Notes To Consolidated Financial Statements FCX has provided a valuation allowance equal to its tax  credit carryforwards ($509.6 million at December 31, 2004,  and $466.0 million at December 31, 2003) as these would  only be used should FCX be required to pay regular U.S.  tax, which is considered unlikely for the foreseeable future  and because the foreign tax credits expire after ten years.  Atlantic Copper is subject to taxation in Spain and has not  generated significant taxable income in recent years. FCX  has provided a valuation allowance equal to the future tax  benefits resulting from Atlantic Copper’s net operating  losses totaling $423.8 million at December 31, 2004, and  $282.6 million at December 31, 2003, which expire through the year 2019. PT Freeport Indonesia’s Indonesian income tax returns  prior to 2000 have been audited or are no longer subject to  review by the Indonesian tax authorities. FCX’s provision for income taxes consists of the following (in thousands): 2004  2003  2002 Current income taxes: Indonesian  $236,836  $218,017  $186,418 United States and other  7,049  9,383  7,624  243,885   227,400   194,042 Deferred Indonesian taxes  86,795   110,653  51,476 Provision for income taxes per income statements   330,680   338,053   245,518 Tax effect of cumulative effect adjustments  —  6,306  (2,352) Total provision for income taxes  $330,680  $344,359  $243,166 2004  2003  2002 Am ount Percent  Amount  Percent  Amount  Percent Income taxes computed at the contractual Indonesian tax rate  $2 0 1,034 35%  $204,321  35%  $157,382 35% Indonesian withholding tax on: Earnings/dividends  4 7,347 8  42,632  7  34,955 8 Interest  1,120 —  1,223  —  1,551 — Other adjustments: Parent company costs  4 0,435 7  61,923  11  45,279 10 Atlantic Copper net loss 3 6,186 6  20,488  3  12,093 3 U.S. alternative minimum tax  8,200 2  9,300  2  8,200 2 Intercompany interest expense  — —  (4,789) (1)  (8,496) (2) Other, net  ( 3,642) —  2,955  1  (5,446) (1) Provision for income taxes per income statements  3 3 0,680 58%   338,053  58%   245,518 55% Tax effect of cumulative effect adjustments  — 6,306  (2,352) Total provision for income taxes  $3 3 0,680 $344,359  $243,166 Note 9.  Investment in PT Smelting and Employee Benefits Differences between income taxes computed at the  contractual Indonesian tax rate and income taxes recorded  follow (dollars in thousands): for the first 15 years of PT Smelting’s commercial opera- tions beginning December 1998, the treatment and refining  charges on the majority of the concentrate PT Freeport  Indonesia provides will not fall below specified minimum  rates, subject to renegotiation in 2008. The rate was $0.23  per pound during the period from the commencement of  PT Smelting’s operations in 1998 until April 2004, when it  declined to a minimum of $0.21 per pound. In December  2003, PT Smelting’s shareholder agreement was amended to  eliminate PT Freeport Indonesia’s assignment of its earnings  in PT Smelting to support a 13 percent cumulative annual  return to Mitsubishi Materials, Mitsubishi and Nippon for  PT Smelting.  PT Smelting, an Indonesian company, operates  a smelter/refinery in Gresik, Indonesia. In 2004, PT Smelting  increased its stated production capacity of 200,000 metric  tons of copper metal per year to 250,000 metric tons.  PT Freeport Indonesia, 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 common stock. PT Freeport  Indonesia provides nearly all of PT Smelting’s copper  concentrate requirements. Under the PT Smelting contract,   FREEPORT-McMoRan COPPER & GOLD INC. 68