LETTERHEAD OF ASARCO INCORPORATED] October 25, 1999 Douglas C. Yearley Phelps Dodge Corporation 2600 North Central Avenue Phoenix, Arizona 85004-3014 Re: Phelps Dodge/ASARCO Merger Agreement Dear Doug: Reference is made to the Agreement and Plan of...

                    [LETTERHEAD OF ASARCO INCORPORATED]

                                    October 25, 1999

Xxxxxxx X. Xxxxxxx
Xxxxxx Dodge Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx  00000-0000

                  Re:   Xxxxxx Dodge/ASARCO Merger Agreement

Dear Xxxx:

     Reference is made to the Agreement and Plan of Merger, dated as of
October 5, 1999 (the "Merger Agreement"), among Xxxxxx Dodge Corporation
("Xxxxxx Dodge"), AAV Corporation and ASARCO Incorporated ("ASARCO") and to
the notice delivered to you by ASARCO pursuant to Section 5.9 of the Merger
Agreement on October 15, 1999.

     Please be advised that, pursuant to Sections 5.9(b) and 7.3(b) of the
Merger Agreement, ASARCO is hereby terminating the Merger Agreement
effective immediately.

     In accordance with the provisions of Section 7.5 of the Merger
Agreement, ASARCO has transferred to Xxxxxx Dodge, by wire transfer of same
day funds, $30 million in payment of the ASARCO Termination Fee (as defined
in the Merger Agreement).

                                    Sincerely,


                                    Xxxxxxx X. XxXxxxxxxx


cc:   Xxxxx X. Xxxxxxxx
        Xxxxxxxx & Xxxxxxxx

      Xxxxxxx X. Xxxxx
        Xxxxxxxxx & Xxxxxxxx