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                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                                    FORM 10-Q



                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934




                       For the quarter ended June 30, 1998

                           Commission file number 1-82



                            PHELPS DODGE CORPORATION

                            (a New York corporation)



                                   13-1808503

                      (I.R.S. Employer Identification No.)


                 2600 N. Central Avenue, Phoenix, AZ 85004-3089


                  Registrant's telephone number: (602) 234-8100


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ].

Number of Common Shares outstanding at August 7, 1998:  58,674,000 shares.

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<PAGE>

                            PHELPS DODGE CORPORATION

                          Quarterly Report on Form 10-Q

                       For the Quarter Ended June 30, 1998


                                TABLE OF CONTENTS

Part I.  Financial Information

      Item 1.  Financial Statements
         Statement of Consolidated Income
         Consolidated Balance Sheet
         Consolidated Statement of Cash Flows
         Consolidated Statement of Common Shareholders' Equity
         Notes to Consolidated Financial Information
         Review by Independent Accountants
         Report of Independent Accountants on Review of Interim
           Financial Information

      Item 2.  Management's Discussion and Analysis
         Results of Operations
         Results of Phelps Dodge Mining Company
         Results of Phelps Dodge Industries
         Other Matters Relating to the Statement of Consolidated Income
         Changes in Financial Condition

Part II.  Other Information

      Item 1.  Legal Proceedings

      Item 4.  Submission of Matters to a Vote of Security Holders

      Item 6.  Exhibits and Reports on Form 8-K

      Signatures

      Index to Exhibits
<PAGE>
                    PHELPS DODGE CORPORATION AND SUBSIDIARIES

                          Part I. Financial Information

Item 1. Financial Statements

STATEMENT OF CONSOLIDATED INCOME
(Unaudited; in millions except per share data)
<TABLE>
<CAPTION>
                                                                First Six
                                       Second Quarter             Months
                                       --------------          -------------
                                      1998        1997        1998       1997
                                      ----        ----        ----       ----
<S>                                 <C>           <C>         <C>         <C>
SALES AND OTHER OPERATING
 REVENUES                           $   794.4     1,065.0     1,592.7     2,086.7
                                    ---------     -------     -------     -------

OPERATING COSTS AND EXPENSES
   Cost of products sold                605.7       742.9     1,196.1     1,438.8
   Depreciation, depletion
    and amortization                     71.0        69.7       144.5       138.6
   Selling and general
    administrative expense               30.4        35.2        64.2        68.9
   Exploration and research
    expense                              13.4        26.5        26.3        43.7
   (Gain) loss on asset
    dispositions (see Note 4)             0.1        --        (186.1)       --
                                    ---------     -------     -------     -------
                                        720.6       874.3     1,245.0     1,690.0
                                    ---------     -------     -------     -------
OPERATING INCOME                         73.8       190.7       347.7       396.7
   Interest expense                     (22.9)      (16.4)      (44.6)      (32.8)
   Capitalized interest                   0.7         3.7         1.2         6.2
   Miscellaneous income and
    expense, net                         16.0        15.0        22.3        24.9
                                    ---------     -------     -------     -------
INCOME BEFORE TAXES, MINORITY
 INTERESTS AND EQUITY IN NET
 EARNINGS OF AFFILIATED
 COMPANIES                               67.6       193.0       326.6       395.0
   Provision for taxes on
    income                              (25.6)      (57.8)     (119.5)     (122.4)
   Minority interests in
    consolidated subsidiaries            (1.4)       (2.8)       (3.8)       (5.1)
   Equity in net earnings
    (losses) of affiliated               (0.2)        2.4         0.8         4.8
     companies
                                    ---------     -------     -------     -------
NET INCOME                          $    40.4       134.8       204.1       272.3
                                    =========     =======     =======     =======

BASIC EARNINGS PER SHARE            $    0.69        2.18        3.49        4.32
                                    =========     =======     =======     =======

DILUTED EARNINGS PER SHARE          $    0.69        2.16        3.48        4.29
                                    =========     =======     =======     =======
AVERAGE NUMBER OF SHARES
 OUTSTANDING - BASIC                     58.5        61.7        58.4        63.0

AVERAGE NUMBER OF SHARES
 OUTSTANDING - DILUTED                   58.7        62.3        58.7        63.5
</TABLE>

See Notes to Consolidated Financial Information.
<PAGE>
BUSINESS SEGMENTS
(Unaudited; in millions)
<TABLE>
<CAPTION>
                                                                First Six
                                       Second Quarter             Months
                                       --------------          -------------
                                      1998        1997        1998       1997
                                      ----        ----        ----       ----
<S>                                 <C>           <C>         <C>         <C>
SALES AND OTHER OPERATING
 REVENUES
   Phelps Dodge Mining
    Company                         $   440.4       603.8       881.6     1,194.1
   Phelps Dodge Industries              354.0       461.2       711.1       892.6
                                    ---------     -------     -------     -------
                                    $   794.4     1,065.0     1,592.7     2,086.7
                                    =========     =======     =======     =======
OPERATING INCOME (LOSS)
   Phelps Dodge Mining
    Company                         $    34.9       142.4        89.5       314.2
   Phelps Dodge Industries
    (see Note 4)                         46.1        59.9       277.3       105.2
   Corporate and other                   (7.2)      (11.6)      (19.1)      (22.7)
                                    ---------     -------     -------     -------
                                    $    73.8       190.7       347.7       396.7
                                    =========     =======     =======     =======
</TABLE>

See Notes to Consolidated Financial Information.
<PAGE>
CONSOLIDATED BALANCE SHEET
(Unaudited; in millions)
<TABLE>
<CAPTION>
                                                      June 30,         Dec. 31,
                                                        1998             1997
                                                        ----             ----
<S>                                                  <C>             <C>  
ASSETS
  Cash and cash equivalents                          $   336.0         157.9
  Accounts receivable, net                               391.5         420.5
  Inventories                                            287.9         297.8
  Supplies                                               114.7         115.1
  Prepaid expenses                                        12.8           7.8
  Deferred income taxes                                   49.5          52.0
                                                     ---------       -------
     Current assets                                    1,192.4       1,051.1
  Investments and long-term
   accounts receivable                                    99.2         131.8
  Property, plant and equipment, net                   3,515.6       3,445.1
  Other assets and deferred charges                      253.8         337.2
                                                     ---------       -------
                                                     $ 5,061.0       4,965.2
                                                     =========       =======
LIABILITIES
  Short-term debt                                    $    87.8          91.4
  Current portion of long-term debt                       65.2          54.8
  Accounts payable and accrued expenses                  445.3         553.2
  Dividends payable (see Note 9)                          29.3          --
  Accrued income taxes                                    49.2           1.7
                                                     ---------       -------
     Current liabilities                                 676.8         701.1
  Long-term debt                                         831.7         857.1
  Deferred income taxes                                  499.1         439.2
  Other liabilities and deferred credits                 336.4         344.1
                                                     ---------       -------
                                                       2,344.0       2,341.5
                                                     ---------       -------
MINORITY INTERESTS IN CONSOLIDATED
 SUBSIDIARIES                                             95.6         113.3
                                                     ---------       -------
COMMON SHAREHOLDERS' EQUITY
  Common shares, 58.7 outstanding
   (12/31/97 - 58.6)                                     366.7         366.5
  Capital in excess of par value                           2.3          --
  Retained earnings                                    2,416.8       2,301.0
  Accumulated other comprehensive
   income (loss)                                        (155.7)       (146.9)
  Other                                                   (8.7)        (10.2)
                                                     ---------       -------
                                                       2,621.4       2,510.4
                                                     ---------       -------
                                                     $ 5,061.0       4,965.2
                                                     =========       =======
</TABLE>
See Notes to Consolidated Financial Information.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; in millions)
<TABLE>
<CAPTION>
                                                               Six months
                                                                 ended
                                                                June 30,
                                                             -------------
                                                          1998           1997
                                                          ----           ----
<S>                                                      <C>             <C>  
OPERATING ACTIVITIES
 Net income                                              $  204.1        272.3
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation, depletion and
    amortization                                            144.5        138.6
   Deferred income taxes                                     21.6         35.5
   Equity earnings net of dividends
    received                                                  0.4         (1.9)
   Changes in current assets and
    liabilities:
     (Increase) decrease in accounts receivable             (32.0)       (29.8)
     (Increase) decrease in inventories                     (17.8)       (18.5)
     (Increase) decrease in supplies                         (4.1)         1.3
     (Increase) decrease in prepaid expenses                 (5.9)       (11.4)
     (Increase) decrease in deferred income taxes             1.1          1.0
     Increase (decrease) in interest payable                  3.2          2.0
     Increase (decrease) in other accounts payable          (50.6)        (8.4)
     Increase (decrease) in accrued income taxes             48.8          1.9
     Increase (decrease) in other accrued expenses           (4.9)        (6.1)
   Gain on asset disposition (see Note 4)                  (186.1)        --
   Other adjustments, net                                   (13.1)        (1.3)
                                                         --------       ------
     Net cash provided by operating activities              109.2        375.2
                                                         --------       ------
INVESTING ACTIVITIES
 Capital outlays                                           (179.8)      (281.9)
 Capitalized interest                                        (1.2)        (6.2)
 Investment in subsidiaries                                (129.6)       (33.7)
 Proceeds from asset dispositions
  and other (see Note 4)                                    452.0         (1.3)
                                                         --------       ------
     Net cash provided by (used in)
      investing activities                                  141.4       (323.1)
                                                         --------       ------
FINANCING ACTIVITIES
 Increase in debt                                            19.1        214.3
 Payment of debt                                            (33.9)       (24.3)
 Common dividends                                           (58.9)       (63.2)
 Purchase of common shares                                   --         (306.6)
 Other, net                                                   1.2          9.7
                                                         --------       ------
     Net cash used in financing activities                  (72.5)      (170.1)
                                                         --------       ------
INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                           178.1       (118.0)
CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD                                                  157.9        470.1
                                                         --------       ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $  336.0        352.1
                                                         ========        =====
</TABLE>

See Notes to Consolidated Financial Information.


<PAGE>
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(Unaudited; in millions)
<TABLE>
<CAPTION>
                       Common Shares                               Accumulated
                      ---------------                                 Other
                      Number             Capital in               Comprehensive            Common
                        of      At Par   Excess of    Retained       Income             Shareholders'
                      shares    Value    Par Value    Earnings       (Loss)      Other     Equity
                      ------    -----     --------    --------       ------      -----     ------
<S>                    <C>      <C>        <C>        <C>          <C>         <C>        <C>      
BALANCE AT
 DECEMBER 31, 1997     58.6     $366.5     $ --       $2,301.0      $(146.9)    $(10.2)   $ 2,510.4
  Stock options
   exercised            0.1        0.2      1.8                                                 2.0
  Restricted shares
   issued, net           --         --     (0.4)                                   1.5          1.1
  Other investment
   adjustments                              0.9                                                 0.9
  Dividends on common
   shares                                                (88.3)                               (88.3)
  Comprehensive
   income:
     Net income                                          204.1                                204.1
     Other
      comprehensive
      income, net of
      tax:
       Translation
        adjustment                                                     (8.9)                   (8.9)
       Unrealized
        gains on
        securities                                                      0.1                     0.1
                                                                    -------                --------
       Other
        comprehensive
        income                                                         (8.8)                   (8.8)
                                                                    -------                --------
     Comprehensive
      income                                                                                  195.3
                       ----     ------     ----       --------      -------     ------     --------
BALANCE AT
JUNE 30, 1998          58.7     $366.7     $2.3       $2,416.8      $(155.7)    $ (8.7)    $2,621.4
                       ====     ======     ====       ========      =======     ======     ========
</TABLE>
See Notes to Consolidated Financial Information.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)

1.       The unaudited  consolidated  financial information presented herein has
         been prepared in accordance with the instructions to Form 10-Q and does
         not include all of the  information  and note  disclosures  required by
         generally accepted accounting principles.  Therefore,  this information
         should  be  read  in  conjunction  with  the   consolidated   financial
         statements and notes thereto  included in the  Corporation's  Form 10-K
         for the year ended  December 31, 1997.  This  information  reflects all
         adjustments that are, in the opinion of management, necessary to a fair
         statement of the results for the interim periods reported.

2.       The results of operations for the  three-month  and six-month  periods
         ended June 30, 1998, are not  necessarily  indicative of the results to
         be expected for the full year.

3.       Depending on market  circumstances,  the Corporation  may  periodically
         purchase or liquidate  various copper price protection  contracts for a
         portion of its expected  future mine production to mitigate the risk of
         adverse  price  fluctuations.  The  Corporation  currently  has no such
         copper price protection contracts in place.

4.       Effective  January 1, 1998, the Corporation  sold Accuride  Corporation
         and related subsidiaries,  its wheel and rim manufacturing business, to
         an affiliate of Kohlberg  Kravis Roberts and Co. (KKR) and the existing
         management of Accuride.  The Corporation retained a 10 percent interest
         in Accuride.  Under the terms of the sales  agreement,  the Corporation
         received  proceeds of $453.2  million  from KKR  resulting in a pre-tax
         gain of  approximately  $186.1 million  ($122.8 million after taxes, or
         $2.09 per common share).

5.       On February 3, 1998, the Corporation acquired the stock of Cobre Mining
         Company Inc. (Cobre) for $113.3 million  including  acquisition  costs.
         The Corporation also assumed Cobre's outstanding debt of $14.8 million.
         The  acquisition  was  at  a  price  of  $3.85  per  common  share  for
         substantially all of Cobre's 27 million common shares, including shares
         issuable  upon the exercise of  outstanding  warrants and options.  The
         primary assets of Cobre include the Continental  Mine,  which comprises
         an open-pit copper mine, two underground  copper mines,  two mills, and
         the surrounding 11,000 acres of land located in southwestern New Mexico
         adjacent to the Corporation's Chino operations.

6.       In the  1998  first  quarter,  the  Corporation  adopted  Statement  of
         Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
         Income." The Corporation has presented the required  information in the
         Consolidated Statement of Common Shareholders' Equity. SFAS No. 130 has
         no  effect  on  the  Corporation's  results  of  operations,  financial
         position, capital resources or liquidity.

7.       On March 4,  1998,  and April 3,  1998,  respectively,  the  Accounting
         Standards  Executive Committee issued Statement of Position (SOP) 98-1,
         "Accounting  for the Costs of Computer  Software  Developed or Obtained
         for  Internal  Use" and SOP 98-5,  "Reporting  on the Costs of Start-Up
         Activities."  These  statements  become  effective  for fiscal  periods
         beginning after December 15, 1998. The Corporation will adopt both SOPs
         in 1999. The Corporation  does not expect either SOP to have a material
         effect on its results of operations or financial position.

8.       In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments and Hedging  Activities."
         This Statement requires recognition of all derivatives as either assets
         or  liabilities   on  the  balance  sheet  and   measurement  of  those
         instruments at fair value. Changes in the fair value of derivatives are
         recorded each period in current earnings or other comprehensive income,
         depending  on whether a  derivative  is  designated  as part of a hedge
         transaction and, if it is, the type of hedge transaction.

         This Statement is effective for fiscal years  beginning  after June 15,
         1999.  Phelps  Dodge plans to adopt SFAS No. 133  effective  January 1,
         2000. The Corporation is evaluating the effect this Statement will have
         on its financial reporting and disclosures.

9.       On June 24,  1998,  the  Corporation's  board of  directors  declared a
         regular  quarterly  dividend of 50 cents per common  share for the 1998
         third  quarter.  This  dividend is to be paid on September 10, 1998, to
         common  shareholders  of record at the close of  business on August 20,
         1998. This has resulted in an outstanding  dividends payable balance of
         $29.3 million as of June 30, 1998.

REVIEW BY INDEPENDENT ACCOUNTANTS

         The financial  information as of June 30, 1998, and for the three-month
and six-month periods ended June 30, 1998 and 1997,  included in Part I pursuant
to Rule 10-01 of Regulation S-X has been reviewed by PricewaterhouseCoopers  LLP
(PwC), the Corporation's  independent accountants,  in accordance with standards
established by the American  Institute of Certified  Public  Accountants.  PwC's
report is included in this quarterly report.

         PwC does not carry out any significant or additional audit tests beyond
those that would have been necessary if its report had not been included in this
quarterly  report.  Accordingly,  such  report is not a  "report"  or "part of a
registration  statement"  within  the  meaning  of  Sections  7 and  11  of  the
Securities Act of 1933 and the liability provisions of Section 11 of such Act do
not apply.
<PAGE>
<AUDIT-REPORT>
                           PRICEWATERHOUSECOOPERS LLP
                        REPORT OF INDEPENDENT ACCOUNTANTS


July 13, 1998


To the Board of Directors and Shareholders of
  the Phelps Dodge Corporation

We have  reviewed the  accompanying  consolidated  balance sheet of Phelps Dodge
Corporation  and its  subsidiaries  as of June 30,  1998,  and the  consolidated
statements of income, of cash flows and of common  shareholders'  equity for the
three-month  and six-month  periods ended June 30, 1998 and 1997. This financial
information is the responsibility of the Corporation's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the consolidated financial information referred to above for it to be
in conformity with generally accepted accounting principles.

We previously audited in accordance with generally accepted auditing  standards,
the  consolidated  balance  sheet  as of  December  31,  1997,  and the  related
consolidated  statements  of income,  of cash flows and of common  shareholders'
equity for the year then ended (not presented  herein),  and in our report dated
January  15,  1998,  except as to Note 2, which is as of  February  3, 1998,  we
expressed an unqualified opinion on those consolidated financial statements.  In
our opinion, the information set forth in the accompanying  consolidated balance
sheet  information  as of December  31, 1997,  is fairly  stated in all material
respects in relation to the  consolidated  balance  sheet from which it has been
derived.


PricewaterhouseCoopers LLP
Phoenix, Arizona
</AUDIT-REPORT>
<PAGE>
Item 2.  Management's Discussion and Analysis

RESULTS OF OPERATIONS

         Phelps Dodge  Corporation had consolidated net income of $40.4 million,
or 69 cents per common  share,  in the second  quarter  of 1998,  compared  with
$134.8 million, or $2.16 per common share, in the 1997 second quarter.  Earnings
for the six months ended June 30, 1998, were $81.3 million,  or $1.39 per common
share,  before a non-recurring,  after-tax gain of $122.8 million,  or $2.09 per
common  share,  from the  January  1998,  sale of Accuride  Corporation,  Phelps
Dodge's wheel and rim business.  Net income after the non-recurring gain for the
six months ended June 30, 1998, was $204.1  million,  or $3.48 per common share,
compared with $272.3 million,  or $4.29 per common share,  in the  corresponding
1997 period.

         Earnings  before  non-recurring  items  were  less in the  1998  second
quarter and the six-month period ended June 30, 1998, than in the  corresponding
1997 periods principally as a result of lower average copper prices. The average
spot  price  per pound of  cathode  copper  on the New York  Commodity  Exchange
(COMEX) was  approximately  36 cents per pound (32 percent)  lower in the second
quarter  of 1998 than the  second  quarter  of 1997,  and 35 cents per pound (31
percent)  lower than the average price in the first half of 1997.  The effect of
this price decrease was mitigated by increased  volumes of copper sold from mine
production,  decreased  copper  production  costs,  and improved  results at the
Corporation's carbon black and wire and cable businesses.

         The  COMEX  spot  price per pound of  copper  cathode,  upon  which the
Corporation  bases its selling price for a majority of its production,  averaged
78 cents in both the second quarter and first six months of 1998,  compared with
$1.14  and $1.13 in the  corresponding  1997  periods.  From July 1 to August 7,
1998, the COMEX price averaged 75 cents per pound, closing at 74 cents on August
7, 1998.

         Any material change in the price the  Corporation  receives for copper,
or in its unit production  costs, has a significant  effect on the Corporation's
results.  The Corporation's  present share of annual production is approximately
1.8 billion pounds of copper.  Accordingly,  each 1 cent per pound change in the
average  annual copper price received by the  Corporation,  or in average annual
unit  production  costs,  causes a variation in annual  operating  income before
taxes of approximately $18 million.

         Depending on market  circumstances,  the Corporation  may  periodically
purchase or liquidate various copper price protection contracts for a portion of
its  expected  future  mine  production  to mitigate  the risk of adverse  price
fluctuations.  The  Corporation  currently  has no such copper price  protection
contracts in place.

         Sales were  $794.4  million in the 1998  second  quarter  and  $1,592.7
million in the first six months of 1998,  compared  with  $1,065.0  million  and
$2,086.7  million  in  the  corresponding  1997  periods.   The  1998  decreases
principally  resulted  from  lower  average  copper  prices  and the  absence of
Accuride  Corporation,  partially  offset by higher sales  volumes of copper and
carbon black.

RESULTS OF PHELPS DODGE MINING COMPANY

         Phelps Dodge Mining Company is an international  business  comprising a
group of companies involved in vertically integrated copper operations including
mining,  concentrating,  electrowinning,  smelting and refining, rod production,
marketing and sales, and related activities.  Copper is sold primarily to others
as rod,  cathode or in  concentrates,  and as rod to the Phelps Dodge Industries
segment.  In addition,  Phelps Dodge Mining  Company at times smelts and refines
copper and produces  copper rod for others on a toll basis.  Phelps Dodge Mining
Company also produces gold, silver, molybdenum and copper chemicals, principally
as by-products,  and sulfuric acid from its air quality control facilities. This
segment also includes the Corporation's  other mining operations and investments
(including  fluorspar,  silver,  lead and  zinc  operations)  and its  worldwide
mineral exploration and development programs.

================================================================================
<TABLE>
<CAPTION>
                                                                        First Six
                                                   Second Quarter         Months
                                                   --------------      --------------
                                                   1998      1997      1998      1997
                                                   ----      ----      ----      ----
<S>                                               <C>       <C>       <C>       <C>
Copper production (short tons):
  Total production                                263,100   241,400   526,900   476,700
  Less minority participants'
   shares *                                        44,500    41,900    89,300    82,600
                                                  -------   -------   -------   -------
  Net Phelps Dodge share                          218,600   199,500   437,600   394,100
                                                  =======   =======   =======   =======
Copper sales (short tons):
  Net Phelps Dodge share from
   own mines                                      214,800   189,700   430,100   382,500
  Purchased copper                                 79,100    83,100   159,000   156,200
                                                  -------   -------   -------   -------
  Total copper sales                              293,900   272,800   589,100   538,700
                                                  =======   =======   =======   =======
New York Commodity Exchange
  average spot price per
  pound - copper cathodes                         $  0.78      1.14      0.78      1.13

                                                               (in millions)
Sales and other operating
 revenues                                         $ 440.4     603.8     881.6   1,194.1

Operating income                                  $  34.9     142.4      89.5     314.2
</TABLE>
-------------------------

*        Minority  participant  interests  include  (i) a 15  percent  undivided
         interest  in the  Morenci,  Arizona,  copper  mining  complex  held  by
         Sumitomo  Metal  Mining  Arizona,  Inc.,  (ii) a one-third  partnership
         interest in Chino Mines  Company in New Mexico held by Heisei  Minerals
         Corporation,  and (iii) a 20 percent  interest in  Candelaria  in Chile
         held by SMMA  Candelaria,  Inc., a jointly owned subsidiary of Sumitomo
         Metal Mining Co., Ltd. and Sumitomo Corporation.

================================================================================

         Phelps  Dodge  Mining  Company's  sales  and other  operating  revenues
decreased by $163.4  million,  or 27 percent,  in the 1998 second quarter and by
$312.5 million, or 26 percent, in the first six months of 1998 compared with the
corresponding  1997  periods.  These  variances  primarily  reflected  decreased
average  selling  prices for copper  that  resulted  in  revenue  reductions  of
approximately $196 million and $377 million, respectively.  Partially offsetting
that price  variance  was a 21,100 ton, or 8 percent,  increase in the volume of
copper sold in the 1998 second  quarter and a 50,400 ton, or 9 percent  increase
in the  volume of  copper  sold for the first six  months.  These  sales  volume
increases  principally  were due to greater  availability  of Phelps Dodge mined
copper  resulting from production  increases at the Candelaria mine in Chile and
the February 1998  acquisition of Cobre Mining Company Inc.  (Cobre) (see Note 5
to the Consolidated Financial Information).

         Phelps Dodge Mining Company reported  operating income of $34.9 million
in the 1998 second  quarter,  compared with $142.4 million in the  corresponding
1997 period.  For the six-month period ended June 30, 1998,  Phelps Dodge Mining
Company  contributed  operating  income of $89.5  million,  compared with $314.2
million in the corresponding 1997 period.  These decreases  primarily  reflected
the lower  average  copper  prices,  partially  offset by the higher  volumes of
copper sold from mine production and lower copper production costs.  Copper sold
from mine  production  increased  by 25,100  tons,  or 13  percent,  over second
quarter 1997  production and by 47,600 tons, or 12 percent,  over  production in
the first six months of 1997. Lower 1998 copper  production costs were primarily
due to the effect of the  Candelaria  mine  expansion.  The  comparison  for the
six-month  period also reflected a first quarter  insurance  claim recovery that
added $11.5  million to Phelps Dodge  Mining  Company's  operating  income ($6.7
million or 11 cents per share, after taxes) in the first half of 1998.

         On May 29, 1998, the  Corporation  announced that it had withdrawn as a
member of the Kafue  Consortium.  The Consortium had been  negotiating  with the
Government of the Republic of Zambia on the purchase of a 94 percent interest in
the Nkana and Nchanga Divisions of the Zambia Consolidated Copper Mines Limited.

         The  collective  bargaining   agreements  covering   approximately  625
employees  at Phelps  Dodge  Mining  Company's  Chino  operations  in New Mexico
expired on June 30, 1996.  As of August 7, 1998,  employees  who were covered by
the agreements have continued to work without a contract.

RESULTS OF PHELPS DODGE INDUSTRIES

         Phelps Dodge  Industries  is a business  segment  comprising a group of
companies  that  manufacture  engineered  products  principally  for the  global
energy, telecommunications,  transportation and specialty chemicals sectors. Its
operations  are  characterized  by  products  with  significant   market  share,
internationally  competitive  cost  and  quality,  and  specialized  engineering
capabilities.   This  business  segment  includes  the  Corporation's  specialty
chemical  operations  through Columbian  Chemicals Company and its subsidiaries;
its wire and cable and  specialty  conductor  operations  through  Phelps  Dodge
International  Corporation  and  Phelps  Dodge  Magnet  Wire  Company  and their
subsidiaries and affiliates; and, until its sale, effective January 1, 1998, its
wheel and rim operations through Accuride Corporation and its subsidiaries.

================================================================================
<TABLE>
<CAPTION>
                                                                  First Six
                                            Second Quarter         Months
                                            --------------      -------------
                                            1998       1997     1998     1997
                                            ----       ----     ----     ----
                                                       (in millions)
<S>                                       <C>          <C>      <C>      <C>  
Sales and other operating revenues:
  Specialty chemicals                     $  109.0     106.4    222.3    215.1
  Wheels and rims *                           --        87.1     --      168.6
  Wire and cable                             245.0     267.7    488.8    508.9
                                          --------     -----    -----    -----
                                          $  354.0     461.2    711.1    892.6
                                          ========     =====    =====    =====

Operating income:
  Specialty chemicals                     $   21.8      18.6     43.1     35.8
  Wheels and rims *                           (0.1)     13.7    186.1     19.8
  Wire and cable                              24.4      27.6     48.1     49.6
                                          --------     -----    -----    -----
                                          $   46.1      59.9    277.3    105.2
                                          ========     =====    =====    =====
</TABLE>
-------------------------

*        Accuride Corporation,  the Corporation's wheel and rim business, was 
         sold  effective January 1, 1998,  resulting in a pre-tax gain of $186.1
         million (see Note 4 to the Consolidated Financial Information).

======================================================================

         Phelps Dodge Industries' reported sales of $354.0 million in the second
quarter  and  $711.1  million  for the first six months of 1998,  compared  with
$461.2  million  and  $892.6  million in the  corresponding  1997  periods.  The
decreases  principally  reflected  the  effect  of the  sale of  Accuride  which
contributed sales of $87.1 million in the 1997 second quarter and $168.6 million
for the first six months of 1997.  Also included in the  decreases  were reduced
sales  prices for magnet wire  related to low copper  prices,  and the effect of
Asian  economic  disruptions  on the  Corporation's  wire  and  cable  business,
particularly in Thailand.

         During  the 1998  second  quarter,  Phelps  Dodge  Industries  recorded
operating  income  of  $46.1  million,   compared  with  $46.2  million  in  the
corresponding   1997  period  before  Accuride's  $13.7  million   contribution.
Operating  income  in the first six  months of 1998 was $91.2  million  before a
$186.1  million  pre-tax  gain from the sale of  Accuride,  compared  with $85.4
million  in the  first  six  months  of 1997  before  Accuride's  $19.8  million
contribution.  The 1998 operating income equaled or exceeded corresponding prior
year  periods,   excluding  Accuride,  despite  the  continuing  Asian  economic
disruptions.  This reflected strong performances by its U.S. and European carbon
black  businesses.  The new 60  percent  owned wire and cable  joint  venture in
Brazil,  which  was  acquired  at  the  end of  1997,  contributed  to the  1998
performance of Phelps Dodge Industries.

         On June 16, 1998, the Corporation announced an agreement to acquire the
Brazilian carbon black manufacturing  business of Copebras S.A., a subsidiary of
Minorco,  for  approximately  $220  million.  Columbian  Chemicals  will  assume
management  and  operating   responsibility  of  the  new  company.   The  sales
transaction  is expected to be completed  later in the year.  The  manufacturing
facility  has an annual  production  capacity  of 170,000  metric tons of carbon
black and annual sales of approximately $110 million.

         The  collective   bargaining   agreement  covering   approximately  360
employees at Phelps Dodge Magnet Wire Company's  Hopkinsville,  Kentucky,  plant
expired on October 11, 1996. As of August 7, 1998, employees who were covered by
the agreement have continued to work without a contract.

OTHER MATTERS RELATING TO THE STATEMENT OF CONSOLIDATED INCOME

         The Corporation's 1998 second quarter  exploration and research expense
was $13.4  million,  a  decrease  of 49  percent  from  that in the 1997  second
quarter.  Exploration and research  expense for the first six months of 1998 was
$26.3 million, a 40 percent decrease from the corresponding  1997 period.  These
decreases  were  principally  a result of the  closure  of the U.S.  exploration
offices  during the 1997 fourth  quarter,  but also  reflected  generally  lower
exploration expenditures worldwide.

         Miscellaneous  income and  expense,  net,  in the 1998  second  quarter
included a non-cash,  pre-tax gain of $8.8 million from the dissolution of joint
venture partnerships between Phelps Dodge and Sumitomo Electric Industries, Ltd.
at five  international  wire and cable  manufacturing and support  companies.  A
non-cash,  pre-tax gain of $6.0 million was included in miscellaneous income and
expense,  net,  in the 1997  second  quarter  from the  exchange  of shares of a
cost-basis investment in a wire and cable business located in Greece.

         Interest  expense net of capitalized  interest was $22.2 million in the
second quarter of 1998 and $43.4 million in the first six months,  compared with
$12.7 million and $26.6 million in the  corresponding  periods in 1997. The 1998
increases  principally reflect interest associated with corporate debt issued in
the 1997 fourth quarter.

         The Corporation  continues to review its year 2000 readiness  including
cost  estimations,  exposure  and  contingency  plans.  Comprehensive  plans  to
identify,  correct  or  reprogram  and test its  systems  to  ensure  year  2000
compliance  have  been   finalized.   The  Corporation  is  in  the  process  of
implementing  the  required  changes  to  its  internal  computer  systems  with
particular  attention  being  given to process  control  technology.  Also,  the
Corporation  continues to focus attention on the compliance  efforts of vendors,
customers,  service providers,  shippers and other third-party providers, and is
in the process of attaining  confirmations  from them with regard to their state
of readiness.  Notwithstanding  the substantive  efforts  described  above,  the
Corporation  could  potentially  experience  disruptions  to some aspects of its
operations.  Contingency  plans  are  therefore  under  development  in order to
mitigate the extent of potential  disruptions  to the business  operations.  The
total cost to the  Corporation of achieving year 2000  compliance,  which is not
expected to be material to the  operations  of Phelps  Dodge,  is  estimated  at
approximately  $10 million as  previously  reported in the 1997 Annual Report on
Form 10-K.

CHANGES IN FINANCIAL CONDITION

         Capital  expenditures  and  investments  during the first six months of
1998 were $241.7  million for Phelps  Dodge  Mining  Company,  including  $113.3
million  for the  acquisition  of the  stock of Cobre  Mining  Company.  Capital
expenditures  and  investments  were $71.0 million for Phelps Dodge  Industries.
Capital  expenditures  and  investments  in the  corresponding  1997 period were
$220.3 million for Phelps Dodge Mining Company, including $108.3 million for the
expansion of the Corporation's  Candelaria mining operations in Chile, and $92.8
million  for  Phelps  Dodge   Industries.   The   Corporation   expects  capital
expenditures and investments for the year 1998 to be approximately  $350 million
for Phelps Dodge Mining Company and approximately  $325 million for Phelps Dodge
Industries, including the planned acquisition of Copebras.

         At June 30,  1998,  the  Corporation's  total debt was $984.7  million,
compared with $1,003.3 million at year-end 1997. The Corporation's ratio of debt
to total  capitalization  was 26.6 percent at June 30, 1998,  compared with 27.7
percent at December 31, 1997.

         On June 10, 1998, the Corporation paid a regular quarterly  dividend of
50 cents per share on its common shares for the 1998 second  quarter;  the total
amount paid was $29.3  million,  bringing total 1998 dividends paid through June
30 to $58.9 million.  On June 24, 1998,  the board of directors  declared a 1998
third  quarter  regular  dividend  of 50 cents  per  common  share to be paid on
September 10, 1998, to shareholders of record at the close of business on August
20, 1998.

         This year through  August 7, the  Corporation  has not purchased any of
its  shares  under its May 7, 1997,  share  purchase  authorization.  Under that
program,  2,394,000 shares remain authorized for purchase. There were 58,674,000
common shares outstanding at June 30, 1998.
<PAGE>
                           Part II. Other Information


Item 1.  Legal Proceedings

         I. Reference is made to Paragraph II, section  A.2.(a) of Item 3, Legal
Proceedings of the Corporation's Form 10-K for the year ended December 31, 1997,
regarding In re the General  Adjudication of All Rights to use Water in the Gila
River System and Source,  Nos. W-1 (Salt River),  W-2 (Verde  River),  W-3 (Gila
River) and W-4 (San Pedro River) (Superior Court of Arizona, Maricopa County).

         On May 4,  1998,  Phelps  Dodge  and the Gila  River  Indian  Community
executed a settlement  agreement  that  resolves the issues  between  themselves
pertinent to this litigation.  This settlement is subject to the approval of the
Secretary of the Interior and the passage of federal legislation.

Item 4.  Submission of Matters to a Vote of Security Holders

         The  Corporation's  annual  meeting was held on May 6, 1998. A total of
49,685,703  common shares,  or about 84.7 percent of the issued and  outstanding
common shares of the  Corporation,  were  represented at the meeting.  Set forth
below is a description of the matters voted upon at the meeting and a summary of
the voting regarding each matter:
<TABLE>
<CAPTION>
                                      For                    Withheld
                                      ---                    --------
<S>                                 <C>                       <C>
Election of Directors:
  Paul Hazen                        49,320,772                364,931

  Manuel J. Iraola                  49,322,352                363,351

  Marie L. Knowles                  49,315,654                370,049

  Gordon R. Parker                  49,324,895                360,808
</TABLE>

<TABLE>
<CAPTION>
                                       For            Against       Abstain
                                       ---            -------       -------
<S>                                  <C>             <C>             <C>
Appointment of
 Auditors                            49,455,491         36,099       194,113

Proposal to adopt the
 1998 Stock Option
  and Restricted
   Stock Plan                        43,770,370      1,756,651       204,407
</TABLE>

         There were no broker non-votes  included in the results of the election
of directors listed above, the appointment of auditors,  or adoption of the 1998
Stock Option and Restricted Stock Plan.


Item 6.  Exhibits and Reports on Form 8-K

          (a) Any exhibits required to be filed by the Corporation are listed in
              the Index to Exhibits.

          (b) No reports on Form 8-K were  filed by the  Corporation  during the
              quarter ended June 30, 1998.
<PAGE>

                                   SIGNATURES



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Corporation  has duly  caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                         PHELPS DODGE CORPORATION
                                         ------------------------
                                        (Corporation or Registrant)




Date:   August 12, 1998                  By:  Gregory W. Stevens
                                              ------------------
                                              Gregory W. Stevens
                                          Vice President and Controller
                                          (Principal Accounting Officer)
<PAGE>

                    PHELPS DODGE CORPORATION AND SUBSIDIARIES

                                INDEX TO EXHIBITS


10.12      The  Corporation's  1998 Stock Option and Restricted  Stock Plan (the
           1998  Plan),   (incorporated  by  reference  to  Exhibit  99  to  the
           Corporation's  Registration Statement on Form S-8 (Reg No. 333-52175)
           (SEC File No.  1-82)).  Forms of Stock  Option  Agreement  and Reload
           Option  Agreement  under the 1998 Plan, and form of Restricted  Stock
           Agreement under the 1998 Plan, all effective as of March 4, 1998 (SEC
           File No. 1-82).

12         Computation of ratios of total debt to total capitalization.

15         Letter from  PricewaterhouseCoopers  LLP with  respect to  unaudited
           interim financial information.