EXHIBIT 10.12

                             STOCK OPTION AGREEMENT
                           (as amended June 22, 1999)

                   1998 Stock Option and Restricted Stock Plan

     STOCK OPTION AGREEMENT, dated , between PHELPS DODGE CORPORATION, a New
York corporation (the "Corporation"), and (the "Employee").

     The Compensation and Management Development Committee of the Board of
Directors of the Corporation (such Committee, and any successor committee
appointed by the Board of Directors of the Corporation to administer the
Corporation's 1998 Stock Option and Restricted Stock Plan (the "Plan"), is
hereinafter referred to as the "Committee") has granted to the Employee an
option under the Plan to purchase Common Shares of the Corporation on the terms
set forth below.

     To evidence the option so granted, and to set forth their terms and
conditions as provided in the Plan, the Corporation and the Employee hereby
agree as follows:

     1. CONFIRMATION OF GRANT OF OPTION; OPTION PRICE.

     The Corporation hereby evidences and confirms its grant to the Employee of
(i) an option (the "Option") to purchase of the Corporation's Common Shares at
an option price of $ per share. The Option granted hereby shall be subject to
the provisions of the Plan. Capitalized terms used herein that are not defined
in this Agreement shall have the meanings assigned to such terms in the Plan.

     2. TERM FOR EXERCISE.

     (a) The Option shall become exercisable, subject to the provisions of this
Section 2 and Sections 3 and 4 hereof, in installments of Common Shares on the
first anniversary of the date of grant of the Option, Common Shares on the
second anniversary and Common Shares on the third anniversary. Unless an earlier
expiration date is specified by this Agreement (or, if applicable, in Supplement
A), the Option shall expire at 5:00 P.M., Arizona Mountain time (such time shall
hereinafter be referred to as the "End of Business"), on the day after the tenth
anniversary of the date on which the Option was granted (the "Termination
Date").

     (b) Without limiting the generality of the foregoing, in the event:

               (i) the Corporation's stockholders holding at least 50% (or such
          greater percentage as may be required by the Certificate of
          Incorporation or By-Laws of the Corporation or by law) of the voting
          stock of the Corporation approve any merger, consolidation, sale of
          assets, liquidation or reorganization in which the Corporation will
          not survive as a publicly owned corporation (such approval hereinafter
          referred to as a "Merger Approval"); or (ii) any of the Corporation's
          Common Shares are purchased pursuant to a tender or exchange offer
          other than an offer by the Corporation, any Subsidiary of the
          Corporation (as defined in the Plan and hereinafter referred to as a
          "Subsidiary"), or any employee benefit plan maintained by the
          Corporation or a Subsidiary (such purchase hereinafter referred to as
          a "Tender Purchase");

then the Option shall become exercisable during the period beginning on the date
of the Merger Approval or Tender Purchase, as the case may be, and ending on the
thirtieth day following such date (but in no event shall the Option become
exercisable under this paragraph earlier than six months from the date on which
the Option was granted (the "Grant Date")). If any portion of the Option shall
be exercised, the Option shall thereafter remain exercisable, according to its
terms, only with respect to the number of Common Shares as to which the Option
would otherwise be exercisable less the number of Common Shares with respect to
which the Option has previously been exercised.

     3. WHO MAY EXERCISE.

     During the Employee's lifetime the Option may be exercised only by him. If
the Employee dies while in the employ of the Corporation or one of its
Subsidiaries, the Option may be exercised for the full number of Common Shares
specified in Section 1 hereof less the number of Common Shares with respect to
which the Option has previously been exercised, by the Employee's estate,
personal representative or beneficiary who acquired the right to exercise the
Option by will or by the laws of descent and distribution, at any time prior to
the End of Business on the earlier of the Termination Date or the fifth
anniversary of the Employee's death. If the Employee dies while he is no longer
employed by the Corporation or a Subsidiary, his Options may be exercised for
the full number of Common Shares as to which he could have exercised them on the
date of his death, by his estate, personal representative or beneficiary who
acquired the right to exercise the Option by will or by the laws of descent and
distribution, at any time prior to the termination date provided by Section 4
hereof. Following the End of Business on the earlier of the Termination Date,
the fifth anniversary of the Employee's death or the termination date provided
by Section 4, as the case may be, the Option shall expire.

     4. EXERCISE AFTER TERMINATION OF EMPLOYMENT.

     If the Employee shall cease to be employed by the Corporation or a
Subsidiary other than by reason of death, Disability (as defined in the Plan),
Retirement (as defined in the Plan) or the Employee's termination for Cause (as
defined in the Plan), the Option shall remain exercisable, to the extent
exercisable on the date of such termination, until the End of Business on the
earlier of the Termination Date or the date which is one month after the day his
employment ends. If the Employee's employment shall terminate due to Disability
or Retirement, the Option shall remain exercisable, to the extent exercisable on
the date of the Employee's termination of employment, until the End of Business
on the earlier of the Termination Date or the fifth anniversary of the date of
such termination of employment; provided, however, that, in the event the
Employee's employment with the Corporation terminates not earlier than six
months from the Grant Date as a result of the Employee's Disability or
Retirement, unless the Employee retires prior to his normal retirement date
under conditions determined by the Committee to be adverse to the Corporation,
or the Employee does not sign a release of claims satisfactory to the
Corporation, the Option shall become exercisable immediately prior to the End of
Business on the date the Employee's employment terminates for the purchase of
the full number of Common Shares specified in Section 1 of the Agreement less
the number of Common Shares with respect to which the Option has previously been
exercised. If the Employee's employment is terminated for Cause, all Options
granted to the Employee which are then outstanding shall be forfeited as of the
effective time of such termination but in no event later than the End of
Business on such termination date. Any portion of the Option which is not
exercisable on the date the Employee's employment terminates for any reason
other than death, Disability, or Retirement shall expire at the End of Business
on such termination date. Any portion of the Option which did not expire on the
date the Employee's employment terminates and which is not exercised within the
period established under this Section 4 shall expire following the End of
Business on the last day on which the Option could have been exercised.

     5. RESTRICTIONS ON EXERCISE.

     The Option may be exercised only with respect to full Common Shares. No
fractional shares shall be issued. The Option may not be exercised in whole or
part:

          (a) if any requisite approval or consent of any governmental authority
     of any kind having jurisdiction over the exercise of options shall not have
     been secured; or

          (b) unless the Common Shares subject to the Option shall be
     effectively listed on the New York Stock Exchange and registered under the
     Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
     listing and registration may be upon official notice of issuance of such
     Common Shares.

     The Corporation may require that, as a condition to any exercise of the
Option, the Employee represent to the Corporation in writing that he is
acquiring the Common Shares subject to such exercise for his own account for
investment only and not with a view to the distribution thereof.

     6. MANNER OF EXERCISE.

     To the extent the Option shall be exercisable in accordance with the terms
hereof, and subject to such administrative regulations as the Committee may have
adopted, the Option may be exercised in whole or from time to time in part by
written notice to the Committee, (i) identifying the Option by Grant Date, the
option price and whether or not the Agreement includes Supplement A, (ii)
specifying the number of Common Shares with respect to which the Option is being
exercised, and (iii) accompanied by full payment of the option price for such
Common Shares (1) in United States dollars by personal check or cash, including
an assignment of the right to receive cash proceeds of the sale of Common Shares
subject to the Option, (2) in Common Shares of the Corporation owned by the
Employee for at least three months prior to the day of exercise, represented by
certificates duly endorsed to the Corporation or its nominee with any requisite
transfer tax stamps attached, the market value of which shall be equal to the
option price for the Common Shares with respect to which the Option is being
exercised, or (3) in a combination of (1) and (2) above. The market value of any
Common Shares delivered pursuant to the immediately preceding sentence shall be
the mean of the high and low prices of such Common Shares on the Consolidated
Trading Tape on the day of exercise or, if there was no such sale on such day,
on the day next preceding the day of exercise on which there was a sale.

     For valuation purposes, the day of exercise of the Option shall be deemed
to be the day on which notice, addressed to the Committee, either to exercise
the Option in whole or in part by the payment of Common Shares (together with
duly endorsed certificates as provided above and any other required payment) is
received at the Corporation's principal office, except that if such notice
(together with certificates and other payment if required) is received on a
Saturday or Sunday or on a holiday observed by the Corporation's principal
office, or after the End of Business on any other day, the day of exercise shall
be deemed to be the next business day. "Written notice" shall include, without
limitation, notice by telegram, telex, cable or telecopy facsimile.

     In the event that the Option shall be exercised by a person other than the
Employee in accordance with the provisions of Section 3 hereof, such person
shall furnish the Corporation with evidence satisfactory to it of his or her
right to exercise the same and of payment or provision for payment of any
estate, transfer, inheritance or death taxes payable with respect to the Option
or with respect to any related Common Shares or payment. The Corporation may
require the Employee or other person exercising the Option to furnish or execute
such documents as the Corporation shall deem necessary to evidence such
exercise, to determine whether registration is then required under the
Securities Act of 1933, as amended, or to comply with or satisfy the
requirements of the Exchange Act, or any other law.

     7. NONASSIGNABILITY.

     Unless the Committee shall otherwise so specify by a supplement to this
Agreement approved in connection with the award hereof or at any subsequent
time, the Option shall not be assignable or transferable except by will or by
the laws of descent and distribution to the extent contemplated by Section 3
hereof. At the request of the Employee, Common Shares purchased on exercise of
the Option may be issued or transferred in the name of the Employee and another
person jointly with the right of survivorship, or in the name of a trust or
other legal entity established to hold property for the benefit of the Employee
or members of his immediate family.

     8. RIGHTS AS STOCKHOLDER.

     The Employee shall have no rights as a stockholder with respect to any
Common Shares covered by the Option until the issuance of a certificate or
certificates to him for such Common Shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the issuance of
such certificate or certificates.

     9. CAPITAL ADJUSTMENTS.

     The number and price of the Common Shares covered by the Option shall be
proportionately adjusted to reflect, as deemed equitable and appropriate by the
Committee, any stock dividend, stock split or share combination of, or
extraordinary cash dividend on, the Corporation's Common Shares or any
recapitalization of the Corporation. To the extent deemed equitable and
appropriate by the Committee, subject to any required action by the stockholders
of the Corporation, in any merger, consolidation, reorganization, liquidation,
dissolution, or other similar transaction, the Option shall pertain to the
securities and other property, if any, which a holder of the number of Common
Shares covered by the Option would have been entitled to receive in connection
with such event.

     10. WITHHOLDING.

          (a) The Corporation's obligation to deliver Common Shares upon the
     exercise of the Option shall be subject to payment by the Employee of any
     amount required to be withheld with respect to such exercise pursuant to
     any applicable federal, state or local tax withholding requirements.

          (b) Unless this Agreement includes Supplement A (making it an
     incentive stock option), the Employee may elect to satisfy all or any part
     of his federal, state and local tax obligations (including, without
     limitation, FICA) with respect to such exercise by having the Corporation
     withhold from any Common Shares otherwise deliverable to him in connection
     with the exercise of the Option a number of Common Shares, or by delivering
     Common Shares already owned by the Employee, having a market value equal in
     amount to the obligations to be so satisfied. The market value of Common
     Shares withheld or delivered shall be the mean of the high and low prices
     of such Common Shares on the Consolidated Trading Tape on the day of
     exercise or, if there was no such sale on such day, on the next preceding
     day on which there was a sale.

     11. GOVERNING LAW.

     This Agreement shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York.

     12. SUPPLEMENTS.

     Attached hereto are the following supplements:

          Supplement A -- Incentive Stock Options

          Supplement B -- Change of Control

          Supplement D -- Reload Option

Any such supplements so attached are incorporated herein and constitute a part
of this Agreement as though set forth in full herein. Additional supplements may
be added to this Agreement at a later date by the Committee; provided however
that if any such additional supplement adversely affects the rights of the
Employee under this Agreement, such supplement shall not be or become effective
unless and until the Employee consents to its addition in writing. All
capitalized terms used in such supplements without definition shall have the
meaning determined under this Agreement.

     13. PREDECESSOR PLANS.

     The Employee hereby acknowledges and agrees that all of the Employee's
outstanding options that were granted pursuant to the Predecessor Plans (as
defined in the Plan) shall hereafter become subject to the terms of this
Agreement.

     IN WITNESS WHEREOF, the Corporation and the Employee have duly executed
this Agreement as of the date set forth above.

                                                     PHELPS DODGE CORPORATION


                                                     By
                                                        ------------------------
                                                              Vice President



                                                     Employee



                                                                    Supplement A
                                                      [Incentive Stock Option --
                                                         1998 Stock Option Plan]

     Supplement A to the Stock Option Agreement (the "Agreement") dated between
Phelps Dodge Corporation (the "Corporation") and (the "Employee").

     1. TERM OF THE OPTION. Each incentive stock option shall expire on the
tenth anniversary of the date of its grant.

     2. DISPOSITION OF SHARES. If the Employee disposes of any Common Shares
received upon exercise of the Option within two years after the Option was
granted to him or within one year after the Common Shares were transferred to
him upon exercise of the Option, whether by sale, gift, or otherwise, the
Employee shall notify the Secretary of the Corporation of the number of such
Common Shares disposed of, the date on which disposed of, the manner of
disposition and the amount, if any, realized upon such disposition, and shall
promptly pay to the Corporation the amount, if any, that the Corporation
specifies in a written notice to the Employee as required to be withheld with
respect to such exercise and disposition pursuant to any applicable federal,
state or local tax withholding requirements.

     3. INTERPRETATION OF AGREEMENT. The Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.


                                                                    Supplement B
                                                           [Change of Control --
                                                         1998 Stock Option Plan]

     Supplement B to the Stock Option Agreement (the "Agreement") dated _______,
between Phelps Dodge Corporation (the "Corporation") and ______________________,
(the "Employee").

     1. ADDITIONAL TRIGGER EVENT FOR EXERCISABILITY. In addition to the
provisions of Section 2 of the Agreement, in the event the Employee's employment
with the Corporation or any Subsidiary terminates by reason of a Qualifying
Termination (as defined below) not earlier than six months from the date on
which the Option was granted and within two years after a Change of Control (as
defined below) of the Corporation, the Option shall become exercisable, no later
than the date of such termination, for the purchase of the full number of Common
Shares specified in Section 1 of the Agreement.

     For the purpose of this Supplement:

          a. A "Change of Control" shall be deemed to have taken place at the
time

              (i)    when any "person" or "group" of persons (as such terms are
                     used in Section 13 and 14 of the Securities Exchange Act of
                     1934, as amended (the "Exchange Act")), other than the
                     Corporation or any employee benefit plan sponsored by the
                     Corporation, becomes the "beneficial owner" (as such term
                     is used in Section 13 of the Exchange Act) of 25% or more
                     of the total number of the Corporation's Common Shares at
                     the time outstanding;

              (ii)   of any Merger Approval (as defined in the Agreement); or

              (iii)  when the individuals who, at the beginning of any period of
                     two years or less, constituted the Board of Directors of
                     the Corporation cease, for any reason, to constitute at
                     least a majority thereof, unless the election or nomination
                     for election of each new director was approved by the vote
                     of at least two-thirds of the directors then still in
                     office who were directors at the beginning of such period.

          b. A "Qualifying Termination" means a termination of the Employee's
employment with the Corporation or any Subsidiary (under circumstances where the
Employee is no longer employed by the Corporation or any such Subsidiary) for
any reason other than:

              (i)    death;

              (ii)   disability;

              (iii)  willful misconduct in the performance of the Employee's
                     duties as an employee which results in a material detriment
                     to the Corporation, and its Subsidiaries, taken as a whole;

              (iv)   retirement at or after the date on which the Employee
                     satisfies the requirements for normal retirement benefits
                     under the Phelps Dodge Retirement Plan; or

              (v)    a termination by the Employee unless:

                     (1)    such termination occurs more than 180 days following
                            the time when a Change of Control takes place and
                            such Change of Control has not been approved by a
                            resolution adopted by the Board of Directors of the
                            Corporation as constituted immediately prior to such
                            Change of Control; or

                     (2)    the Employee terminates his employment on account of
                            one or more of the following events (and the
                            Employee has not agreed to such event in writing):

                            (A)    the assignment to the Employee of any duties
                                   inconsistent, in a way materially adverse to
                                   the Employee, with his positions, duties,
                                   responsibilities and status with the
                                   Corporation and its Subsidiaries immediately
                                   prior to a Change of Control, or a material
                                   reduction in the duties and responsibilities
                                   held by the Employee immediately prior to
                                   such Change of Control; a change in the
                                   Employee's reporting responsibilities, titles
                                   or offices as in effect immediately prior to
                                   such Change of Control; or any removal of the
                                   Employee from or any failure to re-elect the
                                   Employee to any position with the Corporation
                                   or any Subsidiary that the Employee held
                                   immediately prior to such Change of Control
                                   except in connection with the Employee's
                                   promotion or the termination of his
                                   employment for any of the reasons specified
                                   in paragraphs (i) through (iv) above; or

                            (B)    a reduction by the Corporation or any
                                   Subsidiary in the Employee's base salary as
                                   in effect immediately prior to such Change of
                                   Control; the failure by the Corporation or
                                   any such Subsidiary to continue in effect any
                                   employee benefit plan or compensation plan in
                                   which the Employee is participating
                                   immediately prior to such Change of Control
                                   unless the Employee is permitted to
                                   participate in other plans providing him with
                                   substantially comparable benefits; or the
                                   taking of any action by the Corporation or
                                   any such Subsidiary, which would adversely
                                   affect the Employee's participation in or
                                   materially reduce his benefits under such
                                   plan; or

                            (C)    the Corporation's or any Subsidiary's
                                   requiring the Employee to be based anywhere
                                   other than a location within 50 miles of his
                                   location immediately prior to such Change of
                                   Control; or the Corporation's or any
                                   Subsidiary's requiring the Employee to travel
                                   on the Corporation's or any Subsidiary's
                                   business to an extent substantially more
                                   burdensome than his travel obligations
                                   immediately prior to such Change of Control.


                                                                    Supplement D
                                                    [Reload Option -- 1998 Plan]

     Supplement D to the Stock Option Agreement (the "Agreement") dated ________
between Phelps Dodge Corporation (the "Corporation") and _______________________
(the "Employee").

     1. ISSUANCE OF RELOAD OPTION. In the event that the Employee exercises this
Option (a) at least six months prior to the expiration date of this Option, (b)
while still employed by the Corporation or a Subsidiary, (c) prior to the
expiration date of the Plan and (d) prior to any determination by the Committee
to terminate the right of the Employee (including, without limitation, by
terminating such rights for all employees or all employees of a class of
employees which includes the Employee) to receive upon the exercise of this
Option an additional Option in accordance with the terms of this Supplement,
using, in whole or in part, Common Shares owned by the Employee for at least
three months prior to the day of exercise (the "Exercise Date"), the Employee
shall be granted a new option (the "Reload Option") under the Plan on the
Exercise Date for the number of Common Shares of the Corporation equal to the
number of Common Shares exchanged by the Employee to exercise this Option. No
Reload Option shall be granted if the Exercise Date is (a) within six months of
the expiration date of the Option, (b) a date when the Employee is not employed
by the Corporation or a Subsidiary, (c) after the expiration date of the Plan or
(d) after the date, if any, the Committee decides to terminate the right of the
Employee (including, without limitation, by terminating such rights as to all
employees or all employees of a class of employees which includes the Employee)
to receive upon the exercise of this Option an additional Option in accordance
with the terms of this Supplement.

     2. TERMS OF RELOAD OPTION. The Reload Option shall be exercisable on the
same terms and conditions as apply to the Option as set forth in this Agreement
(including, without limitation, the terms and conditions providing to the
Employee certain additional benefits in the event of a Change of Control, as
defined in Supplement B hereto), except that (a) the Reload Option shall become
exercisable in full on the day which is six months after the Exercise Date, (b)
the option price per share shall be the fair market value of a Common Share on
the Exercise Date, which shall be the mean of the high and low prices of a
Common Share on the Consolidated Trading Tape on that day, or, if no sale of
Common Shares is recorded on such tape on that day, then on the next preceding
day on which there was such a sale and (c) the expiration date of the Reload
Option shall be the date of expiration of the Option under this Agreement. The
Corporation may issue a new agreement to evidence the Reload Option and, if it
does, that agreement shall supersede this Agreement in all respects insofar as
the Reload Option is concerned.