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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 September 30, 1996

                           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 November 8, 1996:  64,832,837 shares.

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<PAGE>
                            PHELPS DODGE CORPORATION

                          Quarterly Report on Form 10-Q

                    For the Quarter Ended September 30, 1996



                                TABLE OF CONTENTS

Statement of Consolidated Income

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Statement of Common Shareholders' Equity

Notes to Consolidated Financial Information

Review by Independent Accountants

Report of Independent Accountants on Review of Interim Financial
Information

Management's Discussion and Analysis

Legal Proceedings

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)

                                                               First Nine
                                        Third Quarter            Months
                                        --------------      ----------------
                                       1996       1995      1996        1995
                                       ----       ----      ----        ----
SALES AND OTHER OPERATING
 REVENUES                        $     853.6   1,076.7    2,816.0    3,134.4
                                     -------   -------    -------    -------
OPERATING COSTS AND EXPENSES
   Cost of products sold               613.4     664.2    1,924.8    2,033.5
   Depreciation, depletion
    and amortization                    61.9      54.9      185.8      166.3
   Selling and general
    administrative expense              29.4      27.5       91.1       89.1
   Exploration and research
    expense                             22.2      18.7       62.3       50.5
   Gain on asset dispositions              -         -          -      (26.8)
                                     -------   -------    -------    -------
                                       726.9     765.3    2,264.0    2,312.6
                                     -------   -------    -------    -------
OPERATING INCOME                       126.7     311.4      552.0      821.8
   Interest expense                    (17.5)    (19.0)     (45.0)     (53.8)
   Capitalized interest                  0.5       1.3        1.0        2.8
   Miscellaneous income and
    expense, net                        11.4      10.4       28.6       28.8
                                     -------   -------    -------    -------
INCOME BEFORE TAXES, MINORITY
 INTERESTS AND EQUITY IN NET
 EARNINGS OF AFFILIATED
 COMPANIES                             121.1     304.1      536.6      799.6
   Provision for taxes on
    income                             (39.3)    (91.2)    (174.4)    (239.9)
   Minority interests in
    consolidated subsidiaries           (3.9)     (3.1)     (10.3)      (8.4)
   Equity in net earnings
    of affiliated companies              2.3       2.0        7.7        5.3
                                     -------   -------    -------    -------
NET INCOME                       $      80.2     211.8      359.6      556.6
                                     =======   =======    =======    =======

EARNINGS PER SHARE               $      1.22      3.03       5.40       7.92
                                     =======   =======    =======    =======

AVERAGE NUMBER OF SHARES
 OUTSTANDING                            65.7      69.9       66.6       70.3

BUSINESS SEGMENTS
(Unaudited; in millions)

SALES AND OTHER OPERATING
 REVENUES
   Phelps Dodge Mining
    Company                      $     437.2     659.9    1,551.1    1,856.0
   Phelps Dodge Industries             416.4     416.8    1,264.9    1,278.4
                                     -------   -------    -------    -------
                                 $     853.6   1,076.7    2,816.0    3,134.4
                                     =======   =======    =======    =======
OPERATING INCOME (LOSS)
   Phelps Dodge Mining
    Company                      $      76.5     266.8      407.4      656.8
   Phelps Dodge Industries              58.8      55.4      173.3      193.4
   Corporate and other                  (8.6)    (10.8)     (28.7)     (28.4)
                                     -------   -------    -------    -------
                                 $     126.7     311.4      552.0      821.8
                                     =======   =======    =======    =======

See Notes to Consolidated Financial Information.
<PAGE>
CONSOLIDATED BALANCE SHEET
(Unaudited; in millions)

                                                   Sept. 30,     Dec. 31,
                                                      1996         1995
                                                      ----         ----
ASSETS
  Cash and short-term investments, at cost     $       567.7       608.5
  Accounts receivable, net                             445.4       483.7
  Inventories                                          282.1       281.5
  Supplies                                             119.2       121.4
  Prepaid expenses                                      19.4        15.5
  Deferred income taxes                                 43.4        44.6
                                                    --------     -------
     Current assets                                  1,477.2     1,555.2
  Investments and long-term
   accounts receivable                                  89.1        79.0
  Property, plant and equipment, net                 2,917.5     2,728.7
  Other assets and deferred charges                    293.4       283.0
                                                    --------    --------
                                               $     4,777.2     4,645.9
                                                    ========    ========

LIABILITIES
  Short-term debt                              $        66.9        66.6
  Current portion of long-term debt                     29.4        16.8
  Accounts payable and accrued expenses                535.5       504.8
  Income taxes                                          18.7        16.8
                                                    --------    --------
     Current liabilities                               650.5       605.0
  Long-term debt                                       600.7       613.1
  Deferred income taxes                                422.2       358.1
  Other liabilities and deferred credits               318.5       318.7
                                                    --------    --------
                                                     1,991.9     1,894.9
                                                    --------    --------
MINORITY INTERESTS IN CONSOLIDATED
 SUBSIDIARIES                                           81.4        73.3
                                                    --------    --------
COMMON SHAREHOLDERS' EQUITY
  Common shares, 65.0 outstanding
   (12/31/95 - 68.6)                                   406.5       428.7
  Retained earnings                                  2,410.9     2,360.1
  Cumulative translation adjustments                   (98.3)      (93.9)
  Other                                                (15.2)      (17.2)
                                                    --------    --------
                                                     2,703.9     2,677.7
                                                    --------    --------
                                               $     4,777.2     4,645.9
                                                    ========    ========

See Notes to Consolidated Financial Information.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; in millions)

                                                            Nine months
                                                               ended
                                                            September 30,
                                                           ---------------
                                                           1996       1995
                                                           ----       ----
OPERATING ACTIVITIES
 Net income                                       $        359.6     556.6
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation, depletion and
    amortization                                           185.8     166.3
   Deferred income taxes                                    56.3      79.9
   Equity earnings net of dividends
    received                                                (3.9)     (5.1)
   Changes in current assets and
    liabilities:
     (Increase) decrease in accounts
       receivable                                           39.0     (51.2)
     (Increase) decrease in inventories                     13.8      (7.5)
     (Increase) decrease in supplies                         2.1     (15.1)
     (Increase) decrease in prepaid
       expenses                                             (3.6)     (2.8)
     (Increase) decrease in deferred
       income taxes                                          1.3      (5.7)
     Increase (decrease) in interest
       payable                                               4.2       3.9
     Increase (decrease) in other accounts
       payable                                               2.3     (50.6)
     Increase (decrease) in income taxes                     1.6     (27.8)
     Increase (decrease) in other accrued
       expenses                                             14.0      25.6
   Gain on asset dispositions                                  -     (26.8)
   Other adjustments, net                                    4.6       2.6
                                                        --------  --------
     Net cash provided by operating
      activities                                           677.1     642.3
                                                        --------  --------
INVESTING ACTIVITIES
 Capital outlays                                          (338.8)   (273.6)
 Capitalized interest                                       (1.0)     (2.8)
 Investment in subsidiaries                                (47.3)     (0.2)
 Proceeds from asset dispositions
  and other                                                  3.6      40.3
                                                        --------  --------
     Net cash used in investing activities                (383.5)   (236.3)
                                                        --------  --------
FINANCING ACTIVITIES
 Increase in debt                                           15.7      36.7
 Payment of debt                                           (17.6)    (18.6)
 Common dividends                                          (96.2)    (94.5)
 Purchase of common shares                                (247.0)    (93.7)
 Other                                                      10.7       6.9
                                                        --------  --------
 Net cash used in financing activities                    (334.4)   (163.2)
                                                        --------  --------
INCREASE (DECREASE) IN CASH AND
 SHORT-TERM INVESTMENTS                                    (40.8)    242.8
CASH AND SHORT-TERM INVESTMENTS AT
 BEGINNING OF PERIOD                                       608.5     286.9
                                                        --------  --------
CASH AND SHORT-TERM INVESTMENTS AT END
 OF PERIOD                                        $        567.7     529.7
                                                        ========  ========

See Notes to Consolidated Financial Information.
<PAGE>
STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(Unaudited; in millions)


                          Common Shares               Cumulative
                         ---------------              Translation
                         Number                       Adjustments     Common
                            of    At Par    Retained      and      Shareholders'
                         shares   Value     Earnings     Other        Equity
                         ------   -----     --------     -----        ------
BALANCE AT
 DECEMBER 31, 1995        68.6  $   428.7  $  2,360.1  $  (111.1)  $  2,677.7
  Stock options
   exercised               0.3        2.2        10.0                    12.2
  Common shares
   purchased              (3.9)     (24.4)     (222.6)                 (247.0)
  Net income                                    359.6                   359.6
  Dividends on common
   shares                                       (96.2)                  (96.2)
  Translation
   adjustment                                               (4.4)        (4.4)
  Other                                                      2.0          2.0
                         -----     ------     -------    -------      -------
BALANCE AT
 SEPTEMBER 30, 1996       65.0  $   406.5  $  2,410.9  $  (113.5) $   2,703.9
                         =====     ======     =======    =======      =======

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, 1995.  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 nine-month  periods
         ended September 30, 1996, 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 to
         mitigate  the risk of adverse  price  fluctuations  on a portion of its
         expected future mine production.

         During the 1996 third quarter, the Corporation  liquidated a portion of
         its copper price  protection  contracts that covered  anticipated  mine
         production in the fourth quarter of 1996 and the first quarter of 1997.
         This resulted in cash payments to the Corporation of $15.6 million. The
         related gains,  $8.8 million for the 1996 fourth quarter  contracts and
         $6.8 million for the 1997 first quarter contracts, will be deferred and
         recognized in income during the periods to which the original contracts
         were  applicable.  Contracts  ensuring  minimum  prices for 185 million
         pounds of 1996 third quarter copper production  resulted in payments of
         $3.1 million to Phelps Dodge.  Similar  contracts  covering 600 million
         pounds of 1996 first half copper production expired without payment.

         As of November 8, 1996, the Corporation had net positions in place with
         several  financial  institutions that provide for a minimum 1996 fourth
         quarter  average  price of 95 cents per pound for 95 million  pounds of
         copper  cathode and a minimum 1997 first  quarter  average  price of 90
         cents per pound for 85 million pounds of copper cathode.  These minimum
         prices are based on average  London Metal  Exchange  (LME)  prices.  If
         average  quarterly  LME  prices  fall  below the  minimum  prices,  the
         financial  institutions  will be  obligated  to pay  Phelps  Dodge  the
         difference.


REVIEW BY INDEPENDENT ACCOUNTANTS

         The  financial  information  as of  September  30,  1996,  and  for the
three-month and nine-month  periods ended September 30, 1996 and 1995,  included
in Part I pursuant to Rule 10-01 of  Regulation  S-X has been  reviewed by Price
Waterhouse LLP (Price Waterhouse), the Corporation's independent accountants, in
accordance  with standards  established  by the American  Institute of Certified
Public  Accountants.  Price  Waterhouse's  report is included in this  quarterly
report.

         Price Waterhouse 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>
                              PRICE WATERHOUSE LLP
                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
  Phelps Dodge Corporation


We have  reviewed the  accompanying  consolidated  balance sheet of Phelps Dodge
Corporation  and its  subsidiaries as of September 30, 1996 and the statement of
consolidated  income for the three-month and nine-month  periods ended September
30, 1996 and 1995 and the  consolidated  statements  of cash flows and of common
shareholders'  equity for the  nine-month  periods ended  September 30, 1996 and
1995. These financial  statements are 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  statements referred to above for them 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,  1995,  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 22,  1996 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, 1995, is
fairly stated in all material  respects in relation to the consolidated  balance
sheet from which it has been derived.


Price Waterhouse LLP



Phoenix, Arizona
October 9, 1996
</AUDIT-REPORT>
<PAGE>
Item 2.  Management's Discussion and Analysis

RESULTS OF OPERATIONS

         Phelps Dodge  Corporation had consolidated net income of $80.2 million,
or $1.22 per common share,  in the third  quarter of 1996,  compared with $211.8
million,  or $3.03 per common share,  in the 1995 third quarter.  Net income for
the nine months ended  September  30,  1996,  was $359.6  million,  or $5.40 per
common share,  compared with $556.6  million,  or $7.92 per common share, in the
corresponding  1995 period.  Net income in the 1995 nine-month period included a
first quarter  after-tax  gain of $16.6  million,  or 24 cents per common share,
from the sale of Columbian Chemicals Company's MAPICO division.

         Earnings in the three-month and nine-month  periods ended September 30,
1996,  were  lower  than  those  reported  in  the  corresponding  1995  periods
principally as a result of lower average copper prices.  Average spot prices per
pound of cathode copper on the New York  Commodity  Exchange  (COMEX)  decreased
approximately  45 cents and 28 cents in the third  quarter and first nine months
of 1996,  respectively,  from  the  average  prices  in the  corresponding  1995
periods.

         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
1.5 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 $15 million.

         The  COMEX  spot  price per pound of  copper  cathode,  upon  which the
Corporation bases its selling price,  averaged 91 cents in the third quarter and
$1.08 in the first  nine  months of 1996,  compared  with an average of $1.36 in
each of the corresponding 1995 periods.  From October 1 to November 8, 1996, the
average price was 94 cents, closing at 96 cents on November 8, 1996.

         The Corporation enters into price protection  arrangements from time to
time, depending on market circumstances, to ensure a minimum price for a portion
of the copper it expects from future mine production.  For further discussion of
the  Corporation's  price protection  arrangements for 1996 and 1997 production,
see Note 3 to Consolidated Financial Information.

         Sales were  $853.6  million in the 1996 third  quarter,  compared  with
$1,076.7 million in the corresponding  1995 period.  The 1996 decrease primarily
was a result of lower  average  copper  prices and lower sales volumes of wheels
and rims. The decrease was offset  partially by higher sales volumes of wire and
cable  products.  Sales were $2,816.0  million in the first nine months of 1996,
compared with $3,134.4 million in the corresponding  1995 period.  This decrease
also  primarily  was the result of lower  average  copper prices and lower sales
volumes of wheels and rims, and was partially offset by greater sales volumes of
copper and higher sales volumes of wire and cable products.


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  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.

================================================================================
                                                                First Nine
                                          Third Quarter            Months
                                          --------------       ---------------
                                          1996      1995       1996       1995
                                          ----      ----       ----       ----
Copper production 
  (short tons):
  Total production                     227,000   221,800    694,400    624,600
  Less minority participants'
   shares *                             39,100    39,500    121,100    111,600
                                       -------   -------    -------    -------
  Net Phelps Dodge share               187,900   182,300    573,300    513,000
                                       =======   =======    =======    =======

Copper sales (short tons):
  Net Phelps Dodge share from
   own mines                           194,500   196,600    573,900    512,300
  Purchased copper                      43,900    49,300    163,500    179,900
                                       -------   -------    -------    -------
  Total copper sales                   238,400   245,900    737,400    692,200
                                       =======   =======    =======    =======

New York Commodity Exchange
  average spot price per
  pound - copper cathodes          $      0.91      1.36       1.08       1.36

                                                    (in millions)

Sales and other operating
 revenues                          $     437.2     659.9    1,551.1    1,856.0

Operating income                   $      76.5     266.8      407.4      656.8
-------------------------

*        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 held by SMMA
         Candelaria,  Inc., a jointly owned  subsidiary of Sumitomo Metal Mining
         Co., Ltd. and Sumitomo Corporation.

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

         Phelps  Dodge  Mining  Company's  1996  third  quarter  sales of $437.2
million were 34 percent lower than in the third  quarter of 1995.  This decrease
principally  resulted  from a 45 cents  per pound  decrease  in  average  copper
prices.  Sales of  $1,551.1  million  in the first  nine  months of 1996 were 16
percent lower than in the  corresponding  1995 period.  This decrease  primarily
resulted from a 28 cents per pound decrease in average copper prices,  partially
offset  by a 61,600  ton or 12  percent  increase  in  copper  sales  from  mine
production.  The  primary  contributor  to  1996  production  and  sales  volume
increases  for the first  nine  months  was the  Morenci  mine,  which  included
production from its Southside solution extraction/electrowinning (SX/EW) project
that commenced operations in the third quarter of 1995.

         Phelps Dodge Mining Company recorded  operating income of $76.5 million
in the 1996 third  quarter and $407.4  million in the first nine months of 1996,
compared  with  $266.8  million  and $656.8  million in the  corresponding  1995
periods.  The 1996 third  quarter  decrease from the  corresponding  1995 period
resulted from the lower average copper prices already discussed. The decrease in
operating  income in the first nine months of 1996 from the  corresponding  1995
period  resulted  principally  from the lower  average  copper  prices,  and was
partially  offset by the  higher  volumes  of copper  sold from mine  production
already  discussed.  The 1996 first nine months also  reflected an $18.0 million
reduction of pre-tax earnings in the second quarter for adjustments  during June
to mark to  market  concentrate  transactions  that had been  recorded  in prior
months at provisional  forward prices.  These adjustments  primarily reflected a
sharp drop in copper futures prices in the month of June.

         On May 1, 1996, the Corporation  announced plans to expand concentrator
throughput  at its  Candelaria  copper  mining  complex in  northern  Chile (the
Corporation  owns an 80 percent interest in Candelaria).  At full capacity,  the
$337 million expansion will result in copper production of more than 400 million
pounds in each of the first two years of operations, although, under the current
operating plan, annual copper production will average  approximately 380 million
pounds during the post-expansion mine life. The expansion will include increased
mining activity, the installation of a second semi-autogenous (SAG) mill and new
and  expanded  concentrating  facilities,  and the  addition  of more  than  200
employees.  Construction began in the third quarter of 1996, with new production
scheduled  to come on  line in  mid-1998.  As a  result  of the  expansion,  the
estimated mine life of Candelaria will be reduced from 35 years of production to
19 years.

         The  collective  bargaining   agreements  covering   approximately  700
employees  at Phelps  Dodge  Mining  Company's  Chino  operations  in New Mexico
expired on June 30, 1996. As of November 8, 1996,  employees who were covered by
the agreements have continued to work without a contract.


PHELPS DODGE INDUSTRIES

         Phelps Dodge  Industries  is a business  segment  comprising a group of
companies   that   manufacture   engineered   products   principally   for   the
transportation,  energy and telecommunications sectors worldwide. 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  chemicals  operations
through  Columbian  Chemicals  Company and its  subsidiaries;  its wheel and rim
operations through Accuride  Corporation and its subsidiaries;  and its wire and
cable and specialty  conductor  operations  through  Phelps Dodge  International
Corporation  and Phelps  Dodge Magnet Wire  Company and their  subsidiaries  and
affiliates.

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

                                                                   First Nine
                                              Third Quarter          Months
                                              --------------      -------------
                                              1996      1995      1996     1995
                                              ----      ----      ----     ----
                                                        (in millions)
Sales and other operating revenues:
  Specialty chemicals                  $     105.1      99.5     327.4     319.2
  Wheels and rims                             71.3      84.5     235.2     277.1
  Wire and cable                             240.0     232.8     702.3     682.1
                                           -------   -------   -------   -------
                                       $     416.4     416.8   1,264.9   1,278.4
                                           =======   =======   =======   =======


Operating income: *
  Specialty chemicals                  $      19.4      18.1      64.3      87.7
  Wheels and rims                              9.5      11.5      33.7      39.0
  Wire and cable                              29.9      25.8      75.3      66.7
                                           -------   -------   -------   -------
                                       $      58.8      55.4     173.3     193.4
                                           =======   =======   =======   =======
-------------------------

*        Operating  income in the first nine  months of 1995  included a pre-tax
         gain of  $26.8  million  in  specialty  chemicals  from  the  sale of a
         synthetic iron oxide facility in the first quarter.

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

         During  the  1996  third  quarter,  Phelps  Dodge  Industries  recorded
operating  income  of  $58.8  million,   compared  with  $55.4  million  in  the
corresponding 1995 period. Operating income in the first nine months of 1996 was
$173.3  million,  compared with $166.6  million in the first nine months of 1995
before a pre-tax  gain of $26.8  million  from the sale of  Columbian  Chemicals
Company's  MAPICO  division  in the  first  quarter.  Primarily  as a result  of
benefits from certain  manufacturing cost reduction  programs  instituted during
1995,  earnings  in the third  quarter and first nine months of 1996 were higher
than in the 1995 periods (excluding the MAPICO gain) despite an overall decrease
in sales.

         Phelps Dodge  Industries'  sales of $416.4 million and $1,264.9 million
in the third quarter and first nine months of 1996, respectively, were less than
1 percent lower than in the corresponding  1995 periods as continued strength in
the specialty  chemicals business and higher sales volumes in the wire and cable
businesses  largely offset a 15 percent  decrease in wheel and rim sales.  Sales
volumes of wire and cable products benefited from the acquisition in May 1996 of
Nesor Alloy Corporation,  a leading manufacturer of high-performance  conductors
for the general electronics and aerospace industries.  The decrease in wheel and
rim sales was driven by lower sales volumes resulting from decreased demand from
the major North American manufacturers of medium and heavy trucks and trailers.

         On August 7, 1996,  the  Corporation  announced  plans to  construct  a
magnet wire manufacturing  plant in Monterrey,  Mexico.  Construction of the $42
million  project  is  scheduled  to begin  in 1996  with  commercial  production
expected in early 1998. This new plant, together with the Corporation's recently
expanded  facility in El Paso,  Texas, is expected to support customer growth in
the region  while  freeing up capacity at existing  U.S.  plants to meet growing
demand for magnet wire in the United States.

         The  collective   bargaining   agreement  covering   approximately  360
employees  at Phelps Dodge  Industries'  magnet wire  facility in  Hopkinsville,
Kentucky,  expired on October 11, 1996.  As of November 8, 1996,  employees  who
were covered by the agreement have continued to work without a contract.


OTHER MATTERS RELATING TO THE STATEMENT OF CONSOLIDATED INCOME

         Interest  expense net of capitalized  interest was $17.0 million in the
third quarter of 1996 and $44.0 million in the first nine months,  compared with
$17.7 million and $51.0 million in the  corresponding  periods in 1995. The 1996
nine  month  period   benefited   from  foreign   currency   exchange  gains  of
approximately  $8.0 million  representing the  remeasurement of Venezuelan local
currency debt after a major devaluation of the Bolivar.  These gains were offset
by  approximately  $7.0 million of similar  expenses  included in  miscellaneous
income and expense, net, principally reflecting the effect of the devaluation on
working  capital.  Miscellaneous  income in the first nine months of 1996,  also
included  an  increase  of  $4.7   million  in  dividends   received   from  the
Corporation's   13.9  percent   minority   interest  in  Southern   Peru  Copper
Corporation.


CHANGES IN FINANCIAL CONDITION

         Capital  outlays  during the first  nine  months of 1996,  were  $225.4
million for Phelps  Dodge  Mining  Company and $110.6  million for Phelps  Dodge
Industries. Capital outlays in the corresponding 1995 period were $218.5 million
for Phelps Dodge Mining  Company and $54.4 million for Phelps Dodge  Industries.
The Corporation  expects capital outlays for the year 1996, to be  approximately
$325  million for Phelps  Dodge  Mining  Company,  including  Phelps  Dodge's 80
percent  share  of  amounts  to be spent on the  recently  announced  Candelaria
expansion.  Phelps  Dodge  Industries  is expected to spend  approximately  $150
million  during the year.  This amount does not include the $29 million spent in
May 1996, for the previously announced acquisition of Nesor Alloy Corporation.

         At September 30, 1996, the Corporation's total debt was $697.0 million,
compared with $696.5 million at year-end 1995. The  Corporation's  ratio of debt
to total  capitalization  was 20.0 percent at September 30, 1996,  compared with
20.2 percent at December 31, 1995.

         An existing  revolving  credit  agreement  between the  Corporation and
several  lenders  was  amended on June 4, 1996.  The  agreement,  as amended and
restated,  permits  borrowings of up to $500 million from time to time until its
scheduled  maturity  on June 4, 2001.  The  agreement  allows  for two  one-year
renewals  beyond the  scheduled  maturity date if the  Corporation  requests and
receives approval from at least two-thirds of the lenders involved.  Interest is
payable at a  fluctuating  rate based on the agent  bank's prime rate or a fixed
rate, based on the Eurodollar  Interbank  Offered Rate or at fixed rates offered
independently by the several lenders,  for maturities of from seven to 360 days.
This agreement  provides for a facility fee of eight basis points (0.08 percent)
on total  commitments.  The  agreement  requires the  Corporation  to maintain a
minimum consolidated  tangible net worth of $1.1 billion and limits indebtedness
to 50 percent of total  consolidated  capitalization.  There were no  borrowings
under this agreement at either September 30, 1996 or December 31, 1995.

         On September 6, 1996, the Corporation paid a regular quarterly dividend
of 50 cents per share on its  common  shares  for the 1996  third  quarter.  The
amount  paid for the  third  quarter  was $32.7  million,  bringing  total  1996
dividends paid through  September 30 to $96.2 million.  On November 6, 1996, the
Board of Directors  declared a 1996 fourth quarter regular  dividend of 50 cents
per common share to be paid on December 6, 1996,  to  shareholders  of record at
the close of business on November 18, 1996.

         In 1996 through November 8, the Corporation  purchased 4,104,300 of its
common  shares  at a total  cost of  $260.0  million.  On  March  6,  1996,  the
Corporation  announced  that its current share purchase  authorization  had been
increased  from 5  million  shares  to a total  of 10  million  shares.  Through
November 8, 1996, the Corporation  had purchased  6,779,900 of its common shares
under the  program at a total  cost of $418.1  million,  leaving  an  additional
3,220,100 shares  authorized for purchase.  There were 65,035,000  common shares
outstanding on September 30, 1996.
<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, 1995,
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).

         By a letter  agreement dated September 7, 1990, the Corporation and the
San Carlos  Apache  Tribe agreed upon  principles  to settle the water claims of
that Tribe and other land use issues  involving the Tribe's  Reservation.  Since
that time comprehensive  settlement  agreements among the Tribe, the Corporation
and other parties have been under negotiation.  In the more recent phases of the
settlement  negotiations,  the  Tribe  has  sought  terms  that the  Corporation
believes are unacceptable and inconsistent  with the principles set forth in the
September  7, 1990  letter  agreement.  In July  1996,  the Tribe  notified  the
Corporation to make  preparations to vacate the  Corporation's  Black River pump
station, which is located on the Tribe's Reservation,  by July 1997. Through the
Black River pump station the Corporation obtains  approximately 10,000 acre feet
of water annually for use at the Corporation's  Morenci complex. The Corporation
believes  that it holds valid  rights-of-way  and  easements and has other legal
rights  sufficient to allow for the continued  operation of the Black River pump
station on Reservation  lands.  However,  the  Corporation has advised the Tribe
that,  without  waiving  any  such  rights,  it has  begun  to  consider  issues
associated  with  dismantling  and  removing  the Black  River pump  station and
related  facilities from the Reservation.  The federal  legislation  authorizing
settlement of the Tribe's water rights claims with the Corporation and the other
parties to the proceeding has been extended for a six month period expiring June
30, 1997.

         II. Reference is made to Paragraph III. of Item 3. Legal Proceedings of
the Corporation's Form 10-K for the year ended December 31, 1995,  regarding the
proceedings described below.

         Prior to the mid-1960s, a predecessor of Phelps Dodge Industries,  Inc.
(PDI),  a subsidiary of the  Corporation,  manufactured  and sold some cable and
wire  products  that were  insulated  with  material  containing  asbestos.  PDI
believes that the use of its products did not result in significant  releases of
airborne asbestos fibers.  PDI and the Corporation are collectively  referred to
below as PDI.

         Since  the  late  1980s,   PDI  has  been  served  with  complaints  in
asbestos-related  actions  filed on behalf of over  17,200  claimants.  In these
proceedings,  plaintiffs have alleged bodily injury or death caused by purported
exposure  to  asbestos  and have  claimed  damages  based on  theories of strict
liability and negligence.  Over 12,500 of those  claimants were  participants in
the Ingalls Shipyard asbestos litigation filed in Pascagoula,  Mississippi. Each
claimant  in  that  litigation   sought  from  $2  million  to  $20  million  in
compensatory  and  punitive  damages  from a group of  approximately  100 to 150
defendants,  which  included PDI.  Since the beginning of 1993, PDI has obtained
dismissal of all but one of the claims brought against it in Mississippi.

         As of September 30, 1996, a total of 3,276 asbestos-related claims were
pending  against  PDI in 14  jurisdictions.  PDI is  vigorously  contesting  and
defending these asbestos-related claims.

         In December 1995,  Phelps Dodge and its insurers  executed an agreement
embodying a cost sharing arrangement for defense and indemnity costs arising out
of the asbestos litigation.

         Based   on  its   experience   to  date  in   connection   with   these
asbestos-related claims, and also taking into account the cost-sharing agreement
referred to above,  Phelps Dodge has concluded  that these claims do not involve
material  legal  proceedings  requiring  disclosure  in this  report  under  the
applicable  regulations of the Securities and Exchange Commission.  Accordingly,
Phelps Dodge does not intend to describe  these claims in future reports on Form
10-Q or Form 10-K unless there is a material change requiring such disclosure.

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 September 30, 1996.
<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:   November 8, 1996                        By:  Thomas M. Foster
                                                     ----------------
                                                     Thomas M. Foster
                                              Vice President and Controller
                                              (Principal Accounting Officer)
<PAGE>
                    PHELPS DODGE CORPORATION AND SUBSIDIARIES

                                INDEX TO EXHIBITS



3.2        By-Laws of the Corporation, as amended effective September 4, 1996.



12         Computation of ratios of total debt to total capitalization.



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