Phelps Dodge Statement

Phelps Dodge Corp. today issued the following statement regarding Xstrata plc’s revised offer for Falconbridge Ltd. & today’s announcement by Atticus Capital that it does not support Phelps Dodge’s proposed acquisition of Inco Ltd.:

J. Steven Whisler, chairman and chief executive officer of Phelps Dodge, said: "We believe Inco's bid for Falconbridge, which we fully support, represents the most compelling offer for Falconbridge. This is the only proposal that allows Falconbridge shareholders to participate in the enormous synergies & upside available only by combining these 3 companies. This is the best & final proposal for Falconbridge that we will support. It is time for Falconbridge shareholders to decide what is truly in their best interests.

“Today’s announcement by hedge fund Atticus Capital opposing our proposed transactions does not surprise us at all. In our planning for these transactions, we always assumed this would be their position.

“Atticus has consistently recommended short-term strategies based on their own objectives. Our board of directors, which has carefully considered all of Atticus’ suggestions, has concluded unanimously that our agreement with Inco is a superior path to creating shareholder value in both the long run & the short term. The transactions we have proposed will be substantially & immediately accretive to cash flow, & the new Phelps Dodge Inco will be well positioned for the future. Fortunately, from the many conversations we have had with our shareholders in recent weeks, we are confident that most Phelps Dodge shareholders have come to see the compelling benefits of these transactions.”