Last10K.com

Freeportmcmoran Inc (FCX) SEC Filing 8-K Material Event for the period ending Thursday, October 20, 2022

Freeport-McMoRan, Inc

CIK: 831259 Ticker: FCX

newsreleasebanner2022v2a.jpg
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 in third-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 billion and 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.
foremost_inxcopperx2022xnra.jpg

1

page2header2022a.jpg
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,
2022202120222021
(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.

foremost_inxcopperx2022xnra.jpg

2

page2header2022a.jpg
SUMMARY OPERATING DATA
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Copper (millions of recoverable pounds)
Production1,056 987 3,140 2,810 
Sales, excluding purchases1,060 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)
Production448 374 1,339 976 
Sales480 402 1,365 965 
Average realized price per ounce$1,683 $1,757 $1,786 $1,780 
Molybdenum (millions of recoverable pounds)
Production19 23 63 63 
Sales, excluding purchases17 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.

foremost_inxcopperx2022xnra.jpg

3

page2header2022a.jpg
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.

foremost_inxcopperx2022xnra.jpg

4

page2header2022a.jpg
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,
2022202120222021
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
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,
foremost_inxcopperx2022xnra.jpg

5

page2header2022a.jpg
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.
South America 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,
2022202120222021
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
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.
foremost_inxcopperx2022xnra.jpg

6

page2header2022a.jpg
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,
foremost_inxcopperx2022xnra.jpg

7

page2header2022a.jpg
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,
2022202120222021
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
foremost_inxcopperx2022xnra.jpg

8

page2header2022a.jpg
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 $0.19 per 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.
foremost_inxcopperx2022xnra.jpg

9

page2header2022a.jpg
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 operations4.0 
a
Total consolidated cash and cash equivalents8.6 
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-FI3.0 5.4%
Issued by Freeport Minerals Corporation 0.3 7.5%
Other0.1 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.
foremost_inxcopperx2022xnra.jpg

10

page2header2022a.jpg
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.
-----------------------------------------------------------------------------------------------------------
FREEPORT: Foremost in Copper    
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
foremost_inxcopperx2022xnra.jpg

11

page2header2022a.jpg
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.

foremost_inxcopperx2022xnra.jpg

12


Freeport-McMoRan Inc.
SELECTED OPERATING DATA
Three Months Ended September 30,
2022202120222021
MINING OPERATIONS:ProductionSales
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%)
Total North America373 377 361 375 
South America
Cerro Verde (53.56%)242 226 232 244 
El Abra (51%)60 34 61 36 
Total South America302 260 293 280 
Indonesia
Grasberg (48.76%)b
381 350 406 378 
Total1,056 987 1,060 
c
1,033 
c
Less noncontrolling interests214 187 213 202 
Net842 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%)
Indonesia (48.76%)b
445 371 476 399 
Consolidated448 374 480 402 
Less noncontrolling interests83 70 89 75 
Net365 304 391 327 
Average realized price per ounce$1,683 $1,757 
MOLYBDENUM (millions of recoverable pounds)
(FCX's net interest in %)
Climax (100%)N/AN/A
Henderson (100%)N/AN/A
North America copper mines (100%)a
N/AN/A
Cerro Verde (53.56%)N/AN/A
Consolidated19 23 17 20 
Less noncontrolling interests
Net17 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,
2022202120222021
MINING OPERATIONS:ProductionSales
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%)10 
Total North America1,109 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 America862 764 845 769 
Indonesia
Grasberg (48.76%)b
1,169 956 1,195 946 
Total3,140 2,810 3,171 
c
2,787 
c
Less noncontrolling interests623 537 619 538 
Net2,517 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%)
Indonesia (48.76%)b
1,330 968 1,356 957 
Consolidated1,339 976 1,365 965 
Less noncontrolling interests249 181 254 179 
Net1,090 795 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/AN/A
Henderson (100%)N/AN/A
North America copper mines (100%)a
22 26 N/AN/A
Cerro Verde (53.56%)18 14 N/AN/A
Consolidated63 63 56 63 
Less noncontrolling interests
Net55 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,
2022202120222021
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
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
18 14 
100% Indonesia Mining
Ore extracted and milled (metric tons per day):
Grasberg Block Cave underground mine100,600 76,500 100,900 64,300 
Deep Mill Level Zone underground mine81,400 59,700 79,000 53,500 
Big Gossan underground mine7,600 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)
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 EndedNine Months Ended
September 30,September 30,
2022202120222021
(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 amortization508 

528 1,504  1,430 
Metals inventory adjustments25 14 43 15 
Total cost of sales3,899 3,551 11,066 10,307 
Selling, general and administrative expenses98 102 313 289 
Mining exploration and research expenses38 15 87 36 
Environmental obligations and shutdown costs13 51 51 
Net gain on sales of assets— (60)(2)(63)
Total costs and expenses4,041 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 debt20 — 28 — 
Other income, net25 
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)(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 outstanding1,439 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,
20222021
(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, net31,814 30,345 
Long-term mill and leach stockpiles1,194 1,387 
Other assets1,546 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 portion9,658 9,078 
Deferred income taxes4,316 4,234 
Environmental and asset retirement obligations, less current portion4,223 4,116 
Other liabilities1,550 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,
20222021
(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 accretion180 131 
Payments for environmental and asset retirement obligations(197)(184)
Net charges for defined pension and postretirement plans
28 
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 activities4,070 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 assets102 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 options106 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 equivalents510 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,
20222021
Pre-tax
After-taxa
Per SharePre-tax
After-taxa
Per Share
Net income attributable to common stockN/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— — 
Cerro Verde labor agreement
— — — (5)(2)— 
PT-FI net credits17 
c
0.01 
c
12 0.01 
Net gain on sales of assets— 

— — 60 34 0.02 
Net gain on early extinguishment of debt20 20 0.01 — — — 
Other net (charges) credits(21)
d
(11)(0.01)
e
(8)(0.01)
Net tax creditsf
N/A16 0.01 N/A55 0.04 
$(2)
g
$29 
g
$0.02 
g
$45 $79 $0.05 
Adjusted net income attributable to common stockN/A$375 $0.26 N/A$1,320 $0.89 
Nine Months Ended September 30,
20222021
Pre-tax
After-taxa
Per SharePre-tax
After-taxa
Per Share
Net income attributable to common stockN/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— 63 37 0.02 
Net gain on early extinguishment of debt28 33 0.02 — — — 
Other net charges(37)
d
(23)(0.01)(12)
e
(18)(0.01)
Net tax creditsf
N/A16 0.01 N/A55 0.04 
$(91)
g
$(23)
g
$(0.02)$(106)$(16)$(0.01)
Adjusted net income attributable to common stockN/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 $10 million for the first nine months of 2022.
c.Reflects net (charges) credits associated with contested matters at PT-FI (including historical tax audits and an administrative fine levied by the Indonesia government), asset impairments and exposure for additional export duties for prior periods, which were recorded to the following (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues$— $— $(18)$— 
Production and delivery$21 $$(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,
20222021
Income TaxIncome Tax
IncomeEffective(Provision)IncomeEffective(Provision)
(Loss)a
Tax RateBenefit
(Loss)a
Tax RateBenefit
U.S.b
$(55)—%
c
$— $581 1%
c
$(4)
South America26 (58)%15 
d
502 44%(220)
Indonesia855 40%(343)1,181 32%(382)
e
Eliminations and other41 N/A(18)96 N/A14 
Rate adjustmentf
— N/A31 — N/A(36)
Continuing operations$867 36%$(315)$2,360 27%$(628)
Nine Months Ended September 30,
20222021
Income TaxIncome Tax
IncomeEffective(Provision)IncomeEffective(Provision)
(Loss)a
Tax RateBenefit
(Loss)a
Tax RateBenefit
U.S.b
$854 1%
c
$(5)$1,324 1%
c
$(7)
South America802 36%(287)
d
1,425 40%(576)
Indonesia3,480 39%(1,363)2,940 37%(1,101)
e
Eliminations and other43 N/A(25)(3)N/A19 
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, 2022As of December 31, 2021
Current portion of debt$1.0 $0.4 
Long-term debt, less current portion9.7 9.1 
Consolidated debt10.7 9.5 
Less: consolidated cash and cash equivalents8.6 8.1 
FCX net debt2.1 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,
20222021
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,
20222021
Prior
Perioda
Current
Periodb
Total
Prior
Perioda
Current
Periodb
Total
Revenues
$58 $(832)$(774)$