the common ownership of the companies. In 2015, the company paid a $137.5 million settlement to resolve claims that executives and directors had conflicts of interest that resulted in the company overpaying in that transaction.
In 2014, the company sold its assets in the Eagle Ford shale to Encana for $3.1 billion. In 2015, the company announced job cuts at its Sierrita Mine in Arizona due to low copper and molybdenum prices.
On December 28, 2015, the company announced that James R. Moffett would resign as chairman of the company and be replaced by Gerald J. Ford. Moffett received $16.1 million in severance pay and cash retirement plans totaling more than $63 million. Moffett continued to consult for the company for annual fees of $1.5 million.
In May 2016, the company sold a 13% interest in its Morenci Mine to Sumitomo Group for $1 billion in cash.
In 2016, Freeport sold its deepwater assets, including the Marlin TLP, and the Holstein and Horn Mountain spars, to Anadarko Petroleum.
In August 2017, the company agreed to give a 51% interest in the Grasberg mine to the Government of Indonesia and build a smelter in exchange for a special permit to operate the mine until 2041.
In 2018, the company ranked at number 176 on the Fortune 500 list. During this year, Indonesian President Joko Widodo also planned to take control of 51% of Freeport Indonesia's equity, effectively handing over Freeport control to the Indonesian government. The Indonesian government planned to settle payments of $3.85 billion during the takeover process and finalized the process on December 21, 2018.
During 2018 Freeport-McMoRan Copper & Gold along with 90 additional Fortune 500 companies "paid an effective federal tax rate of 0% or less" as a result of the Tax Cuts and Jobs Act of 2017.
From Wikipedia’s article on Freeport-McMoRan, shared under CC BY-SA 4.0.8