Freeport McMoRan : Reports Third-Quarter and Nine-Month 2022 Results - Form 8-K
October 20, 2022 at 08:20 am EDT
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Freeport-McMoRan
Reports Third-Quarter and Nine-Month 2022 Results
•Strong production performance; copper and gold sales volumes above July 2022 guidance
•Unit net cash costs were 5% above July 2022 guidance
•Solid balance sheet, liquidity and financial flexibility
•Significant debt retirements through open-market transactions
•Published updated climate report
▪Net income attributable to common stock in third-quarter 2022 totaled $404 million, $0.28 per share, and adjusted net income attributable to common stock totaled $375 million, $0.26 per share, after excluding net credits totaling $29 million, $0.02 per share.
▪Consolidated sales totaled 1.1 billion pounds of copper, 480 thousand ounces of gold and 17 million pounds of molybdenum in third-quarter 2022. Consolidated sales for the year 2022 are expected to approximate 4.2 billion pounds of copper, 1.8 million ounces of gold and 76 million pounds of molybdenum, including 1.0 billion pounds of copper, 420 thousand ounces of gold and 20 million pounds of molybdenum in fourth-quarter 2022.
▪Average realized prices in third-quarter 2022 were $3.50 per pound for copper, $1,683 per ounce for gold and $17.05 per pound for molybdenum.
▪Average unit net cash costs inthird-quarter 2022 were $1.75 per pound of copper and are expected to average $1.55 per pound of copper for the year 2022.
▪Operating cash flows totaled $0.8 billion (net of $0.3 billion of working capital and other uses) in third-quarter 2022 and $4.1 billion (net of $1.0 billion of working capital and other uses) for the first nine months of 2022. Based on current sales volume and cost estimates, and assuming average fourth-quarter 2022 prices of $3.50 per pound for copper, $1,700 per ounce for gold and $18.00 per pound for molybdenum, operating cash flows are expected to approximate $4.7 billion (net of $1.4 billion of working capital and other uses) for the year 2022.
▪Capital expenditures totaled $0.8 billion (including $0.4 billion for major mining projects and $0.2 billion for the Indonesia smelter projects) in third-quarter 2022 and $2.4 billion (including $1.2 billion for major mining projects and $0.5 billion for the Indonesia smelter projects) for the first nine months of 2022. Capital expenditures for the year 2022 are expected to approximate $3.6 billion ($2.7 billion excluding the Indonesia smelter projects, including $1.8 billion for major mining projects).
▪FCX has purchased approximately $1.1 billion aggregate principal amount of its senior notes in open-market transactions during 2022 (through October 19, 2022) for a total cost of $1.0 billion (including $402 million aggregate principal amount in third-quarter 2022).
▪At September 30, 2022, consolidated debt totaled $10.7 billionand consolidated cash and cash equivalents totaled $8.6 billion, resulting in net debt of $2.1 billion ($1.3 billion excluding net debt for the Indonesia smelter projects). Refer to the supplemental schedule, "Net Debt," on page IX.
▪Approximately $3.2 billion remains available under FCX's $5.0 billion share repurchase program. During 2022, 35.1 million shares have been repurchased for $1.3 billion, with no shares repurchased since July 11, 2022. Future share repurchases will be funded with available cash flow pursuant to FCX's established financial policy.
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PHOENIX, AZ, October 20, 2022 - Freeport-McMoRan Inc. (NYSE: FCX) reported third-quarter 2022 net income attributable to common stock of $404 million, $0.28 per share, and adjusted net income attributable to common stock of $375 million, $0.26 per share, after excluding net credits totaling $29 million, $0.02 per share, primarily associated with gains on early extinguishment of debt and favorable adjustments associated with international tax audits, partly offset by inventory adjustments. For additional information, refer to the supplemental schedule, "Adjusted Net Income," on page VII.
Richard C. Adkerson, Chairman and Chief Executive Officer, said, "FCX's position as a global leader in the copper industry, together with a solid balance sheet, long-lived assets and experienced team, provide strength as we navigate the current global market uncertainties. Our performance in third-quarter 2022 reflects the global team's focus on achieving our production plans in a challenging cost and supply chain environment. Despite near-term uncertainties, the long-term market fundamentals and value opportunities for our stakeholders remain highly attractive. I am confident that our strategy centered on being Foremost in Copper will be positive for all stakeholders as global conditions improve."
SUMMARY FINANCIAL DATA
Three Months Ended September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in millions, except per share amounts)
Revenuesa,b
$
5,003
$
6,083
$
17,022
$
16,681
Operating incomea
$
962
$
2,462
$
5,507
$
6,061
Net income attributable to common stockc,d
$
404
$
1,399
$
2,771
$
3,200
Diluted net income per share of common stock
$
0.28
$
0.94
$
1.90
$
2.16
Diluted weighted-average common shares outstanding
1,439
1,484
1,455
1,481
Operating cash flowse
$
758
$
1,965
$
4,070
$
5,435
Capital expenditures
$
836
$
541
$
2,422
$
1,344
At September 30:
Cash and cash equivalents
$
8,578
$
7,672
$
8,578
$
7,672
Total debt, including current portion
$
10,690
$
9,665
$
10,690
$
9,665
a.For segment financial results, refer to the supplemental schedules, "Business Segments," beginning on page X.
b.Includes (unfavorable) favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(228) million ($(95) million to net income attributable to common stock or $(0.07) per share) in third-quarter 2022, $(9) million ($(3) million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2021, $58 million ($24 million to net income attributable to common stock or $0.02 per share) for the first nine months of 2022 and $169 million ($65 million to net income attributable to common stock or $0.05 per share) for the first nine months of 2021. For further discussion, refer to the supplemental schedule, "Derivative Instruments," beginning on page IX.
c.Includes net credits (charges) totaling $29 million ($0.02 per share) in third-quarter 2022, $79 million ($0.05 per share) in third-quarter 2021, $(23) million ($(0.02) per share) for the first nine months of 2022 and $(16) million ($(0.01) per share) for the first nine months of 2021 that are described in the supplemental schedule, "Adjusted Net Income," on page VII.
d.FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page X.
e.Working capital and other (uses) sources totaled $(269) million in third-quarter 2022, $180 million in third-quarter 2021, $(980) million for the first nine months of 2022 and $367 million for the first nine months of 2021.
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SUMMARY OPERATING DATA
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Copper (millions of recoverable pounds)
Production
1,056
987
3,140
2,810
Sales, excluding purchases
1,060
1,033
3,171
2,787
Average realized price per pound
$
3.50
$
4.20
$
3.88
$
4.22
Site production and delivery costs per pounda
$
2.35
$
1.88
$
2.16
$
1.92
b
Unit net cash costs per pounda
$
1.75
$
1.24
$
1.50
$
1.36
Gold (thousands of recoverable ounces)
Production
448
374
1,339
976
Sales
480
402
1,365
965
Average realized price per ounce
$
1,683
$
1,757
$
1,786
$
1,780
Molybdenum (millions of recoverable pounds)
Production
19
23
63
63
Sales, excluding purchases
17
20
56
63
Average realized price per pound
$
17.05
$
18.61
$
18.64
$
14.36
a.Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit net cash costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII.
b.Includes $0.03 per pound of copper associated with nonrecurring labor-related charges at Cerro Verde. Refer to the supplemental schedule, "Adjusted Net Income," on page VII.
Market Conditions
The London Metal Exchange (LME) copper settlement price reached a high of $4.87 per pound in March 2022, supported by copper's increasingly important role in decarbonization technologies and limited mine supply. Beginning in June 2022, a series of macro-economic factors (including concerns about the global economy, Chinese economic data, European energy crisis, rising United States (U.S.) interest rates and currency exchange rates related to the strength of the U.S. dollar) led to a decline in copper prices. The LME copper settlement price declined to $3.74 per pound at June 30, 2022, and further declined during third-quarter 2022 to $3.47 per pound at September 30, 2022. The LME copper settlement price was $3.37 per pound on October 19, 2022.
Physical market fundamentals remain tight as evidenced by low levels of global exchange stocks. FCX's global customer base reports healthy demand for copper. FCX believes the outlook for copper fundamentals in the medium- and long-term remain favorable, with studies indicating that demand for copper may double in 15 years based on the global movement towards decarbonization. FCX also believes substantial new mine supply development will be required to meet the goals of the global energy transition, and current prices for copper are insufficient to support new mine supply development, which is expected to add to future supply deficits.
Historically, copper prices have been correlated to various input costs, including energy and other commodity-related consumables. However, during 2022, prices for a number of commodity-related consumables have increased at a time when copper prices have declined. A return to historical long-term correlation and improved labor markets and supply chain constraints would improve cost and operational efficiencies.
The FCX management team and global organization have substantial experience and success in executing under volatile market conditions and a challenging operating environment. FCX benefits from a diversified portfolio of operations with an attractive cost structure, long-lived reserves, optionality in its project pipeline and a strong balance sheet and liquidity position.
FCX is closely monitoring market conditions and will adjust its operating plans to protect its liquidity and preserve its asset values, as necessary. FCX will maintain a strong balance sheet and liquidity position as it focuses on building long-term value in its business, executing its operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures. FCX will opportunistically use excess cash to repurchase its debt and equity securities. Refer to FCX's Financial Policy beginning on page 10.
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Responsible Production
2021 Climate Report. In September 2022, FCX published its updated climate report, available on FCX's website at fcx.com/sustainability. The climate report details FCX's ongoing initiatives to reduce its greenhouse gas (GHG) emissions, improve energy efficiency, evaluate and integrate the use of lower carbon and renewable energy sources and enhance its resilience to future climate-related risks. FCX continues to advance its GHG emissions reduction initiatives across its global operations and has established 2030 GHG reduction targets that collectively cover nearly 100 percent of its Scope 1 and 2 GHG emissions.
The Copper Mark. FCX is committed to validating all of its copper producing sites with the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry's responsible production practices. To achieve the Copper Mark, each site is required to complete an external assurance process to assess conformance with 32 environmental, social and governance (ESG) requirements. To date, FCX has achieved the Copper Mark at all 11 of its eligible copper producing sites in North America, South America and Europe, and PT Freeport Indonesia (PT-FI) has signed a letter of commitment and initiated the validation process.
ICMM. FCX is a founding member of the International Council on Mining & Metals (ICMM), an organization dedicated to a safe, fair and sustainable mining and metals industry, aiming continuously to strengthen ESG performance across the global mining and metals industry. As a member company, FCX is required to implement the 10 Mining Principles which define good ESG practices, and associated position statements, while also meeting 39 performance expectations and producing an externally verified sustainability report in accordance with the Global Reporting Initiative Standards subject to the ICMM Assurance & Validation Procedure.
Consolidated Sales Volumes
Third-quarter 2022 copper sales of 1.1 billion pounds were 4 percent higher than the July 2022 estimate and 3 percent higher than third-quarter 2021 sales, primarily reflecting strong production performance and the timing of shipments at PT-FI.
Third-quarter 2022 gold sales of 480 thousand ounces were 20 percent higher than the July 2022 estimate of 400 thousand ounces of gold, primarily reflecting higher ore grades and the timing of shipments. Third-quarter 2022 gold sales were 19 percent higher than third-quarter 2021 sales of 402 thousand ounces, primarily reflecting increased operating rates at the Grasberg minerals district.
Third-quarter 2022 molybdenum sales of 17 million pounds were lower than the July 2022 estimate of 21 million pounds and third-quarter 2021 sales of 20 million pounds, primarily reflecting lower by-product production from certain copper mines.
Consolidated sales volumes for the year 2022 are expected to approximate 4.2 billion pounds of copper, 1.8 million ounces of gold and 76 million pounds of molybdenum, including 1.0 billion pounds of copper, 420 thousand ounces of gold and 20 million pounds of molybdenum in fourth-quarter 2022. Projected sales volumes are dependent on operational performance, weather-related conditions, timing of shipments and other factors detailed in the Cautionary Statement below.
Consolidated Unit Net Cash Costs
Third-quarter 2022 consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines of $1.75 per pound of copper were higher than the third-quarter 2021 average of $1.24 per pound, primarily reflecting higher energy prices and increased costs for other consumables such as sulfuric acid, explosives, key equipment parts and other supplies and services. Third-quarter 2022 consolidated average unit net cash costs were 5 percent higher than the July 2022 estimate of $1.67 per pound, primarily reflecting higher maintenance and supply costs. Refer to "Mining Operations" below for further discussion.
Assuming average prices of $1,700 per ounce of gold and $18.00 per pound of molybdenum in fourth-quarter 2022 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for FCX's copper mines are expected to average $1.55 per pound of copper for the year 2022 (including $1.68 per pound in fourth-quarter 2022). The impact of price changes during fourth-quarter 2022 on consolidated unit net cash costs for the year 2022 would approximate $0.02 per pound of copper for each $100 per ounce change in the average price of gold and less than $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum.
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MINING OPERATIONS
Leaching Innovation Initiatives. FCX is advancing efforts to improve copper recovery from all ore types using leach processes. Several initiatives ongoing across FCX's North America and South America operations incorporate new applications, technologies and data analytics. FCX believes these leach innovation initiatives provide potential opportunities to produce incremental copper from its large existing leach stockpiles and lower-grade material currently classified as waste. Initial results support the potential for incremental low-cost additions to FCX's production and reserve profile.
North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has substantial reserves and future opportunities in the U.S., primarily associated with existing mining operations.
Lone Star is increasing its operating rates to achieve production of 300 million pounds of copper per year from oxide ores (compared with the initial design capacity of 200 million pounds per year). This oxide project at Lone Star advances the opportunity for development of the underlying, large-scale sulfide resources. FCX is also increasing exploration in the area to support metallurgical testing and mine development planning for a potential significant long-term investment to build additional scale on an economically attractive basis.
FCX is planning an expansion to double the concentrator capacity of the Bagdad operation in northwest Arizona. FCX is engaging stakeholders and is conducting a feasibility study, which is expected to be completed in 2023. The timing of future development will be dependent on market conditions and other economic factors.
Operating Data.Following is summary consolidated operating data for the North America copper mines:
Three Months Ended September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Copper (millions of recoverable pounds)
Production
373
377
1,109
1,090
Sales, excluding purchases
361
375
1,131
1,072
Average realized price per pound
$
3.57
$
4.34
$
4.17
$
4.24
Molybdenum (millions of recoverable pounds)
Productiona
7
9
22
26
Unit net cash costs per pound of copperb
Site production and delivery, excluding adjustments
$
2.76
$
2.12
$
2.54
$
2.11
By-product credits
(0.30)
(0.39)
(0.33)
(0.32)
Treatment charges
0.10
0.09
0.10
0.09
Unit net cash costs
$
2.56
$
1.82
$
2.31
$
1.88
a.Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which include sales of molybdenum produced at the North America copper mines.
b.For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII.
FCX's consolidated copper sales volumes from North America of 361 million pounds in third-quarter 2022 were lower than third-quarter 2021 copper sales volumes of 375 million, primarily reflecting timing of shipments as quarterly production volumes in third-quarter 2022 approximated third-quarter 2021. North America copper sales are estimated to approximate 1.5 billion pounds for the year 2022.
Average unit net cash costs (net of by-product credits) for the North America copper mines of $2.56 per pound of copper in third-quarter 2022 were higher than third-quarter 2021 unit net cash costs of $1.82 per pound,
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primarily reflecting increased costs for energy, labor, maintenance and supplies and lower molybdenum by-product credits.
Average unit net cash costs (net of by-product credits) for the North America copper mines are expected to approximate $2.35 per pound of copper for the year 2022, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $18.00 per pound in fourth-quarter 2022. North America's average unit net cash costs for the year 2022 would change by approximately $0.01 per pound for each $2 per pound change in the average price of molybdenum in fourth-quarter 2022.
SouthAmerica Mining. FCX operates two copper mines in South America - Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). These operations are consolidated in FCX's financial statements. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.
Operating and Development Activities.During third-quarter 2022, milling rates at Cerro Verde's concentrator averaged 403,900 metric tons of ore per day and are currently expected to average over 400,000 metric tons of ore per day in fourth-quarter 2022.
Operating rates at El Abra have returned to pre-COVID-19 levels and increased mining and stacking activities are expected to result in an approximate 30 percent increase in El Abra copper production for the year 2022, compared with the year 2021.
El Abra's large sulfide resource supports a potential major mill project similar to the large-scale concentrator constructed at Cerro Verde in 2015. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project. FCX also is considering options to invest in water infrastructure to provide options to extend existing operations, while continuing to monitor potential changes in Chile's regulatory and fiscal matters. FCX will defer major investment decisions pending clarity on Chile's regulatory and fiscal matters.
Operating Data.Following is summary consolidated operating data for South America mining:
Three Months Ended September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Copper (millions of recoverable pounds)
Production
302
260
862
764
Sales
293
280
845
769
Average realized price per pound
$
3.47
$
4.12
$
3.73
$
4.21
Molybdenum (millions of recoverable pounds)
Productiona
4
5
18
14
Unit net cash costs per pound of copperb
Site production and delivery, excluding adjustments
$
2.60
$
2.14
$
2.50
$
2.20
c
By-product credits
(0.16)
(0.38)
(0.31)
(0.31)
Treatment charges
0.13
0.13
0.15
0.13
Royalty on metals
0.01
0.01
0.01
0.01
Unit net cash costs
$
2.58
$
1.90
$
2.35
$
2.03
a.Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which include sales of molybdenum produced at Cerro Verde.
b.For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII.
c.Includes $0.10 per pound of copper associated with nonrecurring labor-related charges at Cerro Verde. Refer to the supplemental schedule, "Adjusted Net Income," on page VII.
FCX's consolidated copper sales volumes from South America of 293 million pounds in third-quarter 2022 were higher than third-quarter 2021 copper sales volumes of 280 million pounds, primarily reflecting higher mining and milling rates and higher ore grades. Copper sales from South America mining are expected to approximate 1.15 billion pounds for the year 2022.
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Average unit net cash costs (net of by-product credits) for South America mining of $2.58 per pound of copper in third-quarter 2022 were higher than third-quarter 2021 unit net cash costs of $1.90, primarily reflecting higher energy, sulfuric acid and other input costs and lower molybdenum by-product credits, partly offset by higher sales volumes.
Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $2.38 per pound of copper for the year 2022, based on current sales volume and cost estimates and assuming an average price of $18.00 per pound of molybdenum in fourth-quarter 2022.
In September 2022, El Abra and its two workers' unions signed new collective labor agreements (CLAs), which expire on April 30, 2026. No significant charges are expected to be recorded associated with the new CLAs.
Indonesia Mining.PT-FI operates one of the world's largest copper and gold mines at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76 percent ownership interest in PT-FI and manages its mining operations. Under the terms of the 2018 shareholders agreement, FCX's economic interest in PT-FI approximates 81 percent through 2022, and 48.76 percent thereafter. PT-FI's results are consolidated in FCX's financial statements.
Operating and Development Activities. PT-FI currently has three underground operating mines in the Grasberg minerals district: Grasberg Block Cave, DMLZ and Big Gossan. In late 2021, PT-FI achieved quarterly copper and gold production volumes approximating 100 percent of projected annualized levels of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold.
PT-FI's milling rates for ore extracted from its underground mines averaged 188,700 metric tons of ore per day in third-quarter 2022, and PT-FI expects to achieve a similar milling rate in fourth-quarter 2022. The installation of additional milling facilities at PT-FI is currently expected to be completed in the second half of 2023, which would increase milling capacity to approximately 240,000 metric tons of ore per day and provide for continued annualized copper and gold production volumes of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold. PT-FI is also advancing a mill recovery project with the installation of a new copper cleaner circuit that is expected to be completed in the first half of 2024, and is expected to provide incremental metal production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year.
For the year 2022, PT-FI's estimated capital spending on the Grasberg Block Cave and DMLZ underground projects, including construction of a dual-fuel power plant, is expected to approximate $1.0 billion, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID). In accordance with applicable accounting guidance, the aggregate costs (before scheduled contributions from PT Inalum), which are expected to approximate $1.2 billion for the year 2022, will be reflected as an investing activity in FCX's cash flow statement and contributions from PT Inalum will be reflected as a financing activity.
Kucing Liar. PT-FI commenced long-term mine development activities for its Kucing Liar deposit during 2021, which is expected to produce over 6 billion pounds of copper and 5 million ounces of gold between 2028 and the end of 2041. Pre-production development activities will occur over an approximate 10-year timeframe, and capital investments are expected to average approximately $400 million per year over the next 10 years. At full operating rates, annual production from Kucing Liar is expected to approximate 600 million pounds of copper and 500 thousand ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining.
Indonesia Smelter. In connection with PT-FI's 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI committed to construct additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (subject to force majeure provisions).
PT-FI is actively engaged in the following projects for additional domestic smelting capacity:
•Construction of a greenfield smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of copper concentrate per year. The smelter construction is advancing and is expected to be completed as soon as feasible in 2024 at an estimated cost of $3.0 billion, including $2.8 billion for a construction contract (excluding capitalized interest, owner's costs and commissioning) and $0.2 billion for investment in a desalinization plant.
•Expansion of PT Smelting's capacity by 30 percent to 1.3 million metric tons of concentrate per year, which is expected to be completed by the end of 2023. PT-FI completed agreements in November 2021 with the majority owner of PT Smelting to implement the expansion plans. PT-FI is funding the cost of the expansion,
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estimated to approximate $250 million, with a loan that will convert to equity, increasing ownership in PT Smelting from a 39.5 percent ownership interest to a majority ownership interest once the expansion is complete. FCX and PT-FI will consolidate PT Smelting's results following the increase to a majority ownership.
◦Commencing in 2023, PT-FI's commercial arrangement with PT Smelting will convert to a tolling arrangement. PT-FI will pay PT Smelting a tolling fee to smelt and refine its concentrate and will retain title of all products for sale to third parties. This is not expected to result in a significant change in PT-FI's economics but will impact the timing of PT-FI's sales during 2023.
•Construction of a precious metals refinery (PMR) to process gold and silver from the greenfield smelter and PT Smelting at an estimated cost of $400 million.
Capital expenditures for the greenfield smelter and PMR (collectively, the Indonesia smelter projects) totaled $0.5 billion during the first nine months of 2022 and are expected to approximate $0.9 billion for the year 2022. Capital expenditures for the Indonesia smelter projects are being funded with proceeds received from PT-FI's senior notes offering and availability under its revolving credit facility.
Construction of the additional domestic smelter capacity will result in the elimination of export duties, providing an offset to the economic cost associated with the Indonesia smelter projects. Based on current development progress of additional smelting capacity, PT-FI expects export duties to be reduced from the current rate of 5 percent to 2.5 percent by the end of 2022.
Mining Rights. PT-FI and the Indonesia government have begun preliminary discussions regarding the extension of PT-FI's mining rights under its special mining license (IUPK) beyond 2041. PT-FI believes an extension beyond 2041 would enable continuity of operations and the identification of additional resource development opportunities in the Grasberg minerals district.
Operating Data.Following is summary consolidated operating data for Indonesia mining:
Three Months Ended September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Copper (millions of recoverable pounds)
Production
381
350
1,169
956
Sales
406
378
1,195
946
Average realized price per pound
$
3.45
$
4.11
$
3.71
$
4.21
Gold (thousands of recoverable ounces)
Production
445
371
1,330
968
Sales
476
399
1,356
957
Average realized price per ounce
$
1,683
$
1,757
$
1,786
$
1,780
Unit net cash costs per pound of coppera
Site production and delivery, excluding adjustments
$
1.81
b
$
1.46
$
1.55
b
$
1.49
Gold and silver credits
(2.00)
(1.97)
(2.11)
(1.91)
Treatment charges
0.23
0.24
0.24
0.24
Export duties
0.20
0.19
0.20
0.15
Royalty on metals
0.20
0.25
0.24
0.26
Unit net cash costs
$
0.44
$
0.17
$
0.12
$
0.23
a.For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII.
b.Includes charges totaling $0.05 per pound in the third quarter and $0.02 per pound for the first nine months for nonrecurring costs associated with PT-FI's environmental commitments.
PT-FI's consolidated sales of 406 million pounds of copper and 476 thousand ounces of gold in third-quarter 2022 were higher than third-quarter 2021 consolidated sales of 378 million pounds of copper and 399 thousand ounces of gold, primarily reflecting increased operating rates at the Grasberg minerals district, partially offset by
8
lower copper ore grades. Consolidated sales volumes from PT-FI are expected to approximate 1.6 billion pounds of copper and 1.8 million ounces of gold for the year 2022.
PT-FI's unit net cash costs (net of gold and silver credits) of $0.44 per pound of copper in third-quarter 2022 were higher than unit net cash costs of $0.17 per pound in third-quarter 2021, primarily reflecting higher energy costs and increased operating rates, partly offset by higher sales volumes.
Assuming an average gold price $1,700 per ounce in fourth-quarter 2022 and achievement of current sales volumes and cost estimates, unit net cash costs (net of gold and silver credits) for PT-FI are expected to approximate $0.19per pound of copper for the year 2022. PT-FI's average unit net cash costs for the year 2022 would change by approximately $0.04 per pound of copper for each $100 per ounce change in the average price of gold in fourth-quarter 2022.
Molybdenum Mines. FCX operates two wholly owned molybdenum mines in Colorado - the Climax open-pit mine and the Henderson underground mine. The Climax and Henderson mines produce high-purity molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Climax and Henderson mines and at FCX's North America and South America copper mines is processed at FCX's conversion facilities.
Operating and Development Activities. Production from the molybdenum mines totaled 8 million pounds of molybdenum in third-quarter 2022 and 9 million pounds of molybdenum in third-quarter 2021. FCX's consolidated molybdenum sales and average realized prices include sales of molybdenum produced at the Molybdenum mines and at FCX's North America and South America copper mines, which are presented on page 3.
Average unit net cash costs for the Molybdenum mines of $12.10 per pound of molybdenum in third-quarter 2022 were higher than average unit net cash costs of $8.54 per pound in third-quarter 2021, primarily reflecting increased contract labor largely for a pushback at the Climax mine, and higher energy and other input costs. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $11.45 per pound of molybdenum for the year 2022.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII.
EXPLORATION
FCX's mining exploration activities are primarily associated with its existing mines, focusing on opportunities to expand reserves and resources to support development of additional future production capacity. Exploration results continue to indicate opportunities for significant future potential reserve additions at FCX's existing properties in North America and South America. Exploration expenditures for the year 2022, primarily to advance Lone Star and other opportunities at FCX's North America copper mines, are expected to approximate $115 million, compared with $50 million in 2021. FCX has long-lived reserves and a significant resource position in its existing portfolio.
LIQUIDITY, CASH FLOWS, CASH AND DEBT
Liquidity. At September 30, 2022, FCX had $8.6 billion in consolidated cash and cash equivalents and $3.5 billion of availability under its revolving credit facility. In addition, PT-FI and Cerro Verde have $1.3 billion and $350 million, respectively, of availability under their respective revolving credit facilities.
Operating Cash Flows. FCX generated operating cash flows of $0.8 billion (net of $0.3 billion of working capital and other uses) in third-quarter 2022 and $4.1 billion (net of $1.0 billion of working capital and other uses) for the first nine months of 2022.
Based on current sales volume and cost estimates, and assuming average prices of $3.50 per pound of copper, $1,700 per ounce of gold and $18.00 per pound of molybdenum in fourth-quarter 2022, FCX's consolidated operating cash flows are estimated to approximate $4.7 billion (net of $1.4 billion of working capital and other uses) for the year 2022. The impact of price changes during fourth-quarter 2022 on operating cash flows for the year 2022 would approximate $100 million for each $0.10 per pound change in the average price of copper, $35 million for each $100 per ounce change in the average price of gold and $15 million for each $2 per pound change in the average price of molybdenum.
9
Capital Expenditures. Capital expenditures totaled $0.8 billion in third-quarter 2022 (including $0.4 billion for major mining projects and $0.2 billion for the Indonesia smelter projects) and $2.4 billion for the first nine months of 2022 (including $1.2 billion for major mining projects and $0.5 billion for the Indonesia smelter projects).
Capital expenditures are expected to approximate $3.6 billion for the year 2022 (including $1.8 billion for major mining projects and $0.9 billion for the Indonesia smelter projects). Projected capital expenditures for major mining projects include $1.4 billion for planned projects primarily associated with underground mine development in the Grasberg minerals district and supporting mill and power capital costs and $0.4 billion for discretionary growth projects. Capital expenditures for the Indonesia smelter projects are being funded with the proceeds received from PT-FI's senior notes offerings and availability under its revolving credit facility.
Cash. Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests' share, taxes and other costs at September 30, 2022 (in billions):
Cash at domestic companies
$
4.6
Cash at international operations
4.0
a
Total consolidated cash and cash equivalents
8.6
Noncontrolling interests' share
(1.0)
Cash, net of noncontrolling interests' share
7.6
Withholding taxes
(0.3)
Net cash available
$
7.3
a.Includes $2.2 billion from PT-FI's senior notes offerings that is expected to be used to finance the Indonesia smelter projects.
Debt. Following is a summary of total debt and the weighted-average interest rates at September 30, 2022 (in billions, except percentages):
Weighted-
Average
Interest Rate
Senior notes:
Issued by FCXa
$
7.3
4.8%
Issued by PT-FI
3.0
5.4%
Issued by Freeport Minerals Corporation
0.3
7.5%
Other
0.1
1.3%
Total debt
$
10.7
5.0%
a.Includes $1.0 billion maturing in March 2023 with redemption rights at par in December 2022.
At September 30, 2022, there were no borrowings and $8 million in letters of credit issued under FCX's $3.5 billion revolving credit facility. In October 2022, FCX entered into a new $3.0 billion revolving credit facility that matures in October 2027 and replaces its prior revolving credit facility. The terms of the new facility are substantially similar to FCX's prior facility.
FCX has purchased approximately $1.1 billion aggregate principal amount of its senior notes in open-market transactions during 2022 (through October 19, 2022) for a total cost of $1.0 billion (including $402 million aggregate principal amount in third-quarter 2022), resulting in annual cash interest savings of approximately $50 million. During third-quarter 2022, FCX recorded a gain on early extinguishment of debt totaling $20 million associated with its senior note purchases.
FINANCIAL POLICY
FCX's financial policy is aligned with its strategic objectives of maintaining a strong balance sheet and increasing cash returns to shareholders while advancing opportunities for future growth. The policy includes a base dividend and a performance-based payout framework, whereby up to 50 percent of available cash flows generated after planned capital spending and distributions to noncontrolling interests would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to FCX maintaining its net debt at a level not to exceed the net debt target of $3.0 billion to $4.0 billion (excluding project debt for additional smelting capacity in Indonesia). The Board of Directors (the Board) will review the structure of the performance-based payout framework at least annually.
10
At September 30, 2022, FCX's net debt, excluding net debt for the Indonesia smelter projects, totaled $1.3 billion. Refer to the supplemental schedule, "Net Debt," on page IX.
On September 21, 2022, FCX declared dividends totaling $0.15 per share on its common stock (which included a $0.075 per share quarterly base cash dividend and a $0.075 per share quarterly variable cash dividend), which will be paid on November 1, 2022, to shareholders of record as of October 14, 2022. The declaration and payment of dividends (base or variable) is at the discretion of the Board and will depend on FCX's financial results, cash requirements, business prospects, global economic conditions and other factors deemed relevant by the Board.
In July 2022, the Board authorized an increase in the share repurchase program up to $5.0 billion. No shares have been purchased since July 11, 2022. FCX has acquired 47.9 million shares of its common stock for a total cost of $1.8 billion ($38.35 average cost per share) under its share repurchase program, including 35.1 million shares for a total cost of $1.3 billion ($38.36 average cost per share) during 2022. As of October 19, 2022, FCX has 1.43 billion shares of common stock outstanding and $3.2 billion is available under its share repurchase program. The timing and amount of share repurchases is at the discretion of management and will depend on a variety of factors. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board's discretion.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's third-quarter 2022 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing fcx.com. A replay of the webcast will be available through Friday, November 18, 2022.
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is one of the world's largest publicly traded copper producers.
FCX's portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru.
By supplying responsibly produced copper, FCX is proud to be a positive contributor to the world well beyond its operational boundaries. Additional information about FCX is available on FCX's website at fcx.com.
Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to business outlook, strategy, goals or targets; global market conditions; ore grades and milling rates; production and sales volumes; unit net cash costs and operating costs; capital expenditures; operating plans; cash flows; liquidity; PT-FI's financing, construction and completion of additional domestic smelting capacity in Indonesia in accordance with the terms of its IUPK; extension of PT-FI's IUPK beyond 2041; FCX's commitment to deliver responsibly produced copper, including plans to implement and validate its operating sites under specific frameworks; execution of FCX's energy and climate strategies and the underlying assumptions and estimated impacts on FCX's business related thereto; achievement of climate commitments by 2030 and 2050 net zero aspiration; improvements in operating procedures and technology innovations; exploration efforts and results; development and production activities, rates and costs; future organic growth opportunities; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; mineral reserve and mineral resource estimates; final resolution of settlements associated with ongoing legal proceedings; debt repurchases and the ongoing implementation of FCX's financial policy and future returns to shareholders, including dividend payments (base or variable) and share repurchases. The words "anticipates," "may," "can," "plans," "believes," "estimates," "expects," "projects," "targets," "intends," "likely," "will," "should," "could," "to be," "potential," "assumptions," "guidance," "aspirations," "future," "commitments," "pursues," "initiatives," "objectives," "opportunities," "strategy" and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration and payment of dividends (base or variable), and timing and amount of any share repurchases is at the discretion of the Board and management, respectively, and is subject to a number of factors, including maintaining FCX's net debt target, capital availability, FCX's financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by the Board or management, as applicable. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board's discretion.
FCX cautions readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of the commodities FCX produces, primarily copper; changes in FCX's cash requirements, financial position, financing or investment plans; changes in general market, economic, tax, regulatory or industry conditions, including as a result of Russia's invasion of Ukraine or potential global economic downturn or recession; reductions in liquidity and access to capital; the ongoing COVID-19 pandemic and
11
any future public health crisis; political and social risks; operational risks inherent in mining, with higher inherent risks in underground mining; fluctuations in price and availability of commodities purchased; constraints on supply, logistics and transportation services; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; production rates; timing of shipments; results of technical, economic or feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesia government's extension of PT-FI's export license after March 19, 2023; satisfaction of requirements in accordance with PT-FI's IUPK to extend mining rights from 2031 through 2041; the Indonesia government's approval of a deferred schedule for completion of additional domestic smelting capacity in Indonesia; discussions relating to extension of PT-FI's IUPK beyond 2041; cybersecurity incidents; labor relations, including labor-related work stoppages and costs; the results of the human health assessment to evaluate the potential impacts of tailings and mining waste, and compliance with applicable environmental, health and safety laws and regulations; weather- and climate-related risks; environmental risks and litigation results; FCX's ability to comply with its responsible production commitments under specific frameworks and any changes to such frameworks and other factors described in more detail under the heading "Risk Factors" in FCX's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (SEC).
Investors are cautioned that many of the assumptions upon which FCX's forward-looking statements are based are likely to change after the date the forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs or technological solutions and innovation, some aspects of which FCX may not be able to control. Further, FCX may make changes to its business plans that could affect its results. FCX cautions investors that it undertakes no obligation to update any forward-looking statements, which speak only as of the date made, notwithstanding any changes in its assumptions, changes in business plans, actual experience or other changes.
This press release also contains financial measures such as net debt, adjusted net income and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S. generally accepted accounting principles. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX's consolidated financial statements are in the supplemental schedules of this press release.
12
Freeport-McMoRan Inc.
SELECTED OPERATING DATA
Three Months Ended September 30,
2022
2021
2022
2021
MINING OPERATIONS:
Production
Sales
COPPER(millions of recoverable pounds)
(FCX's net interest in %)
North America
Morenci (72%)a
159
160
156
162
Safford (100%)
76
74
72
70
Bagdad (100%)
44
51
42
48
Sierrita (100%)
43
42
43
46
Chino (100%)
34
33
31
32
Tyrone (100%)
15
15
14
14
Miami (100%)
2
2
3
3
Total North America
373
377
361
375
South America
Cerro Verde (53.56%)
242
226
232
244
El Abra (51%)
60
34
61
36
Total South America
302
260
293
280
Indonesia
Grasberg (48.76%)b
381
350
406
378
Total
1,056
987
1,060
c
1,033
c
Less noncontrolling interests
214
187
213
202
Net
842
800
847
831
Average realized price per pound
$
3.50
$
4.20
GOLD (thousands of recoverable ounces)
(FCX's net interest in %)
North America (100%)
3
3
4
3
Indonesia (48.76%)b
445
371
476
399
Consolidated
448
374
480
402
Less noncontrolling interests
83
70
89
75
Net
365
304
391
327
Average realized price per ounce
$
1,683
$
1,757
MOLYBDENUM (millions of recoverable pounds)
(FCX's net interest in %)
Climax (100%)
5
5
N/A
N/A
Henderson (100%)
3
4
N/A
N/A
North America copper mines (100%)a
7
9
N/A
N/A
Cerro Verde (53.56%)
4
5
N/A
N/A
Consolidated
19
23
17
20
Less noncontrolling interests
2
3
2
2
Net
17
20
15
18
Average realized price per pound
$
17.05
$
18.61
a. Amounts are net of Morenci's joint venture partners' undivided interests.
b. FCX's economic interest in PT Freeport Indonesia (PT-FI) approximates 81 percent through 2022 and 48.76 percent thereafter.
c. Consolidated sales volumes exclude purchased copper of 48 million pounds in third-quarter 2022 and 28 million pounds in third-quarter 2021.
I
Freeport-McMoRan Inc.
SELECTED OPERATING DATA (continued)
Nine Months Ended September 30,
2022
2021
2022
2021
MINING OPERATIONS:
Production
Sales
COPPER(millions of recoverable pounds)
(FCX's net interest in %)
North America
Morenci (72%)a
485
470
495
474
Safford (100%)
215
202
215
188
Sierrita (100%)
143
144
146
143
Bagdad (100%)
124
134
130
137
Chino (100%)
91
91
93
82
Tyrone (100%)
43
40
44
38
Miami (100%)
8
9
8
10
Total North America
1,109
1,090
1,131
1,072
South America
Cerro Verde (53.56%)
720
649
704
648
El Abra (51%)
142
115
141
121
Total South America
862
764
845
769
Indonesia
Grasberg (48.76%)b
1,169
956
1,195
946
Total
3,140
2,810
3,171
c
2,787
c
Less noncontrolling interests
623
537
619
538
Net
2,517
2,273
2,552
2,249
Average realized price per pound
$
3.88
$
4.22
GOLD (thousands of recoverable ounces)
(FCX's net interest in %)
North America (100%)
9
8
9
8
Indonesia (48.76%)b
1,330
968
1,356
957
Consolidated
1,339
976
1,365
965
Less noncontrolling interests
249
181
254
179
Net
1,090
795
1,111
786
Average realized price per ounce
$
1,786
$
1,780
MOLYBDENUM (millions of recoverable pounds)
(FCX's net interest in %)
Climax (100%)
14
14
N/A
N/A
Henderson (100%)
9
9
N/A
N/A
North America copper mines (100%)a
22
26
N/A
N/A
Cerro Verde (53.56%)
18
14
N/A
N/A
Consolidated
63
63
56
63
Less noncontrolling interests
8
7
7
7
Net
55
56
49
56
Average realized price per pound
$
18.64
$
14.36
a. Amounts are net of Morenci's joint venture partners' undivided interests.
b. FCX's economic interest in PT-FI approximates 81 percent through 2022 and 48.76 percent thereafter.
c. Consolidated sales volumes exclude purchased copper of 86 million pounds for the first nine months of 2022 and 149 million pounds for the first nine months of 2021.
II
Freeport-McMoRan Inc.
SELECTED OPERATING DATA (continued)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
100% North America Copper Mines
Leach Operations
Leach ore placed in stockpiles (metric tons per day)
622,200
579,100
684,200
656,900
Average copper ore grade (percent)
0.30
0.30
0.29
0.29
Copper production (millions of recoverable pounds)
260
270
759
797
Mill Operations
Ore milled (metric tons per day)
294,600
274,300
297,600
269,000
Average ore grades (percent):
Copper
0.36
0.39
0.37
0.38
Molybdenum
0.02
0.03
0.02
0.03
Copper recovery rate (percent)
82.3
81.6
82.2
80.9
Production (millions of recoverable pounds):
Copper
174
170
538
476
Molybdenum
8
10
23
27
100% South America Mining
Leach Operations
Leach ore placed in stockpiles (metric tons per day)
175,200
171,600
157,700
171,900
Average copper ore grade (percent)
0.34
0.30
0.35
0.33
Copper production (millions of recoverable pounds)
85
62
217
188
Mill Operations
Ore milled (metric tons per day)
403,900
380,300
408,500
381,500
Average ore grades (percent):
Copper
0.32
0.31
0.32
0.30
Molybdenum
0.01
0.01
0.01
0.01
Copper recovery rate (percent)
85.4
86.1
85.5
86.3
Production (millions of recoverable pounds):
Copper
217
199
645
576
Molybdenum
4
5
18
14
100% Indonesia Mining
Ore extracted and milled (metric tons per day):
Grasberg Block Cave underground mine
100,600
76,500
100,900
64,300
Deep Mill Level Zone underground mine
81,400
59,700
79,000
53,500
Big Gossan underground mine
7,600
7,400
7,500
7,500
Other adjustmentsa
(900)
13,800
3,400
16,300
Total
188,700
157,400
190,800
141,600
Average ore grades:
Copper (percent)
1.17
1.30
1.20
1.32
Gold (grams per metric ton)
1.07
1.05
1.06
1.04
Recovery rates (percent):
Copper
90.1
90.1
89.8
90.0
Gold
77.2
78.6
77.9
77.8
Production (recoverable):
Copper (millions of pounds)
381
350
1,169
956
Gold (thousands of ounces)
445
371
1,330
968
100% Molybdenum Mines
Ore milled (metric tons per day)
25,400
24,800
24,600
22,000
Average molybdenum ore grade (percent)
0.18
0.19
0.18
0.19
Molybdenum production (millions of recoverable pounds)
8
9
23
23
a.Also includes ore extracted and milled from the Deep Ore Zone underground mine ore body, which was depleted at the end of 2021.
III
Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(In Millions, Except Per Share Amounts)
Revenuesa
$
5,003
$
6,083
$
17,022
b
$
16,681
Cost of sales:
Production and deliveryb,c,d
3,366
3,009
e
9,519
8,862
e
Depreciation, depletion and amortization
508
528
1,504
1,430
Metals inventory adjustments
25
14
43
15
Total cost of sales
3,899
3,551
11,066
10,307
Selling, general and administrative expenses
98
102
313
289
Mining exploration and research expenses
38
15
87
36
Environmental obligations and shutdown costs
6
13
51
51
Net gain on sales of assets
-
(60)
(2)
(63)
Total costs and expenses
4,041
3,621
11,515
10,620
Operating income
962
2,462
5,507
6,061
Interest expense, netf
(140)
b,d
(138)
(423)
b,d
(431)
b
Net gain on early extinguishment of debt
20
-
28
-
Other income, net
25
d
36
67
d
56
b
Income before income taxes and equity in affiliated companies' net earnings (losses)
867
2,360
5,179
5,686
Provision for income taxesg
(315)
(628)
(1,710)
(1,674)
Equity in affiliated companies' net earnings (losses)
8
(9)
33
(5)
Net income
560
1,723
3,502
4,007
Net income attributable to noncontrolling interests
(156)
(324)
(731)
(807)
Net income attributable to common stockholdersh
$
404
$
1,399
$
2,771
$
3,200
Diluted net income per share attributable to common stock
$
0.28
$
0.94
$
1.90
$
2.16
Diluted weighted-average common shares outstanding
1,439
1,484
1,455
1,481
Dividends declared per share of common stock
$
0.15
$
0.075
$
0.45
$
0.225
a.Includes adjustments to provisionally priced concentrate and cathode sales. For a summary of adjustments to provisionally priced copper sales, refer to the supplemental schedule, "Derivative Instruments," beginning on page IX.
b.Includes PT-FI net credits (charges) totaling $17 million in third-quarter 2022, $1 million in third-quarter 2021, $(34) million for the first nine months of 2022 and $(53) million for the first nine months of 2021, which are summarized in the supplemental schedule, "Adjusted Net Income," on page VII.
c.FCX is engaged in various studies associated with potential future expansion projects primarily at its mining operations. Production and delivery costs include charges for these feasibility and optimization studies totaling $34 million in third-quarter 2022, $20 million in third-quarter 2021, $84 million for the first nine months of 2022 and $36 million for the first nine months of 2021.
d.Includes other net (charges) credits totaling $(21) million in third-quarter 2022, $1 million in third-quarter 2021, $(37) million for the first nine months of 2022 and $(12) million for the first nine months of 2021, which are summarized in the supplemental schedule, "Adjusted Net Income," on page VII.
e.Includes nonrecurring labor-related charges at Cerro Verde totaling $5 million in third-quarter 2021 and $74 million for the first nine months of 2021, which are summarized in the supplemental schedule, "Adjusted Net Income," on page VII.
f.Consolidated interest costs (before capitalization) totaled $182 million in third-quarter 2022, $157 million in third-quarter 2021, $524 million for the first nine months of 2022 and $482 million for the first nine months of 2021. Higher interest costs (before capitalization) in the 2022 periods are primarily related to PT-FI's senior notes that were issued in April 2022.
g.For a summary of FCX's income taxes, refer to the supplemental schedule, "Income Taxes," on page VIII.
h.FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page X.
IV
Freeport-McMoRan Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30,
December 31,
2022
2021
(In Millions)
ASSETS
Current assets:
Cash and cash equivalents
$
8,578
$
8,068
Trade accounts receivable
844
1,168
Income and other tax receivables
485
574
Inventories:
Materials and supplies, net
1,873
1,669
Mill and leach stockpiles
1,369
1,170
Product
1,577
1,658
Other current assets
647
523
Total current assets
15,373
14,830
Property, plant, equipment and mine development costs, net
31,814
30,345
Long-term mill and leach stockpiles
1,194
1,387
Other assets
1,546
1,460
Total assets
$
49,927
$
48,022
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
3,947
$
3,495
Current portion of debt
1,032
372
Accrued income taxes
439
1,541
Current portion of environmental and asset retirement obligations
365
264
Dividends payable
216
220
Total current liabilities
5,999
5,892
Long-term debt, less current portion
9,658
9,078
Deferred income taxes
4,316
4,234
Environmental and asset retirement obligations, less current portion
4,223
4,116
Other liabilities
1,550
1,683
Total liabilities
25,746
25,003
Equity:
Stockholders' equity:
Common stock
161
160
Capital in excess of par value
25,483
25,875
Accumulated deficit
(4,604)
(7,375)
Accumulated other comprehensive loss
(385)
(388)
Common stock held in treasury
(5,701)
(4,292)
Total stockholders' equity
14,954
13,980
Noncontrolling interestsa
9,227
9,039
Total equity
24,181
23,019
Total liabilities and equity
$
49,927
$
48,022
a. Includes $4.6 billion associated with the December 2018 PT-FI transaction, including $4.1 billion associated with the PT Indonesia Asahan Aluminium (Persero) acquisition of Rio Tinto's joint venture interest.
V
Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30,
2022
2021
(In Millions)
Cash flow from operating activities:
Net income
$
3,502
$
4,007
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization
1,504
1,430
Metals inventory adjustments
43
15
Net gain on sales of assets
(2)
(63)
Stock-based compensation
75
79
Net charges for environmental and asset retirement obligations, including accretion
180
131
Payments for environmental and asset retirement obligations
(197)
(184)
Net charges for defined pension and postretirement plans
28
3
Pension plan contributions
(52)
(75)
Net gain on early extinguishment of debt
(28)
-
Deferred income taxes
83
96
Payments for Cerro Verde royalty dispute
-
(421)
a
Other, net
(86)
50
Changes in working capital and other:
Accounts receivable
456
(218)
Inventories
(184)
(310)
Other current assets
(71)
(77)
Accounts payable and accrued liabilities
84
123
Accrued income taxes and timing of other tax payments
(1,265)
849
Net cash provided by operating activities
4,070
5,435
Cash flow from investing activities:
Capital expenditures:
North America copper mines
(430)
(211)
South America
(203)
(94)
Indonesia mining
(1,148)
(904)
Indonesia smelter projects
(517)
(79)
Molybdenum mines
(16)
(4)
Other
(108)
(52)
Proceeds from sale of Freeport Cobalt
-
150
Proceeds from sales of assets
102
21
Loans to PT Smelting for expansion
(51)
-
Acquisition of minority interest in PT Smelting
-
(33)
Other, net
(10)
(25)
Net cash used in investing activities
(2,381)
(1,231)
Cash flow from financing activities:
Proceeds from debt
5,366
633
Repayments of debt
(4,073)
(672)
Cash dividends and distributions paid:
Common stock
(652)
(220)
Noncontrolling interests
(625)
(187)
Treasury stock purchases
(1,347)
-
Contributions from noncontrolling interests
142
135
Proceeds from exercised stock options
106
189
Payments for withholding of employee taxes related to stock-based awards
(55)
(19)
Debt financing costs and other, net
(41)
(47)
Net cash used in financing activities
(1,179)
(188)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
510
4,016
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
8,314
3,903
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of periodb
$
8,824
$
7,919
a.Cerro Verde paid the balance of its royalty dispute liabilities in third-quarter 2021.
b.Includes restricted cash and cash equivalents of $246 million at September 30, 2022, and $247 million at September 30, 2021.
VI
Freeport-McMoRan Inc.
ADJUSTED NET INCOME
Adjusted net income is intended to provide investors and others with information about FCX's recurring operating performance. This information differs from net income attributable to common stock determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. FCX's adjusted net income follows, which may not be comparable to similarly titled measures reported by other companies (in millions, except per share amounts).
Three Months Ended September 30,
2022
2021
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net income attributable to common stock
N/A
$
404
$
0.28
N/A
$
1,399
$
0.94
Metals inventory adjustments
$
(25)
b
$
(10)
$
(0.01)
$
(14)
$
(14)
$
(0.01)
Net adjustments to environmental obligations
5
5
-
2
2
-
Cerro Verde labor agreement
-
-
-
(5)
(2)
-
PT-FI net credits
17
c
8
0.01
1
c
12
0.01
Net gain on sales of assets
-
-
-
60
34
0.02
Net gain on early extinguishment of debt
20
20
0.01
-
-
-
Other net (charges) credits
(21)
d
(11)
(0.01)
1
e
(8)
(0.01)
Net tax creditsf
N/A
16
0.01
N/A
55
0.04
$
(2)
g
$
29
g
$
0.02
g
$
45
$
79
$
0.05
Adjusted net income attributable to common stock
N/A
$
375
$
0.26
N/A
$
1,320
$
0.89
Nine Months Ended September 30,
2022
2021
Pre-tax
After-taxa
Per Share
Pre-tax
After-taxa
Per Share
Net income attributable to common stock
N/A
$
2,771
$
1.90
N/A
$
3,200
$
2.16
Metals inventory adjustments
$
(43)
b
$
(21)
$
(0.01)
$
(15)
$
(15)
$
(0.01)
PT-FI net charges
(34)
c
(23)
(0.02)
(53)
c
(36)
(0.02)
Net adjustments to environmental obligations
(8)
(8)
(0.01)
(15)
(15)
(0.01)
Cerro Verde labor agreement
-
-
-
(74)
(24)
(0.02)
Net gain on sales of assets
2
2
-
63
37
0.02
Net gain on early extinguishment of debt
28
33
0.02
-
-
-
Other net charges
(37)
d
(23)
(0.01)
(12)
e
(18)
(0.01)
Net tax creditsf
N/A
16
0.01
N/A
55
0.04
$
(91)
g
$
(23)
g
$
(0.02)
$
(106)
$
(16)
$
(0.01)
Adjusted net income attributable to common stock
N/A
$
2,794
$
1.92
N/A
$
3,216
$
2.17
a.Reflects impact to FCX net income attributable to common stock (i.e., net of any taxes and noncontrolling interests).
b.Includes stockpile write-offs at Cerro Verde totaling $1 million in third-quarter 2022 and $10 million for the first nine months of 2022.
c.Reflects net (charges) credits associated with contested matters at PT-FI (including historical tax audits and an administrative fine levied by the Indonesia government), asset impairments and exposure for additional export duties for prior periods, which were recorded to the following (in millions):
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Revenues
$
-
$
-
$
(18)
$
-
Production and delivery
$
21
$
1
$
(12)
$
(29)
Interest expense, net
$
(4)
$
-
$
(4)
$
(8)
Other income, net
$
-
$
-
$
-
$
(16)
d.Reflects net (charges) credits primarily associated with a historical tax audit, asset retirement obligation adjustments (ARO), a litigation settlement and contract cancellation costs, which were recorded to production and delivery ($(19) million in third-quarter and $(35) million for the first nine months of 2022), other income, net ($(11) million for the third quarter and first nine months of 2022) and interest expense, net ($9 million for the third quarter and first nine months of 2022).
e.Includes credits recorded to production and delivery associated with ARO adjustments ($1 million in third-quarter and $17 million for the first nine months of 2021). The first nine months of 2021 also include other net charges recorded to production and delivery ($29 million), primarily associated with employee separation charges and international tax matters.
f.Refer to "Income Taxes" below for further discussion of net tax credits.
g.Does not foot because of rounding.
VII
Freeport-McMoRan Inc.
INCOME TAXES
Following is a summary of the approximate amounts used in the calculation of FCX's consolidated income tax provision (in millions, except percentages):
Three Months Ended September 30,
2022
2021
Income Tax
Income Tax
Income
Effective
(Provision)
Income
Effective
(Provision)
(Loss)a
Tax Rate
Benefit
(Loss)a
Tax Rate
Benefit
U.S.b
$
(55)
-%
c
$
-
$
581
1%
c
$
(4)
South America
26
(58)%
15
d
502
44%
(220)
Indonesia
855
40%
(343)
1,181
32%
(382)
e
Eliminations and other
41
N/A
(18)
96
N/A
14
Rate adjustmentf
-
N/A
31
-
N/A
(36)
Continuing operations
$
867
36%
$
(315)
$
2,360
27%
$
(628)
Nine Months Ended September 30,
2022
2021
Income Tax
Income Tax
Income
Effective
(Provision)
Income
Effective
(Provision)
(Loss)a
Tax Rate
Benefit
(Loss)a
Tax Rate
Benefit
U.S.b
$
854
1%
c
$
(5)
$
1,324
1%
c
$
(7)
South America
802
36%
(287)
d
1,425
40%
(576)
Indonesia
3,480
39%
(1,363)
2,940
37%
(1,101)
e
Eliminations and other
43
N/A
(25)
(3)
N/A
19
Rate adjustmentf
-
N/A
(30)
-
N/A
(9)
Continuing operations
$
5,179
33%
$
(1,710)
$
5,686
29%
$
(1,674)
a.Represents income before income taxes and equity in affiliated companies' net earnings (losses).
b.In addition to FCX's North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.
c.Includes valuation allowance release on prior year unbenefited net operating losses (NOLs).
d.The third quarter and first nine months of 2022 include a tax credit of $31 million ($16 million net of noncontrolling interest) primarily associated with completion of Cerro Verde's 2016 tax audit.
e.The third quarter and first nine months of 2021 include net tax benefits of $69 million ($55 million net of noncontrolling interest) associated with the release of a portion of the valuation allowances recorded against PT Rio Tinto Indonesia (PT RTI) NOLs and $24 million ($19 million net of noncontrolling interest) primarily associated with the reversal of a tax reserve related to the treatment of prior year contractor support costs; partly offset by a tax charge of $10 million ($8 million net of noncontrolling interest) associated with the audit of PT-FI's 2019 tax returns.
f.In accordance with applicable accounting rules, FCX adjusts its interim provision for income taxes equal to its consolidated tax rate.
Assuming achievement of current sales volume and cost estimates and average prices of $3.50 per pound for copper, $1,700 per ounce for gold and $18.00 per pound for molybdenum in fourth-quarter 2022, FCX estimates its consolidated effective tax rate for the year 2022 would approximate 34 percent (which would result in a 38 percent effective tax rate in fourth-quarter 2022). Changes in projected sales volumes and average prices during fourth-quarter 2022 would incur tax impacts at estimated effective rates of 40 percent for Peru, 38 percent for Indonesia and 0 percent for the U.S.
On August 16, 2022, the U.S. Inflation Reduction Act of 2022 (the Inflation Reduction Act) was signed into law, which includes, among other provisions, a new corporate alternative minimum tax of 15 percent on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period. Additionally, the Inflation Reduction Act imposes a new excise tax of 1 percent on the fair market value of net corporate stock repurchases. These provisions are effective for tax years beginning after December 31, 2022.FCX continues to analyze the impacts of the Inflation Reduction Act on its future results of operations. The Inflation Reduction Act had no impact on FCX's financial statements for the third quarter or first nine months of 2022.
VIII
Freeport-McMoRan Inc.
NET DEBT
Net debt, which FCX defines as consolidated debt less consolidated cash and cash equivalents, is intended to provide investors with information related to the performance-based payout framework in FCX's financial policy, which requires achievement of a net debt target in the range of $3 billion to $4 billion (excluding project debt for additional smelting capacity in Indonesia). This information differs from consolidated debt determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for consolidated debt determined in accordance with U.S. GAAP. FCX's net debt, which may not be comparable to similarly titled measures reported by other companies follows (in billions):
As of September 30, 2022
As of December 31, 2021
Current portion of debt
$
1.0
$
0.4
Long-term debt, less current portion
9.7
9.1
Consolidated debt
10.7
9.5
Less: consolidated cash and cash equivalents
8.6
8.1
FCX net debt
2.1
1.4
Less: net debt for Indonesia smelter projectsa
0.8
0.2
FCX net debt, excluding Indonesia smelter projects
$
1.3
1.2
a.Includes consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $2.2 billion as of September 30, 2022, and consolidated debt of $0.4 billion and consolidated cash and cash equivalents of $0.2 billion as of December 31, 2021.
DERIVATIVE INSTRUMENTS
For the nine months ended September 30, 2022, FCX's mined copper was sold 60 percent in concentrate, 18 percent as cathode and 22 percent as rod from North America operations. Substantially all of FCX's copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted London Metal Exchange (LME) monthly average copper prices. FCX records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. LME copper settlement prices averaged $3.51 per pound during third-quarter 2022 and settled at $3.47 per pound on September 30, 2022. Because a significant portion of FCX's copper concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of the average recorded copper price for the period. FCX's average realized copper price was $3.50 per pound in third-quarter 2022.
Following is a summary of the adjustments to prior period and current period provisionally priced copper sales (in millions, except per share amounts):
Three Months Ended September 30,
2022
2021
Prior
Perioda
Current
Periodb
Total
Prior
Perioda
Current
Periodb
Total
Revenues
$
(228)
$
(44)
$
(272)
$
(9)
$
(93)
$
(102)
Net income attributable to common stock
$
(95)
$
(21)
$
(116)
$
(3)
$
(36)
$
(39)
Net income per share of common stock
$
(0.07)
$
(0.01)
$
(0.08)
$
-
$
(0.03)
$
(0.03)
a.Reflects adjustments to provisionally priced copper sales at June 30, 2022 and 2021.
b.Reflects adjustments to provisionally priced copper sales during the third quarters of 2022 and 2021.
Nine Months Ended September 30,
2022
2021
Prior
Perioda
Current
Periodb
Total
Prior
Perioda
Current
Periodb
Total
Revenues
$
58
$
(832)
$
(774)
$
169
$
54
$
223
Net income attributable to common stock
$
24
$
(343)
$
(319)
$
65
$
17
$
82
Net income per share of common stock
$
0.02
$
(0.24)
$
(0.22)
$
0.05
$
0.01
$
0.06
a.Reflects adjustments to provisionally priced copper sales at December 31, 2021 and 2020.
b.Reflects adjustments to provisionally priced copper sales for the first nine months of 2022 and 2021.
IX
Freeport-McMoRan Inc.
DERIVATIVE INSTRUMENTS (continued)
At September 30, 2022, FCX had provisionally priced copper sales at its copper mining operations totaling 523 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $3.45 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the quarter-end provisional price would have an approximate $16 million effect on 2022 net income attributable to common stock. The LME copper price settled at $3.37 per pound on October 19, 2022.
DEFERRED PROFITS
FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 39.5 percent of PT-FI's sales to PT Smelting (PT-FI's 39.5 percent-owned Indonesia smelting unit) until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions (reductions) to operating income totaling $33 million ($14 million to net income attributable to common stock) in third-quarter 2022, $41 million ($48 million to net income attributable to common stock) in third-quarter 2021, $73 million ($37 million to net income attributable to common stock) for the first nine months of 2022 and $(144) million ($(97) million to net income attributable to common stock) for the first nine months of 2021. FCX's net deferred profits on its inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $105 million at September 30, 2022. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings.
BUSINESS SEGMENTS
FCX has organized its mining operations into four primary divisions - North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX's reportable segments, which include the Morenci and Cerro Verde copper mines, the Grasberg minerals district (Indonesia Mining), the Rod & Refining operations and Atlantic Copper Smelting & Refining.
Intersegment sales between FCX's business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, the timing of sales to unaffiliated customers and transportation premiums.
FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.
X
Freeport-McMoRan Inc.
BUSINESS SEGMENTS (continued)
(In millions)
Atlantic
Corporate,
North America Copper Mines
South America Mining
Copper
Other
Cerro
Indonesia
Molybdenum
Rod &
Smelting
& Elimi-
FCX
Morenci
Other
Total
Verde
Other
Total
Mining
Mines
Refining
& Refining
nations
Total
Three Months Ended September 30, 2022
Revenues:
Unaffiliated customers
$
18
$
74
$
92
$
666
$
215
$
881
$
1,726
a
$
-
$
1,436
$
604
$
264
b
$
5,003
Intersegment
551
805
1,356
83
-
83
72
127
7
5
(1,650)
-
Production and delivery
408
736
1,144
579
221
800
663
94
1,450
604
(1,389)
3,366
Depreciation, depletion and amortization
44
56
100
84
14
98
265
18
1
8
18
508
Metals inventory adjustments
2
1
3
2
20
22
-
-
-
-
-
25
Selling, general and administrative expenses
-
1
1
2
-
2
26
-
-
6
63
98
Mining exploration and research expenses
-
-
-
-
-
-
-
-
-
-
38
38
Environmental obligations and shutdown costs
-
1
1
-
-
-
-
-
-
-
5
6
Operating income (loss)
115
84
199
82
(40)
42
844
15
(8)
(9)
(121)
962
Interest expense, net
-
1
1
5
-
5
15
-
-
4
115
140
Provision for (benefit from) income taxes
-
-
-
3
(18)
(15)
343
-
-
-
(13)
315
Total assets at September 30, 2022
2,996
5,456
8,452
8,390
1,826
10,216
20,496
1,701
216
1,082
7,764
49,927
Capital expenditures
71
83
154
41
38
79
389
7
2
17
188
c
836
Three Months Ended September 30, 2021
Revenues:
Unaffiliated customers
$
16
$
64
$
80
$
979
$
149
$
1,128
$
1,961
a
$
-
$
1,697
$
783
$
434
b
$
6,083
Intersegment
711
1,020
1,731
95
-
95
81
151
7
-
(2,065)
-
Production and delivery
312
592
904
533
97
630
569
70
1,701
765
(1,630)
3,009
Depreciation, depletion and amortization
40
54
94
101
10
111
280
19
1
7
16
528
Metals inventory adjustments
13
-
13
-
-
-
-
-
-
-
1
14
Selling, general and administrative expenses
-
1
1
2
-
2
28
-
-
5
66
102
Mining exploration and research expenses
-
1
1
-
-
-
-
-
-
-
14
15
Environmental obligations and shutdown costs
(1)
(1)
(2)
-
-
-
-
-
-
-
15
13
Net gain on sales of assets
-
-
-
-
-
-
-
-
-
-
(60)
d
(60)
Operating income (loss)
363
437
800
438
42
480
1,165
62
2
6
(53)
2,462
Interest expense, net
-
1
1
6
-
6
1
-
-
1
129
138
Provision for (benefit from) income taxes
-
-
-
197
24
221
382
e
-
-
(1)
26
628
Total assets at September 30, 2021
2,586
5,244
7,830
8,554
1,843
10,397
18,592
1,726
278
1,067
7,027
46,917
Capital expenditures
42
74
116
41
6
47
328
1
1
5
43
c
541
a.Includes PT-FI's sales to PT Smelting totaling $572 million in third-quarter 2022 and $795 million in third-quarter 2021.
b.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.
c.Primarily includes capital expenditures for the greenfield smelter and precious metals refinery (collectively, the Indonesia smelter projects).
d.Represents the gain on the sale of FCX's remaining cobalt business located in Kokkola, Finland (Freeport Cobalt).
e.Includes net tax benefits of $69 million associated with the release of a portion of the valuation allowances recorded against PT RTI NOLs.
XI
Freeport-McMoRan Inc.
BUSINESS SEGMENTS (continued)
(In millions)
Atlantic
Corporate,
North America Copper Mines
South America Mining
Copper
Other
Cerro
Indonesia
Molybdenum
Rod &
Smelting
& Elimi-
FCX
Morenci
Other
Total
Verde
Other
Total
Mining
Mines
Refining
& Refining
nations
Total
Nine Months Ended September 30, 2022
Revenues:
Unaffiliated customers
$
125
$
159
$
284
$
2,474
$
555
$
3,029
$
5,972
a
$
-
$
4,932
$
1,755
$
1,050
b
$
17,022
Intersegment
1,992
2,978
4,970
325
-
325
208
399
24
5
(5,931)
-
Production and delivery
1,168
2,111
3,279
1,702
510
2,212
1,853
249
4,969
1,789
c
(4,832)
9,519
Depreciation, depletion and amortization
132
175
307
262
35
297
775
52
3
20
50
1,504
Metals inventory adjustments
2
8
10
11
22
33
-
-
-
-
-
43
Selling, general and administrative expenses
1
2
3
6
-
6
83
-
-
19
202
313
Mining exploration and research expenses
-
1
1
-
-
-
-
-
-
-
86
87
Environmental obligations and shutdown costs
(13)
1
(12)
-
-
-
-
-
-
-
63
51
Net gain on sales of assets
-
-
-
-
-
-
-
-
-
-
(2)
(2)
Operating income (loss)
827
839
1,666
818
(12)
806
3,469
98
(16)
(68)
(448)
5,507
Interest expense, net
-
1
1
12
-
12
30
-
-
8
372
423
Provision for (benefit from) income taxes
-
-
-
298
(11)
287
1,363
-
-
-
60
1,710
Capital expenditures
207
223
430
109
94
203
1,148
16
6
60
559
d
2,422
Nine Months Ended September 30, 2021
Revenues:
Unaffiliated customers
$
77
$
147
$
224
$
2,721
$
512
$
3,233
$
5,097
a
$
-
$
4,695
$
2,264
$
1,168
b
$
16,681
Intersegment
1,996
2,783
4,779
260
-
260
189
310
20
-
(5,558)
-
Production and delivery
932
1,646
2,578
1,463
e
306
1,769
1,552
183
4,708
2,213
(4,141)
c
8,862
Depreciation, depletion and amortization
114
161
275
272
34
306
726
51
3
22
47
1,430
Metals inventory adjustments
13
-
13
-
-
-
-
1
-
-
1
15
Selling, general and administrative expenses
1
2
3
6
-
6
81
-
-
17
182
289
Mining exploration and research expenses
-
1
1
-
-
-
-
-
-
-
35
36
Environmental obligations and shutdown costs
-
(1)
(1)
-
-
-
-
-
-
-
52
51
Net gain on sales of assets
-
-
-
-
-
-
-
-
-
-
(63)
f
(63)
Operating income (loss)
1,013
1,121
2,134
1,240
172
1,412
2,927
75
4
12
(503)
6,061
Interest expense, net
-
1
1
31
-
31
8
-
-
4
387
431
Provision for (benefit from) income taxes
-
-
-
515
62
577
1,101
g
-
-
(1)
(3)
1,674
Capital expenditures
74
137
211
84
10
94
904
4
2
18
111
d
1,344
a.Includes PT-FI's sales to PT Smelting totaling $2.3 billion for both the first nine months of 2022 and 2021.
b.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.
c.Includes maintenance charges and idle facility costs associated with major maintenance turnarounds totaling $41 million at Atlantic Copper for the first nine months of 2022 and $87 million at the Miami smelter for the first nine months of 2021.
d.Primarily includes capital expenditures for the Indonesia smelter projects.
e.Includes nonrecurring charges totaling $74 million associated with labor-related charges at Cerro Verde.
f.Includes a $60 million gain on the sale of Freeport Cobalt.
g.Includes net tax benefits of $69 million associated with the release of a portion of the valuation allowances recorded against PT RTI NOLs.
XII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS
Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of FCX's mining operations expressed on a basis relating to the primary metal product for the respective operations. FCX uses this measure for the same purpose and for monitoring operating performance by its mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although FCX's measures may not be comparable to similarly titled measures reported by other companies.
FCX presents gross profit per pound of copper in the following tables using both a "by-product" method and a "co-product" method. FCX uses the by-product method in its presentation of gross profit per pound of copper because (i) the majority of its revenues are copper revenues, (ii) it mines ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of FCX's costs to revenues from the copper, gold, molybdenum and other metals it produces and (iv) it is the method used by FCX's management and Board of Directors to monitor FCX's mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent FCX's metals sales volumes and realized prices change.
FCX shows revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs (credits), net which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges (credits). As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in FCX's consolidated financial statements.
XIII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Molybdenuma
Otherb
Total
Revenues, excluding adjustments
$
1,293
$
1,293
$
111
$
38
$
1,442
Site production and delivery, before net noncash
and other costs shown below
1,000
908
104
31
1,043
By-product credits
(106)
-
-
-
-
Treatment charges
35
33
-
2
35
Net cash costs
929
941
104
33
1,078
Depreciation, depletion and amortization (DD&A)
99
91
6
2
99
Metals inventory adjustments
3
3
-
-
3
Noncash and other costs, net
38
c
33
4
1
38
Total costs
1,069
1,068
114
36
1,218
Other revenue adjustments, primarily for pricing
on prior period open sales
(20)
(20)
-
-
(20)
Gross profit (loss)
$
204
$
205
$
(3)
$
2
$
204
Copper sales (millions of recoverable pounds)
361
361
Molybdenum sales (millions of recoverable pounds)a
7
Gross profit (loss) per pound of copper/molybdenum:
Revenues, excluding adjustments
$
3.57
$
3.57
$
16.75
Site production and delivery, before net noncash
and other costs shown below
2.76
2.51
15.60
By-product credits
(0.30)
-
-
Treatment charges
0.10
0.09
-
Unit net cash costs
2.56
2.60
15.60
DD&A
0.28
0.25
0.95
Metals inventory adjustments
0.01
0.01
-
Noncash and other costs, net
0.10
c
0.09
0.60
Total unit costs
2.95
2.95
17.15
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.06)
(0.06)
-
Gross profit (loss) per pound
$
0.56
$
0.56
$
(0.40)
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
1,442
$
1,043
$
99
$
3
Treatment charges
(6)
29
-
-
Noncash and other costs, net
-
38
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(20)
-
-
-
Eliminations and other
32
34
1
-
North America copper mines
1,448
1,144
100
3
Other miningd
4,941
3,611
390
22
Corporate, other & eliminations
(1,386)
(1,389)
18
-
As reported in FCX's consolidated financial statements
$
5,003
$
3,366
$
508
$
25
a.Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.Includes gold and silver product revenues and production costs.
c.Includes charges totaling $20 million ($0.06 per pound of copper) for feasibility and optimization studies.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XIV
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Molybdenuma
Otherb
Total
Revenues, excluding adjustments
$
1,627
$
1,627
$
152
$
27
$
1,806
Site production and delivery, before net noncash
and other costs shown below
795
724
82
20
826
By-product credits
(148)
-
-
-
-
Treatment charges
35
33
-
2
35
Net cash costs
682
757
82
22
861
DD&A
94
85
7
2
94
Metals inventory adjustments
13
13
-
-
13
Noncash and other costs, net
30
c
28
2
-
30
Total costs
819
883
91
24
998
Other revenue adjustments, primarily for pricing
on prior period open sales
(7)
(7)
-
-
(7)
Gross profit
$
801
$
737
$
61
$
3
$
801
Copper sales (millions of recoverable pounds)
375
375
Molybdenum sales (millions of recoverable pounds)a
9
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments
$
4.34
$
4.34
$
16.69
Site production and delivery, before net noncash
and other costs shown below
2.12
1.93
8.97
By-product credits
(0.39)
-
-
Treatment charges
0.09
0.09
-
Unit net cash costs
1.82
2.02
8.97
DD&A
0.25
0.23
0.73
Metals inventory adjustments
0.03
0.03
-
Noncash and other costs, net
0.08
c
0.08
0.23
Total unit costs
2.18
2.36
9.93
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.02)
(0.02)
-
Gross profit per pound
$
2.14
$
1.96
$
6.76
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
1,806
$
826
$
94
$
13
Treatment charges
(4)
31
-
-
Noncash and other costs, net
-
30
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(7)
-
-
-
Eliminations and other
16
17
-
-
North America copper mines
1,811
904
94
13
Other miningd
5,903
3,735
418
-
Corporate, other & eliminations
(1,631)
(1,630)
16
1
As reported in FCX's consolidated financial statements
$
6,083
$
3,009
$
528
$
14
a.Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.Includes gold and silver product revenues and production costs.
c.Includes charges totaling $12 million ($0.03 per pound of copper) for feasibility and optimization studies.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XV
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Molybdenuma
Otherb
Total
Revenues, excluding adjustments
$
4,720
$
4,720
$
393
$
95
$
5,208
Site production and delivery, before net noncash
and other costs shown below
2,882
2,643
283
70
2,996
By-product credits
(374)
-
-
-
-
Treatment charges
112
109
-
3
112
Net cash costs
2,620
2,752
283
73
3,108
DD&A
306
282
19
5
306
Metals inventory adjustments
10
9
1
-
10
Noncash and other costs, net
104
c
94
8
2
104
Total costs
3,040
3,137
311
80
3,528
Other revenue adjustments, primarily for pricing
on prior period open sales
(13)
(13)
-
-
(13)
Gross profit
$
1,667
$
1,570
$
82
$
15
$
1,667
Copper sales (millions of recoverable pounds)
1,131
1,131
Molybdenum sales (millions of recoverable pounds)a
22
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments
$
4.17
$
4.17
$
17.87
Site production and delivery, before net noncash
and other costs shown below
2.54
2.33
12.87
By-product credits
(0.33)
-
-
Treatment charges
0.10
0.10
-
Unit net cash costs
2.31
2.43
12.87
DD&A
0.27
0.25
0.88
Metals inventory adjustments
0.01
0.01
-
Noncash and other costs, net
0.09
c
0.08
0.40
Total unit costs
2.68
2.77
14.15
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.01)
(0.01)
-
Gross profit per pound
$
1.48
$
1.39
$
3.72
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
5,208
$
2,996
$
306
$
10
Treatment charges
(15)
97
-
-
Noncash and other costs, net
-
104
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(13)
-
-
-
Eliminations and other
74
82
1
-
North America copper mines
5,254
3,279
307
10
Other miningd
16,649
11,072
1,147
33
Corporate, other & eliminations
(4,881)
(4,832)
50
-
As reported in FCX's consolidated financial statements
$
17,022
$
9,519
$
1,504
$
43
a.Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.Includes gold and silver product revenues and production costs.
c.Includes charges totaling $49 million ($0.04 per pound of copper) for feasibility and optimization studies.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XVI
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Molybdenuma
Otherb
Total
Revenues, excluding adjustments
$
4,538
$
4,538
$
337
$
93
$
4,968
Site production and delivery, before net noncash
and other costs shown below
2,254
2,093
194
60
2,347
By-product credits
(337)
-
-
-
-
Treatment charges
98
93
-
5
98
Net cash costs
2,015
2,186
194
65
2,445
DD&A
275
254
15
6
275
Metals inventory adjustments
13
13
-
-
13
Noncash and other costs, net
103
c
99
3
1
103
Total costs
2,406
2,552
212
72
2,836
Other revenue adjustments, primarily for pricing
on prior period open sales
7
7
-
-
7
Gross profit
$
2,139
$
1,993
$
125
$
21
$
2,139
Copper sales (millions of recoverable pounds)
1,072
1,072
Molybdenum sales (millions of recoverable pounds)a
26
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments
$
4.24
$
4.24
$
13.09
Site production and delivery, before net noncash
and other costs shown below
2.11
1.95
7.54
By-product credits
(0.32)
-
-
Treatment charges
0.09
0.09
-
Unit net cash costs
1.88
2.04
7.54
DD&A
0.26
0.24
0.59
Metals inventory adjustments
0.01
0.01
-
Noncash and other costs, net
0.10
c
0.09
0.12
Total unit costs
2.25
2.38
8.25
Other revenue adjustments, primarily for pricing
on prior period open sales
0.01
0.01
-
Gross profit per pound
$
2.00
$
1.87
$
4.84
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
4,968
$
2,347
$
275
$
13
Treatment charges
(21)
77
-
-
Noncash and other costs, net
-
103
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
7
-
-
-
Eliminations and other
49
51
-
-
North America copper mines
5,003
2,578
275
13
Other miningd
16,068
10,425
1,108
1
Corporate, other & eliminations
(4,390)
(4,141)
47
1
As reported in FCX's consolidated financial statements
$
16,681
$
8,862
$
1,430
$
15
a.Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.Includes gold and silver product revenues and production costs.
c.Includes charges totaling $21 million ($0.02 per pound of copper) for feasibility and optimization studies.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XVII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Othera
Total
Revenues, excluding adjustments
$
1,017
$
1,017
$
62
$
1,079
Site production and delivery, before net noncash
and other costs shown below
761
723
52
775
By-product credits
(48)
-
-
-
Treatment charges
40
40
-
40
Royalty on metals
2
2
-
2
Net cash costs
755
765
52
817
DD&A
99
93
6
99
Metals inventory adjustments
22
22
-
22
Noncash and other costs, net
25
23
2
25
Total costs
901
903
60
963
Other revenue adjustments, primarily for pricing
on prior period open sales
(73)
(73)
-
(73)
Gross profit
$
43
$
41
$
2
$
43
Copper sales (millions of recoverable pounds)
293
293
Gross profit per pound of copper:
Revenues, excluding adjustments
$
3.47
$
3.47
Site production and delivery, before net noncash
and other costs shown below
2.60
2.47
By-product credits
(0.16)
-
Treatment charges
0.13
0.14
Royalty on metals
0.01
-
Unit net cash costs
2.58
2.61
DD&A
0.34
0.32
Metals inventory adjustments
0.07
0.07
Noncash and other costs, net
0.09
0.08
Total unit costs
3.08
3.08
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.25)
(0.25)
Gross profit per pound
$
0.14
$
0.14
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
1,079
$
775
$
99
$
22
Treatment charges
(40)
-
-
-
Royalty on metals
(2)
-
-
-
Noncash and other costs, net
-
25
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(73)
-
-
-
Eliminations and other
-
-
(1)
-
South America mining
964
800
98
22
Other miningb
5,425
3,955
392
3
Corporate, other & eliminations
(1,386)
(1,389)
18
-
As reported in FCX's consolidated financial statements
$
5,003
$
3,366
$
508
$
25
a.Includes silver sales of 1.1 million ounces ($17.11 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XVIII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Othera
Total
Revenues, excluding adjustments
$
1,153
$
1,153
$
120
$
1,273
Site production and delivery, before net noncash
and other costs shown below
597
b
546
64
610
By-product credits
(107)
-
-
-
Treatment charges
38
38
-
38
Royalty on metals
3
2
1
3
Net cash costs
531
586
65
651
DD&A
112
101
11
112
Noncash and other costs, net
20
19
1
20
Total costs
663
706
77
783
Other revenue adjustments, primarily for pricing
on prior period open sales
(8)
(8)
-
(8)
Gross profit
$
482
$
439
$
43
$
482
Copper sales (millions of recoverable pounds)
280
280
Gross profit per pound of copper:
Revenues, excluding adjustments
$
4.12
$
4.12
Site production and delivery, before net noncash
and other costs shown below
2.14
b
1.96
By-product credits
(0.38)
-
Treatment charges
0.13
0.13
Royalty on metals
0.01
0.01
Unit net cash costs
1.90
2.10
DD&A
0.40
0.36
Noncash and other costs, net
0.07
0.06
Total unit costs
2.37
2.52
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.03)
(0.03)
Gross profit per pound
$
1.72
$
1.57
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
1,273
$
610
$
112
Treatment charges
(38)
-
-
Royalty on metals
(3)
-
-
Noncash and other costs, net
-
20
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(8)
-
-
Eliminations and other
(1)
-
(1)
South America mining
1,223
630
111
Other miningc
6,491
4,009
401
Corporate, other & eliminations
(1,631)
(1,630)
16
As reported in FCX's consolidated financial statements
$
6,083
$
3,009
$
528
a.Includes silver sales of 1.0 million ounces ($24.34 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.Includes nonrecurring charges totaling $5 million ($0.02 per pound of copper) associated with labor related costs at Cerro Verde.
c.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XIX
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Othera
Total
Revenues, excluding adjustments
$
3,149
$
3,149
$
302
$
3,451
Site production and delivery, before net noncash
and other costs shown below
2,114
1,968
188
2,156
By-product credits
(260)
-
-
-
Treatment charges
124
124
-
124
Royalty on metals
7
6
1
7
Net cash costs
1,985
2,098
189
2,287
DD&A
297
272
25
297
Metals inventory adjustments
32
31
1
32
Noncash and other costs, net
60
57
3
60
Total costs
2,374
2,458
218
2,676
Other revenue adjustments, primarily for pricing
on prior period open sales
35
35
-
35
Gross profit
$
810
$
726
$
84
$
810
Copper sales (millions of recoverable pounds)
845
845
Gross profit per pound of copper:
Revenues, excluding adjustments
$
3.73
$
3.73
Site production and delivery, before net noncash
and other costs shown below
2.50
2.33
By-product credits
(0.31)
-
Treatment charges
0.15
0.15
Royalty on metals
0.01
0.01
Unit net cash costs
2.35
2.49
DD&A
0.35
0.32
Metals inventory adjustments
0.04
0.04
Noncash and other costs, net
0.07
0.06
Total unit costs
2.81
2.91
Other revenue adjustments, primarily for pricing
on prior period open sales
0.04
0.04
Gross profit per pound
$
0.96
$
0.86
Reconciliation to Amounts Reported
Metals
Production
Inventory
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
3,451
$
2,156
$
297
$
32
Treatment charges
(124)
-
-
-
Royalty on metals
(7)
-
-
-
Noncash and other costs, net
-
60
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
35
-
-
-
Eliminations and other
(1)
(4)
-
1
South America mining
3,354
2,212
297
33
Other miningb
18,549
12,139
1,157
10
Corporate, other & eliminations
(4,881)
(4,832)
50
-
As reported in FCX's consolidated financial statements
$
17,022
$
9,519
$
1,504
$
43
a.Includes silver sales of 3.2 million ounces ($21.24 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XX
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Othera
Total
Revenues, excluding adjustments
$
3,238
$
3,238
$
267
$
3,505
Site production and delivery, before net noncash
and other costs shown below
1,690
b
1,568
155
1,723
By-product credits
(234)
-
-
-
Treatment charges
101
101
-
101
Royalty on metals
8
7
1
8
Net cash costs
1,565
1,676
156
1,832
DD&A
306
282
24
306
Noncash and other costs, net
49
45
4
49
Total costs
1,920
2,003
184
2,187
Other revenue adjustments, primarily for pricing
on prior period open sales
98
98
-
98
Gross profit
$
1,416
$
1,333
$
83
$
1,416
Copper sales (millions of recoverable pounds)
769
769
Gross profit per pound of copper:
Revenues, excluding adjustments
$
4.21
$
4.21
Site production and delivery, before net noncash
and other costs shown below
2.20
b
2.04
By-product credits
(0.31)
-
Treatment charges
0.13
0.13
Royalty on metals
0.01
0.01
Unit net cash costs
2.03
2.18
DD&A
0.40
0.36
Noncash and other costs, net
0.07
0.06
Total unit costs
2.50
2.60
Other revenue adjustments, primarily for pricing
on prior period open sales
0.13
0.13
Gross profit per pound
$
1.84
$
1.74
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
3,505
$
1,723
$
306
Treatment charges
(101)
-
-
Royalty on metals
(8)
-
-
Noncash and other costs, net
-
49
-
Other revenue adjustments, primarily for pricing
on prior period open sales
98
-
-
Eliminations and other
(1)
(3)
-
South America mining
3,493
1,769
306
Other miningc
17,578
11,234
1,077
Corporate, other & eliminations
(4,390)
(4,141)
47
As reported in FCX's consolidated financial statements
$
16,681
$
8,862
$
1,430
a.Includes silver sales of 2.7 million ounces ($25.81 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.Includes nonrecurring charges totaling $74 million ($0.10 per pound of copper) associated with labor related costs at Cerro Verde.
c.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XXI
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Gold
Silvera
Total
Revenues, excluding adjustments
$
1,400
$
1,400
$
802
$
30
$
2,232
Site production and delivery, before net noncash
and other credits shown below
735
b
461
264
10
735
Gold and silver credits
(814)
-
-
-
-
Treatment charges
95
60
34
1
95
Export duties
80
50
29
1
80
Royalty on metals
81
48
32
1
81
Net cash costs
177
619
359
13
991
DD&A
265
167
95
3
265
Noncash and other credits, net
(10)
c
(7)
(3)
-
(10)
Total costs
432
779
451
16
1,246
Other revenue adjustments, primarily for pricing
on prior period open sales
(158)
(158)
(17)
(1)
(176)
PT Smelting intercompany profit
60
38
22
-
60
Gross profit
$
870
$
501
$
356
$
13
$
870
Copper sales (millions of recoverable pounds)
406
406
Gold sales (thousands of recoverable ounces)
476
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments
$
3.45
$
3.45
$
1,683
Site production and delivery, before net noncash
and other credits shown below
1.81
b
1.13
553
Gold and silver credits
(2.00)
-
-
Treatment charges
0.23
0.15
72
Export duties
0.20
0.12
61
Royalty on metals
0.20
0.12
67
Unit net cash costs
0.44
1.52
753
DD&A
0.65
0.41
200
Noncash and other credits, net
(0.02)
c
(0.01)
(7)
Total unit costs
1.07
1.92
946
Other revenue adjustments, primarily for pricing
on prior period open sales
(0.39)
(0.39)
(36)
PT Smelting intercompany profit
0.15
0.09
45
Gross profit per pound/ounce
$
2.14
$
1.23
$
746
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
2,232
$
735
$
265
Treatment charges
(95)
-
-
Export duties
(80)
-
-
Royalty on metals
(81)
-
-
Noncash and other credits, net
(2)
(12)
-
Other revenue adjustments, primarily for pricing
on prior period open sales
(176)
-
-
PT Smelting intercompany profit
-
(60)
-
Indonesia mining
1,798
663
265
Other miningd
4,591
4,092
225
Corporate, other & eliminations
(1,386)
(1,389)
18
As reported in FCX's consolidated financial statements
$
5,003
$
3,366
$
508
a.Includes silver sales of 1.6 million ounces ($18.58 per ounce average realized price).
b.Includes charges totaling $21 million ($0.05 per pound of copper) for nonrecurring costs associated with PT-FI's environmental commitments.
c.Includes net credits totaling $21 million ($0.05 per pound of copper) associated with historical tax audits.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XXII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Gold
Silvera
Total
Revenues, excluding adjustments
$
1,555
$
1,555
$
701
$
37
$
2,293
Site production and delivery, before net noncash
and other costs shown below
553
375
169
9
553
Gold and silver credits
(744)
-
-
-
-
Treatment charges
90
61
27
2
90
Export duties
71
48
22
1
71
Royalty on metals
94
67
25
2
94
Net cash costs
64
551
243
14
808
DD&A
280
190
86
4
280
Noncash and other costs, netb
-
-
-
-
-
Total costs
344
741
329
18
1,088
Other revenue adjustments, primarily for pricing
on prior period open sales
(2)
(2)
6
-
4
PT Smelting intercompany loss
(16)
(11)
(5)
-
(16)
Gross profit
$
1,193
$
801
$
373
$
19
$
1,193
Copper sales (millions of recoverable pounds)
378
378
Gold sales (thousands of recoverable ounces)
399
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments
$
4.11
$
4.11
$
1,757
Site production and delivery, before net noncash
and other costs shown below
1.46
0.99
424
Gold and silver credits
(1.97)
-
-
Treatment charges
0.24
0.16
69
Export duties
0.19
0.13
54
Royalty on metals
0.25
0.18
63
Unit net cash costs
0.17
1.46
610
DD&A
0.74
0.50
215
Noncash and other costs, net
-
-
-
Total unit costs
0.91
1.96
825
Other revenue adjustments, primarily for pricing
on prior period open sales
-
-
16
PT Smelting intercompany loss
(0.04)
(0.03)
(12)
Gross profit per pound/ounce
$
3.16
$
2.12
$
936
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
2,293
$
553
$
280
Treatment charges
(90)
-
-
Export duties
(71)
-
-
Royalty on metals
(94)
-
-
Other revenue adjustments, primarily for pricing
on prior period open sales
4
-
-
PT Smelting intercompany loss
-
16
-
Indonesia mining
2,042
569
280
Other miningc
5,672
4,070
232
Corporate, other & eliminations
(1,631)
(1,630)
16
As reported in FCX's consolidated financial statements
$
6,083
$
3,009
$
528
a.Includes silver sales of 1.7 million ounces ($22.22 per ounce average realized price).
b.Amounts round to less than $1 million.
c.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XXIII
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2022
(In millions)
By-Product
Co-Product Method
Method
Copper
Gold
Silvera
Total
Revenues, excluding adjustments
$
4,433
$
4,433
$
2,422
$
98
$
6,953
Site production and delivery, before net noncash
and other costs shown below
1,855
b
1,183
646
26
1,855
Gold and silver credits
(2,523)
-
-
-
-
Treatment charges
287
183
100
4
287
Export duties
245
156
85
4
245
Royalty on metals
281
183
95
3
281
Net cash costs
145
1,705
926
37
2,668
DD&A
775
494
270
11
775
Noncash and other costs, net
20
c
13
7
-
20
Total costs
940
2,212
1,203
48
3,463
Other revenue adjustments, primarily for pricing
on prior period open sales
25
25
3
-
28
PT Smelting intercompany profit
34
21
12
1
34
Gross profit
$
3,552
$
2,267
$
1,234
$
51
$
3,552
Copper sales (millions of recoverable pounds)
1,195
1,195
Gold sales (thousands of recoverable ounces)
1,356
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments
$
3.71
$
3.71
$
1,786
Site production and delivery, before net noncash
and other costs shown below
1.55
b
0.99
476
Gold and silver credits
(2.11)
-
-
Treatment charges
0.24
0.15
74
Export duties
0.20
0.13
63
Royalty on metals
0.24
0.16
70
Unit net cash costs
0.12
1.43
683
DD&A
0.65
0.41
199
Noncash and other costs, net
0.02
c
0.01
5
Total unit costs
0.79
1.85
887
Other revenue adjustments, primarily for pricing
on prior period open sales
0.02
0.02
2
PT Smelting intercompany profit
0.03
0.02
9
Gross profit per pound/ounce
$
2.97
$
1.90
$
910
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
6,953
$
1,855
$
775
Treatment charges
(287)
-
-
Export duties
(245)
-
-
Royalty on metals
(281)
-
-
Noncash and other costs, net
12
32
-
Other revenue adjustments, primarily for pricing
on prior period open sales
28
-
-
PT Smelting intercompany profit
-
(34)
-
Indonesia mining
6,180
1,853
775
Other miningd
15,723
12,498
679
Corporate, other & eliminations
(4,881)
(4,832)
50
As reported in FCX's consolidated financial statements
$
17,022
$
9,519
$
1,504
a.Includes silver sales of 4.7 million ounces ($20.80 per ounce average realized price).
b.Includes charges totaling $21 million ($0.02 per pound of copper) for nonrecurring costs associated with PT-FI's environmental commitments.
c.Includes a net charge of $30 million ($0.02 per pound of copper) consisting of charges associated with a settlement of an administrative fine levied by the Indonesia government and a reserve for exposure associated with export duties in prior periods, partially offset by credits for adjustments to prior year treatment and refining charges and historical tax audits.
d.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XXIV
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30, 2021
(In millions)
By-Product
Co-Product Method
Method
Copper
Gold
Silvera
Total
Revenues, excluding adjustments
$
3,989
$
3,989
$
1,703
$
104
$
5,796
Site production and delivery, before net noncash
and other costs shown below
1,412
972
415
25
1,412
Gold and silver credits
(1,803)
-
-
-
-
Treatment charges
229
158
67
4
229
Export duties
145
99
43
3
145
Royalty on metals
234
167
63
4
234
Net cash costs
217
1,396
588
36
2,020
DD&A
726
499
213
14
726
Noncash and other costs, net
3
b
2
1
-
3
Total costs
946
1,897
802
50
2,749
Other revenue adjustments, primarily for pricing
on prior period open sales
71
71
(4)
-
67
PT Smelting intercompany loss
(106)
(73)
(31)
(2)
(106)
Gross profit
$
3,008
$
2,090
$
866
$
52
$
3,008
Copper sales (millions of recoverable pounds)
946
946
Gold sales (thousands of recoverable ounces)
957
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments
$
4.21
$
4.21
$
1,780
Site production and delivery, before net noncash
and other credits shown below
1.49
1.03
434
Gold and silver credits
(1.91)
-
-
Treatment charges
0.24
0.17
70
Export duties
0.15
0.10
45
Royalty on metals
0.26
0.18
66
Unit net cash costs
0.23
1.48
615
DD&A
0.76
0.52
222
Noncash and other costs, net
0.01
b
0.01
1
Total unit costs
1.00
2.01
838
Other revenue adjustments, primarily for pricing
on prior period open sales
0.08
0.08
(5)
PT Smelting intercompany loss
(0.11)
(0.08)
(33)
Gross profit per pound/ounce
$
3.18
$
2.20
$
904
Reconciliation to Amounts Reported
Production
Revenues
and Delivery
DD&A
Totals presented above
$
5,796
$
1,412
$
726
Treatment charges
(229)
-
-
Export duties
(145)
-
-
Royalty on metals
(234)
-
-
Noncash and other costs, net
31
34
-
Other revenue adjustments, primarily for pricing
on prior period open sales
67
-
-
PT Smelting intercompany loss
-
106
-
Indonesia mining
5,286
1,552
726
Other miningc
15,785
11,451
657
Corporate, other & eliminations
(4,390)
(4,141)
47
As reported in FCX's consolidated financial statements
$
16,681
$
8,862
$
1,430
a.Includes silver sales of 4.3 million ounces ($24.50 per ounce average realized price).
b.Includes credits of $31 million ($0.03 per pound of copper) associated with adjustments to prior year treatment and refining charges and charges of $16 million ($0.02 per pound of copper) associated with a potential settlement of an administrative fine levied by the Indonesia government.
c.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
XXV
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended September 30,
(In millions)
2022
2021
Revenues, excluding adjustmentsa
$
134
$
158
Site production and delivery, before net noncash
and other costs shown below
91
67
Treatment charges and other
7
7
Net cash costs
98
74
DD&A
18
19
Noncash and other costs, net
3
3
Total costs
119
96
Gross profit
$
15
$
62
Molybdenum sales (millions of recoverable pounds)a
8
9
Gross profit per pound of molybdenum:
Revenues, excluding adjustmentsa
$
16.51
$
18.13
Site production and delivery, before net noncash
and other costs shown below
11.26
7.70
Treatment charges and other
0.84
0.84
Unit net cash costs
12.10
8.54
DD&A
2.16
2.14
Noncash and other costs, net
0.40
0.30
Total unit costs
14.66
10.98
Gross profit per pound
$
1.85
$
7.15
Reconciliation to Amounts Reported
Production
Three Months Ended September 30, 2022
Revenues
and Delivery
DD&A
Totals presented above
$
134
$
91
$
18
Treatment charges and other
(7)
-
-
Noncash and other costs, net
-
3
-
Molybdenum mines
127
94
18
Other miningb
6,262
4,661
472
Corporate, other & eliminations
(1,386)
(1,389)
18
As reported in FCX's consolidated financial statements
$
5,003
$
3,366
$
508
Three Months Ended September 30, 2021
Totals presented above
$
158
$
67
$
19
Treatment charges and other
(7)
-
-
Noncash and other costs, net
-
3
-
Molybdenum mines
151
70
19
Other miningb
7,563
4,569
493
Corporate, other & eliminations
(1,631)
(1,630)
16
As reported in FCX's consolidated financial statements
$
6,083
$
3,009
$
528
a.Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X. Also includes amounts associated with FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.
XXVI
Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
Nine Months Ended September 30,
(In millions)
2022
2021
Revenues, excluding adjustmentsa
$
419
$
329
Site production and delivery, before net noncash
and other costs shown below
241
175
Treatment charges and other
20
19
Net cash costs
261
194
DD&A
52
51
Metals inventory adjustments
-
1
Noncash and other costs, net
8
8
Total costs
321
254
Gross profit
$
98
$
75
Molybdenum sales (millions of recoverable pounds)a
23
23
Gross profit per pound of molybdenum:
Revenues, excluding adjustmentsa
$
18.01
$
14.41
Site production and delivery, before net noncash
and other costs shown below
10.37
7.69
Treatment charges and other
0.85
0.85
Unit net cash costs
11.22
8.54
DD&A
2.23
2.21
Metals inventory adjustments
-
0.04
Noncash and other costs, net
0.37
0.34
Total unit costs
13.82
11.13
Gross profit per pound
$
4.19
$
3.28
Reconciliation to Amounts Reported
Metals
Production
Inventory
Nine Months Ended September 30, 2022
Revenues
and Delivery
DD&A
Adjustments
Totals presented above
$
419
$
241
$
52
$
-
Treatment charges and other
(20)
-
-
-
Noncash and other costs, net
-
8
-
-
Molybdenum mines
399
249
52
-
Other miningb
21,504
14,102
1,402
43
Corporate, other & eliminations
(4,881)
(4,832)
50
-
As reported in FCX's consolidated financial statements
$
17,022
$
9,519
$
1,504
$
43
Nine Months Ended September 30, 2021
Totals presented above
$
329
$
175
$
51
$
1
Treatment charges and other
(19)
-
-
-
Noncash and other costs, net
-
8
-
-
Molybdenum mines
310
183
51
1
Other miningb
20,761
12,820
1,332
13
Corporate, other & eliminations
(4,390)
(4,141)
47
1
As reported in FCX's consolidated financial statements
$
16,681
$
8,862
$
1,430
$
15
a.Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X. Also includes amounts associated with FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.
XXVII
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Freeport-McMoRan Inc. published this content on 20 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2022 12:19:01 UTC.
Freeport-McMoRan Inc. specializes in the exploration and operation of copper and gold mines located primarily in the United States, Peru, Chile, Indonesia and Congo. Net sales break down by family of products as follows:
- copper (74.6%): refined copper and copper concentrates (4.1 billion ounces sold in 2023);
- gold (14.5%): 1,713,000 ounces sold;
- molybdenum (8.4%): 1.3 billion ounces sold;
- other (2.5%).
Net sales are distributed geographically as follows: the United States (31.8%), Switzerland (17.4%), Japan (15%), Spain (5.5%), Singapore (5.1%), China (4.7%), Indonesia (3.3%), Germany (3.1%), Chile (1.9%), the United Kingdom (0.7%), and other (11.5%).