Exhibit 13.1


            1997 / ENVIRONMENTAL & 
                   SOCIAL RESPONSIBILITY REPORT

            ENVIRONMENTAL REPORT

            ENVIRONMENTAL POLICY  STATEMENT.  Freeport-McMoRan  Copper &
            Gold Inc. (FCX) has a  formal Environmental Policy Statement
            and  Environmental Auditing  Policy which  provides guidance
            and  a framework  under which  these important  programs are
            conducted.  FCX is committed to environmental compliance and
            high  performance  of  its environmental  programs,  a  safe
            working environment  for its employees and  a healthy socio-
            economic environment  for the local  people in the  areas in
            which the company operates.

            In   last   year's   Annual  Report,   FCX   described   its
            Environmental  Policy and  programs in  some  detail.   This
            year's report  will primarily discuss 1997  activities under
            these ongoing programs.

            1997 FCX ENVIRONMENTAL PROGRAMS UPDATE

            P.T. FREEPORT  INDONESIA COMPANY (PT-FI).   On  December 22,
            1997,  PT-FI  received  approval   from  the  Government  of
            Indonesia's (GOI)  Minister of Environment for  its Regional
            AMDAL  (Analysis  Concerning  Environmental  Impact)  study,
            which  is  a  comprehensive  environmental  assessment  that
            includes  a monitoring  and management  plan.   The Regional
            AMDAL approval  was necessary to  allow PT-FI to  expand its
            milling rate  up to a maximum  of 300,000 MTPD (300K).   The
            300K Regional AMDAL study document  was submitted to BAPEDAL
            (the Indonesian Environmental  Impact Management Agency) and
            the governmental AMDAL Commission on  September 1, 1997, for
            review and  revision.   The study was  the culmination  of a
            multi-year effort  to develop environmental analyses  of the
            impacts and  benefits of the  proposed expansion.   The 300K
            Regional AMDAL study prepared by PT-FI was termed "...the most
            comprehensive BAPEDAL has ever seen" by the AMDAL Commission
            Chairman.   Forty-two  specific  environmental studies  were
            conducted  during  the  AMDAL   process  by  Indonesian  and
            internationally recognized  experts.  An  extensive analysis
            of the  social situation in  PT-FI's area of  operations was
            also  included  in  the  study.  PT-FI  subjected  the  most
            sensitive studies  to peer review  to ensure  their accuracy
            and independence.   Additionally, PT-FI and  its consultants
            presented the findings of these studies at five workshops on
            major social  and environmental issues, which  were attended
            by the AMDAL Commissioners and over 600 interested parties.

                                       [Photo]

            AMDAL Study / AMDAL studies include monitoring of local
                          waterways and aquatic  fauna by  teams of 
                          Indonesian and internationally recognized 
                          scientists.

            PT-FI has numerous ongoing environmental management programs
            that include  monitoring, reclamation, waste  management and
            recycling,  all of  which are  being expanded  in accordance
            with the 300K Regional AMDAL approval.   The following is an
            update on 1997 activities under these programs.

            LONG  TERM ENVIRONMENTAL  MONITORING PLAN:   In  1997, PT-FI
            continued to conduct its  Long Term Environmental Monitoring
            Plan  (LTEMP),  which  evaluates  the  potential  impact  of
            operations on  water quality, biology,  hydrology, sediments
            and air quality within its area  of operations.  Significant
            environmental  data and  analyses have  been developed  from
            this  monitoring program  over 

            [PAGE]  8

            the  past seven  years.   The
            centerpiece of the LTEMP program is PT-FI's state-of-the-art
            environmental laboratory located in  Timika, which, in 1997,
            received  the  GOI's  highest certification  for  analytical
            laboratories.  The  laboratory is also expecting  to soon be
            certified  by  the  National   Association  of  Testing  and
            Analysis.

                                       [Photo]

            Revegetation / Significant research programs continue to
                      demonstrate that a wide variety of native plants
                      and agronomic species, such as pineapples, will
                      grow on deposited tailings.

            TAILINGS MANAGEMENT  PLAN:  One  of PT-FI's key  programs is
            its Tailings  Management Plan (TMP) which  manages the river
            transport and deposition of tailings,  which are the crushed
            rock particles that remain following the physical separation
            of commercially valuable minerals from the  mined ore.  This
            multimillion-dollar  program  controls   the  transport  and
            deposition of tailings through the use  of a levee system on
            the flood  plain in  the Ajkwa River  within a  defined area
            called the  Ajkwa Deposition Area  (ADA).  The  levee system
            was completed in  January 1997 under a plan  approved by the
            GOI.  The updated plan was  again approved in late 1997 as a
            key  element  in  the   comprehensive  300K  Regional  AMDAL
            process.      The   performance  of   the   TMP   has   been
            comprehensively studied  and will be  continuously monitored
            in  the future.    Information to  date  indicates that  the
            system is working well  within engineering expectations and,
            as discussed  later, tailings reclamation studies  show that
            the ADA can readily be revegetated once mining is completed.

            OVERBURDEN MANAGEMENT PLAN:   The Overburden Management Plan
            (OMP)  controls   the  relocation  of   non-commercial  rock
            (overburden)  generated  by  the  Grasberg  open-pit  mining
            operation.   The  latest OMP  was  submitted to  the GOI  in
            conjunction  with  the 300K  Regional  AMDAL  study and  was
            approved.   The OMP includes  a program to  manage potential
            acid rock drainage (ARD) in the Grasberg overburden disposal
            areas  through a  combination of  prevention and  mitigation
            techniques.   Significant  activities continued  in 1997  to
            successfully reduce and/or prevent ARD.

            WASTE MANAGEMENT AND RECYCLING  PLAN:  PT-FI's comprehensive
            waste management and recycling plan, which conforms with GOI
            regulations and PT-FI's waste management policies, continued
            with success in  1997.  The plan provides  a practical means
            of  managing all  wastes  in  an environmentally  acceptable
            manner, with  an emphasis on  recycling or re-use  of wastes
            and substitution of materials where feasible.

            [PAGE]  9

            RECLAMATION AND  REVEGETATION PLAN:  Programs  to revegetate
            and reclaim the ADA have been in place for several years and
            there were  a number of  achievements in 1997  including the
            demonstration  that  additional  species of  native  plants,
            agricultural crops  and fruit trees  grow well  in deposited
            tailings.    PT-FI  has  other  successful  reclamation  and
            revegetation projects  that involve  wetlands and  lakes, as
            well as forest and agricultural areas.

            PT-FI has also developed a program, which continued in 1997,
            to  manage   and  monitor  the  reclamation   of  overburden
            placement areas that includes, among other things, a topsoil
            salvaging  program, hydro-mulching,  and the  collection and
            planting of local plants and seeds.  The reclamation program
            will  provide a  stable vegetative  cover  for the  impacted
            areas and form an ecosystem for  suitable land use following
            mining operations.

            PT-FI has now  established a fund designed  to accumulate at
            least  $100  million by  the  end  of  its mine's  life  for
            eventual mine closure  and reclamation.  The  fund, to which
            PT-FI  continues  to contribute,  will  be  used to  restore
            properties  and related  facilities to  a state  required to
            comply  with  current  Indonesian  environmental  and  other
            regulations.

            ENVIRONMENTAL  AUDITING:    In  1997,  PT-FI  completed  the
            implementation of  all of the  33 recommendations  made from
            the external environmental audit conducted  by Dames & Moore
            in  1996.    An  internal  environmental  audit  of  PT-FI's
            operations was conducted for 1997 in accordance with the FCX
            Environmental  Auditing  Policy.   This  program  an  annual
            internal  audits, as  well as  external  audits every  three
            years,  will  continue throughout  the  life  of the  mining
            operations  to ensure  that  PT-FI's environmental  programs
            remain sound.

            ATLANTIC COPPER, S.A. (ATLANTIC).  As  part of the follow-up
            to  the completion  of  the  1996 environmental  improvement
            project, additional water collection and discharge treatment
            system enhancements were completed in 1997.

            Furthermore,  an Environmental  Management System  (EMS) was
            developed and  fully implemented in 1997.   An environmental
            training and awareness plan was also  fully developed and an
            internal  site auditing  system  was  established to  ensure
            conformance to the  EMS.  The EMS will allow  Atlantic to be
            certified  under  the International  Standards  Organization
            (ISO)  14001  Standard.    The  ISO   14001  Standard  is  a
            management   standard  that   provides  an   internationally
            recognized blueprint for  managing the environmental aspects
            and  impacts  of  a business.    Atlantic  expects  to  have
            completed  ISO 14001  certification in  1998 and  is already
            certified   under  the   ISO  9000   Standard  for   Quality
            Management.    Atlantic   continued  to  maintain  excellent
            relations with local  and regional environmental authorities
            in  1997 and  worked closely  with their  representatives in
            monitoring   and  interpreting   data  from   emissions  and
            effluents.

            SOCIAL RESPONSIBILITY REPORT

            P.T.  FREEPORT INDONESIA  COMPANY (PT-FI).    FCX and  PT-FI
            recognize    the   importance    of   establishing    strong
            relationships with the people in the  area of its operations
            and  the important  role that  those  relationships have  in
            defining  a truly  world-class mining  operation.   FCX also
            recognizes   the   need   for   thoughtful   and   sensitive
            developmental  programs,  in   conjunction  with  local  and
            national   government  and   non-governmental  organizations
            (NGOs), to support the relationship building and development
            process.   When  PT-FI initiated  operations  in Irian  Jaya
            nearly 30 years ago, there were only approximately 400 local
            Amungme  and  Kamoro  people living  in  the  highlands  and
            lowlands  areas near  our mining  

            [PAGE]  10

            operations.   Today,  over
            60,000  people  have moved  into  the  area because  of  the
            opportunities offered  by our mine and  other businesses now
            operating in  the area.  In  last year's Annual  Report, FCX
            described the social situation around its operations in some
            detail.  During 1997 and early 1998, several events occurred
            and  processes  begun  which will  enhance  the  social  and
            economic  development   of  the   local  people   and  their
            relationship with PT-FI.

            THE FREEPORT FUND  FOR IRIAN JAYA DEVELOPMENT  AND THE GOI'S
            DEVELOPMENT PLANS:  In 1997, PT-FI  and the GOI continued to
            work with expert consultants and the local people within its
            area  of operations  to create  comprehensive  land use  and
            human resource development plans.  An  integral part of that
            plan  is  the  Freeport  Fund  for  Irian  Jaya  Development
            (FFIJD),  by which  PT-FI would  make available  funding and
            expertise to support the economic  and social development of
            the area.  As with  many large-scale developmental projects,
            the  implementation  of the  plan  proved  to be  a  complex
            undertaking.   In the  fourth quarter of  1997 and  with the
            support  of the  government and  the  recommendation of  the
            LABAT-Anderson Social Audit (discussed in detail below), PT-
            FI has undertaken  a restructuring of its part  of the GOI's
            development plan  for the  Timika (Mimika)  area.   PT-FI is
            setting  up  the mechanism  to  become  an independent  fund
            provider  for  developmental  projects  in  and  around  its
            operations area.  A local community oversight board is being
            actively  recruited  and  trained to  evaluate  and  monitor
            developmental  projects.    The  oversight  board  is  being
            actively  recruited  and  trained to  evaluate  and  monitor
            development projects.   The oversight board will  be made up
            of  local  and  church   leaders,  NGO's,  local  government
            officials and representatives of PT-FI.

            To improve the administration of  the FFIJD, project funding
            is  being changed  from an  ethno-linguistic group  (tribal)
            basis  to  one  that is  village-based  (geographic).    The
            village-based method is  "bottom-up development recommended
            by  most international  developmental agencies.   The  FFIJD
            will work closely with the GOI's local and regional planning
            boards to coordinate  developmental projects and activities.
            PT-FI  remains committed  to providing  one  percent of  its
            revenue for the development of the  local people through the
            FFIJD.

            LABAT-ANDERSON INDEPENDENT SOCIAL AUDIT:  In early 1996, the
            international consulting firm  of LABAT-Anderson undertook a
            comprehensive independent  audit of  social programs  at PT-
            FI's operations  in Irian  Jaya.   The team  included LABAT-
            Anderson   personnel  as   well  as   nationally  recognized
            Indonesian  scientists and  other  experts  from around  the
            world.  In July 1997, the LABAT-Anderson

                                       [Photo]

            Social Audit / Local leaders discuss social issues with
                      Willy Tjen (far left), LABAT-Andersen team
                      leaders, as part of the independent social audit.

            [PAGE]  11

            team  submitted its  final  report to  the  Minister of  the
            Environment and  PT-FI.  It noted  the remarkable complexity
            of  the issues  in Irian  Jaya and  especially those  in the
            Mimika  district   caused  by  rapid  social   and  economic
            development,  unceasing  migration  into the  area  and  the
            mixing of ethno-linguistic groups.  The report further noted
            that PT-FI  had gone beyond requirements  or expectations in
            providing  assistance  for  the  development  of  the  local
            people.     Nevertheless,  the  report  made   a  number  of
            recommendations  designed  to  make  PT-FI's  programs  more
            effective, all  of which  have been  accepted and  are being
            implemented.   LABAT-Anderson  recommended that  (1) PT-FI's
            participation in  the GOI's developmental plan  for the area
            be restructured  to provide for  more direct input  by local
            people  through their  leaders, (2)  input be  village-based
            rather  than tribe-based  and  (3)  programs for  "capacity-
            building" among the local people be  enhanced.  As discussed
            above, PT-FI is restructuring its  FFIJD program and several
            international and local  NGOs as well as  the United Nations
            Development Program  have been invited to  undertake village
            development and capacity-building for the local people.

            LAND RIGHTS AGREEMENT  WITH KAMORO VILLAGES:   In 1997, land
            use  agreements  with  two  separate  Kamoro  villages  were
            reached.    The  agreements  cover  land  used  for  tailing
            deposition  and  the  expanded  portsite.    The  agreements
            established   programs  in   the  respective   villages  for
            education,  enhanced   health  care,  social   and  economic
            development, and infrastructure enhancement.  The agreements
            stipulate a multi-year timetable for implementation.

            Public  Health /  A Young  child is  treated at  one of  the
                              public health clinics in our COW area.

                                       [Photo]

            PUBLIC HEALTH AND MALARIA CONTROL:      PT-FI  continues  to
            be  proud of  the  work of  its  Public  Health and  Malaria
            Control   Department   which  has   become   internationally
            recognized  for  its remarkable  record  in  the control  of
            mortality  and morbidity  from  malaria  and other  tropical
            diseases.  Beginning in late 1997  and continuing into 1998,
            the department has been actively supporting  the work of the
            GOI,  the   Indonesian  Red  Cross  and   the  International
            Committee of  the Red  Cross in  providing famine  relief to
            areas  east  of  our  operations  area  that  were  severely
            affected by drought conditions.

            In early  1998, PT-FI initiated  discussions with  the Roman
            Catholic  diocese of  Jayapura to  establish an  independent
            hospital in  Timika, funded substantially  by the  FFIJD, to
            provide primary  medical care to  all local people  who were
            not PT-FI employees  or employee dependents.   This would be
            the first independent  medical facility in the  area.  PT-FI
            would continue  to accept case  referrals from  the hospital
            (as  it currently  does from  the  government's clinic)  for
            patients whose condition requires additional care.

            INSTITUTIONAL AND  COMMUNITY DEVELOPMENT:  One  of the major
            developmental  challenges  for  the   local  people  is  the
            establishment of  institutions that can help  them relate to
            government  as well  as to  PT-FI  and each  other.   Tribal
            culture 

             [PAGE]  12

            has intended  to be very individual,  which has made
            effective  communication   between  the  people   and  other
            institutions  difficult.   As the  entire area  develops and
            changes,   helping  the   people  create   the  institutions
            necessary for communication, negotiation and problem solving
            is essential.   In  addition, villages  such as  Kwamki Lama
            have  residents of  several different  tribes which  has not
            been typical in the past.   These "mixed villages" require a
            geographic  rather  than a  tribal  identity.   Through  the
            expertise of  the government,  NGOs, including  churches and
            church groups in the region, and  others, positive steps are
            being taken to foster  institution and community development
            throughout the area.

            RESEARCH PROJECTS:   The  people of Irian  Jaya have  a rich
            cultural heritage  and traditions  which are  different from
            "western"  societies.     Often,  problems  are   caused  by
            misunderstandings about  cultures and  cultural change.   To
            address this  issue, PT-FI has enhanced  its anthropological
            expertise  by the  addition of  staff  anthropologists.   To
            supplement  their   work,  a  joint  team   from  University
            Cenderawasih in Jayapura, Irian Jaya and Australian National
            University in Canberra has undertaken a project to establish
            a "social  mapping" and to  collect other  ethnographic data
            about  all  local  residents.   The  multi-year  project  is
            currently approximately 50 percent complete.

            HUMAN RIGHTS:   PT-FI and  FCX have strongly condemned human
            rights violations  in Irian Jaya  and believe  in protecting
            the human rights of all people and especially those who live
            and work in  the area in which PT-FI has  operations.  PT-FI
            works actively  with KOMNAS-Ham,  the official  human rights
            organization in Indonesia, to monitor and resolve situations
            which might impinge upon the human rights of individuals and
            groups.

            ATLANTIC  COMMUNITY PROGRAMS.    Atlantic  has a  continuing
            Program of Support and Protection of  the Arts and Sciences,
            Public Communication and Community  Relations.  This program
            is carried out both individually and in conjunction with the
            Association  of Chemical  Industries in  Huelva.   In  1997,
            Atlantic completed two significant programs, the restoration
            of the  Church of  La Milagrossa in  Huelva and  donation of
            significant  support for  the Latin  American Film  Festival
            held in Huelva.

            [PAGE]  13



1997  /  SELECTED FINANCIAL AND        FREEPORT-McMoRan COPPER & GOLD INC.
         OPERATING DATA


                   1997        1996       1995       1994         1993
                ----------  ---------- ----------- ----------  ----------
                  (Financial Data In Thousands, Except Per Share Amounts)
                                                 
FCX FINANCIAL DATA
Years Ended December 31:
Revenues        $2,000,904  $1,905,036  $1,834,335 $1,212,284  $  925,932
Operating income   664,215     638,261b    596,432c   280,134d    155,319e
Net income
applicable to
common stock       208,541a    174,680b    199,465c    78,403d     21,862e,f
Net income per
common share          1.06a        .90b        .98c       .38d        .11e,f
Dividends paid
per common share       .90         .90        .675        .60         .60
Average
common shares
outstanding        196,392     194,910     203,536    205,755     197,929

At December 31:
  Property,
  plant and
  equipment, net 3,521,715   3,088,644   2,845,625  2,360,489   1,646,603
  Total assets   4,152,209   3,865,534   3,581,746  3,040,197   2,116,653
  Long-term debt,
  including current
  portion and
  short-term
  borrowings     2,388,982   1,562,916   1,167,232    549,710     260,659
  Mandatory
  redeemable
  preferred stock  500,007     500,007     500,007    500,007     232,620
  Stockholders'
  equity           278,892     675,379     881,674    994,975     947,927

PT-FI OPERATING DATA
Ore milled (metric
tons per day)      128,600     127,400     111,900     72,500      62,300
Copper grade
(percent)             1.37        1.35        1.32       1.51        1.57
Gold grade 
  Grams per
  metric ton          1.51        1.52        1.39       1.31        1.46
  Ounce per
  metric ton          .049        .049        .045       .042        .047
Silver grade 
  Grams per
  metric ton          3.11        3.10        3.17       3.02        4.02
  Ounce per
  metric ton          .100        .100        .102       .097        .129
Recovery rates (percent)
  Copper              85.4        83.8        85.0       83.7        87.0
  Gold                81.4        77.1        74.3       72.8        76.2
  Silver              65.6        64.6        63.2       64.7        67.2
Copper 
  Production
  (000s of
  recoverable
  pounds)        1,166,500   1,118,800     978,000    710,300     658,400
  Sales
  000s of
  recoverable
  pounds)        1,188,600   1,097,000     985,100    700,800     645,700
  Average
  realized
  price g             $.94       $1.02       $1.22      $1.02        $.90
Gold
  Production
  (recoverable
  ounces)        1,798,300   1,695,200   1,310,400    784,000     786,700
  Sales
  (recoverable
  ounces)        1,888,100   1,698,900   1,353,400    794,700     762,900
  Average
  realized
  price           $ 346.14h    $390.96h    $383.73h   $381.13     $361.74
Silver 
  Production
  (recoverable
  ounces)        2,568,700   2,360,600   2,303,000  1,305,400   1,541,200
  Sales
  (recoverable
  ounces)        2,724,300   2,532,000   2,349,400  1,335,400   1,480,900
  Average
  realized
  price              $4.68       $4.95       $4.99      $5.08       $4.15

  ATLANTIC COPPER OPERATING DATA (since acquisition)
  Concentrate
  treated
  (metric tons)    929,700     804,500     434,400i   485,300     330,200
  Anodes (000s of pounds)
  Production       639,800     547,900     296,000    347,500     299,300
  Sales            133,500      77,300      44,600     38,300       3,300
  Cathodes (000s of pounds)
  Production       505,600     462,900     258,200    312,100     227,300
  Sales
  (including
  wire rod)        505,300     461,100     280,200    309,400     294,800
  Cathode cash
  production cost
  per pound           $.12        $.15        $.18       $.17        $.18



a.   Includes a $25.3 million gain ($12.3 million to net income or
     $0.06 per share) for the reversal of stock appreciation rights
     costs caused by the decline in FCX's common stock price in
     1997.

b.   Includes charges totaling $17.4 million ($8.0 million to net
     income or $0.04 per share) consisting of $12.7 million for
     costs of stock appreciation rights caused by the increase in
     FCX's common stock price in 1996, $3.0 million for costs
     related to a civil disturbance and $1.7 million for an early
     retirement program.

c.   Includes charges totaling $49.6 million ($26.9 million to net
     income or $0.13 per share) consisting of $29.8 million for
     costs of stock appreciation rights caused by the increase in
     FCX's common stock price in 1995, $12.5 million for a materials
     and supplies inventory reserve adjustment in connection with
     the completion of PT-FI's 118,000 metric tons per day expansion
     program and $7.3 million for an early retirement program.

d.   Includes a $32.6 million insurance settlement gain ($17.4
     million to net income or $0.08 per share).

e.   Includes charges totaling $37.1 million ($20.5 million to net
     income or $0.10 per share) for restructuring and other related
     costs.

f.   Includes a $9.9 million cumulative charge ($0.05 per share) for
     changes in accounting principle.

g.   Amounts were $0.90 in 1997, $0.97 in 1996, $1.28 in 1995, $1.15
     in 1994 and $0.82 in 1993 before hedging adjustments.

h.   Amounts were $326.08 in 1997, $382.62 in 1996 and $380.85 in
     1995  before hedging adjustments.

i.   Reflects shutdowns caused by a strike at an adjacent plant,
     expansion equipment tie-ins and normal maintenance turnarounds.

[PAGE]  14


               
1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

OVERVIEW

To enhance understanding of Freeport-McMoRan Copper & Gold Inc.'s
(FCX) financial results, the components of Management's Discussion
and Analysis are presented adjacent to the pertinent financial data.
Accordingly, in addition to the discussion that begins on this page
and continues through page 22, further analyses of consolidated
results of operations can be found on page 25, cash flows and
liquidity on page 27, and capital resources and financial condition
on page 29, as well as the Environmental & Social Responsibility
Report on pages 8 through 13. The results of operations reported and
summarized throughout are not necessarily indicative of future
operating results.

FCX operates through its majority-owned subsidiaries, P.T. Freeport
Indonesia Company (PT-FI) and P.T. IRJA Eastern Minerals Corporation
(Eastern Mining), and through Atlantic Copper, S.A. (Atlantic), a
wholly owned subsidiary.  PT-FI's operations involve mineral
exploration and development, mining and milling of ore containing
copper, gold and silver in Irian Jaya, Indonesia and the worldwide
marketing of concentrates containing those metals.  PT-FI also has a
25 percent interest in P.T. Smelting Co. (PT Smelting), an
Indonesian company formed to construct and operate a copper smelter
and refinery in Gresik, Indonesia.  Eastern Mining conducts mineral
exploration activities in Irian Jaya.  Atlantic is engaged in the
smelting and refining of copper concentrates in Spain and marketing
refined copper products.

In 1996, FCX and Rio Tinto plc (Rio Tinto) established exploration
and expansion joint ventures. Pursuant to the exploration joint
ventures, Rio Tinto has a 40 percent interest in future development
projects under PT-FI's Contract of Work (COW) and  Eastern Mining's
COW. Rio Tinto also has a 40 percent interest in certain assets and
future production exceeding specified annual amounts of copper, gold
and silver through 2021.

The FCX/Rio Tinto exploration joint ventures are continuing their
exploration activities within the original 24,700 acre PT-FI Block A
area, the adjacent approximate 3.25 million acre PT-FI Block B area
and the approximate 1.8 million acre Eastern Mining area. As
required by the applicable COW, PT-FI has relinquished its rights to
approximately 3.25 million acres in Block B and is required to make
one final relinquishment of approximately 1.6 million acres no later
than December 1998. Eastern Mining has relinquished an approximate
0.7 million acre area and must relinquish an additional
approximately 1.2 million acres in two equal installments no later
than August 1998 and August 2001.  For a discussion of exploration
cost sharing arrangements with Rio Tinto, see "Exploration Expenses"
on page 25.

FCX and Rio Tinto are expected to complete construction on the "fourth
concentrator mill expansion" of PT-FI's facilities during the first 
half of 1998.  The expanded mill facilities provide FCX an opportunity
to increase throughput beyond 200,000 metric tons of ore per day (MTPD)
and improve profitability by optimizing the ore available from PT-FI's 
mines.  See Note 2 of the Notes to Financial Statements for a discussion of 
the joint venture arrangements. In December 1997, PT-FI received approval 
from the Indonesian authorities to expand its milling rate up to a maximum of 
300,000 MTPD.  FCX and Rio Tinto have initiated pre-feasibility studies 
to consider further expansion of the mining and milling facilities beyond
the current fourth concentrator mill expansion.

In December 1997, FCX signed a letter of intent to acquire an ownership
interest in P.T. Iriana Mutiara Mining (Iriana).  Iriana holds a COW area
covering approximately 1.2 million acres in central Irian Jaya, in part 
contiguous to Eastern Mining's COW area.  The transaction is subject to
execution of definitive documentation pursuant to which FCX would become
operator of the Iriana COW area.  As operator, FCX would be required to 
spend at least $0.5 million on exploration in 1998.  If FCX elects to 
continue participation beyond June 30, 1999, it would acquire a 90 percent 
ownership interest and would fund all exploration cost up to and including 
a feasibility study.  FCX would also be responsible for arranging 
construction financing for Iriana for any economically feasible projects
in the Iriana COW area.  Pursuant to the joint venture arrangements with
Rio Tinto, Rio Tinto has the option to participate with respect to 40 percent
of FCX's interest in this 1.2 million acre COW area.

During 1997, additions and revisions to the aggregate proved and
probable reserves of the Grasberg and other Block A ore bodies
totaled approximately 204.8 million metric tons of ore representing
5.0 billion recoverable pounds of copper, 9.2 million recoverable
ounces of gold and 22.3 million recoverable ounces of silver.
December 31, 1997 aggregate proved and probable recoverable
reserves, net of 1997 production, totaled  2.17 billion metric tons
of ore averaging 1.20 percent copper, 1.20 grams of gold per metric
ton and 3.95 grams of silver per metric ton representing 47.1 billion 

[PAGE]  15

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

pounds of copper, 62.7 million ounces of gold and 138.4
million ounces of silver.  Pursuant to joint venture arrangements,
Rio Tinto has a 40 percent interest in future production exceeding
specified annual amounts of copper, gold and silver through 2021
calculated by reference to PT-FI's proved and probable reserves as
of December 31, 1994.  Rio Tinto's 40 percent share of joint venture
proved and probable reserves as of December 31, 1997 was
approximately 9.3 billion pounds of copper, 11.4 million ounces of
gold and 27.1 million ounces of silver.  Net of Rio Tinto's share,
additions and revisions to PT-FI's proved and probable copper, gold
and silver reserves represent 2.6 times 1997 copper production, over
3 times 1997 gold production and over 5 times 1997 silver
production.  Net of Rio Tinto's share, PT-FI's share of proved and
probable recoverable copper, gold and silver reserves was 37.8
billion pounds of copper, 51.3 million ounces of gold and 111.3
million ounces of silver as of December 31, 1997 (Note 14).
Estimated recoverable reserves were assessed using a copper price of
$0.90 per pound and a gold price of $325 per ounce.  Using prices of
$0.75 per pound of copper and $280 per ounce of gold would reduce
estimated recoverable reserves by approximately 12 percent for
copper, 9 percent for gold and 15 percent for silver.

RESULTS OF OPERATIONS

FCX has two operating segments:  "mining and exploration" and
"smelting and refining."  The mining and exploration segment
includes PT-FI's copper and gold mining operations in Indonesia and
the Indonesian exploration activities of both PT-FI and Eastern
Mining.  The smelting and refining segment includes Atlantic's
operations in Spain and PT-FI's equity investment in PT Smelting.
Summary operating results by segment follow (in millions):



                                                 Years Ended December 31,
                                          ----------------------------------
                                             1997          1996       1995
                                          ----------    ----------  --------
                                                             
Mining and exploration                    $    630.8    $    648.0    $675.7
Smelting and refining                           30.6           6.4     (24.1)
Intercompany eliminations and other  a           2.8         (16.1)    (55.2)
                                          ----------    ----------  --------
  Operating income                        $    664.2    $    638.3    $596.4
                                          ==========    ==========  ========



a.   Profit on PT-FI sales to Atlantic is not reflected in FCX's
     consolidated results until completion of the smelting and 
     refining process.  The eliminations totaled $19.0 million
     in 1997, $2.7 million in 1996 and $(40.4) million in 1995.
     The increased level of PT-FI concentrate sales to Atlantic 
     at the end of 1995 to support the expanded smelter capacity
     resulted in significant intercompany eliminations.

MINING AND EXPLORATION

A summary of increases (decreases) in PT-FI revenues follows (in
millions):



                                             1997          1996
                                          ----------    ----------
                                                  
  Sales volumes:
    Copper                                $     93.4    $    136.7
    Gold                                        74.0         132.6
  Price realizations:
    Copper                                     (88.8)       (222.7)
    Gold                                       (84.6)         12.3
  Adjustments to prior year open sales          59.0          (4.7)
  Treatment charges, royalties and other       (33.5)        (46.3)
                                          ----------    ----------
  Net increase in revenues
   over prior year                        $     19.5    $      7.9
                                          ==========    ==========


[PAGE]  16

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

PT-FI Operating Results - 1997 Compared with 1996.  PT-FI's
1997 revenues were slightly higher than 1996 revenues as record
sales volumes were substantially offset by a decline in price
realizations. Copper sales volumes rose 8 percent and gold sales
volumes rose 11 percent primarily as a result of improvements in
recovery rates (see Selected Financial and Operating Data).  Average
copper realizations declined 8 percent from $1.02 per pound in 1996
to $0.94 per pound in 1997.  PT-FI's revenues include net additions
totaling $42.6 million in 1997 and $38.2 million in 1996 recognized
under PT-FI's copper price protection program. Average 1997 gold
realizations declined 11 percent or nearly $45 per ounce compared to
1996. PT-FI's revenues also include additions totaling $37.6 million
in 1997 and $14.1 million in 1996 recognized on gold forward sales
contracts.  Adjustments to prior year open sales totaled $54.9
million in 1997 compared with $(4.1) million in 1996.  Treatment
charges increased in 1997 because of higher sales volumes and
tighter market conditions. Royalties and a portion of treatment
charges vary with the price of copper.



PT-FI Gross Profit Per Pound of Copper(cents)
                                               Years Ended December 31,
                                          ---------------------------------
                                             1997          1996      1995
                                          ----------    ---------- --------
                                                                    
Average realized price a                        94.4         101.9    122.2
                                          ----------    ---------- --------
Production costs:
  Site production and delivery                  50.6          52.4     54.0b
  Gold and silver credits                      (55.5)        (61.3)   (53.8)
  Treatment charges                             24.4          22.9     19.6
  Royalty on metals                              2.6           2.8      4.3
                                          ----------    ---------- --------
    Cash production costs                       22.1          16.8     24.1
  Depreciation and amortization                 15.0          13.0     10.4
                                          ----------    ---------- --------
    Total production costs                      37.1          29.8     34.5
                                          ----------    ---------- --------
Revenue adjustments c                            3.7          (2.0)    (2.1)
                                          ----------    ---------- --------
                                                61.0          70.1     85.6
                                          ==========    ========== ========


a.   Amounts were $0.90 in 1997, $0.97 in 1996 and $1.28 in 1995
     before hedging adjustments.

b.   Excludes an inventory reserve adjustment of $12.5 million (1.3
     cents per pound).

c.   Reflects adjustments for prior year concentrate sales and
     amortization of the price protection program cost.

Average cash production costs in 1997 of 22.1 cents per pound
of copper were higher than the comparable 1996 average primarily
because of lower gold credits.  Lower gold realizations offset
record gold sales and reduced unit gold credits by 9 percent.  Site
production and delivery costs per pound declined primarily because
of lower labor costs offset by higher treatment charges that
reflected tightened smelter capacity. Treatment charge rates for a
significant portion of PT-FI's 1998 projected sales were negotiated
in the fourth quarter of 1997 based on then current market
conditions.  As a result of a continued tight smelter market,
treatment charges are expected to increase slightly in 1998.  PT-
FI's copper royalty rate varies from 1.5 percent, at a copper price
of $0.90 or less, to 3.5 percent, at a copper price over $1.10, on
the value of copper sold (after delivery costs, treatment charges
and other selling costs); the gold and silver royalty rate is 1.0
percent.  PT-FI has agreed with the Government of Indonesia (GOI)
that on metal production from mill throughput in excess of 200,000
MTPD it will pay a second royalty.

PT-FI's 1997 depreciation rate of 15.0 cents per pound of
copper reflects an increase over the 1996 rate because of the first
phase of the enhanced infrastructure program (EIP) and other 1997
capital additions.  The EIP is designed to provide the
infrastructure needed for PT-FI's growing operations and expected
future growth, to enhance the living conditions of PT-FI's
employees, and to develop and promote the growth of local and third
party activities and enterprises in Irian Jaya.  The first phase of
the EIP was completed in 1996; therefore, the 1996 rate of 13.0
cents per pound did not include the EIP for a full year.  The 1998
depreciation rate is expected to increase to 17.0 cents per pound of
copper to reflect a half year of depreciation on the fourth
concentrator mill expansion and other capital additions.

[PAGE]  17

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

PT-FI Outlook.  PT-FI's copper concentrates are sold primarily
under dollar-denominated long-term sales agreements, mostly to
companies in Asia and Europe.  PT-FI has commitments from various
parties, including Atlantic,  to purchase virtually all of its
estimated 1998 production at market prices. With PT-FI's fourth
concentrator mill expansion set to begin operations during the first
half of 1998, PT-FI's share of sales for 1998 is expected to
approximate 1.4 billion pounds of copper and 2.2 million ounces of
gold.  Strong 1998 copper and gold sales reflect the expectation of
producing at higher mill throughput rates than in 1997 because of
the fourth concentrator mill expansion, partially offset by lower
average grades than during 1997. PT-FI has a long-term contract to
provide Atlantic with approximately 60 percent of its copper
concentrate requirements at market prices.

Exploration.  FCX continues an aggressive exploration program in
Irian Jaya, in the Block A, Block B, and Eastern Mining blocks.  In
Block A, delineation drilling is currently under way in seven
underground drill stations at Kucing Liar.  In addition, two surface
drills are working to test deep Kucing Liar-type targets on the west
and northeast flanks of the Grasberg intrusive complex.  Delineation
drilling at the Grasberg and DOZ ore bodies is scheduled to continue
throughout 1998.  In Block B, drilling and trenching continues at
the Wabu Ridge Gold Project.  A pre-feasibility study is ongoing
with all aspects of a potential commercial operation being studied.
Elsewhere in Block B, condemnation work, geology and drilling
continues in anticipation of the final land relinquishment.  In the
Eastern Mining COW areas, geologic mapping and sampling have
identified several new targets which will be scheduled for drilling
during early 1998.

PT-FI Operating Results - 1996 Compared with 1995. PT-FI's 1996
revenues were slightly higher than 1995 revenues as higher sales
volumes were substantially offset by a decline in copper
realizations. Copper sales volumes rose 11 percent and gold sales
volumes rose 26 percent as a result of a 14 percent increase in
average mill throughput and improvements in copper and gold ore
grades and gold recovery rates.  Copper realizations declined from
$1.22 per pound in 1995 to $1.02 per pound in 1996.  PT-FI's 1996
revenues include net additions totaling $38.2 million recognized
under PT-FI's copper price protection program, compared with net
reductions totaling $68.6 million in 1995. Average 1996 gold
realizations were slightly higher compared to 1995. PT-FI's revenues
also include additions totaling $14.1 million in 1996 and $3.9
million in 1995 recognized on gold forward sales contracts.
Treatment charges increased in 1996 because of the increased sales
volumes coupled with higher negotiated rates because of tighter
market conditions. Despite higher sales volumes, royalties were
lower because of lower copper prices.

Average cash production costs in 1996 of 16.8 cents per pound
of copper were 30 percent lower than the comparable 1995 average.
Higher gold sales and realizations resulted in improved gold
credits. Higher treatment charges reflect tightening smelter
capacity.  PT-FI's 1996 depreciation rate of 13.0 cents per pound of
copper reflects depreciation for the expanded operations and a half
year of depreciation for the first phase of the EIP.  The 1995 rate
did not include the EIP costs.

SMELTING AND REFINING

Atlantic Operating Results - 1997 Compared with 1996.  Atlantic
reported higher revenues ($874.5 million compared to $778.1 million
in 1996) and cost of sales ($831.2 million compared to $759.4
million in 1996) because of increases in production from its newly
expanded facilities.  Atlantic reached its full production capacity
of 270,000 metric tons of metal per year in June 1996 and completed
a $13.0 million "debottlenecking" project in June 1997 which
increased annual production capacity by 20,000 metric tons.
Atlantic also benefited from higher treatment and refining rates in
1997 ($0.26 per pound compared with $0.23 per pound in 1996).
Cathode cash production costs ($0.12 per pound) in 1997 were 20
percent lower than in 1996. Higher treatment charges, which
negatively affect PT-FI, benefit Atlantic. The effect of an
equivalent change in treatment charges on PT-FI and Atlantic largely
offset in FCX's consolidated financial results, after taking into
account income taxes and minority interests.

PT Smelting Operating Results - 1997.   PT-FI accounts for its 25
percent interest in PT Smelting under the equity method (Note 10).
Construction of PT Smelting's smelting and refining facilities in
Gresik, Indonesia is expected to be completed in mid-1998 and first
production is expected in the fourth quarter of 1998.  PT-FI's share
of PT Smelting's 1997 operating loss totaled $1.5 million,
consisting of administrative costs.

[PAGE]  18

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

Atlantic Operating Results - 1996 Compared with 1995.  Atlantic
completed the expansion of its smelter from 150,000 to 270,000
metric tons of metal per year and reached full production capacity
in June 1996. For 1996, Atlantic reported higher revenues ($778.1
million compared to $541.3 million in 1995) and cost of sales
($759.4 million compared to $546.5 million in 1995) primarily
because of increases in production.  Shutdowns in 1995 caused by a
strike at an adjacent plant, expansion equipment tie-ins and normal
maintenance turnarounds impacted results adversely. Atlantic also
benefited from lower cathode cash production costs, $0.15 per pound
in 1996 compared with $0.18 per pound in 1995.

DISCLOSURES ABOUT MARKET RISKS

Commodity Price Risk.  FCX's revenues are derived primarily
from PT-FI's sale of copper concentrates, which also contain
significant amounts of gold, and the sale of copper cathodes and
wire rod by Atlantic.  FCX's net income can vary significantly with
fluctuations in the market prices of copper and gold.  At various
times, in response to market conditions, FCX has entered into copper
and gold price protection contracts for some portion of its expected
future mine production to mitigate the risk of adverse price
fluctuations.  Based on PT-FI's projected 1998 sales volumes, each
$0.01 per pound change in the average price realized on copper sales
would have an approximate $14 million impact on revenues and an
approximate $7 million impact on net income.  Each $10 per ounce
change in the average price realized on PT-FI annual gold sales
would have an approximate $22 million impact on revenues and an
approximate $11 million impact on net income.

     The significant decline in gold prices in early 1997 increased
the value of PT-FI's forward gold sales contracts covering 876,000
ounces of gold sales at an average price of $376.08 per ounce from
February 1997 through August 1997.  In February 1997, PT-FI closed
these contracts and received $30.1 million cash.  As a result, PT-FI
reported gold revenues through August 1997 at a higher price than
realized under its contract terms with customers, but no longer has
any forward gold sales positions.  PT-FI has suspended its program
of selling gold forward on a six-month basis but may reinstate the
program in the future.  Future gold sales will be priced at then
current market prices as long as the forward sales program is
suspended.

     The  significant decline in copper prices during 1996 increased
the value of put option contracts that PT-FI purchased under its
price protection program to provide a floor price of $0.90 per pound
for essentially all copper sales through the second quarter of 1997
at an average cost of approximately $0.02 per pound.  During the
third quarter of 1996, PT-FI sold all of its put option contracts
covering approximately 1.2 billion pounds of copper for $97.2
million cash.  As a result,  PT-FI reported copper revenues through
June 30, 1997 at a higher price than realized under its copper
concentrate sales contracts, but PT-FI no longer has any price
protection on its copper sales.   As conditions warrant, PT-FI may
enter into new contracts for its future copper sales.

     PT-FI's concentrate sales agreements, with regard to copper,
provide for provisional billings when shipped with final settlement
generally based on the average London Metal Exchange (LME) price for
a specified future month.  Copper revenues on provisionally priced
open pounds are adjusted monthly based on then current prices.  At
December 31, 1997, FCX had consolidated copper sales totaling 323.3
million pounds recorded at an average price of $0.74 per pound
remaining to be finally priced. Approximately 70 percent of these
open pounds are expected to be finally priced during the first
quarter of 1998 with the remaining pounds to be priced during the
second quarter of 1998.  A one cent movement in the average price
used for these open pounds will have an approximate $1.6 million
impact on FCX's 1998 net income.

[PAGE]  19

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

FCX has redeemable preferred stock indexed to gold and silver
prices which hedge future production and are carried at their
original issue value.  As redemption payments occur, differences
between the carrying value and the redemption payment will be
recorded as an adjustment to revenues.  Future mandatory redemption
payments in ounces and equivalent value in dollars based on December
31, 1997 gold and silver prices follow (dollars in millions):



                Gold                   Silver
               (Ozs.)      Amount      (Ozs.)       Amount
             ----------  ----------  ----------   ---------- 
                                          
1998               -          $-        -              $-
1999               -          -      2,380,000          14.3
2000               -          -      2,380,000          14.3
2001               -          -      2,380,000          14.3
2002               -          -      2,380,000          14.3
Thereafter    1,030,000       297.9  9,520,000          57.1

At December 31, 1997:
  Fair value                 $242.0                    $92.2
                         ==========               ==========
  Carrying value             $400.0                   $100.0
                         ==========               ==========

    
Atlantic's purchases of copper concentrate are priced at
approximately the same time as its sales of the refined copper,
thereby protecting Atlantic from most copper price risk.  Atlantic
enters into futures contracts to hedge its price risk whenever its
physical purchases and sales pricing periods do not match. At
December 31, 1997, Atlantic had contracts, with a fair value of less
than $0.1 million, to sell 2.0 million pounds of copper at an
average price of $0.80 per pound in January 1998 and contracts, with
a fair value of $(1.5) million,  to purchase 20.3 million pounds of
copper at an average price of $0.87 per pound through December 1999.

Foreign Currency Exchange Risk.  FCX conducts the majority of its
operations in Indonesia and Spain where its functional currencies
are U.S. dollars.  All of FCX's revenues are denominated in U.S.
dollars; however, some costs are denominated in either Indonesian
rupiah or Spanish pesetas.  FCX's results are positively affected
when the U.S. dollar strengthens against these foreign currencies
and adversely affected when the U.S. dollar weakens against these
foreign currencies.

Over the past several years, and more dramatically in the
second half of 1997, the Indonesian rupiah has weakened against the
U.S. dollar and PT-FI has benefited primarily through lower labor
costs. PT-FI previously has not entered into financial contracts for
the rupiah; however, it is currently reviewing its rupiah hedging
policy in view of current circumstances.

Assuming estimated 1998 rupiah payments of 500 billion and an
exchange rate of 7,500 rupiah to one U.S. dollar, each one thousand
rupiah change in the exchange rate could result in an approximate
$4.5 million change in FCX's annual net income.  PT-FI had net
rupiah-denominated monetary assets at December 31,1997 totaling
$14.2 million recorded at an exchange rate of 7,450 rupiah to one
U.S. dollar. Adjustments to these net assets to reflect changes in
the exchange rate are recorded as currency transaction gains or
(losses) in production costs and totaled $(6.3) million in 1997.

A portion of Atlantic's operating costs and certain Atlantic
assets and liabilities are denominated in Spanish pesetas.  Based on
estimated 1998 pesetas payments of 15 billion and an exchange rate
of 150.7 pesetas to one U.S. dollar, each ten peseta change in the
U.S. dollar and Spanish peseta exchange rate results in an
approximate $6 million change in FCX's annual net income before any
hedging effects. Atlantic had net peseta-denominated monetary
liabilities at December 31, 1997 totaling $70.3 million recorded at
an exchange rate of 150.7 pesetas to one U.S. dollar.  Adjustments
to these net liabilities to reflect changes in the exchange rate are
recorded as currency transaction gains or (losses) in Other Income
and totaled $16.6 million in 1997 and $10.3 million in 1996.

[PAGE]  20

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

During 1996, Atlantic implemented a currency hedging program to
reduce its exposure to changes in the U.S. dollar and Spanish peseta
exchange rate that involves foreign exchange option and forward
contracts.  These contracts currently hedge approximately 80 percent
of Atlantic's projected net peseta cash outflows through January
1999 (Note 11).  In addition to the currency transaction gains noted
above, Atlantic recorded losses to Other Income related to its
forward currency contracts, which under current accounting do not
qualify for hedge accounting, totaling $6.5 million in 1997 and $1.0
million in 1996.

At December 31, 1997, Atlantic had contracts, with a fair value
of $(2.0) million, to purchase 6.3 billion Spanish pesetas at an
average exchange rate of 143.8 pesetas to one U.S. dollar through
January 1999 and option contracts, with a fair value of $0.5
million,  to purchase 6.3 billion Spanish pesetas at an average
strike price of 140.6 pesetas to one U.S. dollar through January
1999.

Interest Rate Risk.  FCX has interest rate swap contracts to fix 
interest rates on a portion of its floating rate debt.  The costs 
associated with these contracts are amortized to interest expense over 
the terms of the agreements.  The table below presents future maturities of
principal (or notional amount) for outstanding debt and interest swaps 
at December 31, 1997 and fair value at December 31, 1997 (dollars in
millions):



                   1998    1999    2000     2001   2002  Thereafter Fair Value
                  -----   ------  ------   ------ ------ ---------- ---------
                                                     
Long-term debt (Note 8):
  Fixed rate       $7.0     $7.0    $7.0   $148.0    $-      $450.0    $632.9
  Average interest 
   rate             8.1%     8.1%    8.1%     9.4%    -%        7.3%      7.9%
  Variable rate   $73.9    $69.1  $104.3    $74.0  $380.0  $1,068.2  $1,770.0
  Average interest 
   rate             7.8%     9.6%    8.9%     9.0%    8.3%      9.1%      8.9%
Interest rate swaps (Note 11):
  Amount          $32.1    $32.1   $97.8      $-     $-        $-       $(1.2)
  Average interest 
   rate             7.0%     7.0%    6.1%      -%     -%        -%        6.4%



RECENT DEVELOPMENTS IN INDONESIA

Recently, unfavorable economic developments have negatively impacted
Southeast Asia in general and Indonesia in particular. Indonesia's
national debt ratings have been downgraded, the Indonesian rupiah
has devalued significantly and the Indonesian economic growth rate
and stock market values have declined. The International Monetary
Fund and certain countries are making loans and other commitments to
Indonesia, as well as certain other Asian nations, to stabilize
their currencies' values and their ability to service debt. In
return, changes in these countries' financial and regulatory
practices are being required. Repercussions of these and other
economic developments have also negatively affected commodity
markets, including copper and gold prices, because of anticipated
declines in Asian demand.

PT-FI and Eastern Mining believe there are a number of factors which
mitigate the above concerns related to their operations, all of
which are in Indonesia. PT-FI's and Eastern Mining's operations are
conducted through the PT-FI and Eastern Mining COWs, both of which
have 30-year terms, provide for two 10-year extensions under certain
conditions, and govern PT-FI's and Eastern Mining's rights and
obligations relating to taxes, exchange controls, repatriation and
other matters. Both COWs were concluded pursuant to the 1967 Foreign
Capital Investment Law, which expresses Indonesia's foreign
investment policy and provides basic guarantees of remittance rights
and protection against nationalization, a framework for economic
incentives and basic rules regarding other rights and obligations of
foreign investors. Specifically, the COWs provide that the GOI will
not nationalize or expropriate PT-FI's or Eastern Mining's mining
operations.  Any disputes under the COWs are subject to
international arbitration.

[PAGE]  21

1997 / MANAGEMENT'S DISCUSSION     FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

The Company has had positive relations with the GOI since it
commenced business activities in Indonesia in 1967 and contributes
significantly to the economy of Irian Jaya and Indonesia.   PT-FI is
one of the largest taxpayers in Indonesia and is a significant
employer in a remote and undeveloped area of the country.  PT-FI
intends to continue to maintain positive working relationships with
the central, provincial and local branches of the GOI regarding its
operations and development efforts.

All PT-FI sales revenues and all debt and debt service are
denominated in U.S. dollars; whereas, a portion of PT-FI's
expenditures are paid in rupiah.  As a result, the decline in the
value of the rupiah has benefited current operating results by
reducing certain operating costs in terms of U.S. dollars.

OTHER MATTERS

In March 1997, P.T. Nusamba Mineral Industri (NMI), a subsidiary of
P.T. Nusantara Ampera Bakti, acquired from a third party
approximately 51 percent of the capital stock of P.T. Indocopper
Investama Corporation (PT-II).  FCX owns the remaining 49 percent of
PT-II, which is a 9.4 percent owner of PT-FI. NMI financed $254.0
million of the $315.0 million purchase price with a variable rate
commercial loan maturing in March 2002.  The purchase price was
based in part on FCX's market value using its publicly traded common
stock price at the time of the transaction.  FCX has agreed that if
NMI defaults on the loan, FCX will purchase the PT-II stock or the
lenders' interest in the commercial loan for the amount then due by
NMI under the loan.  FCX also agreed to lend to NMI any shortfalls
between the interest payments due on the commercial loan and the
dividends received by NMI from PT-II.  At December 31, 1997, $7.6
million was due in March 2002 from NMI because of interest payment
shortfalls.  The amount of any future shortfalls will depend
primarily on the level of PT-FI's dividends to PT-II.

FCX believes that PT-FI's operations are being conducted
pursuant to applicable permits and are in compliance in all
material respects with applicable Indonesian environmental
laws, rules and regulations. In 1996, PT-FI began contributing
to a fund designed to accumulate at least $100 million by the
end of its Indonesian mine's life for eventual mine closure and
reclamation.  Although the ultimate amount of reclamation and
closure costs to be incurred is currently indeterminable, based
on recent analyses PT-FI estimates that ultimate reclamation
and closure costs may require as much as $100 million but would
not exceed $150 million.  These costs will be incurred
throughout the remaining life of the mine, which is currently
estimated to exceed 30 years.  FCX had $5.5 million accrued on
a unit-of-production basis at December 31, 1997 for mine
closure and reclamation costs, included in other liabilities.
An increasing emphasis on environmental issues and future
changes in regulations could require FCX to incur additional
costs which would be charged against future operations.
Estimates involving environmental matters are by their nature
imprecise and  can be expected to be revised over time because
of changes in government regulations, operations, technology
and inflation.  See FCX's Environmental Report beginning on
page 8 for information about FCX's environmental programs.

Since early 1996, PT-FI has participated in an independent
social/cultural audit of its Irian Jaya operations under a voluntary
program monitored by the GOI.  The audit was conducted by LABAT-
Anderson, an internationally recognized consulting firm, and their
final report was made public in August 1997.  All of the
recommendations in LABAT-Anderson's report have been agreed to by
PT-FI and are in the process of being implemented.  See FCX's Social
Responsibility Report beginning on page 10 for information about
FCX's social programs.

FCX has assessed its year 2000 information systems cost issues
and believes that its current plans for system upgrades will
adequately address these issues internally at no material cost.

CAUTIONARY STATEMENT

Management's discussion and analysis contains forward-looking
statements regarding market risks, mineral reserves, treatment
charge rates, depreciation rates, copper and gold grades and sales
volumes, exploration activities, capital expenditures, expansion
costs, Gresik smelter costs, the availability of financing, future
environmental costs and relations with the indigenous population of
Irian Jaya. Important factors that might cause future results to
differ from these projections are described in more detail in FCX's
Form 10-K for the year ended December 31, 1997 filed with the
Securities and Exchange Commission.

                          ________________________

[PAGE]  22

1997                                  FREEPORT-McMoRan COPPER & GOLD INC.

REPORT OF MANAGEMENT

Freeport-McMoRan Copper & Gold Inc. (the Company) is
responsible for the preparation of the financial statements and all
other information contained in this Annual Report.  The financial
statements have been prepared in conformity with generally accepted
accounting principles and include amounts that are based on
management's informed judgments and estimates.

The Company maintains a system of internal accounting controls
designed to provide reasonable assurance at reasonable costs that
assets are safeguarded against loss or unauthorized use, that
transactions are executed in accordance with management's
authorization and that transactions are recorded and summarized
properly.  The system is tested and evaluated on a regular basis by
the Company's internal auditors, Price Waterhouse LLP.  In
accordance with generally accepted auditing standards, the Company's
independent public accountants, Arthur Andersen LLP, have developed
an overall understanding of our accounting and financial controls
and have conducted other tests as they consider necessary to support
their opinion on the financial statements.

The Board of Directors, through its Audit Committee composed
solely of non-employee directors, is responsible for overseeing the
integrity and reliability of the Company's accounting and financial
reporting practices and the effectiveness of its system of internal
controls.  Arthur Andersen LLP and Price Waterhouse LLP meet
regularly with, and have access to, this committee, with and without
management present, to discuss the results of their audit work.

/s/ James R. Moffett                 /s/Richard C. Adkerson

James R. Moffett                        Richard C. Adkerson
Chairman of the Board and               President, Chief Operating Officer
Chief Executive Officer                 and Chief Financial Officer
             



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
FREEPORT-McMoRan COPPER & GOLD INC.:

We have audited the accompanying balance sheets of Freeport-
McMoRan Copper & Gold Inc. (the Company), a Delaware Corporation, as
of December 31, 1997 and 1996, and the related statements of income,
cash flow and stockholders' equity for each of the three years in
the period ended December 31, 1997.  These financial statements are
the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
the Company as of December 31, 1997 and 1996 and the results of its
operations and its cash flow for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted
accounting principles.

                                             Arthur Andersen LLP

New Orleans, Louisiana,
  January 20, 1998

[PAGE]  23


         
1997 / STATEMENTS OF INCOME           FREEPORT-McMoRan COPPER & GOLD INC.

                                   Years Ended December 31,
                          ------------------------------------------
                             1997          1996              1995
                          ----------      ----------      ----------
                           (In Thousands, Except Per Share Amounts)
                                                 
Revenues                  $2,000,904      $1,905,036      $1,834,335
Cost of sales:
Production and delivery    1,008,604         951,863         934,707
Depreciation and
amortization                 213,855         173,978         124,055
                          ----------      ----------      ----------
  Total cost of sales      1,222,459       1,125,841       1,058,762
Exploration expenses          17,629               -          13,888
General and administrative
expenses                      96,601         140,934         165,253
                          ----------      ----------      ----------
  Total costs and
  expenses                 1,336,689       1,266,775       1,237,903
                          ----------      ----------      ----------
Operating income             664,215         638,261         596,432
Interest expense, net       (151,720)       (117,291)        (50,080)
Other income (expense),
net                            4,271             976          (1,590)
                          ----------      ----------      ----------
Income before income
taxes and minority
interests                    516,766         521,946         544,762
Provision for income
taxes                       (231,315)       (247,168)       (234,044)
Minority interests in
net income of
consolidated subsidiaries    (40,343)        (48,529)        (57,100)
                          ----------      ----------      ----------
Net income                   245,108         226,249         253,618
Preferred dividends          (36,567)        (51,569)        (54,153)
                          ----------      ----------      ----------
Net income applicable
to common stock           $  208,541      $  174,680      $  199,465
                          ==========      ==========      ==========

Net income per share of common stock:

     Basic                     $1.06            $.90            $.98
                               =====            ====            ====
     Diluted                   $1.06            $.89            $.98
                              ======            ====            ====

Average common shares outstanding:

     Basic                   196,392         194,910         203,536
                             =======         =======         =======
     Diluted                 197,653         196,682         204,406
                             =======         =======         =======

Dividends paid per
common share                    $.90            $.90           $.675
                                ====            ====           =====


The accompanying Notes to Financial Statements are an integral part
of these financial statements.

[PAGE]  24
             
1997 / MANAGEMENT'S DISCUSSION      FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

CONSOLIDATED RESULTS OF OPERATIONS

Revenues.  Increased production from expansions resulted in higher
sales volumes in each of the past three years.  Lower copper and
gold realizations in 1997 compared with 1996 and lower copper
realizations in 1996 compared with 1995 have partially offset the
impact of higher sales volumes.

Cost of Sales.  Production and delivery costs have risen with the
corresponding increases in production volumes; however, cost
reduction efforts and efficiencies from the expansions partially
offset some of those increases.  Increases in depreciation and
amortization were caused by additions to property, plant and
equipment to support the expanded operating levels, and by increased
production as certain assets are depreciated on the unit-of-
production method.

Exploration Expenses.  The FCX/Rio Tinto joint ventures incurred
exploration costs of $44.6 million in 1997 and $39.2 million in 1996
as they continued to aggressively explore the COW areas.  During
1997, FCX reported $17.6 million of exploration expense primarily
for costs incurred in the Eastern Mining and PT-FI Block B areas.
Costs in these areas are now being shared 60 percent by FCX and 40
percent by Rio Tinto. All 1996 exploration costs and 1995
exploration costs after May 1995 were reimbursed by Rio Tinto's $100
million exploration funding received in 1996.  Approximately $11.4
million in PT-FI's Block A remains to be applied to the Rio Tinto
$100 million exploration funding. The FCX/Rio Tinto joint ventures'
1998 exploration budgets total approximately $40 million, most of
which will be shared 60 percent by FCX and 40 percent by Rio Tinto.

General and Administrative Expenses.  General and
administrative expenses declined 31 percent from 1996 to 1997
primarily because of the reversal of $25.3 million of costs of stock
appreciation rights caused by the decline in FCX's common stock
price during the fourth quarter of 1997. General and administrative
expenses for 1996 and 1995 include $13.2 million and $37.1 million,
respectively, for costs of stock appreciation rights when FCX's
stock price rose and early retirement charges.  As a percentage of
revenues, general and administrative expenses were 4.8 percent in
1997, 7.4 percent in 1996 and 9.0 percent in 1995.

Interest Expense, Net.  FCX's total interest cost (before
capitalization) rose to $174.7 million in 1997, compared to $140.3
million in 1996 and $99.9 million in 1995, because of an overall
increase in debt levels associated with the expansions and the FCX
share purchase programs.  Capitalized interest relating primarily to
the fourth concentrator mill expansion totaled $23.0 million in 1997
and capitalized interest related to the PT-FI and Atlantic
expansions and the first phase of the EIP in 1996 and 1995 totaled
$23.0 million and $49.8 million, respectively.  Interest expense is
expected to increase during 1998 because of higher debt levels and
reduced capitalized interest.  Additionally, in connection with
rating agency downgrades of Indonesia's national debt ratings, FCX's
credit ratings were also downgraded in early 1998.  As a result of
the downgrade, the spread on the FCX/PT-FI revolver borrowings
increased by 112.5 basis points.

Provision for Income Taxes.  FCX's effective tax rate was 45 percent
in 1997, 47 percent in 1996 and 43 percent in 1995 (Note 7).  PT-
FI's COW provides a 35 percent corporate income tax rate for PT-FI
and a 10 percent withholding on dividends paid to FCX by PT-FI and
on interest for debt incurred after the signing of the COW.  The
withholding rate declined from 15 percent to 10 percent beginning
February 1997 because of an amendment to the United States/Indonesia
tax treaty.  Included in the 1997 provision for income taxes is $9.6
million representing additional amounts payable pursuant to an
Indonesian Presidential Decree.  No income taxes are recorded at
Atlantic, which is subject to taxation in Spain, because it has not
generated taxable income in recent years.

The FCX United States federal income tax returns for the years
1990-1992 and PT-FI's 1994 Indonesian income tax return are
currently under examination.  In January 1998, PT-FI settled and
paid assessments from the Indonesian tax authorities for the years
1989-1993 with no material adverse effect on the financial condition
or results of operations of FCX.

Minority Interests and Preferred Dividends.  Minority interests in
net income of consolidated subsidiaries is primarily related to net
income levels at PT-FI.  Preferred dividends declined in 1997
primarily because in December 1996 FCX's Convertible Exchangeable
Preferred Stock was converted to FCX common stock or redeemed for
cash (Note 6).

[PAGE]  25


                
1997 / STATEMENTS OF CASH FLOW        FREEPORT-McMoRan COPPER & GOLD INC.

                                Years Ended December 31,
                          ------------------------------------------
                             1997            1996            1995
                          ----------      ----------      ----------
                                        (In Thousands)
                                                            
Cash flow from operating activities:
Net income                $  245,108      $  226,249      $  253,618
Adjustments to reconcile 
net income to net cash provided by
operating activities:
  Depreciation and
  amortization               213,855         173,978         124,055
  Deferred income taxes       61,717          54,194          22,735
  Deferral of unearned
  income                      30,102          97,173               -
  Recognition of unearned
   income                    (76,595)        (51,066)        (36,207)
  Minority interests'
  share of net income         40,343          48,529          57,100
  Deferred stock
  appreciation rights
  costs, mining costs
  and other                  (53,131)         (9,625)         35,492
  (Increase) decrease in working capital:
    Accounts receivable       80,611           6,860           2,095
    Inventories               51,957          (6,474)        (47,308)
    Prepaid expenses and
    other                         32           3,906          (4,593)
    Accounts payable and
    accrued liabilities       (8,963)         42,155         (86,747)
    Accrued income taxes     (71,484)         14,645          72,876
                          ----------      ----------      ----------
  (Increase) decrease in
  working capital             52,153          61,092         (63,677)
                          ----------      ----------      ----------
Net cash provided by
operating activities         513,552         600,524         393,116
                          ----------      ----------      ----------

Cash flow from investing activities:
Capital expenditures:
  PT-FI                     (530,191)       (401,538)       (435,475)
  Investment in
  PT Smelting                (36,243)        (38,845)         (4,101)
  Atlantic Copper            (18,478)        (51,855)       (141,742)
  Other                       (9,575)              -          (2,168)
  Investment in Freeport
  Copper Company                   -               -         (25,000)
  Other                        1,870           3,535          (9,656)
                          ----------      ----------      ----------
Net cash used in
investing activities        (592,617)       (488,703)       (618,142)
                          ----------      ----------      ----------

Cash flow from financing activities:
  Proceeds from sale of:
     7.50% Senior notes            -         197,525               -
     7.20% Senior notes            -         248,045               -
Borrowings from Rio Tinto    371,040          75,360               -
Proceeds from debt           831,927         241,640         617,535
Repayment of debt           (723,398)       (372,633)       (259,885)
Net proceeds from
infrastructure financing     265,843               -         242,775
Purchase of FCX common
shares                      (438,388)       (220,997)       (177,755)
Cash dividends paid:
  Common stock              (178,341)       (175,766)       (137,563)
  Preferred stock            (40,543)        (52,437)        (50,591)
  Minority interests         (33,773)        (44,045)        (38,897)
  Other                       (3,461)          1,722          12,038
                          ----------      ----------      ----------
Net cash provided by
(used in) financing
activities                    50,906        (101,586)        207,657
                          ----------      ----------      ----------
Net increase (decrease)
in cash and cash
equivalents                  (28,159)         10,235         (17,369)
Cash and cash equivalents
at beginning of year          37,118          26,883          44,252
                          ----------      ----------      ----------
Cash and cash equivalents
at end of year            $    8,959      $   37,118      $   26,883
                          ==========      ==========      ==========

Interest paid             $  155,658      $  142,170      $   91,291
                          ==========      ==========      ==========

Income taxes paid         $  259,434      $  178,328      $  138,433
                          ==========      ==========      ==========


The accompanying Notes to Financial Statements, which include
information in Notes 1 and 6 regarding noncash transactions, are an
integral part of these financial statements.

[PAGE]  26

                 
1997 / MANAGEMENT'S DISCUSSION        FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

CASH FLOWS AND LIQUIDITY

FCX's primary sources of cash are operating cash flows and
borrowings, while its primary cash outflows over the last three
years have been capital expenditures, dividends and purchases of its
common stock. PT-FI is on schedule  to complete construction of the
fourth concentrator mill expansion in the first half of 1998, a
project that is being funded almost entirely with nonrecourse
borrowings from Rio Tinto.  In December 1997, the FCX Board of
Directors announced a reduction in FCX's regular quarterly cash
dividend on its common stock to $0.05 per share, or $0.20 per share
annually, from the 1997 annual dividend of $0.90 per share. This
reduction reflects the impact of significantly lower copper and gold
prices and is effective for 1998. The reduced dividend and other
cost containment measures undertaken by FCX are expected to provide
FCX the financial flexibility to continue to invest in operations
and maintain its aggressive exploration program.

Operating Activities.  Operating cash flow declined 14 percent or
$87.0 million in 1997.  Record copper and gold sales volumes in 1997
were offset by lower realizations.  FCX received $97.2 million of
cash proceeds from the sale of copper put option contracts in 1996
and recognized $46.1 million in 1997 revenues and $51.1 million in
1996 revenues.  Working capital, excluding cash, decreased $52.2
million in 1997 primarily because decreases in accounts receivable
offset decreases in taxes payable.  The $61.1 million decrease in
1996 primarily relates to exploration advances from Rio Tinto and an
increase in accrued income taxes payable because of higher taxable
income.  Net cash provided by operating activities during 1996 rose
53 percent or $207.4 million over 1995, primarily reflecting the
proceeds from the sale of copper put option contracts and working
capital changes.

Investing Activities.  FCX's 1997 capital expenditures increased
compared to 1996 primarily because of PT-FI's fourth concentrator
mill expansion.  Atlantic completed its $225 million expansion to
270,000 metric tons per year in 1996 and its $13.0 million
debottlenecking project in June 1997.  Atlantic received grants from
the Spanish government of $7.5 million in 1997, $29.5 million in
1996 and a total of $52.8 million through December 31, 1997.  These
grants are recorded as a reduction of capital expenditures and are
contingent on Atlantic meeting specified conditions.

FCX's capital expenditures declined by $91.2 million in 1996
compared with 1995 primarily because of the completion of PT-FI's
118,000 MTPD expansion during 1995, the completion of Atlantic's
smelter expansion during 1996 and the completion of the first phase
of PT-FI's EIP during 1996. Partially offsetting the reduction in
PT-FI's other capital expenditures was an increase in expenditures
for the fourth concentrator mill expansion.  In 1995, FCX purchased
Freeport Copper Company from Freeport-McMoRan Inc., FCX's former
parent, for $25.0 million.

Financing Activities.  Nonrecourse borrowings from Rio Tinto totaled
$371.0 million in 1997 and $75.4 million in 1996.  In 1996, FCX sold
publicly its 7.50% and 7.20% Senior Notes for net proceeds of $445.6
million.  Net proceeds from debt totaled $108.5 million and net
proceeds from infrastructure financing totaled $265.8 million in
1997 while net repayments of debt totaled $131.0 million in 1996.
The net proceeds from infrastructure financing in 1997 included
$36.5 million from the sale of PT-FI's ownership interest in the
related joint ventures (see "Infrastructure Asset Sales" under
Capital Resources and Financial Condition).  The 1995 period
included $357.7 million of net proceeds from debt and $242.8 million
of proceeds from infrastructure financing.

In 1995, FCX announced an open market share purchase program
for up to 20 million shares of its Class A and Class B common shares
and in August 1997 FCX announced a new program for an additional 20
million shares.  During 1997, FCX acquired 18.3 million of its
shares for $439.8 million (an average of $24.07 per share).  From
inception through February 20, 1998, FCX has purchased a total of
33.5 million shares for $818.2 million (an average of $24.41 per
share) and approximately 6.5 million shares remain available under
FCX's 40 million open market share purchase programs.  The timing of
purchases is dependent upon many factors, including the price of
common shares, FCX's business and financial condition, and general
economic and market conditions. During 1996, FCX acquired 7.6
million of its shares for $221.6 million (an average of $29.24 per
share).  During 1995, FCX acquired 7.7 million of its shares for
$177.8 million (an average of $23.13 per share).

As discussed above, the 1998 regular quarterly cash dividend on
common stock is expected to be $0.05 per share. The 1996 increase in
cash dividends paid on common stock compared with 1995 results from
the fourth-quarter 1995 increase in the regular quarterly dividend
from $0.15 to $0.225 per share.

[PAGE]  27


         
1997 / BALANCE SHEETS                  FREEPORT-McMoRan COPPER & GOLD INC.

                                                 December 31,
                                          --------------------------
                                             1997            1996
                                          ----------      ----------
                                                (In Thousands)
                                                         
ASSETS
Current assets:
Cash and cash equivalents                 $    8,959      $   37,118
Accounts receivable:
  Customers                                   89,599         176,920
  Other                                       40,012          59,830
Inventories:
  Product                                    120,794         161,901
  Materials and supplies                     194,006         213,811
Prepaid expenses and other                     9,719          11,636
                                          ----------      ----------
  Total current assets                       463,089         661,216
Property, plant and equipment, net         3,521,715       3,088,644
Investment in PT Smelting                     83,061          46,817
Other assets                                  84,344          68,857
                                          ----------      ----------
Total assets                              $4,152,209      $3,865,534
                                          ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities  $  261,866      $  311,797
Unearned customer receipts                   101,428          46,458
Current portion of long-term
debt and short-term borrowings                80,852         136,617
Accrued income taxes                          31,519         103,003
                                          ----------      ----------
  Total current liabilities                  475,665         597,875
Long-term debt, less current portion       1,843,770       1,350,099
Note payable to Rio Tinto                    464,360          76,200
Accrued postretirement benefits
and other liabilities                        125,980         200,646
Deferred income taxes                        403,047         359,684
Minority interests                            60,488         105,644
Mandatory redeemable preferred stock         500,007         500,007
Stockholders' equity:
Step-up convertible preferred stock          349,990         349,990
Class A common stock, par value $0.10,
97,071,944 shares issued and outstanding       9,707           9,707
Class B common stock, par value $0.10,
121,404,858 shares and 120,979,123 shares
issued and outstanding, respectively          12,140          12,098
Capital in excess of par value of
common stock                                 649,792         636,100
Retained earnings                            107,679          77,479
Cumulative foreign currency translation
adjustment                                    10,244          10,244
Common stock held in treasury -
34,221,720 shares and
15,930,693 shares, at cost, respectively    (860,660)       (420,239)
                                          ----------      ----------
Total stockholders' equity                   278,892         675,379
                                          ----------      ----------
Total liabilities and stockholders'
 equity                                   $4,152,209      $3,865,534
                                          ==========      ==========


The accompanying Notes to Financial Statements are an integral part
of these financial statements.

[PAGE]  28

                
1997 / MANAGEMENT'S DISCUSSION         FREEPORT-McMoRan COPPER & GOLD INC.
       AND ANALYSIS

CAPITAL RESOURCES AND FINANCIAL CONDITION

Assets.  FCX's assets increased by $286.7 million over 1996
primarily because of expenditures for property, plant and equipment.
Accounts receivable from customers decreased 49 percent primarily
because of lower copper and gold prices.  Other assets increased
during 1997 primarily because of a $19.6 million increase in
deferred mining costs partially offset by PT-FI's sale of its
ownership interest in certain infrastructure asset joint ventures,
discussed below.

PT-FI's 1998 capital expenditures are expected to approximate
$225 million (other than for the fourth concentrator mill expansion
discussed below), representing mine and mill sustaining capital and
other long-term enhancement projects.  Funding is expected to be
provided by operating cash flow, PT-FI's bank credit facilities
($641.0 million commitment available at February 20, 1998, subject
to $547.4 million borrowing base availability) and other financing
sources.  Capital expenditures in 1998 for the fourth concentrator
mill expansion are expected to approximate $160 million, including
the coal-fired power plant and related facilities.  The new power
plant facilities will not only provide the required power for the
expanded operations but also improve the profitability of existing
operations, which currently use power generated by higher cost
diesel-fueled facilities.  Rio Tinto will finance approximately $60
million of these capital expenditures in accordance with the joint
venture arrangements (Note 2).  Incremental cash flow attributable
to such expansion projects will be shared 60 percent PT-FI and 40
percent Rio Tinto.  PT-FI has assigned its interest in such
incremental cash flow to Rio Tinto until Rio Tinto has received an
amount equal to the funds loaned to PT-FI plus interest based on Rio
Tinto's cost of borrowing. The incremental production from the
expansion, as well as production from PT-FI's existing operations,
will share proportionately in operating and administrative costs.
PT-FI will continue to receive 100 percent of cash flow from
specified annual amounts of copper, gold and silver through 2021
calculated by reference to its proved and probable reserves as of
December 31, 1994.

Construction began in 1996 on PT Smelting's 200,000 metric tons of
metal per year copper smelter/refinery complex in Gresik, Indonesia.
The estimated aggregate project cost, before working capital
requirements, is approximately $625 million.  The project is being
financed with a $300 million nonrecourse term loan and a $110
million working capital facility from a group of commercial banks.
The remaining funding is being provided pro-rata by PT-FI (25
percent) and the other owners (75 percent). PT-FI expects its 1998
cash investment in the smelter to total approximately $3 million.
Upon completion of the Gresik smelter in mid-1998 and the PT-FI
fourth concentrator mill expansion, FCX anticipates that
approximately 50 percent of PT-FI's annual concentrate production
will be sold to Atlantic and PT Smelting at market prices.

Infrastructure Asset Sales.  In March 1997, PT-FI completed the
final $75 million sale of infrastructure assets to joint ventures
owned one-third by PT-FI and two-thirds by P.T. ALatieF Nusakarya
Corporation (ALatieF), an Indonesian investor.  The sales to the
ALatieF joint ventures totaled $270.0 million during the period from
December 1993 to March 1997.  PT-FI subsequently sold its one-third
interest in the joint ventures to ALatieF and is leasing the assets
under infrastructure asset financing arrangements.  PT-FI continues
to guarantee an approximate $50 million bank loan associated with
the purchases.  PT-FI no longer consolidates the joint ventures.
Because of PT-FI's sale of its interest in the joint ventures and
the resulting change in accounting for these transactions as
infrastructure asset financings rather than consolidation, PT-FI's
interest expense is higher and minority interest charges are lower.
In December 1997, PT-FI completed a $366.4 million sale, including
$74.4 million for the remaining costs expected to be incurred to
complete construction, of the new power plant facilities associated
with the fourth concentrator mill expansion to the joint venture
that owns the assets which already provide electricity to PT-FI.
The purchase price included $123.2 million for Rio Tinto's share of
the new power plant facilities.  Sales to the power joint venture
totaled $581.4 million through 1997 including $458.2 million of PT-
FI owned assets.  PT-FI subsequently sold its 30 percent interest in
the joint venture to the other partners and is purchasing power
under infrastructure asset financing arrangements pursuant to a
power sales agreement.

Liabilities and Stockholders' Equity.  FCX's liabilities rose by
$683.2 million over 1996, primarily reflecting an increase in total
debt. Current liabilities decreased primarily because of a $45.7
million decrease in the current portion of long-term debt at
Atlantic and a $71.5 million decrease in accrued income taxes
partially offset by an increase in unearned customer receipts
because of lower copper and gold prices.  Deferred income taxes
increased $43.4 million because of timing differences related to tax
and book depreciation of property, plant and equipment.  Equity
declined by $396.5 million from 1996 primarily because of $439.8
million of FCX common stock purchases.

[PAGE]  29


                
1997 / STATEMENTS OF                   FREEPORT-McMoRan COPPER & GOLD INC.
       STOCKHOLDERS' EQUITY

                                  Years Ended December 31,
                          ------------------------------------------
                             1997            1996            1995
                          ----------      ----------      ----------
                                        (In Thousands)
                                                 
Convertible Exchangeable Preferred Stock:
Balance at beginning
of year                   $        -      $  223,900      $  223,900
Conversions to Class A
 common stock                      -        (221,093)              -
Redemptions                        -          (2,807)              -
                          ----------      ----------      ----------
  Balance at end of year           -               -         223,900
                          ----------      ----------      ----------

Step-Up Convertible Preferred Stock:
Balance at beginning
of year                      349,990         350,000         350,000
Conversions to Class A
common stock                       -             (10)              -
                          ----------      ----------      ----------
  Balance at end of year     349,990         349,990         350,000
                          ----------      ----------      ----------

Class A common stock:
Balance at beginning
of year                        9,707           8,804           6,597
Conversions of preferred
stock and Class B
common stock                       -             903           2,207
                          ----------      ----------      ----------
  Balance at end of year       9,707           9,707           8,804
                          ----------      ----------      ----------

Class B common stock:
Balance at beginning
of year                       12,098          11,862          13,998
Conversions to Class A
common stock                       -               -          (2,207)
Exercised stock options           42             236              71
                          ----------      ----------      ----------
  Balance at end of year      12,140          12,098          11,862
                          ----------      ----------      ----------

Capital in excess of par value of common stock:
Balance at beginning
of year                      636,100         376,054         362,557
Conversions of preferred
stock                              -         220,073               -
Exercised stock options       13,692          39,973          13,497
                          ----------      ----------      ----------
  Balance at end of year     649,792         636,100         376,054
                          ----------      ----------      ----------

Retained earnings:
Balance at beginning
of year                       77,479          78,565          41,663
Net income                   245,108         226,249         253,618
Cash dividends on
common stock                (178,341)       (175,766)       (137,563)
Dividends on preferred
stock                        (36,567)        (51,569)        (54,153)
Purchase of Freeport
Copper Company                     -               -         (25,000)
                          ----------      ----------      ----------
  Balance at end of year     107,679          77,479          78,565
                          ----------      ----------      ----------

Cumulative foreign currency translation adjustment:
Balance at beginning
of year                       10,244          10,244          (3,740)
Adjustment                         -               -          13,984
                          ----------      ----------      ----------
  Balance at end of year      10,244          10,244          10,244
                          ----------      ----------      ----------

  Common stock held in treasury:
Balance at beginning
of year                     (420,239)       (177,755)              -
  Purchase of 18,270,500,
  7,576,500 and 7,685,100
  shares, respectively      (439,827)       (221,565)       (177,755)
  Tender of 20,527 and
  669,093 shares,
  respectively, to FCX to
  exercise stock options        (594)        (20,919)              -
                          ----------      ----------      ----------
  Balance at end of year    (860,660)       (420,239)       (177,755)
                          ----------      ----------      ----------
Total stockholders'
equity                    $  278,892      $  675,379      $  881,674
                          ==========      ==========      ==========


The accompanying Notes to Financial Statements are an integral part
of these financial statements.

[PAGE]  30

                
1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.  The consolidated financial statements of
Freeport-McMoRan Copper & Gold Inc. (FCX) include its majority-owned
subsidiaries, P.T. Freeport Indonesia Company (PT-FI) and P.T. IRJA
Eastern Minerals Corporation (Eastern Mining), as well as its wholly
owned subsidiary, Atlantic Copper, S.A. (Atlantic).  FCX's
unincorporated joint ventures with Rio Tinto plc (Rio Tinto) are
reflected using the proportionate consolidation method in accordance
with standard industry practice (Note 2).  PT-FI's investment in
P.T. Smelting Co. (PT Smelting) is accounted for under the equity
method (Note 10).  All significant intercompany transactions have
been eliminated.  Certain prior year amounts have been reclassified
to conform to the 1997 presentation.

Use of Estimates.  The preparation of FCX's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes.  The
more significant areas requiring the use of management estimates
include the pricing of open concentrate sales, useful lives for
depreciation and amortization, allowances for obsolete inventory,
reclamation and environmental obligations, postretirement and other
employee benefits, valuation allowances for deferred tax assets,
future cash flow associated with assets and proved and probable
reserves.  Actual results could differ from those estimates.

Cash and Cash Equivalents.  Highly liquid investments purchased with
a maturity of three months or less are considered cash equivalents.

Inventories.  Inventories are stated at the lower of cost or market.
PT-FI uses the average cost method and Atlantic uses the first-in,
first-out (FIFO) cost method.

Property, Plant and Equipment.  Property, plant and equipment are
carried at cost.  Mineral exploration costs are expensed as
incurred, except in the year a property is deemed to contain a
viable mineral deposit, in which case they are capitalized.
Development costs, including interest incurred during the
construction and development period, are capitalized.  Expenditures
for replacements and improvements are capitalized.  Depreciation for
mining and milling life-of-mine assets is determined using the unit-
of-production method based on estimated recoverable copper reserves.
Other assets are depreciated on a straight-line basis over estimated
useful lives of 15 to 20 years for buildings and 3 to 25 years for
machinery and equipment.

Income Taxes.  FCX accounts for income taxes pursuant to Statement
of Financial Accounting Standards No. 109 (SFAS 109).  Deferred income
taxes are provided to reflect the future tax consequences of differences
between the tax bases of assets and liabilities and their reported 
amounts in the financial statements.

Reclamation and Mine Closure.  Estimated reclamation and mine
closure costs for PT-FI's current mining operations in Indonesia are
accrued and charged to income over the estimated life of the mine by
the unit-of-production method based on estimated recoverable copper
reserves.  Expenditures resulting from the remediation of conditions
caused by past operations which do not contribute to future revenue
generation are expensed.

Financial Contracts.  FCX has entered into financial contracts to
manage certain market risks resulting from fluctuations in commodity
prices (primarily copper and gold), foreign exchange rates and
interest rates by creating offsetting market exposures.  FCX views
all of its financial contracts as hedges as it does not engage in
speculative activity.  Costs or premiums and gains or losses on the
contracts, including closed contracts, are recognized with the
hedged transaction.  Also, gains or losses are recognized if the
hedged transaction is no longer expected to occur or if deferral
criteria are not met. FCX monitors its credit risk on an ongoing
basis and considers this risk to be minimal because its contracts
are with a diversified group of financially strong counterparties.

At December 31, 1997, FCX had redeemable preferred stock indexed to
commodities, deferred costs on foreign exchange option contracts, open 
foreign exchange forward contracts, open forward copper sales and
purchase contracts, and interest rate swap contracts (Note 11).
Redeemable preferred stock indexed to commodities is treated as a 
hedge of future produciton and is carried at its original issue value.
As redemption payments occur, differences between the carrying value 
and the redemption payment will be recorded as an adjustment to revenues.

[PAGE]  31

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

Atlantic hedges its anticipated Spanish peseta cash flows with
foreign exchange option contracts and foreign exchange forward
contracts.  Gains and losses, including costs, on option contracts
that qualify as hedges for accounting purposes are recognized in
income when the underlying hedged transaction is recognized or when
a previously anticipated transaction is no longer expected to occur.
Changes in market value of forward exchange contracts which protect
anticipated transactions are recognized in the period incurred.
Atlantic's purchases of copper concentrate are priced at
approximately the same time as its sales of the refined copper,
thereby protecting Atlantic from most copper price risk.  Atlantic
enters into futures contracts to hedge its price risk whenever its
physical purchases and sales pricing periods do not match. Gains and
losses on futures contracts are recognized with the hedged
transaction.

FCX has interest rate swap contracts to fix the interest rates
on a portion of its floating rate debt. The costs associated with
these contracts are amortized to interest expense over the terms of
the agreements.

Concentrate Sales.  Revenues from PT-FI's concentrate sales are
recorded net of royalties, treatment costs and the impact of the
price protection program (Note 11).  PT-FI's concentrate sales
agreements, including its sales to Atlantic, provide for provisional
billings based on world metals prices when shipped, primarily using
then current prices on the London Metal Exchange (LME), with actual
settlement on the copper portion generally based on the average LME
price for a specified future month (quotational period).  Copper
revenues on provisionally priced open pounds are adjusted monthly
based on then current prices.  At December 31, 1997, FCX had
consolidated copper sales totaling 323.3 million pounds recorded at
an average price of $0.74 per pound remaining to be finally priced.
Approximately 70 percent of these open pounds are expected to be
finally priced during the first quarter of 1998 with the remaining
pounds to be priced during the second quarter of 1998.  A one cent
movement in the average price used for these open pounds will have
an approximate $1.6 million impact on FCX's 1998 net income.  Gold
sales are priced according to individual contract terms, generally
the average London Bullion Market Association price for the month of
shipment.

In December 1991, PT-FI and the Government of Indonesia (GOI)
signed a Contract of Work (COW) with a 30-year term and two 10-year
extensions permitted.  Under the COW PT-FI pays the GOI a royalty of
1.5 percent to 3.5 percent on the value of copper sold, net of
delivery costs, treatment charges and other selling costs, and a 1.0
percent royalty on gold and silver sales.  The royalties totaled
$31.4 million in 1997, $30.4 million in 1996 and $42.0 million in
1995.  PT-FI has agreed with the GOI that on production in excess of
200,000 metric tons of ore per day (MTPD) it will pay a second
royalty.

Foreign Currencies.  Effective January 1, 1996, Atlantic changed its
functional currency from the Spanish peseta to the U.S. dollar.
This resulted from the significant changes in Atlantic's operations
related to its expansion and the sale of its mining operations in
Spain. Previously, Atlantic's assets and liabilities that were
denominated in pesetas were translated to U.S. dollars using the
exchange rate in effect at the balance sheet date, with translation
adjustments recorded as a component of stockholders' equity.

Transaction gains and losses associated with Atlantic's peseta-
denominated and PT-FI's rupiah-denominated monetary assets and
liabilities are included in net income.  Net Atlantic transaction
gains totaled $16.6 million in 1997 and $10.3 million in 1996.
Atlantic's net peseta-denominated monetary liabilities totaled $70.3
million at December 31, 1997 based on an exchange rate of 150.7
pesetas to one dollar. PT-FI's net rupiah-denominated monetary
assets totaled $14.2 million at December 31, 1997 based on an
exchange rate of 7,450 rupiah to one dollar. Net PT-FI transaction
losses related to these net rupiah-denominated monetary assets
totaled $6.3 million in 1997, and were not material in 1996 and
1995.

Earnings Per Share.  In February 1997, the Financial Accounting
Standards Board (FASB) issued SFAS 128, "Earnings Per Share," which
simplifies the computation of earnings per share (EPS).  FCX adopted
SFAS 128 in the fourth quarter of 1997 and restated prior years' EPS
data as required by SFAS 128.

Basic net income per share of common stock was calculated by
dividing net income applicable to common stock by the weighted-
average number of common shares outstanding during the year.  From
January 1, 1998 through January 20, 1998, FCX purchased 3.3 million
shares under its open market share purchase program.  Diluted net
income per share of common stock was calculated by dividing net
income applicable to common stock by the weighted-average number 

[PAGE]  32

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

of common shares outstanding during the year plus dilutive stock
options which represented 1.3 million shares in 1997, 1.8 million
shares in 1996 and 0.9 million shares in 1995.

Options to purchase common stock that were outstanding during
the years presented but were not included in the computation of
diluted EPS totaled 2.3 million options at an average exercise price
of approximately $33 per share in 1997 and 1.8 million options at an
average exercise price of approximately $35 per share in 1996. These
were excluded because the options' exercise price was greater than
the average market price of the common shares.  The FCX preferred
stock outstanding was not included in the computation of diluted EPS
because including them would have increased EPS.  The preferred
stock was convertible into 11.7 million shares of common stock in
1997 and 1996, and 20.8 million shares of common stock in 1995.
Dividends accrued on convertible preferred stock totaled $21.0
million in 1997 and 1996, and $36.7 million in 1995.

2.  OWNERSHIP AND JOINT VENTURES WITH RIO TINTO

In 1995, Freeport-McMoRan Inc. (FTX), the former parent of FCX,
completed its restructuring by distributing all the shares of FCX
Class B common stock which it owned to FTX common stockholders. As a
result of this distribution, FTX no longer owns any interest in FCX.
Prior to the distribution, Rio Tinto purchased 23.9 million shares
of FCX Class A common stock (approximately 12 percent of the then
outstanding common stock of FCX) from FTX.

FCX's direct ownership in PT-FI totaled 81.3 percent at
December 31, 1997 and 1996.  FCX also owns 49 percent of P.T.
Indocopper Investama Corporation (PT-II), a 9.4 percent owner of PT-
FI, bringing FCX's total ownership in PT-FI to 85.9 percent at
December 31, 1997 and 1996.  At December 31, 1997, PT-FI's net
assets totaled $485.5 million, including $281.9 million of retained
earnings.  FCX has various intercompany loans to PT-FI totaling
$982.5 million at December 31, 1997.  In March 1997, PT Nusamba
Mineral Industri (NMI), a subsidiary of P.T. Nusantara Ampera Bakti,
acquired from a third party approximately 51 percent of the capital
stock of PT-II.  NMI financed $254.0 million of the $315.0 million
purchase price with a variable rate commercial loan maturing in
March 2002.  The purchase price was based in part on FCX's market
value using its publicly traded common stock price at the time of
the transaction. FCX has agreed that if NMI defaults on the loan,
FCX will purchase the PT-II stock or the lenders' interest in the
commercial loan for the amount then due by NMI under the loan.  FCX
also agreed to lend to NMI any shortfalls between the interest
payments due on the commercial loan and the dividends received by
NMI from PT-II.  At December 31, 1997, $7.6 million was due in March
2002 from NMI because of interest payment shortfalls.  The amount of
any future shortfalls will depend primarily on the level of PT-FI's
dividends to PT-II.

FCX's direct ownership in Eastern Mining totaled 90
percent at December 31, 1997 and 1996.  PT-II owns the remaining 10
percent of Eastern Mining, bringing FCX's total ownership in Eastern
Mining to 94.9 percent at December 31, 1997 and 1996.

FCX owns 100 percent of the outstanding Atlantic stock.  At December
31, 1997, Atlantic's net assets totaled $47.3 million and FCX had
outstanding advances to Atlantic totaling $30.3 million. Atlantic is
not expected to pay dividends in the near future.

Joint Ventures With Rio Tinto.  FCX and Rio Tinto  have established
exploration and expansion joint ventures.  Pursuant to the
exploration joint ventures, Rio Tinto has a 40 percent interest in
future development projects under PT-FI's COW and Eastern Mining's
COW.  Under the arrangements, Rio Tinto funded $100 million in 1996
for approved exploration costs in the areas covered by the PT-FI COW
and Eastern Mining COW.  As of December 31, 1997, $11.4 million in
PT-FI's Block A remains to be applied to the $100 million Rio Tinto
exploration funding and is classified as a current liability.
Mutually agreed upon exploration costs in PT-FI's Block B and
Eastern Mining's COW areas are now being shared 60 percent by FCX
and 40 percent by Rio Tinto.

Pursuant to the expansion joint venture, Rio Tinto has a 40
percent interest in certain assets and future production exceeding
specified annual amounts of copper, gold and silver through 2021.
FCX and Rio Tinto are expected to complete construction on the
"fourth concentrator mill expansion" of PT-FI's facilities during
the first half of 1998.  Costs for the expansion are expected to
approximate $960 million, including both working capital and a coal-
fired power plant and related facilities.  The new power plant
facilities were sold in December 1997 to a joint venture that owns
assets which provide electricity to PT-FI (Note 8).

[PAGE]  33

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

To finance the expansion,  Rio Tinto agreed to make available
to PT-FI a nonrecourse loan of up to $450 million.  Through December
31, 1997, Rio Tinto has funded $744.0 million of expansion costs
($446.4 million loaned to PT-FI and the remainder funded directly by
Rio Tinto).  Expansion costs above $750 million will be funded 60
percent by PT-FI and 40 percent by Rio Tinto except for
approximately $80 million for costs to be funded by PT-FI to enhance
the profitability of PT-FI's existing operations.  Incremental cash
flow attributable to such expansion projects will be shared 60
percent PT-FI and 40 percent Rio Tinto. PT-FI has assigned its
interest in such incremental cash flow to Rio Tinto until Rio Tinto
has received an amount equal to the funds lent to PT-FI plus
interest based on Rio Tinto's cost of borrowing.  The incremental
production from the expansion, as well as production from PT-FI's
existing operations, will share proportionately in operating and
administrative costs.  PT-FI will continue to receive 100 percent of
cash flow from specified annual amounts of copper, gold and silver
through 2021 calculated by reference to its proved and probable
reserves as of December 31, 1994 (Note 14).

3.   INVENTORIES

The components of product inventories follow (in thousands):


                                              December 31, 
                                          -------------------
                                            1997       1996
                                          --------   --------
                                               
     PT-FI: Concentrates - Average Cost   $ 16,118   $ 36,043
     Atlantic: Concentrates -FIFO           72,088     78,374
               Work in process - FIFO       26,501     40,719
               Finished goods - FIFO         6,087      6,765
                                          --------   --------
     Total product inventories            $120,794   $161,901
                                          ========   ========


The average cost method was used to determine the cost of
essentially all materials and supplies inventory at December 31,
1997 and 1996.  Materials and supplies inventory is net of
obsolescence reserves totaling $29.5 million at December 31, 1997
and $19.3 million at December 31, 1996.

4.   PROPERTY, PLANT AND EQUIPMENT, NET

The components of net property, plant and equipment follow (in
thousands):


 
                                           December 31,
                                      -----------------------
                                         1997          1996
                                      ----------   ----------
                                             
Exploration, development and other    $  929,844   $  815,869
Buildings and infrastructure             717,518      973,850
Machinery and equipment                1,281,903    1,217,872
Mobile equipment                         355,802      256,570
Infrastructure assets                    930,399      368,612
Construction in progress                 397,272      344,580
                                      ----------    ---------
   Property, plant and equipment       4,612,738    3,977,353
Accumulated depreciation and 
  amortization                        (1,091,023)    (888,709)
                                      ----------   ----------
  Property, plant and equipment, net  $3,521,715   $3,088,644
                                      ==========   ==========


Exploration, development and other include $124.8 million of excess
costs related to investments in consolidated subsidiaries which are
amortized over the lives of the related assets.  Property, plant and
equipment are net of grants from the Spanish government totaling
$52.8 million.  The grants are contingent on Atlantic meeting
specified conditions.

[PAGE]  34

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

5.   REDEEMABLE PREFERRED STOCK

FCX has outstanding 6.0 million depositary shares representing
300,000 shares of its Gold-Denominated Preferred Stock.  Each
depositary share has a cumulative quarterly cash dividend equal to
the value of 0.000875 ounce of gold and will be redeemed in August
2003 for the cash value of 0.1 ounce of gold.

FCX has outstanding 4.3 million depositary shares representing
215,279 shares of its Gold-Denominated Preferred Stock, Series II.
Each depositary share has a cumulative quarterly cash dividend equal
to the value of 0.0008125 ounce of gold and will be redeemed in
February 2006 for the cash value of 0.1 ounce of gold.

FCX has outstanding 4.8 million depositary shares representing
119,000 shares of its Silver-Denominated Preferred Stock.  Each
depositary share has a cumulative quarterly cash dividend equal to
the value of 0.04125 ounce of silver.  Beginning in August 1999, FCX
will redeem the underlying Silver-Denominated Preferred Stock in
eight equal annual installments.

6.  STOCKHOLDERS' EQUITY

Common Stock.  FCX has 473.6 million authorized shares of capital
stock consisting of 423.6 million shares of common stock and 50.0
million shares of preferred stock.  FCX has two classes of common
stock which differ only as to their voting rights for the directors
of FCX.  Holders of Class B common stock elect 80 percent of the FCX
directors while holders of Class A common stock and preferred stock
elect 20 percent.

Preferred Stock.  In 1996, FCX called for redemption its
depositary shares representing Convertible Exchangeable Preferred
Stock.  Prior to the redemption date, holders of 8.8 million
depositary shares converted their shares into 9.0 million FCX Class
A common shares.  FCX paid $2.9 million in January 1997 to redeem
the remaining 0.1 million depositary shares.

FCX has outstanding 14.0 million depositary shares representing
700,000 shares of its Step-Up Convertible Preferred Stock.  Each
depositary share has a cumulative $1.75 annual cash dividend
(payable quarterly) and a $25 liquidation preference, and is
convertible at the option of the holder into 0.835 shares of FCX
Class A common stock.  Through August 1999, FCX may redeem these
depositary shares for 0.835 shares of FCX Class A common stock per
depositary share if the market price of FCX Class A common stock
exceeds $37.43 per share for 20 trading days within any period of 30
consecutive trading days. Thereafter, FCX may redeem these
depositary shares at $25 per share (payable in FCX Class A common
stock, cash or a combination of both, at FCX's option) plus accrued
and unpaid dividends.

Stock Options.  In 1995, FCX's shareholders adopted the Adjusted
Stock Award Plan to provide for the issuance of certain stock awards
to employees, officers and directors of FTX in connection with FTX's
distribution of FCX shares.  Under this plan, FCX made a one time
grant of awards to purchase up to 10.7 million Class B common
shares, including stock appreciation rights (SARs), at prices
equivalent to the original FTX price at date of grant as adjusted
for the proportionate market value of FCX shares at the time of the
distribution.  All options granted under this plan expire 10 years
from the original FTX date of grant.

FCX's shareholders adopted the 1995 Stock Option Plan (the 1995
Plan) to provide for the issuance of stock options and other stock-
based awards (including SARs) at no less than market value at the
time of grant.  Under this plan, FCX can grant options to eligible
participants to purchase up to 10 million Class B common shares.
Options granted under the 1995 Plan expire 10 years after the date
of grant. FCX's shareholders also adopted the 1995 Stock Option Plan
for Non-Employee Directors (the Director Plan) authorizing FCX to
grant options to purchase up to 2 million shares.  Options granted
under the Director Plan are exercisable in 25 percent annual
increments beginning one year from the date of grant and expire 10
years after the date of grant.  Under certain options, FCX will pay
cash to the optionee equal to an amount based on the maximum
individual federal income tax rate in effect at the time of
exercise. Options for 7.6 million shares under the 1995 Plan and 1.7
million shares under the Director Plan were available for new grants
as of December 31, 1997.  A summary of stock options outstanding,
including 1.4 million SARs, follows:

[PAGE]  35

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.



                         1997                  1996               1995
                --------------------- --------------------  -----------------
                             Weighted             Weighted           Weighted
                  Number     Average    Number    Average   Number   Average
                    of       Option       of      Option      of     Option
                  Options     Price     Options    Price    Options   Price
                ---------- ---------- ---------- ---------  -------  -------- 
                                                           
Balance at
January 1        7,990,083     $23.04  9,770,040    $18.59     -       $ -
  Granted upon
   FTX restructuring   -          -        -           -   10,715,351   18.53
  Granted          856,900      29.18  1,909,200     34.71    170,000   26.69
  Exercised       (579,612)     18.47 (3,538,945)    17.07 (1,075,868)  19.11
  Expired/
   Forfeited      (201,534)     30.45   (150,212)    22.66    (39,443)  22.49
                ----------            ----------           ----------  
Balance at
December 31      8,065,837      23.84  7,990,083     23.04  9,770,040   18.59
                ==========            ==========           ==========  

    
Summary information of fixed stock options outstanding at
December 31, 1997 follows:



                             Options Outstanding           Options Exercisable
                            -----------------------------  -------------------
                                       Weighted   Weighted          Weighted
                            Number     Average    Average  Number   Average
                              of      Remaining   Option    of      Option
Range of Exercise Prices    Options       Life    Price   Options   Price
- ------------------------  ----------  ----------  ------ ---------  ------
                                                     
     $13.10 to $19.37      1,265,326   3.2 years  $17.71 1,265,326  $17.71
     $19.93 to $29.19      3,711,767   5.6 years   21.89 2,814,235   20.26
     $30.44 to $35.50      1,660,342   8.3 years   34.95   352,183   34.75
                          ----------                    ----------
                           6,637,435                     4,431,744
                          ==========                    ==========


FCX has adopted the disclosure-only provisions of SFAS No. 123
and continues to apply APB Opinion No. 25 and related
interpretations in accounting for its stock-based compensation
plans. FCX recognized a $25.3 million gain in 1997 and  charges
totaling $12.7 million in 1996 and $29.8 million in 1995 for the
cost of SARs caused by the fluctuations in FCX's common stock price.
Had compensation cost for FCX's fixed stock option grants been
determined based on the fair value at the grant dates for awards
under those plans consistent with SFAS 123, FCX's stock-based
compensation costs would have increased by $6.3 million ($3.4
million to net income or $0.02 per share) in 1997, $2.4 million
($1.3 million to net income or $0.01 per share) in 1996 and $0.2
million ($0.1 million to net income) in 1995. For the pro forma
computations, the fair values of the fixed option grants were
estimated on the dates of grant using the Black-Scholes option-
pricing model.  The weighted average fair value for fixed stock
option grants was $10.24 per option in 1997, $12.09 per option in
1996 and $8.34 per option in 1995.  The weighted average assumptions
used include a risk-free interest rate of 6.9 percent in 1997, 6.6
percent in 1996 and 6.4 percent in 1995; expected volatility of 30
percent in 1997, 26 percent in 1996 and 29 percent in 1995; expected
lives of 10 years and an annual dividend of $0.90 per share.  The
pro forma effects on net income for 1997, 1996 and 1995 are not
representative of future years because FCX first adopted its stock
option plans in 1995. No other discounts or restrictions related to
vesting or the likelihood of vesting of fixed stock options were
applied.

[PAGE]  36

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

7.   INCOME TAXES

The components of FCX's deferred taxes follow (in thousands):



                                                December 31,
                                          --------------------------
                                             1997            1996
                                          ----------      ----------
                                                    
Deferred tax asset:
Foreign tax credits                       $  137,784      $  103,578
U.S. alternative minimum tax credits          49,946          43,906
Atlantic net operating loss carryforwards     97,400          85,858
Deferred compensation                          5,898          16,607
Intercompany profit elimination                8,141          16,217
Obsolescence reserve                           8,095           5,089
Valuation allowance                         (285,130)       (233,342)
                                          ----------      ----------
Total deferred tax asset                      22,134          37,913
                                          ----------      ----------
Deferred tax liability:
Property, plant and equipment               (423,515)       (396,493)
Other                                         (1,666)         (1,104)
                                          ----------      ----------
Total deferred tax liability                (425,181)       (397,597)
                                          ----------      ----------
Net deferred tax liability                $ (403,047)     $ (359,684)
                                          ==========      ==========


FCX has provided a valuation allowance equal to its tax credit
carryforwards ($187.7 million at December 31, 1997 and $147.5
million at December 31, 1996) as these  would only be used should
FCX be required to pay regular U.S. tax, which is considered
unlikely for the foreseeable future.  Atlantic is subject to
taxation in Spain and FCX has provided a valuation allowance equal
to the future tax benefits resulting from $278.3 million of net
operating losses at December 31, 1997 which expire through the year
2004 and $245.3 million of net operating losses at December 31,
1996, because Atlantic has not generated taxable income in recent
years.

FCX's U.S. federal income tax returns for the years 1990-1992
and PT-FI's 1994 Indonesian income tax return are currently under
examination.  In January 1998, PT-FI settled and paid assessments
from the Indonesian tax authorities for the years 1989-1993 with no
material adverse effect on the consolidated financial condition or
results of operations of FCX.

The provision for income taxes consists of the following (in
thousands):



                             1997            1996            1995
                          ----------      ----------      ----------
                                                 
Current income taxes:
Indonesian                $  159,713      $  182,354      $  197,409
United States and other        9,885          10,620          13,900
                          ----------      ----------      ----------
                             169,598         192,974         211,309
Deferred Indonesian taxes     61,717          54,194          22,735
                          ----------      ----------      ----------
                          $  231,315      $  247,168      $  234,044
                          ==========      ==========      ==========

[PAGE]  37

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

Reconciliations of the differences between income taxes
computed at the contractual Indonesian tax rate and income taxes
recorded follow (dollars in thousands):





                            1997                1996              1995
                  ---------------------  ------------------  ----------------
                    Amount      Percent    Amount   Percent  Amount   Percent
                  ----------    -------  ---------- -------  -------- -------
                                                          
Income taxes
computed at the
contractual
Indonesian
tax rate          $  180,868       35%   $  182,681    35%   $190,667     35%
Indonesian withholding tax on:  
  Earnings/
  dividends           21,886        4        37,097     7      24,025      4
  Interest             6,818        1         7,590     1       8,256      2
Increase (decrease)
attributable to:
  Intercompany
  interest
  expense            (24,192)      (5)      (21,260)   (4)    (23,780)    (4)
  Parent company
  costs               24,926        5        11,498     2       5,978      1
  Indonesian
  presidential
  decree               9,643        2           -       -         -        -
  U.S. alternative
  minimum tax          8,500        2         9,500     2      13,900      3
  Atlantic net
  loss (income)       (1,187)       -         8,378     2      13,225      2
  Other, net           4,053        1        11,684     2       1,773      -
                  ----------  -------    ----------  ------- --------- ------
Provision for
income taxes      $  231,315       45%   $  247,168    47%   $234,044     43%
                  ==========  =======    ==========  ======= ========= ======


8.  LONG-TERM DEBT



                                                 December 31,
                                          -------------------------
                                             1997           1996
                                          ----------     ----------
                                               (In Thousands)
                                                    
Notes payable:
  FCX and PT-FI credit facilities,
  average rate 6.4% in 1997
  and 6.2% in 1996                        $  250,000      $   95,000
  Rio Tinto loan including accrued
  interest, average rate 5.8%
  in 1997 and 5.7% in 1996  (Note 2)         464,360          76,200
  Atlantic facility, average rate
  7.2% in 1997 and 7.3% in 1996              291,276         277,500
  Equipment loan, average rate
  8.1% in 1997 and 1996                       49,000          56,000
  ALatieF loan, average rate
  8.2% in 1996                                  -             51,000
  Other, primarily  Atlantic borrowings       78,273         103,697
9 3/4% Senior Notes due 2001                 120,000         120,000
7.50% Senior Notes due 2006                  200,000         200,000
7.20% Senior Notes due 2026                  250,000         250,000
Infrastructure asset financings, net         686,073         333,519
                                          ----------      ----------
                                           2,388,982       1,562,916
Less current portion and
short-term borrowings                         80,852         136,617
                                          ----------      ----------
                                          $2,308,130      $1,426,299
                                          ==========      ==========


Notes Payable.  In 1996, the FCX and PT-FI credit facilities were
amended to increase the availability under the facilities by $250
million to a combined total of $1 billion. PT-FI retained its $550
million facility ($485.0 million of additional borrowings available
at December 31, 1997) and FCX and PT-FI now have a separate $450
million facility ($265.0 million of additional borrowings available
at December 31, 1997). These credit facilities are also subject to a
borrowing base, scheduled to be redetermined during the second quarter 
by the banks, which had $656.0 million 

[PAGE]  38

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

available at December 31, 1997.  These variable rate revolving facilities 
are available until December 2002, provide for minimum working capital 
requirements, specified cash flow to interest coverage and restrictions 
on other borrowings.  PT-FI assigned its existing and future sales 
contracts and pledged its rights under the COW and most of its assets as
security for its borrowings.

In October 1997, Atlantic restructured its variable rate
project financing (the Atlantic Facility) to include the balance of
the original $225 million term loan ($206.3 million balance), the
original $65 million working capital facility ($65 million balance)
and a new $20 million term loan, all nonrecourse to FCX.  The term
portion of the facility will be repaid quarterly beginning April
1999 and matures October 2004.  The working capital facility matures
April 2003. The Atlantic Facility requires certain hedging
arrangements, restricts other borrowings and specifies certain
minimum coverage ratios.  The Atlantic Facility is secured by 51
percent of Atlantic's capital stock.

In 1994, FCX entered into a $70 million variable rate equipment
loan secured by certain PT-FI assets.  In 1995, FCX fixed the
interest rate on the loan at 8.1 percent.  Principal payments total
$7.0 million annually with a final payment in December 2001.

Senior Notes.  In 1996, FCX sold publicly its 7.50% Senior Notes Due
2006 (the 2006 Notes) for net proceeds of $197.5 million and its
7.20% Senior Notes Due 2026 (the 2026 Notes) for net proceeds of
$248.0 million.  Interest is payable semiannually in May and
November of each year. The holder of each 2026 Note may elect early
repayment in November 2003.  The Notes are redeemable at the option
of FCX at the greater of (a) their principal amount or (b) the
remaining scheduled payments of principal and interest discounted to
the date of redemption on a semiannual basis at the applicable
treasury rate plus 30 basis points, together with, in either case,
accrued interest to the date of redemption.

Infrastructure Asset Financings.  In March 1997, PT-FI
completed the final $75.0 million sale of infrastructure assets to
joint ventures owned one-third by PT-FI and two-thirds by P.T.
ALatieF Nusakarya Corporation (ALatieF), an Indonesian investor.
The sales to the ALatieF joint ventures totaled $270.0 million
during the period from December 1993 to March 1997.  PT-FI
subsequently sold its one-third interest in the joint ventures to
ALatieF and is leasing the infrastructure assets under
infrastructure asset financing arrangements.  PT-FI continues to
guarantee an approximate $50 million bank loan associated with the
purchases.  PT-FI no longer consolidates the joint ventures.  At
December 31, 1997, the ALatieF infrastructure asset financings
totaled $141.0 million.

In December 1997, PT-FI completed a $366.4 million sale, including
$74.4 million for the remaining costs expected to be incurred to
complete construction, of the new power plant facilities associated
with the fourth concentrator mill expansion to the joint venture
that owns the assets which already provide electricity to PT-FI.
The purchase price included $123.2 million for Rio Tinto's share of
the new power plant facilities.  Sales to the power joint venture
totaled $581.4 million through 1997 including $458.2 million of PT-
FI owned assets.  PT-FI subsequently sold its 30 percent interest in
the joint venture to the other partners and is purchasing power
under infrastructure asset financing arrangements.  At December 31,
1997, the infrastructure asset financing obligations pursuant to the
power sales agreement totaled $436.7 million.

In 1995, PT-FI sold certain of its port, marine, logistics and
construction equipment and facilities for $100.0 million and sold
$48.0 million of its aviation assets to a joint venture, 25 percent
owned by PT-FI. PT-FI guarantees certain of the bank loans totaling
approximately $80 million associated with these sales.  PT-FI is
leasing these assets under infrastructure asset financing
arrangements.  At December 31, 1997, the obligations under these
infrastructure asset financings totaled $103.1 million.

Maturities.  Maturities of debt instruments and infrastructure asset
financings  based on the amounts and terms outstanding at December
31, 1997 totaled $80.9 million in 1998, $76.1 million in 1999,
$111.3 million in 2000, $222.5 million in 2001, $380.0 million in
2002 and $1,518.2 million thereafter.

Capitalized Interest.  Capitalized interest totaled $23.0 million in
1997, $23.0 million in 1996 and $49.8 million in 1995.

[PAGE]  39

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

9.  TRANSACTIONS WITH FTX AND FMS, AND EMPLOYEE BENEFITS

Management Services Agreement.  Through December 31, 1995, FTX
furnished certain management and administrative services to FCX
under a management services agreement.  These costs, which included
related overhead, totaled $55.5 million in 1995.  In 1996, FM
Services Company (FMS), a newly formed entity owned 40 percent by
FCX, began providing certain administrative, financial and other
services that were previously provided by FTX on a similar cost-
reimbursement basis. These costs totaled $44.7 million in 1997 and
$45.2 million in 1996.  Management believes these costs do not
differ materially from the costs that would have been incurred had
the relevant personnel providing these services been employed
directly by FCX.  Through December 31, 1995, all U.S.-based
employees as well as expatriate employees overseas were employed by
FTX. In 1996, all U.S. and expatriate employees performing direct
services for FCX or its affiliates other than those employed by FMS
became FCX employees.

Pension Plans.   In 1996, FCX and FMS established defined benefit
pension plans to cover substantially all U.S. and certain overseas
employees. Employees transferred from FTX retained their accumulated
benefits. In 1996, FCX and FMS changed the pension benefit formula
to a cash balance formula from the prior benefit calculation based
on years of service and final average pay. Under the amended plan,
FCX and FMS credit each participant's account annually with at least
4 percent of the participant's qualifying compensation.
Additionally, interest is credited annually to each participant's
account balance. FCX and FMS fund their respective pension
liabilities in accordance with Internal Revenue Service guidelines.
Additionally, for those employees in the qualified defined benefit
plan whose benefits are limited under federal income tax laws, FCX
and FMS sponsor unfunded, nonqualified plans.   Information on the
FCX plans follows  (in thousands):



                                    December 31,
                                 -------------------
                                  1997        1996
                                 -------   ---------
                                      
Actuarial present value of benefit obligations 
  (projected unit credit method):
  Vested                         $ 10,889   $  6,993
  Nonvested                           787        293
                                 --------   --------
Accumulated benefit obligations  $ 11,676   $  7,286
                                 ========   ========

Projected benefit obligations 
  (projected unit credit method) $(13,652)  $(12,292)
Less plan assets at fair value      7,660      6,639
                                 --------   --------
Projected benefit obligations
  in excess of plan assets         (5,992)    (5,653)   
Unrecognized net loss                 328      1,615
Unrecognized prior service costs     (927)    (1,075)
Unrecognized transition asset        (402)      (460)
                                 --------   ---------
Accrued pension cost             $ (6,993)  $ (5,573)
                                 ========   =========


In determining the present value of benefit obligations, FCX used
discount rates of 7.25 percent in 1997 and 7.75 percent in 1996, a
5 percent annual increase in future compensation levels and a 9 
percent average expected rate of return on assets.  Net periodic
pension costs for the FCX plans totaled $1.4 million for 1997 and 
$2.1 million for 1996.

PT-FI has a defined benefit plan denominated in Indonesian
rupiah covering substantially all of its Indonesian national
employees. PT-FI funds the plan in accordance with Indonesian
pension guidelines.  The actuarial present value of the accumulated
benefit obligation, determined by the projected credit method, was
$3.9 million and $9.2 million at December 31, 1997 and 1996,
respectively, based on corresponding exchange rates of 7,450 rupiah
to one U.S. dollar and 2,342 rupiah to one U.S. dollar.  The
projected benefit obligation at December 31, 1997 and 1996, was $7.2
million and $18.0 million, respectively, based on a discount rate of
11 percent and a 9 percent annual increase in future compensation
levels on both dates. PT-FI's plan assets totaled $2.0 million at
December 31, 1997 and $1.7 million at December 31, 1996.

[PAGE]  40

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

Atlantic has an unfunded contractual obligation denominated in
Spanish pesetas to supplement amounts paid to retired employees.
The accrued liability totaled $69.4 million and $80.4 million at
December 31, 1997 and 1996, respectively, based on corresponding
exchange rates of 150.7 pesetas to one U.S. dollar and 131.4 pesetas
to one U.S. dollar. Atlantic expensed $5.8 million in 1997, $6.8
million in 1996 and $7.1 million in 1995 for interest on this
obligation. Cash payments were $7.5 million in 1997, $8.5 million in
1996 and $8.9 million in 1995.  Under Spanish law, Atlantic is
required to fund this obligation by mid-1999.  The actuarial
valuation of this obligation was $87.9 million at December 31, 1997
and $93.7 million at December 31, 1996, based on  discount rates of
6 percent and 7 percent, respectively.

Other Benefits.  FCX and FMS provide certain health care and life
insurance benefits for retired employees, the cost of which was not
material to the financial statements.  The actuarial present value
of FCX's accumulated postretirement obligation totaled $1.0 million
at December 31, 1997 and $1.1 million at December 31, 1996.  The
initial health care cost trend rate used was 8.5 percent for 1997,
decreasing 0.5 percent per year until reaching 5 percent.  Based on
the current plan provisions, a change in the trend rate would have
no impact.  The discount rate used was 7.25 percent for 1997 and
7.75 percent for 1996.  FCX has the right to modify or terminate
these benefits.  FCX and FMS have other employee benefit plans,
certain of which are related to FCX's performance, which costs are
recognized currently in general and administrative expense.

10.  COMMITMENTS AND CONTINGENCIES

Environmental, Reclamation and Mine Closure.  FCX believes that its
operations are being conducted pursuant to applicable permits
and are in compliance in all material respects with applicable
environmental laws, rules and regulations. FCX incurs
significant costs for environmental programs and projects.
In 1996, FCX began contributing to a fund designed to
accumulate at least $100 million by the end of its Indonesian
mine's life for eventual mine closure and reclamation.
Although the ultimate amount of reclamation and closure costs
to be incurred is currently indeterminable, based on recent
analyses PT-FI estimates that ultimate reclamation and closure
costs may require as much as $100 million but would not exceed
$150 million.  These costs will be incurred throughout the
remaining life of the mine, which is currently estimated to
exceed 30 years.  FCX had $5.5 million accrued on a unit-of-
production basis at December 31, 1997 for mine closure and
reclamation costs, included in other liabilities.  An
increasing emphasis on environmental issues and future changes
in regulations could require FCX to incur additional costs
which would be charged against future operations. Estimates
involving environmental matters are by their nature imprecise
and  can be expected to be revised over time because of changes
in government regulations, operations, technology and inflation.

Long-Term Contracts and Operating Leases.  Atlantic has commitments
with parties other than PT-FI to purchase concentrate totaling
425,000 metric tons in 1998, 405,000 metric tons in 1999, 370,000
metric tons in 2000, 340,000 metric tons in 2001, 270,000 metric
tons in 2002 and a total of 220,000 metric tons thereafter, at
market prices.

FCX's minimum annual contractual charges under noncancelable
long-term contracts and operating leases which extend to 2000  total
$1.7 million, with $1.4 million in 1998, $0.2 million in 1999 and
$0.1 million in 2000.  Total rental expense under long-term
contracts and operating leases amounted to $2.2 million in 1997,
$3.8 million in 1996 and $7.2 million in 1995.

Gresik Smelter.  PT Smelting, an Indonesian company, commenced
construction in 1996 on a copper smelter in Gresik, Indonesia having
a design capacity of 200,000 metric tons of copper cathode per year.
PT-FI, Mitsubishi Materials Corporation (Mitsubishi Materials),
Mitsubishi Corporation (Mitsubishi) and Nippon Mining & Metals Co.,
Ltd. (Nippon) own 25 percent, 60.5 percent, 9.5 percent and 5
percent, respectively, of the outstanding PT Smelting stock.  The
estimated aggregate project cost, before working capital
requirements, is approximately $625 million.  PT Smelting has a $300
million nonrecourse term loan and a $110 million working capital
facility with a group of banks.  The remaining funding will be
provided by PT-FI, Mitsubishi Materials, Mitsubishi and Nippon in
accordance with their interests.  Construction is expected to be
completed in mid-1998.  It is anticipated that PT-FI would provide
all of the smelter's copper concentrate requirements at market
rates; however, for the first fifteen years of operations the
treatment and refining charges would not fall below a certain
minimum rate.  PT-FI has also agreed to assign, if necessary, its
earnings in PT Smelting to support a 13 percent cumulative annual
return to Mitsubishi Materials, Mitsubishi and Nippon for the first
20 years of commercial operations.

[PAGE]  41

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

11.  FINANCIAL INSTRUMENTS

Summarized below are financial instruments whose carrying
amounts are not equal to their fair value at December 31, 1997 and
1996.  Fair values are based on quoted market prices and other
available market information.



                                 1997                       1996
                         ----------------------    -------------------------
                          Carrying     Fair        Carrying         Fair
                           Amount      Value        Amount          Value
                         ----------- ----------    -----------   -----------
                                           (In Thousands)
                                                            
Price protection program:
  Open contracts
  in asset
  position               $      -    $         16  $       -     $    17,314
  Open contracts
  in liability position         -          (1,494)         -            -
Debt:
  Long-term debt (Note 8) (2,388,982)  (2,402,862)  (1,562,916)   (1,575,929)
  Interest rate swaps           -          (1,210)         -          (1,331)
  Foreign exchange contracts:
    $U.S./Deutsche marks        -             -            -             (30)
    $U.S./Spanish pesetas      1,148           471         908           300
Redeemable preferred stock
(Note 5)                    (500,007)     (334,177)   (500,007)     (405,855)



Price Protection Program.  From time to time, PT-FI enters into
forward and option contracts to hedge the market risk associated
with fluctuations in the prices of commodities it sells.  At
December 31, 1997, PT-FI had no outstanding forward or option
contracts.  FCX's revenues include net additions totaling $42.6
million in 1997 and $38.2 million in 1996, and net reductions
totaling $68.6 million in 1995 related to PT-FI's copper price
protection program.  Revenues also include net additions totaling
$37.6 million in 1997, $14.1 million in 1996 and $3.9 million in
1995 from gold forward contracts.

At December 31, 1997, Atlantic had sold forward 2.0 million
pounds of copper at an average price of $0.80 per pound and
purchased forward 20.3 million pounds of copper at an average price
of $0.87 per pound to minimize the copper price risk of its
concentrate inventory.

Debt.  PT-FI entered into an interest rate swap in 1991 and Atlantic
entered into interest rate swaps in 1995 to manage exposure to
interest rate changes on a portion of their variable rate debt.  PT-
FI pays 8.3 percent on $28.6 million of financing at December 31,
1997, reducing annually through 1999. Atlantic pays an average of
6.1 percent on $133.3 million of financing at December 31, 1997,
reducing annually through 2000. Interest on comparable floating rate
debt averaged 5.7 percent in 1997, 5.6 percent in 1996 and 6.1
percent in 1995, resulting in additional interest costs of $1.5
million, $2.2 million and $1.5 million, respectively.

Foreign Exchange Contracts.  During 1996, Atlantic implemented a
currency hedging program to reduce its exposure to changes in the
U.S. dollar and Spanish peseta exchange rate.  As of December 31,
1997, Atlantic has options through January 1999 on a total of 6.3
billion Spanish pesetas with an average strike price of 140.6
pesetas at a cost of $1.1 million.  Atlantic also has entered into
foreign exchange contracts which mature through January 1999,
totaling $43.8 million on another 6.3 billion Spanish pesetas.

Atlantic is a party to letters of credit totaling $8.5 million
at December 31, 1997.  Fair value of these letters of credit is not
material at December 31, 1997.

[PAGE]  42

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

12.  BUSINESS SEGMENTS

FCX has adopted SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" which requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance.
FCX has two operating segments:  "mining and exploration" and
"smelting and refining."  The mining and exploration segment
includes PT-FI's copper and gold mining operations in Indonesia and
the Indonesian exploration activities of both PT-FI and Eastern
Mining.  The smelting and refining segment includes Atlantic's
operations in Spain and PT-FI's equity investment in PT Smelting in
Gresik, Indonesia.  The segment data presented below were prepared
on the same basis as the consolidated FCX financial statements.



                           Mining        Smelting                
                             and           and       Eliminations      FCX
                         Exploration     Refining     and Other       Total
                          ----------    ----------    ----------    ----------
                                           (In Thousands)
                                                             
1997
Revenues                  $1,505,295    $  874,514    $ (378,905)   $2,000,904
Production and delivery      604,851       800,997a     (397,244)    1,008,604
Depreciation and
amortization                 178,289        31,693         3,873       213,855
Exploration expense           14,758             -         2,871        17,629
General and administrative
expenses                      76,549        11,197         8,855        96,601
                          ----------    ----------    ----------    ----------
Operating income          $  630,848    $   30,627    $    2,740    $  664,215
                          ==========    ==========    ==========    ==========
Capital expenditures      $  529,731    $   54,721    $   10,035    $  594,487
                          ==========    ==========    ==========    ==========
Total assets              $3,406,539    $  742,184a   $    3,486    $4,152,209
                          ==========    ==========    ==========    ==========

1996
Revenues                  $1,485,848    $  778,120    $ (358,932)   $1,905,036
Production and delivery      575,781       731,651      (355,569)      951,863
Depreciation and
amortization                 142,605        27,783         3,590       173,978
General and administrative
expenses                     119,492        12,301         9,141       140,934
                          ----------    ----------    ----------    ----------
Operating income          $  647,970    $    6,385    $  (16,094)   $  638,261
                          ==========    ==========    ==========    ==========
Capital expenditures      $  398,986    $   90,086    $    3,166    $  492,238
                          ==========    ==========    ==========    ==========
Total assets              $3,168,837    $  775,336a   $  (78,639)   $3,865,534
                          ==========    ==========    ==========    ==========

1995
Revenues                  $1,477,919    $  541,291    $ (184,875)   $1,834,335
Production and delivery      547,716       528,904      (141,913)      934,707
Depreciation and
amortization                 102,664        17,572         3,819       124,055
Exploration expenses          10,828         2,248           812        13,888
General and administrative
expenses                     141,014        16,705         7,534       165,253
                          ----------    ----------    ----------    ----------
Operating income (loss)   $  675,697    $  (24,138)   $  (55,127)   $  596,432
                          ==========    ==========    ==========    ==========
Capital expenditures      $  434,383    $  143,958    $    5,145    $  583,486
                          ==========    ==========    ==========    ==========
Total assets              $2,888,535    $  783,123a   $  (89,912)   $3,581,746
                          ==========    ==========    ==========    ==========


a.  PT-FI recorded losses related to PT Smelting totaling $1.5 million in 
1997.  Total assets include PT-FI's equity investment in PT Smelting totaling
$83.1 million at December 31, 1997, $46.8 million at December 31, 1996 and
$8.0 million at December 31, 1995.

[PAGE]  43

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.
     
FCX markets its products worldwide primarily pursuant to the
terms of long-term contracts.  The following table details the
percentage of consolidated revenues attributable to various
contracts:



                               1997            1996            1995
                            ----------      ----------      ----------
                                                        
Long-term contracts:
  Japanese companies            16%              17%             16%
  Swiss firm                     8                10              11
  German firm                    4                5               14
  Other                         64                62              47
Spot sales                       8                6               12



PT-FI's contracts with a group of Japanese companies, the Swiss
firm and the German firm extend through 2000, 2003 and 1999,
respectively.  There are several other long-term agreements in
place, each representing less than ten percent of sales.  Certain
terms of these long-term contracts are negotiated annually.

FCX revenues attributable to foreign countries based on the
location of the customer follows (in thousands):



                   1997       1996         1995
                ---------- -----------  ----------
                               
Japan           $  470,373 $   474,443  $  383,635
Spain              402,276     342,373     313,949
Switzerland        297,821     353,776     302,726
Germany            108,519      98,076     263,137
Others             721,915     636,368     570,888
                ----------  ----------  ----------
  Total         $2,000,904  $1,905,036  $1,834,335
                ==========  ==========  ==========


13.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


                                                  Net Income    Net Income
                                                  Applicable     Per Share
                                  Operating       to Common   --------------
                   Revenues         Income          Stock     Basic  Diluted
                  ----------      ----------      ----------  -----   -----
                        (In Thousands, Except Per Share Amounts)
                                                       
1997
  1st Quarter     $  523,780      $  197,608      $   62,451   $.31   $.31
  2nd Quarter        566,950         213,701          69,852    .35    .35
  3rd Quarter        489,522         136,417          36,577    .19    .19
  4th Quarter a      420,652         116,489          39,661    .21    .21
                  ----------      ----------      ----------
                  $2,000,904      $  664,215      $  208,541    1.06  1.06
                  ==========      ==========      ==========

1996
  1st Quarter b   $  388,392      $  105,543      $   22,450   $.11   $.11
  2nd Quarter        424,348         111,627          29,045    .15    .15
  3rd Quarter        474,664         170,322          46,126    .24    .24
  4th Quarter        617,632         250,769          77,059    .40    .39
                  ----------      ----------      ----------
                  $1,905,036      $  638,261      $  174,680    .90    .89
                  ==========      ==========      ==========



a.   Includes a $25.3 million gain ($12.3 million to net income or
     $0.06 per share) for the reversal of SAR costs caused by the
     decline in FCX's common stock price.

b.   Includes charges totaling $18.7 million ($8.6 million to net
     income or $0.04 per share) consisting of $12.7 million for
     costs of SARs caused by the increase in FCX's common stock
     price, $3.0 million (reduced to $1.7 million in the second
     quarter) for an early retirement program and $3.0 million for
     costs related to a civil disturbance.

[PAGE]  44

1997 / NOTES TO FINANCIAL STATEMENTS   FREEPORT-McMoRan COPPER & GOLD INC.

14.  SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)

Total estimated proved and probable mineral reserves at the Grasberg
and other Block A ore bodies in Indonesia follow:



                          Average Ore Grade Per Ton      Recoverable Reserves
                      ---------------------------------- --------------------
Year-End    Ore       Copper     Gold        Silver       Copper   Gold Silver
- --------------------- ---------------------------------- --------------------
        (Metric Tons)  (%)  (Grams)(Ounce)(Grams)(Ounce) (Billions  (Millions
                                                          of Lbs.)   of Ozs.) 
                                                  
1993    1,074,100,000  1.31  1.47  .047    4.04   .130     26.8    39.1   76.7
1994    1,125,640,000  1.30  1.42  .046    4.06   .131     28.0    39.6   80.8
1995    1,899,244,000  1.17  1.18  .038    3.78   .121     40.3    52.1  111.1
1996    2,008,285,000  1.19  1.18  .038    3.80   .122     43.2    55.3  118.7
1997    2,166,212,000  1.20  1.20  .039    3.95   .127     47.1    62.7  138.4

By Deposit at December 31, 1997
Grasberg:
Open pit1,087,800,000  1.06  1.27  .041    2.90   .093     20.9    33.3   50.8
Under-
ground    670,846,000  1.22  1.09  .035    3.73   .120     14.8    17.7   40.3
Kucing 
Liar      221,871,000  1.42  1.57  .050    5.12   .165      5.7     8.4   18.3
DOZ        79,306,000  1.41  0.83  .027    7.04   .226      2.1     1.7    9.5
IOZ        38,148,000  1.18  0.45  .014    7.65   .246      0.9     0.4    5.0
Big Gossan 37,349,000  2.69  1.02  .033   16.42   .528      1.8     0.9    9.9
DOM        30,892,000  1.67  0.42  .014    9.63   .310      0.9     0.3    4.6
          --------------------------------------------------------------------
Total   2,166,212,000  1.20  1.20  .039    3.95   .127     47.1    62.7  138.4



Estimated recoverable reserves were assessed using a copper
price of $0.90 per pound and a gold price of $325 per ounce.  Using
prices of $0.75 per pound of copper and $280 per ounce of gold would
reduce estimated recoverable reserves by approximately 12 percent
for copper, 9 percent for gold and 15 percent for silver.

In PT-FI's Block A, Rio Tinto agreed to make available to PT-FI
a nonrecourse loan of up to $450 million to fund the cost of the
fourth concentrator mill expansion (Note 2).  Incremental cash flow
attributable to such expansion projects will be shared 60 percent
PT-FI and 40 percent Rio Tinto.  PT-FI has assigned its interest in
such incremental cash flow to Rio Tinto until Rio Tinto has received
an amount equal to the funds lent to PT-FI plus interest based on
Rio Tinto's cost of borrowing.  Incremental cash flow consists of
amounts generated from production in excess of specified annual
amounts based on the December 31, 1994 reserves and mine plan. The
incremental production from the expansion, as well as production
from PT-FI's existing operations, will share proportionately in
operating and administrative costs.  FCX will continue to receive
100 percent of cash flow from its existing production facilities as
specified by the contractual arrangements.  PT-FI's estimated net
share of recoverable reserves follows:



   Year-End       Copper                   Gold              Silver
  ----------     ----------             ----------         ------------
               (Billions of Lbs.)    (Millions of Ozs.)  (Millions of Ozs.)
                                                                  
     1993            26.8                   39.1                 76.7
     1994            28.0                   39.6                 80.8
     1995            34.6                   46.0                 96.7
     1996            35.9                   47.4                100.4
     1997            37.8                   51.3                111.3



[PAGE]  45

1997 / SHAREHOLDER INFORMATION        FREEPORT-McMoRan COPPER & GOLD INC.

            FCX CLASS A COMMON SHARES.  Our Class A common shares trade
            on the New York Stock Exchange (NYSE) under the symbol
            "FCX.A."  The FCX.A share price is reported daily in the
            financial press under "FMCGA" in most listings of NYSE
            securities.  At year-end 1997, the number of holders of
            record of our Class A common shares was 9,819.  NYSE
            composite tape Class A common share price ranges during 1997
            and 1996:

                      
                      
                                          1997           1996
                                      High    Low    High    Low
                                                
                      First Quarter  $33.50 $25.38  $32.88  $27.50
                      Second Quarter  30.38  25.88   34.88   28.75
                      Third Quarter   28.75  25.75   31.25   26.63
                      Fourth Quarter  28.88  14.63   31.25   26.38

                      

            FCX CLASS B COMMON SHARES.  Our Class B common shares trade
            on the NYSE under the symbol "FCX."  The FCX share price is
            reported daily in the financial press under "FMCG" in most
            listings of NYSE securities.  At year-end 1997, the number
            of holders of record of our Class B common shares was
            15,103.

            NYSE composite tape Class B common share price ranges during
            1997 and 1996:

                      
                      
                                         1997           1996
                                      High     Low   High   Low
                                               
                      First Quarter  $34.88  $27.50 $33.75 $27.38
                      Second Quarter  31.88   26.50  36.13  30.00
                      Third Quarter   30.75   27.19  33.00  28.38
                      Fourth Quarter  29.94   14.94  32.88  28.00
                      

            COMMON SHARE DIVIDENDS.  FCX Class A and Class B common
            share cash dividends declared and paid for the quarterly
            periods of 1997 and 1996 were:

                      
                      
                                                   1997
                                      Amount
                                        Per     Record
                                       Share     Date       Payment Date
                                                   
                      First Quarter    $.225 Apr. 15, 1997  May  1, 1997
                      Second Quarter    .225 Jul. 15, 1997  Aug. 1, 1997
                      Third Quarter     .225 Oct. 15, 1997  Nov. 1, 1997
                      Fourth Quarter    .05  Jan. 16, 1998  Feb. 1, 1998

                       
                                                    1996
                                       Amount
                                         Per     Record       Payment
                                        Share     Date          Date            
                                                    
			    First Quarter     $.225 Apr. 15, 1996  May  1, 1996
                      Second Quarter     .225 Jul. 15, 1996  Aug. 1, 1996
                      Third Quarter      .225 Oct. 15, 1996  Nov. 1, 1996
                      Fourth Quarter     .225 Jan. 15, 1997  Feb. 1, 1997

                      
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