SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 20, 1996
Freeport-McMoRan Resource Partners, Limited Partnership
Delaware 1-9164 72-1067072
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation or Number)
organization)
1615 Poydras Street
New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582- 4000
Item 5. Other Events.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
From time to time, Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP") may make certain written and oral
forward-looking statements. Important factors that could cause
actual results to differ materially from anticipated results or
expectations include the following: fluctuations in the actual
or anticipated supply of and demand for fertilizer products that
are frequently affected by rapidly changing agricultural
conditions; changes in governmental policies that affect the
number of acres planted, levels of grain stocks, the mix of crops
planted and prevailing crop prices; fluctuations in the supply of
and demand for sulphur and oil; imprecision in estimating sulphur
and oil reserves; possible increased environmental costs and
liabilities arising from the production, storage and distribution
of phosphate fertilizers and chemicals, sulphur and oil;
unanticipated industrial accidents; plant damage caused by severe
weather or natural disasters; unexpected geological conditions
resulting in cave-ins, flooding and rock-bursts and unexpected
changes in rock stability conditions; exchange rate fluctuations;
fluctuations in interest rates; unanticipated difficulties in
obtaining necessary financing; timing of necessary governmental
permits and approvals relating to operations, expansions of
operations and financing of operations; and difficulties in
reaching agreements, or resolving disputes, with joint venture
partners, government officials, suppliers or customers.
Many of these factors are beyond FRP's ability to control or
predict. Investors are therefore cautioned not to place undue
reliance upon forward-looking statements. FRP assumes no
obligation to update its forward-looking statements, whether as a
result of receiving new information, the occurrence of future
events or otherwise.
A more detailed discussion of certain of the foregoing
factors follows:
Seasonality and Volatility of Product Markets
FRP sells its fertilizer products in the domestic and export
markets under spot market and long-term contract terms.
Agricultural demand for FRP's phosphate fertilizers is materially
affected by prevailing agricultural conditions. Generally, FRP
experiences seasonal increases in domestic sales prior to the
fall and spring planting of crops and diminished sales after the
spring planting season. Sales are also influenced by current and
projected grain inventories and prices, quantities of fertilizers
imported to and exported from North America and various
governments' agricultural policies. Grain inventories are
directly influenced by highly unpredictable weather patterns and
rapidly changing field conditions (particularly during periods of
high fertilizer consumption), and by trends in world-wide food
consumption.
Among the governmental policies that influence the
fertilizer markets are those directly or indirectly influencing
the number of acres planted, the level of grain stocks, the mix
of crops planted and crop prices. In the United States, the Farm
Bill enacted in April of 1996 ends government-guaranteed prices
for corn, other feed grains, cotton, rice and wheat, and provides
farmers with guaranteed payments that decline over seven years.
The Farm Bill also brought an immediate end to planting controls.
FRP has not yet determined whether the Farm Bill will have an
effect on its operations. The possibility that the U.S.
government or any foreign government may remove acres from
cultivation through subsidies to farmers is an important factor
influencing the demand for fertilizers.
All of FRP's major products are commodities, and the markets
and prices for such products have been volatile historically and
may continue to be volatile in the future. FRP's operating
margins and cash flow are subject to substantial fluctuations in
response to changes in supply and demand for its products,
conditions in the domestic and foreign agriculture industry,
market uncertainties and a variety of additional factors beyond
FRP's control.
Competition
The sulphur, fertilizer and phosphate rock mining industries
are highly competitive. Because competition is based largely on
price, maintaining low production costs is critical to
competitiveness. Any increases in FRP's costs or decreases in its
competitors' costs affect FRP's ability to compete effectively.
Because the market for FRP's products is global, FRP faces
intense competition from overseas producers, most of which are
state supported, especially those in North Africa and the former
Soviet Union. Additionally, foreign competitors frequently are
motivated by non-market factors such as the need for hard
currency, rather than by normal considerations of profit and
loss.
Environmental Matters
FRP's operations include exploration, mining, development
and production of natural resources, chemical processing, and the
extraction, handling, production, processing, treatment, storage,
transportation and disposal of materials and waste products that
may be toxic or hazardous. Consequently, FRP is subject to
numerous environmental laws and regulations. FRP has incurred
and will continue to incur, significant capital expenditures and
operating costs based on these laws and regulations. Continued
governmental and public emphasis on environmental issues may
result in increased capital expenditures and operating costs in
the future, although the impact of future laws and regulations or
future changes to existing laws and regulations cannot be
predicted or quantified.
Federal legislation (sometimes referred to as "Superfund"
legislation) imposes liability, without regard to fault, for
clean-up of certain waste sites, even though waste management
activities at the site may have been performed in compliance with
regulations applicable at the time. Under the Superfund
legislation, one responsible party may be required to bear more
than its proportional share of clean-up costs if payments cannot
be obtained from other responsible parties. In addition,
federal and state regulatory programs and legislation mandate
clean-up of certain wastes at operating sites. Governmental
authorities have the power to enforce compliance with these
regulations and permits, and violators are subject to civil and
criminal penalties, including fines, injunctions or both. Third
parties also have the right to pursue legal actions to enforce
compliance. Liability under these laws can be significant and
unpredictable.
FRP has received notices from governmental agencies that it
is one of many potentially responsible parties at certain sites
under relevant federal and state environmental laws. Some of
these sites involve significant cleanup costs. The ultimate
settlement of liability for the clean-up of such sites usually
occurs many years after the receipt of notices identifying
potentially responsible parties because of the many complex,
technical and financial issues associated with site clean-up.
FRP cannot predict its potential liability for the clean-up costs
that it may incur in the future.
Operating Hazards
FRP's offshore sulphur mining and oil production operations,
and its marine transportation operations, are subject to marine
perils, including collisions, fire, explosions, hurricanes and
other adverse weather conditions. FRP's mining operations are
also subject to risks such as unexpected geological conditions
resulting in cave-ins, flooding and rock-bursts and unexpected
changes in rock stability conditions. FRP's oil exploration and
production activities are subject to risks including blowouts,
cratering and fires, each of which could result in personal
injury to personnel or damage to property and the environment.
FRP's operations may be subject to significant interruption,
and FRP may be subject to significant liability due to industrial
accidents occurring at one or more of its plants, or drilling or
mining operations, or severe weather or natural disaster damage
to any one or more its plants, or drilling or mining operations.
Foreign Sales
A significant portion of FRP's revenues come from sales outside
of the United States. FRP's foreign sales are subject to
numerous risks including changes in currency and exchange
controls, the availability of foreign exchange, laws, regulatory
policies and actions affecting foreign trade and government
subsidies, tariffs and quotas.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Freeport-McMoRan Resource Partners,
Limited Partnership
By: /s/ Nancy D. Bonner
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Nancy D. Bonner
Vice President & Controller
(authorized signatory and
Principal Accounting Officer)
Date: December 20, 1996
