Freeport-McMoRan(FCX) - 2024 Q1 - Quarterly Report

Part I. Financial Information This section presents the company's unaudited consolidated financial statements and related notes for the period Item 1. Financial Statements This section presents unaudited consolidated financial statements, including balance sheets, income, comprehensive income, cash flows, and equity, with detailed accounting notes Consolidated Balance Sheet Highlights (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :--------------------------- | :----- | | Total Current Assets | $14,842 | $14,065 | +$777 | | Total Assets | $54,198 | $52,506 | +$1,692 | | Total Current Liabilities | $6,305 | $5,815 | +$490 | | Total Liabilities | $26,093 | $25,196 | +$897 | | Total Equity | $28,105 | $27,310 | +$795 | | Cash and Cash Equivalents | $5,208 | $4,758 | +$450 | | Restricted Cash and Cash Equivalents | $1,034 | $1,208 | -$174 | | Total Debt | $9,425 | $9,422 | +$3 | Consolidated Income Statement Highlights (Three Months Ended March 31, 2024 vs. 2023) | Metric | March 31, 2024 (Millions) | March 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Revenues | $6,321 | $5,389 | +$932 | | Total Costs and Expenses | $4,687 | $3,788 | +$899 | | Operating Income | $1,634 | $1,601 | +$33 | | Net Income | $1,162 | $1,049 | +$113 | | Net Income Attributable to Common Stockholders | $473 | $663 | -$190 | | Basic EPS | $0.33 | $0.46 | -$0.13 | | Diluted EPS | $0.32 | $0.46 | -$0.14 | Consolidated Cash Flow Highlights (Three Months Ended March 31, 2024 vs. 2023) | Metric | March 31, 2024 (Millions) | March 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net Cash Provided by Operating Activities | $1,896 | $1,050 | +$846 | | Net Cash Used in Investing Activities | $(1,277) | $(1,164) | -$113 | | Net Cash Used in Financing Activities | $(342) | $(1,172) | +$830 | | Net Increase (Decrease) in Cash and Equivalents | $277 | $(1,286) | +$1,563 | Consolidated Balance Sheets (Unaudited) This section presents the company's unaudited consolidated balance sheets as of March 31, 2024, and December 31, 2023 Consolidated Statements of Income (Unaudited) This section presents the company's unaudited consolidated statements of income for the three months ended March 31, 2024, and 2023 Consolidated Statements of Comprehensive Income (Unaudited) This section presents the company's unaudited consolidated statements of comprehensive income for the three months ended March 31, 2024, and 2023 Consolidated Statements of Cash Flows (Unaudited) This section presents the company's unaudited consolidated statements of cash flows for the three months ended March 31, 2024, and 2023 Consolidated Statements of Equity (Unaudited) This section presents the company's unaudited consolidated statements of equity for the three months ended March 31, 2024, and 2023 Notes to Consolidated Financial Statements (Unaudited) This section provides detailed notes explaining the accounting policies and significant transactions impacting the financial statements NOTE 1. GENERAL INFORMATION This note details the attribution of PT-FI's net income/loss and significant tax audit resolutions - PT-FI's net income/loss is attributed based on equity ownership (FCX 48.76%, MIND ID 26.24%, PT Indonesia Papua Metal Dan Mineral 25.00%) since January 1, 2023, with exceptions for historical tax matters and gold sales[35] - PT-FI recorded net credits of $215 million in Q1 2024 from a 2021 corporate income tax audit closure and disputed tax matters, with approximately 81% attributed to FCX[35] NOTE 2. EARNINGS PER SHARE This note provides details on basic and diluted earnings per share and their reconciliation Net Income Per Share Attributable to Common Stockholders | Metric | March 31, 2024 | March 31, 2023 | | :----- | :------------- | :------------- | | Basic | $0.33 | $0.46 | | Diluted | $0.32 | $0.46 | Reconciliation of Net Income and Weighted-Average Shares | Metric | March 31, 2024 (Millions) | March 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net income | $1,162 | $1,049 | | Net income attributable to noncontrolling interests | $(689) | $(386) | | Undistributed dividends and earnings allocated to participating securities | $(5) | $(5) | | Net income attributable to common stockholders | $468 | $658 | | Basic weighted-average shares outstanding | 1,436 | 1,433 | | Dilutive stock options and RSUs | 8 | 10 | | Diluted weighted-average shares outstanding | 1,444 | 1,443 | NOTE 3. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES This note details the composition of inventories, including raw materials, work-in-process, finished goods, and stockpiles Inventory Components (March 31, 2024 vs. December 31, 2023) | Inventory Type | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Raw materials | $413 | $469 | | Work-in-process | $252 | $221 | | Finished goods | $1,691 | $1,782 | | Total product | $2,356 | $2,472 | | Total materials and supplies, net | $2,202 | $2,169 | | Total current mill and leach stockpiles | $1,419 | $1,419 | | Total long-term mill and leach stockpiles | $1,313 | $1,336 | - Materials and supplies inventory was net of obsolescence reserves totaling $48 million at March 31, 2024, and $41 million at December 31, 2023[41] NOTE 4. INCOME TAXES This note provides information on income taxes, including geographic sources and effective tax rates Geographic Sources of Income Taxes (Three Months Ended March 31, 2024 vs. 2023) | Jurisdiction | March 31, 2024 (Millions) | March 31, 2023 (Millions) | | :----------- | :-------------------------- | :-------------------------- | | U.S. | $(1) | $4 | | International | $(511) | $(503) | | Total | $(512) | $(499) | - Consolidated effective income tax rate was 31% for Q1 2024 (including a $182 million net benefit from Indonesia tax matters) and 32% for Q1 2023[43] - PT-FI recorded net credits of $215 million in Q1 2024, including $199 million to provision for income taxes, related to the closure of its 2021 corporate income tax audit and resolution of disputed tax matters[44] - Resolution of Indonesia tax matters resulted in a decrease of unrecognized tax benefits of $276 million and a decrease of $43 million in related interest and penalties[45] NOTE 5. DEBT AND EQUITY This note details the company's debt components, credit facilities, interest costs, and dividend declarations Debt Components (March 31, 2024 vs. December 31, 2023) | Debt Type | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Senior notes and debentures (FCX) | $6,007 | $6,005 | | Senior notes and debentures (PT-FI) | $2,981 | $2,980 | | Total Debt | $9,425 | $9,422 | | Long-term debt, less current portion | $8,656 | $8,656 | - FCX has a $3.0 billion revolving credit facility, PT-FI has a $1.75 billion facility, and Cerro Verde has a $350 million facility, all with no borrowings outstanding at March 31, 2024[50] - Consolidated interest costs (before capitalization) totaled $175 million in Q1 2024, down from $207 million in Q1 2023, while capitalized interest increased to $86 million in Q1 2024 from $56 million in Q1 2023, primarily due to Indonesia smelter projects[51] - On March 27, 2024, the Board declared cash dividends totaling $0.15 per share ($0.075 base + $0.075 variable), with FCX having $3.2 billion available for repurchases under its share repurchase program[51][52] NOTE 6. FINANCIAL INSTRUMENTS This note provides information on the company's financial instruments, including derivatives and provisional sales contracts Copper Futures and Swap Contracts (Fair Value Hedges) (Three Months Ended March 31, 2024 vs. 2023) | Metric | March 31, 2024 (Millions) | March 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Unrealized gains (losses) | $9 | $14 | | Realized gains | $1 | $8 | Embedded Derivatives in Provisional Sales Contracts (March 31, 2024) | Metric | Open Positions (Millions) | Average Price Per Unit | Contract Market | Maturities Through | | :-------------------------------- | :------------------------ | :--------------------- | :-------------- | :----------------- | | Copper (pounds) | 463 | $3.83 | $4.01 | August 2024 | | Gold (ounces) | 286 | $2,091 | $2,226 | July 2024 | Gains (Losses) from Non-Hedge Commodity Contracts (Three Months Ended March 31, 2024 vs. 2023) | Contract Type | March 31, 2024 (Millions) | March 31, 2023 (Millions) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Embedded derivatives in provisional sales contracts (Copper) | $66 | $231 | | Embedded derivatives in provisional sales contracts (Gold and other) | $44 | $42 | | Copper forward contracts | $(9) | $(2) | - Total Derivative Assets were $136 million at March 31, 2024, up from $80 million at December 31, 2023, while Total Derivative Liabilities were $19 million at March 31, 2024, down from $24 million at December 31, 2023[62] NOTE 7. FAIR VALUE MEASUREMENT This note provides fair value measurements for financial instruments, categorized by valuation input levels Fair Value of Financial Instruments (March 31, 2024) | Asset/Liability | Carrying Amount (Millions) | Fair Value (Millions) | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | | :-------------------------------- | :-------------------------- | :-------------------- | :----------------- | :----------------- | :----------------- | | Investment securities | $33 | $33 | $26 | $7 | $0 | | Legally restricted funds | $211 | $211 | $65 | $20 | $126 | | Derivatives (Assets) | $136 | $136 | $8 | $128 | $0 | | Contingent consideration | $47 | $40 | $0 | $0 | $40 | | Derivatives (Liabilities) | $19 | $19 | $2 | $17 | $0 | | Long-term debt | $9,425 | $9,301 | $0 | $9,301 | $0 | - No significant transfers in or out of Level 3 occurred during Q1 2024[68] - Contingent consideration for Deepwater GOM oil and gas properties is classified as Level 3 due to unobservable inputs in the discounted cash flow model[76] NOTE 8. CONTINGENCIES AND COMMITMENTS This note outlines environmental obligations, asset retirement obligations, and regulatory export approvals - FCX recorded adjustments to environmental obligations totaling $56 million in Q1 2024, primarily for a former processing facility in Ohio and groundwater remediation in Oklahoma[78] - Asset Retirement Obligations (AROs) additions totaled $256 million in Q1 2024 at mining operations, primarily due to revised closure plans reflecting commitment to the Global Industry Standard on Tailings Management[79] - Freeport-McMoRan Oil & Gas (FM O&G) recorded charges of $109 million in Q1 2024 for assumed oil and gas abandonment obligations due to bankruptcies of other companies[80] - PT-FI obtained approval for revised quotas for estimated concentrate and anode slime exports through May 2024 and is working to obtain approvals to continue exports until smelter projects are fully commissioned by year-end 2024[83] NOTE 9. BUSINESS SEGMENTS This note provides financial and operational data segmented by product revenues, operating income, and capital expenditures Product Revenues (Three Months Ended March 31, 2024 vs. 2023) | Product | March 31, 2024 (Millions) | March 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Copper (Cathode) | $1,941 | $1,511 | +$430 | | Copper (Concentrate) | $1,818 | $1,403 | +$415 | | Gold | $1,168 | $531 | +$637 | | Molybdenum | $421 | $592 | -$171 | | Total Consolidated Revenues | $6,321 | $5,389 | +$932 | Operating Income by Segment (Three Months Ended March 31, 2024 vs. 2023) | Segment | March 31, 2024 (Millions) | March 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | North America Copper Mines | $153 | $364 | -$211 | | South America Operations | $249 | $518 | -$269 | | Indonesia Operations | $1,596 | $854 | +$742 | | Molybdenum Mines | $10 | $107 | -$97 | | Rod & Refining | $11 | $1 | +$10 | | Atlantic Copper Smelting & Refining | $7 | $7 | $0 | | Corporate, Other & Eliminations | $(392) | $(250) | -$142 | | Total Operating Income | $1,634 | $1,601 | +$33 | Capital Expenditures by Segment (Three Months Ended March 31, 2024 vs. 2023) | Segment | March 31, 2024 (Millions) | March 31, 2023 (Millions) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | North America Copper Mines | $237 | $196 | +$41 | | South America Operations | $82 | $100 | -$18 | | Indonesia Operations | $842 | $772 | +$70 | | Molybdenum Mines | $27 | $9 | +$18 | | Total Capital Expenditures | $1,254 | $1,121 | +$133 | - PT-FI is currently being assessed export duties for copper concentrates at a rate of 7.5%, up from 2.5% in Q1 2023[89] Report of Independent Registered Public Accounting Firm This section contains the report from the independent registered public accounting firm Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and operational results for the three months ended March 31, 2024 OVERVIEW This overview highlights Q1 2024 operating performance, production increases, smelter project progress, and financial position - Q1 2024 operating performance was strong, with significant increases in consolidated copper and gold sales volumes from PT Freeport Indonesia (PT-FI) compared to Q1 2023[102] - Incremental copper production from leach innovation initiatives totaled 51 million pounds in Q1 2024, up from 22 million pounds in Q1 2023[103] - Construction of the Manyar smelter and precious metals refinery (PMR) is on schedule for substantial completion by May 2024[103] - Net income attributable to common stockholders was $473 million in Q1 2024, down from $663 million in Q1 2023, primarily due to higher income attributable to noncontrolling interests at Indonesia operations[104] - At March 31, 2024, consolidated debt was $9.4 billion, consolidated cash and cash equivalents were $5.2 billion (or $6.1 billion including restricted cash), with net debt totaling $0.3 billion, excluding $3.0 billion of debt for Indonesia smelter projects[104] OUTLOOK This section provides the company's forward-looking estimates for sales volumes, unit net cash costs, operating cash flows, and capital expenditures Consolidated Sales Volumes This subsection projects consolidated sales volumes for copper, gold, and molybdenum for the year 2024 Projected Consolidated Sales Volumes for Year 2024 | Commodity | Recoverable Pounds/Ounces | | :---------- | :------------------------ | | Copper | 4.15 billion pounds | | Gold | 2.0 million ounces | | Molybdenum | 84 million pounds | - Consolidated sales volumes in Q2 2024 are expected to approximate 1.0 billion pounds of copper, 500 thousand ounces of gold, and 21 million pounds of molybdenum[109] - 2024 production volumes are expected to exceed sales volumes, reflecting the deferral of approximately 90 million pounds of copper and 120 thousand ounces of gold for processing by Indonesia smelter projects[109] - PT-FI's current export licenses for copper concentrates and anode slimes extend through May 2024; the company is working to obtain approvals to continue exports until Indonesia smelter projects are fully commissioned by year-end 2024[110] Consolidated Unit Net Cash Costs This subsection provides projections for consolidated unit net cash costs for copper mines and the impact of commodity price changes - Consolidated unit net cash costs for copper mines are expected to average $1.57 per pound of copper for the year 2024[112] - The impact of price changes on consolidated unit net cash costs for 2024 would approximate $0.04 per pound of copper for each $100 per ounce change in the average price of gold and $0.02 per pound of copper for each $2 per pound change in the average price of molybdenum[112] Consolidated Operating Cash Flows This subsection estimates consolidated operating cash flows and the sensitivity to commodity price fluctuations for 2024 - Consolidated operating cash flows are estimated to approximate $7.4 billion for the year 2024, net of $0.2 billion of working capital and other uses[113] - Estimated income tax provision for the year 2024 is $2.8 billion[113] - The impact of price changes on consolidated operating cash flows for 2024 would approximate $270 million for each $0.10 per pound change in copper, $105 million for each $100 per ounce change in gold, and $90 million for each $2 per pound change in molybdenum[113] Consolidated Capital Expenditures This subsection outlines projected capital expenditures for 2024, including major mining and Indonesia smelter projects - Capital expenditures are expected to approximate $4.6 billion for the year 2024[114] - This includes $2.3 billion for major mining projects (primarily underground mine development in Grasberg and potential North America expansion) and $1.0 billion for the Indonesia smelter projects[114] - Projected capital expenditures for the Indonesia smelter projects for the remainder of 2024 are expected to be funded with availability under PT-FI's revolving credit facility[115] MARKETS This section analyzes market conditions and price trends for key commodities including LME copper, London gold, and molybdenum LME Copper Prices This subsection discusses LME copper price movements and market fundamentals during Q1 2024 - During Q1 2024, LME copper settlement prices ranged from a low of $3.67 per pound to a high of $4.07 per pound, averaged $3.83 per pound, and settled at $3.96 per pound on March 28, 2024[119] - The LME copper settlement price was $4.52 per pound on April 30, 2024, bolstered by expectations of tight supplies and optimism about demand[119] - Fundamentals for copper are favorable, supported by its critical role in the global transition to renewable power, electric vehicles, and other carbon-reduction initiatives[119] London Gold Prices This subsection reviews London PM gold price trends and market drivers during Q1 2024 - During Q1 2024, London PM gold prices ranged from a low of $1,985 per ounce to a high of $2,214 per ounce, averaged $2,070 per ounce, and closed at $2,214 per ounce on March 28, 2024[122] - Gold prices hit a record high during Q1 2024, propelled by U.S. interest rate cut expectations and strong safe-haven demand, reaching a new record high of $2,402 per ounce on April 12, 2024[122] Platts Metals Daily Molybdenum Dealer Oxide Prices This subsection analyzes molybdenum price movements and global demand trends during Q1 2024 - During Q1 2024, the weekly average price of molybdenum ranged from a low of $19.34 per pound to a high of $20.42 per pound, averaged $19.93 per pound, and was $19.81 per pound on March 28, 2024[126] - Overall global demand for molybdenum was mixed, with steady demand from energy, power generation, aerospace, and defense sectors, and some weakness in the construction sector[126] - Fundamentals for molybdenum are positive with favorable demand drivers and limited supply, with the price at $20.63 per pound on April 26, 2024[126] CONSOLIDATED RESULTS This section provides a detailed analysis of the company's consolidated financial results, including revenues, costs, and income taxes Revenues This subsection analyzes consolidated revenue performance, highlighting drivers of change and average realized prices - Consolidated revenues totaled $6.3 billion in Q1 2024, up from $5.4 billion in Q1 2023[130] - Revenue increase was driven by higher sales volumes for copper (+$1,134 million) and gold (+$581 million), partly offset by lower average realized prices for copper (-$188 million) and molybdenum (-$203 million), and higher royalties and export duties (-$199 million)[130] - Average realized prices in Q1 2024, compared with Q1 2023, were 4% lower for copper, 10% higher for gold, and 33% lower for molybdenum[131] - Net unfavorable adjustments to prior periods' provisionally priced copper sales totaled $(7) million in Q1 2024, compared to favorable adjustments of $210 million in Q1 2023[133] - PT-FI incurred export duties totaling $156 million in Q1 2024 (7.5% rate), up from $17 million in Q1 2023 (2.5% rate)[135] Production and Delivery Costs This subsection examines consolidated production and delivery costs, identifying key factors influencing changes - Consolidated production and delivery costs totaled $3.8 billion in Q1 2024, up from $3.2 billion in Q1 2023[136] - Higher costs primarily reflected increased operating rates, particularly at PT-FI, and charges totaling $109 million associated with assumed oil and gas abandonment obligations[136] - Site production and delivery costs for copper mines were $2.32 per pound of copper in Q1 2024, down from $2.57 per pound in Q1 2023, primarily reflecting higher metal volumes in Indonesia[137] Depreciation, Depletion and Amortization This subsection analyzes changes in consolidated depreciation, depletion, and amortization expenses - Consolidated depreciation, depletion and amortization (DD&A) increased to $595 million in Q1 2024, compared to $399 million in Q1 2023, primarily reflecting higher sales volumes at PT-FI[139] Environmental Obligations and Shutdown Costs This subsection reports on net charges related to environmental obligations and shutdown costs - Net charges for environmental obligations and shutdown costs totaled $56 million in both Q1 2024 and Q1 2023[140] Interest Expense, Net This subsection details consolidated interest costs and capitalized interest, noting the impact of smelter projects - Consolidated interest costs (before capitalization) totaled $175 million in Q1 2024, down from $207 million in Q1 2023[141] - Capitalized interest increased to $86 million in Q1 2024, compared to $56 million in Q1 2023, primarily due to increased construction and development costs for the Indonesia smelter projects[141] Other Income, Net This subsection analyzes the components contributing to other income, net, for the period - Other income, net, totaled $129 million in Q1 2024, up from $88 million in Q1 2023[142] - The increase primarily reflects a $26 million credit associated with the reduction in the accrual to indemnify PT Mineral Industri Indonesia (MIND ID) from potential losses arising from historical tax disputes, and higher foreign currency exchange gains[142] Income Taxes This subsection discusses the consolidated effective income tax rate and projected rates for 2024 - Consolidated effective income tax rate was 31% for Q1 2024 (including a $182 million net benefit from Indonesia tax matters) and 32% for Q1 2023[43] - Estimated consolidated effective tax rate for the year 2024 is approximately 35% (reflecting 37% for the remainder of 2024)[144] - Projected estimated effective tax rates for 2024 are 39% for Peru, 36% for Indonesia, and 0% for the U.S[144] Noncontrolling Interests This subsection details net income attributable to noncontrolling interests and its sensitivity to copper prices - Net income attributable to noncontrolling interests totaled $689 million in Q1 2024, up from $386 million in Q1 2023[145] - Beginning January 1, 2023, FCX's economic and ownership interest in PT-FI is 48.76%, with exceptions for historical tax matters and gold sales attributed at approximately 81% to FCX[145] - Net income attributable to noncontrolling interests is estimated to approximate $2.7 billion for the year 2024[146] - The impact of price changes on net income attributable to noncontrolling interests for 2024 would approximate $0.2 billion for each $0.25 per pound change in the average price of copper[146] OPERATIONS This section provides an overview of the company's operational performance, including responsible production, innovation, and segment-specific activities Responsible Production This subsection highlights the company's commitment to sustainability and safety reporting - FCX published its 2023 Annual Report on Sustainability in April 2024, marking its 23rd year of reporting[147] - The company is committed to maintaining the Copper Mark and/or Molybdenum Mark at all its global sites, which requires independent external assurance of environmental, social, and governance criteria[147] Leaching Innovation Initiatives This subsection details incremental copper production achieved through leaching innovation and future opportunities - Incremental copper production from leaching innovation initiatives totaled 51 million pounds in Q1 2024, compared with 22 million pounds in Q1 2023[148] - The company achieved its initial annual run rate target of approximately 200 million pounds of copper in late 2023 and is pursuing opportunities for significant increases in recoverable metal[148] Feasibility and Optimization Studies This subsection reports on costs incurred for feasibility and optimization studies and future estimates - Costs for feasibility and optimization studies totaled $34 million in Q1 2024, down from $50 million in Q1 2023[150] - Estimated costs for these studies will approximate $200 million for the year 2024[150] North America This subsection provides an overview of North America operations, including development activities, operating data, and unit net cash costs Development Activities This subsection outlines potential expansion projects and pre-feasibility studies in North America - A potential expansion project at Bagdad could increase copper production by 200 to 250 million pounds per year, with estimated incremental capital costs of $3.5 billion[153] - Projects at Safford/Lone Star aim to increase copper production from oxide ores to 300 million pounds per year, with pre-feasibility studies for a significant expansion expected by late 2025[154] Operating Data This subsection presents North America copper operating data, including production, sales, and average realized prices North America Copper Operating Data (Q1 2024 vs. Q1 2023) | Metric | March 31, 2024 (Millions of lbs) | March 31, 2023 (Millions of lbs) | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | | Production | 314 | 332 | -18 | | Sales | 331 | 332 | -1 | | Average realized price | $3.96 | $4.16 | -$0.20 | - Molybdenum production was 7 million pounds in both Q1 2024 and Q1 2023[158] - Leach ore placed in stockpiles was 617,400 metric tons per day in Q1 2024 (up from 613,200), with average copper ore grade of 0.21% (down from 0.27%), resulting in copper production from leach operations of 211 million pounds (down from 234 million)[157] - Mill ore milled was 307,600 metric tons per day in Q1 2024 (up from 297,500), with average copper ore grade of 0.32% (down from 0.34%), resulting in copper production from mill operations of 153 million pounds (down from 154 million)[158] - North America copper sales are estimated to approximate 1.3 billion pounds for the year 2024[159] Unit Net Cash Costs This subsection details average unit net cash costs for North America copper mines and factors influencing them - Average unit net cash costs for North America copper mines were $2.98 per pound of copper in Q1 2024, higher than $2.45 per pound in Q1 2023, primarily reflecting higher mining costs and lower molybdenum by-product credits[162] - Average unit net cash costs for North America copper mines are expected to approximate $3.00 per pound of copper for the year 2024[163] - North America's average unit net cash costs for 2024 would change by approximately $0.03 per pound for each $2 per pound change in the average price of molybdenum[163] South America This subsection provides an overview of South America operations, including labor matters, development activities, operating data, and unit net cash costs Labor Matters This subsection reports on collective labor agreements at Cerro Verde - Cerro Verde reached a new four-year collective labor agreement (CLA) with one of its two unions in April 2024, expecting nonrecurring charges of approximately $80 million[165] Development Activities This subsection outlines planning for potential major mill projects in South America - At El Abra in Chile, FCX is engaged in planning for a potential submission of an environmental impact statement by year-end 2025 for a potential major mill project[165] Operating Data This subsection presents South America copper operating data, including production, sales, and average realized prices South America Copper Operating Data (Q1 2024 vs. Q1 2023) | Metric | March 31, 2024 (Millions of lbs) | March 31, 2023 (Millions of lbs) | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | | Production | 280 | 304 | -24 | | Sales | 284 | 302 | -18 | | Average realized price | $3.94 | $4.08 | -$0.14 | - Molybdenum production was 3 million pounds in Q1 2024, down from 6 million pounds in Q1 2023[166] - Consolidated copper sales from South America operations of 284 million pounds in Q1 2024 were lower than 302 million pounds in Q1 2023, primarily reflecting lower volumes of leach ore placed in stockpiles and lower milling rates associated with mill maintenance[167] - Copper sales from South America operations are expected to approximate 1.1 billion pounds for the year 2024[167] Unit Net Cash Costs This subsection details average unit net cash costs for South America operations and factors influencing them - Average unit net cash costs for South America operations were $2.60 per pound of copper in Q1 2024, higher than $2.20 per pound in Q1 2023, primarily reflecting lower molybdenum by-product credits and lower copper volumes[171] - Average unit net cash costs for South America operations are expected to approximate $2.51 per pound of copper for the year 2024[173] Indonesia This subsection provides an overview of Indonesia operations, including labor, regulatory, and mining rights matters, development activities, and smelting projects Labor Matters This subsection reports on collective labor agreements at PT-FI's Grasberg minerals district operations - PT-FI reached a new two-year collective labor agreement (CLA) with its three employee unions at its Grasberg minerals district operations in April 2024, with no significant nonrecurring costs[174] Regulatory Matters This subsection discusses PT-FI's export licenses and assessed export duties on copper concentrates - PT-FI's current export licenses for copper concentrate and anode slimes extend through May 2024, and the company is working to obtain approvals to continue exports until the Indonesia smelter projects are fully commissioned by year-end 2024[174] - PT-FI is currently being assessed export duties on copper concentrates at a rate of 7.5% (compared to 2.5% in Q1 2023), incurring $156 million in Q1 2024[175] Mining Rights This subsection addresses the extension of PT-FI's special mining license beyond 2041 - The Indonesia government is updating regulations to enable PT-FI to apply for an extension of its special mining license (IUPK) beyond 2041[175] Operating and Development Activities This subsection details PT-FI's underground mine production, milling rates, energy transition plans, and long-term mine development - PT-FI's underground mines produced 0.5 billion pounds of copper and 0.5 million ounces of gold in Q1 2024, with milling rates averaging 219,500 metric tons of ore per day, a 33% increase from Q1 2023[176] - PT-FI plans investments of approximately $1 billion over the next four years to transition its energy source from coal to liquefied natural gas, aiming to meaningfully reduce Scope 1 greenhouse gas emissions[177] - Long-term mine development activities are ongoing for PT-FI's Kucing Liar deposit, expected to produce over 7 billion pounds of copper and 6 million ounces of gold between 2029 and 2041[178] Indonesia Smelting and Refining This subsection provides updates on the construction and commissioning of the Manyar smelter and Precious Metals Refinery - Construction of the Manyar smelter is advancing on schedule for substantial completion by May 2024, with ramp-up through December 2024, at an estimated cost of $3.0 billion[179][180] - The Precious Metals Refinery (PMR) is under construction, with commissioning expected during the second half of 2024, and current cost estimates totaling $665 million[180] - Capital expenditures for the Indonesia smelter projects totaled $0.5 billion in Q1 2024 and are expected to approximate $1.0 billion for the year 2024[181] - PT Smelting completed a 30% capacity expansion, and PT-FI's ownership is expected to increase to approximately 65% from 39.5%[181] Operating Data This subsection presents Indonesia copper and gold sales data and ore milled rates for Q1 2024 versus Q1 2023 Indonesia Copper & Gold Sales (Q1 2024 vs. Q1 2023) | Metric | March 31, 2024 | March 31, 2023 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Copper Sales (Millions of lbs) | 493 | 198 | +295 | | Gold Sales (Thousands of oz) | 564 | 266 | +298 | | Average Copper Price ($/lb) | $3.92 | $4.07 | -$0.15 | | Average Gold Price ($/oz) | $2,145 | $1,949 | +$196 | Ore Milled (Metric Tons per Day) (Q1 2024 vs. Q1 2023) | Mine | March 31, 2024 (MT/day) | March 31, 2023 (MT/day) | Change | | :-------------------------------- | :---------------------- | :---------------------- | :----- | | Grasberg Block Cave | 139,300 | 89,700 | +49,600 | | Deep Mill Level Zone | 67,300 | 70,000 | -2,700 | | Big Gossan | 9,000 | 7,000 | +2,000 | | Total | 219,500 | 164,800 | +54,700 | - Consolidated sales volumes from PT-FI are expected to approximate 1.7 billion pounds of copper and 2.0 million ounces of gold for the year 2024[183] - PT-FI's consolidated copper and gold production volumes for 2024 are expected to exceed sales volumes, reflecting the deferral of approximately 90 million pounds of copper and 120 thousand ounces of gold for processing by Indonesia smelter projects[183] Unit Net Cash (Credits) Costs This subsection analyzes PT-FI's unit net cash credits, royalties, and export duties, and their impact on costs - PT-FI's unit net cash credits were $0.12 per pound of copper in Q1 2024, compared to $0.08 per pound in Q1 2023, with the favorable change reflecting higher sales volumes, partly offset by lower by-product credits and higher export duties[186] - PT-FI's royalties totaled $118 million in Q1 2024, up from $58 million in Q1 2023, while export duties totaled $156 million in Q1 2024, up from $17 million in Q1 2023[186] - Average unit net cash credits for PT-FI are expected to approximate $0.12 per pound of copper for the year 2024[189] - PT-FI's average unit net cash credits for 2024 would change by approximately $0.09 per pound of copper for each $100 per ounce change in the average price of gold[189] Molybdenum This subsection provides an overview of molybdenum operations, including production and unit net cash costs Operating Activities This subsection reports on molybdenum production from primary operations - Production from primary molybdenum operations totaled 8 million pounds of molybdenum in both Q1 2024 and Q1 2023[191] Unit Net Cash Costs Per Pound of Molybdenum This subsection details average unit net cash costs for primary molybdenum operations and factors influencing them - Average unit net cash costs for primary molybdenum operations were $15.80 per pound of molybdenum in Q1 2024, higher than $12.24 per pound in Q1 2023, primarily reflecting higher costs for contract labor and maintenance supplies[193] - Average unit net cash costs for primary molybdenum operations are expected to approximate $15.47 per pound of molybdenum for the year 2024[193] Smelting and Refining This subsection discusses changes in intercompany profit deferrals and deferred profits on inventories - Changes in intercompany profit deferrals resulted in net reductions to operating income totaling $(17) million in Q1 2024, compared to net additions of $111 million in Q1 2023[196] - Net deferred profits on inventories at Atlantic Copper to be recognized in future periods' net income attributable to common stock totaled $63 million at March 31, 2024[196] CAPITAL RESOURCES AND LIQUIDITY This section discusses the company's financial policy, cash position, debt, and cash flow activities Financial Policy This subsection outlines FCX's financial policy, including net debt targets and shareholder return framework - FCX's financial policy includes a net debt target not to exceed $3.0 billion to $4.0 billion (excluding debt for the Indonesia smelter projects)[201] - The performance-based payout framework allocates up to 50% of available cash flows (after capital spending and noncontrolling interest distributions) to shareholder returns, with the balance to debt reduction and growth projects[201] - On March 27, 2024, the Board declared cash dividends totaling $0.15 per share ($0.075 base + $0.075 variable), with anticipated total dividends for 2024 being $0.60 per share ($0.30 base + $0.30 variable)[203] Cash This subsection details the company's consolidated cash and cash equivalents, and net cash available to the parent company - At March 31, 2024, FCX had $5.2 billion in consolidated cash and cash equivalents[104] Net Cash Available to Parent Company (March 31, 2024) | Metric | Amount (Billions) | | :-------------------------------- | :---------------- | | Cash at domestic companies | $2.3 | | Cash at international operations | $2.9 | | Total consolidated cash | $5.2 | | Noncontrolling interests' share | $(1.4) | | Withholding taxes | $(0.1) | | Net cash available | $3.7 | - The net cash available excludes $0.9 billion of current restricted cash associated with PT-FI's export proceeds[204] Debt This subsection provides information on consolidated debt, scheduled maturities, and available credit facilities - Consolidated debt totaled $9.4 billion at March 31, 2024, with a weighted-average interest rate of 5.2%[104][206] - FCX has $0.7 billion in scheduled senior note maturities in November 2024, with no further senior note maturities until 2027[206] - At March 31, 2024, FCX had $3.0 billion of availability under its revolving credit facility, and PT-FI and Cerro Verde had $1.75 billion and $350 million, respectively, of availability under their revolving credit facilities, with no borrowings outstanding[105][206] Operating Activities This subsection analyzes net cash provided by operating activities and the factors contributing to changes - Operating cash flows were $1.9 billion (net of $0.1 billion of working capital and other uses) in Q1 2024, up from $1.1 billion (net of $0.5 billion of working capital and other uses) in Q1 2023[125][207] - Higher operating cash flows in Q1 2024 primarily reflect higher copper and gold sales volumes and higher gold prices[207] Investing Activities This subsection details capital expenditures, including major mining and Indonesia smelter projects - Capital expenditures, including capitalized interest, totaled $1.3 billion in Q1 2024, up from $1.1 billion in Q1 2023[125][208] - Q1 2024 capital expenditures included $0.4 billion for major mining projects (primarily underground development in Grasberg) and $0.5 billion for the Indonesia smelter projects[208] Financing Activities This subsection analyzes net cash used in financing activities, including debt repayments and dividend payments - Net cash used in financing activities was $(342) million in Q1 2024, compared to $(1,172) million in Q1 2023[24] - Debt repayments totaled $612 million in Q1 2024, significantly lower than $1,273 million in Q1 2023[24] - Cash dividends on common stock were $0.2 billion in both Q1 2024 and Q1 2023, while cash dividends and distributions paid to noncontrolling interests totaled $102 million in Q1 2024 (none in Q1 2023)[209][210] CONTRACTUAL OBLIGATIONS This section confirms no material changes to contractual obligations since December 31, 2023 - There have been no material changes in FCX's contractual obligations since December 31, 2023[211] CONTINGENCIES This section discusses environmental obligations, asset retirement obligations, and litigation matters Environmental Obligations and AROs This subsection details charges for environmental obligations and additions to asset retirement obligations - FCX recorded $56 million in charges for revisions to environmental obligations in Q1 2024[213] - ARO additions totaled $365 million in Q1 2024, including $256 million at mining operations (due to Global Industry Standard on Tailings Management) and $109 million for assumed oil and gas abandonment obligations (due to bankruptcies)[213] Litigation and Other Contingencies This subsection addresses the company's stance on legal proceedings and recent settlement payments - Management does not believe the outcome of any legal proceeding will have a material adverse effect on financial condition[244] - FCX made a $15 million settlement payment in Q1 2024 for the Louisiana parishes coastal erosion cases[82][245] NEW ACCOUNTING STANDARDS This section confirms no significant updates to previously reported accounting standards - There were no significant updates to previously reported accounting standards included in FCX's 2023 Form 10-K[216] NET DEBT This section provides a calculation of net debt, distinguishing debt for Indonesia smelter projects Net Debt Calculation (March 31, 2024) | Metric | Amount (Billions) | | :-------------------------------- | :---------------- | | Consolidated debt | $9.4 | | Less: consolidated cash and cash equivalents | $(5.2) | | Less: current restricted cash (PT-FI) | $(0.9) | | FCX net debt | $3.3 | | Less: debt for Indonesia smelter projects | $(3.0) | | FCX net debt, excluding Indonesia smelter projects debt | $0.3 | - Net debt target is not to exceed $3.0 billion to $4.0 billion (excluding debt for Indonesia smelter projects)[217] PRODUCT REVENUES AND PRODUCTION COSTS This section provides detailed tables on product revenues and production costs CAUTIONARY STATEMENT This section includes a cautionary statement regarding forward-looking information Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's market risks during Q1 2024 - No material changes in market risks during the three-month period ended March 31, 2024[242] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and the absence of material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of March 31, 2024[243] - No material change in internal control over financial reporting occurred during Q1 2024[243] Part II. Other Information This section covers legal proceedings, risk factors, equity sales, mine safety, and other disclosures Item 1. Legal Proceedings This section discusses various legal proceedings, their potential impact, and recent developments - Management does not believe the outcome of any legal proceeding will have a material adverse effect on financial condition[244] - No material changes to legal proceedings previously disclosed, other than an update on Louisiana parishes coastal erosion cases where FCX made a $15 million settlement payment in Q1 2024[82][245] Item 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in the 2023 Form 10-K - There have been no material changes to risk factors previously disclosed in Part I, Item 1A. of the 2023 Form 10-K[245] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and details the status of the share repurchase program - There were no unregistered sales of equity securities during the quarter ended March 31, 2024[245] Share Repurchase Program Status (March 31, 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | Q1 2024 | — | $— | — | $3,164,642,228 | Item 4. Mine Safety Disclosures This section outlines FCX's commitment to workforce health and safety through its "Safe Production Matters" strategy - FCX's global health and safety strategy, "Safe Production Matters," focuses on fatality prevention, eliminating systemic root causes of incidents, and continuous improvement[249] - The Fatal Risk Management (FRM) program aims to achieve zero workplace fatalities by raising awareness to fatal risks and the measures necessary to mitigate them[249] Item 5. Other Information This section confirms no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q1 2024 - No director or officer adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during Q1 2024[250] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, corporate documents, and certifications Signature This section contains the official signature for the report, confirming its due authorization and filing - The report was signed by Ellie L. Mikes, Vice President and Chief Accounting Officer, on May 8, 2024[265]