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INVENTORIES:
9 Months Ended
Sep. 30, 2011
INVENTORIES: 
INVENTORIES:

 

 

NOTE 5 - INVENTORIES:

 

Inventories were as follows:

 

(in millions)

 

At September 30,
2011

 

At December 31,
2010

 

Inventory, current:

 

 

 

 

 

Metals at lower of average cost or market:

 

 

 

 

 

Finished goods

 

$

108.3

 

$

67.9

 

Work-in-process

 

259.0

 

227.6

 

Supplies at average cost

 

256.6

 

245.5

 

Total current inventory

 

$

623.9

 

$

541.0

 

 

 

 

 

 

 

Inventory, long-term

 

 

 

 

 

Long-term leach stockpiles

 

$

83.3

 

$

29.7

 

 

LONG-TERM INVENTORY:

 

In prior years the Company capitalized the production cost of leachable material with low copper content at the Buenavista mine in Mexico.  In 2011, the Company extended this practice of recognizing inventories for costs associated with leaching activities at the La Caridad mine in Mexico and the Toquepala and Cuajone mines in Peru in order to conform to evolving mine production plans at these mines.  As a result of changing market conditions and mining processes, mineral extraction through leaching has become integral to the mining operations carried out at La Caridad, Toquepala and Cuajone.  Accordingly, the process and sale of mineral content in leaching dumps is reasonably assured and the costs associated with leaching activities at such mines are now recognized as inventories.  As the production cycle of the leaching process is significantly longer than the conventional process of concentrating, smelting and electrolytic refining, the Company includes on its balance sheet, current leach inventory (included in work-in-process inventories) and long-term leach inventory.  The cost attributed to the leach material is charged to cost of sales generally over a five-year period (the average estimated recovery period based on the recovery percentages of each mine).

 

During the nine months ended September 30, 2011 total leaching costs capitalized as long-term inventory of leachable material amounted to $87.1 million. There was no capitalization during the nine months ended September 30, 2010.  Long-term leaching inventories recognized as cost of sales amounted to $33.6 million and $31.2 million for the nine months ended September 30, 2011 and 2010, respectively.