Freeport-McMoRan
Annual Report 2023

Plain-text annual report

T H E V A L U E O F 2 0 2 3 A N N UA L R E P O R T Freeport-McMoRan Inc. (FCX or Freeport) is a leading international metals company with the objective of being foremost in copper. Headquartered in Phoenix, Arizona, FCX operates large, long-lived, geographically diverse assets with significant proven and probable mineral reserves of copper, gold and molybdenum. FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. FCX has a strong commitment to safety performance, environmental management and the communities where it operates. As a founding member of the International Council on Mining and Metals (ICMM), FCX is committed to implementing ICMM’s Mining Principles, which serve as a best practice framework on sustainable development for the global mining and metals industry. FCX has also achieved the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry’s responsible production practices, at all 12 of its copper-producing sites globally. 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 at fcx.com. 2023 Financial Highlights REVENUES $22.9 BILLION NET INCOME PER SHARE $1.28 OF COMMON STOCK COMMON STOCK DIVIDENDS $0.60 PER SHARE OPERATING CASH FLOWS $5.3 BILLION CAPITAL EXPENDITURES $3.1 BILLION Excluding Indonesia smelter projects NET DEBT $0.8 BILLION Excluding Indonesia smelter projects Freeport was named to Fortune’s 100 Fastest-Growing Companies 2023 list, which ranks companies based on growth in revenue, profits and stock returns; this year’s edition tracks those metrics over the three years through June 2023. Our global team achieved success during 2023 on several important initiatives to enhance value, advance growth options and position our portfolio for the future as we focus on unlocking the “Value of Copper” for the benefit of all stakeholders in a safe, responsible and sustainable manner. 2023 Annual Report 1 Table of Contents 4 6 8 The Value of Copper 24 Board of Directors and Leadership Letter to Shareholders 25 Financial and Operating Information Operational Overview 112 Performance Graph 20 Sustainability 113 Stockholder Information 22 Climate Strategy Geographically Diverse, Long-lived Portfolio HENDERSON, COLORADO CLIMAX, COLORADO CHINO, NEW MEXICO TYRONE, NEW MEXICO CERRO VERDE, PERU EL ABRA, CHILE MORENCI, ARIZONA BAGDAD, ARIZONA SAFFORD/LONE STAR, ARIZONA SIERRITA, ARIZONA MIAMI, ARIZONA NORTH AMERICA SOUTH AMERICA INDONESIA CONSOLIDATED TOTALS Reserves at 12/31/23 Cu 44.7 billion lbs Cu 30.5 billion lbs Cu 29.0 billion lbs Cu 104.1 billion lbs Au 0.6 million ozs Au 23.9 million ozs Au 24.5 million ozs Mo 2.7 billion lbs Mo 0.7 billion lbs Mo 3.3 billion lbs 2023 Sales Cu 1.4 billion lbs Cu 1.2 billion lbs Cu 1.5 billion lbs Cu 4.1 billion lbs Mo 81 million lbs* Mo 81 million lbs Au 1.7 million ozs Au 1.7 million ozs 2 Freeport | The Value of Copper * Includes sales of molybdenum produced at FCX’s North America and South America copper mines. Note: lbs=pounds; ozs=ounces. Freeport’s portfolio includes several mines that were among the largest copper producers in the world during 2023.* (thousand metric tons) 0 200 400 600 800 1,000 1,200 Grasberg Cerro Verde Morenci * Source: Wood Mackenzie GRASBERG MINERALS DISTRICT, INDONESIA COPPER (CU) GOLD (AU) MOLYBDENUM (MO) 2023 Annual Report 3 T H E V A L U E O F 4 Freeport | The Value of Copper T H E V A L U E O F C O P P E R Copper has been integral in driving economic progress over time as it enables a higher standard of living while contributing to infrastructure, the food chain, manufacturing, technology and medical applications. We believe long-term copper market fundamentals will lead to higher copper prices in the future, supported by anticipated strong growth in demand associated with secular trends, the growing intensity of use of copper in electrification and the realities of the cost and timeframes required for new supply development. Infrastructure Copper is the backbone of construction and urbanization. It is a critical metal for wire, plumbing and hardware and possesses the best electrical and thermal heat conductivity of any industrial metal. Technology Copper demand is expected to benefit from technology advances in communications, artificial intelligence applications, expanding connectivity through global infrastructure and public health initiatives. Decarbonization Copper is vital to energy efficiency. Global decarbonization is expected to drive intensity of copper use. For example, copper is essential to electric vehicle technology and its supporting infrastructure. The evolving market will have a substantial impact on copper demand. Difficult to Replicate Copper is an extremely versatile metal. Copper’s physical attributes include superior electrical conductivity, corrosion resistance, structural capability, efficient heat transfer and aesthetics. Copper is Antimicrobial Copper has an inherent ability to kill a wide range of harmful microbes relatively rapidly — often within two hours or less — and with a high degree of efficiency. 2023 Annual Report 5 L E T T E R T O S H A R E H O L D E R S Dear Fellow Shareholders We are pleased to present our 2023 Annual Report, “The we are building significant momentum in the Americas with Value of Copper.” As a leading responsible supplier of our innovative and low-cost, high-value leach initiatives. copper, Freeport is committed to providing our global customers with important metals necessary for the global economy. Our conviction in the favorable long-term fundamentals for copper underpins our strategy that is centered on being “Foremost in Copper.” After growing our volumes in recent years, we sustained copper production in 2023 during a challenging environment for industry supply and reported another year of growth in gold production. We continue to actively manage costs and productivity initiatives to address Our global team achieved success during 2023 on inflation. In Indonesia, we successfully commissioned several important initiatives to enhance value, advance a new milling circuit to process additional volumes and growth options and position our portfolio for the future. made great strides toward completing our new world- We achieved multiple operating records at the Grasberg class smelter, which reached the 90 percent completion minerals district in Indonesia and Cerro Verde in Peru, and milestone at year-end. CEO Transition In February 2024, Freeport announced that Kathleen Quirk, President and a member of the Board of Directors (Board), will succeed Richard Adkerson as Freeport’s Chief Executive Officer (CEO) effective at the upcoming annual meeting. As a senior member of the company’s executive team Kathleen Quirk commented, “I am excited to lead this great company. We have an exceptionally talented global team committed to our for more than 20 years and Chief Financial mission of providing copper and other metals Officer from 2003 to 2022, Kathleen has essential to our lives and the global economy been instrumental in Freeport’s strategic in a responsible and efficient manner. I look planning and execution of company goals. forward to continuing to enhance value for This transition is the result of a multi-year our stakeholders through strong execution of succession planning process led by the Board our plans, the pursuit of innovation and new and the appointment recognizes Kathleen’s technologies to improve efficiency and grow our distinguished tenure and contributions at business through the development of our large Freeport and her proven leadership and track resource base to serve an expanding market for record of accomplishments. our products.” 6 Freeport | The Value of Copper Our future growth options are supported by our sizeable reporting to our Board. I will remain Chairman of the Board, copper reserves and an even larger resource position. supporting the leadership transition and continuing to support Within our portfolio, we look for opportunities to maximize the company on global matters of strategic importance. value through innovation, operating efficiencies and investments in projects where we have large resource positions. We have a proven track record and plan to continue to leverage our existing infrastructure, people and capabilities to increase values from our resource base. In the United States (U.S.), we achieved our initial target from our innovative leach recovery project and advanced development options for a potential expansion of our Bagdad mine in northwest Arizona. We are developing Serving as CEO of Freeport for over 20 years has been an honor. Our people are best in class, and together, we have made valuable, lasting positive impacts on our industry, our communities and society at large. I value my strong relationships with our stakeholders — including our employees, investors, industry executives, community partners and government officials — all of whom are critical to the success of our company and our industry. additional resources in the Grasberg minerals district in Kathleen’s strong business and strategic acumen and Indonesia and advancing studies for a potential major increasing levels of responsibility over many years have expansion project in Chile. We believe long-term copper market fundamentals will demonstrated she has the skills to lead our company and continue Freeport’s tradition of excellence. lead to higher copper prices in the future, supported by The future for Freeport is bright. We have a winning anticipated strong growth in demand associated with combination of great assets and talented people and serve secular trends, the growing intensity of use of copper in markets with growing needs for our products. With long- electrification and the realities of the cost and timeframes lived reserves, organic growth opportunities, a solid balance required for new supply development. During 2023, we returned cash to shareholders in line with our established financial policy. Since we implemented our sheet and a proven track record for successful project development, Freeport is well-positioned to build long-term value for the benefit of all stakeholders. performance-based payout framework in 2021, shareholder On behalf of our Board and management team, I would like returns have totaled $3.8 billion. Our financial policy to thank you for your investment in our company. continues to be centered on maintaining a strong financial position, providing cash returns to shareholders and investing in value-enhancing growth projects. As a leader in the industry, we were one of the first companies to achieve the Copper Mark and Molybdenum Mark at all of our operating sites, demonstrating our commitment to responsible operating practices. During 2023, we initiated several new programs to enhance our safety performance. Despite our robust safety programs, we continue to mourn the loss of one of our contractors in Indonesia who was fatally injured in an industrial accident. Our commitment to providing a safe work environment remains our top priority. Best personal regards, RICHARD C. ADKERSON Chairman of the Board and Chief Executive Officer In June 2024, at our annual meeting of shareholders, March 26, 2024 we will complete the previously announced leadership transition. Kathleen Quirk will become CEO and assume full responsibility for executive management of the company 2023 Annual Report 7 FCX’s 2023 results reflect strong operating performance, including achievement of a number of important initiatives to advance growth options, to position it for the future and aimed at enhancing value. 8 Freeport | The Value of Copper O P E R A T I O N A L O V E R V I E W Consolidated Results FCX’s consolidated sales volumes of 4.1 billion pounds of copper and 1.7 million ounces of gold in 2023 were lower than 4.2 billion pounds of copper and 1.8 million ounces of gold in 2022, primarily reflecting impacts of lower ore grades at its North America copper mines and the deferral of sales recognition related to its subsidiary’s, PT Freeport Indonesia (PT-FI), new concentrate tolling arrangement, partly offset by an increase in mining and milling rates and ore grades at the Grasberg minerals district and its South America mines. Consolidated molybdenum sales totaled 81 million pounds in 2023 and 75 million pounds in 2022. FCX’s 2023 results reflect strong operating performance, including achievement of a number of important initiatives to advance growth options, to position it for the future and aimed at enhancing value. FCX believes the actions taken in recent years to build a solid balance sheet and maintain flexible organic growth options while maintaining liquidity will allow it to continue to execute its business plans in a prudent manner and preserve substantial future asset values. FCX also believes long-term fundamentals for copper are favorable and that future demand will be supported by copper’s role in the global transition to renewable power, electric vehicles and other carbon-reduction initiatives, continued urbanization in developing countries and growing connectivity globally. CONSOLIDATED COPPER PRODUCTION billions of pounds 4.2 4.2 3.8 21 22 23 CONSOLIDATED GOLD PRODUCTION millions of ounces 2.0 1.8 1.4 21 22 23 Sustained Large-scale Production After growing our volumes in recent years, we were able to sustain production of copper in 2023 despite a challenging environment for copper supply, and we reported another year of growth in gold production. We are continuing to actively manage costs and productivity initiatives to address cost inflation. Underground in Indonesia 2023 Annual Report 9 O P E R A T I O N A L O V E R V I E W AMERICAS LEACH INNOVATION INITIATIVES North America Operations SIGNIFICANT POTENTIAL 38 billion pounds contained* 16% South America 50% Morenci In North America, FCX operates seven open-pit copper mines — Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico; and two molybdenum mines — Henderson and Climax in Colorado. Molybdenum concentrate, gold and silver are also produced by certain of FCX’s North America copper mines. FCX has substantial mineral reserves and future opportunities in the U.S., primarily associated with existing operations. FCX has a potential expansion project to more than double the concentrator capacity and current production of the Bagdad operation, whose reserve life currently exceeds 80 years and supports an expanded operation. Technical and economic studies were completed in late 2023. Expanded operations also are expected to provide improved efficiency and reduce unit net cash costs through economies of scale. The decision to proceed and timing of the potential expansion will take into account overall copper market conditions, availability of labor and other factors, including progress on conversion of the existing haul truck fleet to autonomous and expanding housing alternatives to support long-range plans. FCX continues to advance plans at Lone Star to increase volumes to achieve 300 million pounds of copper per year from oxide ores, which reflects expansion of the initial design capacity of 200 million pounds of copper per year. Positive drilling conducted in recent years indicates opportunities to expand production to include sulfide ores in the future. FCX is completing metallurgical testing and mine development planning and expects to commence pre-feasibility studies during 2024 for a potential significant expansion. North America’s consolidated copper sales totaled 1.36 billion pounds in 2023 and 1.47 billion pounds in 2022. 34% Other North America LEACH CONTRIBUTIONS IN 2023 BY REGION ~200 million pounds annual run rate achieved in 2023 13% South America 60% Morenci 27% Other North America * Copper from historical placements beyond assumed recovery estimates and is not included in mineral reserves or mineral resources. See Cautionary Statement. Autonomous Haulage At Bagdad, we are converting our existing manned haul truck fleet to fully autonomous. The operation, which is located in northwest Arizona, has a reserve life that exceeds 80 years. In 2023, we completed technical studies for a potential expansion to more than double the concentrator capacity of the Bagdad operation. An investment decision is pending copper market conditions, labor availability and other factors. 10 Freeport | The Value of Copper Morenci mine in Arizona, U.S. In the U.S., we achieved our targeted leach innovation initiatives run rate of approximately 200 million pounds per year by the end of 2023. These exciting initiatives involve deploying new operating practices to our traditional leach operations to get more out of our massive stockpiles containing material that has been placed in prior years. 2023 Annual Report 11 At El Abra in Chile, our team is commencing work in preparation for an environmental impact statement to provide optionality for future development. 12 Freeport | The Value of Copper O P E R A T I O N A L O V E R V I E W 1.2 BILLION LBS South America Operations FCX operates two copper mines in South America — Cerro Verde in Peru and El Abra in Chile. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver. 2023 consolidated copper sales FCX has identified a large sulfide resource at El Abra that would support a 30.5 BILLION LBS Estimated recoverable proven and probable copper mineral reserves as of December 21, 2023 29% FCX COPPER RESERVES IN SOUTH AMERICA potential major mill project similar to the large-scale concentrator at Cerro Verde. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project. Capital cost requirements are being updated to reflect current market conditions. FCX is evaluating water infrastructure alternatives to provide options to extend existing operations and support a future expansion, while continuing to monitor Chile’s regulatory and fiscal matters, as well as trends in capital costs for similar projects. In parallel, as part of the permitting process for the potential expansion, FCX is planning for a potential submission of an environmental impact statement during 2025, subject to ongoing stakeholder engagement and economic evaluations. Consolidated copper sales from FCX’s South America mines were 1.2 billion pounds in 2023 and 2022. Renewable Energy Transition During 2023, Cerro Verde entered into a new power purchase agreement that is expected to transition its electric power to fully renewable energy sources in 2026. This initiative is expected to eliminate Cerro Verde’s Scope 2 greenhouse gas (GHG) emissions and positively contribute to Freeport’s 2030 Americas Copper GHG emission intensity reduction target. 2023 Annual Report 13 O P E R A T I O N A L O V E R V I E W UNDERGROUND ORE TO MILL thousands of metric tons per day 201 187 145 87 Indonesia Operations Through its subsidiary, PT-FI, FCX operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Central Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76% ownership interest in PT-FI and manages its operations. PT-FI’s results are consolidated in FCX’s financial statements. PT-FI currently has three underground operating mines in the Grasberg minerals 20 21 22 23 district: Grasberg Block Cave, Deep Mill Level Zone and Big Gossan. Long-term mine development activities are ongoing for PT-FI’s Kucing Liar deposit in the Grasberg minerals district, which is expected to produce over 7 billion pounds of copper and 6 million ounces of gold between 2029 and the end of 2041, providing PT-FI with sustained long-term, large-scale and low-cost production. An extension of PT-FI’s operating rights beyond 2041 would extend the life of the project as well as the lives of PT-FI’s currently operating mines. PT-FI’s underground mines continue to perform well, with copper and gold production increasing in each of the past three years. During 2023, PT-FI achieved multiple annual operating records, including total underground ore mined (and milled) and volume of concentrate produced. Lower consolidated sales of 1.5 billion pounds of copper and 1.7 million ounces of gold in 2023, compared with 1.6 billion pounds of copper and 1.8 million ounces of gold in 2022, resulted from the deferral of sales recognition related to a new concentrate tolling agreement. Lower gold sales volumes in 2023, compared to 2022, also reflect the timing of shipments of anode slimes associated with a change in administrative requirements for exported products. Unit net cash costs per pound of copper (net of gold, silver and other by-product credits) remain among the lowest in the world and totaled $0.10 in 2023 and $0.09 in 2022. COPPER PRODUCTION billions of pounds 1.7 1.6 1.3 0.8 20 21 22 23 GOLD PRODUCTION millions of ounces 2.0 1.8 1.4 0.8 20 21 22 23 Transitioning to LNG PT-FI is advancing plans to transition its existing energy source from coal to lower-carbon liquefied natural gas (LNG) at the Grasberg minerals district over the coming years. The new 265 megawatt gas-fired combined cycle power plant is expected to meaningfully reduce Grasberg’s Scope 1 GHG intensity. 14 Freeport | The Value of Copper Reclamation activities form mangrove forests in Indonesia During 2023, we successfully commissioned a new milling circuit to process additional volumes from our underground mines in Indonesia. 2023 Annual Report 15 FCX has significant mineral reserves, mineral resources and future development opportunities within its portfolio of mining assets. 16 Freeport | The Value of Copper M I N I N G R E S E R V E S A N D M I N E R A L I Z E D M A T E R I A L Long-lived Asset Base 104.1 BILLION LBS Estimated recoverable proven and probable copper mineral reserves (1) $3.00 PER LB Copper price used to determine recoverable reserves ~25 YEARS Implied reserve life for copper, excluding mineral resources 211 BILLION LBS Estimated incremental copper resources on a contained basis as of December 31, 2023 (2) (1) Estimate of recoverable proven and probable consolidated mineral reserves using long- term average prices of $3.00/lb for copper; FCX’s net equity interest in copper mineral reserves totaled 75.1 billion lbs as of December 31, 2023. (2) Includes measured, indicated and inferred mineral resources. Estimates of consolidated mineral resources (contained metal) were assessed using a long-term average copper price of $3.50/lb. Mineral resources are not included in mineral reserves and will not qualify as mineral reserves until comprehensive engineering studies establish legal and economic feasibility. Accordingly, no assurance can be given that the estimated mineral resources will become proven and probable mineral reserves. See Cautionary Statement. Mining Reserves and Mineralized Material FCX has significant mineral reserves, mineral resources and future development opportunities within its portfolio of mining assets. FCX’s estimated consolidated recoverable proven and probable mineral reserves from its mines at December 31, 2023, included 104.1 billion pounds of copper, 24.5 million ounces of gold, 3.34 billion pounds of molybdenum and 329 million ounces of silver, which were determined using metal price assumptions of $3.00 per pound for copper, $1,500 per ounce for gold, $12 per pound for molybdenum and $20 per ounce for silver. In addition to the estimated consolidated recoverable proven and probable mineral reserves, FCX’s estimated mineral resources (including measured, indicated and inferred resources) at December 31, 2023, which were assessed using $3.50 per pound for copper, totaled 211 billion pounds of incremental contained copper. FCX continues to pursue opportunities to convert this material into mineral reserves, future production volumes and cash flow. Estimated Recoverable Proven and Probable Mineral Reserves (1) CONSOLIDATED COPPER RESERVES BY REGION 104.1 billion lbs 43% North America 29% South America 28% Indonesia 2023 Annual Report 17 F I N A N C I A L P E R F O R M A N C E Financial Performance FCX remains focused on managing costs efficiently and commissioning and owner’s costs. Projected capital continues to advance several important value-enhancing expenditures for major mining projects include $1.1 billion initiatives. FCX closely monitors market conditions and will for planned projects, primarily associated with underground adjust its operating plans to protect liquidity and preserve mine development in the Grasberg minerals district and asset values, if necessary. FCX expects to maintain a strong potential expansion projects in North America, and balance sheet and liquidity position as it focuses on building $1.2 billion for discretionary growth projects. long-term value in its business, executing its operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures. Capital expenditures for the Indonesia smelter projects are being funded with the remaining proceeds from PT-FI’s senior notes and availability under its revolving credit facility. Operating Cash Flows and Liquidity FCX generated consolidated operating cash flows of $5.3 billion in 2023. At December 31, 2023, FCX had total consolidated debt of $9.4 billion, consolidated cash and cash equivalents of $4.8 billion (excluding $1.1 billion of cash associated with PT-FI export proceeds required to be temporarily deposited in Indonesia banks for a period of 90 days), and no borrowings and $3.0 billion available under its revolving credit facility. In addition, PT-FI and Cerro Verde had $1.75 billion and $350 million, respectively, of availability under their revolving credit facilities. Financing Transactions FCX’s net debt repayments totaled $1.2 billion in 2023, including the repayment of its 3.875% Senior Notes that matured in March 2023 totaling $966 million and open-market purchases of its senior notes for a total cost of $221 million. Financial Policy FCX’s financial policy is aligned with its strategic objectives of maintaining a solid balance sheet, providing cash returns to shareholders and advancing opportunities for future growth. The policy includes a base dividend and a Based on current sales volume and costs estimates, performance-based payout framework, whereby up to 50% and assuming average prices of $3.75 per pound of of available cash flows generated after planned capital copper, $2,000 per ounce of gold and $19.00 per pound spending and distributions to noncontrolling interests would of molybdenum, consolidated operating cash flows are be allocated to shareholder returns and the balance to estimated to approximate $5.8 billion for the year 2024. debt reduction and investments in value-enhancing growth The impact of copper price changes during 2024 on projects, subject to FCX maintaining its net debt at a operating cash flows would approximate $400 million for level not to exceed the net debt target of $3.0 billion to each $0.10 per pound change in the average price of copper. $4.0 billion (excluding net project debt for the Indonesia Investing Activities FCX’s capital expenditures, including capitalized interest, totaled $4.8 billion in 2023, including $1.8 billion for major projects primarily associated with the underground development activities in the Grasberg minerals district and $1.7 billion for the Indonesia smelter projects. smelter projects). FCX’s Board reviews the structure of the performance-based payout framework at least annually. Based on current market conditions, the base and variable dividends on FCX’s common stock are anticipated to total $0.60 per share for 2024 (including the dividends paid on February 1, 2024), comprised of a $0.30 per share base dividend and $0.30 per share variable dividend. The Capital expenditures are expected to approximate $4.6 billion declaration and payment of dividends (base or variable) in 2024 (including $2.3 billion for major mining projects and is at the discretion of the Board and will depend on FCX’s $1.0 billion for Indonesia smelter projects). Projected capital financial results, cash requirements, global economic expenditures for the Indonesia smelter projects in 2024 conditions and other factors deemed relevant by the Board. exclude capitalized interest and $0.3 billion of estimated 18 Freeport | The Value of Copper FCX’s financial policy is aligned with its strategic objectives of maintaining a solid balance sheet, providing cash returns to shareholders and advancing opportunities for future growth. Shareholder Returns $0.8 BILLION Net debt at year-end 2023, excluding net debt for the Indonesia smelter projects ~50% FREE CASH FLOW To be returned to shareholders under performance-based payout framework COMMON STOCK DIVIDENDS $0.60 PER SHARE FCX paid $0.30 per share in base dividends and $0.30 per share in variable dividends in 2023 $3.8 BILLION Cash returned to shareholders since adoption of financial policy in 2021, including dividends and share repurchases 2023 Annual Report 19 Cerro Verde has made significant investments in local water infrastructure that enhance agricultural production RECENT FCX ACCOLADES S&P Global 2024 Sustainability Yearbook Member Corporate Human Rights Benchmark Top 2023 Performer in Extractives Top 100 JUST companies in the U.S. by JUST Capital 2024 rankings 20 Freeport | The Value of Copper America’s Best Large Employers 2024 by Forbes 100 Best Corporate Citizens by 3BL Media S U S T A I N A B I L I T Y Community Investments Sustainability FCX is a leading responsible copper producer — supplying approximately 9% of the world’s mined copper. As global decarbonization accelerates, demand for copper is expected to increase. FCX recognizes the interdependencies of growth and sustainability and the importance of effectively managing its environmental and social impacts while supplying copper to a world with increasing requirements for metals. FCX’s sustainability strategy — Accelerate the Future, Responsibly — is dedicated to this imperative. FCX’s sustainability strategy is supported by its environmental and social commitments which, in alignment with its business objectives, seek to enhance responsible production practices at its sites around the world. Fundamental to this work are the health, safety and well-being of its workforce and host communities where it operates. FCX seeks to work collaboratively with its stakeholders to support shared value creation and to recognize, respect and promote human rights everywhere it conducts business. FCX is dedicated to effective environmental management and stewardship, which are key to ensuring the long-term viability of its business, including maintaining critical support from its host communities and governments. In pursuing its sustainability strategy, FCX aims to align with the highest standards including the International Council on Metals and Mining’s Performance Expectations and the Copper Mark. FCX has achieved — and is committed to maintaining — the Copper Mark and Molybdenum Mark at all of its sites globally. To maintain this validation, each site is required to complete an independent external assurance process to assess conformance with various environmental, social and governance criteria. Awarded sites must be revalidated every three years. Learn more about FCX’s sustainability strategy and initiatives in its most recent Annual Report on Sustainability, available at fcx.com/sustainability. OVER $170 MILLION 2023 total investments $2.49 BILLION Cumulative investments since 2009 FCX has achieved the Copper Mark and Molybdenum Mark at all sites globally Promoting Respect for Human Rights FCX is dedicated to the recognition, respect and promotion of human rights wherever it operates. One of the ways FCX assesses its performance on human rights is through human rights impact assessments (HRIAs) conducted by third-party consultants using methodologies aligned with the United Nations’ Guiding Principles. In 2023, FCX completed the HRIA at PT-FI’s Grasberg operations and initiated an assessment at Cerro Verde’s operations, which is expected to be completed later in 2024. Students from local indigenous communities at PT-FI’s Nemangkawi Mining Institute 2023 Annual Report 21 C L I M A T E S T R A T E G Y Climate Strategy Pillars Climate Strategy 1 REDUCTION FCX strives to reduce, manage and mitigate its GHG emissions where possible. FCX currently has four 2030 GHG emissions reduction targets which, collectively, cover nearly 100% of its global (Scope 1 and 2) emissions. 2 RESILIENCE FCX strives to enhance its resilience to climate change risks (both physical and transitional) for its current and future operations, its host communities and its stakeholders. 3 CONTRIBUTION FCX strives to be a positive contributor beyond its operational boundaries by responsibly producing and supplying the copper that will support the technologies needed to enable the energy transition. This includes collaborating with industry and value chain partners to develop solutions. Copper is the metal of electrification. Copper’s essential role in current and emerging clean energy technologies is critical to global decarbonization. FCX is dedicated to making a positive impact on the global energy transition by executing on its climate strategy and delivering the responsibly produced copper necessary to support the energy transition, which includes managing and mitigating its GHG emissions and other climate-related risks and impacts. FCX continues to advance important initiatives to reduce its GHG emissions, improve energy efficiency, evaluate and integrate the use of lower carbon and renewable energy and enhance its resilience to future climate-related risks. In 2023, FCX announced plans to replace the existing coal-fired power plant at the Grasberg minerals district with a new LNG-fueled power plant and signed a new power purchase agreement at Cerro Verde, which is expected to transition the operations to fully renewable energy sources beginning in 2026. FCX also continued its collaboration with Caterpillar’s Early Learner program and Komatsu’s GHG Alliance, both of which are focused on the development and advancement of zero-emissions mining trucks and supporting technologies and infrastructure. FCX recognizes that climate change poses considerable near- and long-term challenges for society and for FCX’s operational and financial performance. Mining is energy-intensive and generates significant GHG emissions that contribute to climate change. This is why FCX aspires to participate in — and positively contribute to — a 2050 net zero economy. FCX is continuing to advance its climate strategy by collaborating and innovating in order to take practical, responsible steps toward an eventual net zero mining future. Learn more about FCX’s climate strategy and progress in its most recent Climate Report, available at fcx.com/sustainability. Americas Leach Innovation Initiatives Support Climate Strategy Through process innovations, such as Leach to the Last Drop, FCX is advancing efforts to improve copper recovery from its leach processes by incorporating new applications, technologies and data analytics. FCX has copper contained in existing stockpiles that do not require additional mining, and leach processes are generally less energy-intensive than smelting. As a result, if successful, FCX’s leaching initiatives could enable it to provide additional copper production with a lower carbon footprint. 22 Freeport | The Value of Copper Morenci mine in Arizona, U.S. Environmental monitoring in Indonesia at PT-FI’s Grasberg operations FCX has four 2030 GHG emissions reduction targets, covering nearly 100% of its Scope 1 and Scope 2 GHG emissions. 2023 Annual Report 23 B O A R D O F D I R E C T O R S A N D L E A D E R S H I P BOARD OF DIRECTORS Richard C. Adkerson* Chairman of the Board and Chief Executive Officer Freeport-McMoRan Inc. Dustan E. McCoy (2) Lead Independent Director Freeport-McMoRan Inc. Retired Chairman and Chief Executive Officer Brunswick Corporation David P. Abney (1, 2) Retired Chairman and Chief Executive Officer United Parcel Service, Inc. Marcela E. Donadio (1, 3) Retired Partner and Americas Oil & Gas Sector Leader Ernst & Young LLP Robert W. “Bob” Dudley (3, 4) Retired Group Chief Executive BP, p.l.c. Hugh Grant (2) Retired Chairman of the Board, President and Chief Executive Officer Monsanto Company Lydia H. Kennard (3, 4) President and Chief Executive Officer KDG Construction Consulting and Quality Engineering Solutions Ryan M. Lance (4) Chairman and Chief Executive Officer ConocoPhillips Sara Grootwassink Lewis (1) Retired Chief Executive Officer Lewis Corporate Advisors Kathleen L. Quirk* President Freeport-McMoRan Inc. John J. Stephens (1) Retired Senior Executive Vice President and Chief Financial Officer AT&T Inc. Frances Fragos Townsend (4) Advisory Services, Frances Fragos Townsend, LLC Dr. Henry A. Kissinger May 27, 1923 — November 29, 2023 In Memoriam In Memoriam Dr. Kissinger served as a director on FCX’s Board from 1995 to 2001 and as Director Emeritus for over twenty years. He was a valued partner and advisor to our company and his contributions to the world are immeasurable. BOARD COMMITTEES: 1) Audit Committee 2) Compensation Committee 3) Governance Committee 4) Corporate Responsibility Committee EXECUTIVE OFFICERS SENIOR LEADERSHIP Richard C. Adkerson* Chairman of the Board and Chief Executive Officer Kathleen L. Quirk* President Maree E. Robertson Senior Vice President and Chief Financial Officer Douglas N. Currault II Senior Vice President and General Counsel Stephen T. Higgins Senior Vice President and Chief Administrative Officer * Effective at the Annual Meeting of Stockholders on June 11, 2024, Ms. Quirk will assume the additional role of Chief Executive Officer, succeeding Mr. Adkerson. Mr. Adkerson will continue serving as Chairman of the Board. 24 Freeport | The Value of Copper Operations Administration Mark J. Johnson Director and Executive Vice President PT Freeport Indonesia President and Chief Operating Officer Freeport-McMoRan Indonesia Joshua F. “Josh” Olmsted President and Chief Operating Officer Freeport-McMoRan Americas A. Cory Stevens President Freeport-McMoRan Mining Services Michael J. Kendrick President Climax Molybdenum Co. Javier Targhetta President, Atlantic Copper S.L.U. Senior Vice President, FCX (Concentrates) Clayton A. “Tony” Wenas President Director PT Freeport Indonesia Robert R. Boyce Vice President and Treasurer William E. Cobb Vice President and Chief Sustainability Officer Pamela Q. Masson Vice President and Chief Human Resources Officer Ellie L. Mikes Vice President and Chief Accounting Officer Bertrand L. Odinet, II Vice President, Chief Information Officer and Chief Innovation Officer Internal Auditors Deloitte & Touche LLP F I N A N C I A L A N D O P E R A T I N G I N F O R M A T I O N TA B L E O F C O N T E N T S TA B L E O F C O N T E N T S 26 Selected Operating Data 66 Consolidated Statements of Income 28 Management’s Discussion and Analysis 67 Consolidated Statements of Comprehensive Income 61 Management’s Report on Internal Control Over Financial Reporting 62 Report of Independent Registered Public Accounting Firm 63 Report of Independent Registered Public Accounting Firm 68 Consolidated Statements of Cash Flows 69 Consolidated Balance Sheets 70 Consolidated Statements of Equity 71 Notes to Consolidated Financial Statements 2023 Annual Report 25 S E L E C T E D O P E R A T I N G D A T A Years Ended December 31, 2023 2022 2021 2020 2019 4,212 4,086 3.85 $ 1,993 1,713 $ 1,972 82 81 $ 24.64 4,210 4,213 3.90 $ 1,811 1,823 $ 1,787 85 75 $ 18.71 3,843 3,807 4.33 $ 1,381 1,360 $ 1,796 85 82 $ 15.56 3,206 3,202 2.95 $ 857 855 $ 1,832 76 80 $ 10.20 1,350 1,361 3.93 $ 1,467 1,469 4.08 $ 1,460 1,436 4.30 $ 1,418 1,422 2.82 $ 30 29 34 33 692,000 0.23 941 676,400 0.29 1,019 665,900 0.29 1,056 714,300 0.27 1,047 3,247 3,292 2.73 $ 882 991 $ 1,415 90 90 $ 12.61 $ 1,457 1,442 2.74 32 750,900 0.23 993 308,500 294,200 269,500 279,700 326,100 0.32 0.02 81.8 633 0.37 0.02 81.8 695 0.38 0.03 81.2 649 1,202 1,200 3.82 $ 1,176 1,162 3.80 $ 1,047 1,055 4.34 $ $ 22 23 21 0.35 0.02 84.1 647 979 976 3.05 19 191,200 0.35 317 163,000 0.35 302 163,900 0.32 256 160,300 0.35 241 0.34 0.02 87.0 748 $ 1,183 1,183 2.71 29 205,900 0.37 268 417,400 409,200 380,300 331,600 393,100 0.34 0.01 81.3 885 0.32 0.01 85.3 874 0.31 0.01 87.3 791 0.34 0.01 84.3 738 0.36 0.02 83.5 916 CONSOLIDATED MINING Copper (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound Gold (thousands of recoverable ounces) Production Sales, excluding purchases Average realized price per ounce Molybdenum (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound NORTH AMERICA COPPER MINES Operating Data, Net of Joint Venture Interestsa Copper (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound Molybdenum (millions of recoverable pounds) Production 100% Operating Data Leach operations Leach ore placed in stockpiles (metric tons per day) Average copper ore grade (%) Copper production (millions of recoverable pounds) Mill operations Ore milled (metric tons per day) Average ore grade (%): Copper Molybdenum Copper recovery rate (%) Copper production (millions of recoverable pounds) SOUTH AMERICA MINING Copper (millions of recoverable pounds) Production Sales Average realized price per pound Molybdenum (millions of recoverable pounds) Production Leach operations Leach ore placed in stockpiles (metric tons per day) Average copper ore grade (%) Copper production (millions of recoverable pounds) Mill operations Ore milled (metric tons per day) Average ore grade (%): Copper Molybdenum Copper recovery rate (%) Copper production (millions of recoverable pounds) a. Amounts are net of Morenci’s joint venture partners’ undivided interest. 26 Freeport | The Value of Copper S E L E C T E D O P E R A T I N G D A T A Years Ended December 31, 2023 2022 2021 2020 2019 INDONESIA MINING Copper (millions of recoverable pounds) Production Sales Average realized price per pound Gold (thousands of recoverable ounces) Production Sales Average realized price per ounce Mill operations Ore milled (metric tons per day) Average ore grade: Copper (%) Gold (grams per metric ton) Recovery rates (%): Copper Gold MOLYBDENUM MINES Ore milled (metric tons per day) Average molybdenum ore grade (%) Molybdenum production (millions of recoverable pounds) 1,660 1,525 3.81 $ 1,978 1,697 $ 1,972 1,567 1,582 3.80 1,798 1,811 1,787 $ $ 1,336 1,316 4.34 $ 1,370 1,349 $ 1,796 809 804 $ 3.08 848 842 $ 1,832 607 667 2.72 $ 863 973 $ 1,416 198,300 192,600 151,600 87,700 110,100 1.22 1.12 89.7 77.9 27,900 0.15 30 1.19 1.05 90.0 77.7 26,100 0.18 33 1.30 1.04 89.8 77.0 1.32 1.10 91.9 78.1 0.84 0.93 88.4 75.0 21,800 0.19 30 20,700 0.17 24 30,100 0.14 29 2023 Annual Report 27 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S In Management’s Discussion and Analysis of Financial Condition Indonesia are progressing, with construction progress for these and Results of Operations and Quantitative and Qualitative projects measured at over 90% at year-end 2023. We are also Disclosures About Market Risk (MD&A), “we,” “us” and “our” refer advancing a series of initiatives across our North America and South to Freeport-McMoRan Inc. and its consolidated subsidiaries. America operations to incorporate new applications, technologies The results of operations reported and summarized below include and data analytics to our leaching processes. In fourth-quarter 2023, forward-looking statements that are not guarantees of future we achieved our initial run rate target of approximately 200 million performance and are not necessarily indicative of future operating pounds of copper per year through these initiatives. results (refer to “Cautionary Statement” below for further discussion). Net income attributable to common stock totaled $1.8 billion in References to “Notes” are Notes included in our Notes to Consolidated 2023 and $3.5 billion in 2022. Our results in 2023, compared Financial Statements. Throughout MD&A, all references to income to 2022, primarily reflect the change in our economic interest in or losses per share are on a diluted basis. PT Freeport Indonesia (PT-FI) (refer to Note 3 for further discussion) This section of our Form 10-K discusses the results of operations and increased production costs, including for maintenance and for the years 2023 and 2022 and comparisons between these supplies. Refer to “Consolidated Results” for discussion of items years. Discussion of the results of operations for the year 2021 and impacting our consolidated results for the two years ended comparisons between the years 2022 and 2021 are not included in December 31, 2023. this Form 10-K and can be found in Items 7. and 7A. “Management’s At December 31, 2023, we had consolidated debt of $9.4 billion Discussion and Analysis of Financial Condition and Results of and consolidated cash and cash equivalents of $4.8 billion Operations and Quantitative and Qualitative Disclosures About ($5.8 billion including restricted cash and cash equivalents associated Market Risk” contained in Part II of our Annual Report on Form 10-K with PT-FI’s export proceeds required to be temporarily deposited for the fiscal year ended December 31, 2022. in Indonesia banks), resulting in net debt of $3.6 billion ($0.8 billion OVERVIEW excluding net debt for the Manyar smelter and precious metals refinery (PMR) in Indonesia—collectively, the Indonesia smelter We are a leading international metals company with the objective projects). Refer to “Net Debt” for reconciliations of consolidated of being foremost in copper. Headquartered in Phoenix, Arizona, debt, consolidated cash and cash equivalents and consolidated we operate large, long-lived, geographically diverse assets with restricted cash and cash equivalents to net debt. significant proven and probable mineral reserves of copper, gold Other than $0.7 billion in scheduled senior note maturities in and molybdenum. We are one of the world’s largest publicly traded November 2024, we have no further senior note maturities until copper producers. Our portfolio of assets includes the Grasberg 2027. At December 31, 2023, we had no borrowings and $3.0 billion minerals district in Indonesia, one of the world’s largest copper available under our revolving credit facility, and PT-FI and Cerro and gold deposits; and significant operations in North America Verde had $1.75 billion and $350 million, respectively, available and South America, including the large-scale Morenci minerals under their revolving credit facilities. Refer to Note 8 and “Capital district in Arizona and the Cerro Verde operation in Peru. Resources and Liquidity” for further discussion of our debt. Our results for 2023 reflect strong operating performance, We have significant mineral reserves, mineral resources and future including achievement of a number of important initiatives to development opportunities within our portfolio of mining assets. advance growth options, to position us for the future and aimed At December 31, 2023, our estimated consolidated recoverable at enhancing value. Despite economic uncertainty, including proven and probable mineral reserves totaled 104.1 billion pounds rising costs, we have continued to generate positive operating of copper, 24.5 million ounces of gold and 3.34 billion pounds of cash flows. We believe the actions we have taken in recent years molybdenum. Refer to Note 17 and “Critical Accounting Estimates— to build a solid balance sheet and maintain flexible organic Mineral Reserves” for further discussion. growth options while maintaining liquidity will allow us to During 2023, production from our mines totaled 4.2 billion pounds continue to execute our business plans in a prudent manner and of copper, 2.0 million ounces of gold and 82 million pounds of preserve substantial future asset values. molybdenum. Following is the allocation of our consolidated copper, We believe that we have a high-quality portfolio of long-lived gold and molybdenum production in 2023 by geographic location: copper assets that are positioned to generate long-term value, and we remain focused on executing our operating and investment plans. Our underground mining operations at the Grasberg minerals district in Indonesia continue to perform well, with copper and gold production increasing in each of the past three years, including achievement of multiple operating records during 2023. Furthermore, North America South America Indonesia Copper 32% 29 39 100% Gold Molybdenum 1% — 99 100% 73%a 27 — 100% a. Our North America copper mines produced 37% of consolidated molybdenum production, and our projects to expand our domestic smelting and refining capacity in Henderson and Climax molybdenum mines produced 36%. 28 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Copper production from the Morenci mine in North America, Cerro assuming average prices of $2,000 per ounce of gold and $19.00 per Verde mine in Peru and the Grasberg minerals district in Indonesia pound of molybdenum for the year 2024. Estimated consolidated together totaled 76% of our consolidated copper production in 2023. unit net cash costs for the year 2024 include assessment of export OUTLOOK duties at PT-FI of $0.11 per pound of copper (refer to “Operations— Indonesia Mining” for further discussion). Quarterly unit net cash Our financial results vary as a result of fluctuations in market prices costs vary with fluctuations in sales volumes and realized prices, primarily for copper, gold and, to a lesser extent, molybdenum, primarily for gold and molybdenum. The impact of price changes as well as other factors. World market prices for these commodities on consolidated unit net cash costs for the year 2024 would have fluctuated historically and are affected by numerous factors approximate $0.04 per pound of copper for each $100 per ounce beyond our control. Refer to “Markets,” and Item 1A. “Risk Factors” change in the average price of gold and $0.02 per pound of copper contained in Part I of our annual report on Form 10-K for the for each $2 per pound change in the average price of molybdenum. year ended December 31, 2023, for further discussion. Because we Consolidated Operating Cash Flows. Our consolidated operating cannot control the price of our products, the key measures that cash flows vary with sales volumes; prices realized from copper, management focuses on in operating our business are sales volumes, gold and molybdenum sales; production costs; income taxes; other unit net cash costs, operating cash flows and capital expenditures. working capital changes; and other factors. Our consolidated Consolidated Sales Volumes. Following are our projected operating cash flows are estimated to approximate $5.8 billion consolidated sales volumes for 2024 and actual consolidated sales (including $0.1 billion of working capital and other sources) for the volumes for 2023: Copper (millions of recoverable pounds): North America copper mines South America mining Indonesia mining Total Gold (thousands of recoverable ounces) Molybdenum (millions of recoverable pounds) 2024 (Projected) 2023 (Actual) 1,280 1,130 1,680 4,090 1,975 85a 1,361 1,200 1,525 4,086 1,713 81 a. Includes 55 million pounds from our North America and South America copper mines and 30 million pounds from our Molybdenum mines. year 2024, based on current sales volume and cost estimates, and assuming average prices of $3.75 per pound of copper, $2,000 per ounce of gold and $19.00 per pound of molybdenum for the year 2024. Estimated consolidated operating cash flows in 2024 also reflect a projected income tax provision of $2.3 billion (refer to “Consolidated Results—Income Taxes” for further discussion of our projected income tax rate). The impact of price changes on operating cash flows for the year 2024 would approximate $400 million for each $0.10 per pound change in the average price of copper, $180 million for each $100 per ounce change in the average price of gold and $120 million for each $2 per pound change in the average price of molybdenum. For the year 2024, consolidated copper production volumes are Consolidated Capital Expenditures. Capital expenditures for expected to exceed consolidated sales volumes, reflecting the the year 2024 are expected to approximate $4.6 billion (including deferral of approximately 90 million pounds of copper from PT-FI $2.3 billion for major mining projects and $1.0 billion for the concentrates that will be processed by the Manyar smelter and Indonesia smelter projects). Projected capital expenditures for sold as refined metal in future periods. the Indonesia smelter projects in 2024 exclude capitalized interest Projected sales volumes are dependent on operational and $0.3 billion of estimated commissioning and owner’s costs. performance; extension of PT-FI’s export permits for copper Projected capital expenditures for major mining projects include concentrates and anode slimes beyond May 2024; the timing of $1.1 billion for planned projects, primarily associated with the ramp-up of the Indonesia smelter projects; weather-related underground mine development in the Grasberg minerals district conditions, including ongoing El Niño weather impacts; timing of and potential expansion projects in North America, and $1.2 billion shipments and other factors. For further discussion of other for discretionary growth projects. We closely monitor market important factors that could cause results to differ materially from conditions and will continue to adjust our operating plans, including projections, refer to “Cautionary Statement” below, and Item 1A. capital expenditures, to protect our liquidity and preserve our “Risk Factors” contained in Part I of our annual report on Form 10-K asset values, as necessary. for the year ended December 31, 2023. Capital expenditures for the Indonesia smelter projects are being Consolidated Unit Net Cash Costs. Consolidated unit net cash funded with the remaining proceeds from PT-FI’s senior notes and costs (net of by-product credits) for our copper mines are expected availability under its revolving credit facility. to average $1.60 per pound of copper for the year 2024, based on achievement of current sales volume and cost estimates and 2023 Annual Report 29 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S MARKETS World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2014 through December 2023, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.87 per pound in 2022; the London Bullion Market Association (London) PM gold price fluctuated from a low of $1,049 per ounce in 2015 to a record high of $2,078 per ounce in 2023, and the Platts Metals Daily Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of $37.42 per pound in 2023. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023. LME Copper Prices Through December 31, 2023 countries and growing connectivity globally. The small number of approved, large-scale projects beyond those that have been announced, the long lead times required to permit and build new mines and declining ore grades at existing operations continue to highlight the fundamental supply challenges for copper. London Gold Prices Through December 31, 2023 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 D o l l a r s p e r o u n c e 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1,500 1,200 900 600 300 s n o t c i r t e m f o s 0 0 0 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 D o l l a r s p e r p o u n d This graph presents London PM gold prices from January 2014 through December 2023. For the year 2023, London PM gold prices averaged $1,941 per ounce (ranging from a low of $1,811 per ounce in February to a high of $2,078 per ounce in December) and closed at $2,078 per ounce on December 28, 2023. Gold prices were positively impacted at the end of 2023 by growing expectations among investors of interest rate cuts, a weaker dollar and increased geopolitical tensions. The London PM gold price was $2,053 per ounce on January 31, 2024. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 LME Copper Prices Exchange Stocks Platts Metals Daily Molybdenum Dealer Oxide Prices Through December 31, 2023 This graph presents LME copper settlement prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc. and the Shanghai Futures Exchange from January 2014 through December 2023. For the year 2023, the LME copper settlement prices averaged $3.85 per pound (ranging from a low of $3.54 per pound in October to a high of $4.28 per pound in January) and closed at $3.84 per pound on December 29, 2023. Recent prices have been correlated with sentiment on the Chinese economy and financial system drivers tied to interest rates, inflation data and movements in the United States (U.S.) dollar exchange rates. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 D o l l a r s p e r p o u n d $40 $35 $30 $25 $20 $15 $10 $5 $0 Near-term fundamentals for copper improved in late 2023 with continued strong demand in China and the U.S. and significant reductions in the supply outlook. The LME copper settlement price was $3.86 per pound on January 31, 2024. We believe long-term fundamentals for copper are favorable and that future demand will be supported by copper’s role in the global transition to renewable power, electric vehicles and other carbon-reduction initiatives, continued urbanization in developing This graph presents the Platts Metals Daily Molybdenum Dealer Oxide weekly average price from January 2014 through December 2023. For the year 2023, the weekly average price for molybdenum averaged $24.12 per pound (ranging from a low of $16.86 per pound in November to a high of $37.42 per pound in February) and was $19.77 per pound on December 29, 2023. Overall global demand is being driven by key molybdenum-consuming segments (energy, 30 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S aerospace and defense) offset by weakness in commodity steel- not materially impact our financial results in 2023; however, consuming segments (construction). Like copper, demand for future guidance released by the U.S. Department of the Treasury molybdenum is positively impacted by new technologies for clean (Treasury) could differ from our interpretations. energy. The Platts Metals Daily Molybdenum Dealer Oxide weekly In December 2021, the Organisation for Economic Co-operation average price was $19.52 per pound on January 26, 2024. and Development (OECD) published a framework for Pillar Two of CRITICAL ACCOUNTING ESTIMATES the Global Anti-Base Erosion Rules (GloBE). The GloBE rules were designed to coordinate participating jurisdictions in updating the MD&A is based on our consolidated financial statements, which international tax system to ensure that large multinational companies have been prepared in conformity with generally accepted pay a minimum level of income tax. Recommendations from the accounting principles (GAAP) in the U.S. The preparation of these OECD regarding a global minimum income tax and other changes are statements requires that we make estimates and assumptions being considered and/or implemented in jurisdictions where we that affect the reported amounts of assets, liabilities, revenues and operate. At current metals market prices, we believe enactment of expenses. We base these estimates on historical experience and the recommended framework in jurisdictions where we operate will on assumptions that we consider reasonable under the result in minimal impacts to our financial results in the near term. circumstances; however, reported results could differ from those We operate in the U.S. and multiple international tax jurisdictions, based on the current estimates under different assumptions or and our income tax returns are subject to examination by tax conditions. The areas requiring the use of management’s estimates authorities in those jurisdictions who may challenge any tax position are also discussed in Note 1 under the subheading “Use of on these returns. Uncertainty in a tax position may arise because Estimates.” Management has reviewed the following discussion tax laws are subject to interpretation. We use significant judgment of its development and selection of critical accounting estimates to (i) determine whether, based on the technical merits, a tax with the Audit Committee of our Board of Directors (Board). position is more likely than not to be sustained and (ii) measure the Taxes. Refer to Note 11, and Item 1A. “Risk Factors” contained amount of tax benefit that qualifies for recognition. in Part I of our annual report on Form 10-K for the year ended We have uncertain tax positions related to income tax assessments December 31, 2023, for further discussion of our consolidated in Peru and Indonesia, including penalties and interest, which income taxes. have not been recorded at December 31, 2023. Final taxes paid In preparing our consolidated financial statements, we estimate may be dependent upon many factors, including negotiations with the actual amount of income taxes currently payable or receivable taxing authorities. In certain jurisdictions, we pay a portion of the as well as deferred income tax assets and liabilities attributable to disputed amount before formally appealing an assessment. Such temporary differences between the financial statement carrying payment is recorded as a receivable if we believe the amount is amounts of existing assets and liabilities and their respective tax collectible. Refer to Note 12 for further discussion. bases. Deferred income tax assets and liabilities are measured A valuation allowance is provided for those deferred income using enacted tax rates expected to apply to taxable income in the tax assets for which available information, including positive years in which these temporary differences are expected to be and negative evidence, suggests that the related benefits will not recovered or settled. The effect on deferred income tax assets and be realized. In determining the amount of the valuation allowance, liabilities of a change in tax rates or laws is recognized in income in we consider future reversals of existing taxable temporary the period in which such changes are enacted. differences, future taxable income exclusive of reversing temporary Our operations are in multiple jurisdictions where uncertainties differences, carryback opportunities, as well as prudent and arise in the application of complex tax regulations. Some of these feasible tax planning strategies in each jurisdiction. If we determine tax regimes are defined by contractual agreements with the local that we will not realize all or a portion of our deferred income government, while others are defined by general tax laws and tax assets, we will increase our valuation allowance. Conversely, regulations. We and our subsidiaries are subject to reviews of our if we determine that we will ultimately be able to realize all or a income tax filings and other tax payments, and disputes can arise portion of the related benefits for which a valuation allowance has with the taxing authorities over the interpretation of our contracts been provided, all or a portion of the related valuation allowance or laws. will be reduced. Our valuation allowances totaled $3.9 billion at On January 1, 2023, the provisions of the U.S. Inflation Reduction December 31, 2023, and covered all of our U.S. foreign tax credits Act of 2022 (the Act) became applicable, and we have made and U.S. federal net operating losses (NOLs), substantially all of our interpretations of certain provisions of the Act. Based on these U.S. state and foreign NOLs, as well as a portion of our U.S. federal, interpretations, we determined that the provisions of the Act did state and foreign deferred tax assets. During 2023, our valuation allowances decreased by $91 million. 2023 Annual Report 31 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Environmental Obligations. Refer to Notes 1 and 12, and Item 1A. becomes available regarding the nature or extent of site contamination, “Risk Factors” contained in Part I of our annual report on Form updated cost assumptions (including increases and decreases 10-K for the year ended December 31, 2023, for further discussion to cost estimates), changes in the anticipated scope and timing of of environmental obligations, including a summary of changes in remediation activities, the settlement of environmental matters, our estimated environmental obligations for the three years ended required remediation methods and actions by or against December 31, 2023. governmental agencies or private parties. Our current and historical operating activities are subject to Asset Retirement Obligations. Refer to Notes 1 and 12, and Item 1A. various national, state and local environmental laws and “Risk Factors” contained in Part I of our annual report on Form 10-K regulations that govern emissions of air pollutants; discharges of for the year ended December 31, 2023, for further discussion of water pollutants; generation, handling, storage and disposal of reclamation and closure costs, including a summary of changes in our hazardous substances, hazardous wastes and other toxic materials; asset retirement obligations (AROs) for the three years ended and remediation, restoration and reclamation of environmental December 31, 2023. contamination, and compliance with these laws and regulations We record the fair value of our estimated AROs associated requires significant expenditures. Environmental expenditures are with tangible long-lived assets in the period incurred. Fair value is charged to expense or capitalized, depending upon their future measured as the present value of cash flow estimates after economic benefits. The guidance provided by U.S. GAAP requires considering inflation and a market risk premium. Our cost estimates that liabilities for contingencies be recorded when it is probable that are reflected on a third-party cost basis and comply with our legal obligations have been incurred, and the cost can be reasonably obligation to retire tangible long-lived assets in the period incurred. estimated. At December 31, 2023, environmental obligations These cost estimates may differ from financial assurance cost recorded in our consolidated balance sheet totaled $1.9 billion, which estimates for reclamation activities because of a variety of factors, reflect obligations for environmental liabilities attributed to the including obtaining updated cost estimates for reclamation Comprehensive Environmental Response, Compensation, and activities, the timing of reclamation activities, changes in scope Liability Act of 1980 or analogous state programs and for estimated and the exclusion of certain costs not considered reclamation and future costs associated with environmental matters. closure costs. At December 31, 2023, AROs recorded in our Accounting for environmental obligations represents a critical consolidated balance sheet totaled $3.0 billion. accounting estimate because (i) changes to environmental laws Generally, ARO activities are specified by regulations or in permits and regulations and/or circumstances affecting our operations issued by the relevant governing authority, and management’s could result in significant changes to our estimates, which could judgment is required to estimate the extent and timing of expenditures. have a significant impact on our results of operations, (ii) we will Accounting for AROs represents a critical accounting estimate not incur most of these costs for a number of years, requiring because (i) we will not incur most of these costs for a number of us to make estimates over a long period, (iii) calculating the years, requiring us to make estimates over a long period, discounted cash flows for certain of our environmental obligations (ii) reclamation and closure laws and regulations could change in requires management to estimate the amounts and timing the future and/or circumstances affecting our operations could of projected cash flows and make long-term assumptions about change, either of which could result in significant changes to our inflation rates and (iv) changes in estimates used in determining our current plans, (iii) our commitment to implement the Global environmental obligations could have a significant impact on our Industry Standard on Tailings Management could result in changes results of operations. to our plans and the scope of work required, (iv) the methods We perform a comprehensive annual review of our environmental used or required to plug and abandon non-producing oil and gas obligations and also review changes in facts and circumstances wellbores, remove platforms, tanks, production equipment and associated with these obligations at least quarterly. Judgments and flow lines, and restore the wellsite could change, (v) calculating the estimates are based upon currently available facts, existing fair value of our AROs requires management to estimate projected technology, presently enacted laws and regulations, remediation cash flows, make long-term assumptions about inflation rates, experience, whether we are a potentially responsible party (PRP), determine our credit-adjusted, risk-free interest rates and determine the ability of other PRPs to pay their allocated portions and market risk premiums that are appropriate for our operations take into consideration reasonably possible outcomes. Our cost and (vi) given the magnitude of our estimated reclamation, mine estimates can change substantially as additional information closure and wellsite abandonment and restoration costs, changes in any or all of these estimates could have a significant impact on our results of operations. 32 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Mineral Reserves. Refer to Note 17, and Items 1. and 2. “Business As discussed in Note 1, we depreciate our life-of-mine mining and Properties” and Item 1A. “Risk Factors” contained in Part I of and milling assets and values assigned to proven and probable our annual report on Form 10-K for the year ended December 31, mineral reserves using the unit-of-production (UOP) method 2023, for further information regarding, and risks associated with, based on our estimated recoverable proven and probable mineral our estimated recoverable proven and probable mineral reserves. reserves. Because the economic assumptions used to estimate Recoverable proven and probable mineral reserves were mineral reserves may change from period to period and additional determined from the application of relevant modifying factors to geological data is generated during the course of operations, geological data, in order to establish an operational, economically estimates of mineral reserves may change, which could have a viable mine plan, and have been prepared in accordance with significant impact on our results of operations, including changes the disclosure requirements of Subpart 1300 of U.S. Securities to prospective depreciation rates and impairments of long-lived and Exchange Commission Regulation S-K. The determination of asset carrying values. Based on projected copper sales volumes, if mineral reserves involves numerous uncertainties with respect to estimated copper reserves at our mines were 10% higher at the ultimate geology of the ore bodies, including quantities, grades December 31, 2023, we estimate that our annual depreciation, and recoveries. Estimating the quantity and grade of mineral depletion and amortization (DD&A) expense for 2024 would reserves requires us to determine the size, shape and depth of our decrease by approximately $56 million (approximately $24 million ore bodies by analyzing geological data, such as samplings of drill to net income attributable to common stock), and a 10% holes, tunnels and other underground workings. In addition to the decrease in copper reserves would increase DD&A expense by geology of our mines, assumptions are required to determine approximately $219 million (approximately $73 million to net income the economic feasibility of mining these reserves, including estimates attributable to common stock). We perform annual assessments of of future commodity prices, the mining methods we use and the our existing assets in connection with the review of mine operating related costs incurred to develop and mine our mineral reserves. and development plans. If it is determined that assigned asset Our estimates of recoverable proven and probable mineral reserves lives do not reflect the expected remaining period of benefit, any are prepared by and are the responsibility of our employees. These change could affect prospective DD&A rates. estimates are reviewed and verified regularly by independent experts As discussed below, we review and evaluate our long-lived in mining, geology and reserve determination. assets for impairment when events or changes in circumstances Our estimated recoverable proven and probable mineral indicate that the related carrying amount of such assets may reserves at December 31, 2023, were determined using metal price not be recoverable, and changes to our estimates of recoverable assumptions of $3.00 per pound of copper, $1,500 per ounce of proven and probable mineral reserves could have an impact on gold and $12.00 per pound of molybdenum. The following table our assessment of asset recoverability. summarizes changes in our estimated consolidated recoverable Recoverable Copper in Stockpiles. Refer to Note 1 for further proven and probable copper, gold and molybdenum mineral discussion of our accounting policy for recoverable copper in reserves during 2023: Consolidated reserves at December 31, 2022a Net revisionsb Production Consolidated reserves at December 31, 2023a Copper (billion pounds) 111.0 (2.7) (4.2) 104.1 Gold (million ounces) Molybdenum (billion pounds) 26.9 (0.4) (2.0) 24.5 3.53 (0.11) (0.08) 3.34 stockpiles, including adjustments to stockpile inventory volumes. We record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Mill and leach stockpiles are evaluated periodically to ensure that they are stated at the lower of weighted-average cost or net realizable value. Accounting for recoverable copper from mill and leach stockpiles represents a critical accounting estimate because (i) it is impracticable to determine copper contained in mill and leach a. Includes estimated recoverable metals contained in stockpiles. See below for additional discussion stockpiles by physical count, thus requiring management to employ of recoverable copper in stockpiles. b. Primarily reflects the impact of higher cost assumptions in North America and South America and mine redesigns and recovery changes at the Grasberg minerals district. reasonable estimation methods and (ii) recoveries from leach stockpiles can vary significantly. At December 31, 2023, estimated consolidated recoverable copper was 1.5 billion pounds in leach stockpiles (with a carrying value of $2.3 billion) and 0.3 billion pounds in mill stockpiles (with a carrying value of $0.5 billion). 2023 Annual Report 33 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Impairment of Long-Lived Mining Assets. Refer to Note 1, and timing and cost to develop and produce the mineral reserves; value Item 1A. “Risk Factors” contained in Part I of our annual report on beyond proven and probable mineral reserve estimates; and the Form 10-K for the year ended December 31, 2023, for further use of appropriate discount rates in the measurement of fair value. information regarding, and risks associated with, impairment of We believe our estimates and models used to determine fair long-lived mining assets. value are similar to what a market participant would use. As quoted We assess the carrying values of our long-lived mining assets market prices are unavailable for our individual mining operations, when events or changes in circumstances indicate that the related fair value is determined through the use of after-tax discounted carrying amounts of such assets may not be recoverable. In estimated future cash flows. evaluating our long-lived mining assets for recoverability, we use During the two-year period ended December 31, 2023, no estimates of pre-tax undiscounted future cash flows of our mines. material impairments of our long-lived mining assets were recorded. Estimates of future cash flows are derived from current business In addition to decreases in future metal price assumptions, plans, which are developed using near-term metal price forecasts other events that could result in future impairment of our long-lived reflective of the current price environment and management’s mining assets include, but are not limited to, decreases in projections for long-term average metal prices. In addition to near- estimated recoverable proven and probable mineral reserves and and long-term metal price assumptions, other key assumptions any event that might otherwise have a material adverse effect on include estimates of commodity-based and other input costs; mine site production levels or costs. proven and probable mineral reserves estimates, including the 34 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S CONSOLIDATED RESULTS Years Ended December 31, SUMMARY FINANCIAL DATA (in millions, except per share amounts) Revenuesa,b Operating incomea Net income attributable to common stockc,d Diluted net income per share attributable to common stock Diluted weighted-average common shares outstanding Operating cash flowsg Capital expenditures At December 31: Cash and cash equivalents Restricted cash and cash equivalents, current Total debt, including current portion 2023 2022 $22,855 $ 6,225 $ 1,848e $ 1.28 1,443 $ 5,279 $ 4,824 $ 4,758 $ 1,208h $ 9,422 $ 22,780 $ 7,037 $ 3,468f $ 2.39 1,451 $ 5,139 $ 3,469 $ 8,146 $ 111 $ 10,620 a. Refer to Note 16 for a summary of revenues and operating income by operating division. b. Includes favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $183 million ($62 million to net income attributable to common stock or $0.04 per share) in 2023 and $60 million ($25 million to net income attributable to common stock or $0.02 per share) in 2022 (refer to Note 14). c. We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to “Operations—Smelting and Refining” for a summary of net impacts from changes in these deferrals. d. Our economic interest in PT-FI is 48.76% and prior to January 1, 2023, it approximated 81%. e. Includes net charges totaling $373 million ($0.26 per share), primarily associated with net adjustments to environmental obligations and related litigation reserves, contested tax rulings issued by the Peruvian f. Supreme Court, impairment of oil and gas properties and an accrual for a potential administrative fine in Indonesia, partly offset by an adjustment to correct certain inputs in the historical PT-FI ARO model. Includes net charges totaling $74 million ($0.05 per share), primarily associated with net adjustments to environmental obligations and related litigation reserves and an ARO adjustment at PT-FI, partly offset by net gains on early extinguishment of debt and net adjustments to historical tax matters. g. Working capital and other uses totaled $0.9 billion in 2023 and $1.6 billion in 2022. h. Includes $1.1 billion associated with PT-FI’s export proceeds temporarily deposited in Indonesia banks in accordance with a 2023 regulation issued by the Indonesia government (refer to Note 14). Years Ended December 31, SUMMARY OPERATING DATA Copper (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound Site production and delivery costs per pounda Unit net cash costs per pounda Gold (thousands of recoverable ounces) Production Sales, excluding purchases Average realized price per ounce Molybdenum (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound 2023 2022 4,212 4,086 $ 3.85 $ 2.36 $ 1.61 1,993 1,713 $ 1,972 82 81 $ 24.64 4,210 4,213 $ 3.90 $ 2.19 $ 1.50 1,811 1,823 $ 1,787 85 75 $ 18.71 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 the per pound unit net cash costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.” 2023 Annual Report 35 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Revenues pricing. Accordingly, in times of rising copper prices, our revenues Consolidated revenues totaled $22.9 billion in 2023 and $22.8 billion benefit from adjustments to the final pricing of provisionally priced in 2022. Our revenues primarily include the sale of copper concentrate, sales pursuant to contracts entered into in prior periods; in times copper cathode, copper rod, gold in concentrate and molybdenum. of falling copper prices, the opposite occurs. Following is a summary of changes in our consolidated revenues from 2022 to 2023 (in millions): Consolidated revenues – 2022 Mining operations: (Lower) higher sales volumes: Copper Gold Molybdenum (Lower) higher averaged realized prices: Copper Gold Molybdenum Adjustments for prior year provisionally priced copper sales Higher Atlantic Copper revenues Lower revenues from sales of purchased copper Higher treatment charges Lower royalties and export duties Other, including intercompany eliminations Consolidated revenues – 2023 $ 22,780 (497) (197) 120 (204) 316 479 123 367 (65) (35) 38 (370) $ 22,855 Sales Volumes. Copper and gold sales volumes were lower in 2023, compared to 2022, primarily reflecting impacts of lower ore grades at North America copper mines and the deferral of sales recognition related to the PT Smelting tolling arrangement, partly offset by an increase in mining and milling rates and ore grades at Indonesia mining and South America mines. Refer to “Operations” for further discussion of sales volumes at our mining operations. Realized Prices. Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. In 2023, our average realized prices, compared with 2022, were 1% lower for copper, 10% higher for gold and 32% higher for molybdenum. Substantially all of our copper concentrate and some cathode Consolidated revenues include net unfavorable adjustments to current year provisionally priced copper sales (i.e., provisionally priced sales during the years 2023 and 2022) totaling $86 million for 2023 and $539 million for 2022. See below for discussion of adjustments related to prior year provisionally priced copper sales. Prior Year Provisionally Priced Copper Sales. Net favorable adjustments to prior years’ provisionally priced copper sales (i.e., provisionally priced copper sales at December 31, 2022 and 2021) recorded in consolidated revenues totaled $183 million in 2023 and $60 million in 2022. Refer to “Disclosures About Market Risks— Commodity Price Risk” for further discussion of our provisionally priced copper sales, and to Note 14 for a summary of total adjustments to prior period and current period provisionally priced copper sales. At December 31, 2023, we had provisionally priced copper sales totaling 223 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $3.87 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2023, recorded provisional price would have an approximate $22 million effect on 2024 revenues ($7 million to net income attributable to common stock). The LME copper price settled at $3.86 per pound on January 31, 2024. Atlantic Copper Revenues. Higher Atlantic Copper revenues in 2023, compared with 2022, primarily reflects higher sales volumes, mostly because of reduced operations during 2022 associated with a scheduled major maintenance turnaround. Purchased Copper. Lower revenues associated with purchased copper in 2023, compared to 2022, primarily reflects lower volumes. We purchased copper cathode primarily for processing by our Rod & Refining operations, totaling 103 million pounds in 2023 and sales contracts provide final copper pricing in a specified future 124 million pounds in 2022. month (generally one to four months from the shipment date). We record revenues and invoice 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. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final Treatment Charges. Revenues from our concentrate sales are recorded net of treatment charges (i.e., fees paid to smelters that are generally negotiated annually), which will vary with the sales volumes and the price of copper. Treatment charges in 2023 compared to 2022 reflect higher rates for Cerro Verde and PT-FI’s copper concentrates, partly offset by the elimination of treatment charges for PT-FI’s copper concentrates smelted by PT Smelting. 36 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S As discussed in Note 3, PT-FI’s commercial arrangement with Our copper mining operations require significant amounts PT Smelting changed from a copper concentrate sales agreement of energy, principally diesel, electricity, coal and natural gas, most to a tolling arrangement and, as a result, beginning in 2023, costs of which is obtained from third parties under long-term contracts. incurred under the tolling arrangement are recorded as production Our take-or-pay contractual obligations for electricity totaled costs in the consolidated statements of income. approximately $0.3 billion at December 31, 2023. We do not have Royalties and Export Duties. Royalties are primarily on PT-FI sales take-or-pay contractual obligations for other energy commodities. and vary with the volume of metal sold and the prices of copper Energy represented 19% of our copper mine site operating costs and gold. In late 2022, the export duty rate on PT-FI’s sales declined in 2023, including purchases of approximately 250 million gallons from 5% to 2.5% as a result of smelter development progress, of diesel fuel; approximately 8,650 gigawatt hours of electricity and effective March 29, 2023, export duties were eliminated upon at our North America and South America copper mining operations verification by the Indonesia government that construction progress (we generate all of our power at our Indonesia mining operation); of the Manyar smelter exceeded 50%. Subsequently, in July 2023, approximately 700 thousand metric tons of coal for our coal power the Indonesia government issued a revised regulation on duties for plant in Indonesia; and approximately 2 million MMBtu (million various exported products, including copper concentrates, and British thermal units) of natural gas at certain of our North America under the revised regulation, PT-FI was assessed export duties for mines. Based on current cost estimates, energy will approximate copper concentrates at 7.5% during the second half of 2023. 20% of our copper mine site operating costs for 2024. Refer to “Operations—Indonesia Mining” for further discussion of the current progress of additional smelting and refining capacity in Indonesia and to Note 13 for discussion of PT-FI’s royalties and export duties. Production and Delivery Costs Depreciation, Depletion and Amortization Depreciation will vary under the UOP method as a result of changes in sales volumes and the related UOP rates at our mining operations. Consolidated DD&A totaled $2.1 billion in 2023 and $2.0 billion in 2022. Our consolidated DD&A is estimated to Consolidated production and delivery costs totaled $13.6 billion in approximate $2.4 billion for the year 2024, based on current sales 2023, compared with $13.1 billion in 2022. Higher consolidated volume estimates. production and delivery costs in 2023 primarily reflected increased consolidated operating rates, higher commodity-related costs across our operations and increased costs of labor (including contract labor), particularly in North America. Partly offsetting these higher costs was an adjustment of $112 million recorded in 2023 to correct certain inputs in the historical PT-FI ARO model. Additionally, in 2022, PT-FI recorded charges of $116 million for ARO adjustments (refer to Note 12). Refer to Note 16 for details of production and delivery costs by operating segment. Mining Unit Site Production and Delivery Costs Per Pound. Site production and delivery costs for our copper mining operations Environmental Obligations and Shutdown Costs Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates (refer to “Critical Accounting Estimates— Environmental Obligations” for further discussion). Shutdown costs include care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities primarily include labor, energy and commodity-based inputs, such or operations. as sulfuric acid, reagents, liners, tires and explosives. Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines averaged $2.36 per pound of copper in 2023 and $2.19 per pound in 2022. Refer to “Operations— Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements. Net charges for environmental obligations and shutdown costs totaled $319 million in 2023, including $195 million in net adjustments to environmental obligations and $65 million associated with an adjustment to the proposed settlement of talc-related litigation. Net charges for the year 2022 totaled $121 million, including $43 million in net adjustments to environmental obligations and $44 million for a proposed settlement related to historical environmental litigation. Refer to Note 12 for further discussion of environmental obligations and litigation matters. 2023 Annual Report 37 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Net Gain on Early Extinguishment of Debt to the Indonesia smelter projects. Refer to “Operations” and Net gain on early extinguishment of debt totaled $10 million in “Capital Resources and Liquidity—Investing Activities” for further 2023 and $31 million in 2022, primarily associated with senior note discussion of current development projects. purchases. The year 2022 also includes a charge of $10 million associated with the repayment of the PT-FI term loan. Refer to Note 8 for further discussion. Interest Expense, Net Other Income (Expense), Net Other income (expense), net, of $286 million in 2023 was higher than $207 million in 2022, primarily reflecting higher interest income. Additionally, other income (expense), net included Consolidated interest costs (before capitalization) totaled $782 million penalties totaling $69 million in 2023 associated with Cerro Verde’s in 2023 and $710 million in 2022. Higher interest costs (before capitalization) in 2023, compared to 2022, reflect higher interest costs at PT-FI, partly offset by the impact of lower average outstanding debt because of the repayment of our 3.875% Senior Notes in March 2023 and open-market purchases of certain of our senior notes. Refer to Note 8 for further discussion of our debt. Additionally, interest expense for 2023 includes charges totaling $74 million for Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court. Capitalized interest totaled $267 million in 2023 and $150 million in 2022. The increase in capitalized interest in 2023, compared with 2022, is primarily associated with development activities related contested tax rulings issued by the Peruvian Supreme Court, and credits totaling $76 million in 2022 associated with adjustments to penalties on historical contested tax matters in Indonesia. Income Taxes Refer to Note 11, and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, for further discussion of income taxes. Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision for the years ended December 31 (in millions, except percentages): U.S.b South America Indonesia PT-FI historical contested tax disputes Eliminations and other Consolidated FCX Income (Loss)a $ 55 1,161d 4,825 — (35) $ 6,006 2023 Effective Tax Rate —%c 44% 37% N/A N/A 38% Income Tax (Provision) Benefit $ 1 (512) (1,774) — 15 $(2,270) 2022 Effective Tax Rate —%c 37% 39% N/A N/A 34% Income Tax (Provision) Benefit $ 4 (453) (1,797) (23) 2 $(2,267) Income (Loss)a $ 811 1,236 4,629 72 (33) $6,715 a. Represents income before income taxes, equity in affiliated companies’ net earnings and noncontrolling interests. b. In addition to our 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 NOLs. Refer to Note 11 for further discussion of the provisions of the Act, which became applicable to us on January 1, 2023. d. Includes net charges associated with interest and penalties on Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court totaling $142 million ($73 million net of noncontrolling interests). 38 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Assuming achievement of current sales volume and cost estimates assurance framework developed specifically for the copper and average prices of $3.75 per pound for copper, $2,000 per ounce industry, and recently extended to other metals including for gold and $19.00 per pound for molybdenum for 2024, we molybdenum. To achieve the Copper Mark, each site is required to estimate our consolidated effective tax rate for the year 2024 would complete an independent external assurance process to assess approximate 40%. The estimated consolidated effective tax rate is conformance with 33 ESG criteria. Awarded sites must be expected to decrease with higher copper prices. Changes in revalidated every three years. We have achieved the Copper Mark projected sales volumes and average prices during 2024 would incur and/or Molybdenum Mark, as applicable, at all of our sites globally. tax impacts at estimated effective rates of 39% for Peru, 36% for ICMM. We are a founding member of the International Council Indonesia and 0% for the U.S., which excludes any impact from the on Mining & Metals (ICMM), an organization dedicated to a Act. Our projected estimated effective tax rate of 0% for the U.S. safe, fair and sustainable mining and metals industry, aiming for the year 2024 may be adjusted as additional guidance is released continuously to strengthen ESG performance across the global by the Treasury on key provisions of the Act. mining and metals industry. As a member company, we are Net Income Attributable to Noncontrolling Interests Refer to Note 16 for net income attributable to noncontrolling interests for each of our business segments. Net income attributable to noncontrolling interests, which is primarily associated with PT-FI, Cerro Verde and El Abra, totaled $1.9 billion in 2023 and $1.0 billion in 2022 (which represented 32% and 15%, respectively, of our consolidated net income before income taxes). The increase in net income attributable to noncontrolling interests reflects the change in our economic required to implement the 10 Mining Principles that define good ESG practices, and associated position statements, while also meeting 39 performance expectations and producing an externally verified sustainability report utilizing the Global Reporting Initiative Sustainability Reporting Standards subject to the ICMM Assurance & Validation Procedure. 2022 Annual Report on Sustainability. In April 2023, we published our 2022 Annual Report on Sustainability marking our 22nd year of reporting on our sustainability progress. We are committed to building upon our achievements in sustainability and our position interest in PT-FI, which is 48.76%, compared to approximately 81% as a leading responsible copper producer. prior to January 1, 2023. Net income in 2023 also included a $35 million net benefit associated with PT-FI sales volumes that were attributed to us at our previous approximate 81% economic ownership interest (refer to Note 3). Based on achievement of current sales volume and cost estimates and assuming average prices of $3.75 per pound of copper, $2,000 per ounce of gold and $19.00 per pound of molybdenum, net income attributable to noncontrolling interests 2022 Climate Report. In September 2023, we published our annual climate report detailing our ongoing progress to advance our climate strategy focused on reducing our greenhouse gas (GHG) emissions, enhancing our resilience to climate risks and contributing responsibly produced copper to the global economy. We have four 2030 GHG emissions reduction targets that collectively cover nearly 100% of our Scope 1 and 2 GHG emissions. is estimated to approximate $2.1 billion for the year 2024 (which Leaching Innovation Initiatives represents 36% of our estimated consolidated net income before We are advancing a series of initiatives across our North America income taxes). The actual amount of net income attributable to and South America operations to incorporate new applications, noncontrolling interests will depend on many factors, including technologies and data analytics to our leaching processes. These relative performance of each business segment, commodity leach innovation initiatives are providing opportunities to prices, costs and other factors. Refer to Note 3 for ownership in produce incremental copper from our large existing leach stockpiles. our subsidiaries. OPERATIONS Responsible Production Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, for discussion of environmental (including climate), social and governance (ESG) related risks. The Copper Mark. We demonstrate our responsible production performance through the Copper Mark, a comprehensive Initial results are providing incremental low-cost additions to our expected annual production and the potential to add to our reserve profile. Incremental copper production from these initiatives totaled 144 million pounds for the year 2023, and in fourth-quarter 2023 we achieved our initial run rate target of approximately 200 million pounds of copper per year. We are pursuing opportunities to apply recent operational enhancements at a larger scale and are testing new technology applications that we believe have the potential for significant increases in recoverable metal beyond the initial annual run rate target. 2023 Annual Report 39 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Feasibility and Optimization Studies The decision to proceed and timing of the potential expansion We are engaged in various studies associated with potential future will take into account overall copper market conditions, availability expansion projects primarily at our mining operations. The costs for these studies are charged to production and delivery costs as incurred and totaled $185 million for 2023 and $139 million for 2022. We estimate the costs of these studies will approximate $200 million for the year 2024. North America Copper Mines of labor and other factors, including progress on conversion of the existing haul truck fleet to autonomous and expanding housing alternatives to support long-range plans. In parallel, we are advancing activities for expanded tailings infrastructure projects required under long-range plans in order to advance the potential construction timeline. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended We operate seven open-pit copper mines in North America— December 31, 2023, for further discussion. Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami We continue to advance plans at Safford/Lone Star to increase in Arizona, and Chino and Tyrone in New Mexico. All of the North volumes to achieve 300 million pounds of copper per year from America mining operations are wholly owned, except for Morenci. oxide ores, which reflects expansion of the initial design capacity We record our 72% undivided joint venture interest in Morenci of 200 million pounds of copper per year. Positive drilling using the proportionate consolidation method. conducted in recent years indicates opportunities to expand The North America copper mines include open-pit mining, production to include sulfide ores in the future. We are completing sulfide-ore concentrating, leaching and solution extraction/ metallurgical testing and mine development planning and expect electrowinning (SX/EW) operations. A majority of the copper to commence pre-feasibility studies during 2024 for a potential produced at our North America copper mines is cast into copper significant expansion. rod by our Rod & Refining segment. The remainder of our North Operating Data. Following is summary operating data for the America copper production is sold as copper cathode or copper North America copper mines for the years ended December 31: concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate, gold and silver are also produced by certain of our North America copper mines. Development Activities. We have substantial reserves and future opportunities in the U.S., primarily associated with existing mining operations. Operating Data, Net of Joint Venture Interests Copper (millions of recoverable pounds) Production Sales, excluding purchases Average realized price per pound We have a potential expansion project to more than double the concentrator capacity of the Bagdad operation in northwest Molybdenum (millions of recoverable pounds) Productiona Arizona. Bagdad’s reserve life currently exceeds 80 years and supports an expanded operation. In late 2023, we completed 100% Operating Data Leach operations 2023 2022 1,350 1,361 3.93 1,467 1,469 4.08 $ $ 30 29 technical and economic studies, which indicated the opportunity to construct new concentrating facilities to expand capacity from 77,000 metric tons of ore per day to between 165,000 to 185,000 metric tons of ore per day. Estimated incremental project capital costs approximate $3.5 billion (excluding infrastructure that would be required in the long-range plans) and is expected to increase production by approximately 200-250 million pounds of copper per year, which would more than double Bagdad’s current production. Expanded operations also are expected to provide improved efficiency and reduce unit net cash costs through economies of scale. Project economics indicate that the expansion would require an incentive copper price in the range of $3.50 to $4.00 per pound and would require approximately three to four years to complete. Leach ore placed in stockpiles (metric tons per day) Average copper ore grade (%) Copper production (millions of recoverable pounds) 692,000 0.23 941 676,400 0.29 1,019 Mill operations Ore milled (metric tons per day) Average ore grade (%): Copper Molybdenum Copper recovery rate (%) Copper production (millions of recoverable pounds) 308,500 294,200 0.32 0.02 81.8 633 0.37 0.02 81.8 695 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines. Our consolidated copper production and sales volumes from the North America copper mines in 2023 were below 2022 volumes, primarily reflecting lower ore grades associated with the Morenci and Safford mines, partly offset by leach recovery initiatives and higher mining and milling rates. We are pursuing a number of initiatives to enhance productivity and improve equipment reliability to offset declines in ore grades. We are also reviewing 40 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S cost performance and evaluating the costs and benefits of adjusting isolation or as a substitute for measures of performance mining and milling rates at Morenci. determined in accordance with U.S. GAAP. This measure is North America copper sales are estimated to approximate 1.3 billion presented by other metals mining companies, although our pounds in 2024. Refer to “Outlook” for projected molybdenum measure may not be comparable to similarly titled measures sales volumes. reported by other companies. Unit Net Cash Costs. We believe unit net cash costs per pound of Gross Profit per Pound of Copper and Molybdenum. The following copper is a measure that provides investors with information about table summarizes unit net cash costs and gross profit per the cash-generating capacity of our mining operations expressed pound at our North America copper mines for the two years ended on a basis relating to the primary metal product for our respective December 31, 2023. Refer to “Product Revenues and Production operations. We use this measure for the same purpose and for Costs” for an explanation of the “by-product” and “co-product” monitoring operating performance by our mining operations. This methods and a reconciliation of unit net cash costs per pound to information differs from measures of performance determined production and delivery costs applicable to sales reported in our in accordance with U.S. GAAP and should not be considered in consolidated financial statements. Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Unit net cash costs DD&A Noncash and other costs, net Total unit costs Revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Copper sales (millions of recoverable pounds) Molybdenum sales (millions of recoverable pounds)a By-Product Method $ 3.93 3.00 (0.49) 0.12 2.63 0.30 0.18b 3.11 0.01 $ 0.83 1,367 2023 Co-Product Method Copper $ 3.93 2.65 — 0.12 2.77 0.27 0.16 3.20 0.01 $ 0.74 1,367 Molybdenuma $ 23.38 17.63 — — 17.63 1.30 0.77 19.70 — $ 3.68 30 By-Product Method $ 4.08 2.58 (0.33) 0.10 2.35 0.28 0.13b 2.76 (0.01) $ 1.31 1,472 2022 Co-Product Method Copper $ 4.08 2.36 — 0.10 2.46 0.26 0.11 2.83 (0.01) $ 1.24 1,472 Molybdenuma $ 17.87 13.35 — — 13.35 0.90 0.52 14.77 — $ 3.10 29 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes charges totaling $0.08 per pound of copper in 2023 and $0.06 per pound of copper in 2022 for feasibility and optimization studies. Our North America copper mines have varying cost structures Average unit net cash costs (net of by-product credits) for because of differences in ore grades and characteristics, the North America copper mines are expected to approximate processing costs, by-product credits and other factors. Average $2.89 per pound of copper for the year 2024, based on achievement unit net cash costs (net of by-product credits) for the North of current sales volume and cost estimates and assuming an America copper mines of $2.63 per pound of copper in 2023 were average price of $19.00 per pound of molybdenum. North America’s higher than average unit net cash costs of $2.35 per pound of average unit net cash costs for the year 2024 would change by copper in 2022, primarily reflecting lower volumes and increased approximately $0.04 per pound for each $2 per pound change in costs of labor (including contract labor) and maintenance and the average price of molybdenum. supplies, partly offset by higher molybdenum by-product credits and lower energy costs. South America Mining Because certain assets are depreciated on a straight-line basis, North America’s average unit depreciation rate may vary with asset additions and the level of copper production and sales. We operate two copper mines in South America—Cerro Verde in Peru (in which we own a 53.56% interest) and El Abra in Chile (in which we own a 51% interest), which are consolidated in our Revenue adjustments primarily result from changes in prices on financial statements. provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results—Revenues” for further discussion of adjustments to prior period provisionally priced copper sales. South America mining includes open-pit mining, sulfide-ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or cathode 2023 Annual Report 41 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S under long-term contracts. Our South America mines also sell Unit Net Cash Costs. We believe unit net cash costs per pound a portion of their copper concentrate production to Atlantic of copper is a measure that provides investors with information Copper. In addition to copper, the Cerro Verde mine produces about the cash-generating capacity of our mining operations molybdenum concentrate and silver. expressed on a basis relating to the primary metal product for Development Activities. At the El Abra operations in Chile, we our respective operations. We use this measure for the same have identified a large sulfide resource that would support a purpose and for monitoring operating performance by our mining potential major mill project similar to the large-scale concentrator operations. This information differs from measures of at Cerro Verde. Technical and economic studies continue to be performance determined in accordance with U.S. GAAP and evaluated to determine the optimal scope and timing for the sulfide should not be considered in isolation or as a substitute for project. Capital cost requirements are being updated to reflect measures of performance determined in accordance with U.S. current market conditions. We are evaluating water infrastructure GAAP. This measure is presented by other metals mining alternatives to provide options to extend existing operations and companies, although our measure may not be comparable to support a future expansion, while continuing to monitor Chile’s similarly titled measures reported by other companies. regulatory and fiscal matters, as well as trends in capital costs for Gross Profit per Pound of Copper. The following table summarizes similar projects. In parallel, as part of the permitting process for unit net cash costs and gross profit per pound of copper at our the potential expansion, we are planning for a potential submission South America mining operations for the two years ended of an environmental impact statement during 2025, subject December 31, 2023. Unit net cash costs per pound of copper are to ongoing stakeholder engagement and economic evaluations. reflected under the by-product and co-product methods as the Operating Data. Following is summary operating data for our South America mining operations also had sales of molybdenum South America mining operations for the years ended December 31. and silver. Refer to “Product Revenues and Production Costs” Copper (millions of recoverable pounds) Production Sales Average realized price per pound Molybdenum (millions of recoverable pounds) Productiona Leach operations 2023 2022 1,202 1,200 3.82 1,176 1,162 3.80 $ $ 22 23 Leach ore placed in stockpiles (metric tons per day) Average copper ore grade (%) Copper production (millions of recoverable pounds) 191,200 0.35 317 163,000 0.35 302 Mill operations Ore milled (metric tons per day) Average ore grade (%): Copper Molybdenum Copper recovery rate (%) Copper production (millions of recoverable pounds) 417,400 409,200 0.34 0.01 81.3 885 0.32 0.01 85.3 874 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde. Our consolidated copper production and sales volumes from South America mining for the year 2023 were higher than the year 2022, primarily reflecting an increase in mining and milling rates and ore grades, partly offset by lower recovery rates. Projected copper sales volumes of 1.1 billion in 2024 from South America mining reflect expected lower ore grades at Cerro Verde, but assume no significant impacts to water availability, which is being monitored closely in light of ongoing El Niño weather patterns. Refer to “Outlook” for projected molybdenum sales volumes. for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. 2023 2022 By-Product Co-Product By-Product Co-Product Method Method Method Method $ 3.82 $ 3.82 $ 3.80 $ 3.80 2.57 (0.39) 0.19 0.01 2.38 0.38 0.08a 2.84 2.34 — 0.19 0.01 2.54 0.35 0.07 2.96 2.52 (0.34) 0.15 0.01 2.34 0.35 0.08a 2.77 2.33 — 0.14 0.01 2.48 0.32 0.08 2.88 0.06 $ 1.04 0.06 $ 0.92 0.03 $ 1.06 0.03 $ 0.95 1,200 1,200 1,162 1,162 Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Copper sales (millions of recoverable pounds) a. Includes $0.04 per pound of copper in 2023 and $0.02 per pound of copper in 2022 for feasibility and optimization studies. 42 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Our South America mines have varying cost structures because PT-FI and the Indonesia government are completing administrative of differences in ore grades and characteristics, processing processes to update quotas for estimated concentrate and anode costs, by-product credits and other factors. Average unit net cash slimes exports through May 2024. costs (net of by-product credits) for South America mining of PT-FI is working with the Indonesia government to obtain $2.38 per pound of copper in 2023 were higher than average unit approvals to continue exports of copper concentrates and anode net cash costs of $2.34 per pound in 2022, primarily reflecting slimes subsequent to May 2024 until the Indonesia smelter projects increased costs of maintenance and supplies and higher treatment are fully commissioned and reach designed operating conditions. charges, partly offset by higher volumes and molybdenum Refer to Notes 12 and 13 for further discussion of Indonesia by-product credits. regulatory matters and export duties being assessed at PT-FI Revenues from Cerro Verde’s concentrate sales are recorded net under revised regulations. of treatment charges, which will vary with Cerro Verde’s sales Mining Rights. Given the long-term nature of planning for mining volumes and the price of copper. Higher treatment charges in 2023, investments, the Indonesia government is updating regulations that compared to 2022, reflected higher smelting and refining rates. would enable PT-FI to apply for an extension of its special mining Because certain assets are depreciated on a straight-line basis, license (IUPK) beyond 2041. An extension would enable continuity South America’s unit depreciation rate may vary with asset of large-scale operations for the benefit of all stakeholders and additions and the level of copper production and sales. provide growth options through additional resource development Revenue adjustments primarily result from changes in prices on opportunities in the highly attractive Grasberg minerals district. provisionally priced copper sales recognized in prior periods. Operating and Development Activities. Over a multi-year Refer to “Consolidated Results—Revenues” for further discussion investment period, PT-FI has successfully commissioned three of adjustments to prior period provisionally priced copper sales. large-scale underground mines in the Grasberg minerals district Average unit net cash costs (net of by-product credits) for South (Grasberg Block Cave, Deep Mill Level Zone (DMLZ) and Big America mining are expected to approximate $2.37 per pound Gossan), which provided production volumes of 1.7 billion pounds of copper for the year 2024, based on achievement of current sales of copper and 2.0 million ounces of gold for the year 2023. volume and cost estimates and assuming an average price of Milling rates for ore from these underground mines averaged $19.00 per pound of molybdenum. 198,300 metric tons of ore per day in 2023, an approximate 3% Indonesia Mining PT-FI operates one of the world’s largest copper and gold mines at increase from 192,600 metric tons of ore per day in 2022. During 2023, PT-FI set a number of annual operating records, including total underground ore mined (and milled) and volume of the Grasberg minerals district in Central Papua, Indonesia. PT-FI concentrate produced. produces copper concentrate that contains significant quantities of gold and silver. We have a 48.76% ownership interest in PT-FI and manage its mining operations. PT-FI’s results are consolidated in our financial statements. Prior to January 1, 2023, our ownership interest in PT-FI approximated 81%. Other than copper concentrate delivered to PT Smelting for further processing into refined products, most of PT-FI’s copper concentrate is sold under long-term contracts. Regulatory Matters. Over the past several years, the Indonesia government has enacted various laws and regulations to promote downstream processing of various products, including copper concentrates. In 2018, PT-FI agreed to expand its domestic smelting and refining capacity and has made substantial progress towards completion. At year-end 2023, progress of these projects was measured at over 90% (refer to “Indonesia Smelting and Refining” below). In July 2023, PT-FI was granted an export license for copper concentrate, and in December 2023, PT-FI was granted an export license for anode slimes, each for the export of specified quantities of concentrate and anode slimes and valid through May 2024. In December 2023, PT-FI completed the installation of new milling facilities, which will enable PT-FI to further leverage the success of the underground mines and provide sustained large- scale production volumes. 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 second half of 2024 to provide incremental production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year. PT-FI is advancing plans to transition its existing energy source from coal to liquefied natural gas, which is expected to meaningfully reduce PT-FI’s Scope 1 GHG emissions at the Grasberg minerals district. The project includes investments in a new gas-fired combined cycle facility. Capital expenditures for the new facilities, to be incurred over the next four years, approximate $1 billion, which represents an incremental cost of $0.4 billion compared to previously planned investments to refurbish the existing coal units. 2023 Annual Report 43 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Kucing Liar. Long-term mine development activities are ongoing Capital expenditures for the Indonesia smelter projects totaled for PT-FI’s Kucing Liar deposit in the Grasberg minerals district, $1.7 billion for the year 2023 and are expected to approximate which is expected to produce over 7 billion pounds of copper $1.0 billion for the year 2024. Projected capital expenditures for the and 6 million ounces of gold between 2029 and the end of 2041. Indonesia smelter projects in 2024 exclude capitalized interest An extension of PT-FI’s operating rights beyond 2041 would and $0.3 billion of estimated commissioning and owner’s costs. extend the life of the project. Pre-production development activities Capital expenditures for the Indonesia smelter projects are being commenced in 2022 and are expected to continue over an funded with the remaining proceeds from PT-FI’s senior notes approximate 10-year timeframe. Capital investments are estimated and availability under its revolving credit facility. Start-up costs for to average approximately $400 million per year over this period. the Indonesia smelter projects are expected to total $0.2 billion At full operating rates of approximately 90,000 metric tons of ore in 2024. per day, annual production from Kucing Liar is expected to Operating Data. Following is summary operating data for our approximate 560 million pounds of copper and 520 thousand Indonesia mining operations for the years ended December 31. 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 Smelting and Refining. In connection with PT-FI’s 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI agreed to expand its domestic smelting and refining capacity. At the end of 2023, progress of the Indonesia smelter projects exceeded 90%. PT-FI is actively engaged in the following projects for additional domestic smelting and refining capacity: • In December 2023, PT Smelting commissioned the expansion of its capacity by 30% to 1.3 million metric tons of copper concentrate per year. The project was successfully completed on time and within budget. The project was funded by PT-FI with borrowings totaling approximately $250 million that will convert to equity in 2024, increasing PT-FI’s ownership in PT Smelting to approximately 65% from 39.5%. • Construction progress of the Manyar smelter in Gresik, Indonesia (with a capacity to process approximately 1.7 million metric tons of copper concentrate per year) is advancing on schedule with a target of May 2024 for mechanical completion, followed by a ramp-up period through December 2024. Construction of the smelter has 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 desalination plant. • The PMR is being constructed to process gold and silver from the Manyar smelter and PT Smelting. Construction is in progress with commissioning expected during 2024. Current cost estimates for the PMR total $665 million. Operating Data Copper (millions of recoverable pounds) Production Sales Average realized price per pound Gold (thousands of recoverable ounces) Production Sales Average realized price per ounce 100% Operating Data Ore extracted and milled (metric tons per day): Grasberg Block Cave underground mine DMLZ underground mine Big Gossan underground mine Other adjustments Total Average ore grade: Copper (%) Gold (grams per metric ton) Recovery rates (%): Copper Gold 2023 2022 1,660 1,525 3.81 $ 1,978 1,697 $ 1,972 117,300 75,900 7,900 (2,800) 198,300 1.22 1.12 89.7 77.9 1,567 1,582 $ 3.80 1,798 1,811 $ 1,787 103,300 76,300 7,600 5,400 192,600 1.19 1.05 90.0 77.7 Lower consolidated sales of 1.5 billion pounds of copper and 1.7 million ounces of gold in 2023, compared with 1.6 billion pounds of copper and 1.8 million ounces of gold in 2022, primarily reflect the deferral of sales recognition related to the PT Smelting tolling arrangement. Lower gold sales volumes in 2023, compared to 2022, also reflect the timing of shipments of anode slimes associated with a change in administrative requirements for products that were previously being exported by PT Smelting. 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. For the year 2024, consolidated copper production volumes from PT-FI are expected to exceed its consolidated sales volumes, reflecting the deferral of approximately 90 million pounds of copper that will be processed by the Manyar smelter and sold as refined metal in future periods. 44 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Unit Net Cash Costs. We believe unit net cash costs per pound of Gross Profit per Pound of Copper and per Ounce of Gold. The copper is a measure that provides investors with information about following table summarizes the unit net cash costs and gross the cash-generating capacity of our mining operations expressed profit per pound of copper and per ounce of gold at our Indonesia on a basis relating to the primary metal product for our respective mining operations for the two years ended December 31, 2023. operations. We use this measure for the same purpose and for Refer to “Product Revenues and Production Costs” for an monitoring operating performance by our mining operations. This explanation of “by-product” and “co-product” methods and a information differs from measures of performance determined reconciliation of unit net cash costs per pound to production and in accordance with U.S. GAAP and should not be considered in delivery costs applicable to sales reported in our consolidated isolation or as a substitute for measures of performance determined financial statements. in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below Gold, silver and other by-product credits Treatment charges Export duties Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Gross profit per pound/ounce Copper sales (millions of recoverable pounds) Gold sales (thousands of recoverable ounces) By-Product Method $ 3.81 1.62 (2.30) 0.35 0.21 0.22 0.10 0.68 0.01a,b 0.79 0.08 0.07 $ 3.17 1,525 2023 Co-Product Method Gold Copper $ 3.81 $ 1,972 1.01 — 0.22 0.13 0.14 1.50 0.42 0.01 1.93 0.07 0.05 $ 2.00 1,525 522 — 114 69 71 776 218 5 999 9 24 $ 1,006 1,697 By-Product Method $ 3.80 1.58 (2.13) 0.22 0.19 0.23 0.09 0.65 0.11b 0.85 0.02 0.01 $ 2.98 1,582 2022 Co-Product Method Copper $ 3.80 1.01 — 0.14 0.12 0.15 1.42 0.42 0.07 1.91 0.01 0.01 $ 1.91 1,582 Gold $ 1,787 477 — 65 58 69 669 195 35 899 2 3 $ 893 1,811 a. b. Includes charges totaling $0.02 per pound of copper for feasibility and optimization studies. Includes (credits) charges associated with ARO adjustments totaling $(0.07) per pound of copper in 2023 and $0.07 per pound of copper in 2022. A significant portion of PT-FI’s costs are fixed and unit costs vary PT-FI’s export duties totaled $324 million in 2023 and $307 million depending on volumes and other factors. PT-FI’s unit net cash in 2022. Refer to Note 13 for further discussion of PT-FI’s costs (net of gold, silver and other by-product credits) of $0.10 per export duties under its IUPK and amounts being assessed under pound of copper in 2023 were higher than the unit net cash costs a revised regulation. of $0.09 per pound of copper in 2022, primarily reflecting higher PT-FI’s royalties vary with the volume of metal sold and the treatment charges, partly offset by higher gold, silver and other prices of copper and gold. PT-FI’s royalties totaled $338 million in by-product credits. 2023 and $357 million in 2022. Treatment charges vary with the volume of metals sold and the Because certain assets are depreciated on a straight-line basis, price of copper. The increase in treatment charges per pound PT-FI’s unit depreciation rate may vary with asset additions and of copper and ounce of gold in 2023, compared with 2022, reflects the level of copper production and sales. higher costs associated with the new tolling arrangement with Revenue adjustments primarily result from changes in prices on PT Smelting compared to the previous copper concentrate sales provisionally priced copper sales recognized in prior periods. agreement. Tolling costs paid to PT Smelting are recorded as Refer to “Consolidated Results—Revenues” for further discussion production costs in the consolidated statements of income of adjustments to prior period provisionally priced copper sales. but are reflected as treatment costs above in our unit net cash costs presentation. 2023 Annual Report 45 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S PT Smelting intercompany profit represents the change in Unit Net Cash Costs Per Pound of Molybdenum. We believe unit net the deferral of 39.5% of PT-FI’s profit on sales to PT Smelting. cash costs per pound of molybdenum is a measure that provides As discussed in Note 3, beginning in 2023, PT-FI’s commercial investors with information about the cash-generating capacity of arrangement with PT Smelting changed from a copper concentrate our mining operations expressed on a basis relating to the primary sales agreement to a tolling arrangement and there will be no metal product for our respective operations. We use this measure further sales from PT-FI to PT Smelting. for the same purpose and for monitoring operating performance by Average unit net cash costs (net of gold, silver and other our mining operations. This information differs from measures of by-product credits) for PT-FI are expected to approximate $0.09 performance determined in accordance with U.S. GAAP and should per pound of copper for the year 2024, based on achievement of not be considered in isolation or as a substitute for measures of current sales volumes and cost estimates and assuming an performance determined in accordance with U.S. GAAP. This average price of $2,000 per ounce of gold. PT-FI’s estimated unit measure is presented by other metals mining companies, although net cash costs for the year 2024 include assessment of export our measure may not be comparable to similarly titled measures duties of $0.27 per pound of copper (see Note 13 for discussion of reported by other companies. export duties being assessed under a revised regulation). PT-FI’s Average unit net cash costs for our Molybdenum mines of average unit net cash costs for the year 2024 would change by $15.13 per pound of molybdenum in 2023 were higher than approximately $0.10 per pound of copper for each $100 per ounce $11.43 per pound of molybdenum in 2022, primarily reflecting lower change in the average price of gold. volumes and higher contract labor costs. PT-FI’s projected sales volumes and unit net cash costs for the Average unit net cash costs for the Molybdenum mines are year 2024 are dependent on operational performance; extension of expected to approximate $14.29 per pound of molybdenum for the PT-FI’s export permits for copper concentrates and anode slimes year 2024, based on achievement of current sales volumes and beyond May 2024; weather-related conditions; and other factors. cost estimates. Refer to “Product Revenues and Production Costs” Refer to “Cautionary Statement” below, and Item 1A. “Risk Factors” for a reconciliation of unit net cash costs per pound to production contained in Part I of our annual report on Form 10-K for the year and delivery costs applicable to sales reported in our consolidated ended December 31, 2023, for further discussion of factors that could financial statements. cause results to differ materially from projections. Smelting and Refining Molybdenum Mines Through our downstream integration, we are able to assure placement We operate two wholly owned molybdenum mines in Colorado— of a significant portion of our copper concentrate production. We the Climax open-pit mine and the Henderson underground wholly own and operate the Miami smelter in Arizona, Atlantic Copper mine. The Climax and Henderson mines produce high-purity, (a smelter and refinery in Spain), and the El Paso refinery in Texas. chemical-grade molybdenum concentrate, which is typically PT-FI also has a 39.5% ownership interest in PT Smelting (refer to further processed into value-added molybdenum chemical Note 3). products. The majority of the molybdenum concentrate produced In 2024, we expect to complete the Indonesia smelter projects, at the Climax and Henderson mines, as well as from our North which will smelt and refine copper concentrate from PT-FI as well as America and South America copper mines, is processed at our process anode slimes. As a result, PT-FI’s operations will be fully conversion facilities integrated, and treatment charges reflecting the cost of smelting Operating Activities. Production from the Molybdenum mines and refining operations will be recorded in production and delivery totaled 30 million pounds of molybdenum in 2023 and 33 million costs (refer to “Indonesia Mining—Indonesia Smelting and pounds in 2022. Refer to “Consolidated Results” for our consolidated Refining” above). In addition, our North America copper mines are molybdenum operating data, which includes sales of molybdenum largely integrated with our Miami smelter and El Paso refinery. produced at our Molybdenum mines and from our North America Atlantic Copper’s treatment charges, which consist of a base and South America copper mines. Refer to “Outlook” for projected rate per pound of copper and per ounce of gold, are generally fixed consolidated molybdenum sales volumes. and represent a cost to our mining operations and income to Atlantic Copper (i.e., higher treatment charges benefit our Atlantic Copper operations). 46 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Refer to Items 1. and 2. “Business and Properties” contained in senior notes and availability under its revolving credit facility). Part I of our annual report on Form 10-K for the year ended Projected capital expenditures for the Indonesia smelter projects in December 31, 2023, for further information regarding our smelting 2024 exclude capitalized interest and $0.3 billion of estimated and refining facilities. commissioning and owner’s costs. We defer recognizing profits on sales from our mining operations Planned capital expenditures for major mining projects over to Atlantic Copper (and on 39.5% of PT-FI’s sales to PT Smelting the next few years are primarily associated with underground mine for 2022) until final sales to third parties occur. Changes in these development in the Grasberg minerals district and potential deferrals attributable to variability in intercompany volumes expansion projects in North America. resulted in net additions to operating income totaling $64 million We have cash on hand and the financial flexibility to fund ($37 million to net income attributable to common stock) in 2023 capital expenditures and our other cash requirements for the next and $52 million ($33 million to net income attributable to common twelve months, including noncontrolling interest distributions, stock) in 2022. Our net deferred profits on our inventories at income tax payments, debt repayments, current common stock Atlantic Copper to be recognized in future periods’ net income dividends (base and variable) and any share or debt repurchases. attributable to common stock totaled $57 million at December 31, At December 31, 2023, we had $4.8 billion of consolidated cash 2023. Quarterly variations in ore grades, the timing of and cash equivalents (which includes $0.2 billion of cash designated intercompany shipments and changes in product prices will result for Indonesia smelter projects) and FCX, PT-FI and Cerro Verde in variability in our net deferred profits and quarterly earnings. have $3.0 billion, $1.75 billion and $350 million, respectively, CAPITAL RESOURCES AND LIQUIDITY Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. See “Consolidated Results,” and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, for further discussion of our energy requirements and related costs. We remain focused on managing costs efficiently and continue to advance several important value-enhancing initiatives. We believe the actions we have taken in recent years to build a solid balance sheet, successfully expand low-cost operations and maintain flexible organic growth options while maintaining sufficient liquidity, will allow us to continue to execute our business plans in a prudent manner during periods of economic uncertainty while preserving substantial future asset values. We closely monitor market conditions and will adjust our operating plans to protect liquidity and preserve our asset values, if necessary. We expect to maintain a strong balance sheet and liquidity position as we focus on building long-term value in our business, executing our operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures. Based on current sales volume, cost and metal price estimates discussed in “Outlook,” our available cash and cash equivalents plus our projected consolidated operating cash flows of $5.8 billion for the year 2024 exceed our expected consolidated capital expenditures of $4.6 billion (which includes $2.3 billion for major mining projects and $1.0 billion for the Indonesia smelter projects that are being funded with the remaining proceeds from PT-FI’s available under their revolving credit facilities. Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2024 and to “Debt” below and Note 8 for further discussion. At December 31, 2023, we had $1.2 billion in current restricted cash and cash equivalents, which includes (i) $1.1 billion associated with PT-FI’s export proceeds temporarily deposited in Indonesia banks in accordance with a 2023 regulation issued by the Indonesia government that requires 30% of export proceeds to be temporarily deposited into Indonesia banks for a period of 90 days before withdrawal, and (ii) $145 million in assurance to support PT-FI’s commitment for smelter development in Indonesia. Financial Policy. Our financial policy is aligned with our strategic objectives of maintaining a solid balance sheet, providing cash returns to shareholders and advancing opportunities for future growth. The policy includes a base dividend and a performance- based payout framework, whereby up to 50% of available cash flows generated after planned capital spending and distributions to noncontrolling interest would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to us maintaining our net debt at a level not to exceed the net debt target of $3.0 billion to $4.0 billion (excluding net project debt for the Indonesia smelter projects). Our Board reviews the structure of the performance- based payout framework at least annually. At December 31, 2023, our net debt, excluding net debt for the Indonesia smelter projects, totaled $0.8 billion. Refer to “Net Debt” for further discussion. 2023 Annual Report 47 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S In December 2023, our Board declared cash dividends totaling and noncontrolling interests’ share. See Item 1A. “Risk Factors” $0.15 per share on our common stock (including a $0.075 per contained in Part I of our annual report on Form 10-K for the year share quarterly base cash dividend and a $0.075 per share quarterly ended December 31, 2023, for further discussion of our holding variable, performance-based cash dividend), which was paid on company structure and the potential impact of changes in tax laws. February 1, 2024, to shareholders of record as of January 12, 2024. Based on current market conditions, the base and variable Debt dividends on our common stock are anticipated to total $0.60 per share for 2024 (including the dividends paid on February 1, 2024), comprised of a $0.30 per share base dividend and $0.30 per share variable dividend. The declaration and payment of dividends (base or variable) are at the discretion of our Board and will depend on our financial results, cash requirements, global economic conditions and other factors deemed relevant by our Board. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, and “Cautionary Statement” below for further discussion. Cash At December 31, 2023, consolidated debt totaled $9.4 billion, with a related weighted-average interest rate of 5.2%. Substantially all of our outstanding debt is fixed rate. FCX has $0.7 billion in scheduled senior note maturities in November 2024 with no further senior note maturities until 2027. Our total debt has an average remaining duration of approximately 10 years. We had no borrowings and $7 million in letters of credit issued under our $3.0 billion revolving credit facility. Additionally, at December 31, 2023, no amounts were drawn under PT-FI’s $1.75 billion revolving credit facility or Cerro Verde’s $350 million revolving credit facility. Refer to Note 8 for further discussion of the above items and for information regarding our debt arrangements. Following is a summary of the U.S. and international components We may from time to time seek to retire or purchase our of consolidated cash and cash equivalents available to the parent outstanding debt through cash tenders and/or exchanges for equity company, excluding cash committed for the Indonesia smelter or debt, in open-market purchases, privately negotiated transactions projects and net of noncontrolling interests’ share, taxes and other or otherwise. Such tenders, exchanges or purchases, if any, will be costs at December 31, 2023 (in billions): upon such terms and at such prices as we may determine, and will Cash at domestic companies Cash at international operations Total consolidated cash and cash equivalents Cash for Indonesia smelter projects Noncontrolling interests’ share Cash, net of noncontrolling interests’ share Withholding taxes Net cash available $ 2.7 2.1a 4.8 (0.2)b (0.9) 3.7 (0.1) $ 3.6 a. Excludes $1.1 billion of cash associated with PT-FI’s export proceeds required to be temporarily deposited in Indonesia banks for 90 days in accordance with a 2023 regulation issued by the Indonesia government, which is presented as current restricted cash and cash equivalents in FCX’s consolidated balance sheet. b. Estimated remaining net proceeds from PT-FI’s senior notes. Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayments, working capital or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility. We have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Operating Activities We generated consolidated operating cash flows of $5.3 billion in 2023 (net of $0.9 billion of working capital and other uses) and $5.1 billion in 2022 (net of $1.6 billion of working capital and other uses). Investing Activities Capital Expenditures. Capital expenditures, including capitalized interest, totaled $4.8 billion for the year 2023, including $1.8 billion for major mining projects primarily associated with the underground development activities in the Grasberg minerals district and $1.7 billion for the Indonesia smelter projects. Capital expenditures, including capitalized interest, totaled $3.5 billion for the year 2022, including $1.7 billion for major projects primarily associated with underground development activities in the Grasberg minerals district and $0.8 billion for the Indonesia smelter projects. 48 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S A large portion of the capital expenditures relate to projects that As of February 15, 2024, $3.2 billion remains available under are expected to add significant production and cash flow in future the share repurchase program. The timing and amount of share periods, enabling us to continue to generate operating cash flows repurchases are at the discretion of management and will depend exceeding capital expenditures in future years. Refer to “Outlook” on a variety of factors. The share repurchase program may be for further discussion of projected capital expenditures for 2024. modified, increased, suspended or terminated at any time at the Proceeds from Sales of Assets. Proceeds from sales of assets for Board’s discretion. Refer to Item 1A. “Risk Factors” contained the year 2022 included $60 million from the sale of all of our shares in Part I of our annual report on Form 10-K for the year ended in Jervois Global Limited. Refer to Note 2 for further discussion. December 31, 2023, “Cautionary Statement” below and discussion Loans to PT Smelting for Expansion. PT-FI made loans to PT Smelting of our financial policy above. totaling $129 million in 2023 and $65 million in 2022 to fund PT Contributions from Noncontrolling Interests. We received equity Smelting’s expansion project. Refer to Note 3 for further discussion. contributions totaling $50 million in 2023 and $0.2 billion in Financing Activities Debt Transactions. Net debt repayments totaled $1.2 billion in 2023, including the repayment of our 3.875% Senior Notes that matured in 2022 from PT Mineral Industri Indonesia (MIND ID) for its share of capital spending on the underground mine development projects in the Grasberg minerals district. Beginning in 2023, capital spending at PT-FI is shared in accordance with the shareholders’ March 2023 totaling $996 million and open-market purchases of ownership interests. our senior notes for a total cost of $221 million. Net borrowings of debt totaled $1.2 billion in 2022, including PT-FI’s $3.0 billion senior notes offering, partly offset by the purchases of our senior notes in open market transactions ($1.0 billion), and the repayment of borrowings under PT-FI’s term loan ($0.6 billion) and Cerro Verde’s term loan ($0.3 billion). Refer to Note 8 for further discussion. Cash Dividends on Common Stock. We paid cash dividends on our common stock totaling $0.9 billion in 2023 and 2022. The declaration and payment of dividends (base or variable) are at the discretion of our Board and will depend on our financial results, cash requirements, global economic conditions and other factors deemed relevant by our Board. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, and “Cautionary Statement” below. Cash Dividends and Distributions Paid to Noncontrolling Interests. Cash dividends and distributions paid to noncontrolling interests Stock-based Awards. Proceeds from exercised stock options totaled $47 million in 2023 and $125 million in 2022, and payments for related employee taxes totaled $50 million in 2023 and $55 million in 2022. See Note 10 for a discussion of stock-based awards. CONTINGENCIES Environmental Obligations and AROs Refer to Note 12 and “Critical Accounting Estimates,” and Items 1. and 2. “Business and Properties” and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, for further information about contingencies associated with environmental matters and AROs. For 2024, we expect to incur approximately $0.6 billion of aggregate environmental capital expenditures and other environmental costs and $0.2 billion in aggregate ARO expenditures (including $0.1 billion for our oil and gas operations). at our international operations totaled $0.6 billion in 2023 and Litigation and Other Contingencies $0.8 billion in 2022. Based on the current sales volume, cost estimates and assumed average prices in 2024 discussed in Refer to Note 12, and Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” contained in Part I of our annual report on Form 10-K “Outlook,” we currently expect cash dividends and distributions for the year ended December 31, 2023, for further discussion of paid to noncontrolling interests to approximate $2.0 billion contingencies associated with legal proceedings and other matters. for the year 2024, mostly to PT-FI’s noncontrolling interests. Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries. Treasury Stock Purchases. Under the share repurchase program, we acquired 35.12 million shares of FCX common stock for a total cost of $1.3 billion ($38.36 average cost per share) in 2022. There were no shares acquired under the program in 2023. Refer to Note 10 for further discussion. DISCLOSURES ABOUT MARKET RISKS Commodity Price Risk Our 2023 consolidated revenues from our mining operations include the sale of copper concentrate, copper cathode, copper rod, gold, molybdenum and other metals by our North America and South America mines, the sale of copper concentrate (which also contains significant quantities of gold and silver), copper cathode and anode slimes by our Indonesia mining operations, the sale of 2023 Annual Report 49 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S molybdenum in various forms by our molybdenum operations, and Following are the favorable impacts of net adjustments to the the sale of copper cathode, copper anode and gold in anode and prior years’ provisionally priced copper sales for the years ended slimes by Atlantic Copper. Our financial results will vary with December 31 (in millions, except per share amounts): fluctuations in the market prices of the commodities we produce, primarily copper and gold, and to a lesser extent molybdenum. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook.” World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023, for further discussion of financial risks associated with fluctuations in the market prices of the commodities we sell. During 2023, our mined copper was sold 51% in concentrate, 27% as cathode and 22% as rod from North America operations. Substantially all of our copper concentrate and some 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 LME monthly average copper settlement prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our 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. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs. Revenues Net income attributable to common stock Net income per share attributable to common stock 2023 $ 183 $ 62 $0.04 2022 $ 60 $ 25 $ 0.02 At December 31, 2023, we had provisionally priced copper sales at our copper mining operations totaling 223 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $3.87 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2023, provisional price recorded would have an approximate $22 million effect on 2024 revenues ($7 million to net income attributable to common stock). The LME copper settlement price closed at $3.86 per pound on January 31, 2024. Foreign Currency Exchange Risk The functional currency for most of our operations is the U.S. dollar. Substantially all of our revenues and a significant portion of our costs are denominated in U.S. dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesia rupiah, Peruvian sol, Chilean peso and euro. We recognized foreign currency translation gains on balances denominated in foreign currencies totaling $20 million in 2023 and $9 million in 2022. Generally, our operating results are positively affected when the U.S. dollar strengthens in relation to those foreign currencies and are adversely affected when the U.S. dollar weakens in relation to those foreign currencies. Following is a summary of estimated annual payments and the impact of changes in foreign currency rates on our annual operating costs: Indonesia Rupiah Australian dollar South America Peruvian sol Chilean peso Atlantic Copper Euro Exchange Rate per $1 at December 31, Estimated Annual Payments 2023 2022 (in local currency) (in millions of U.S. dollars)b 15,339 1.47 15,652 1.47 15.7 trillion 292 million 3.71 877 0.91 3.82 856 0.94 2.1 billion 227 billion 170 million $ 188 $ 1,024 $ 199 $ 555 $ 259 10% Change in Exchange Rate (in millions of U.S. dollars)a Increase Decrease $ (93) $ (18) $ (50) $ (24) $ (17) $ 114 $ 22 $ 62 $ 29 $ 21 a. Reflects the estimated impact on annual operating costs assuming a 10% increase or decrease in the exchange rate reported at December 31, 2023. b. Based on exchange rates at December 31, 2023. 50 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Interest Rate Risk At December 31, 2023, we had total debt maturities based on for our scheduled maturities of principal for our outstanding debt and the related fair values at December 31, 2023 (in millions, principal amounts of $9.5 billion, substantially all of which was except percentages): fixed-rate debt. The table below presents average interest rates Fixed-rate debt Average interest rate Variable-rate debt Average interest rate 2024 $ 733 4.5% $ 33 4.5% 2025 $ 4 —% $ — —% 2026 $ 4 —% $ — —% 2027 $ 1,320 5.0% $ — —% 2028 $ 924 4.2% $ — —% Thereafter Fair Value $ 6,468 5.4% $ — —% $ 9,331 $ 5.2% 33 4.5% NEW ACCOUNTING STANDARDS Refer to Note 1 for discussion of recently issued accounting standards and their projected impact on our future financial statements and disclosures. NET DEBT We believe that net debt provides investors with information related to the performance-based payout framework in our financial policy, which requires us to maintain our net debt at a level not to exceed the net debt target of $3 billion to $4 billion (excluding net project debt for the Indonesia smelter projects). We define net debt as consolidated debt less (i) consolidated cash and cash equivalents and (ii) current restricted cash associated with PT-FI’s export proceeds. 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. Our net debt, which may not be comparable to similarly titled measures reported by other companies, follows (in billions): December 31, Current portion of debt Long-term debt, less current portion Consolidated debt Less: consolidated cash and cash equivalents Less: current restricted cash associated with PT-FI’s export proceedsb FCX net debt Less: net debt for Indonesia smelter projectsc FCX net debt, excluding Indonesia smelter projects 2023 $ 0.8 8.7 9.4a 4.8 1.1 3.6a 2.8 $ 0.8 2022 $ 1.0 9.6 10.6 8.1 — 2.5 1.2 $ 1.3 a. Does not foot because of rounding. b. In accordance with a 2023 regulation issued by the Indonesia government, 30% of PT-FI’s export proceeds are being temporarily deposited into Indonesia banks for a period of 90 days before withdrawal and are presented as current restricted cash and cash equivalents in our consolidated balance sheet. As the 90-day holding period is the only restriction on the cash, we have included such amount in the calculation of net debt. c. Includes consolidated debt of $3.0 billion at both dates and consolidated cash and cash equivalents of $0.2 billion as of December 31, 2023, and $1.8 billion as of December 31, 2022. PRODUCT REVENUES AND PRODUCTION COSTS Mining Product Revenues and Unit Net Cash Costs Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies. We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by our management and the Board to monitor operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change. We show revenue adjustments for prior period open sales as separate line items. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock- based compensation costs, long-lived asset impairments, idle facility costs, feasibility and optimization study costs, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements. 2023 Annual Report 51 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Year Ended December 31, 2023 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit Copper sales (millions of recoverable pounds) Molybdenum sales (millions of recoverable pounds)a Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales Eliminations and other North America copper mines Other miningd Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method Co-Product Method Copper Molybdenuma Otherb Total $6,249 4,305 — 169 4,474 418 242 5,134 13 $ 1,128 $ 5,368 $ 5,368 $ 710 $171 149 — 8 157 8 3 168 — $ 3 4,093 (669) 169 3,593 418 242c 4,253 13 $ 1,128 3,621 — 161 3,782 371 215 4,368 13 $ 1,013 1,367 1,367 $ 3.93 $ 3.93 3.00 (0.49) 0.12 2.63 0.30 0.18c 3.11 0.01 $ 0.83 2.65 — 0.12 2.77 0.27 0.16 3.20 0.01 $ 0.74 Revenues Production and Delivery $ 6,249 (9) — 13 63 6,316 22,791 (6,252) $ 22,855 $ 4,305 160 242 — 71 4,778 14,849 (6,000) $ 13,627 535 — — 535 39 24 598 — $ 112 30 $ 23.38 17.63 — — 17.63 1.30 0.77 19.70 — $ 3.68 DD&A $ 418 — — — — 418 1,586 64 $ 2,068 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $107 million ($0.08 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other mining operations as presented in Note 16. 52 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued) Year Ended December 31, 2022 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit Copper sales (millions of recoverable pounds) Molybdenum sales (millions of recoverable pounds)a Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales Eliminations and other North America copper mines Other miningd Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method Co-Product Method Copper Molybdenuma Otherb Total $ 127 96 — 5 101 6 3 110 — $ 17 $ 6,646 3,957 — 149 4,106 409 183 4,698 (13) $ 1,935 $ 6,007 $ 6,007 $ 512 3,799 (481) 149 3,467 409 183c 4,059 (13) $ 1,935 3,478 — 144 3,622 377 166 4,165 (13) $ 1,829 1,472 1,472 $ 4.08 $ 4.08 2.58 (0.33) 0.10 2.35 0.28 0.13c 2.76 (0.01) $ 1.31 2.36 — 0.10 2.46 0.26 0.11 2.83 (0.01) $ 1.24 Revenues Production and Delivery $ 6,646 (22) — (13) 99 6,710 22,464 (6,394) $ 22,780 $ 3,957 127 183 — 110 4,377 14,899 (6,206) $ 13,070 383 — — 383 26 14 423 — 89 29 $ $ 17.87 13.35 — — 13.35 0.90 0.52 14.77 — $ 3.10 DD&A $ 409 — — — 1 410 1,539 70 $ 2,019 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $86 million ($0.06 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other mining operations as presented in Note 16. 2023 Annual Report 53 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Year Ended December 31, 2023 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Royalty on metals Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit Copper sales (millions of recoverable pounds) Gross profit per pound of copper: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Royalty on metals Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales Eliminations and other South America mining Other miningc Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method $ 4,583 3,083 (463) 234 8 2,862 459 92b 3,413 71 $ 1,241 1,200 $ 3.82 2.57 (0.39) 0.19 0.01 2.38 0.38 0.08b 2.84 0.06 $ 1.04 Revenues $ 5,109 (234) (8) — 74 — 4,941 24,166 (6,252) $ 22,855 Copper $ 4,583 2,810 — 234 7 3,051 412 87 3,550 71 $ 1,104 1,200 $ 3.82 2.34 — 0.19 0.01 2.54 0.35 0.07 2.96 0.06 $ 0.92 Production and Delivery $ 3,149 — — 92 — (2) 3,239 16,388 (6,000) $ 13,627 Co-Product Method Othera Total $ 526 339 — — 1 340 47 5 392 3 $ 137 $ 5,109 3,149 — 234 8 3,391 459 92 3,942 74 $ 1,241 DD&A $ 459 — — — — — 459 1,545 64 $ 2,068 a. Includes silver sales of 4.1 million ounces ($23.57 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Includes charges totaling $44 million ($0.04 per pound of copper) for feasibility studies. c. Represents the combined total for our other mining operations as presented in Note 16. 54 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S South America Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued) Year Ended December 31, 2022 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Royalty on metals Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit Copper sales (millions of recoverable pounds) Gross profit per pound of copper: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below By-product credits Treatment charges Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales Gross profit per pound Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Royalty on metals Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales Eliminations and other South America mining Other miningb Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method $ 4,413 2,929 (394) 170 10 2,715 408 93 3,216 35 $ 1,232 1,162 $ 3.80 2.52 (0.34) 0.15 0.01 2.34 0.35 0.08 2.77 0.03 $ 1.06 Revenues $ 4,864 (170) (10) — 35 (1) 4,718 24,456 (6,394) $ 22,780 Copper $ 4,413 2,705 — 170 9 2,884 370 88 3,342 35 $ 1,106 1,162 $ 3.80 2.33 — 0.14 0.01 2.48 0.32 0.08 2.88 0.03 $ 0.95 Production and Delivery $ 2,986 — — 93 — (5) 3,074 16,202 (6,206) $ 13,070 Co-Product Method Othera Total $ 451 281 — — 1 282 38 5 325 — $ 126 $ 4,864 2,986 — 170 10 3,166 408 93 3,667 35 $ 1,232 DD&A $ 408 — — — — — 408 1,541 70 $ 2,019 a. Includes silver sales of 4.4 million ounces ($20.82 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Represents the combined total for our other mining operations as presented in Note 16. 2023 Annual Report 55 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs Year Ended December 31, 2023 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below Gold, silver and other by-product credits Treatment charges Export duties Royalty on metals Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Gross profit Copper sales (millions of recoverable pounds) Gold sales (thousands of recoverable ounces) Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below Gold, silver and other by-product credits Treatment charges Export duties Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Gross profit per pound/ounce Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Export duties Royalty on metals Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Eliminations and other Indonesia mining Other miningc Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method Copper Co-Product Method Gold Silver & Othera Total $ 157 42 — 9 5 5 61 17 — 78 (1) 2 $ 80 $ 9,304 2,467 — 537 324 338 3,666 1,028 22 4,716 131 112 $ 4,831 $ 5,801 $ 5,801 2,467 (3,520) 537 324 338 146 1,028 22b 1,196 114 112 $ 4,831 1,538 — 335 202 212 2,287 641 14 2,942 114 70 $ 3,043 1,525 1,525 $ 3.81 $ 3.81 1.62 (2.30) 0.35 0.21 0.22 0.10 0.68 0.01b 0.79 0.08 0.07 $ 3.17 1.01 — 0.22 0.13 0.14 1.50 0.42 0.01 1.93 0.07 0.05 $ 2.00 Revenues Production and Delivery $ 9,304 (336) (324) (338) — 131 — — 8,437 20,670 (6,252) $ 22,855 $ 2,467 201 — — 22 — (112) (26) 2,552 17,075 (6,000) $ 13,627 $ 3,346 887 — 193 117 121 1,318 370 8 1,696 18 40 $ 1,708 1,697 $ 1,972 522 — 114 69 71 776 218 5 999 9 24 $ 1,006 DD&A $ 1,028 — — — — — — — 1,028 976 64 $ 2,068 a. Includes silver sales of 6.0 million ounces ($23.37 per ounce average realized price). b. Includes credits of $112 million ($0.07 per pound of copper) to correct certain inputs in the historical PT-FI ARO model. Also, includes a charge of $55 million ($0.04 per pound of copper) associated with a potential administrative fine and charges totaling $27 million ($0.02 per pound of copper) for feasibility and optimization studies. c. Represents the combined total for our other mining operations as presented in Note 16. 56 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued) Year Ended December 31, 2022 (In millions) Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below Gold, silver and other by-product credits Treatment charges Export duties Royalty on metals Net cash costs DD&A Noncash and other costs, net Total costs Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Gross profit Copper sales (millions of recoverable pounds) Gold sales (thousands of recoverable ounces) Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments Site production and delivery, before net noncash and other costs shown below Gold, silver and other by-product credits Treatment charges Export duties Royalty on metals Unit net cash costs DD&A Noncash and other costs, net Total unit costs Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Gross profit per pound/ounce Reconciliation to Amounts Reported (In millions) Totals presented above Treatment charges Export duties Royalty on metals Noncash and other costs, net Other revenue adjustments, primarily for pricing on prior period open sales PT Smelting intercompany profit Eliminations and other Indonesia mining Other miningc Corporate, other & eliminations As reported in our consolidated financial statements By-Product Method Copper Co-Product Method Gold Silver & Othera Total $ 134 36 — 5 4 3 48 15 2 65 1 — $ 70 $ 9,389 2,507 — 341 307 357 3,512 1,025 182 4,719 31 14 $ 4,715 $ 6,018 $ 6,018 2,507 (3,375) 341 307 357 137 1,025 182b 1,344 27 14 $ 4,715 1,607 — 218 197 230 2,252 657 117 3,026 27 9 $ 3,028 1,582 1,582 $ 3.80 $ 3.80 1.58 (2.13) 0.22 0.19 0.23 0.09 0.65 0.11b 0.85 0.02 0.01 $ 2.98 1.01 — 0.14 0.12 0.15 1.42 0.42 0.07 1.91 0.01 0.01 $ 1.91 Revenues Production and Delivery $ 9,389 (341) (307) (357) 11 31 — — 8,426 20,748 (6,394) $ 22,780 $ 2,507 — — — 193 — (14) (2) 2,684 16,592 (6,206) $ 13,070 $ 3,237 864 — 118 106 124 1,212 353 63 1,628 3 5 $ 1,617 1,811 $ 1,787 477 — 65 58 69 669 195 35 899 2 3 $ 893 DD&A $ 1,025 — — — — — — — 1,025 924 70 $ 2,019 a. Includes silver sales of 6.3 million ounces ($21.41 per ounce average realized price). b. Includes charges of $116 million ($0.07 per pound of copper) associated with an ARO adjustment. Also includes a net charge of $30 million ($0.02 per pound of copper) associated with a settlement of an administrative fine levied by the Indonesia government and a reserve for exposure associated with export duties in prior periods, partially offset by credits for adjustments to prior year treatment and refining charges and historical tax audits. c. Represents the combined total for our other mining operations as presented in Note 16. 2023 Annual Report 57 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs Years Ended December 31, (In millions) Revenues, excluding adjustmentsa Site production and delivery, before net noncash and other costs shown below Treatment charges and other Net cash costs DD&A Noncash and other costs, net Total costs Gross profit Molybdenum sales (millions of recoverable pounds)a Gross profit per pound of molybdenum: Revenues, excluding adjustmentsa Site production and delivery, before net noncash and other costs shown below Treatment charges and other Unit net cash costs DD&A Noncash and other costs, net Total unit costs Gross profit per pound Reconciliation to Amounts Reported (In millions) Year Ended December 31, 2023 Totals presented above Treatment charges and other Noncash and other costs, net Molybdenum mines Other miningb Corporate, other & eliminations As reported in our consolidated financial statements Year Ended December 31, 2022 Totals presented above Treatment charges and other Noncash and other costs, net Molybdenum mines Other miningb Corporate, other & eliminations As reported in our consolidated financial statements 2023 2022 $ 702 $ 593 423 25 448 66 16 530 172 30 $ $ 23.71 14.28 0.85 15.13 2.24 0.55 17.92 $ 5.79 347 28 375 74 12 461 132 33 $ $ 18.08 10.59 0.84 11.43 2.27 0.37 14.07 $ 4.01 Revenues Production and Delivery DD&A $ 702 (25) — 677 28,430 (6,252) $ 22,855 $ 593 (28) — 565 28,609 (6,394) $ 22,780 $ 423 — 16 439 19,188 (6,000) $ 13,627 $ 347 — 12 359 18,917 (6,206) $ 13,070 $ 66 — — 66 1,938 64 $ 2,068 $ 74 — — 74 1,875 70 $ 2,019 a. Reflects sales of the Molybdenum mines’ production to the molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table. b. Represents the combined total for our other mining operations as presented in Note 16. Also includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines. 58 Freeport | The Value of Copper M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S CAUTIONARY STATEMENT Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance, operations and projects. 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 construction and completion of additional domestic smelting and refining capacity in Indonesia in accordance with the terms of its IUPK; extension of PT-FI’s IUPK beyond 2041; export licenses; export duties; export volumes; our commitment to deliver responsibly produced copper and molybdenum, including plans to implement, validate and maintain validation of our operating sites under specific frameworks; execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business and stakeholders related thereto; achievement of 2030 climate targets and 2050 net zero aspiration; improvements in operating procedures and technology innovations and applications; exploration efforts and results; development and production activities, rates and costs; future organic growth opportunities; tax rates; 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 and environmental proceedings; debt repurchases; and the ongoing implementation of our 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 are at the discretion of our Board and management, respectively, and are subject to a number of factors, including not exceeding our net debt target, capital availability, our financial results, cash requirements, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by our Board or management, as applicable. Our share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion. We caution 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 our 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 we produce, primarily copper; PT-FI’s ability to continue to export and sell copper concentrates and anode slimes; changes in export duties, including results of proceedings to dispute export duties; completion of additional domestic smelting and refining capacity in Indonesia; production rates; timing of shipments; price and availability of consumables and components we purchase as well as constraints on supply and logistics, and transportation services; changes in our cash requirements, financial position, financing or investment plans; changes in general market, economic, geopolitical, regulatory or industry conditions; reductions in liquidity and access to capital; changes in tax laws and regulations; political and social risks, including the potential effects of violence in Indonesia, civil unrest in Peru, and relations with local communities and Indigenous Peoples; operational risks inherent in mining, with higher inherent risks in underground mining; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations, including the ability to smelt and refine; results of technical, economic or feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; satisfaction of requirements in accordance with PT-FI’s IUPK to extend mining rights from 2031 through 2041; discussions relating to the extension of PT-FI’s IUPK beyond 2041; cybersecurity risks; any major public health crisis; labor relations, including labor-related work stoppages and increased costs; compliance with applicable environmental, health and safety laws and regulations; weather- and climate-related risks; environmental risks, including availability of secure water supplies; litigation results; tailings management; our ability to comply with our responsible production commitments under specific frameworks and any changes to such frameworks and other factors described in more detail in Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2023. 2023 Annual Report 59 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S Investors are cautioned that many of the assumptions upon Our annual report on Form 10-K for the year ended December 31, which our forward-looking statements are based are likely to 2023, also contains measures such as net debt and unit net cash change after the date the forward-looking statements are made, costs per pound of copper and molybdenum, which are not including, for example, commodity prices, which we cannot control, recognized under U.S. GAAP. Refer to “Operations—Unit Net Cash and production volumes and costs or technological solutions and Costs” for further discussion of unit net cash costs associated innovations, some aspects of which we may not be able to control. with our operating divisions, and to “Product Revenues and Further, we may make changes to our business plans that could Production Costs” for reconciliations of per pound costs by operating affect our results. We caution investors that we undertake no division to production and delivery costs applicable to sales obligation to update any forward-looking statements, which speak reported in our consolidated financial statements. Refer to “Net only as of the date made, notwithstanding any changes in our Debt” for reconciliations of consolidated debt, consolidated cash assumptions, changes in business plans, actual experience or and cash equivalents and current restricted cash associated with other changes. PT-FI’s export proceeds to net debt. Estimates of mineral reserves and mineral resources are subject to considerable uncertainty. Such estimates are, to a large extent, based on metal prices for the commodities we produce and interpretations of geologic data, which may not necessarily be indicative of future results or quantities ultimately recovered. Our annual report on Form 10-K for the year ended December 31, 2023, also includes forward-looking statements regarding mineral resources not included in proven and probable mineral reserves. A mineral resource, which includes measured, indicated and inferred mineral resources, is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. Such a deposit cannot qualify as recoverable proven and probable mineral reserves until legal and economic feasibility are confirmed based upon a comprehensive evaluation of development and operating costs, grades, recoveries and other material modifying factors. Accordingly, no assurance can be given that the estimated mineral resources will become proven and probable mineral reserves. 60 Freeport | The Value of Copper M A N A G E M E N T ’ S R E P O R T O N I N T E R N A L C O N T R O L O V E R F I N A N C I A L R E P O R T I N G Freeport-McMoRan Inc.’s (the Company’s) management is Because of its inherent limitations, internal control over financial responsible for establishing and maintaining adequate internal reporting may not prevent or detect misstatements. Projections control over financial reporting. Internal control over financial of any evaluation of effectiveness to future periods are subject reporting is defined in Rule 13a-15(f) or 15d-15(f) under the Securities to the risk that controls may become inadequate because of Exchange Act of 1934 as a process designed by, or under the changes in conditions, or that the degree of compliance with the supervision of, the Company’s principal executive and principal policies or procedures may deteriorate. financial officers and effected by the Company’s Board of Our management, including our principal executive officer and Directors, management and other personnel, to provide reasonable principal financial officer, assessed the effectiveness of our assurance regarding the reliability of financial reporting and the internal control over financial reporting as of the end of the fiscal preparation of financial statements for external purposes in year covered by this annual report on Form 10-K. In making this accordance with generally accepted accounting principles and assessment, our management used the criteria set forth in includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on its assessment, management concluded that, as of December 31, 2023, our Company’s internal control over financial reporting is effective based on the COSO criteria. accordance with generally accepted accounting principles, and Ernst & Young LLP, an independent registered public accounting that receipts and expenditures of the Company are being firm, who audited the Company’s consolidated financial statements made only in accordance with authorizations of management included in this Form 10-K, has issued an attestation report on and directors of the Company; and the Company’s internal control over financial reporting, which is • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. included herein. Richard C. Adkerson Maree E. Robertson Chairman of the Board and Senior Vice President and Chief Executive Officer Chief Financial Officer 2023 Annual Report 61 R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M To the Board of Directors and Stockholders of Freeport-McMoRan Inc. Opinion on Internal Control Over Financial Reporting We have audited Freeport-McMoRan Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Freeport-McMoRan Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 15, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. the audit to obtain reasonable assurance about whether effective ERNST & YOUNG LLP internal control over financial reporting was maintained in all material respects. Phoenix, Arizona February 15, 2024 62 Freeport | The Value of Copper R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M To the Board of Directors and Stockholders of Freeport-McMoRan Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Freeport-McMoRan Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 15, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 2023 Annual Report 63 R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M Description of the Matter Uncertain Tax Positions As discussed in Note 12 to the consolidated financial statements, the Company operates in the United States and multiple international tax jurisdictions, and its income tax returns are subject to examination by tax authorities in those jurisdictions who may challenge any tax position on these returns. Uncertainty in a tax position may arise because tax laws are subject to interpretation. The Company uses significant judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. Auditing management’s estimate of the amount of tax benefit that qualifies for recognition involved auditor judgment because management’s estimate is complex, requires a high degree of judgment and is based on interpretations of tax laws and legal rulings. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for uncertain tax positions. This included testing controls over management’s review of the technical merits of tax positions and disputed tax assessments, including the process to measure the financial statement impact of these tax matters. Description of the Matter Our audit procedures included, among others, evaluating the Company’s accounting for these tax positions by using our knowledge of and experience with the application of respective tax laws by the relevant tax authorities, or our understanding of the contractual arrangements with the applicable government, if the position is governed by a contract. We analyzed the Company’s assumptions and data used to determine the tax assessments and tested the accuracy of the calculations. We involved our tax professionals located in the respective jurisdictions to assess the technical merits of the Company’s tax positions and to evaluate the application of relevant tax laws in the Company’s recognition determination. We obtained and assessed the Company’s correspondence with the relevant tax authorities and, as applicable, third-party tax or legal opinions or other external correspondence and analyses. We also evaluated the adequacy of the Company’s disclosures included in Notes 11 and 12 in relation to these tax matters. Environmental Obligations As discussed in Note 12 to the consolidated financial statements, the Company is subject to national, state and local environmental laws and regulations governing the protection of the environment, including remediation, restoration and reclamation of environmental contamination. Liabilities for environmental contingencies are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. As of December 31, 2023, the Company’s consolidated environmental obligations totaled $1.9 billion. Auditing management’s accounting for environmental obligations was challenging because significant judgment is required by the Company to estimate the future costs to remediate the environmental matters. The significant judgment was primarily due to the inherent estimation uncertainty relating to the amount of future costs. Such uncertainties involve assumptions regarding the nature and extent of contamination at each site, the nature and extent of required cleanup 64 Freeport | The Value of Copper R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M How We Addressed the Matter in Our Audit efforts under existing environmental regulations, the duration and effectiveness of the chosen remedial strategy, and allocation of costs among other potentially responsible parties. We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s measurement of the environmental loss contingencies. For example, we tested controls over management’s review of the environmental loss contingency calculations and management’s assessment to evaluate key judgments and estimates affecting the environmental loss contingencies. To test the Company’s measurement of the environmental loss contingencies, among other procedures, we inspected correspondence with regulatory agencies, obtained external legal counsel confirmation letters, and inspected environmental studies. Additionally, we tested the accuracy and completeness of the underlying data used in the Company’s analyses and tested the significant assumptions discussed above. We utilized our environmental professionals to search for new or contrary evidence related to the Company’s sites and to assist in evaluating the estimated future costs by comparing the estimated future costs to environmental permits, third party observable data such as vendor quotes, and to historical costs incurred for similar activities. ERNST & YOUNG LLP We have served as the Company’s auditor since 2002. Phoenix, Arizona February 15, 2024 2023 Annual Report 65 C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E Years Ended December 31, (In millions, except per share amounts) Revenues Cost of sales: Production and delivery Depreciation, depletion and amortization Total cost of sales Selling, general and administrative expenses Mining exploration and research expenses Environmental obligations and shutdown costs Net gain on sales of assets Total costs and expenses Operating income Interest expense, net Net gain on early extinguishment of debt Other income (expense), net Income before income taxes and equity in affiliated companies’ net earnings Provision for income taxes Equity in affiliated companies’ net earnings Net income Net income attributable to noncontrolling interests Net income attributable to common stockholders Net income per share attributable to common stockholders: Basic Diluted Weighted-average common shares outstanding: Basic Diluted Dividends declared per share of common stock 2023 2022 2021 $ 22,855 $ 22,780 $ 22,845 13,627 2,068 15,695 479 137 319 — 16,630 6,225 (515) 10 286 6,006 (2,270) 15 3,751 (1,903) $ 1,848 $ 1.28 $ 1.28 1,434 1,443 $ 0.60 13,070 2,019 15,089 420 115 121 (2) 15,743 7,037 (560) 31 207 6,715 (2,267) 31 4,479 (1,011) $ 3,468 $ 2.40 $ 2.39 1,441 1,451 $ 0.60 12,032 1,998 14,030 383 55 91 (80) 14,479 8,366 (602) — (105) 7,659 (2,299) 5 5,365 (1,059) $ 4,306 $ 2.93 $ 2.90 1,466 1,482 $ 0.375 The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements. 66 Freeport | The Value of Copper C O N S O L I D A T E D S T A T E M E N T S O F C O M P R E H E N S I V E I N C O M E Years Ended December 31, (In millions) Net income Other comprehensive income, net of taxes: Defined benefit plans: Actuarial gains arising during the period, net of taxes Prior service costs arising during the period Amortization of unrecognized amounts included in net periodic benefit costs Foreign exchange losses Other comprehensive income Total comprehensive income Total comprehensive income attributable to noncontrolling interests Total comprehensive income attributable to common stockholders 2023 2022 2021 $ 3,751 $ 4,479 $ 5,365 39 — 5 — 44 3,795 (1,901) $ 1,894 62 (1) 8 (1) 68 4,547 (1,011) $ 3,536 179 — 18 (1) 196 5,561 (1,060) $ 4,501 The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements. 2023 Annual Report 67 C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S Years Ended December 31, (In millions) Cash flow from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization Stock-based compensation Net charges for environmental and asset retirement obligations, including accretion Payments for environmental and asset retirement obligations Charge for talc-related litigation Net charges for defined pension and postretirement plans Pension plan contributions Net gain on early extinguishment of debt Net gain on sales of assets Deferred income taxes Changes in deferred profit on PT Freeport Indonesia’s sales to PT Smelting Charges for social investment programs at PT Freeport Indonesia Payments for social investment programs at PT Freeport Indonesia Impairment of oil and gas properties Payments for Cerro Verde royalty dispute Other, net Changes in working capital and other: Accounts receivable Inventories Other current assets Accounts payable and accrued liabilities Accrued income taxes and timing of other tax payments Net cash provided by operating activities Cash flow from investing activities: Capital expenditures: North America copper mines South America Indonesia mining Indonesia smelter projects Molybdenum mines Other Proceeds from sales of assets Loans to PT Smelting for expansion Acquisition of minority interest in PT Smelting Other, net Net cash used in investing activities Cash flow from financing activities: Proceeds from debt Repayments of debt Cash dividends and distributions paid: Common stock Noncontrolling interests Treasury stock purchases Contributions from noncontrolling interests Proceeds from exercised stock options Payments for withholding of employee taxes related to stock-based awards Debt financing costs and other, net Net cash used in financing activities Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents Cash, cash equivalents and restricted cash and cash equivalents at beginning of year Cash, cash equivalents and restricted cash and cash equivalents at end of year The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements. 68 Freeport | The Value of Copper 2023 2022 2021 $ 3,751 $ 4,479 2,068 109 295 (250) 65 62 (75) (10) — 182 (112) 84 (44) 67 — (33) 166 (873) (29) (161) 17 5,279 (761) (368) (1,696) (1,715) (84) (200) 27 (129) — (30) (4,956) 1,781 (2,980) (863) (625) — 50 47 (50) (10) (2,650) (2,327) 8,390 $ 6,063 2,019 95 369 (274) — 45 (54) (31) (2) 36 (14) 84 (11) — — (1) 56 (573) (12) (73) (999) 5,139 (597) (304) (1,575) (806) (33) (154) 108 (65) — (14) (3,440) 5,735 (4,515) (866) (840) (1,347) 189 125 (55) (49) (1,623) 76 8,314 $ 8,390 $ 5,365 1,998 98 540 (273) — 4 (109) — (80) (171) 86 75 (67) — (421) (77) (472) (618) (101) 487 1,451 7,715 (342) (162) (1,296) (222) (6) (87) 247 (36) (33) (27) (1,964) 1,201 (1,461) (331) (583) (488) 182 210 (29) (41) (1,340) 4,411 3,903 $ 8,314 C O N S O L I D A T E D B A L A N C E S H E E T S December 31, (In millions, except par value) ASSETS Current assets: Cash and cash equivalents Restricted cash and cash equivalents Trade accounts receivable Income and other tax receivables Inventories: Product Materials and supplies, net Mill and leach stockpiles Other current assets Total current assets Property, plant, equipment and mine development costs, net Long-term mill and leach stockpiles Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued liabilities Accrued income taxes Current portion of debt Current portion of environmental and asset retirement obligations Dividends payable Total current liabilities Long-term debt, less current portion Environmental and asset retirement obligations, less current portion Deferred income taxes Other liabilities Total liabilities Equity: Stockholders’ equity: Common stock, par value $0.10, 1,619 shares and 1,613 shares issued, respectively Capital in excess of par value Accumulated deficit Accumulated other comprehensive loss Common stock held in treasury—184 shares and 183 shares, respectively, at cost Total stockholders’ equity Noncontrolling interests Total equity Total liabilities and equity The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements. 2023 2022 $ 4,758 1,208 1,209 455 2,472 2,169 1,419 375 14,065 35,295 1,336 1,810 $ 52,506 $ 3,729 786 766 316 218 5,815 8,656 4,624 4,453 1,648 25,196 162 24,637 (2,059) (274) (5,773) 16,693 10,617 27,310 $ 52,506 $ 8,146 111 1,336 459 1,833 1,964 1,383 381 15,613 32,627 1,252 1,601 $ 51,093 $ 4,027 744 1,037 320 217 6,345 9,583 4,463 4,269 1,562 26,222 161 25,322 (3,907) (320) (5,701) 15,555 9,316 24,871 $ 51,093 2023 Annual Report 69 C O N S O L I D A T E D S T A T E M E N T S O F E Q U I T Y Stockholders’ Equity (In millions) Balance at January 1, 2021 Exercised and issued stock-based awards Stock-based compensation, including the tender of shares Treasury stock purchases Dividends Contributions from noncontrolling interests Net income attributable to common stockholders Net income attributable to noncontrolling interests Other comprehensive income Balance at December 31, 2021 Exercised and issued stock-based awards Stock-based compensation, including the tender of shares Treasury stock purchases Dividends Contributions from noncontrolling interests Net income attributable to common stockholders Net income attributable to noncontrolling interests Other comprehensive income Balance at December 31, 2022 Exercised and issued stock-based awards Stock-based compensation, including the tender of shares Dividends Contributions from noncontrolling interests Net income attributable to common stockholders Net income attributable to noncontrolling interests Other comprehensive income (loss) Common Stock Number of At Par Value Shares 1,590 13 — — — — — — — 1,603 10 — — — — — — — 1,613 6 — — — — — — $ 159 1 — — — — — — — 160 1 — — — — — — — 161 1 — — — — — — Accumulated Other Common Stock Held in Treasury Capital in Excess of Accumulated Comprehensive Number Par Value Deficit Loss of Shares At Cost Total Stockholders’ Noncontrolling Equity Interests Total Equity $ 26,037 $ (11,681) $ (583) — 225 — 75 — — — (551) — 89 — — — — 195 — — — — — — 4,306 — — 25,875 131 88 — (864) 92 — — — 25,322 68 87 (864) 24 — — — (7,375) — — — — — 3,468 — — (3,907) — — — — 1,848 — — (388) — — — — — — — 68 (320) — — — — — — 46 132 — 1 13 — — — — — 146 — 2 35 — — — — — 183 — 1 — — — — — $ (3,758) — (46) (488) — — — — — (4,292) — (62) (1,347) — — — — — (5,701) — (72) — — — — — $ 10,174 226 29 (488) (551) 89 4,306 — 195 13,980 132 26 (1,347) (864) 92 3,468 — 68 15,555 69 15 (864) 24 1,848 — 46 $ 8,494 — (5) — (603) 93 — 1,059 1 9,039 — (11) — (820) 97 — 1,011 — 9,316 — (1) (625) 26 — 1,903 (2) $ 18,668 226 24 (488) (1,154) 182 4,306 1,059 196 23,019 132 15 (1,347) (1,684) 189 3,468 1,011 68 24,871 69 14 (1,489) 50 1,848 1,903 44 Balance at December 31, 2023 1,619 $ 162 $ 24,637 $ (2,059) $ (274) 184 $ (5,773) $ 16,693 $ 10,617 $ 27,310 The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements. 70 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation. The consolidated financial statements of Freeport-McMoRan Inc. (FCX) include the accounts of those subsidiaries where it directly or indirectly has more than 50% of the voting rights and/or has control over the subsidiary. As of December 31, 2023, the most significant entities that FCX consolidates include its 48.76%-owned subsidiary PT Freeport Indonesia (PT-FI), and the following wholly owned subsidiaries: Freeport Minerals Corporation (FMC) and Atlantic Copper, S.L.U. (Atlantic Copper). Refer to Note 3 for further discussion, including FCX’s Functional Currency. The functional currency for the majority of FCX’s foreign operations is the U.S. dollar. For foreign subsidiaries whose functional currency is the U.S. dollar, monetary assets and liabilities denominated in the local currency are translated at current exchange rates, and non-monetary assets and liabilities, such as inventories, property, plant, equipment and mine development costs, are translated at historical exchange rates. Gains and losses resulting from translation of such account balances are included in other income (expense), net, as are gains and losses from foreign currency transactions. Foreign currency gains totaled $20 million in 2023, $9 million in 2022 and $66 million conclusion to consolidate PT-FI. in 2021. FMC’s unincorporated joint venture at Morenci is reflected using Cash Equivalents. Highly liquid investments purchased with the proportionate consolidation method (refer to Note 3 for further discussion). Investments in unconsolidated companies over which FCX has the ability to exercise significant influence, but does not control, are accounted for under the equity method and include PT-FI’s investment in PT Smelting (refer to Note 3 for further discussion). Investments in unconsolidated companies owned less than 20%, and for which FCX does not exercise significant influence, are recorded at (i) fair value for those that have a readily determinable fair value or (ii) cost, less any impairment, for those that do not have a readily determinable fair value. All significant intercompany transactions have been eliminated. Dollar amounts maturities of three months or less are considered cash equivalents. Restricted Cash and Cash Equivalents. Restricted cash and cash equivalents are classified as a current or long-term asset based on the timing and nature of when or how the cash is expected to be used or when the restrictions are expected to lapse. FCX’s restricted cash and cash equivalents are primarily related to PT-FI’s export proceeds required to be temporarily deposited in Indonesia banks in accordance with Indonesia regulations, assurance bonds to support PT-FI’s commitment for smelter development in Indonesia, and guarantees and commitments for certain mine closure obligations. Refer to Notes 12 and 14 for in tables are stated in millions, except per share amounts. further information. Business Segments. FCX has organized its mining operations into four primary divisions—North America copper mines, Inventories. Inventories include product, materials and supplies, and mill and leach stockpiles. Inventories are stated at the lower of South America mining, Indonesia mining and Molybdenum mines, weighted-average cost or net realizable value (NRV). and operating segments that meet certain thresholds are reportable Product. Product inventories include raw materials, work-in- segments. FCX’s reportable segments include the Morenci, process and finished goods. Corporate general and administrative Cerro Verde and Grasberg (Indonesia mining) copper mines, the costs are not included in inventory costs. Rod & Refining operations and Atlantic Copper Smelting & Refining. Refer to Note 16 for further discussion. Raw materials are primarily unprocessed concentrate at Atlantic Copper’s smelting and refining operations. Use of Estimates. The preparation of FCX’s financial statements in Work-in-process inventories are primarily copper concentrate at conformity with accounting principles generally accepted in the United States (U.S.) requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. The more significant areas requiring the use of management estimates include mineral reserve estimation; asset lives for depreciation, depletion and various stages of conversion into anode and cathode at Atlantic Copper’s operations. Atlantic Copper’s in-process inventories are valued at the weighted-average cost of the material fed to the smelting and refining process plus in-process conversion costs. Finished goods for mining operations represent salable products (e.g., copper and molybdenum concentrate, copper anode, amortization; environmental obligations; asset retirement obligations; copper cathode, copper rod, molybdenum oxide, and high-purity estimates of recoverable copper in mill and leach stockpiles; deferred taxes and valuation allowances; reserves for contingencies and litigation; asset acquisitions and impairment, including estimates used to derive future cash flows associated with those assets; pension benefits; and valuation of derivative instruments. Actual results could differ from those estimates. molybdenum chemicals and other metallurgical products). Finished goods are valued based on the weighted-average cost of source material plus applicable conversion costs relating to associated process facilities. Costs of finished goods and work-in- process (i.e., not raw materials) inventories include labor and 2023 Annual Report 71 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S benefits, supplies, energy, depreciation, depletion, amortization, processing methods change. Recovery adjustments will typically site overhead costs and other necessary costs associated with the result in a future impact to the value of the material removed from extraction and processing of ore, such as mining, milling, smelting, the stockpiles at a revised weighted-average cost per pound leaching, solution extraction and electrowinning (SX/EW), refining, of recoverable copper. For example, an increase in recovery rates roasting and chemical processing. increases recoverable copper in the leach stockpiles resulting in a Mill and Leach Stockpiles. Mill and leach stockpiles are lower weighted-average cost per pound of recoverable copper and work-in-process inventories for FCX’s mining operations. Mill and a decrease in recovery rates decreases recoverable copper in the leach stockpiles contain ore that has been extracted from an ore leach stockpiles and results in a higher weighted-average cost per body and is available for metal recovery. Mill stockpiles contain pound of recoverable copper. sulfide ores, and recovery of metal is through milling, concentrating Based on the annual review of mill and leach stockpiles, FCX and smelting and refining or, alternatively, by concentrate leaching. increased its estimated recoverable copper in certain leach Leach stockpiles contain oxide ores and certain secondary sulfide stockpiles, net of joint venture interests, by 73 million pounds in ores and recovery of metal is through exposure to acidic solutions 2023 and 223 million pounds in 2022. These revised estimates that dissolve contained copper and deliver it in solution to extraction did not have a material impact on the weighted-average cost per processing facilities (i.e., SX/EW). The recorded cost of mill and pound of recoverable copper or FCX’s consolidated site production leach stockpiles includes mining and haulage costs incurred to and delivery costs in 2023 or 2022. deliver ore to stockpiles, depreciation, depletion, amortization and Property, Plant, Equipment and Mine Development Costs. Property, site overhead costs. Material is removed from the stockpiles at plant, equipment and mine development costs are carried at cost. a weighted-average cost per pound. Each mine site maintains one Mineral exploration costs, as well as drilling and other costs work-in-process balance on a weighted-average cost basis for incurred for the purpose of converting mineral resources to proven each process (i.e., leach, mill or concentrate leach) regardless of and probable mineral reserves or identifying new mineral resources the number of stockpile systems at that site. at development or production stage properties, are charged to Because it is impracticable to determine copper contained in expense as incurred. Development costs are capitalized beginning mill and leach stockpiles by physical count, reasonable estimation after proven and probable mineral reserves have been established. methods are employed. The quantity of material delivered to mill Development costs include costs incurred resulting from mine and leach stockpiles is based on surveyed volumes of mined pre-production activities undertaken to gain access to proven and material and daily production records. Sampling and assaying of probable mineral reserves, including shafts, adits, drifts, ramps, blasthole cuttings determine the estimated copper grade of the permanent excavations, infrastructure and removal of overburden. material delivered to mill and leach stockpiles. For underground mines certain costs related to panel development, Expected copper recoveries for mill stockpiles are determined such as undercutting and drawpoint development, are also by metallurgical testing. The recoverable copper in mill stockpiles, capitalized as mine development costs until production reaches once entered into the production process, can be produced into sustained design capacity for the mine. After reaching design copper concentrate almost immediately. capacity, the underground mine transitions to the production Expected copper recoveries for leach stockpiles are determined phase and panel development costs are allocated to inventory and using small-scale laboratory tests, small- to large-scale column included as a component of production and delivery costs. testing (which simulates the production process), historical trends Additionally, interest expense allocable to the cost of developing and other factors, including mineralogy of the ore and rock type. mining properties and to constructing new facilities is capitalized Total copper recovery in leach stockpiles can vary significantly until assets are ready for their intended use. from a low percentage to more than 90% depending on several Expenditures for replacements and improvements are variables, including processing methodology, processing variables, capitalized. Costs related to periodic scheduled maintenance (i.e., mineralogy and particle size of the rock. For newly placed material turnarounds) are charged to expense as incurred. Depreciation for on active stockpiles, as much as 80% of the total copper recovery mining and milling life-of-mine assets, infrastructure and other may occur during the first year, and the remaining copper may be common costs is determined using the unit-of-production (UOP) recovered over many years. method based on total estimated recoverable proven and probable Process rates and copper recoveries for mill and leach stockpiles copper reserves (for primary copper mines) and proven and are monitored regularly, and recovery estimates are adjusted probable molybdenum reserves (for primary molybdenum mines). annually based on new information and as related technology and Development costs and acquisition costs for proven and probable mineral reserves that relate to a specific ore body are depreciated 72 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S using the UOP method based on estimated recoverable proven key assumptions include estimates of commodity-based and other and probable mineral reserves for the ore body benefited. input costs; proven and probable mineral reserves estimates, Depreciation, depletion and amortization using the UOP method including the timing and cost to develop and produce the reserves; is recorded upon extraction of the recoverable copper or VBPP estimates; and the use of appropriate discount rates in molybdenum from the ore body or production of finished goods the measurement of fair value. FCX believes its estimates and (as applicable), at which time it is allocated to inventory cost and models used to determine fair value are similar to what a market then included as a component of production and delivery costs. participant would use. As quoted market prices are unavailable for Other assets are depreciated on a straight-line basis over FCX’s individual mining operations, fair value is determined estimated useful lives for the related assets of up to 50 years for through the use of after-tax discounted estimated future cash flows buildings and 3 to 50 years for machinery and equipment, and (i.e., Level 3 measurement). mobile equipment. Deferred Mining Costs. Stripping costs (i.e., the costs of removing Included in property, plant, equipment and mine development overburden and waste material to access mineral deposits) costs is value beyond proven and probable mineral reserves (VBPP), incurred during the production phase of an open-pit mine are primarily resulting from FCX’s acquisition of FMC. The concept of considered variable production costs and are included as a VBPP may be interpreted differently by different mining companies. component of inventory produced during the period in which FCX’s VBPP is attributable to (i) measured and indicated mineral stripping costs are incurred. Major development expenditures, resources that FCX believes could be brought into production with including stripping costs to prepare unique and identifiable areas the establishment or modification of required permits and should outside the current mining area for future production that are market conditions and technical assessments warrant, (ii) inferred considered to be pre-production mine development, are capitalized mineral resources and (iii) exploration potential. and amortized using the UOP method based on estimated Carrying amounts assigned to VBPP are not charged to expense recoverable proven and probable mineral reserves for the ore body until the VBPP becomes associated with additional proven and benefited. However, where a second or subsequent pit or major probable mineral reserves and the reserves are produced or the expansion is considered to be a continuation of existing mining VBPP is determined to be impaired. Additions to proven and activities, stripping costs are accounted for as a current production probable mineral reserves for properties with VBPP will carry with cost and a component of the associated inventory. them the value assigned to VBPP at the date acquired, less any Environmental Obligations. Environmental expenditures are impairment amounts. Refer to Note 5 for further discussion. charged to expense or capitalized, depending upon their future Impairment of Long-Lived Mining Assets. FCX assesses the carrying economic benefits. Accruals for such expenditures are recorded values of its long-lived mining assets for impairment when events when it is probable that obligations have been incurred and or changes in circumstances indicate that the related carrying the costs can be reasonably estimated. Environmental obligations amounts of such assets may not be recoverable. In evaluating long- attributed to the Comprehensive Environmental Response, lived mining assets for recoverability, estimates of pre-tax Compensation, and Liability Act of 1980 (CERCLA) or analogous undiscounted future cash flows of FCX’s individual mines are state programs are considered probable when a claim is asserted, used. An impairment is considered to exist if total estimated or is probable of assertion, and FCX, or any of its subsidiaries, have undiscounted future cash flows are less than the carrying amount been associated with the site. Other environmental remediation of the asset. Once it is determined that an impairment exists, an obligations are considered probable based on specific facts and impairment loss is measured as the amount by which the asset circumstances. FCX’s estimates of these costs are based on carrying value exceeds its fair value. The estimated undiscounted an evaluation of various factors, including currently available facts, cash flows used to assess recoverability of long-lived assets and existing technology, presently enacted laws and regulations, to measure the fair value of FCX’s mining operations are derived remediation experience, whether or not FCX is a potentially from current business plans, which are developed using near-term responsible party (PRP) and the ability of other PRPs to pay their price forecasts reflective of the current price environment and allocated portions. With the exception of those obligations management’s projections for long-term average metal prices. In assumed in the acquisition of FMC that were initially recorded at addition to near- and long-term metal price assumptions, other estimated fair values (refer to Note 12 for further discussion), environmental obligations are recorded on an undiscounted basis. Where the available information is sufficient to estimate the amount of the obligation, that estimate has been used. Where the 2023 Annual Report 73 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S information is only sufficient to establish a range of probable Revenue Recognition. FCX recognizes revenue for its products liability and no point within the range is more likely than any other, upon transfer of control in an amount that reflects the consideration the lower end of the range has been used. Possible recoveries of it expects to receive in exchange for those products. Transfer of some of these costs from other parties are not recognized in the control is in accordance with the terms of customer contracts, consolidated financial statements until they become probable. which is generally upon shipment or delivery of the product. While Legal costs associated with environmental remediation (such as payment terms vary by contract, terms generally include payment fees to third-party legal firms for work relating to determining the to be made within 30 days, but not longer than 60 days. Certain extent and type of remedial actions and the allocation of costs of FCX’s concentrate and cathode sales contracts also provide for among PRPs) are included as part of the estimated obligation. provisional pricing, which is accounted for as an embedded Environmental obligations assumed in the acquisition of FMC, derivative (refer to Note 14 for further discussion). For provisionally which were initially recorded at fair value and estimated on a priced sales, 90% to 100% of the provisional invoice amount is discounted basis, are accreted to full value over time through collected upon shipment or within 20 days, and final balances are charges to interest expense. Adjustments arising from changes in settled in a contractually specified future month (generally one to amounts and timing of estimated costs and settlements may result in four months from the shipment date) based on quoted monthly increases and decreases in these obligations and are calculated average copper settlement prices on the London Metal Exchange in the same manner as they were initially estimated. Unless these (LME) or the Commodity Exchange Inc. (COMEX), and quoted adjustments qualify for capitalization, changes in environmental monthly average London Bullion Market Association (London) PM obligations are charged to operating income when they occur. gold prices. FCX performs a comprehensive review of its environmental FCX’s product revenues are also recorded net of treatment obligations annually and also reviews changes in facts and charges, royalties and export duties. Moreover, because a portion of circumstances associated with these obligations at least quarterly. the metals contained in copper concentrate is unrecoverable as Asset Retirement Obligations. FCX records the fair value of a result of the smelting process, FCX’s revenues from concentrate estimated asset retirement obligations (AROs) associated with sales are also recorded net of allowances based on the quantity tangible long-lived assets in the period incurred. AROs associated and value of these unrecoverable metals. These allowances are a with long-lived assets are those for which there is a legal negotiated term of FCX’s contracts and vary by customer. Treatment obligation to settle under existing or enacted law, statute, written and refining charges represent payments or price adjustments to or oral contract or by legal construction. These obligations, which smelters and refiners that are generally fixed. Refer to Note 16 for a are initially estimated based on discounted cash flow estimates, summary of revenue by product type. are accreted to full value over time through charges to production Gold sales are priced according to individual contract terms, and delivery costs. In addition, asset retirement costs (ARCs) generally the average London PM gold price for a specified month are capitalized as part of the related asset’s carrying value and are near the month of shipment. depreciated over the asset’s useful life. The majority of FCX’s molybdenum sales are priced based on For mining operations, reclamation costs for disturbances are the Platts Metals Daily Molybdenum Dealer Oxide weekly average recognized as an ARO and as a related ARC in the period of price, plus conversion premiums for products that undergo the disturbance and depreciated primarily on a UOP basis. FCX’s additional processing, such as ferromolybdenum and molybdenum AROs for mining operations consist primarily of costs associated chemical products, for the month prior to the month of shipment. with mine reclamation and closure activities. These activities, Stock-Based Compensation. Compensation costs for share-based which are site specific, generally include costs for earthwork, payments to employees are measured at fair value and charged revegetation, water treatment and demolition. to expense over the requisite service period for awards that are For non-operating properties without reserves, changes to the expected to vest. The fair value of stock options is determined ARO are recorded in production and delivery costs. using the Black-Scholes-Merton option valuation model. The fair At least annually, FCX reviews its ARO estimates for changes in value for stock-settled restricted stock units (RSUs) is based on the projected timing of certain reclamation and closure/restoration costs, changes in cost estimates and additional AROs incurred during the period. Refer to Note 12 for further discussion. 74 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S FCX’s stock price on the date of grant. Shares of common stock are using the more dilutive of the two-class method or the treasury- issued at the vesting date for stock-settled RSUs. The fair value of stock method. Basic net income per share of common stock performance share units (PSUs) are determined using FCX’s stock was computed by dividing net income attributable to common price and a Monte-Carlo simulation model. The fair value for stockholders (after deducting undistributed dividends and earnings liability-classified awards (i.e., cash-settled RSUs) is remeasured allocated to participating securities) by the weighted-average each reporting period using FCX’s stock price. FCX has elected shares of common stock outstanding during the year. Diluted net to recognize compensation costs for stock option awards that vest income per share of common stock was calculated by including over several years on a straight-line basis over the vesting period, the basic weighted-average shares of common stock outstanding and for RSUs using the graded-vesting method over the vesting adjusted for the effects of all potential dilutive shares of common period. Refer to Note 10 for further discussion. stock, unless their effect would be antidilutive. Earnings Per Share. FCX calculates its basic net income per Reconciliations of net income and weighted-average shares of share of common stock under the two-class method and common stock outstanding for purposes of calculating basic and calculates its diluted net income per share of common stock diluted net income per share for the years ended December 31 follow: Net income Net income attributable to noncontrolling interests Undistributed dividends and earnings allocated to participating securities Net income attributable to common stockholders (shares in millions) Basic weighted-average shares of common stock outstanding Add shares issuable upon exercise or vesting of dilutive stock options and RSUs Diluted weighted-average shares of common stock outstanding Net income per share attributable to common stockholders: Basic Diluted 2023 $ 3,751 (1,903) (6) $ 1,842 1,434 9 1,443 $ 1.28 $ 1.28 2022 $ 4,479 (1,011) (7) $ 3,461 1,441 10 1,451 $ 2.40 $ 2.39 2021 $ 5,365 (1,059) (7) $ 4,299 1,466 16 1,482 $ 2.93 $ 2.90 Outstanding stock options with exercise prices greater than the Income Taxes. In December 2023, the FASB issued an ASU average market price of FCX’s common stock during the year are requiring enhancements to disclosures related to income taxes, excluded from the computation of diluted net income per share including the rate reconciliation and information on income of common stock. Excluded shares of common stock associated taxes paid. This ASU becomes effective January 1, 2025. FCX is with outstanding stock options totaled less than 1 million shares assessing the impact of this ASU, and upon adoption, may be in 2023, 1 million shares in 2022 and 5 million shares in 2021. required to include certain additional disclosures in the notes to Global Intangible Low-Taxed Income (GILTI). FCX has elected to its financial statements. treat taxes due on future U.S. inclusions in taxable income related Subsequent Events. FCX evaluated events after December 31, to GILTI as a current period expense when incurred. 2023, and through the date the consolidated financial statements New Accounting Standards. Following is a discussion of new were issued, and determined any events or transactions accounting standards. occurring during this period that would require recognition or Segment Reporting. In November 2023, the Financial Accounting disclosure are appropriately addressed in these consolidated Standards Board (FASB) issued an Accounting Standards Update financial statements. (ASU) related to segment reporting that requires disclosure of significant segment expenses and other segment items by reportable NOTE 2. ACQUISITIONS AND DISPOSITIONS segment. This ASU becomes effective for annual periods beginning in 2024 and interim periods in 2025. FCX does not expect the new ASU to have a significant impact on its current segment reporting as presented within Note 16. Cobalt Business. In September 2021, FCX’s 56% owned subsidiary, Koboltti Chemicals Holdings Limited (KCHL), completed the sale of its remaining cobalt business based in Kokkola, Finland (Freeport Cobalt) to Jervois Global Limited (Jervois) for $208 million (before post-closing adjustments), consisting of cash consideration of 2023 Annual Report 75 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S $173 million and 7% of Jervois common stock (valued at $35 million PT-FI Divestment. On December 21, 2018, FCX completed the at the time of closing). In 2022, KCHL sold these shares for transaction with the Indonesia government regarding PT-FI’s long- $60 million. At closing, Freeport Cobalt’s assets included cash of term mining rights and share ownership (the 2018 Transaction). approximately $20 million and other net assets of $125 million. In Pursuant to the divestment agreement and related documents, 2021, FCX recorded a gain of $60 million ($34 million to net income PT Mineral Industri Indonesia (MIND ID), an Indonesia state- attributable to common stock) associated with this transaction. owned enterprise, acquired all of Rio Tinto plc’s (Rio Tinto) interests In addition, KCHL has the right to receive contingent consideration associated with its joint venture with PT-FI (the former Rio Tinto through 2026 of up to $40 million based on the future performance Joint Venture) and 100% of FCX’s interests in PT Indonesia Papua of Freeport Cobalt. Any gain related to the contingent consideration Metal Dan Mineral (PTI). will be recognized when received. Following this transaction, FCX no In connection with the 2018 Transaction, PT-FI acquired all of longer has cobalt operations. the common stock of PT Rio Tinto Indonesia that held the former PT Smelting. In April 2021, PT-FI acquired 14.5% of the outstanding Rio Tinto Joint Venture interest. After the 2018 Transaction, MIND common stock of PT Smelting, a smelter and refinery in Gresik, ID’s (26.24%) and PTI’s (25.00%) collective share ownership of Indonesia, for $33 million, increasing its ownership interest from PT-FI totals 51.24% and FCX’s share ownership totals 48.76%. The 25.0% to 39.5%. The remaining outstanding shares of PT Smelting arrangements provide for FCX and the other pre-transaction are owned by Mitsubishi Materials Corporation (MMC). PT-FI PT-FI shareholders (i.e., MIND ID) to retain the economics of the accounts for its investment in PT Smelting under the equity method revenue and cost sharing arrangements under the former Rio Tinto (refer to Note 3 for further discussion). NOTE 3. OWNERSHIP IN SUBSIDIARIES AND JOINT VENTURES Ownership in Subsidiaries. FMC produces copper and molybdenum from mines in North America and South America. At December 31, 2023, FMC’s operating mines in North America were Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami located in Arizona; Tyrone and Chino located in New Mexico; and Henderson and Climax located in Colorado. FMC has a 72% interest in Morenci (refer to “Joint Ventures. Sumitomo and SMM Morenci, Inc.”) and owns 100% of the other North America mines. At December 31, 2023, operating mines in South America were Cerro Verde (53.56% owned) located in Peru and El Abra (51% owned) located in Chile. At December 31, 2023, FMC’s net assets totaled $17.8 billion and its accumulated deficit totaled $13.3 billion. FCX had no loans to FMC outstanding at December 31, 2023. FCX owns 48.76% of PT-FI (refer to “PT-FI Divestment”). At December 31, 2023, PT-FI’s net assets totaled $15.5 billion and its retained earnings totaled $11.0 billion. FCX had no loans to PT-FI outstanding at December 31, 2023. FCX owns 100% of the outstanding Atlantic Copper (FCX’s wholly owned smelting and refining unit in Spain) common stock. At December 31, 2023, Atlantic Copper’s net assets totaled $97 million and its accumulated deficit totaled $443 million. FCX had $611 million in loans to Atlantic Copper outstanding at December 31, 2023. Joint Venture. As a result, FCX’s economic interest in PT-FI approximated 81% through 2022 and is 48.76% in 2023 and thereafter (see “Attribution of PT-FI Net Income or Loss” below). FCX, PT-FI, PTI and MIND ID entered into a shareholders agreement (the PT-FI Shareholders Agreement), which includes provisions related to the governance and management of PT-FI. FCX considered the terms of the PT-FI Shareholders Agreement and related governance structure, including whether MIND ID has substantive participating rights, and concluded that it has retained control and would continue to consolidate PT-FI in its financial statements following the 2018 Transaction. Among other terms, the governance arrangements under the PT-FI Shareholders Agreement transfers control over the management of PT-FI’s mining operations to an operating committee, which is controlled by FCX. Additionally, as discussed above, the existing PT-FI shareholders retained the economics of the revenue and cost sharing arrangements under the former Rio Tinto Joint Venture, so that FCX’s economic interest in the project through 2041 will not be significantly affected by the 2018 Transaction. FCX believes its conclusion to continue to consolidate PT-FI in its financial statements is in accordance with the U.S. Securities and Exchange Commission (SEC) Regulation S-X, Rule 3A-02 (a), which provides for situations in which consolidation of an entity, notwithstanding the lack of majority ownership, is necessary to present fairly the financial position and results of operations of the registrant, because of the existence of a parent-subsidiary relationship by means other than record ownership of voting stock. 76 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Attribution of PT-FI Net Income or Loss. FCX concluded that On November 30, 2021, PT-FI entered into a convertible loan the attribution of PT-FI’s net income or loss from December 21, agreement to fund an expansion of PT Smelting’s facilities. In 2018 (the date of the divestment transaction), through December 31, December 2023, the project was completed and PT-FI’s loan is 2022 (the Initial Period), should be based on the economics expected to convert into PT Smelting equity in 2024, increasing replacement agreement included in the PT-FI Shareholders PT-FI’s ownership in PT Smelting to approximately 65%. Agreement, as previously discussed. The economics replacement FCX has determined that PT Smelting is a variable interest entity agreement entitled FCX to approximately 81% of PT-FI dividends (VIE), however, as mutual consent of both PT-FI and MMC is paid during the Initial Period, with the remaining 19% paid to required to make the decisions that most significantly impact the the noncontrolling interests. PT-FI’s cumulative net income during economic performance of PT Smelting, PT-FI is not the primary the Initial Period totaled $6.0 billion, of which $4.9 billion was beneficiary. As PT-FI has the ability to exercise significant influence attributed to FCX. In addition, because PT-FI did not achieve the over PT Smelting, it accounts for its investment in PT Smelting Gold Target (as defined in the PT-FI Shareholders Agreement) under the equity method (refer to Note 6). during the Initial Period, PT-FI’s net income and cash dividends PT-FI’s maximum exposure to loss is its investment in PT Smelting associated with the sale of approximately 190,000 ounces of gold and its loan to fund the expansion (refer to Note 6). PT-FI’s equity during 2023 were attributed approximately 81% to FCX and 19% in PT Smelting’s earnings totaled $10 million in 2023, $24 million in to MIND ID. 2022 and $6 million in 2021. Beginning January 1, 2023, the attribution of PT-FI’s net income Beginning January 1, 2023, PT-FI’s commercial arrangement or loss is based on equity ownership percentages (48.76% for FCX, with PT Smelting changed from a copper concentrate sales 26.24% for MIND ID and 25.00% for PTI), except for net income agreement to a tolling arrangement. Under this arrangement, PT-FI of $35 million that was attributable to the approximately 190,000 pays PT Smelting a tolling fee to smelt and refine its copper ounces of gold sales discussed above. concentrate and PT-FI retains title to all products for sale to third For all of its other partially owned consolidated subsidiaries, FCX parties (i.e., there are no further sales from PT-FI to PT Smelting). attributes net income or loss based on equity ownership percentages. While the new tolling agreement with PT Smelting does not Joint Ventures. Sumitomo and SMM Morenci, Inc. FMC owns a 72% undivided interest in Morenci via an unincorporated joint venture. The remaining 28% is owned by Sumitomo (15%) and SMM Morenci, Inc. (13%). Each partner takes in kind its share of Morenci’s production. FMC purchased 46 million pounds during 2023 and 62 million pounds during 2022 of Morenci’s copper cathode from Sumitomo and SMM Morenci, Inc. at market prices for $177 million significantly change PT-FI’s economics, it impacts the timing of PT-FI’s sales and working capital requirements. NOTE 4. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES The components of inventories follow: December 31, Current inventories: and $245 million, respectively. FMC had receivables from Sumitomo Raw materials (primarily concentrate) and SMM Morenci, Inc. totaling $17 million at December 31, 2023, and $25 million at December 31, 2022. PT Smelting. PT Smelting is an Indonesia company that owns a copper smelter and refinery in Gresik, Indonesia. In 1996, PT-FI entered into a joint venture and shareholder agreement with MMC Work-in-process Finished goodsa Total product Total materials and supplies, netb Mill stockpiles Leach stockpiles to jointly construct the PT Smelting facilities. PT Smelting, which Total current mill and leach stockpiles commenced operations in 1999, was the first operating copper smelter facility in Indonesia. PT-FI owns 39.5% of the outstanding common stock of PT Smelting. MMC owns the remaining 60.5% of PT Smelting’s outstanding common stock and serves as the operator of the facilities. Long-term inventoriesc: Mill stockpiles Leach stockpiles Total long-term mill and leach stockpilesc 2023 2022 $ 469 221 1,782 $2,472 $2,169 $ 179 1,240 $1,419 $ 251 1,085 $ 1,336 $ 443 221 1,169 $ 1,833 $ 1,964 $ 216 1,167 $ 1,383 $ 199 1,053 $ 1,252 a. The increase in finished goods inventory at December 31, 2023, was primarily associated with the change in PT-FI’s commercial arrangement with PT Smelting (refer to Note 3) and the timing of shipments of anode slimes. b. Materials and supplies inventory was net of obsolescence reserves totaling $41 million at December 31, 2023, and $39 million at December 31, 2022. c. Estimated metals in stockpiles not expected to be recovered within the next 12 months. 2023 Annual Report 77 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 5. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT COSTS, NET The components of net property, plant, equipment and mine development costs follow: December 31, Proven and probable mineral reserves VBPP Mine development and other Buildings and infrastructure Machinery and equipment Mobile equipment Construction in progress Oil and gas properties Total Accumulated depreciation, depletion and amortizationa Property, plant, equipment and mine development costs, net 2023 2022 $ 7,160 359 12,325 10,165 15,246 4,986 6,885 27,441 84,567 (49,272) $ 7,159 360 12,314 9,746 14,790 4,756 4,419 27,356 80,900 (48,273) $ 35,295 $ 32,627 a. Includes accumulated amortization for oil and gas properties of $27.4 billion at December 31, 2023, and $27.3 billion at December 31, 2022. FCX recorded $1.6 billion for VBPP in connection with the FMC acquisition (excluding $0.6 billion associated with mining operations that were subsequently sold) and transferred $0.8 billion to proven and probable mineral reserves through 2023 ($1 million in 2023 and $16 million in 2022). Cumulative impairments of and adjustments to VBPP total $0.5 billion, which were primarily recorded in 2008. Capitalized interest, which primarily related to FCX’s mining operations’ capital projects, including the construction and development of the Manyar smelter and precious metals refinery in Indonesia (collectively, the Indonesia smelter projects), totaled NOTE 6. OTHER ASSETS The components of other assets follow: December 31, Intangible assetsa Legally restricted trust assetsb Disputed tax assessments:c Cerro Verde PT-FI Investments: PT Smeltingd Restricted time depositse Fixed income, equity securities and other Loans to PT Smelting for expansionf Long-term receivable for taxesg Prepaid rent and deposits Contingent consideration associated with sales of assetsh Long-term employee receivables Other Total other assets 2023 2022 $ 422 212 $ 416 182 274 10 123 97 84 233 70 39 38 26 182 $ 1,810 333 12 50 133 79 101 54 26 47 24 144 $ 1,601 a. Indefinite-lived intangible assets totaled $214 million at December 31, 2023 and 2022. Definite-lived intangible assets totaled $208 million at December 31, 2023, and $202 million at December 31, 2022, which was net of accumulated amortization totaling $43 million and $39 million, respectively. b. Reflects amounts held in trusts for AROs related to properties in New Mexico (refer to Note 12 for further discussion). c. Refer to Note 12 for further discussion. d. PT-FI’s ownership in PT Smelting is recorded using the equity method. Amounts were reduced by unrecognized profits on sales from PT-FI to PT Smelting totaling $112 million at December 31, 2022. Trade accounts receivable from PT Smelting totaled $277 million at December 31, 2022. e. Relates to PT-FI’s regulatory commitments (refer to Notes 12 and 14 for further discussion). f. Refer to Note 3 for further discussion. g. Includes tax overpayments and refunds not expected to be realized within the next 12 months. h. Refer to Note 15 for further discussion. NOTE 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $267 million in 2023, $150 million in 2022 and $72 million in 2021. The components of accounts payable and accrued liabilities follow: During the three-year period ended December 31, 2023, no material impairments of FCX’s long-lived mining assets were recorded. December 31, 2023 2022 Accounts payable Salaries, wages and other compensation Deferred revenue Accrued interesta Pension, postretirement, postemployment and other employee benefitsb PT-FI contingenciesc Accrued taxes, other than income taxes Leasesd Community development programs Litigation accruals Accrued mining royalties Other Total accounts payable and accrued liabilities $ 2,466 343 161 146 129 122 88 84 58 51 13 68 $ 3,729 $ 2,701 329 76 218 143 179 75 38 60 99 41 68 $ 4,027 a. Third-party interest paid, net of capitalized interest, was $419 million in 2023, $417 million in 2022 and $640 million in 2021. b. Refer to Note 9 for long-term portion. c. Refer to Notes 12 and 13 for further discussion. d. Refer to Note 13 for further discussion. 78 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 8. D EBT FCX’s debt at December 31, 2023, is net of reductions of $67 million ($78 million at December 31, 2022) for unamortized net discounts and unamortized debt issuance costs. The components of debt follow: December 31, Revolving credit facilities: FCX PT-FI Cerro Verde Senior notes and debentures: Issued by FCX: 3.875% Senior Notes due 2023 4.55% Senior Notes due 2024 5.00% Senior Notes due 2027 4.125% Senior Notes due 2028 4.375% Senior Notes due 2028 5.25% Senior Notes due 2029 4.25% Senior Notes due 2030 4.625% Senior Notes due 2030 5.40% Senior Notes due 2034 5.450% Senior Notes due 2043 Issued by PT-FI: 4.763% Senior Notes due 2027 5.315% Senior Notes due 2032 6.200% Senior Notes due 2052 Issued by FMC: 7 ⅛% Debentures due 2027 9 1/2% Senior Notes due 2031 6 1/8% Senior Notes due 2034 Other Total debt Less current portion of debt Long-term debt Revolving Credit Facilities. 2023 2022 $ — — — $ — — — — 730 448 483 430 468 446 588 723 1,689 746 1,490 744 115 121 118 83 9,422 (766) $8,656 995 729 465 543 475 499 494 615 723 1,687 745 1,489 744 115 122 118 62 10,620 (1,037) $ 9,583 exceptions, restrict the ability of FCX’s subsidiaries that are not borrowers or guarantors to incur additional indebtedness (including guarantee obligations) and the ability of FCX or FCX’s subsidiaries to: create liens on assets; enter into sale and leaseback transactions; engage in mergers, liquidations and dissolutions; and sell assets. In addition, the revolving credit facility contains a total leverage ratio financial covenant. PT-FI. In November 2023, PT-FI amended and restated its senior unsecured revolving credit facility to, among other things, increase the availability to $1.75 billion, extend the maturity date under the facility to November 2028 and reduce the applicable margin used in the determination of interest rates. PT-FI’s revolving credit facility is available for its general corporate purposes, including to fund PT-FI’s projects related to the expansion of smelting and refining capacity in Indonesia. PT-FI’s revolving credit facility contains customary affirmative covenants and representations and also contains standard negative covenants that, among other things, restrict, subject to certain exceptions, the ability of PT-FI to incur additional indebtedness; create liens on assets; enter into sale and leaseback transactions; sell assets; and modify or amend the shareholders agreement or related governance structure. The credit facility also contains financial covenants governing maximum total leverage and minimum interest expense coverage and other covenants addressing certain environmental and social compliance requirements. Cerro Verde. Cerro Verde has a $350 million, senior unsecured revolving credit facility that matures in May 2027. Cerro Verde’s revolving credit facility contains customary representations and affirmative and negative covenants. At December 31, 2023, FCX, PT-FI and Cerro Verde had no FCX. FCX and PT-FI have a $3.0 billion, unsecured revolving credit borrowings outstanding under their respective revolving credit facility that matures in October 2027. Under the terms of the facilities and were in compliance with their respective covenants. revolving credit facility, FCX may obtain loans and issue letters of credit in an aggregate amount of up to $3.0 billion with a $1.5 billion Senior Notes. sublimit on the issuance of letters of credit and a $500 million limit on PT-FI’s borrowing capacity. At December 31, 2023, FCX had $7 million in letters of credit issued under its revolving credit facility. Interest on loans made under the revolving credit facility may, at the option of FCX or PT-FI, be determined based on the Secured Overnight Financing Rate plus a spread to be determined by reference to a grid based on FCX’s credit rating. The revolving credit facility contains customary affirmative covenants and representations, and also contains various negative covenants that, among other things and subject to certain FCX. In March 2023, FCX repaid in full the outstanding principal balance of its 3.875% Senior Notes totaling $996 million at maturity. Beginning in 2022 and through 2023, FCX has purchased $1.3 billion aggregate principal amount of its senior notes in open- market transactions for a total cost of $1.2 billion. There have been no purchases of senior notes in open-market transactions since July 2023. Listed below are the FCX senior notes, purchased on the open market during 2023 and 2022. 2023 Annual Report 79 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Principal Amount Adjustments Value Net Book Redemption Value Gain Year Ended December 31, 2023 5.00% Senior Notes due 2027 4.125% Senior Notes due 2028 4.375% Senior Notes due 2028 5.25% Senior Notes due 2029 4.25% Senior Notes due 2030 4.625% Senior Notes due 2030 Total Year Ended December 31, 2022 5.00% Senior Notes due 2027 4.125% Senior Notes due 2028 4.375% Senior Notes due 2028 5.25% Senior Notes due 2029 4.25% Senior Notes due 2030 4.625% Senior Notes due 2030 5.40% Senior Notes due 2034 5.450% Senior Notes due 2043 Total $ 17 61 46 31 50 28 $ 233 $ 131 153 171 97 101 228 20 160 $ 1,061 $ 17 $ — 61 — 45 (1) 31 — 49 (1) 28 — $ (2) $ 231 (1) (2) (1) (1) (2) — (2) $ (1) $ 130 152 169 96 100 226 20 158 $ (10) $ 1,051 $ 17 58 43 31 46 26 $ 221 $ 130 143 163 93 93 215 20 150 $ 1,007 $ — 3 2 — 3 2 $ 10 $ — 9 6 3 7 11 — 8 $ 44 The senior notes listed below are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to the dates stated below, at specified redemption prices beginning on the dates stated below, and at 100% of principal two years before maturity. Debt Instrument 5.00% Senior Notes due 2027 4.125% Senior Notes due 2028 4.375% Senior Notes due 2028 5.25% Senior Notes due 2029 4.25% Senior Notes due 2030 4.625% Senior Notes due 2030 Date September 1, 2022 March 1, 2023 August 1, 2023 September 1, 2024 March 1, 2025 August 1, 2025 The senior notes listed below are redeemable in whole or in part, at the option of FCX, at a make-whole redemption price prior to the dates stated below and beginning on the dates stated below at 100% of principal. Debt Instrument 4.55% Senior Notes due 2024 5.40% Senior Notes due 2034 5.450% Senior Notes due 2043 Date August 14, 2024 May 14, 2034 September 15, 2042 FCX’s senior notes contain limitations on liens and rank equally with FCX’s other existing and future unsecured and unsubordinated indebtedness. PT-FI. In April 2022, PT-FI completed the sale of $3.0 billion aggregate principal amount of unsecured senior notes, consisting of $750 million of 4.763% Senior Notes due 2027, $1.5 billion of 5.315% Senior Notes due 2032 and $750 million of 6.200% Senior Notes due 2052. PT-FI used $0.6 billion of the net proceeds to repay the borrowings under its term loan and recorded a loss on early extinguishment of debt of $10 million in 2022. PT-FI is using the remaining net proceeds to finance the Indonesia smelter projects. 80 Freeport | The Value of Copper The senior notes listed below are redeemable in whole or in part, at the option of PT-FI, at a make-whole redemption price prior to the dates stated below and beginning on the dates stated below at 100% of principal. Debt Instrument 4.763% Senior Notes due 2027 5.315% Senior Notes due 2032 6.200% Senior Notes due 2052 Date March 14, 2027 January 14, 2032 October 14, 2051 Cerro Verde Shareholder Loans. In December 2014, Cerro Verde entered into loan agreements with three of its shareholders, which will mature in May 2024. No amounts were outstanding at December 31, 2023 and 2022, and availability under these agreements totals $200 million. Maturities. Maturities of debt instruments based on the principal amounts outstanding at December 31, 2023, total $766 million in 2024, $4 million in 2025, $4 million in 2026, $1.3 billion in 2027, $0.9 billion in 2028 and $6.5 billion thereafter. NOTE 9. OTHER LIABILITIES, INCLUDING EMPLOYEE BENEFITS The components of other liabilities follow: December 31, 2023 2022 Pension, postretirement, postemployment and other employment benefitsa Leasesb Provision for tax positions Litigation accruals Social investment programs Indemnification of MIND IDb Other Total other liabilities a. Refer to Note 7 for current portion. b. Refer to Note 13 for further discussion. $ 704 347 174 163 79 75 106 $ 1,648 $ 775 294 161 109 36 74 113 $ 1,562 Pension Plans. Following is a discussion of FCX’s pension plans. FMC Plans. FMC has U.S. trusteed, non-contributory pension plans covering some U.S. employees and some employees of its international subsidiaries hired before 2007. The applicable FMC plan design determines the manner in which benefits are calculated for any particular group of employees. Benefits are calculated based on final average monthly compensation and years of service or based on a fixed amount for each year of service. Non-bargained FMC employees hired after December 31, 2006, are not eligible to participate in the FMC U.S. pension plan. In August 2020, the FMC Retirement Plan, the largest FMC plan, was amended such that, effective September 1, 2020, participants no longer accrue any additional benefits. N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S FCX’s funding policy for these plans provides that contributions Curve that have a yield higher than the regression mean yield to pension trusts shall be at least equal to the minimum funding curve. The Mercer Yield Curve—Above Mean consists of spot requirements of the Employee Retirement Income Security Act of (i.e., zero coupon) interest rates at one-half-year increments for 1974, as amended, for U.S. plans; or, in the case of international each of the next 30 years and is developed based on pricing plans, the minimum legal requirements that may be applicable in and yield information for high-quality corporate bonds. Changes the various countries. Additional contributions also may be made in the discount rate are reflected in FCX’s benefit obligation and, from time to time. therefore, in future pension costs. FCX’s primary investment objectives for the FMC plan assets SERP Plan. FCX has an unfunded Supplemental Executive held in a master trust (Master Trust) are to maintain funds sufficient Retirement Plan (SERP) for its chief executive officer. The SERP to pay all benefit and expense obligations when due, minimize provides for retirement benefits payable in the form of a joint and the volatility of the plan’s funded status to the extent practical, survivor annuity, life annuity or an equivalent lump sum. The and to maintain prudent levels of risk consistent with the plan’s participant has elected to receive an equivalent lump sum payment. investment policy. The FMC plan assets are invested in a risk- The payment will equal a percentage of the participant’s highest mitigating portfolio, which is allocated among multiple fixed average compensation for any consecutive three-year period income managers. The current target allocation of the portfolio is during the five years immediately preceding the completion of long-duration credit (50%); long-duration U.S. government/credit 25 years of credited service. The SERP benefit will be reduced (20%); core fixed income (16%); long-term U.S. Treasury Separate by the value of all benefits from current and former retirement Trading of Registered Interest and Principal Securities (13%); and plans (qualified and nonqualified) sponsored by FCX, by FM Services cash equivalents (1%). Company, FCX’s wholly owned subsidiary, or by any predecessor The expected rate of return on plan assets is evaluated at least employer (including FCX’s former parent company), except for annually, taking into consideration asset allocation, historical benefits produced by accounts funded exclusively by deductions and expected future performance on the types of assets held in from the participant’s pay. the Master Trust, and the current economic environment. Based on PT-FI Plan. PT-FI has a defined benefit pension plan denominated these factors, FCX expects the pension assets will earn an in Indonesia rupiah covering substantially all of its Indonesia average of 5.75% per annum beginning January 1, 2024, which is national employees. PT-FI funds the plan and invests the assets based on the target asset allocation and long-term capital market in accordance with Indonesia pension guidelines. The pension return expectations. obligation was valued at an exchange rate of 15,339 rupiah to one For estimation purposes, FCX assumes the long-term asset mix U.S. dollar on December 31, 2023, and 15,652 rupiah to one for these plans generally will be consistent with the current mix. U.S. dollar on December 31, 2022. Indonesia labor laws require that Changes in the asset mix could impact the amount of recorded companies provide a minimum severance to employees upon pension costs, the funded status of the plans and the need for future employment termination based on the reason for termination and cash contributions. A lower-than-expected return on assets also the employee’s years of service. PT-FI’s pension benefit obligation would decrease plan assets and increase the amount of recorded includes benefits determined in accordance with this law. PT-FI’s pension costs in future years. When calculating the expected return expected rate of return on plan assets is evaluated at least annually, on plan assets, FCX uses the market value of assets. taking into consideration its long-range estimated return for the Among the assumptions used to estimate the pension benefit plan based on the asset mix. Based on these factors, PT-FI expects obligation is a discount rate used to calculate the present value of its pension assets will earn an average of 7% per annum beginning expected future benefit payments for service to date. The discount January 1, 2024. The discount rate assumption for PT-FI’s plan is rate assumption for FCX’s U.S. plans is designed to reflect yields based on the Indonesia Government Security Yield Curve. Changes on high-quality, fixed-income investments for a given duration. The in the discount rate are reflected in PT-FI’s benefit obligation and, determination of the discount rate for these plans is based on therefore, in future pension costs. expected future benefit payments together with the Mercer Yield Curve—Above Mean. The Mercer Yield Curve—Above Mean is constructed from the bonds in the Mercer Pension Discount 2023 Annual Report 81 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Plan Information. FCX uses a measurement date of December 31 During 2023, the actuarial loss of $15 million for the FCX pension for its plans. Information for qualified and non-qualified plans plans primarily resulted from the decrease in the discount rate where the projected benefit obligations and the accumulated from 5.41% to 5.15%. During 2022, the actuarial gain of $623 million benefit obligations exceed the fair value of plan assets follows: for the FCX pension plans primarily resulted from the increase in December 31, Projected and accumulated benefit obligation Fair value of plan assets 2023 $ 1,828 1,475 2022 $ 1,831 1,422 Information on the qualified and non-qualified FCX (FMC and SERP plans) and PT-FI plans as of December 31 follows: Change in benefit obligation: Benefit obligation at beginning of year Service cost Interest cost Actuarial losses (gains) Special termination benefits and plan amendments Foreign exchange losses (gains) Benefits and administrative expenses paid Benefit obligation at end of year Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Employer contributionsa Foreign exchange gains (losses) Benefits and administrative expenses paid Fair value of plan assets at end of year Funded status FCX PT-FI 2023 2022 2023 2022 $ 1,884 15 98 15 $ 2,553 15 71 (623) — 1 — (3) $ 215 11 14 3 1 4 $ 237 12 14 (2) 2 (22) (133) 1,880 (129) 1,884 (27) 221 (26) 215 1,483 121 65 1 2,071 (509) 52 (2) 205 11 9 4 240 10 2 (21) (133) (129) (26) (26) 1,537 1,483 203 205 $ (343) $ (401) $ (18) $ (10) Accumulated benefit obligation $ 1,878 $ 1,882 $ 182 $ 176 Weighted-average assumptions used to determine benefit obligations: Discount rate Rate of compensation increase 5.15% N/A 5.41% 6.75% 7.00% 4.00% 4.00% N/A Balance sheet classification of funded status: Other assets Accounts payable and accrued the discount rate from 2.85% to 5.41%. The weighted-average assumptions used to determine net periodic benefit cost and the components of net periodic benefit cost for FCX’s pension plans for the years ended December 31 follow: Weighted-average assumptions:a Discount rate Expected return on plan assets Service cost Interest cost Expected return on plan assets Amortization of net actuarial losses Net periodic benefit cost 2023 2022 2021 5.41% 5.00% 2.85% 3.00% 2.50% 5.25% $ 15 98 (72) 15 $ 56 $ 15 71 (62) 15 $ 39 $ 12 66 (98) 25 $ 5 a. The assumptions shown relate only to the FMC Retirement Plan. The weighted-average assumptions used to determine net periodic benefit cost and the components of net periodic benefit cost for PT-FI’s pension plan for the years ended December 31 follow: Weighted-average assumptions: Discount rate Expected return on plan assets Rate of compensation increase Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of net actuarial gains Special termination benefit Net periodic benefit cost 2023 2022 2021 7.00% 7.00% 4.00% 6.50% 7.00% 4.00% 6.25% 7.75% 4.00% $ 11 14 (14) 2 (1) 1 $ 13 $ 12 14 (15) 1 (1) 2 $ 13 $ 13 14 (19) 1 (1) — $ 8 The service cost component of net periodic benefit cost is included in operating income, and the other components are included in other income (expense), net in the consolidated statements of income. Included in accumulated other comprehensive loss are the following amounts that have not been recognized in net periodic 2023 After Taxes and Before Noncontrolling Taxes Interests 2022 After Taxes and Before Noncontrolling Taxes Interests $ 382 (1) $ 381 $ 257 (2) $ 255 $ 426 — $ 426 $ 305 (2) $ 303 $ 9 $ 8 $ — $ — pension cost as of December 31: liabilities Other liabilities Total (3) (349) $ (343) (4) (405) $ (401) — (18) $ (18) — (10) $ (10) a. Employer contributions for 2024 are currently expected to approximate $65 million for the FCX plans and $11 million for the PT-FI plan (based on a December 31, 2023, exchange rate of 15,339 Indonesia rupiah to one U.S. dollar). Net actuarial losses Prior service costs 82 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Plan assets are classified within a fair value hierarchy that prioritizes and, as such, are classified within Level 2 of the fair value hierarchy. the inputs to valuation techniques used to measure fair value. A bid-evaluation price is an estimated price at which a dealer The hierarchy gives the highest priority to unadjusted quoted prices would pay for a security. A mid-evaluation price is the average of in active markets for identical assets or liabilities (Level 1), then to the estimated price at which a dealer would sell a security and the prices derived using significant observable inputs (Level 2) and the estimated price at which a dealer would pay for a security. These lowest priority to prices derived using significant unobservable evaluations are based on quoted prices, if available, or models that inputs (Level 3). use observable inputs. A summary of the fair value for pension plan assets, including Private equity investments are valued at NAV using information those measured at net asset value (NAV) as a practical expedient, from general partners and have inherent restrictions on associated with the FCX plans follows: redemptions that may affect the ability to sell the investments at Fair Value at December 31, 2023 Level 1 NAV Level 2 Level 3 Total $ 417 24 $ 417 24 $ — — $ — — $ — — — — — — $ — — — 67 — $ 508 — — — 1 $ 1 677 276 — 62 $1,015 Commingled/collective funds: Fixed income securities Short-term investments Fixed income: Corporate bonds Government bonds Private equity investments Other investments Total investments Cash and receivables Payables Total pension plan net assets 677 276 67 63 1,524 17 (4) $1,537 Total Fair Value at December 31, 2022 Level 1 NAV Level 2 Level 3 Commingled/collective funds: Fixed income securities Short-term investments Fixed income: Corporate bonds Government bonds Private equity investments Other investments Total investments Cash and receivables Payables Total pension plan net assets $ 335 30 $ 335 30 $ — — $ — — — — 25 — $ 390 — — — 1 $ 1 712 282 — 54 $ 1,048 712 282 25 55 1,439 49 (5) $ 1,483 $ — — — — — — $ — Following is a description of the pension plan asset categories included in the above tables and the valuation techniques used to measure fair value. There have been no changes to the techniques used to measure fair value. Commingled/collective funds are managed by several fund managers and are valued at the NAV per unit of the fund. For most of these funds, the majority of the underlying assets are actively traded securities. These funds primarily require up to a two-business- day notice for redemptions. Fixed income investments include corporate and government bonds held directly by the Master Trust. Fixed income securities are valued using a bid-evaluation price or a mid-evaluation price their NAV in the near term. A summary of the fair value hierarchy for pension plan assets associated with the PT-FI plan follows: Fair Value at December 31, 2023 Total Level 1 Level 2 Level 3 Government bonds Common stocks Mutual funds Total investments Cash and receivablesa Payables Total pension plan net assets $ 102 67 12 181 22 — $ 203 $ 102 67 12 $ 181 $ — — — $ — $ — — — $ — Government bonds Common stocks Mutual funds Total investments Cash and receivablesa Payables Total pension plan net assets a. Cash consists primarily of short-term time deposits. Fair Value at December 31, 2022 Total Level 1 Level 2 Level 3 $ 95 72 12 $ 179 $ — — — $ — $ — — — $ — $ 95 72 12 179 27 (1) $ 205 Following is a description of the valuation techniques used for pension plan assets measured at fair value associated with the PT-FI plan. There have been no changes to the techniques used to measure fair value. Government bonds, common stocks and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded and, as such, are classified within Level 1 of the fair value hierarchy. The techniques described above may produce a fair value calculation that may not be indicative of NRV or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with those used by other market participants, the use of different techniques or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 2023 Annual Report 83 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S The expected benefit payments for FCX’s and PT-FI’s pension The costs charged to operations for the employee savings plan plans follow: 2024 2025 2026 2027 2028 2029 through 2033 FCX $ 123 183 126 128 128 632 PT-FIa $ 30 27 29 29 27 128 a. Based on a December 31, 2023, exchange rate of 15,339 Indonesia rupiah to one U.S. dollar. totaled $119 million in 2023, $101 million in 2022 and $95 million in 2021. FCX has other employee benefit plans, certain of which are related to FCX’s financial results, which are recognized in operating costs. NOTE 10. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION FCX’s authorized shares of capital stock total 3.05 billion shares, consisting of 3.0 billion shares of common stock and 50 million Postretirement and Other Benefits. FCX also provides postretirement shares of preferred stock. medical and life insurance benefits for certain U.S. employees and, Financial Policy. In February 2021, FCX’s Board of Directors in some cases, employees of certain international subsidiaries. (Board) adopted a financial policy for the allocation of cash flows These postretirement benefits vary among plans, and many plans aligned with FCX’s strategic objectives of maintaining a strong require contributions from retirees. The expected cost of providing balance sheet, providing cash returns to shareholders and such postretirement benefits is accrued during the years employees advancing opportunities for future growth. The policy includes a render service. base dividend and a performance-based payout framework, The benefit obligation (funded status) for the postretirement whereby up to 50% of available cash flows generated after planned medical and life insurance benefit plans consisted of a current portion capital spending and distributions to noncontrolling interests of $5 million (included in accounts payable and accrued liabilities) would be allocated to shareholder returns and the balance to debt and a long-term portion of $34 million (included in other liabilities) reduction and investments in value enhancing growth projects, at December 31, 2023, and a current portion of $6 million and a subject to FCX maintaining its net debt at a level not to exceed long-term portion of $43 million at December 31, 2022. the net debt target of $3.0 billion to $4.0 billion (excluding net FCX has a number of postemployment plans covering project debt for the Indonesia smelter projects). The Board reviews severance, long-term disability income, continuation of health the structure of the performance-based payout framework at and life insurance coverage for disabled employees or other welfare least annually. benefits. The accumulated postemployment benefit obligation In February 2021, the Board reinstated a cash dividend on consisted of a current portion of $7 million (included in accounts FCX’s common stock (base dividend), and on November 1, 2021, payable and accrued liabilities) and a long-term portion of $46 million the Board approved (i) a variable cash dividend on FCX’s common (included in other liabilities) at December 31, 2023, and a current stock and (ii) a new share repurchase program authorizing portion of $7 million and a long-term portion of $41 million at repurchases of up to $3.0 billion of FCX common stock. In July 2022, December 31, 2022. the Board authorized an increase in the share repurchase program FCX also sponsors a retirement savings plan for most of its from up to $3.0 billion to up to $5.0 billion. U.S. employees. The plan allows employees to contribute a Under its share repurchase program, FCX acquired 12.74 million portion of their income in accordance with specified guidelines. shares of its common stock for a total cost of $0.5 billion ($38.32 The savings plan is a qualified 401(k) plan for all U.S. salaried average cost per share) in 2021 and 35.12 million shares of its and non-bargained hourly employees. Participants exercise control common stock for a total cost of $1.3 billion ($38.36 average cost and direct the investment of their contributions and account per share) in 2022. There were no shares acquired under the balances among various investment options under the plan. FCX program in 2023. As of February 15, 2024, FCX has $3.2 billion contributes to the plan and matches a percentage of employee available for repurchases under the program. contributions up to certain limits. For employees whose eligible On December 20, 2023, FCX declared quarterly cash dividends compensation exceeds certain levels, FCX provides a nonqualified totaling $0.15 per share on its common stock (including a $0.075 per unfunded defined contribution plan, which had a liability balance share base dividend and $0.075 per share variable dividend), of $62 million at December 31, 2023, and $56 million at December 31, which were paid on February 1, 2024, to common stockholders of 2022, all of which was included in other liabilities. record as of January 12, 2024. The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases are at the discretion of FCX’s Board and management, respectively, and are subject to a 84 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S number of factors, including not exceeding FCX’s net debt Stock Options. Stock options granted under the plans generally target, capital availability, FCX’s financial results, cash requirements, expire 10 years after the date of grant. Stock options vest in global economic conditions, changes in laws, contractual one-third annual increments beginning one year from the date restrictions and other factors deemed relevant by FCX’s Board or of grant. The award agreements provide that participants will management, as applicable. FCX’s share repurchase program receive the following year’s vesting upon retirement. Therefore, on may be modified, increased, suspended or terminated at any time at the date of grant, FCX accelerates one year of amortization for the Board’s discretion. retirement-eligible employees. The award agreements also provide Accumulated Other Comprehensive Loss. A summary of changes in the for accelerated vesting upon certain qualifying terminations of balances of each component of accumulated other comprehensive employment within one year following a change of control. FCX did loss, net of tax, follows: not grant stock options in 2023 or 2022. Balance at January 1, 2021 Amounts arising during the perioda,b Amounts reclassifiedc Balance at December 31, 2021 Amounts arising during the perioda,b Amounts reclassifiedc Balance at December 31, 2022 Amounts arising during the perioda,b Amounts reclassifiedc Balance at December 31, 2023 Defined Benefit Plans Translation Adjustment $ (593) 176 19 (398) 61 7 (330) 41 5 $ (284) $ 10 — — 10 — — 10 — — $ 10 Total $ (583) 176 19 (388) 61 7 (320) 41 5 $(274) A summary of stock options outstanding as of December 31, 2023, and activity during the year ended December 31, 2023, follows: Weighted- Average Exercise Price Per Share Weighted- Average Remaining Aggregate Intrinsic Contractual Value Term (years) $ 17.75 24.18 34.27 15.63 4.3 $ 236 Number of Options 11,614,052 (2,851,786) (12,333) 8,749,933 Balance at January 1 Exercised Expired/Forfeited Balance at December 31 Vested and exercisable at a. Includes net actuarial gains, net of noncontrolling interest, totaling $174 million for 2021, $59 million for 2022 and $38 million for 2023. b. Includes tax provision totaling $2 million for 2021, 2022 and 2023. c. Includes amortization primarily related to actuarial losses, net of taxes of less than $1 million for 2021, 2022 and 2023. December 31 8,726,933 15.59 4.3 $ 235 The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Expected volatility is based on implied volatilities from traded Stock Award Plans. FCX currently has awards outstanding under options on FCX’s common stock and historical volatility of FCX’s various stock-based compensation plans. The stockholder- common stock. FCX uses historical data to estimate future option approved 2016 Stock Incentive Plan (the 2016 Plan) provides for the exercises, forfeitures and expected life. When appropriate, issuance of stock options, stock appreciation rights, restricted separate groups of employees who have similar historical exercise stock, RSUs, PSUs and other stock-based awards for up to 72 million behavior are considered separately for valuation purposes. The common shares. As of December 31, 2023, 20.5 million shares expected dividend rate is calculated using the expected annual were available for grant under the 2016 Plan, and no shares were dividend at the date of grant. The risk-free interest rate is based on available under other plans. Federal Reserve rates in effect for bonds with maturity dates Stock-Based Compensation Cost. Compensation cost charged equal to the expected term of the option. against earnings for stock-based awards for the years ended Information related to stock options during the years ended December 31 follows: December 31 follows: Selling, general and administrative expenses Production and delivery Total stock-based compensation Tax benefit and noncontrolling interests’ sharea Impact on net income 2023 $ 64 45 109 (5) $104 2022 $ 57 38 95 (4) $ 91 2021 $ 64 34 98 (5) $ 93 a. Charges in the U.S. are not expected to generate a future tax benefit. Weighted-average assumptions used to value stock option awards: Expected volatility Expected life of options (in years) Expected dividend rate Risk-free interest rate Weighted-average grant-date fair value (per option) Intrinsic value of options exercised Fair value of options vested a. FCX did not grant stock options in 2023 or 2022. 2023a 2022a 2021 N/A N/A N/A N/A N/A $52 $ 3 N/A N/A N/A N/A N/A $ 148 $ 23 58.1% 5.90 2.5% 0.6% $ 11.92 $ 194 $ 16 2023 Annual Report 85 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Stock-Settled PSUs and RSUs. Since 2014, FCX’s executive officers The total fair value of stock-settled RSUs and PSUs granted was received annual grants of PSUs that vest after a three-year $93 million during 2023, $83 million during 2022 and $62 million performance period. The total grant date target shares related to during 2021. The total intrinsic value of stock-settled RSUs and the PSU grants were 0.4 million for 2023 and 2022 and 0.3 million PSUs vested was $136 million during 2023, $138 million during 2022 for 2021, of which the executive officers will earn (i) between 0% and $56 million during 2021. As of December 31, 2023, FCX had and 200% of the target shares based on achievement of financial $27 million of total unrecognized compensation cost related to metrics and (ii) may be increased or decreased up to 25% of the unvested stock-settled RSUs and PSUs expected to be recognized target shares based on FCX’s total shareholder return compared to over approximately 1.2 years. the total shareholder return of a peer group. PSU awards for FCX’s Cash-Settled RSUs. Cash-settled RSUs are similar to stock- executive officers who are retirement-eligible are non-forfeitable. As settled RSUs, but are settled in cash rather than in shares of such, FCX charges the estimated fair value of the non-forfeitable common stock. These cash-settled RSUs generally vest over three PSU awards to expense at the time the financial and operational years of service. Some award agreements allow for participants to metrics are established, which is typically grant date. The fair value receive the following year’s vesting upon retirement. Therefore, on of PSU awards for FCX’s executive officers who are not retirement- the date of grant of these cash-settled RSU awards, FCX accelerates eligible are expensed over the performance period. one year of amortization for retirement-eligible employees. The FCX grants RSUs that vest over a period of three years or at the cash-settled RSUs are classified as liability awards, and the fair end of three years to certain employees. Some award agreements value of these awards is remeasured each reporting period until allow for participants to receive the following year’s vesting upon the vesting dates. The award agreements for cash-settled RSUs retirement. Therefore, on the date of grant of these RSU awards, provide for accelerated vesting upon certain qualifying terminations FCX accelerates one year of amortization for retirement-eligible of employment within one year following a change of control. employees. FCX also grants RSUs to its directors, which vest Dividends attributable to cash-settled RSUs accrue and are on the first anniversary of the date of grant. The fair value of the paid if the awards vest. A summary of outstanding cash-settled RSUs is amortized over the vesting period or the period until the RSUs as of December 31, 2023, and activity during the year ended director becomes retirement eligible, whichever is shorter. Upon December 31, 2023, follows: a director’s retirement, all of their unvested RSUs immediately vest. For retirement-eligible directors, the fair value of RSUs is recognized in earnings on the date of grant. The award agreements provide for accelerated vesting of all RSUs held by directors if there is a change of control (as defined in the award agreements) and for accelerated vesting of all RSUs held by employees if they experience a qualifying termination within one year following a change of control. Balance at January 1 Granted Vested Forfeited Balance at December 31 Weighted- Average Grant-Date Aggregate Intrinsic Fair Value Value Per Award Number of Awards 814,289 $ 28.04 43.06 546,100 (475,151) 22.54 41.36 (26,497) 858,741 40.23 $37 Dividends attributable to RSUs and PSUs accrue and are paid if The total grant-date fair value of cash-settled RSUs was $24 million the awards vest. A summary of outstanding stock-settled RSUs during 2023, $15 million during 2022 and $9 million during 2021. and PSUs as of December 31, 2023, and activity during the year The intrinsic value of cash-settled RSUs vested was $20 million ended December 31, 2023, follows: Balance at January 1 Granted Vested Forfeited Balance at December 31 Weighted- Average Grant-Date Aggregate Intrinsic Fair Value Value Per Award $ 28.05 39.72 19.76 38.24 37.23 $243 Number of Awards 6,650,873 2,270,941 (3,172,907) (49,332) 5,699,575 during 2023, $26 million during 2022 and $24 million during 2021. The accrued liability associated with cash-settled RSUs consisted of a current portion of $19 million (included in accounts payable and accrued liabilities) and a long-term portion of $7 million (included in other liabilities) at December 31, 2023, and a current portion of $19 million and a long-term portion of $5 million at December 31, 2022. 86 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Other Information. The following table includes amounts related Income taxes are provided on the earnings of FCX’s material to exercises of stock options and vesting of RSUs and PSUs during foreign subsidiaries under the assumption that these earnings will the years ended December 31: be distributed. FCX has not provided deferred income taxes 2023 2022 2021 for other differences between the book and tax carrying amounts of its investments in material foreign subsidiaries as FCX considers its ownership positions to be permanent in duration, and 1,633,519 1,511,072 1,358,101 quantification of the related deferred tax liability is not practicable. FCX shares tendered or withheld to pay the exercise price and/or the statutory withholding taxesa Cash received from stock option exercises Actual tax benefit realized for tax deductions Amounts FCX paid for employee taxes $ $ $ 47 4 50 $ $ $ 125 13 55 $ $ $ 210 9 29 a. Under terms of the related plans, upon exercise of stock options, vesting of stock-settled RSUs and payout of PSUs, employees may tender or have withheld FCX shares to pay the exercise price and/or required withholding taxes. NOTE 11. INCOME TAXES Geographic sources of income before income taxes and equity in affiliated companies’ net earnings for the years ended December 31 consist of the following: U.S. Foreign Total 2023 $ 68 5,938 $ 6,006 2022 2021 $ 840 5,875 $ 6,715 $ 1,861 5,798 $ 7,659 U.S. federal statutory tax rate Withholding and other impacts on foreign earnings Effect of foreign rates different than the U.S. federal statutory rate Foreign tax credit limitation Percentage depletion Valuation allowancea Non-deductible permanent differences Uncertain tax positions State income taxes PT-FI historical tax disputesb PT Rio Tinto Indonesia valuation allowance Other items, net Provision for income taxes a. Refer to “Valuation Allowances” below. b. Refer to “Indonesia Tax Matters” below. FCX’s provision for income taxes for the years ended December 31 consists of the following: Current income taxes: Federal State Foreign Total current Deferred income taxes: Federal State Foreign Total deferred Adjustments Operating loss carryforwards Provision for income taxes 2023 2022 2021 $ 5 (6) (2,087) (2,088) $ — 1 (2,232) (2,231) (50) (3) (320) (373) (149) (6) (144) (299) 6 185 $ (2,270) 1 262 $ (2,267) $ — (11) (2,460) (2,471) (184) (4) (23) (211) 193a 190 $ (2,299) a. Primarily reflects the release of valuation allowances on net operating losses at PT Rio Tinto Indonesia (see below). A reconciliation of the U.S. federal statutory tax rate to FCX’s effective income tax rate for the years ended December 31 follows: 2023 2022 2021 Amount $ (1,261) (615) (313) (289) 183 128 (68) (28) (6) — — (1) $ (2,270) % (21)% (10) (5) (5) 3 2 (1) (1) — — — — (38)% Amount % Amount % $ (1,410) (673) (314) (50) 189 28 (29) (17) (4) (8) — 21 $ (2,267) (21)% (10) (5) (1) 3 — — — — — — — (34)% $ (1,608) (678) (328) (116) 221 326 (21) 13 (14) (193) 189 (90) $ (2,299) (21)% (9) (4) (1) 3 4 — — — (3) 2 (1) (30)% 2023 Annual Report 87 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S FCX paid federal, state and foreign income taxes totaling $2.1 billion FCX develops an estimate of which future tax deductions will be in 2023, $3.1 billion in 2022 and $1.3 billion in 2021. FCX received realized and recognizes a valuation allowance to the extent these refunds of federal, state and foreign income taxes totaling less than deductions are not expected to be realized in future periods. $1 million in 2023, $46 million in 2022 and $109 million in 2021. Valuation allowances will continue to be carried on U.S. foreign The components of deferred taxes follow: tax credits, U.S. federal, state and foreign NOLs and U.S. federal, 2023 2022 state and foreign deferred tax assets, until such time that (i) FCX generates taxable income against which any of the assets, credits December 31, Deferred tax assets: Foreign tax credits Net operating losses Accrued expenses Employee benefit plans Other Deferred tax assets Valuation allowances Net deferred tax assets Deferred tax liabilities: Property, plant, equipment and mine development costs Undistributed earnings Other Total deferred tax liabilities Net deferred tax liabilities $ 1,228 1,761 1,390 78 215 4,672 (3,894) 778 (4,118) (911) (195) (5,224) $ (4,446) $ 1,514 1,923 1,303 99 230 5,069 (3,985) 1,084 (4,330) (810) (211) (5,351) $ (4,267) Tax Attributes. At December 31, 2023, FCX had (i) U.S. foreign tax credits of $1.2 billion that will expire between 2024 and 2027, (ii) U.S. federal net operating losses (NOLs) of $5.4 billion that primarily expire between 2036 and 2037, of which $0.4 billion can be carried forward indefinitely, (iii) U.S. state NOLs of $10.4 billion that primarily expire between 2024 and 2043 and (iv) Atlantic Copper NOLs of $0.5 billion that can be carried forward indefinitely. Valuation Allowances. On the basis of available information at December 31, 2023, including positive and negative evidence, FCX has provided valuation allowances for certain of its deferred tax assets where it believes it is more-likely-than-not that some portion or all of such assets will not be realized. Valuation allowances totaled $3.9 billion at December 31, 2023, and covered all of FCX’s U.S. foreign tax credits and U.S. federal NOLs, substantially all of its U.S. state and foreign NOLs, as well as a portion of its U.S. federal, state and foreign deferred tax assets. The valuation allowance related to FCX’s U.S. foreign tax credits totaled $1.2 billion at December 31, 2023. FCX has operations in tax jurisdictions where statutory income taxes and withholding taxes are in excess of the U.S. federal income tax rate. Valuation allowances are recognized on foreign tax credits for which no benefit is expected to be realized. The valuation allowance related to FCX’s U.S. federal, state and foreign NOLs totaled $1.8 billion and other deferred tax assets totaled $0.9 billion at December 31, 2023. NOLs and deferred tax assets represent future deductions for which a benefit will only be realized to the extent these deductions offset future income. 88 Freeport | The Value of Copper or NOLs can be used, (ii) forecasts of future income provide sufficient positive evidence to support reversal of the valuation allowances or (iii) FCX identifies a prudent and feasible means of securing the benefit of the assets, credits or NOLs that can be implemented. The $91 million net decrease in the valuation allowances during 2023 is primarily related to $32 million of U.S. federal NOLs utilized during 2023, and a $292 million decrease related to expirations of U.S. foreign tax credits partially offset by an increase of $188 million, primarily associated with current year changes in U.S. federal temporary differences and a $22 million increase in valuation allowances against Section 163(j) deferred tax assets related to current year activity. U.S. Inflation Reduction Act of 2022. The provisions of the U.S. Inflation Reduction Act of 2022 (the Act) became applicable to FCX on January 1, 2023. The Act includes, among other provisions, a new Corporate Alternative Minimum Tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period. FCX has made interpretations of certain provisions of the Act, and based on these interpretations, determined that the provisions of the Act did not materially impact FCX’s financial results in 2023. Although the U.S. Department of the Treasury (Treasury) published guidance in 2023 that provided some additional clarity on these rules, uncertainty remains regarding the application of the CAMT. Future guidance released by the Treasury may differ from FCX’s interpretations of the Act, which could be material and may further limit FCX’s ability to realize future benefits from its U.S. NOLs. Indonesia Tax Matters. In 2018, PT-FI received unfavorable Indonesia Tax Court decisions with respect to its appeal of capitalized mine development costs on its 2012 and 2014 corporate income tax returns. PT-FI appealed those decisions to the Indonesia Supreme Court. In 2019, the Indonesia Supreme Court communicated an unfavorable ruling regarding the treatment of mine development costs on PT-FI’s 2014 tax return. During fourth- quarter 2019, PT-FI met with the Indonesia Tax Office and developed a framework for resolution of the disputed matters as they relate to the audits for years 2012 through 2016. N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S In 2021, PT-FI participated in discussions with the Indonesia Tax positions reflect the largest amount of benefit, determined on a Office regarding progress on the framework for resolution. As a cumulative probability basis, that is more-likely-than-not to be result of these discussions and the revised positions taken by both realized upon settlement with the applicable taxing authority with the Indonesia Tax Office and PT-FI, FCX could no longer conclude full knowledge of all relevant information. FCX’s policy associated a resolution of all of the disputed tax items at a more-likely- with uncertain tax positions is to record accrued interest in interest than-not threshold and PT-FI recorded net charges of $384 million, expense and accrued penalties in other income (expense), net, including $155 million for non-deductible penalties recorded to rather than in the provision for income taxes. other income (expense), net, $43 million for non-deductible interest A summary of the activities associated with FCX’s reserve for recorded to interest expense, net, and $186 million to provision for unrecognized tax benefits for the years ended December 31 follows. income tax expense. During 2022, in conjunction with the framework for resolution of disputed matters and the closure of the 2018 corporate income tax audit, PT-FI recorded net charges of $13 million, including $5 million for non-deductible interest recorded to interest expense, net, and $8 million to provision for income taxes. PT-FI continues to engage with the Indonesia Tax Office in pursuit of clarification Balance at beginning of year Additions: Prior year tax positions Current year tax positions Decreases: Prior year tax positions Settlements with taxing authorities on certain aspects of the original framework for resolution of the Balance at end of year 2023 $ 810 27 28 (13) (132) $ 720 2022 $ 808 26 25 (12) (37) $ 810 2021 $ 474 330 71 (30) (37) $ 808 disputed matters. In 2022, in conjunction with the issuance of Government Regulation Number 50 of 2022, which stipulates that objection, tax court, and judicial review verdicts issued after the issuance of the harmonization law qualify for reduced penalties, PT-FI recorded net credits totaling $69 million, including a credit of $76 million recorded to other income (expense), net, and a charge of $7 million to provision for income taxes. Peru Tax Matters. Cerro Verde’s current mining stability agreement subjects it to a stable income tax rate of 32% through the expiration of the agreement on December 31, 2028. The enacted tax rate The total amount of accrued interest and penalties associated with unrecognized tax benefits was $536 million at December 31, 2023, primarily relating to unrecognized tax benefits associated with cost recovery methods and royalties and other related mining taxes, $551 million at December 31, 2022, and $620 million at December 31, 2021. Amounts include unpaid items on the consolidated balance sheet of $33 million at December 31, 2023, $36 million at December 31, 2022, and $41 million at December 31, 2021. Charges for interest and penalties related to unrecognized tax benefits totaled $153 million in 2023, $7 million in 2022 and on dividend distributions, which is not stabilized by the agreement, $34 million in 2021. is 5%. Chile Tax Matters. In December 2023, the US-Chilean Tax Treaty was ratified and will enter into force in 2024. Ratification of this treaty results in the extension of FCX’s share of income from El Abra being subject to an income tax rate of 35%. Beginning in 2018, and through 2023, mining royalty rates at El Abra were based on a sliding scale of 5% to 14% (depending on a defined operational margin). In August 2023, the Chile legislature approved a mining royalty tax reform package that took effect on January 1, 2024, under which the mining royalty taxes will consist of two main components: (i) profitability based mining royalty rates on a sliding scale of 8% to 26% (depending on a defined operational margin) and (ii) an additional ad valorem royalty tax based on 1% of sales. The reserve for unrecognized tax benefits of $720 million at December 31, 2023, included $597 million ($421 million net of income tax benefits and valuation allowances) that, if recognized, would reduce FCX’s provision for income taxes. Changes in the reserve for unrecognized tax benefits associated with current and prior- year tax positions were primarily related to uncertainties associated with FCX’s tax treatment of cost recovery methods and various non-deductible costs. There continues to be uncertainty related to the timing of settlements with taxing authorities, but if additional settlements are agreed upon during the year 2024, FCX could experience a change in its reserve for unrecognized tax benefits. FCX or its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The tax years for FCX’s major tax jurisdictions that remain subject to Uncertain Tax Positions. Tax positions reflected in the consolidated examination are as follows: financial statements are, based on their technical merits, more- likely-than-not to be sustained upon examination by taxing authorities or have otherwise been effectively settled. Such tax Jurisdiction U.S. Federal Indonesia Peru Chile Years Subject to Examination Additional Open Years 2017-2018 2012-2015, 2017, 2021 — 2022 2020-2023 2020, 2022-2023 2017-2023 2020-2021, 2023 2023 Annual Report 89 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 12.CONTINGENCIES Environmental. FCX’s operations are subject to various environmental laws and regulations that govern the generation, storage, treatment, transportation and disposal of hazardous substances; solid waste disposal; air emissions; wastewater discharges; remediation, restoration and reclamation of environmental contamination, including mine closures and reclamation; protection of endangered and threatened species and designation of critical habitats; and other related matters. FCX subsidiaries that operate in the U.S. also are subject to potential liabilities arising under CERCLA and similar A summary of changes in FCX’s estimated environmental obligations for the years ended December 31 follows: Balance at beginning of year Accretion expensea Net additionsb Spending Balance at end of year Less current portion Long-term portion 2023 2022 2021 $ 1,740 119 195 (115) 1,939 (131) $ 1,808 $ 1,664 110 43 (77) 1,740 (125) $ 1,615 $ 1,584 104 40 (64) 1,664 (64) $ 1,600 a. Represents accretion of the fair value of environmental obligations assumed in the acquisition of state laws that impose responsibility on current and previous FMC, which were determined on a discounted cash flow basis. owners and operators of a facility for the remediation of hazardous substances released from the facility into the environment, including damages to natural resources, in some cases irrespective of when the damage to the environment occurred or who caused it. Remediation liability also extends to persons who arranged for the disposal of hazardous substances or transported the hazardous substances to a disposal site selected by the transporter. These liabilities are often shared on a joint and several basis, meaning that each responsible party is fully responsible for the remediation if some or all of the other historical owners or operators no longer exist, do not have the financial ability to respond or cannot be found. As a result, because of FCX’s acquisition of FMC, many of the subsidiary companies FCX now owns are responsible for a wide variety of environmental remediation projects throughout the U.S., and FCX expects to spend substantial sums annually for many years to address those remediation issues. Certain FCX subsidiaries have been advised by the U.S. Environmental Protection Agency (EPA), the Department of the Interior, the Department of Agriculture and various state agencies that, under CERCLA or similar state laws and regulations, they may be liable for costs of responding to environmental conditions at a number of sites that have been or are being investigated to determine whether releases of hazardous substances have occurred and, if so, to develop and implement remedial actions to address environmental concerns. FCX is also subject to claims where the release of hazardous substances is alleged to have damaged natural resources (NRD) and to litigation by individuals allegedly exposed to hazardous substances. As of December 31, 2023, FCX had more than 80 active remediation projects, including NRD claims, in 22 U.S. states. The aggregate environmental obligation for approximately 50% of the active remediation projects totaled approximately $20 million at December 31, 2023. b. Primarily reflects revisions for changes in the anticipated scope and timing of projects. See further discussion below for charges recorded in 2023 associated with the Pinal Creek and Newtown Creek environmental matters. Estimated future environmental cash payments (on an undiscounted and de-escalated basis) total $4.5 billion, including $131 million in 2024, $147 million in 2025, $139 million in 2026, $128 million in 2027, $108 million in 2028 and $3.9 billion thereafter. The amount and timing of these estimated payments will change as a result of changes in regulatory requirements, changes in scope and timing of remediation activities, the settlement of environmental matters and as actual spending occurs. At December 31, 2023, FCX’s environmental obligations totaled $1.9 billion, including $1.8 billion recorded on a discounted basis for those obligations assumed in the FMC acquisition at fair value. FCX estimates it is reasonably possible that these obligations could range between $3.9 billion and $5.0 billion on an undiscounted and de-escalated basis. At December 31, 2023, the most significant environmental obligations were associated with the Pinal Creek site in Arizona; the Newtown Creek site in New York City; historical smelter sites principally located in Arizona, Indiana, Kansas, Missouri, New Jersey, Oklahoma and Pennsylvania; and uranium mining sites in the western U.S. The recorded environmental obligations for these sites totaled $1.6 billion at December 31, 2023. FCX may also be subject to litigation brought by private parties, regulators and local governmental authorities related to these historical sites. A discussion of these sites follows. Pinal Creek. The Pinal Creek site was listed under the Arizona Department of Environmental Quality’s (ADEQ) Water Quality Assurance Revolving Fund program in 1989 for contamination in the shallow alluvial aquifers within the Pinal Creek drainage near Miami, Arizona. Since that time, environmental remediation has been performed by members of the Pinal Creek Group, consisting of Freeport-McMoRan Miami Inc. (Miami), an indirect wholly owned subsidiary of FCX, and two other companies. Pursuant to a 2010 settlement agreement, Miami agreed to take full responsibility for future groundwater remediation at the Pinal Creek site, with 90 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S limited exceptions. Remediation work consisting of groundwater Historical Smelter Sites. FCX subsidiaries and their predecessors extraction and treatment plus source control capping is at various times owned or operated copper, zinc and lead smelters expected to continue for many years. During 2023, FCX recorded or refineries in states including Arizona, Indiana, Kansas, Missouri, adjustments to the Pinal Creek environmental obligation totaling New Jersey, Oklahoma and Pennsylvania. For some of these former $61 million associated with a refined engineering scope and cost processing sites, certain FCX subsidiaries have been advised by estimate for work to be completed within the next several years. EPA or state agencies that they may be liable for costs of FCX’s environmental liability balance for this site was $518 million investigating and, if appropriate, remediating environmental at December 31, 2023. conditions associated with these former processing facilities. At Newtown Creek. From the 1930s until 1964, Phelps Dodge other sites, certain FCX subsidiaries have entered into state Refining Corporation (PDRC), an indirect wholly owned subsidiary voluntary remediation programs to investigate and, if appropriate, of FCX, operated a copper smelter, and from the 1930s until 1984, remediate on-site and off-site conditions associated with the a copper refinery, on the banks of Newtown Creek (the creek), facilities. The historical processing sites are in various stages of which is a 3.5-mile-long waterway that forms part of the boundary assessment and remediation. At some of these sites, disputes between Brooklyn and Queens in New York City. Heavy industrial with local residents and elected officials regarding alleged health uses on and around the creek and discharges from the City of effects or the effectiveness of remediation efforts have resulted New York’s sewer system over more than a century resulted in in litigation of various types, and similar litigation at other sites significant environmental contamination of the waterway. In 2010, is possible. EPA notified PDRC, four other companies and the City of New York From 1920 until 1986, United States Metals Refining Company that EPA considers them PRPs under CERCLA. The notified parties (USMR), an indirect wholly owned subsidiary of FCX, owned and began working with EPA to identify other PRPs. In 2010, EPA operated a copper smelter and refinery in the Borough of Carteret, designated the creek as a Superfund site, and in 2011, PDRC and New Jersey. Since the early 1980s, the site has been the subject four other companies (the Newtown Creek Group, NCG) and the of environmental investigation and remediation, under the direction City of New York entered an Administrative Order on Consent and supervision of the New Jersey Department of Environmental to perform a remedial investigation/feasibility study (RI/FS) to Protection (NJDEP). On-site contamination is in the later stages of assess the nature and extent of environmental contamination in remediation. In 2012, after receiving a request from NJDEP, the creek and identify remedial options. EPA approved the final USMR also began investigating and remediating off-site properties, RI in April 2023. The NCG’s FS work and efforts to identify other which is ongoing. As a result of off-site soil sampling in public PRPs are ongoing. The NCG expects to submit a draft FS report and private areas near the former Carteret smelter, FCX established to EPA by October 2026 and currently expects EPA to select a an environmental obligation for known and potential off-site creek-wide remedy in 2029, with the actual remediation construction environmental remediation. Assessments of sediments in the adjacent starting several years later. Further, in early 2022, EPA asked the Arthur Kill and possible remedial actions could result in additional NCG to develop and evaluate alternatives for an early action adjustments to the related environmental remediation obligation in remediation project in the East Branch tributary of the creek. The future periods. NCG submitted to EPA a draft early action focused feasibility study FCX’s environmental liability balance for historical smelter sites, relating to remediation options for the East Branch and EPA including in the Borough of Carteret, New Jersey, was $262 million provided comments. During 2023, FCX recorded adjustments to at December 31, 2023. Newtown Creek environmental obligations totaling $64 million During 2023, the Superior Court of New Jersey approved an based on updated cost estimates from such draft early action agreement between the parties to settle all claims for an amount focused feasibility study. FCX’s environmental liability balance for not material to FCX in a putative class action titled Juan Duarte, this site was $423 million at December 31, 2023. The final costs of Betsy Duarte and N.D., Infant, by Parents and Natural Guardians fulfilling this remedial obligation and the allocation of costs among Juan Duarte and Betsy Duarte, Leroy Nobles and Betty Nobles, on PRPs are uncertain and subject to change based on the results behalf of themselves and all others similarly situated v. United States of the RI/FS, the remedy ultimately selected by EPA and related Metals Refining Company, Freeport-McMoRan Copper & Gold Inc. allocation determinations. Changes to the overall cost of this and Amax Realty Development, Inc., Docket No. 734-17, that remedial obligation and the portion ultimately allocated to PDRC was filed on January 30, 2017, against USMR, FCX, and Amax Realty could be material to FCX. Development, Inc. 2023 Annual Report 91 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Uranium Mining Sites. During a period between 1940 and the AROs. FCX’s ARO estimates are reflected on a third-party cost early 1980s, certain FCX subsidiaries and their predecessors were basis and are based on FCX’s legal obligation to retire tangible, involved in uranium exploration and mining in the western U.S., long-lived assets. A summary of changes in FCX’s AROs for the primarily on federal and tribal lands in the Four Corners region of years ended December 31 follows: the Southwest. Similar exploration and mining activities by other companies have also caused environmental impacts warranting remediation. In 2017, the Department of Justice, EPA, Navajo Nation, and two FCX subsidiaries reached an agreement regarding the financial contribution of the U.S. Government and the FCX subsidiaries and the scope of the environmental investigation and remediation work for 94 former uranium mining sites on tribal lands. Under the terms of the Consent Decree executed in May 2017, and approved by the U.S. District Court for the District of Arizona, the U.S. contributed $335 million into a trust fund to cover the government’s initial share of the costs, and FCX’s subsidiaries are proceeding with the environmental investigation and remediation work at the 94 sites. The program is expected to take more than 20 years to complete. The Consent Decree excluded 23 former uranium mine sites at which an FCX subsidiary may also be potentially liable, but for which the United States recovered funds as part of a larger bankruptcy settlement with Tronox. By letter dated September 29, 2021, EPA informed an FCX subsidiary as well as two other federal entities that it does not expect to have funds sufficient to remediate all of the sites covered by the Tronox bankruptcy settlement. Based on information from EPA, it is currently considered unlikely that EPA will deplete the Tronox settlement funds in the near-term. FCX is also conducting site surveys of historical uranium mining claims associated with FCX subsidiaries on non-tribal federal lands Balance at beginning of year Liabilities incurred Settlements and revisions to cash flow estimates, net Accretion expense Spending Balance at end of year Less current portion Long-term portion 2023 $ 3,043 18 54 20b (134) 3,001 (185) $2,816 2022 $ 2,716 9 381a 134 (197) 3,043 (195) $ 2,848 2021 $ 2,472 2 331a 112 (201) 2,716 (200) $ 2,516 a. Primarily reflects adjustments at PT-FI, Morenci and Bagdad for the year 2022 and PT-FI for the year 2021, see further discussion below. b. Includes a $112 million adjustment at PT-FI to correct certain inputs in the historical PT-FI ARO model. ARO costs may increase or decrease significantly in the future as a result of changes in regulations, changes in engineering designs and technology, permit modifications or updates, changes in mine plans, settlements, inflation or other factors and as reclamation (concurrent with mining operations or post mining) spending occurs. ARO activities and expenditures for mining operations generally are made over an extended period of time commencing near the end of the mine life; however, certain reclamation activities may be accelerated if legally required or if determined to be economically beneficial. For ARO activities and expenditures for oil and gas operations, the methods used or required to plug and abandon non-producing oil and gas wellbores; remove platforms, tanks, production equipment and flow lines; and restore wellsites in the Four Corners region. Under a memorandum of understanding could change over time. with the U.S. Bureau of Land Management (BLM), site surveys are being performed on approximately 15,000 mining claims, ranging from undisturbed claims to claims with mining features. Based on these surveys, BLM has issued no further action determinations for certain undisturbed claims. A similar agreement is in place with the U.S. Forest Service for mine features on U.S. Forest Service land. Either BLM or the U.S. Forest Service may request additional assessment or remediation activities for other claims with mining features. FCX will update this obligation when it has a sufficient number of remedy decisions from the BLM or the U.S. Forest Service to support a reasonably certain range of outcomes. FCX expects it will take several years to complete this work. FCX’s environmental liability balance for the uranium mining sites was $444 million at December 31, 2023. Financial Assurance. New Mexico, Arizona, Colorado and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. FCX has satisfied financial assurance requirements by using a variety of mechanisms, primarily involving parent company performance guarantees and financial capability demonstrations, but also trust funds, surety bonds, letters of credit and other collateral. The applicable regulations specify financial strength tests that are designed to confirm a company’s or guarantor’s financial capability to fund estimated reclamation and closure costs. The amount of financial assurance FCX subsidiaries are required to provide will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At December 31, 2023, FCX’s financial assurance obligations associated with these U.S. mine closure and reclamation/restoration costs totaled $1.8 billion, 92 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S of which $1.1 billion was in the form of guarantees issued by FCX meet the closure costs approved by ADEQ. Closure costs for and FMC. At December 31, 2023, FCX had trust assets totaling facilities covered by APPs are required to be updated every six $0.2 billion (included in other assets), which are legally restricted years and financial assurance mechanisms are required to to be used to satisfy its financial assurance obligations for its be updated every two years. During 2022, the Morenci and mining properties in New Mexico. In addition, FCX subsidiaries Bagdad mines increased their AROs by $118 million and $65 million, have financial assurance obligations for their oil and gas properties respectively, associated with their updated closure strategies associated with plugging and abandoning wells and facilities and plans for stockpiles and tailings impoundments that were totaling $0.5 billion. Where oil and gas guarantees associated with submitted to ADEQ for approval. In accordance with FCX’s the Bureau of Ocean Energy Management do not include a commitment to the Global Industry Standard on Tailings stated cap, the amounts reflect management’s estimates of the Management, Sierrita expects to revise its closure plan and cost potential exposure. estimate in 2024, which could result in a significant change in New Mexico Environmental and Reclamation Programs. FCX’s estimate. FCX will continue evaluating and, as necessary, updating New Mexico operations are regulated under the New Mexico Water its closure plans and closure cost estimates at other Arizona sites, Quality Act and regulations adopted by the Water Quality Control and any such updates may also result in increased costs that could Commission. In connection with discharge permits, the New Mexico be significant. Environment Department (NMED) has required each of these Portions of Arizona mining facilities that operated after January 1, operations to submit closure plans for NMED’s approval. The closure 1986, also are subject to the Arizona Mined Land Reclamation Act plans must include measures to assure meeting applicable (AMLRA). AMLRA requires reclamation to achieve stability and groundwater quality standards following the closure of discharging safety consistent with post-mining land use objectives specified in facilities and to abate groundwater or surface water contamination a reclamation plan. Reclamation plans must be approved by the to meet applicable standards. FCX’s New Mexico operations also State Mine Inspector and must include an estimate of the cost to are subject to regulation under the 1993 New Mexico Mining Act perform the reclamation measures specified in the plan along with (the Mining Act) and the related rules that are administered by the financial assurance. In fourth-quarter 2023, the Arizona State Mining and Minerals Division of the New Mexico Energy, Minerals Mines Inspector requested updates to reclamation cost estimates and Natural Resources Department. Under the Mining Act, mines and associated financial assurance for FCX’s Arizona mine sites. are required to obtain approval of reclamation plans. The agencies FCX’s responses to their requests and the posting of updated approved updates to the closure plan and financial assurance financial assurance will not be completed until mid-2024; FCX’s instruments and completed a permit renewal for Chino in 2020 and expectation is that these updates, in the aggregate, will not be Tyrone in 2021. At December 31, 2023, FCX had accrued reclamation material. FCX will continue to evaluate options for future reclamation and closure costs of $522 million for its New Mexico operations. and closure activities at its operating and non-operating sites, Additional accruals may be required based on the state’s periodic which are likely to result in adjustments to FCX’s AROs, and those review of FCX’s updated closure plans and any resulting permit adjustments could be material. conditions, and the amount of those accruals could be material. At December 31, 2023, FCX had accrued reclamation and closure Arizona Environmental and Reclamation Programs. FCX’s Arizona costs of $607 million for its Arizona operations. operations are subject to regulatory oversight by the ADEQ. Colorado Reclamation Programs. FCX’s Colorado operations ADEQ has adopted regulations for its aquifer protection permit are regulated by the Colorado Mined Land Reclamation Act (APP) program that require permits for, among other things, certain (Reclamation Act) and regulations promulgated thereunder. Under facilities, activities and structures used for mining, leaching, the Reclamation Act, mines are required to obtain approval of concentrating and smelting, and require compliance with aquifer plans for reclamation of lands affected by mining operations to be water quality standards during operations and closure. An performed during mining or upon cessation of mining operations. application for an APP requires a proposed closure strategy that In 2020, the Division of Reclamation, Mining, and Safety (DRMS) will meet applicable groundwater protection requirements following approved Henderson’s proposed update to its closure plan and cessation of operations and an estimate of the implementation cost, closure cost estimate. with a more detailed closure plan required at the time operations In 2019, Colorado enacted legislation that requires proof of an cease. A permit applicant must demonstrate its financial ability to end date for water treatment as a condition of permit authorizations for new mining operations and expansions beyond current permit authorizations. While this requirement does not apply to existing 2023 Annual Report 93 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S operations, it may lead to changes in long-term water management pit and was charged to production and delivery costs). In 2022, requirements at Climax and Henderson operations and AROs. In estimated costs associated with West Wanagon slope stabilization accordance with its permit from DRMS, Climax expects to submit remediation and reclamation activities increased primarily as a an updated reclamation plan and cost estimate in April 2024, which result of increased material needed for stockpile stabilization could result in a significant change in estimate. and increased costs for equipment, operations and maintenance, As of December 31, 2023, FCX had accrued reclamation and increased manpower/headcount allocation and contractor/ closure costs of $171 million for its Colorado operations. consultant cost impacts, which resulted in ARO adjustments Chile Reclamation and Closure Programs. El Abra is subject to totaling $131 million in 2022 (of which $116 million related to the regulation under the Mine Closure Law administered by the Chile depleted Grasberg open pit and was charged to production and Mining and Geology Agency. El Abra submitted an updated closure delivery costs). At December 31, 2023, FCX had accrued reclamation plan and cost estimates in November 2018, and approval of the and closure costs of $958 million for its PT-FI operations. updated closure plan and cost estimates was received in August Indonesia government regulations issued in 2010 require a 2020. In compliance with the requirement for five-year updates, company to provide a mine closure guarantee in the form of a time El Abra expects to submit an updated plan with closure cost deposit placed in a state-owned bank in Indonesia. At December 31, estimates in 2025 unless a modification to the closure plan requires 2023, PT-FI had restricted time deposits totaling $97 million for early submission. At December 31, 2023, FCX had accrued mine closure included in other assets. reclamation and closure costs of $106 million for its El Abra operation. Oil and Gas Properties. Substantially all of FM O&G’s oil and Peru Reclamation and Closure Programs. Cerro Verde is subject gas leases require that, upon termination of economic production, to regulation under the Mine Closure Law administered by the the working interest owners plug and abandon non-producing Peru Ministry of Energy and Mines (MINEM). Under the closure wellbores, remove equipment and facilities from leased acreage, regulations, mines must submit a closure plan that includes the and restore land in accordance with applicable local, state and reclamation methods, closure cost estimates, methods of control federal laws. Following several sales transactions, FM O&G’s and verification, closure and post-closure plans, and financial remaining operating areas primarily include offshore California assurance. In compliance with the requirement for five-year updates, and the Gulf of Mexico. In 2023, ARO adjustments associated in 2023, Cerro Verde submitted its updated closure plan and cost with oil and gas properties totaled $91 million, which reflected estimates and received approval from MINEM in December 2023. abandoned wells and additional obligations assumed as a result of At December 31, 2023, FCX had accrued reclamation and closure bankruptcies from other companies. As of December 31, 2023, costs of $206 million for its Cerro Verde operation. FM O&G AROs cover 115 wells and approximately 130 platforms and Indonesia Reclamation and Closure Programs. The ultimate other structures and it had accrued reclamation and closure amount of reclamation and closure costs to be incurred at PT-FI’s costs of $391 million. operations will be determined based on applicable laws and Litigation. In addition to the material pending legal proceedings regulations and PT-FI’s assessment of appropriate remedial activities discussed below and above under “Environmental,” we are under the circumstances, after consultation with governmental involved periodically in ordinary routine litigation incidental to authorities, affected local residents and other affected parties and our business, some of which may result in adverse judgments, cannot currently be projected with precision. Some reclamation settlements, fines, penalties, injunctions or other relief. SEC costs will be incurred during mining activities, while the remaining regulations require us to disclose environmental proceedings reclamation costs will be incurred at the end of mining activities, involving a governmental authority if we reasonably believe which are currently estimated to continue through 2041. In 2021, that such proceedings may result in monetary sanctions above the construction time frame for reclamation of the West Wanagon a stated threshold. Pursuant to the SEC regulations, we use a overburden stockpile was extended from 2025 to 2029 because threshold of $1 million for purposes of determining whether safety constraints for working in steep and difficult terrain have disclosure of any such environmental proceedings is required. reduced labor and equipment operating efficiencies. The time frame Management does not believe, based on currently available extension resulted in longer and escalating fixed costs, combined information, that the outcome of any current pending legal with additional anticipated volumes of stockpile material to be proceeding will have a material adverse effect on FCX’s financial moved, which resulted in ARO adjustments totaling $397 million in condition, although individual or cumulative outcomes could 2021 (of which $340 million related to the depleted Grasberg open be material to FCX’s operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period. 94 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Louisiana Parishes Coastal Erosion Cases. Certain FCX affiliates allegedly contained in industrial products such as electrical wire were named as defendants in 13 cases filed in 2013 and thereafter and cable, raw materials such as paint and joint compounds, in Louisiana state courts by six south Louisiana parishes talc-based lubricants used in rubber manufacturing or from asbestos (Cameron, Jefferson, Plaquemines, St. Bernard, St. John the Baptist contained in buildings and facilities located at properties owned and Vermilion), alleging that certain oil and gas exploration and or operated by affiliates of FCX. Many of these suits involve a large production operations and sulfur mining and production operations number of codefendants. Based on litigation results to date and in coastal Louisiana contaminated and damaged coastal wetlands facts currently known, FCX believes that the amounts of any such and caused significant land loss along the Louisiana coast. losses, individually or in the aggregate, are not material to its The state of Louisiana intervened in the litigation in support of the consolidated financial statements. There can be no assurance that parishes’ claims. In 2019, affiliates of FCX reached an agreement future developments will not alter this conclusion. in principle to settle all 13 cases, and as of October 2022, all parties There has been a significant increase in the number of cases have executed the settlement agreement. The settlement alleging the presence of asbestos contamination in talc-based agreement does not include any admission of liability by FCX or its cosmetic and personal care products and in cases alleging affiliates. Under the terms of the agreement, FCX agreed it will pay exposure to talc products that are not alleged to be contaminated $15 million in trust to later be deposited into a newly formed with asbestos. The primary targets have been the producers of Coastal Zone Recovery Fund (the Fund) if the state of Louisiana those products, but defendants in many of these cases also include passes enabling legislation to establish the Fund within three years talc miners. Cyprus Amax Minerals Company (CAMC), an indirect of execution of the settlement agreement. Upon payment of the wholly owned subsidiary of FCX, and Cyprus Mines Corporation $15 million, the FCX affiliates will be fully released and dismissed (Cyprus Mines), a wholly owned subsidiary of CAMC, are among from all 13 pending cases. The maximum out-of-pocket settlement those targets. Cyprus Mines was engaged in talc mining and payment will be $23.5 million, including the initial $15 million processing from 1964 until 1992 when it exited its talc business by payment. The settlement agreement terms will also require the FCX conveying it to a third party in two related transactions. Those affiliates to pay into the Fund twenty annual installments of transactions involved (1) a transfer by Cyprus Mines of the assets $4.25 million provided the state of Louisiana passes the enabling of its talc business to a newly formed subsidiary that assumed all legislation. The first two of such annual installments are pre-sale and post-sale talc liabilities, subject to limited reservations, conditioned on the enactment of the enabling legislation within and (2) a sale of the stock of that subsidiary to the third party. In three years of execution of the settlement agreement, and all 2011, the third party sold that subsidiary to Imerys Talc America subsequent installments are conditioned on the FCX affiliates (Imerys), an affiliate of Imerys S.A. In accordance with the terms of receiving simultaneous reimbursement on a dollar-for-dollar basis the 1992 transactions and subsequent agreements, Imerys from the proceeds of environmental credit sales generated by undertook the defense and indemnification of Cyprus Mines and the Fund, which is expected to offset the payments resulting in a CAMC in talc lawsuits. $23.5 million maximum total payment obligation. Cyprus Mines has contractual indemnification rights, subject to On March 16, 2023, a non-plaintiff coastal parish included limited reservations, against Imerys, which historically acknowledged in the settlement (Terrebonne) filed an amended petition titled those indemnification obligations and took responsibility for all Terrebonne Parish Consolidated Government vs. Louisiana cases tendered to it. However, in February 2019, Imerys filed for Department of Natural Resources et al., Docket No. 185576, in the Chapter 11 bankruptcy protection, which triggered an immediate 32nd Judicial District Court, Terrebonne Parish, State of Louisiana, automatic stay under the federal bankruptcy code prohibiting any adding the settling FCX affiliates to a lawsuit that challenges party from continuing or initiating litigation or asserting new claims whether Terrebonne Parish is validly bound to the settlement against Imerys. As a result, Imerys stopped defending the talc agreement and seeks to have the court declare the settlement void. lawsuits against Cyprus Mines and CAMC. In addition, Imerys took FCX is vigorously defending this matter. the position that it alone owns, and has the sole right to access, Asbestos and Talc Claims. Since approximately 1990, various the proceeds of the legacy insurance coverage of Cyprus Mines FCX affiliates have been named as defendants in a large number of and CAMC for talc liabilities. In March 2019, Cyprus Mines and lawsuits alleging personal injury from exposure to asbestos or talc CAMC challenged this position and obtained emergency relief from the bankruptcy court to gain access to the insurance until the 2023 Annual Report 95 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S question of ownership and contractual access could be decided in Cerro Verde Royalty Dispute. SUNAT (National Superintendency an adversary proceeding before the bankruptcy court, which is of Customs and Administration) assessed mining royalties on ore currently on hold. The bankruptcy court continues to temporarily stay processed by the Cerro Verde concentrator for the period from approximately 950 talc lawsuits against CAMC, Cyprus Mines, December 2006 to December 2013. Cerro Verde contested each of FCX and Imerys but there can be no assurance that the bankruptcy these assessments because it believes that its 1998 stability court will continue to impose the interim stay. agreement exempts from royalties all minerals extracted from its In January 2021, Imerys filed the form of a settlement and mining concession, irrespective of the method used for processing release agreement to be entered into by CAMC, Cyprus Mines, such minerals. During 2021, Cerro Verde paid the balance of the FCX, Imerys and the other debtors, tort claimants’ committee disputed royalty assessments and has no remaining exposure and future claims representative in the Imerys bankruptcy. associated with the royalty dispute with the Peruvian tax In accordance with the global settlement, among other things, authorities. No royalty assessments were issued for the years after (1) CAMC agreed to contribute a total of $130 million in cash 2013, as Cerro Verde began paying royalties on all of its production to a settlement trust in seven annual installments, which will be in January 2014 under its new 15-year stability agreement. guaranteed by FCX, and (2) CAMC and Cyprus Mines and their In 2020, FCX filed on its own behalf and on behalf of Cerro affiliates will contribute to the settlement trust all rights that they Verde, international arbitration proceedings against the Peruvian have to the proceeds of certain legacy insurance policies as well government under the United States-Peru Trade Promotion as indemnity rights they have against Johnson & Johnson. Agreement. The hearing on the merits took place in May 2023 and Mediation to resolve open issues is complete, but the parties closing arguments occurred in July 2023. In 2020, SMM Cerro Verde remain in the process of finalizing approval of the amended global Netherlands B.V. (SMM Cerro Verde), another shareholder of settlement, which would increase the contribution from CAMC Cerro Verde, filed parallel international arbitration proceedings by $65 million, to $195 million. The payment terms from the initial against the Peruvian government under the Netherlands-Peru settlement are unchanged. The global settlement continues to Bilateral Investment Treaty. SMM Cerro Verde’s hearing on the merits be subject to, among other things, votes by claimants in both the and closing arguments took place in February 2023 and the parties Imerys and Cyprus Mines bankruptcy cases as well as bankruptcy are awaiting decisions from both arbitration proceedings. No court approvals in both cases, and there can be no assurance that amounts have been recorded for potential gain contingencies the global settlement will be approved and successfully implemented. associated with the international arbitration proceedings. At December 31, 2023, FCX had a litigation reserve of $195 million Other Peru Tax Matters. Cerro Verde has also received associated with the proposed settlement (representing charges assessments from SUNAT for additional taxes, penalties and interest recorded to environmental obligations and shutdown costs of related to various audit exceptions for income and other taxes. $65 million in 2023 and $130 million in 2020). Cerro Verde has filed or will file objections to the assessments Tax Matters. FCX’s operations are in multiple jurisdictions where because it believes it has properly determined and paid its taxes. uncertainties arise in the application of complex tax regulations. A summary of these assessments follows: Some of these tax regimes are defined by contractual agreements with the local government, while others are defined by general tax laws and regulations. FCX and its subsidiaries are subject to reviews of its income tax filings and other tax payments, and disputes can arise with the taxing authorities over the interpretation of its contracts or laws. The final taxes paid may be dependent upon many factors, including negotiations with taxing authorities. In certain jurisdictions, FCX pays a portion of the disputed amount before formally appealing an assessment. Such payment is recorded as a receivable if FCX believes the amount is collectible. Tax Year 2003 to 2008 2009 2010 2011 and 2012 2013 2014 to 2022 Tax Assessment Penalties and Interest $ 47 56 54 42 48 81 $ 328 $ 130 52 126 77 72 35 $ 492 Total $ 177 108 180 119 120 116 $ 820 As of December 31, 2023, Cerro Verde had paid the $820 million of disputed tax assessments. A reserve has been applied against these payments totaling $546 million, resulting in a net receivable of $274 million (included in other assets), which Cerro Verde believes is collectible. 96 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Cerro Verde’s income tax assessments, penalties and interest smelter development projects with construction progress greater included in the table above totaled $712 million at December 31, than 50%, and regulations by the Ministry of Trade on the permitted 2023, of which $242 million has not been charged to expense. export of various products, including copper concentrates. Indonesia Tax Matters. PT-FI has received assessments from the In July 2023, PT-FI was granted an export license for copper Indonesia tax authorities for additional taxes and interest related concentrate and in December 2023, PT-FI was granted an export to various audit exceptions for income and other taxes. PT-FI license for anode slimes, which are valid through May 2024. PT-FI has filed objections to the assessments because it believes it has and the Indonesia government are completing administrative properly determined and paid its taxes. A summary of these processes to update quotas for estimated concentrate and anode assessments follows: slimes exports through May 2024. Tax Year 2005 2007 2012 and 2013 2014 and 2015 2017 Tax Assessment Penalties and Interest $ 62 45 40 104 7 $ 258 $ 29 22 36 — 3 $ 90 Total $ 91 67 76 104 10 $ 348 As of December 31, 2023, PT-FI had paid $189 million on these disputed tax assessments. A reserve has been applied against these payments totaling $179 million, resulting in a net receivable of $10 million (included in other assets), which PT-FI believes is collectible. PT-FI’s income tax assessments, penalties and interest included in the table above totaled $301 million at December 31, 2023, of which $117 million has not been charged to expense. Withholding Tax Assessments. In 2019, the Indonesia Supreme Court rendered an unfavorable decision related to a PT-FI 2005 withholding tax matter. PT-FI had also received an unfavorable Indonesia Supreme Court decision in 2017. PT-FI currently has other pending cases at the Indonesia Supreme Court related to withholding taxes for employees and other service providers for the years 2005 and 2007, which total $43 million (based on the exchange rate as of December 31, 2023, and included in accounts payable and accrued liabilities in the consolidated balance sheet at December 31, 2023), including penalties and interest. Indonesia Regulatory Matters. Export Licenses. In June 2023, export licenses for several exporters, including PT-FI and PT Smelting, expired. In addition, a change in regulations during 2023 required PT-FI to follow a new administrative process for the export of anode slimes. During 2023, the Indonesia government issued various regulations to address exports of unrefined metals, including regulations by Ministry of Energy and Mineral Resources (MEMR) to allow continued exports of copper concentrates through May 2024 for companies engaged in ongoing PT-FI is working with the Indonesia government to obtain approvals to continue exports of copper concentrates and anode slimes subsequent to May 2024 until the Indonesia smelter projects are fully commissioned and reach designed operating conditions. Export Duties. Refer to Note 13 for further discussion of export duties. Smelter Development Progress. In January 2021, the Indonesia government levied an administrative fine of $149 million for the period from March 30, 2020, through September 30, 2020, against PT-FI for failing to achieve physical development progress on its Manyar smelter as of July 31, 2020. In January 2021, PT-FI responded to the Indonesia government by objecting to the fine because of events outside of its control causing a delay of the Manyar smelter’s development progress. PT-FI believes that its communications during 2020 with the Indonesia government were not properly considered before the administrative fine was levied. In June 2021, the MEMR issued a ministerial decree for the calculation of an administrative fine for lack of smelter development in light of the COVID-19 pandemic, and in 2021, PT-FI recorded charges totaling $16 million for a potential settlement of the administrative fine. In January 2022, the Indonesia government submitted a new estimate of the administrative fine totaling $57 million, and in March 2022, PT-FI paid the administrative fine and recorded an additional charge of $41 million. In May 2023, the MEMR issued a new decree prescribing a revised formula for administrative fines for delays in construction of smelting and refining facilities, taking into account allowances for certain delays associated with the COVID-19 pandemic as verified by a third-party. In mid-July 2023, PT-FI submitted its third-party verified calculation, which resulted in an accrual for a potential administrative fine of $55 million based on the formula prescribed by the decree related to the period from August 2020 through January 2022. PT-FI continues to discuss the applicability of this administrative fine with MEMR. Based on PT-FI’s revised smelter construction schedule, which was accepted by the Indonesia government in connection with the renewal of PT-FI’s export license in early 2022, PT-FI does not believe any additional fines should be assessed under the decree. 2023 Annual Report 97 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Smelter Assurance. The decree issued by MEMR in May 2023 NOTE 13. COMMITMENTS AND GUARANTEES also required assurance in the form of an escrow account, which can be withdrawn if smelter development progress is at least 90% on June 10, 2024. During 2023, PT-FI deposited $10 million in a joint account with the Indonesia government while it continues to discuss the applicability of the May 2023 decree. At December 31, 2023, development progress of the Indonesia smelter projects was 90.5% (refer to Note 13); as such, PT-FI does not believe Leases. The components of FCX’s leases presented in the consolidated balance sheets for the years ended December 31 follow: Lease right-of-use assets (included in property, plant, equipment and mine development costs, net) Short-term lease liabilities (included in accounts payable and accrued liabilities) 2023 2022 $ 448 $342 $ 84 347 $431 $ 38 294 $ 332 additional deposits are necessary. Refer to Note 14 for discussion Long-term lease liabilities (included in other liabilities) of PT-FI’s assurance bonds to support its commitment for smelter Total lease liabilitiesa development in Indonesia. Letters of Credit, Bank Guarantees and Surety Bonds. Letters of credit and bank guarantees totaled $353 million at December 31, 2023, primarily associated with reclamation/AROs, copper concentrate shipments from PT-FI to Atlantic Copper as required by Indonesia regulations, and disputed export duties (refer to Note 13 for discussion). In addition, FCX had surety bonds totaling $497 million at December 31, 2023, primarily associated with environmental obligations and AROs. Insurance. FCX purchases a variety of insurance products to mitigate potential losses, which typically have specified deductible amounts or self-insured retentions and policy limits. FCX generally is self-insured for U.S. workers’ compensation but purchases excess insurance up to statutory limits. An actuarial analysis is performed twice a year on the various casualty insurance programs covering FCX’s U.S.-based mining operations, including workers’ compensation, to estimate expected losses. At December 31, 2023, FCX’s liability for expected losses under these insurance programs totaled $58 million, which consisted of a current portion of $11 million (included in accounts payable and accrued liabilities) and a long-term portion of $47 million (included in other liabilities). In addition, FCX has receivables of $20 million a. Includes a land lease by PT-FI for the Manyar smelter totaling $130 million at December 31, 2023 and 2022. This is FCX’s only significant finance lease. Operating lease costs, primarily included in production and delivery expense in the consolidated statements of income, for the years ended December 31 follow: Operating leases Variable and short-term leases Total operating lease costs 2023 $ 48 126a $174 2022 $ 46 84 $ 130 2021 $ 42 62 $ 104 a. Includes $30 million related to a variable lease component of PT-FI’s tolling arrangement with PT Smelting. Refer to Note 3 for additional discussion of PT-FI’s commercial arrangement with PT Smelting. FCX acquired right-of-use assets through lease arrangements of $167 million in 2023, $76 million in 2022 and $176 million in 2021. FCX payments included in operating cash flows for its lease liabilities totaled $61 million in 2023, $41 million in 2022 and $54 million in 2021. FCX payments included in financing cash flows for its lease liabilities totaled $3 million in 2023, $7 million in 2022 and $25 million in 2021. As of December 31, 2023, the weighted-average discount rate used to determine the lease liabilities was 4.7% (4.1% as of December 31, 2022) and the weighted-average remaining lease term (a current portion of $6 million included in other accounts receivable was 13.1 years (12.0 years as of December 31, 2022). and a long-term portion of $14 million included in other assets) for expected claims associated with these losses to be filed with The future minimum payments for leases presented in the consolidated balance sheet at December 31, 2023, follow: insurance carriers. 2024 2025 2026 2027 2028 Thereafter Total payments Less amount representing interest Present value of net minimum lease payments Less current portion Long-term portion $ 105 52 44 38 29 299 567 (136) 431 (84) $ 347 98 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Contractual Obligations. At December 31, 2023, based on applicable Export Duties. The IUPK required PT-FI to pay export duties of prices on that date, FCX has unconditional purchase obligations 5%, declining to 2.5% when smelter development progress (including take-or-pay contracts with terms less than one year) of exceeded 30% and eliminated when development progress for $4.2 billion, primarily comprising the procurement of copper additional smelting and refining capacity in Indonesia exceeded concentrate ($3.3 billion), transportation services ($0.3 billion) and 50%. In December 2022, PT-FI received approval, based on electricity ($0.3 billion). Some of FCX’s unconditional purchase construction progress achieved, for a reduction in export duties obligations are settled based on the prevailing market rate for the from 5% to 2.5%, which was effective immediately. In March 2023, service or commodity purchased. In some cases, the amount the Indonesia government further verified that construction of the actual obligation may change over time because of market progress of the Manyar smelter exceeded 50% and PT-FI’s export conditions. Obligations for copper concentrate provide for duties were eliminated effective March 29, 2023. deliveries of specified volumes to Atlantic Copper at market-based In July 2023, the Ministry of Finance issued a revised regulation on prices. Transportation obligations are primarily associated with duties for various exported products, including copper concentrates. contracted ocean freight agreements for FCX’s South America and Under the revised regulation PT-FI was assessed export duties Indonesia operations. Electricity obligations are primarily for for copper concentrates at 7.5% in the second half of 2023 (totaling long-term power purchase agreements in North America and $307 million). For 2024, the revised regulation assesses export contractual minimum demand at the South America mines. duties for copper concentrates at 10% for companies with smelter FCX’s unconditional purchase obligations total $2.2 billion in progress of 70% to 90% and at 7.5% for companies with smelter 2024, $1.3 billion in 2025, $0.3 billion in 2026, $0.1 billion in 2027, progress exceeding 90%. As of December 31, 2023, construction $0.1 billion in 2028 and $0.2 billion thereafter. During the three- progress of the Indonesia smelter projects exceeded 90%; year period ended December 31, 2023, FCX fulfilled its minimum however, PT-FI is subject to the 10% export duty in 2024 until it contractual purchase obligations. receives a revised concentrate export license (after which PT-FI IUPK—Indonesia. In December 2018, FCX completed the 2018 expects to be subject to the 7.5% export duty). PT-FI’s export Transaction with the Indonesia government regarding PT-FI’s duties totaled $324 million in 2023, $307 million in 2022 and long-term mining rights and share ownership. Concurrent with the $218 million in 2021. PT-FI also continues to discuss the applicability closing of the 2018 Transaction, the Indonesia government granted of the revised regulation with the Indonesia government because PT-FI a special mining license (IUPK) to replace its former of inconsistencies with its IUPK. Contract of Work, enabling PT-FI to conduct operations in the Chiyoda Contract. In July 2021, PT-FI awarded a construction Grasberg minerals district through 2041. Under the terms of the contract to Chiyoda for the construction of the Manyar smelter in IUPK, PT-FI was granted an extension of mining rights through Gresik, Indonesia, with an estimated contract cost of $2.8 billion. 2031, with rights to extend mining rights through 2041, subject The smelter is expected to be commissioned during 2024. to PT-FI completing the development of additional smelting and Indemnification. The PT-FI divestment agreement, discussed in refining capacity in Indonesia and fulfilling its defined fiscal Note 3, provides that FCX will indemnify MIND ID and PTI from obligations to the Indonesia government (refer to Note 12). The any losses (reduced by receipts) arising from any tax disputes of IUPK, and related documentation, contains legal and fiscal terms PT-FI disclosed to MIND ID in a Jakarta, Indonesia, tax court letter and is legally enforceable through 2041, assuming the additional limited to PTI’s respective percentage share at the time the loss is extension is received. In addition, FCX, as a foreign investor, has finally incurred. Any net obligations arising from any tax settlement rights to resolve investment disputes with the Indonesia government would be paid on December 21, 2025. FCX had accrued $75 million through international arbitration. as of December 31, 2023, and $74 million as of December 31, 2022, The key fiscal terms set forth in the IUPK include a 25% corporate (included in other liabilities in the consolidated balance sheets) income tax rate, a 10% profits tax on net income, and royalty rates related to this indemnification. of 4% for copper, 3.75% for gold and 3.25% for silver. PT-FI’s royalties charged against revenues totaled $338 million in 2023, $357 million in 2022 and $319 million in 2021. Dividend distributions from PT-FI to FCX totaled $0.4 billion in 2023, $2.5 billion in 2022 and $1.0 billion in 2021, and are subject to a 10% withholding tax. 2023 Annual Report 99 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Community Development Programs. FCX has adopted policies As part of these transactions, FMC indemnified the counterparty that govern its working and engagement relationships with from and against certain excluded or retained liabilities existing the communities where it operates. These policies are designed at the time of sale that would otherwise have been transferred to to guide FCX’s practices and programs in a manner that respects the party at closing. These indemnity provisions generally now and promotes basic human rights and the culture of the local require FCX to indemnify the party against certain liabilities that people impacted by FCX’s operations. FCX continues to make may arise in the future from the pre-closing activities of FMC for significant expenditures on community development, education, assets sold or purchased. The indemnity classifications include health, training, and cultural programs. environmental, tax and certain operating liabilities, claims PT-FI provides funding and technical assistance to support or litigation existing at closing and various excluded liabilities or various community development programs in areas such as health, obligations. Most of these indemnity obligations arise from education, economic development and local infrastructure. In transactions that closed many years ago, and given the nature of 1996, PT-FI established a social investment fund with the aim of these indemnity obligations, it is not possible to estimate the contributing to social and economic development in the Mimika maximum potential exposure. Except as described in the following Regency. Prior to 2019, the fund was mainly managed by the sentence, FCX does not consider any of such obligations as Amungme and Kamoro Community Development Organization, having a probable likelihood of payment that is reasonably a community-led institution. In 2019, a new foundation, the estimable, and accordingly, has not recorded any obligations Amungme and Kamoro Community Empowerment Foundation associated with these indemnities. With respect to FCX’s (Yayasan Pemberdayaan Masyarakat Amungme dan Kamoro, environmental indemnity obligations, any expected costs from or YPMAK) was established, and in 2020, PT-FI appointed YPMAK these guarantees are accrued when potential environmental to assist in distributing a significant portion of PT-FI’s funding to obligations are considered by management to be probable and support the development and empowerment of the local the costs can be reasonably estimated. indigenous Papuan people. YPMAK is governed by a Board of Governors consisting of seven representatives, including four NOTE 14. FINANCIAL INSTRUMENTS from PT-FI. In addition, since 2001, PT-FI has voluntarily established and contributed to land rights trust funds administered by Amungme and Kamoro representatives that focus on socioeconomic initiatives, human rights and environmental issues. PT-FI is committed to the continued funding of YPMAK programs and the land rights trust funds, as well as for other local- community development initiatives through 2041 and has made and expects to continue making annual investments in public health, education and local economic development. PT-FI recorded charges totaling $123 million in both 2023 and 2022 and $109 million in 2021 to production and delivery costs for social and economic development programs. Guarantees. FCX provides certain financial guarantees (including indirect guarantees of the indebtedness of others) and indemnities. Prior to its acquisition by FCX, FMC and its subsidiaries have, as part of merger, acquisition, divestiture and other transactions, from time to time, indemnified certain sellers, buyers or other FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates. Commodity Contracts. From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions. A discussion of FCX’s derivative contracts and programs follows. Derivatives Designated as Hedging Instruments— Fair Value Hedges parties related to the transaction from and against certain liabilities Copper Futures and Swap Contracts. Some of FCX’s U.S. copper associated with conditions in existence (or claims associated rod and cathode customers request a fixed market price instead with actions taken) prior to the closing date of the transaction. of the COMEX average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the 100 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S customers pay the fixed price they requested. FCX accomplishes Similarly, FCX purchases copper under contracts that provide for this by entering into copper futures or swap contracts. Hedging provisional pricing. Mark-to-market price fluctuations from gains or losses from these copper futures and swap contracts are these embedded derivatives are recorded through the settlement recorded in revenues. FCX did not have any significant gains or date and are reflected in revenues for sales contracts and in losses resulting from hedge ineffectiveness during the three years inventory for purchase contracts. ended December 31, 2023. At December 31, 2023, FCX held A summary of FCX’s embedded derivatives at December 31, copper futures and swap contracts that qualified for hedge 2023, follows: accounting for 78 million pounds at an average contract price of $3.85 per pound, with maturities through November 2025. Summary of Gains (Losses). A summary of realized and unrealized gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, including on the related hedged item for the years ended December 31 follows: 2023 2022 2021 Average Price Per Unit Open Positions Contract Market Maturities Through 469 223 $ 3.74 2,013 $ 3.87 2,078 May 2024 May 2024 Embedded derivatives in provisional sales contracts: Copper (millions of pounds) Gold (thousands of ounces) Embedded derivatives in provisional purchase contracts: Copper (millions of pounds) 155 3.72 3.86 April 2024 Copper futures and swap contracts: Unrealized gains (losses): Derivative financial instruments Hedged item—firm sales commitments Realized (losses) gains: Matured derivative financial instruments $ 3 (3) (4) $ (11) 11 $ (4) 4 Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into copper forward contracts designed to hedge its copper price risk whenever its (63) 65 physical purchases and sales pricing periods do not match. These Derivatives Not Designated as Hedging Instruments Embedded Derivatives. Certain FCX sales contracts provide for provisional pricing primarily based on the LME copper price or the COMEX copper price and the London gold price at the time of shipment as specified in the contract. FCX receives market prices based on prices in the specified future month, which results in price fluctuations recorded in revenues until the date of settlement. FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper prices and the London gold price as specified in the contracts, which results in an embedded derivative (i.e., a pricing mechanism that is finalized after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale of the metals contained in the concentrate, cathode or anode slimes at the then-current LME copper, COMEX copper or London gold prices. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host contract in its concentrate, cathode and anode slime sales agreements since these contracts do not allow for net settlement and always result in physical delivery. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through earnings each period, using the period-end LME or COMEX copper forward prices and the adjusted London gold price, until the date of final pricing. economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in production and delivery costs. At December 31, 2023, Atlantic Copper held net copper forward sales contracts for 31 million pounds at an average contract price of $3.82 per pound, with maturities through February 2024. Summary of Gains (Losses). A summary of the realized and unrealized gains (losses) recognized in operating income for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, for the years ended December 31 follows: 2023 2022 2021 Embedded derivatives in provisional sales contractsa: Copper $97 $ (479) $ 425 Gold and other metals 55 (12) (2) (6) 37 (15) Copper forward contractsb a. Amounts recorded in revenues. b. Amounts recorded in cost of sales as production and delivery costs. 2023 Annual Report 101 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Unsettled Derivative Financial Instruments Credit Risk. FCX is exposed to credit loss when financial institutions A summary of the fair values of unsettled commodity derivative with which it has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. 2023 2022 To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the $ 4 $ 3 76 — $ 80 166 1 $ 170 creditworthiness of these counterparties. As of December 31, 2023, the maximum amount of credit exposure associated with derivative transactions was $80 million. Other Financial Instruments. Other financial instruments include cash, cash equivalents, restricted cash and cash equivalents, accounts receivable, investment securities, legally restricted trust assets, accounts payable and accrued liabilities, accrued income taxes, dividends payable and debt. The carrying value for these $ — $ 3 financial instruments classified as current assets or liabilities approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 15 for the fair values of investment securities, legally restricted funds and debt). In addition, as of December 31, 2023, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 15 for the related fair values). Cash, Cash Equivalents and Restricted Cash and Cash Equivalents. The following table provides a reconciliation of total cash, cash equivalents and restricted cash and cash equivalents presented in the consolidated statements of cash flows: December 31, 2023 2022 Balance sheet components: Cash and cash equivalentsa Restricted cash and cash equivalents, current Restricted cash and cash equivalents, long-term—included in other assets Total cash, cash equivalents and restricted cash and cash equivalents presented in the consolidated statements of cash flows $ 4,758 1,208b $ 8,146 111 97 133 $ 6,063 $ 8,390 a. Includes time deposits of $0.3 billion at December 31, 2023, and $0.5 billion at December 31, 2022, and cash designated for smelter development projects totaling $0.2 billion at December 31, 2023, and $1.8 billion at December 31, 2022. b. Includes (i) $1.1 billion associated with 30% of PT-FI’s export proceeds required to be temporarily deposited in Indonesia banks for 90 days in accordance with a 2023 regulation issued by the Indonesia government and (ii) $145 million in assurance bonds to support PT-FI’s commitment for smelter development in Indonesia. The terms for $135 million of the assurance bonds have been fulfilled, and in August 2023, PT-FI submitted a request to MEMR for their release. financial instruments follows: December 31, Commodity Derivative Assets: Derivatives designated as hedging instruments: Copper futures and swap contracts Derivatives not designated as hedging instruments: Embedded derivatives in provisional sales/ purchase contracts Copper forward contracts Total derivative assets Commodity Derivative Liabilities: Derivatives designated as hedging instruments: Copper futures and swap contracts Derivatives not designated as hedging instruments: Embedded derivatives in provisional sales/ purchase contracts Copper forward contracts Total derivative liabilities 23 1 $ 24 39 — $ 42 FCX’s commodity contracts have netting arrangements with counterparties with which the right of offset exists, and it is FCX’s policy to generally offset balances by contract on its balance sheet. FCX’s embedded derivatives on provisional sales/purchase contracts are netted with the corresponding outstanding receivable/payable balances. A summary of these net unsettled commodity contracts in the balance sheet follows (there were no offsetting amounts at December 31, 2023 and 2022): December 31, Amounts presented in balance sheet: Commodity contracts: Embedded derivatives in provisional sales/purchase contracts Copper derivatives Balance sheet classification: Trade accounts receivable Other current assets Accounts payable and accrued liabilities Other liabilities Assets 2023 2022 Liabilities 2023 2022 $ 76 4 $ 80 $ 76 4 — — $ 80 $ 166 4 $ 170 $ 163 4 3 — $170 $ 23 1 $ 24 $ 2 — 22 — $24 $ 39 3 $ 42 $ 7 — 34 1 $ 42 102 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 15. FAIR VALUE MEASUREMENT Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). FCX did not have any significant transfers in or out of Level 3 for 2023. FCX’s financial instruments are recorded on the consolidated balance sheets at fair value except for contingent consideration associated with the sale of the Deepwater GOM oil and gas properties (which was recorded under the loss recovery approach) and debt. A summary of the carrying amount and fair value of FCX’s financial instruments (including those measured at NAV as a practical expedient), other than cash, cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, accrued income taxes and dividends payable (refer to Note 14), follows: At December 31, 2023 Carrying Amount Total NAV Fair Value Level 1 Level 2 Level 3 Assets Investment securities:a,b U.S. core fixed income fund Equity securities Total Legally restricted funds:a U.S. core fixed income fund Government mortgage-backed securities Government bonds and notes Corporate bonds Money market funds Asset-backed securities Collateralized mortgage-backed securities Total Derivatives:c Embedded derivatives in provisional sales/purchase contracts in a gross asset position Copper futures and swap contracts Total Contingent consideration for the sale of the Deepwater GOM oil and gas propertiesa Liabilities Derivatives:c Embedded derivatives in provisional sales/purchase contracts in a gross liability position Copper forward contracts Total $ 27 6 33 65 51 37 29 17 12 1 212 76 4 80 50 23 1 24 $ 27 6 33 65 51 37 29 17 12 1 212 76 4 80 42 23 1 24 Long-term debt, including current portiond 9,422 9,364 $ 27 — 27 65 — — — — — — 65 — — — — — — — — $ — 6 6 $ — — — $ — — — — — — — 17 — — 17 — 3 3 — — 1 1 — — 51 37 29 — 12 1 130 76 1 77 — 23 — 23 9,364 — — — — — — — — — — — 42 — — — — 2023 Annual Report 103 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S At December 31, 2022 Carrying Amount Total NAV Fair Value Level 1 Level 2 Level 3 Assets Investment securities:a,b U.S. core fixed income fund Equity securities Total Legally restricted funds:a U.S. core fixed income fund Government mortgage-backed securities Government bonds and notes Corporate bonds Asset-backed securities Money market funds Collateralized mortgage-backed securities Total Derivatives:c Embedded derivatives in provisional sales/purchase contracts in a gross asset position Copper futures and swap contracts Copper forward contracts Total Contingent consideration for the sale of the Deepwater GOM oil and gas propertiesa Liabilities Derivatives:c Embedded derivatives in provisional sales/purchase contracts in a gross liability position Copper forward contracts Total $ 25 7 32 56 37 34 31 17 3 3 181 166 3 1 170 67 39 3 42 $ 25 7 32 56 37 34 31 17 3 3 181 166 3 1 170 $ 25 — 25 56 — — — — — — 56 — — — — 57 — 39 3 42 — — — — $ — 7 7 $ — — — $ — — — — — — — — 3 — 3 — 3 1 4 — — — — — — 37 34 31 17 — 3 122 166 — — 166 — 39 3 42 10,097 — — — — — — — — — — — — 57 — — — — Long-term debt, including current portiond 10,620 10,097 a. Current portion included in other current assets and long-term portion included in other assets. b. Excludes amounts included in restricted cash and cash equivalents and other assets (which approximated fair value), primarily associated with (i) PT-FI’s export proceeds ($1.1 billion at December 31, 2023), (ii) assurance bonds to support PT-FI’s commitment for additional smelter development in Indonesia ($145 million at December 31, 2023, and $133 million at December 31, 2022) and (iii) PT-FI’s mine closure and reclamation guarantees ($97 million at December 31, 2023, and $103 million at December 31, 2022). c. Refer to Note 14 for further discussion and balance sheet classifications. d. Recorded at cost except for debt assumed in acquisitions, which are recorded at fair value at the respective acquisition dates. 104 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Valuation Techniques. The U.S. core fixed income fund is valued at In December 2016, FCX’s sale of its Deepwater GOM oil and gas NAV. The fund strategy seeks total return consisting of income properties included up to $150 million in contingent consideration and capital appreciation primarily by investing in a broad range of that was recorded at the total amount under the loss recovery investment-grade debt securities, including U.S. government approach. The contingent consideration is being received over time obligations, corporate bonds, mortgage-backed securities, asset- as future cash flows are realized from a third-party production backed securities and money market instruments. There are no handling agreement for an offshore platform, with the related restrictions on redemptions (which are usually within one business payments commencing in 2018. The contingent consideration day of notice). included in (i) other current assets totaled $12 million at Equity securities are valued at the closing price reported on December 31, 2023, and $20 million at December 31, 2022, and the active market on which the individual securities are traded and, (ii) other assets totaled $38 million at December 31, 2023, and as such, are classified within Level 1 of the fair value hierarchy. $47 million at December 31, 2022. The fair value of this contingent Fixed income securities (government mortgage-backed consideration was calculated based on a discounted cash flow securities, government securities, corporate bonds, asset-backed model using inputs that include third-party estimates for reserves, securities, collateralized mortgage-backed securities and municipal production rates and production timing, and discount rates. bonds) are valued using a bid-evaluation price or a mid-evaluation Because significant inputs are not observable in the market, the price. These evaluations are based on quoted prices, if available, or contingent consideration is classified within Level 3 of the fair models that use observable inputs and, as such, are classified value hierarchy. within Level 2 of the fair value hierarchy. Long-term debt, including current portion, is primarily valued Money market funds are classified within Level 1 of the fair value using available market quotes and, as such, is classified within hierarchy because they are valued using quoted market prices in Level 2 of the fair value hierarchy. active markets. The techniques described above may produce a fair value that FCX’s embedded derivatives on provisional copper concentrate, may not be indicative of NRV or reflective of future fair values. copper cathode and gold purchases and sales are valued using Furthermore, while FCX believes its valuation techniques are quoted monthly LME or COMEX copper forward prices and the appropriate and consistent with other market participants, the use adjusted London gold prices at each reporting date based on the of different techniques or assumptions to determine fair value of month of maturity (refer to Note 14 for further discussion); however, certain financial instruments could result in a different fair value FCX’s contracts themselves are not traded on an exchange. As a measurement at the reporting date. There have been no changes in result, these derivatives are classified within Level 2 of the fair the techniques used at December 31, 2023, as compared to those value hierarchy. techniques used at December 31, 2022. FCX’s derivative financial instruments for copper futures and A summary of the changes in the fair value of FCX’s Level 3 swap contracts and copper forward contracts that are traded on instrument, contingent consideration for the sale of the the respective exchanges are classified within Level 1 of the fair Deepwater GOM oil and gas properties, for the years ended value hierarchy because they are valued using quoted monthly December 31 follows: COMEX or LME prices at each reporting date based on the month of maturity (refer to Note 14 for further discussion). Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy based on COMEX and LME forward prices. Balance at beginning of year Net unrealized gains (losses) related to assets still held at the end of the year Settlements Balance at end of year 2023 $ 57 1 (16) $ 42 2022 $ 81 (1) (23) $ 57 2021 $ 88 12 (19) $ 81 2023 Annual Report 105 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S NOTE 16. BUSINESS SEGMENT INFORMATION Years Ended December 31, 2023 2022 2021 Product Revenues. FCX’s revenues attributable to the products it sold for the years ended December 31 follow: Copper: Concentrate Cathode Rod and other refined copper products Purchased coppera Gold Molybdenum Otherb Adjustments to revenues: Treatment chargesc Royalty expensed PT-FI export dutiese Revenues from contracts with customers Embedded derivativesf Total consolidated revenues 2023 2022 2021 $ 7,127 6,629 3,659 416 3,472 2,006 585 (538) (346) (307) 22,703 152 $22,855 $ 9,650 5,134 3,699 481 3,397 1,416 688 (503) (366) (325) 23,271 (491) $22,780 $ 8,705 5,900 3,369 757 2,580 1,283 821 (445) (330) (218) 22,422 423 $22,845 a. FCX purchases copper cathode primarily for processing by its Rod & Refining operations. b. Primarily includes revenues associated with silver and, prior to 2022, cobalt. c. Treatment charges for the year 2023 exclude tolling costs paid to PT Smelting, which are recorded as production costs in the consolidated statements of income. Revenues:a U.S. Switzerland Japan Spain Singapore China Indonesia Germany Chile Philippines India South Korea Egypt United Kingdom Other Total $ 7,264 3,971 3,431 1,251 1,178 1,081 767 714 428 396 354 267 229 171 1,353 $ 22,855 $ 7,339 2,740 2,462 1,174 1,492 929 3,026 632 383 249 330 302 149 355 1,218 $22,780 $ 7,168 3,682 2,372 1,495 156 1,044 3,132 469 343 264 207 270 268 659 1,316 $22,845 a. Revenues are attributed to countries based on the location of the customer. Major Customers and Affiliated Companies. Copper concentrate sales to PT Smelting totaled 13% of FCX’s consolidated revenues in 2022 and 14% in 2021, and they are the only customer that accounted d. Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold for 10% or more of FCX’s annual consolidated revenues during and prices. e. Refer to Note 13 for further discussion of PT-FI export duties. Amounts include credits (charges) of $17 million in 2023 and $(18) million in 2022 associated with adjustments to prior-period export duties. f. Refer to Note 14 for discussion of embedded derivatives related to FCX’s provisionally priced concentrate and cathode sales contracts. Geographic Area. Information concerning financial data by geographic area follows: December 31, Long-lived assets:a Indonesia U.S. Peru Chile Other Total a. Excludes deferred tax assets and intangible assets. 2023 2022 $ 20,602 9,386 6,563 1,105 355 $38,011 $ 18,121 8,801 6,727 1,103 309 $ 35,061 the three years ended December 31, 2023. Consolidated revenues include sales to the noncontrolling interest owners of FCX’s South America mining operations and Morenci’s joint venture partners totaling $1.4 billion in 2023, $1.7 billion in 2022 and $1.4 billion in 2021. Consolidated revenues also include PT-FI’s sales to PT Smelting totaling $27 million in 2023 (reflecting adjustments to prior period provisionally priced concentrate sales), $3.0 billion in 2022 and $3.1 billion in 2021 as well as sales to PT-FI’s partner in PT Smelting, MMC, totaling $2.0 billion in 2023, $0.6 billion in 2022 and $0.4 billion in 2021. As discussed in Note 3, beginning January 1, 2023, PT-FI’s commercial arrangement with PT Smelting changed from a copper concentrate sales agreement to a tolling arrangement, and there are no further sales from PT-FI to PT Smelting. Labor Matters. As of December 31, 2023, approximately 29% of FCX’s global labor force was covered by collective bargaining agreements, and approximately 16% was covered by agreements that will or were scheduled to expire during 2024 (including the collective bargaining agreement with PT-FI’s unions that is effective through March 2024) or that had expired as of December 31, 2023, and continue to be negotiated. Business Segments. FCX has organized its mining operations into four primary divisions—North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX’s reportable 106 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S segments, which include the Morenci, Cerro Verde and Grasberg South America Mining. South America mining includes two (Indonesia Mining) copper mines, the Rod & Refining operations and operating copper mines—Cerro Verde in Peru and El Abra in Chile. Atlantic Copper Smelting & Refining. These operations include open-pit mining, sulfide-ore concentrating, Intersegment sales between FCX’s business segments are based leaching and SX/EW operations. on terms similar to arm’s-length transactions with third parties at The Cerro Verde open-pit copper mine, located near Arequipa, the time of the sale. Intersegment sales may not be reflective of Peru, produces copper cathode and copper concentrate. In the actual prices ultimately realized because of a variety of factors, addition to copper, the Cerro Verde mine also produces molybdenum including additional processing, timing of sales to unaffiliated concentrate and silver. During 2023, the Cerro Verde mine customers and transportation premiums. produced 82% of FCX’s South America copper and 23% of FCX’s FCX defers recognizing profits on sales from its mining operations consolidated copper production. to Atlantic Copper Smelting & Refining until final sales to third Indonesia Mining. Indonesia mining includes PT-FI’s Grasberg parties occur. FCX also deferred recognizing profit on 39.5% of minerals district that produces copper concentrate that contains PT-FI’s sales to PT Smelting from April 30, 2021, to December, 31, significant quantities of gold and silver. During 2023, PT-FI’s 2022, and 25.0% prior to April 30, 2021, until final sales to third Grasberg minerals district produced 39% of FCX’s consolidated parties occurred. As discussed in Note 3, beginning January 1, 2023, copper production and 99% of FCX’s consolidated gold production. PT-FI’s commercial arrangement with PT Smelting changed and Molybdenum Mines. Molybdenum mines include the wholly there are no further sales from PT-FI to PT Smelting. Quarterly owned Henderson underground mine and Climax open-pit mine, variations in ore grades, the timing of intercompany shipments and both in Colorado. The Henderson and Climax mines produce changes in product prices result in variability in FCX’s net deferred high-purity, chemical-grade molybdenum concentrate, which is profits and quarterly earnings. typically further processed into value-added molybdenum FCX allocates certain operating costs, expenses and capital chemical products. expenditures to its operating divisions and individual segments. Rod & Refining. The Rod & Refining segment consists of copper However, not all costs and expenses applicable to an operation are conversion facilities located in North America, and includes a allocated. U.S. federal and state income taxes are recorded and refinery and two rod mills, which are combined in accordance with managed at the corporate level (included in Corporate, Other & segment reporting aggregation guidance. These operations Eliminations), whereas foreign income taxes are recorded and process copper produced at FCX’s North America copper mines managed at the applicable country level. In addition, most and purchased copper into copper cathode and rod. At times these mining exploration and research activities are managed on a operations refine copper and produce copper rod for customers on consolidated basis, and those costs, along with some selling, a toll basis. Toll arrangements require the tolling customer to general and administrative costs, are not allocated to the operating deliver appropriate copper-bearing material to FCX’s facilities for divisions or individual segments. Accordingly, the following processing into a product that is returned to the customer, who Financial Information by Business Segment reflects management pays FCX for processing its material into the specified products. determinations that may not be indicative of what the actual Atlantic Copper Smelting & Refining. Atlantic Copper smelts and financial performance of each operating division or segment would refines copper concentrate and markets refined copper and be if it was an independent entity. precious metals in slimes. During 2023, Atlantic Copper purchased North America Copper Mines. FCX operates seven open-pit 3% of its concentrate requirements from FCX’s North America copper mines in North America—Morenci, Safford (including copper mines, 17% from FCX’s South America mining operations Lone Star), Bagdad, Sierrita and Miami in Arizona, and Chino and and 20% from FCX’s Indonesia mining operations, with the remainder Tyrone in New Mexico. The North America copper mines include purchased from unaffiliated third parties. open-pit mining, sulfide-ore concentrating, leaching and SX/EW Corporate, Other & Eliminations. Corporate, Other & Eliminations operations. A majority of the copper produced at the North America consists of FCX’s other mining, oil and gas operations and other copper mines is cast into copper rod by FCX’s Rod & Refining corporate and elimination items, which include the Miami smelter, segment. In addition to copper, certain of FCX’s North America copper Freeport Cobalt (until its sale in September 2021), molybdenum mines also produce molybdenum concentrate, gold and silver. conversion facilities in the U.S. and Europe, the Indonesia The Morenci open-pit mine, located in southeastern Arizona, smelter projects, certain non-operating copper mines in North produces copper cathode and copper concentrate. In addition to America (Ajo, Bisbee and Tohono in Arizona) and other mining copper, the Morenci mine also produces molybdenum concentrate. support entities. During 2023, the Morenci mine produced 43% of FCX’s North America copper and 14% of FCX’s consolidated copper production. 2023 Annual Report 107 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S FINANCIAL INFORMATION BY BUSINESS SEGMENT North America Copper Mines South America Mining Morenci Other Total Cerro Verde Other Total Indonesia Molybdenum Mining Mines Atlantic Copper Smelting Rod & Refining & Refining Corporate, Other & Eliminations FCX Total Year Ended December 31, 2023 Revenues: Unaffiliated customers Intersegment Production and delivery Depreciation, depletion and amortization Selling, general and administrative expenses Mining exploration and research expenses Environmental obligations and shutdown costs Operating income (loss) 91 $ 2,328 1,730 175 2 — (1) 513 $ 152 3,745 3,048 243 2 3 28 573 $ 243 6,073 4,778 418 4 3 27 1,086 $ 3,330 787 2,529 395 9 — — 1,184 Interest expense, net Net gain on early extinguishment of debt Other (expense) income, net Provision for (benefit from) income taxes Equity in affiliated companies’ net earnings Net income (loss) attributable to noncontrolling interests Total assets at December 31, 2023 Capital expenditures — — (5) — — — 3,195 232 1 — 3 — — — 5,996 529 1 — (2) — — — 9,191 761 77d — (13) 495 — 300 8,120 271 $ 824 — 710 64 — — — 50 — — 11 17 — 36 1,930 97 $ 4,154 787 3,239 459 9 — — 1,234 77 — (2) 512 — 336 10,050 368 $ 7,816a 621 2,552c 1,028 129 — — 4,728 42 — 127 1,774 10 1,614e 21,655 1,696 $ — 677 439 66 — — — 172 — — (1) — — — 1,782 84 $ 5,886 $ 2,791 19 40 2,718 5,901 28 5 28 — — — — — 36 20 — — (2) — — — 172 13 31 — (8) — — — 1,326 64 $ 1,965b (8,217) (6,000) 64 309 134 292 (1,051) 364 10 174 (16) 5 (47) 8,330 1,838f $ 22,855 — 13,627 2,068 479 137 319 6,225 515 10 286 2,270 15 1,903 52,506 4,824 Year Ended December 31, 2022 Revenues: Unaffiliated customers Intersegment Production and delivery Depreciation, depletion and amortization Selling, general and administrative expenses Mining exploration and research expenses Environmental obligations and shutdown costs Net gain on sales of assets Operating income (loss) Interest expense, net Net (loss) gain on early extinguishment of debt Other (expense) income, net Provision for (benefit from) income taxes Equity in affiliated companies’ net earnings Net income attributable to noncontrolling interests Total assets at December 31, 2022 Capital expenditures North America Copper Mines South America Mining Morenci Other Total Cerro Verde Other Total Indonesia Molybdenum Mining Mines Atlantic Copper Rod & Smelting Refining & Refining Corporate, Other & Eliminations FCX Total $ 175 2,514 1,550 177 2 — (5) — 965 1 — (2) — — — 3,052 263 $ 253 3,768 2,827 233 3 1 1 — 956 1 — (30) — — — 5,552 334 $ 428 6,282 4,377 410 5 1 (4) — 1,921 2 — (32) — — — 8,604 597 $ 3,444 $ 768 — 506 705 2,369 51 357 — 8 — — — — — — 12 1,216 $ 4,212 506 3,074 408 8 — — — 1,228 $ 8,028a 398 2,684c 1,025 117 — — — 4,600 15 — 13 461 — 372 8,398 164 — — 4 (8) — 35 1,873 140 40 15 — (11) 124 17 1,820 453 24 — 592e 407 20,639 10,271 1,575 304 $ — 565 359 74 — — — — 132 — — — — — — 1,697 33 $ 6,281 $ 2,439 4 2,452g 27 25 — — — (61) 31 6,330 5 — — — — (23) $ 1,392b (7,786) (6,206) 70 265 114 125 (2) (760) — — (1) — — — 183 9 15 — 13 (1) — — 1,262 76 488 42 86 (5) 7 12 8,437 875f $ 22,780 — 13,070 2,019 420 115 121 (2) 7,037 560 31 207 2,267 31 1,011 51,093 3,469 108 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S FINANCIAL INFORMATION BY BUSINESS SEGMENT (continued) North America Copper Mines South America Mining Morenci Other Total Cerro Verde Other Total Indonesia Molybdenum Mining Mines Atlantic Copper Smelting Rod & Refining & Refining Corporate, Other & Eliminations FCX Total Year Ended December 31, 2021 Revenues: Unaffiliated customers Intersegment Production and delivery Depreciation, depletion and amortization Selling, general and administrative expenses Mining exploration and research expenses Environmental obligations and shutdown costs Net gain on sales of assets Operating income (loss) Interest expense, net Other income (expense), net Provision for (benefit from) income taxes Equity in affiliated companies’ net earnings (losses) Net income (loss) attributable to noncontrolling interests Total assets at December 31, 2021 Capital expenditures $ 82 2,728 1,239 152 2 — — — 1,417 — 6 — — — 2,708 135 $ 180 3,835 2,235 217 2 1 (1) — 1,561 $ 262 6,563 3,474 369 4 1 (1) — 2,978 $ 3,736 $ 720 — 460 2,000h 429 47 366 — 8 — — — — — — 244 1,822 1 9 — — — 5,208 207 1 15 — — — 7,916 342 28 30 730 — 526 8,694 132 — 13 90 — 76 1,921 30 $ 4,456 460 2,429 413 8 — — — 2,066 28 43 820 — 602 10,615 162 $ 7,241a 282 2,425c 1,049 111 — — — 3,938 48 (152) 1,524j 6 459e 18,971 1,296 $ — 444 254 67 — — — — 123 — 1 — — — 1,713 6 $ 6,356 29 6,381 5 — — — — (1)e $ 2,961 — 2,907 28 24 — — (19) 21 — 1 — — — 228 2 6 12 — — — 1,318 34 $ 1,569b (7,778) (5,838)g 67 236 54 92 (61)i (759) 519 (25) (45) (1) (2) 7,261 273f $ 22,845 — 12,032 1,998 383 55 91 (80) 8,366 602 (105) 2,299 5 1,059 48,022 2,115 a. Includes sales to PT Smelting totaling $27 million in 2023 (reflecting adjustments to prior period provisionally priced concentrate sales), $3.0 billion in 2022 and $3.1 billion in 2021. b. Includes revenues from FCX’s molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines. c. Includes charges for administrative fines of $55 million in 2023, $41 million in 2022 and $16 million in 2021. Includes credits totaling $112 million in 2023 to correct certain inputs in the historical PT-FI ARO model and charges totaling $116 million in 2022 and $340 million in 2021 associated with ARO adjustments. Refer to Note 12 for further discussion. d. Includes $74 million of interest charges associated with Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court, partly offset by a $13 million credit for the settlement of interest on Cerro Verde’s historical profit sharing liability. e. FCX’s economic interest in PT-FI is 48.76% and prior to January 1, 2023, it approximated 81%. Refer to Note 1 for further discussion of first-quarter 2023 gold sales volumes that were attributed approximately 81% to FCX in accordance with the PT-FI shareholders agreement. f. Primarily includes capital expenditures for the Indonesia smelter projects. g. Includes maintenance charges and idle facility costs associated with major maintenance turnarounds at Atlantic Copper totaling $41 million in 2022 and at the Miami smelter totaling $87 million in 2021. h. Includes nonrecurring charges totaling $92 million associated with labor-related costs at Cerro Verde for agreements reached with its hourly employees. i. j. Includes a $60 million gain on the sale of FCX’s remaining cobalt business located in Kokkola, Finland. Refer to Note 2 for further discussion. Includes net tax benefits of $189 million associated with the release of a portion of the valuation allowance recorded against PT Rio Tinto NOLs. Refer to Note 11 for further discussion. 2023 Annual Report 109 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Estimated recoverable proven and probable mineral reserves at December 31, 2023, were determined using metals price assumptions of $3.00 per pound for copper, $1,500 per ounce for gold and $12 per pound for molybdenum. For the three-year period ended December 31, 2023, LME copper settlement prices averaged $4.02 per pound, London PM gold prices averaged $1,846 per ounce and the weekly average price for molybdenum quoted by Platts Metals Daily averaged $19.62 per pound. The recoverable proven and probable mineral reserves presented in the table below represent the estimated metal quantities from which FCX expects to be paid after application of estimated metallurgical recoveries and smelter recoveries, where applicable. Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2023 Gold (million ounces) Coppera (billion pounds) Molybdenum (billion pounds) North America South America Indonesiab Consolidated basisc Net equity interestb,d 44.7 30.5 29.0 104.1 75.1 0.6 — 23.9 24.5 12.2 2.66 0.68 — 3.34 3.02 Note: Totals may not foot because of rounding. a. Estimated consolidated recoverable copper reserves included 1.5 billion pounds in leach stockpiles and 0.3 billion pounds in mill stockpiles. b. Estimated recoverable proven and probable mineral reserves from Indonesia reflect estimates of minerals that can be recovered through 2041. As a result, PT-FI’s current long-term mine plan and planned operations are based on the assumption that PT-FI will abide by the terms and conditions of the IUPK and will be granted the 10-year extension from 2031 through 2041 (refer to Note 13 for discussion of PT-FI’s IUPK). As a result, PT-FI will not mine all of these mineral reserves during the initial term of the IUPK. Prior to the end of 2031, PT-FI expects to mine 43% of its proven and probable recoverable mineral reserves at December 31, 2023, representing 47% of FCX’s net equity share of recoverable copper reserves and 49% of FCX’s net equity share of recoverable gold reserves. c. Consolidated mineral reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America (refer to Note 3 for further discussion). Excluded from the table above were FCX’s estimated recoverable proven and probable mineral reserves of 329 million ounces of silver, which were determined using $20 per ounce. d. Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of FCX’s ownership in subsidiaries). Excluded from the table above were FCX’s estimated recoverable proven and probable mineral reserves of 218 million ounces of silver. NOTE 17. SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED) Recoverable proven and probable mineral reserves as of December 31, 2023, have been prepared using industry accepted practice and conform to the disclosure requirements under Subpart 1300 of SEC Regulation S-K. FCX’s proven and probable mineral reserves may not be comparable to similar information regarding mineral reserves disclosed in accordance with the guidance in other countries. Proven and probable mineral reserves were determined by the use of mapping, drilling, sampling, assaying and evaluation methods generally applied in the mining industry. Mineral reserves, as used in the reserve data presented here, mean an estimate of tonnage and grade of measured and indicated mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. Proven mineral reserves are the economically mineable part of a measured mineral resource. To classify an estimate as a proven mineral reserve, the qualified person must possess a high degree of confidence of tonnage, grade and quality. Probable mineral reserves are the economically mineable part of an indicated or, in some cases, a measured mineral resource. The qualified person’s level of confidence will be lower in determining a probable mineral reserve than it would be in determining a proven mineral reserve. To classify an estimate as a probable mineral reserve, the qualified person’s confidence must still be sufficient to demonstrate that extraction is economically viable considering reasonable investment and market assumptions. FCX’s mineral reserve estimates are based on the latest available geological and geotechnical studies. FCX conducts ongoing studies of its ore bodies to optimize economic values and to manage risk. FCX revises its mine plans and estimates of proven and probable mineral reserves as required in accordance with the latest available studies. 110 Freeport | The Value of Copper N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2023 Orea (million metric tons) Average Ore Grade Per Metric Tona FCX’s Interest FCX’s Interest 100% Basis Copper (%) Gold (grams) Molybdenum (%) 72% 100% 100% 100% 100% 100% 100% 100% 100% 2,750 2,398 2,473 1,038 346 149 48 90 — 3,819 2,398 2,473 1,038 346 149 48 90 — 0.22 0.23 0.35 0.40 0.44 — — 0.17 — — —c —c — 0.03 — — — — 53.56% 51% 2,189 337 4,087 660 0.34 0.44 — — 48.76% 48.76% 48.76% 48.76% 379 163 24 188 1.02 0.80 2.26 0.68 0.63 0.93 1.05 0.92 777 333 49 385 16,653 15,584 12,571 0.01 0.02 0.02 — — 0.15 0.16 — — 0.01 — — — — — Recoverable Proven and Probable Mineral Reservesb Copper (billion pounds) Gold Molybdenum (million ounces) (billion pounds) 12.6 10.0 15.9 6.7 2.7 — — 0.3 0.1 — 0.1 0.2 — 0.3 — — — — 0.23 0.99 0.89 — — 0.46 0.15 — — 27.0 3.5 — — 0.68 — 14.7 4.9 2.2 7.1 107.7 104.1 75.1 11.3 5.3 1.0 6.3 24.5 24.5 12.2 — — — — 3.40 3.34 3.02 North America Production stage: Morenci Sierrita Bagdad Safford, including Lone Star Chino, including Cobre Climax Henderson Tyrone Miami South America Production stage: Cerro Verde El Abra Indonesiad Production stage: Grasberg Block Cave Deep Mill Level Zone Big Gossan Development stage: Kucing Liar Total 100% basis Consolidated basise FCX’s net equity interest f Note: Totals may not foot because of rounding. a. Excludes material contained in stockpiles. b. Includes estimated recoverable metals contained in stockpiles. c. Amounts not shown because of rounding. d. Estimated recoverable proven and probable mineral reserves from Indonesia reflect estimates of minerals that can be recovered through 2041. Refer to Note 13 for discussion of PT-FI’s IUPK. e. Consolidated mineral reserves represent estimated metal quantities after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion). f. Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of FCX’s ownership in subsidiaries). 2023 Annual Report 111 P E R F O R M A N C E G R A P H The following graph compares the change in the cumulative total S&P Total Market Index that are classified in the metals and stockholder return on our common stock with the cumulative mining sub-industry. This comparison assumes $100 invested on total return of the S&P 500 Stock Index and the S&P Metals and December 31, 2018, in (a) Freeport-McMoRan Inc. common stock, Mining Select Industry Index from 2019 through 2023. The S&P (b) the S&P 500 Stock Index and (c) the S&P Metals and Mining Metals and Mining Select Industry Index comprises stocks in the Select Industry Index (with the reinvestment of all dividends). Comparison of 5 Year Cumulative Total Return Among Freeport-McMoRan Inc., the S&P 500 Stock Index and the S&P Metals and Mining Select Industry Index $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Freeport-McMoRan Inc. S&P 500 Stock Index December 31, 2018 2019 2020 2021 2022 2023 $ 100.00 $ 129.53 $ 257.86 $ 416.14 $385.62 $438.31 100.00 131.49 155.68 200.37 164.08 207.21 S&P Metals and Mining Select Industry Index 100.00 114.83 133.71 181 .14 205.53 250.59 112 Freeport | The Value of Copper S T O C K H O L D E R I N F O R M A T I O N INVESTOR INQUIRIES COMMON STOCK DIVIDENDS FCX currently pays a cash dividend on its common stock at an annual rate of $0.30 per share. Under FCX’s performance- based payout framework, the Board approved a variable cash dividend on common stock for 2023 and 2022 totaling $0.30 per share per annum. The combined annual rate of the base dividend and the variable dividend totaled $0.60 per share in 2023 and 2022. 2023 Amount per Share Record Date Payment Date Base Variable First Quarter $0.075 $0.075 Jan. 13, 2023 Feb. 1, 2023 Second Quarter $0.075 $0.075 April 14, 2023 May 1, 2023 Third Quarter $0.075 $0.075 July 14, 2023 Aug. 1, 2023 Fourth Quarter $0.075 $0.075 Oct. 13, 2023 Nov. 1, 2023 2022 Amount per Share Record Date Payment Date Base Variable First Quarter $0.075 $0.075 Jan. 14, 2022 Feb. 1, 2022 Second Quarter $0.075 $0.075 April 14, 2022 May 2, 2022 Third Quarter $0.075 $0.075 July 15, 2022 Aug. 1, 2022 Fourth Quarter $0.075 $0.075 Oct. 14, 2022 Nov. 1, 2022 Based on current market conditions, the base and variable dividends on FCX’s common stock are anticipated to total $0.60 per share for 2024 (including the dividends paid on February 1, 2024), comprised of a $0.30 per share base dividend and $0.30 per share variable dividend. FCX BENEFICIAL OWNERS The beneficial owners of more than five percent of our outstanding common stock as of December 31, 2023, included The Vanguard Group (8.3 percent), BlackRock, Inc. (7.7 percent) and FMR LLC (5.6 percent). The Investor Relations Department is pleased to receive any inquiries about the company. Our Principles of Business Conduct and our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC), which includes certifications of our Chief Executive Officer and Chief Financial Officer, are available on our website. Additionally, copies will be furnished, without charge, to any stockholder of the company entitled to vote at the annual meeting, upon written request. The Investor Relations Department can be contacted as follows: Freeport-McMoRan Inc. Investor Relations Department 333 North Central Avenue Phoenix, AZ 85004 Telephone 602.366.8400 fcx.com TRANSFER AGENT Questions about lost certificates, lost or missing dividend checks, or notifications of change of address should be directed to our transfer agent, registrar and dividend disbursement agent: Computershare 150 Royall Street, Suite 101 Canton, MA 02021 Telephone 800.953.2493 https://www-us.computershare.com/investor/contact NOTICE OF ANNUAL MEETING The annual meeting of stockholders will be held June 11, 2024. Notice of the annual meeting will be sent to stockholders of record as of the close of business on April 15, 2024. In accordance with SEC rules, we will report the voting results of our annual meeting on a Form 8-K, which will be available on our website (fcx.com). FCX COMMON STOCK FCX’s common stock trades on the New York Stock Exchange (NYSE) under the symbol “FCX.” As of March 15, 2024, the number of holders of record of FCX’s common stock was 9,602. NYSE composite tape common share price ranges during 2023 and 2022 were: 2023 2022 High Low High Low First Quarter $ 46.73 $ 34.88 $ 51.99 $ 34.94 Second Quarter 43.46 33.05 51.85 28.87 FM_FCX FreeportFCX Third Quarter 44.70 36.04 33.89 24.80 Fourth Quarter 43.42 32.83 41.16 27.50 Freeport-McMoRan freeportfcx 2023 Annual Report 113 F R E E P O R T T H E V A L U E O F C O P P E R 2 0 2 3 A N N U A L R E P O R T 333 North Central Avenue Phoenix, Arizona 85004 602.366.8100 FCX.COM 

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