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.
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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
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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.
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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,
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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
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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.
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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
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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
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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
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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
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E
P
O
R
T
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V
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E
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F
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O
P
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2
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2
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A
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P
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333 North Central Avenue
Phoenix, Arizona 85004
602.366.8100
FCX.COM