Freeport-McMoRan (FCX) 10-K risk factor changes: FY2015 vs FY2014

Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; cash production costs per barrel of oil equivalent (BOE); operating cash flows; capital expenditures; [added: debt reduction initiatives;] exploration efforts and results; development and production activities and costs; liquidity; tax rates; the impact of copper, gold, molybdenum, [removed: cobalt] [added: cobalt,] crude oil and natural gas price changes; the impact of [removed: derivative positions; the impact of] deferred intercompany profits on earnings; reserve estimates; future dividend payments; [removed: debt reduction;] and share [removed: purchases.][added: purchases and sales.]

Declines in the market prices of copper, gold [removed: and/or] [added: and] oil [removed: could] [added: have] adversely [removed: affect] [added: affected] our earnings, cash flows and asset values and, if [removed: sustained, could] [added: sustained or intensified, may] adversely affect our ability to repay debt.

Fluctuations in the market prices of copper, gold [removed: or] [added: and] oil [removed: can] [added: have caused and may continue to] cause significant volatility in our financial performance and [removed: adversely affect] [added: in] the trading prices of our debt and common stock.

[removed: A substantial] [added: If low prices persist] or [removed: extended] decline [removed: in the market prices of these commodities could] [added: further, they may continue to] have a material adverse effect on our financial results, the value of our assets and/or our ability to repay our debt and meet our other fixed [removed: obligations,] [added: obligations;] and [removed: could] [added: may continue to] depress the trading prices of our common stock and of our publicly traded debt securities.

[removed: Additionally, if the] [added: If] market prices for [removed: the] [added: our primary] commodities [removed: we produce] [added: continue to] decline [removed: for a sustained period of time,] [added: or persist at low levels,] we may have to [added: further] revise our operating plans, including curtailing [removed: production, halting or delaying expansion projects,] [added: production further,] reducing operating costs and capital expenditures and discontinuing certain exploration and development programs.

We may be unable to decrease our costs in an amount sufficient to offset reductions in revenues, [removed: and] [added: in which case we] may incur [removed: losses.][added: additional losses, and those losses may be material.]

Fluctuations in commodities prices [removed: can occur because of] [added: are caused by] varied and complex factors beyond our control, including global supply and demand balances and inventory [removed: levels of the commodities we sell;] [added: levels;] global economic and political conditions; [removed: government] [added: international] regulatory, trade and tax policies; commodities investment activity and speculation; the price and availability of substitute products; and changes in technology.

Factors [removed: particularly] affecting gold prices may include the relative strength of the U.S. dollar to other currencies, inflation and interest rate expectations, purchases and sales of gold by governments and central banks, demand from China and India, two of the world’s largest consumers of gold, and [added: global] demand for jewelry containing gold.

Crude oil prices [removed: may] [added: have been and could] be affected [added: in the future] by continued development of shale reserves through hydraulic fracturing, actions of the Organization of the Petroleum Exporting Countries and other major oil producing nations, political and weather conditions in oil producing regions, transportation and refinery capacity, the amount of foreign imports of oil into the U.S., and [removed: potential changes] [added: the impact of legislation adopted] in [added: December 2015 lifting 40-year old restrictions on exporting] U.S. [removed: laws restricting oil exports.][added: oil.]

[removed: Lower] [added: As further discussed in Note 1 and in Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), lower] oil prices, and to a lesser extent natural gas prices, were a [added: significant] contributing factor to the [removed: $5.5 billion of] non-cash impairment charges [removed: recorded] [added: totaling $13.1 billion] for the year [removed: ended December 31, 2014,] [added: 2015 and $3.7 billion for the year 2014] to write-down the carrying value of our [removed: oil and gas properties and reduce the goodwill associated with our] [added: proved] oil and gas [removed: operations to zero.][added: properties.]

[removed: During 2014, the] [added: Copper prices have declined significantly during 2015, with] London Metal Exchange (LME) spot copper prices [removed: ranged from a low of $2.86 per pound to a high of $3.38] [added: averaging $3.11] per pound [added: in 2014] and [removed: averaged $3.11] [added: $2.49] per [removed: pound.][added: pound in 2015.]

[removed: Sustained lower copper] [added: Copper] prices [added: at or below the December 31, 2015, level] could result in [added: additional inventory adjustments and] impairment [removed: of] [added: charges for] our long-lived mining [removed: assets and/or lower of cost or market inventory adjustments.][added: assets.]

At December 31, [removed: 2014,] [added: 2015,] our total consolidated debt was [removed: $19.0] [added: $20.4] billion (see Note 8) and our total consolidated cash was [removed: $464] [added: $224] million.

| • | Limiting our ability to fund future working capital and capital expenditures, to engage in future development activities, or to otherwise realize the value of our assets and opportunities fully because of the need to dedicate a substantial portion of our cash flows from operations to payments on our debt; [removed: or] |

[removed: At] [added: As of] February [removed: 20, 2015,] [added: 24, 2016,] our senior unsecured debt was rated [removed: "BBB-"] [added: "BB"] with a [removed: stable] [added: negative] outlook by Standard [removed: and Poor’s, "BBB"] [added: & Poor’s (S&P), "BBB-"] with a [removed: stable] [added: negative] outlook by Fitch [removed: Ratings,] [added: Ratings (Fitch),] and [removed: "Baa3"] [added: "B1"] with a [removed: stable] [added: negative] outlook by Moody’s Investors [removed: Service.][added: Service (Moody's).]

[removed: We cannot be assured] [added: There is no assurance] that our credit ratings will not be downgraded in the future.

We also have plugging and abandonment obligations related to our oil and gas [removed: operations,] [added: properties,] and are required to provide bonds or other forms of financial assurance in connection with those operations.

We are required by U.S. federal and state [removed: mining] laws [added: and regulations] to provide financial assurance sufficient to allow a third party to implement approved closure and reclamation plans [added: for our mining properties] if we are unable to do so.

The U.S. Environmental Protection Agency (EPA) and state agencies may also [removed: seek] [added: require] financial assurance for investigation and remediation actions that are required under settlements of enforcement actions under the Comprehensive Environmental Response, Compensation and Liability Act [added: of 1980] (CERCLA) or equivalent state regulations.

It is uncertain how the new requirements, if promulgated, will affect the amount and form of our existing and future financial assurance [removed: obligations.][added: obligations or the extent to which they will supplement or replace state requirements.]

As of December 31, [removed: 2014,] [added: 2015,] our financial assurance obligations associated with closure, reclamation and remediation [removed: in our] [added: of] mining [added: sites,] and plugging and abandonment obligations in our oil and gas operations totaled approximately $2.6 billion, and a substantial portion of these obligations were satisfied by FCX and FM O&G guarantees and financial capability demonstrations.

[removed: If our financial condition were to deteriorate substantially or our] [added: As a result of the downgrade of the] credit [removed: rating were downgraded,] [added: ratings of our debt below investment grade by S&P's and Moody’s,] we may be required to provide additional or alternative forms of financial assurance, such as letters of credit, surety bonds or collateral.

Failure to provide the required financial assurance could result in the closure of [added: the affected] mines or suspension of the affected oil and gas operations.

We are a U.S.-based natural [removed: resource] [added: resources] company with substantial mining assets located outside of the U.S. We conduct international mining operations in Indonesia, Peru, Chile and the Democratic Republic of Congo (DRC).

| • | Changes in another country's laws, regulations and policies, including those relating to labor, taxation, royalties, divestment, imports, exports, trade regulations, currency and environmental matters, which [removed: because of rising "resource nationalism" in countries around the world, may impose increasingly onerous requirements on foreign operations and investment;] |

There has been a substantial increase in the global enforcement of these [removed: laws.][added: laws in recent years, and a steadily increasing focus on enforcement of those laws continues.]

Any violation of [removed: these] [added: those] laws could result in significant criminal or civil fines and penalties, litigation, and loss of operating licenses or permits, and may damage our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

Because our Grasberg [removed: minerals district] [added: mining operations in Indonesia] is [removed: our most] [added: a] significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia.

PT-FI has been engaged in discussions with officials of the Indonesian government since 2012 regarding various provisions of its [added: COW, including extending the term of the] COW.

[removed: The] [added: Notwithstanding provisions in the COW prohibiting it from doing so, the] Indonesian government has sought to modify existing mining contracts, including PT-FI’s COW, to address provisions [removed: of] [added: contained in] the [removed: 2009 Mining Law] [added: mining law enacted in 2009,] and [removed: subsequent regulations,] [added: mining regulations adopted thereunder,] including [added: matters] with respect to the size of contract concessions, government revenues, domestic processing of minerals, divestment, provision of local [added: goods and] services, conversion from a COW to a licensing framework for extension periods, and a requirement that extensions may be applied for only within two years prior to a COW’s expiration.

[removed: Despite PT-FI’s rights under its COW to] export [removed: concentrates] [added: concentrate] without the payment of duties, PT-FI was unable to obtain administrative approval for exports and operated at approximately half of its capacity from mid-January 2014 through July 2014.

[removed: Effective with the signing of] [added: Under] the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increase [removed: royalties to 4.0 percent for copper and 3.75 percent for gold from the previous] [added: royalty] rates [removed: of 3.5 percent for copper] and [removed: 1.0 percent for gold, and] [added: agreed to] pay export duties [removed: as] [added: (which were] set [removed: forth in a new regulation.][added: at 7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and are eliminated when development progress exceeds 30 percent).]

[removed: Under] [added: The MOU also anticipated an amendment of] the [removed: MOU,] [added: COW within six months to address other matters; however,] no terms of the COW other than those relating to the [removed: export duties,] smelter [removed: bond and] [added: bond, increased] royalties [removed: described above will be changed until the completion of an amended COW.][added: and export duties were changed.]

If we are unable to reach agreement with the government on our long-term rights, we may be required to reduce or defer investments in our underground development projects, which would [removed: negatively impact] [added: materially and adversely affect] future production and reserves.

[removed: In addition, we are] [added: PT-FI is] required to apply for renewal of export permits at six-month [removed: intervals and the next renewal date is July 25, 2015.][added: intervals.]

Indonesia has [removed: also] [added: long] faced separatist movements and civil and religious strife in a number of provinces.

In Papua, there have been sporadic attacks on civilians by separatists and sporadic but [added: highly publicized conflicts between separatists and the Indonesian military.]

Prior to the end of 2021, we expect to mine [removed: 23] [added: 21] percent of aggregate proven and probable recoverable ore at December 31, [removed: 2014,] [added: 2015,] representing [removed: 30] [added: 27] percent of PT-FI's share of recoverable copper reserves and [removed: 40] [added: 38] percent of its share of recoverable gold reserves.

For further discussion, refer to the above risk factor "Because our Grasberg minerals district is [removed: our most] [added: a] significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia."

[removed: Certain] [added: Recently adopted] Indonesian laws and regulations [removed: may] conflict with the mining rights established under the COW.

As described below, during 2015 and in early 2016, copper and oil prices declined significantly.

In response to lower commodities prices, we have announced revised operating plans that incorporate significant reductions in capital spending, production curtailments at certain North and South America mines and actions to reduce operating, exploration and administrative costs, which may not achieve all the results we anticipate.

We are also pursuing asset sales and joint venture arrangements to raise proceeds for debt reduction.

We may be unable to receive favorable terms for asset sales or joint venture arrangements in the current market environment, which may prevent us from achieving our desired debt reduction levels.

On December 31, 2015, the LME spot copper price was $2.13 per pound.

Copper prices weakened further in early 2016 with the LME spot copper price ranging from $1.96 per pound to $2.13 per pound from January 1, 2016, to February 19, 2016.

The decline in prices during 2015 resulted in non-cash charges for copper and molybdenum inventory adjustments ($338 million) and long-lived mining asset impairments ($37 million), as more fully discussed in Notes 4 and 5.

Other events that could result in impairment of our long-lived mining assets include, but are not limited to, decreases in estimated proven and probable mineral reserves and any event that might otherwise have a material adverse effect on mine production costs.

The London PM gold price averaged $1,160 per ounce in 2015 and $1,266 per ounce in 2014, and was $1,062 per ounce on December 31, 2015.

Oil prices have declined significantly since mid-2014, with Brent crude oil prices averaging $99.45 per barrel in 2014 and $53.64 per barrel in 2015.

On December 31, 2015, the Brent crude oil price was $37.28.

In early 2016, oil prices weakened further to multi-year lows in response to excess global supplies and relatively weak economic conditions with Brent crude oil prices ranging from $27.88 per barrel to $37.22 per barrel from January 1, 2016, to February 19, 2016.

As further described in Note 1, under full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of proved oil and gas properties for impairment.

The U.S. Securities and Exchange Commission (SEC) requires that the twelve-month average of the first-day-of-the-month historical reference prices be used to determine the ceiling test limitation.

Using West Texas Intermediate (WTI) as the reference oil price, the average price was $50.28 per barrel at December 31, 2015, compared with $94.99 per barrel at December 31, 2014.

If the twelve-month historical average price remains below the December 31, 2015, twelve-month average of $50.28 per barrel, the ceiling test limitation will decrease potentially resulting in additional ceiling test impairments of our oil and gas properties.

The WTI spot oil price was $29.64 per barrel at February 19, 2016.

In addition to declines in the trailing twelve-month average oil and natural gas prices, other factors that could result in future impairment of our oil and gas properties, include costs transferred from unevaluated properties to the full cost pool without corresponding proved oil and natural gas reserve additions, negative reserve revisions and the future incurrence of exploration, development and production costs.

At December 31, 2015, carrying costs for unevaluated properties were $4.8 billion.

These costs will be transferred into the full cost pool as the properties are evaluated and proved reserves are established or if impairment is determined.

If these activities do not result in additions to discounted future net cash flows from proved oil and natural gas reserves at least equal to the related costs transferred (net of related tax effects), ceiling test impairments may occur.

During 2015, we transferred $6.4 billion of costs associated with unevaluated properties to the full cost pool mostly reflecting impairment of the carrying values of unevaluated properties.

| • | Requiring us to sell assets to reduce debt; or |

On February 26, 2016, we reached agreement with our bank group to amend our revolving credit facility and term loan.

The changes pursuant to the revolving credit facility and the term loan included modifications of the maximum leverage ratio and minimum interest expense coverage ratio to provide us with additional flexibility, and the commitment under our revolving credit facility has been reduced by $500 million from $4.0 billion to $3.5 billion.

A springing collateral and guarantee trigger was added to the revolving credit facility and term loan.

Under this provision, if we have not entered into definitive agreements for asset sales totaling $3.0 billion in aggregate by June 30, 2016, that are reasonably expected to close by December 31, 2016, we will be required to secure the revolving credit facility and term loan with a mutually acceptable collateral and guarantee package.

If such asset sales totaling $3.0 billion in aggregate have not occurred by December 31, 2016, then the springing collateral and guarantee trigger will go into effect.

Refer to Notes 8 and 18 for further information about the revolving credit facility and term loan.

Any failure to comply with the financial and other covenants in our debt agreements may result in an event of default that would allow the creditors to accelerate the related debt, which in turn may trigger cross-acceleration or cross-default provisions in other debt agreements.

Our cash flow would not be sufficient to fully repay borrowings under our debt instruments that are accelerated upon an event of default.

Since August 2015 and through January 5, 2016, we sold 210 million shares of our common stock at an average price of $9.47 per share under at-the-market equity programs that generated approximately $2 billion in gross proceeds.

We may seek to raise additional equity capital to fund operations, reduce debt or improve our financial position, which may have a negative impact to our stock price.

For additional information, see Note 10.

For more information, refer to the risk factor below relating to mine closure and reclamation regulations and plugging and abandonment obligations related to our oil and gas operations.

Our strategic review of the oil and gas business and evaluation of other transactions may not result in increased stockholder value.

Our Board of Directors (the Board) is undertaking a strategic review of alternatives for our oil and gas business.

We and our advisors are actively engaged with interested parties in a process to evaluate opportunities that include asset sales and joint venture arrangements that would generate cash proceeds for debt repayment.

We are also evaluating transactions involving certain of our mining assets.

These initiatives may not result in transactions or other events that will lead to debt reduction or an increase in stockholder value.

For further information about the market prices of our primary commodities, including the declines in copper and oil prices since mid-2014, refer to the discussion below and in Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A).

Since the second half of 2014, oil prices have declined significantly.

After averaging $109 per barrel in the first half of 2014, Brent crude oil prices averaged $90 per barrel for the second half of 2014 and declined to $57.33 per barrel on December 31, 2014, and were $60.22 per barrel on February 20, 2015.

Refer to Notes 1 and 2 and MD&A for further discussion of these impairment charges.

Sustained weaker oil and natural gas prices could result in additional impairments of our oil and gas properties.

Copper prices have also declined.

The LME spot copper price closed at $2.88 per pound on December 31, 2014, and has declined to $2.59 per pound on February 20, 2015.

Refer to Note 1 and MD&A for further discussion of our accounting policies and estimates used in evaluating impairment of our long-lived assets and our oil and gas properties.

In addition, a future downgrade in our credit rating could negatively affect our cost of and ability to access capital.

In addition, a downgrade could affect our requirements to provide significant financial assurance of our performance under certain legal requirements and contractual arrangements.

Refer to the following risk factor for more information.

Currently there are no financial assurance requirements for active mining operations under CERCLA, but in 2009, the EPA published a notice identifying classes of facilities within the hardrock mining industry for which the agency will develop financial responsibility requirements under CERCLA.

The EPA has indicated that it intends to propose regulations regarding hardrock mining financial responsibility in August 2016.

The EPA's schedule has been challenged by environmental groups, which are petitioning the court to require the EPA to finalize such regulations by January 2016.

Also, the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) regulations applicable to lessees in federal waters require that lessees have substantial U.S. assets and net worth or post bonds or other acceptable financial assurance that the regulatory obligations will be met.

BOEM has signaled its intention to redesign and implement revised financial assurance requirements associated with offshore plugging and abandonment obligations.

BOEM has recently taken a stricter approach regarding the level of decommissioning liabilities to be included in its financial test for purposes of determining eligibility for exemption from financial assurance requirements.

It is uncertain whether additional changes will be implemented by the BOEM and how these changes might affect the form and amount of our existing and future financial assurance obligations associated with our offshore activities in federal waters.

Our oil and gas operations are located in the U.S., except that we expect to commence drilling at our first international oil and gas prospect offshore Morocco in the first half of 2015.

In 2009, Indonesia enacted a mining law (2009 Mining Law), which operates under a licensing system that is less protective of licensees than the contract of work system that governs PT-FI.

The 2009 Mining Law and the regulations issued pursuant to that law provide that contracts of work would continue to be honored until their expiration.

However, the regulations, including those issued in January 2014, attempt to apply certain provisions of the 2009 Mining Law and regulations to existing contracts of work and seek to apply the licensing system to any extension periods of contracts of work.

In January 2012, the President of Indonesia issued a decree calling for the creation of a team of Ministers to evaluate contracts of work for adjustment to the 2009 Mining Law and to take steps to assess and determine the Indonesian government's position on reduction to the size of contract concessions, increasing government revenues and domestic processing of minerals.

In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates.

On July 25, 2014, PT-FI and the Indonesian government entered into a Memorandum of Understanding (MOU) under which PT-FI and the government agreed to negotiate an amended COW to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021.

Execution of the MOU enabled the resumption of concentrate exports, which began in August 2014.

The MOU has been extended to July 25, 2015.

Provisions being addressed in the negotiation of an amended COW include the development of new copper smelting and refining capacity in Indonesia, divestment to the Indonesian government and/or Indonesian nationals of up to a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and timely granting rights for the continuation of operations from 2022 through 2041.

Negotiations are taking into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves.

The Indonesian government revised its January 2014 regulations regarding export duties, which are now set at 7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and are eliminated when development progress exceeds 30 percent.

PT-FI is advancing plans for the construction of new smelter capacity in parallel with completing of negotiations of its long-term operating rights and will also discuss the possibility of expanding industrial activities in Papua in connection with its long-term development plans.

PT-FI has identified a site adjacent to the existing PT Smelting site in Gresik, Indonesia, for the construction of additional smelter capacity.

We cannot predict if such permits will be granted on a timely basis or whether we will be permitted to export concentrates after July 25, 2015.

In January 2015, the Indonesian government issued regulations that require letters of credit to be posted to secure export sales of goods, which may impact PT-FI and PT Smelting.

Such regulations are contrary to our COW, but it is possible that the Indonesian government may seek to impose such requirements on PT-FI.

These requirements could result in additional costs as well as administrative complexities, which could impact the ability to obtain customs clearance to export concentrates in a timely manner.

highly publicized conflicts between separatists and the Indonesian military.

Since July 2009, there have been violent incidents in and around the Grasberg minerals district, including along the road leading to our mining and milling operations, which have resulted in 20 fatalities and 59 injuries.

The next presidential election is scheduled to be held in 2016.

The failure of the systems or structures used to successfully manage these risks could result in significant personal injury, loss of life, property damage and damage to the environment, both in and around our areas of operations, as well as damage to production facilities and delays in or curtailments of production.

Our operations in the western United States (U.S.) require significant [added: secure] quantities of water for mining, ore processing and related support facilities.

Continuous operation of our mines is dependent [removed: on] [added: on, among other things,] our ability to maintain our water rights and claims and the continuing physical availability of the water supplies.

In the arid western U.S., [added: where certain of our mines are located,] water rights are often contested, and disputes over water rights are generally time-consuming, expensive and not necessarily dispositive unless they resolve both actual and potential claims.

The loss of a water right, [removed: loss of continued use of] [added: or] a currently available water [removed: supply, or inability to expand our water resources] [added: supply] could [removed: materially and adversely affect our mining operations by significantly increasing the cost of water, forcing] [added: force] us to curtail operations, [removed: preventing us from expanding operations] or [removed: forcing] [added: force] premature closures, thereby increasing and/or accelerating costs [removed: and] [added: or] foregoing profitable operations.

In Arizona, where our operations use both surface and groundwater, we are a participant in two active general stream adjudications in which the Arizona courts have been attempting, for over 40 years, to quantify and prioritize surface water claims for two of the state's largest river systems, which [added: primarily] affect [removed: four of] our [removed: operating mines (Morenci,] [added: Morenci,] Safford, Sierrita and [removed: Miami).][added: Miami mines.]

The adjudications are addressing the state law claims of thousands of competing users, including us, as well as [removed: very] significant [removed: federally based] [added: federal] water claims [removed: of U.S. interests in Arizona] that are potentially adverse to the [added: state law] claims of [added: both] surface water and groundwater [removed: users under state law.][added: users.]

[removed: Because groundwater accounts for approximately 40 percent of Arizona's water supplies, the] [added: Any] re-characterization of [removed: any significant portion of that water] [added: groundwater] as surface water could [removed: jeopardize] [added: affect] the ability of consumers, farmers, ranchers, municipalities, and industrial users like [removed: us,] [added: us] to continue to access water supplies that have been relied on for decades.

Because we are a [removed: significant] user of both groundwater and surface water in Arizona, we are an active participant in the adjudication proceedings.

The principal parties, in addition to us, include: the state of Arizona; the Gila Valley Irrigation District; the Franklin Irrigation District; the San Carlos Irrigation and Drainage District; the Salt River Project; the San Carlos Apache Tribe; the Gila River Indian Community (GRIC); and the U.S. on behalf of those tribes, on its own behalf, and on behalf of the White Mountain Apache Tribe, the [added: Fort McDowell Mohave-Apache Indian Community, the Salt River Pima-Maricopa Indian Community, and the Payson Community of Yavapai Apache Indians.]

These federal proceedings have [added: either] been stayed pending the Arizona Superior Court [removed: adjudications.][added: adjudications or have been settled.]

[removed: Among these] [added: Also in 2014, ADWR submitted a proposal for the] next projects [removed: is] [added: that it believes should be undertaken in] the [added: case, including the] development of procedures for "cone of depression" analyses [removed: in the San Pedro River watershed] to determine whether a well located outside of the subflow zone creates a cone of depression that intersects the subflow zone and causes a [removed: 0.1 foot or greater] drawdown in the subflow of the river.

Based on the cone of depression analyses, wells outside of the subflow zone could be [removed: determined by the court to be] subject to the jurisdiction of the adjudication court, which [removed: may] [added: might then] require the owners of those wells to either demonstrate a valid surface water claim to support [removed: such] [added: the pumping, refrain from] pumping or [removed: potentially be subject to compliance or damages claims.][added: pay damages.]

On November 6, 2014, the court held a hearing to address the parties’ comments to ADWR’s revised [removed: report and to discuss ADWR’s proposal for next projects.][added: report.]

Given the legal and technical complexity of [removed: this adjudication, its] [added: these adjudications, their] long history, and [removed: its] [added: their] long-term legal, economic and political implications, it is difficult to predict the timing or the outcome of [removed: this issue or of the overall adjudication.][added: these proceedings.]

[removed: If we are] unable to satisfactorily resolve the issues being addressed in [removed: this adjudication,] [added: the adjudications,] our ability to pump groundwater could be diminished or curtailed, and our operations at Morenci, Safford, [removed: Sierrita, Miami] [added: Sierrita] and [removed: Bagdad] [added: Miami] could be adversely [removed: affected.][added: affected unless we are able to acquire alternative resources.]

As part of the Gila River adjudication, the U.S. has asserted numerous claims for [removed: federal non-Indian reserved] [added: express and implied "reserved"] surface water and groundwater rights [added: on non-Indian federal lands] throughout Arizona.

These claims are [removed: based on] [added: related to] reservations of federal land for specific purposes (e.g., national parks, military bases and wilderness areas).

[removed: Instead, these] [added: Unlike state law-based water rights, federal reserved water] rights are given priority in the prior appropriation system based on the date the land was reserved, not the date that water was first used on the land.

Because federal reserved water rights have not [added: yet] been quantified, the task of determining how much water each federal reservation may use has been left to the Gila River adjudication court.

Several “contested cases” to quantify reserved water rights for particular federal reservations [added: in Arizona] are currently pending in the adjudication.

In multiple instances, the U.S. asserts a right to all water in a particular watershed that was not effectively appropriated under state law prior to the [added: establishment of the federal] reservation.

This creates risks for both surface water users and groundwater users because such [added: expansive] claims [removed: can] [added: may] severely impede current and future uses of water within the same watershed.

Because there are numerous federal reservations in watersheds across Arizona, the reserved water right claims of the U.S. pose a significant risk to multiple operations, including Morenci and Safford in the Upper Gila River watershed, [added: and] Sierrita in the Santa Cruz [removed: watershed, and Bagdad in the Bill Williams River] watershed.

Groundwater is treated differently from surface water under Arizona law, which historically allowed land owners to pump unlimited quantities of subsurface water, subject only to the requirement of putting it to "reasonable use." However, court decisions in one of the adjudications have concluded that underground water is often hydrologically connected to surface water so that it actually is surface water and is therefore subject to the Arizona doctrine of prior appropriation, as a result of which it would be subject to the adjudication and potentially unavailable to groundwater pumpers in the absence of valid surface water claims, which historic groundwater pumpers typically do not have.

Following this and other court rulings in 2012 and 2013, ADWR submitted a revised report in 2014.

The court held hearings in 2015 to address the parties' comments and objections, and the issue is currently under advisement with the court.

In May 2015, ADWR submitted a report concerning cone of depression testing, and in November 2015, several parties, including us, submitted comments to that report.

In addition, federal reserved water rights, if recognized by the court, may enjoy greater protection from groundwater pumping than is accorded to state law-based water rights.

For instance, In re Aravaipa Canyon Wilderness Area is a contested case to resolve the U.S.'s claims to water for the Aravaipa Canyon Wilderness Area.

These claims went to trial in 2015 and the parties are awaiting a decision.

In Re Fort Huachuca concerns the U.S.'s claims to water for an Army base and is scheduled for trial in 2016.

In Re Redfield Canyon Wilderness Area and In Re San Pedro Riparian National Conservation Area concern the U.S.'s claims to two other federal reservations, and these cases are expected to go to trial in 2017.

If we are

The legal precedent set in these proceedings may also affect our Bagdad mine.

Groundwater is treated differently from surface water under Arizona law, which historically allowed land owners to pump at will, subject to the doctrine of reasonable use.

However, court decisions in one of the adjudications have concluded that groundwater pumping may affect surface water, thereby effectively making it surface water and bringing the pumping within the jurisdiction of the general stream adjudications.

The effort to define the boundaries between groundwater and surface water remains contested and is currently the principal focus of one of those adjudications.

Additionally, the adjudication court is currently addressing the quantification of several U.S. federal water rights claims.

The legal precedent in these proceedings may affect the adjudication of federal water right claims near our Arizona operations.

Fort McDowell Mohave-Apache Indian Community, the Salt River Pima-Maricopa Indian Community, and the Payson Community of Yavapai Apache Indians.

Following a three-day hearing held in January 2012, the court directed ADWR to submit a further report detailing the additional work it deemed necessary to properly delineate the San Pedro River basin subflow zone.

On January 10, 2013, the court issued an order instructing ADWR to complete additional technical work and submit a new report.

ADWR submitted its revised report on April 1, 2014, and on October 1, 2014, the parties submitted their comments to the revised report.

Also on October 1, 2014, as directed by the court, ADWR submitted a proposal for the next projects that ADWR believes should be undertaken in the case.

During that hearing, ADWR agreed to provide additional information to the parties by February 13, 2015, to facilitate better evaluation of ADWR’s methodologies and decision-making resulting in the revised report.

Unlike state law-based water rights, federal reserved water rights are not based on a history of beneficial use of specific amounts of water.

As a result, these federal water rights can be very disruptive to existing state law-based water rights and uses, particularly groundwater uses.

Although the Bill Williams watershed is not part of the Gila River adjudication, decisions made in the Gila River adjudication may be asserted as precedents for similar federal claims in the Bill Williams watershed.

| For the fiscal year ended December 31, [removed: 2014] [added: 2015] | | |

[removed: ][added: ]

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act þ Yes [removed: ¨] [added: o] No

[removed: ¨] [added: o] Yes þ No

þ Yes [removed: ¨] [added: o] No

þ Large accelerated filer [removed: ¨] [added: o] Accelerated filer [removed: ¨] [added: o] Non-accelerated filer [removed: ¨] [added: o] Smaller reporting company

The aggregate market value of common stock held by non-affiliates of the registrant was [removed: $21.8] [added: $8.6] billion on February [removed: 20, 2015,] [added: 19, 2016,] and [removed: $37.3] [added: $19.1] billion on June 30, [removed: 2014.][added: 2015.]

| Portions of our proxy statement for our [removed: 2014] [added: 2016] annual meeting of stockholders are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this report. |

| [Items 1. and 2. Business and [removed: Properties](#s0FB0335522F53540449BC9E48A856D28)] [added: Properties](#sAF1448D7F74A2B1DB97FB30DF4440FD6)] | [removed: [1](#s0FB0335522F53540449BC9E48A856D28)] [added: [1](#sAF1448D7F74A2B1DB97FB30DF4440FD6)] |

| [Item 1A. Risk [removed: Factors](#s31D16B740FC441528981C9E4AB6F4EDC)] [added: Factors](#sB13684B42939858D81FBB310B0AFF401)] | [removed: [45](#s31D16B740FC441528981C9E4AB6F4EDC)] [added: [49](#sB13684B42939858D81FBB310B0AFF401)] |

| [Item 1B. Unresolved Staff [removed: Comments](#s86716BE355DE1BF3F968C9E4ABC5A4DA)] [added: Comments](#s48B943A989A52A358A0AB310B2D4577C)] | [removed: [58](#s86716BE355DE1BF3F968C9E4ABC5A4DA)] [added: [63](#s48B943A989A52A358A0AB310B2D4577C)] |

| [Item 3. Legal [removed: Proceedings](#s67EFFF829152B8CAAD89C9E4ABC86832)] [added: Proceedings](#s4B0207547762C6A00927B310B4CB89FD)] | [removed: [59](#s67EFFF829152B8CAAD89C9E4ABC86832)] [added: [64](#s4B0207547762C6A00927B310B4CB89FD)] |

| [Item 4. Mine Safety [removed: Disclosures](#s8EE8F53E94A302AB9397C9E4ABDBC2E1)] [added: Disclosures](#s2D2F1C6732202FC6D0EAB310B6AF6980)] | [removed: [61](#s8EE8F53E94A302AB9397C9E4ABDBC2E1)] [added: [66](#s2D2F1C6732202FC6D0EAB310B6AF6980)] |

| [Executive Officers of the [removed: Registrant](#s8EE8F53E94A302AB9397C9E4ABDBC2E1)] [added: Registrant](#s2D2F1C6732202FC6D0EAB310B6AF6980)] | [removed: [61](#s8EE8F53E94A302AB9397C9E4ABDBC2E1)] [added: [66](#s2D2F1C6732202FC6D0EAB310B6AF6980)] |

| [Item 5. Market for Registrant’s Common Equity, Related Stockholder [removed: Matters](#s591F80B2D062D079F776C9E4AC38D4FE)] [added: Matters](#s8AADC49EB2321D375DB4B310BACD9F85)] | |

| [and Issuer Purchases of Equity [removed: Securities](#s591F80B2D062D079F776C9E4AC38D4FE)] [added: Securities](#s8AADC49EB2321D375DB4B310BACD9F85)] | [removed: [62](#s591F80B2D062D079F776C9E4AC38D4FE)] [added: [67](#s8AADC49EB2321D375DB4B310BACD9F85)] |

| [Item 6. Selected Financial [removed: Data](#sC9FAF4A39EC4E8827064C9E48A915FFD)] [added: Data](#s64770A8622C93829D6BBB30D36B83A2A)] | [removed: [64](#sC9FAF4A39EC4E8827064C9E48A915FFD)] [added: [68](#s64770A8622C93829D6BBB30D36B83A2A)] |

| [Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and [removed: Results](#s94B181E070348B1A3643C9E4AD92583D)] [added: Results](#s5E7C51A9C57D17594EB9B310C172F323)] | |

| [of Operations and Quantitative and Qualitative Disclosures about Market [removed: Risk](#s94B181E070348B1A3643C9E4AD92583D)] [added: Risk](#s5E7C51A9C57D17594EB9B310C172F323)] | [removed: [68](#s94B181E070348B1A3643C9E4AD92583D)] [added: [72](#s5E7C51A9C57D17594EB9B310C172F323)] |

| [Item 8. Financial Statements and Supplementary [removed: Data](#sB286F7B20E9BE9A313C6C9E4B59D9B22)] [added: Data](#s8D8F1CFB6782E26AAF86B310EEC10912)] | [removed: [128](#sB286F7B20E9BE9A313C6C9E4B59D9B22)] [added: [136](#s8D8F1CFB6782E26AAF86B310EEC10912)] |

| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s1C0A1F1B3A400D6AFF2BC9E478E9798A)] [added: Disclosure](#s9B1A6F3282C078806A95B30CAD1DD41D)] | [removed: [206](#s1C0A1F1B3A400D6AFF2BC9E478E9798A)] [added: [216](#s9B1A6F3282C078806A95B30CAD1DD41D)] |

| [Item 9A. Controls and [removed: Procedures](#s2A48B8130DF58ED31544C9E4BCC9D409)] [added: Procedures](#s2E6BEDA7BC246843174DB31145401168)] | [removed: [206](#s2A48B8130DF58ED31544C9E4BCC9D409)] [added: [216](#s2E6BEDA7BC246843174DB31145401168)] |

| [Item 9B. Other [removed: Information](#s93C6BD18975317A7D1A6C9E4BD2337BD)] [added: Information](#s47F25E7757C264A79459B311474382F6)] | [removed: [206](#s93C6BD18975317A7D1A6C9E4BD2337BD)] [added: [217](#s47F25E7757C264A79459B311474382F6)] |

| [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#s5867A6FC0FFD7AD9264BC9E4BD77BF5A)] [added: Governance](#s288A4DE34C1A692C7D14B3114B48C098)] | [removed: [207](#s5867A6FC0FFD7AD9264BC9E4BD77BF5A)] [added: [218](#s288A4DE34C1A692C7D14B3114B48C098)] |

| [Item 11. Executive [removed: Compensation](#sC1CA90C67CD50A8B2611C9E4BD798846)] [added: Compensation](#sC4A1F875AFD99787DE30B3114D4B34F9)] | [removed: [207](#sC1CA90C67CD50A8B2611C9E4BD798846)] [added: [218](#sC4A1F875AFD99787DE30B3114D4B34F9)] |

| [Item 12. Security Ownership of Certain Beneficial Owners and Management [removed: and](#sF7ED4E8E1BCC946478B2C9E4A3AE718C)] [added: and](#s3E8450453053AAF3F9DAB3114F402D07)] | |

| [Related Stockholder [removed: Matters](#sF7ED4E8E1BCC946478B2C9E4A3AE718C)] [added: Matters](#s3E8450453053AAF3F9DAB3114F402D07)] | [removed: [207](#sF7ED4E8E1BCC946478B2C9E4A3AE718C)] [added: [218](#s3E8450453053AAF3F9DAB3114F402D07)] |

| [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#sEA2C0892989CF3FA1DC9C9E4BDCD22F5)] [added: Independence](#s9AC1F6C96713979A9BF0B3115143FC14)] | [removed: [207](#sEA2C0892989CF3FA1DC9C9E4BDCD22F5)] [added: [218](#s9AC1F6C96713979A9BF0B3115143FC14)] |

| [Item 14. Principal Accounting Fees and [removed: Services](#s07EEDE72A92CD3034F8BC9E4BE1F560F)] [added: Services](#sD68FCD9160E317549381B3115346C42C)] | [removed: [207](#s07EEDE72A92CD3034F8BC9E4BE1F560F)] [added: [218](#sD68FCD9160E317549381B3115346C42C)] |

| [Item 15. Exhibits, Financial Statement [removed: Schedules](#sD23786F068505DCCA279C9E4BE7220B5)] [added: Schedules](#sF65D30C3599807217B97B311574BF09C)] | [removed: [207](#sD23786F068505DCCA279C9E4BE7220B5)] [added: [218](#sF65D30C3599807217B97B311574BF09C)] |

| [Index to Financial [removed: Statements](#sD6FF285FC74DFB8C16AEC9E478E9E3AD)] [added: Statements](#s6DCEAF5F75A4BB1A9B7BB30CAD1D465E)] | [removed: [F-1](#sD6FF285FC74DFB8C16AEC9E478E9E3AD)] [added: [F-1](#s6DCEAF5F75A4BB1A9B7BB30CAD1D465E)] |

| [Exhibit [removed: Index](#sCA6E07F81B1D1EE603ACC9E4BF028DD4)] [added: Index](#sBF665E602E48464D9651B3115F768E25)] | [removed: [E-1](#sCA6E07F81B1D1EE603ACC9E4BF028DD4)] [added: [E-1](#sBF665E602E48464D9651B3115F768E25)] |

We are a premier U.S.-based natural [removed: resource] [added: resources] company with an [removed: industry leading] [added: industry-leading] global portfolio of mineral [removed: assets,] [added: assets and] significant oil and natural gas [removed: resources and a growing production profile.][added: resources.]

Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold [removed: deposits,] [added: deposits;] significant mining operations in North and South [removed: America,] [added: America;] the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in [removed: Africa] [added: Africa;] and significant [added: U.S.] oil and natural gas [removed: assets in North America.][added: assets.]

As further discussed in Note 2, [removed: during] [added: in November] 2014, we completed [removed: sales] [added: the sale] of our 80 percent ownership interests in the Candelaria and Ojos del Salado copper mining operations [removed: and of our Eagle Ford shale assets, and also acquired additional oil and gas interests] in [removed: the Deepwater Gulf of Mexico (GOM).][added: Chile.]

Following are [removed: FCX's] [added: our] ownership interests at December 31, [removed: 2014,] [added: 2015,] in [removed: its] operating mines through [removed: its subsidiaries] [added: our subsidiaries,] Freeport Minerals Corporation (FMC) and PT Freeport Indonesia (PT-FI), and in [removed: its] [added: our] oil and gas business through [removed: its] [added: our] subsidiary, [removed: FCX Oil & Gas Inc. (FM O&G):][added: FM O&G:]

[removed: ][added: ]

| a. | FMC has an 85 percent undivided interest in Morenci via an unincorporated joint [removed: venture.] [added: venture (as further discussed in Note 18, we have entered into a definitive agreement to sell a 13 percent undivided interest in Morenci; the transaction is expected to close in mid-2016).] Additionally, PT-FI has established an unincorporated joint venture with Rio Tinto plc (Rio Tinto) related to our Indonesia operations. Refer to Note 3 for further discussion of our ownership in subsidiaries and joint ventures. |

At December 31, [removed: 2014,] [added: 2015,] our estimated consolidated recoverable proven and probable mineral reserves totaled [removed: 103.5] [added: 99.5] billion pounds of copper, [removed: 28.5] [added: 27.1] million ounces of gold, [removed: 3.11] [added: 3.05] billion pounds of molybdenum, [removed: 282.9] [added: 271.2] million ounces of silver and [removed: 0.85] [added: 0.87] billion pounds of cobalt.

Following is a summary of our consolidated recoverable proven and probable mineral reserves at December 31, [removed: 2014,] [added: 2015,] by geographic location (refer to “Mining Operations” for further discussion):

10-K 1 a2015form10-k.htm FCX 2015 FORM 10-K

þ Yes o No

o Yes þ No

Common stock issued and outstanding was 1,251,849,800 shares on February 19, 2016, and 1,040,217,108 shares on June 30, 2015.

| [Part I](#sFCCF2EAEE5A9BCF8839DB3107C9E2C8E) | [1](#sFCCF2EAEE5A9BCF8839DB3107C9E2C8E) |

| [Part II](#sA0B7693ADC2B4754DA1FB310B8D79CD2) | [67](#sA0B7693ADC2B4754DA1FB310B8D79CD2) |

| [Part III](#s84637CA47AB6EE640CFCB31149459D6F) | [218](#s84637CA47AB6EE640CFCB31149459D6F) |

| [Part IV](#s4CD98ECE244D5A33DE04B3115549DA03) | [218](#s4CD98ECE244D5A33DE04B3115549DA03) |

| [Signatures](#sD6D393A42A7A7BA13617B30CAD1DFE25) | [S-1](#sD6D393A42A7A7BA13617B30CAD1DFE25) |

During 2015, in response to weak market conditions, we took actions to enhance our financial position, including significant reductions in capital spending, production curtailments at certain North and South America mines and actions to reduce operating, exploration and administrative costs.

We are also taking continuing actions to reduce oil and gas costs and capital expenditures.

Our oil and gas business (FCX Oil & Gas Inc., or FM O&G) is undertaking a near-term deferral of exploration and development expenditures by idling the three Deepwater Gulf of Mexico (GOM) drillships it has under contract.

Refer to "Mining Operations" and "Oil and Gas Operations" for further discussion of revised operating plans.

Concerns about the global economy, and particularly the weakening of the Chinese economy, have dominated financial market sentiment and negatively impacted commodity prices, including copper.

Oil prices have weakened to multi-year lows in response to excess global supplies and relatively weak economic conditions.

Current market conditions and uncertainty about the timing of economic and commodity price recovery require us to continue taking actions to strengthen our financial position, reduce debt and re-focus our portfolio of assets.

Our business strategy is focused on our position as a leading global copper producer.

We will continue to manage our production activities, spending on capital projects and the administration of our business to enhance cash flows, and intend to complete asset sales to reduce debt.

Several initiatives are currently being advanced, including an evaluation of alternatives for the oil and gas business as well as several potential transactions involving certain of our mining assets.

In February 2016, we announced that we have entered into a definitive agreement to sell a 13 percent undivided interest in the Morenci unincorporated joint venture to Sumitomo Metal Mining Co., Ltd. for $1.0 billion in cash (refer to Note 18 for further discussion).

We are confident about the longer term outlook for copper prices based on the global demand and supply fundamentals.

With our established reserves and large-scale current production base, our significant portfolio of undeveloped resources, and our global organization of highly qualified and dedicated workers and management, we believe we are well positioned to generate significant asset sale proceeds while retaining an attractive portfolio of high-quality assets.

Our Board of Directors is undertaking a strategic review of alternatives for FM O&G.

We and our advisors are actively engaged with interested participants in a process to evaluate opportunities that include asset sales and joint venture arrangements to generate cash proceeds for debt repayment.

We expect to advance the evaluation of these alternatives during the first half of 2016.

During 2014, we also completed the sale of our Eagle Ford shale assets in Texas and acquired additional oil and gas interests in the GOM.

| Indonesia | 28 | | | 99 | | | — | | | 39 | | | — | |

| Africa | 7 | | | — | | | — | | | — | | | 100 | |

| | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % |

| Indonesia | 19 | | | 98 | | | — | | |

| | 100 | % | | 100 | % | | 100 | % | |

| a. | Our Henderson and Climax molybdenum mines produced 52 percent of consolidated molybdenum production, and our North America copper mines produced 40 percent. |

Copper concentrate is also produced at the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia.

Copper cathode is also produced at Atlantic Copper (our wholly owned copper smelting and refining unit in Spain) and PT Smelting (PT-FI's 25 percent owned copper smelter and refinery in Indonesia).

We have incorporated changes in the commercial pricing structure for our chemicals products to promote continuation of chemical-grade production.

| | PT-FI – Indonesia | 2 | 9,058 | | September 2017 | |

| b. | In February 2016, El Abra and one of its workers’ unions (representing approximately one-third of El Abra’s union-represented employees) signed a new four-year CLA agreement, which expires April 2020. |

| c. | The CLA between Atlantic Copper and its workers' unions expired in December 2015, and the CLA between Rotterdam and its workers' unions expired in March 2015; new agreements are currently being negotiated. |

Our ability to identify and successfully develop additional prospects and to discover oil and

Revised Operating Plans

10-K 1 a2014form10-k.htm FCX 2014 10-K

Common stock issued and outstanding was 1,039,863,035 shares on February 20, 2015, and 1,038,896,868 shares on June 30, 2014.

| [Part I](#s43C7FDBB2570D8AE7390C9E4A66B7351) | [1](#s43C7FDBB2570D8AE7390C9E4A66B7351) |

| [Part II](#sD40FB1006868F21BDA53C9E4AC35E893) | [62](#sD40FB1006868F21BDA53C9E4AC35E893) |

| [Part III](#sBC6ABFCD5520CA98C506C9E4BD256563) | [207](#sBC6ABFCD5520CA98C506C9E4BD256563) |

| [Part IV](#s343C71E575B830E5684DC9E4BE21EE9A) | [207](#s343C71E575B830E5684DC9E4BE21EE9A) |

| [Signatures](#s1EAF68CB18B951E5CAFBC9E478E9F165) | [S-1](#s1EAF68CB18B951E5CAFBC9E478E9F165) |

| Indonesia | 28% | | 99% | | — | | 39% | | — |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Indonesia | 16% | | 93% | | — | |

| Africa | 11% | | — | | — | |

| a. | Includes production from the Candelaria and Ojos del Salado mines totaling 284 million pound of copper (7 percent of consolidated FCX production) and 72 thousand ounces of gold (6 percent of consolidated FCX production). On November 3, 2014, FCX completed the sale of its 80 percent ownership interests in the Candelaria and Ojos del Salado mining operations. |

All of our proved oil and natural gas reserves were located in the U.S., with 74 percent comprised of oil (including natural gas liquids, or NGLs) and 63 percent represented by proved developed reserves.

No other customer accounted for more than 10 percent of our consolidated revenues in any of the past three years.

In South America, copper concentrate is produced at our Cerro Verde mine.

Atlantic Copper S.L.U. (Atlantic Copper, our wholly owned copper smelting and refining unit in Spain - refer to "Mining Operations - Smelting Facilities and Other Mining Properties" for further discussion) and PT Smelting also produce copper cathode.

During 2014, 21 percent of our South America mines' copper sales volumes were shipped to Atlantic Copper in the form of copper concentrate.

Approximately 40 percent of our gas production is sold monthly based on published index pricing, with the remainder priced daily on the spot market.

Additionally, we have contractors that have personnel at many of our operations, including approximately 19,800 at our South America mining operations (including contractors for the Cerro Verde expansion), 18,000 at the Grasberg minerals district, 4,600 at the Tenke minerals district, 3,400 in the U.S. and 500 in Europe and other locations.

| | PT-FI – Indonesia | 1 | 9,244 | | September 2015 | |

Each partner takes in kind its share of Morenci’s production.

Morenci has expanded its mining and milling capacity to process additional sulfide ores identified through exploratory drilling.

Construction of the expanded Morenci milling facility is substantially complete.

Remaining items include completion of the molybdenum circuit, which would add capacity of approximately 9 million pounds of molybdenum per year, and the construction of an expanded tailings storage facility.

Both are expected to be completed in 2015.

"Risk Factors" and Item 3.

“Legal Proceedings” for further discussion.

The

Although we believe the Bagdad operation has sufficient water sources to support current operations, we are a party to litigation that may set legal precedents, which could adversely affect our water rights at Bagdad and at our other properties in Arizona.

Current operations include leaching by the SX/EW process.

The available mining fleet consists of six 227-metric ton haul trucks loaded by one 34 cubic meter shovel dipper and one 19 cubic meter loader dipper.

This fleet is capable of moving an average of approximately 450,000 metric tons of material per day.

Construction activities associated with a large-scale expansion at Cerro Verde are advancing toward completion in late 2015.

Detailed engineering and major procurement activities are complete and construction progress is more than 50 percent complete.

Cerro Verde will also begin to receive electrical power under long-term contracts with ElectroPeru beginning in 2015 to supply energy to the expanded facilities.

Cerro Verde’s participation in the Pillones Reservoir Project has allowed better regulation of the Rio Chili system, securing water rights that we believe will be sufficient to support Cerro Verde’s current operations.

We continue to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries.

Contracts of Work.

PT-FI pays royalties on copper, gold and silver in the concentrate it sells.

Our TRIR (including contractors) was 0.56 per 200,000 man-hours worked in [added: 2015 and] 2014, [removed: 0.74 per 200,000 man-hours worked in 2013] and [removed: 0.58] [added: 0.74] per 200,000 man-hours worked in [removed: 2012.][added: 2013.]

The metal mining sector industry average reported by the U.S. Mine Safety and Health Administration (MSHA) was [removed: 2.38] [added: 2.23] per 200,000 man-hours worked in [removed: 2013] [added: 2014] and [removed: 2.27] [added: 2.39] per 200,000 man-hours worked in [removed: 2012.][added: 2013.]

The metal mining sector industry average for [removed: 2014] [added: 2015] was not available at the time of this filing.

Certain information as of February [removed: 20, 2015,] [added: 19, 2016,] about our executive officers is set forth in the following table and accompanying text:

| Richard C. Adkerson | | [removed: 68] [added: 69] | | Vice Chairman of the Board, [removed: and FCX] President and Chief Executive Officer |

| James C. Flores | | [removed: 55] [added: 56] | | [removed: Vice] [added: FCX Oil & Gas Inc.] Chairman of the [removed: Board, and FM O&G President] [added: Board] and Chief Executive Officer |

| Michael J. Arnold | | [removed: 62] [added: 63] | | Executive Vice President and Chief Administrative Officer |

| Kathleen L. Quirk | | [removed: 51] [added: 52] | | Executive Vice President, Chief Financial Officer and Treasurer |

[removed: He] [added: Mr. Adkerson] served as Co-Chairman of the Board of McMoRan Exploration Co. (MMR) from September [removed: 1998, and President and Chief Executive Officer from May 2010] [added: 1998] until FCX's acquisition of MMR in 2013.

Flores has served as [removed: Vice Chairman of the Board, and FM O&G President and] [added: FCX Oil & Gas Inc. (FM O&G)] Chief Executive Officer since June [removed: 2013.][added: 2013 and as FM O&G Chairman of the Board since October 2015.]

[removed: Mr. Flores previously served as] Chairman of the Board, President and Chief Executive Officer of Plains Exploration & Production Company (PXP) from September 2002 until FCX's acquisition of PXP in 2013.

| Harry M. "Red" Conger, IV | | 60 | | President and Chief Operating Officer - Americas and Africa Mining |

Harry M.

"Red" Conger, IV has served as Chief Operating Officer - Americas and Africa Mining since July 2015, and as President - Americas since 2007.

He has also served as President and Chief Operating Officer - Rod and Refining since 2014.

Prior to 2007, he served in a number of senior operations positions at Phelps Dodge Corporation.

He served as Vice Chairman of the Board of FCX from June 2013 to October 2015, and as President of FM O&G from June 2013 to July 2015.

Mr. Flores previously served as

| James R. Moffett | | 76 | | Chairman of the Board |

James R.

Moffett has served as Chairman of the Board since May 1992.

Mr. Moffett previously served as the Chief Executive Officer from July 1995 until December 2003.

Mr. Adkerson served as Co-Chairman of the Board of MMR from September 1998 until FCX's acquisition of MMR in 2013.

The table below shows the NYSE composite tape common share price ranges during [removed: 2014] [added: 2015] and [removed: 2013:][added: 2014:]

| First Quarter | | [removed: $38.09] [added: $23.72] | | [removed: $30.38] [added: $16.43] | | [removed: $36.26] [added: $38.09] | | [removed: $30.72] [added: $30.38] |

| Second Quarter | | [removed: $36.51] [added: $23.97] | | [removed: $32.35] [added: $18.11] | | [removed: $34.00] [added: $36.51] | | [removed: $26.37] [added: $32.35] |

| Third Quarter | | [removed: $39.32] [added: $18.84] | | [removed: $32.29] [added: $7.76] | | [removed: $34.99] [added: $39.32] | | [removed: $26.95] [added: $32.29] |

| Fourth Quarter | | [removed: $32.91] [added: $14.20] | | [removed: $20.94] [added: $6.08] | | [removed: $38.00] [added: $32.91] | | [removed: $32.34] [added: $20.94] |

At February [removed: 20, 2015,] [added: 19, 2016,] there were [removed: 15,149] [added: 14,544] holders of record of our common stock.

In February 2012, the Board authorized an increase in the cash dividend on our common stock to [removed: the current] [added: an] annual rate of $1.25 per share ($0.3125 per share quarterly).

Below is a summary of dividends on FCX common stock for [removed: 2014] [added: 2015] and [removed: 2013:][added: 2014:]

| First Quarter | | $0.3125 | | [removed: 01/15/2013] [added: 01/15/2015] | | [removed: 02/01/2013] [added: 02/02/2015] |

The following table sets forth information with respect to shares of FCX common stock purchased by us during the three months ended December 31, [removed: 2014:][added: 2015:]

| October 1-31, [removed: 2014] [added: 2015] | | — | | | $ | — | | | — | | | 23,685,500 | |

| December 1-31, [removed: 2014] [added: 2015] | | — | | | $ | — | | | — | | | 23,685,500 | |

| Total | | [removed: 214,923] [added: —] | | | $ | [removed: 27.79] [added: —] | | | — | | | 23,685,500 | |

| | | 2015 | | | | 2014 | | |

The Board declared a one-time special cash dividend of $0.1105 per share related to the settlement of the shareholder derivative litigation, which was paid in August 2015.

In March 2015, the Board reduced the annual common stock dividend to $0.20 per share ($0.05 per share quarterly), and in December 2015, the Board suspended the annual common stock dividend.

The Board will review its financial policy on an ongoing basis.

| | | 2015 | | | | |

| Second Quarter | | $0.0500 | | 04/15/2015 | | 05/01/2015 |

| Special Dividend | | $0.1105 | | 07/15/2015 | | 08/03/2015 |

| Third Quarter | | $0.0500 | | 07/15/2015 | | 08/03/2015 |

| Fourth Quarter | | $0.0500 | | 10/15/2015 | | 11/02/2015 |

| November 1-30, 2015 | | — | | | $ | — | | | — | | | 23,685,500 | |

| | | 2014 | | | | 2013 | | |

The Board also authorized a supplemental common stock dividend of $1.00 per share that was paid in July 2013.

| | | 2013 | | | | |

| Second Quarter | | $0.3125 | | 04/15/2013 | | 05/01/2013 |

| Supplemental Dividend | | $1.0000 | | 06/14/2013 | | 07/01/2013 |

| Third Quarter | | $0.3125 | | 07/15/2013 | | 08/01/2013 |

| Fourth Quarter | | $0.3125 | | 10/15/2013 | | 11/01/2013 |

On December 19, 2014, the Board declared a regular quarterly dividend of $0.3125 per share, which was paid on February 2, 2015, to common stockholders of record at the close of business on January 15, 2015.

| November 1-30, 2014 | | 214,923 | | b | $ | 27.79 | | | — | | | 23,685,500 | |

| | |

| --- | --- |

| b. | Consists of shares acquired in connection with stock option exercises. |

| | [removed: 2014] [added: 2015] | | | | [removed: 2013a] [added: 2014] | | | | [removed: 2012] [added: 2013a] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | |

| Revenues | $ | [removed: 21,438] [added: 15,877] | | b | $ | [removed: 20,921] [added: 21,438] | | b | $ | [removed: 18,010] [added: 20,921] | | [added: b] | $ | [removed: 20,880] [added: 18,010] | | | $ | [removed: 18,982] [added: 20,880] | | |

| Operating [added: (loss)] income | $ | [removed: 97] [added: (13,382] | [added: )] | [removed: b,c] [added: b,c,d] | $ | [removed: 5,351] [added: 97] | | [removed: b,d,e] [added: b,c,e] | $ | [removed: 5,814] [added: 5,351] | | [added: b,c,f] | $ | [removed: 9,140] [added: 5,814] | | [removed: e] [added: c,g] | $ | [removed: 9,068] [added: 9,140] | | [added: c,h] |

| Net (loss) income | $ | [removed: (745] [added: (12,089] | ) | | $ | [removed: 3,441] [added: (745] | [added: )] | | $ | [removed: 3,980] [added: 3,441] | | | $ | [removed: 5,747] [added: 3,980] | | | $ | [removed: 5,544] [added: 5,747] | | |

| Net (loss) income attributable to common stockholders | $ | [removed: (1,308] [added: (12,236] | ) | [removed: b,c,f,g] [added: b,c,d,i] | $ | [removed: 2,658] [added: (1,308] | [added: )] | [removed: b,d,e,f,g,h] [added: b,c,e,j,k] | $ | [removed: 3,041] [added: 2,658] | | [removed: f,g] [added: b,c,f,j,k,l] | $ | [removed: 4,560] [added: 3,041] | | [removed: e,f,g] [added: c,g,j,k] | $ | [removed: 4,273] [added: 4,560] | | [removed: f] [added: c,h,j,k] |

| Basic net (loss) income per share attributable to common stockholders | $ | [removed: (1.26] [added: (11.31] | ) | | $ | [removed: 2.65] [added: (1.26] | [added: )] | | $ | [removed: 3.20] [added: 2.65] | | | $ | [removed: 4.81] [added: 3.20] | | | $ | [removed: 4.67] [added: 4.81] | | |

| Basic weighted-average common shares outstanding | [removed: 1,039] [added: 1,082] | | | | [removed: 1,002] [added: 1,039] | | | | [removed: 949] [added: 1,002] | | | | [removed: 947] [added: 949] | | | | [removed: 915] [added: 947] | | | |

| Diluted net (loss) income per share attributable to common stockholders | $ | [removed: (1.26] [added: (11.31] | ) | [removed: b,c,f,g] [added: b,c,d,i] | $ | [removed: 2.64] [added: (1.26] | [added: )] | [removed: b,d,e,f,g,h] [added: b,c,e,j,k] | $ | [removed: 3.19] [added: 2.64] | | [removed: f,g] [added: b,c,f,j,k,l] | $ | [removed: 4.78] [added: 3.19] | | [removed: e,f,g] [added: c,g,j,k] | $ | [removed: 4.57] [added: 4.78] | | [removed: f] [added: c,h,j,k] |

| Diluted weighted-average common shares outstanding | [removed: 1,039] [added: 1,082] | | | | [removed: 1,006] [added: 1,039] | | | | [removed: 954] [added: 1,006] | | | | [removed: 955] [added: 954] | | | | [removed: 949] [added: 955] | | | |

| Dividends declared per share of common stock | $ | [removed: 1.25] [added: 0.2605] | | | $ | [removed: 2.25] [added: 1.25] | | | $ | [removed: 1.25] [added: 2.25] | | | $ | [removed: 1.50] [added: 1.25] | | | $ | [removed: 1.125] [added: 1.50] | | |

| Operating cash flows | $ | [removed: 5,631] [added: 3,220] | | | $ | [removed: 6,139] [added: 5,631] | | | $ | [removed: 3,774] [added: 6,139] | | | $ | [removed: 6,620] [added: 3,774] | | | $ | [removed: 6,273] [added: 6,620] | | |

| Capital expenditures | $ | [removed: 7,215] [added: 6,353] | | | $ | [removed: 5,286] [added: 7,215] | | | $ | [removed: 3,494] [added: 5,286] | | | $ | [removed: 2,534] [added: 3,494] | | | $ | [removed: 1,412] [added: 2,534] | | |

| Cash and cash equivalents | $ | [removed: 464] [added: 224] | | | $ | [removed: 1,985] [added: 464] | | | $ | [removed: 3,705] [added: 1,985] | | | $ | [removed: 4,822] [added: 3,705] | | | $ | [removed: 3,738] [added: 4,822] | | |

| Property, plant, equipment and mining development costs, net | $ | [removed: 26,220] [added: 27,509] | | | $ | [removed: 24,042] [added: 26,220] | | | $ | [removed: 20,999] [added: 24,042] | | | $ | [removed: 18,449] [added: 20,999] | | | $ | [removed: 16,785] [added: 18,449] | | |

| Oil and gas properties, net | $ | [removed: 19,274] [added: 7,093] | | | $ | [removed: 23,359] [added: 19,274] | | | $ | [removed: —] [added: 23,359] | | | $ | — | | | $ | — | | |

| Goodwill | $ | — | | | $ | [removed: 1,916] [added: —] | | | $ | [removed: —] [added: 1,916] | | | $ | — | | | $ | — | | |

| Redeemable noncontrolling interest | $ | [removed: 751] [added: 764] | | | $ | [removed: 716] [added: 751] | | | $ | [removed: —] [added: 716] | | | $ | — | | | $ | — | | |

| Total stockholders’ equity | $ | [removed: 18,287] [added: 7,828] | | | $ | [removed: 20,934] [added: 18,287] | | | $ | [removed: 17,543] [added: 20,934] | | | $ | [removed: 15,642] [added: 17,543] | | | $ | [removed: 12,504] [added: 15,642] | | |

| b. | Includes net noncash mark-to-market [removed: realized gains] (losses) [added: gains] associated with crude oil and natural gas derivative contracts totaling [added: $(319) million ($(198) million to net loss attributable to common stockholders or $(0.18) per share) for 2015,] $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) for 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013. |

| [removed: c.] [added: e.] | [removed: Includes (i) impairment] [added: The year 2014 includes net] charges [removed: of $5.5] [added: totaling $4.8] billion [removed: ($4.0] [added: to operating income ($3.6] billion to net loss attributable to common stockholders or [removed: $3.89] [added: $3.46] per share) [added: consisting of (i) $3.7 billion ($2.3 billion] to [removed: reduce] [added: net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $1.7 billion ($1.7 billion to net loss attributable to common stockholders) to impair] the [added: full] carrying value of [added: goodwill, (ii) $46 million ($29 million to net loss attributable to common stockholders) for charges at] oil and gas [removed: properties pursuant to full cost accounting rules] [added: operations primarily associated with idle/terminated rig costs] and [removed: to fully impair goodwill] [added: inventory write-downs] and [removed: (ii)] [added: (iv) $6 million ($4 million to net loss attributable to common stockholders) for adjustments to molybdenum inventories, partly offset by (v) net] gains [added: on sales] of [added: assets of] $717 million ($481 million to net loss attributable to common [removed: stockholders or $0.46 per share)] [added: stockholders)] primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mining operations. |

| [removed: e.] [added: g.] | [removed: Includes] [added: The year 2012 includes net] charges [removed: associated with labor agreements] totaling [removed: $36 million ($13] [added: $16] million to [removed: net] [added: operating] income [removed: attributable to common stockholders or $0.01 per share) at Cerro Verde in 2013 and $116 million ($50] [added: ($8] million to net income attributable to common stockholders or [removed: $0.05] [added: $0.01] per share) [added: associated with a labor agreement] at [removed: PT-FI, Cerro Verde and El Abra in 2011.] [added: Candelaria.] |

| [removed: f.] [added: j.] | Includes after-tax net gains (losses) on early extinguishment of debt totaling $3 million (less than $0.01 per share) in 2014, $(28) million ($(0.03) per share) in 2013, $(149) million ($(0.16) per share) in [removed: 2012,] [added: 2012 and] $(60) million ($(0.06) per share) in [removed: 2011 and $(71) million ($(0.07) per share) in 2010.] [added: 2011.] |

| [removed: g.] [added: k.] | As further discussed in "Consolidated Results - Provision for Income Taxes" contained in [removed: Part 7. and 7a. Management's Discussion and Analysis of Financial Condition and Results of Operations, net (loss) income attributable to common stockholders includes a] [added: MD&A , amounts include] net tax [removed: charge] [added: charges] of $121 million ($103 million net of noncontrolling interests or $0.10 per share) in [removed: 2014,] [added: 2014 and] a net tax benefit of $199 million ($0.20 per share) in [removed: 2013 and] [added: 2013. In addition, the year 2012 includes] a net tax benefit of $205 million ($98 million net of noncontrolling interests or $0.11 per share) [removed: in 2012. The] [added: primarily for adjustments to Cerro Verde's deferred income taxes, and the] year 2011 includes a tax charge of $53 million ($49 million net of noncontrolling interests or $0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining [removed: burden during the remaining term of its 1998 stability agreement.] [added: burden.] |

| [removed: h.] [added: q.] | [removed: Includes] [added: The year 2013 includes] a gain of $128 million [added: ($128 million] to net income attributable to common stockholders [removed: ($0.13] [added: or $0.13] per share) related to our preferred stock [removed: investments] [added: investment] in and the subsequent acquisition of McMoRan Exploration Co. [added: (MMR).] |

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | |

| Copper [removed: (recoverable)] | | | | | | | | | | | | | | | | | | | | |

| Production (millions of [added: recoverable] pounds) | [removed: 3,904] [added: 4,017] | | | | [removed: 4,131] [added: 3,904] | | | | [removed: 3,663] [added: 4,131] | | | | [removed: 3,691] [added: 3,663] | | | | [removed: 3,908] [added: 3,691] | | | |

| Production (thousands of [added: recoverable] metric tons) | [removed: 1,771] [added: 1,822] | | | | [removed: 1,874] [added: 1,771] | | | | [removed: 1,662] [added: 1,874] | | | | [removed: 1,674] [added: 1,662] | | | | [removed: 1,773] [added: 1,674] | | | |

| Sales, excluding purchases (millions of [added: recoverable] pounds) | [removed: 3,888] [added: 4,070] | | | | [removed: 4,086] [added: 3,888] | | | | [removed: 3,648] [added: 4,086] | | | | [removed: 3,698] [added: 3,648] | | | | [removed: 3,896] [added: 3,698] | | | |

| Sales, excluding purchases (thousands of [added: recoverable] metric tons) | [removed: 1,764] [added: 1,846] | | | | [removed: 1,853] [added: 1,764] | | | | [removed: 1,655] [added: 1,853] | | | | [removed: 1,678] [added: 1,655] | | | | [removed: 1,767] [added: 1,678] | | | |

| Average realized price per pound | $ | [removed: 3.09] [added: 2.42] | | | $ | [removed: 3.30] [added: 3.09] | | | $ | [removed: 3.60] [added: 3.30] | | | $ | [removed: 3.86] [added: 3.60] | | | $ | [removed: 3.59] [added: 3.86] | | |

| Gold (thousands of recoverable ounces) | [removed: | | | | | | | | | | | | | |] [added: 1,835] | | | [added: 1,247] | | |

| Production [added: (thousands of recoverable ounces)] | [removed: 1,214] [added: 1,257] | | | | [removed: 1,250] [added: 1,214] | | | | [removed: 958] [added: 1,250] | | | | [removed: 1,383] [added: 958] | | | | [removed: 1,886] [added: 1,383] | | | |

| Sales, excluding purchases [added: (thousands of recoverable ounces)] | [removed: 1,248] [added: 1,247] | | | | [removed: 1,204] [added: 1,248] | | | | [removed: 1,010] [added: 1,204] | | | | [removed: 1,378] [added: 1,010] | | | | [removed: 1,863] [added: 1,378] | | | |

| Average realized price per ounce | $ | [removed: 1,231] [added: 1,129] | | | $ | [removed: 1,315] [added: 1,231] | | | $ | [removed: 1,665] [added: 1,315] | | | $ | [removed: 1,583] [added: 1,665] | | | $ | [removed: 1,271] [added: 1,583] | | |

| Molybdenum (millions of recoverable pounds) | [removed: | | | | | | | | | | | | | |] [added: 73] | | [added: a] | [added: 89] | | |

| [removed: Production] [added: Production:] | [removed: 95] | | | | [removed: 94] | | | | [removed: 85] | | | | [removed: 83] | | | | [removed: 72] | | | |

| Sales, excluding purchases [added: (millions of recoverable pounds)] | [removed: 95] [added: 89] | | | | [removed: 93] [added: 95] | | | | [removed: 83] [added: 93] | | | | [removed: 79] [added: 83] | | | | [removed: 67] [added: 79] | | | |

| Average realized price per pound | $ | [removed: 12.74] [added: 8.70] | | | $ | [removed: 11.85] [added: 12.74] | | | $ | [removed: 14.26] [added: 11.85] | | | $ | [removed: 16.98] [added: 14.26] | | | $ | [removed: 16.47] [added: 16.98] | | |

| Production (millions of [added: recoverable] pounds) | [removed: 1,670] [added: 1,947] | | | | [removed: 1,431] [added: 1,670] | | | | [removed: 1,363] [added: 1,431] | | | | [removed: 1,258] [added: 1,363] | | | | [removed: 1,067] [added: 1,258] | | | |

| Total assets | $ | 46,577 | | | $ | 58,674 | | m | $ | 63,385 | | m | $ | 35,421 | | m | $ | 32,038 | | m |

| Total debt, including current portion | $ | 20,428 | | | $ | 18,849 | | m | $ | 20,618 | | m | $ | 3,508 | | m | $ | 3,505 | | m |

You should read this data in conjunction with Items 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risks (MD&A) and Item 8.

Financial Statements and Supplementary Data thereto contained in our annual report on Form 10-K for the year ended December 31, 2015.

All references to income or losses per share are on a diluted basis, unless otherwise noted.

| c. | Includes net charges (credits) for adjustments to environmental obligations and related litigation reserves of $43 million ($28 million to net loss attributable to common stockholders or $0.03 per share) in 2015, $76 million ($50 million to net loss attributable to common stockholders or $0.05 per share) in 2014, $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) in 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) in 2011. |

| d. | The year 2015 includes net charges totaling $13.8 billion to operating loss ($12.0 billion to net loss attributable to common stockholders or $11.11 per share) consisting of (i) $13.1 billion ($11.6 billion to net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $338 million ($217 million to net loss attributable to common stockholders) for adjustments to copper and molybdenum inventories, (iii) $188 million ($117 million to net loss attributable to common stockholders) for charges at oil and gas operations primarily associated with other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties, (iv) $156 million ($94 million to net loss attributable to common stockholders) for charges at mining operations primarily associated with asset impairment, restructuring and other net charges and (v) $18 million ($12 million to net loss attributable to common stockholders) for executive retirement benefits, partly offset by (vi) a net gain of $39 million ($25 million to net loss attributable to common stockholders) for the sale of the Luna Energy power facility. |

| f. | The year 2013 includes net charges totaling $232 million to operating income ($137 million to net income attributable to common stockholders or $0.14 per share) consisting of (i) $80 million ($50 million to net income attributable to common stockholders) for transaction and related costs principally associated with our oil and gas acquisitions, (ii) $76 million ($49 million to net income attributable to common stockholders) associated with updated mine plans at Morenci that resulted in a loss in recoverable leach stockpiles, (iii) $37 million ($23 million to net income attributable to common stockholders) for restructuring an executive employment arrangement, (iv) $36 million ($13 million to net income attributable to common stockholders) associated with a labor agreement at Cerro Verde and (v) $3 million ($2 million to net income attributable to common stockholders) for adjustments to molybdenum inventories. |

| h. | The year 2011 includes net charges totaling $57 million to operating income ($19 million to net income attributable to common stockholders or $0.02 per share) consisting of (i) $116 million ($50 million to net income attributable to common stockholders) associated with labor agreements at PT Freeport Indonesia (PT-FI), Cerro Verde and El Abra, partly offset by (ii) a gain of $59 million ($31 million to net income attributable to common stockholders) for the settlement of an insurance claim for business interruption and property damage related to PT-FI's concentrate pipelines. |

| i. | The year 2015 includes a gain of $92 million ($92 million to net loss attributable to common stockholders or $0.09 per share) related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement. |

| l. | The year 2013 includes a gain of $128 million ($0.13 per share) related to our preferred stock investments in and the subsequent acquisition of McMoRan Exploration Co. |

| m. | Amounts restated to reflect adoption of new accounting guidance for debt issuance costs, which reduced total debt and total assets by $121 million at December 31, 2014, $88 million at December 31, 2013, $19 million at December 31, 2012, and $32 million at December 31, 2011. |

| SOUTH AMERICA MININGa | | | | | | | | | | | | | | | | | | | | |

| Deep Mill Level Zone underground mine | 2,900 | | | | — | | | | — | | | | — | | | | — | | | |

| Copper | | | | | | | | | | | | | | | | | | | | |

The ratio of earnings to fixed charges and preferred stock dividends is the same as the ratio of earnings to fixed charges for the years presented because no shares of preferred stock were outstanding during these years.

| a. | As a result of the loss recorded in 2015, the ratio coverage was less than 1:1. FCX would have needed to generate additional earnings of $14.2 billion to achieve coverage of 1:1 in 2015. |

and 7A.

Our results for 2015, compared with 2014, were significantly affected by lower price realizations from copper and oil.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Indonesia | 19 | | | 98 | | | — | | |

| | 100 | % | | 100 | % | | 100 | % | |

Our Board of Directors (the Board) is undertaking a strategic review of alternatives for our oil and gas business (FCX Oil & Gas Inc., or FM O&G).

We and our advisors are actively engaged with interested participants in a process to evaluate opportunities that include asset sales and joint venture arrangements that would generate cash proceeds for debt repayment.

We expect to advance the evaluation of these alternatives during the first half of 2016.

At December 31, 2015, we had $20.4 billion in total debt.

We have announced initiatives to accelerate our debt reduction plans.

Several initiatives are currently being advanced, including an evaluation of alternatives for the oil and gas business as well as several potential transactions involving certain of our mining assets.

In February 2016, we entered into a definitive agreement to sell a 13 percent undivided interest in the Morenci unincorporated joint venture to Sumitomo Metal Mining Co., Ltd. for $1.0 billion in cash and also reached agreement with our bank group to amend our revolving credit facility and term loan.

REVISED OPERATING PLANS

During 2015, in response to weak market conditions, we took actions to enhance our financial position, including significant reductions in capital spending, production curtailments at certain North and South America mines (which resulted in aggregate annual reductions of 350 million pounds of copper and 34 million pounds of molybdenum) and actions to reduce operating, exploration and administrative costs (refer to “Operations” for further discussion).

In addition, we generated approximately $2 billion in gross proceeds from at-the-market equity programs, and our Board reduced our annual common stock dividend from $1.25 per share to $0.20 per share in March 2015, and subsequently suspended the annual common stock dividend in December 2015 (refer to Note 10 and “Capital Resources and Liquidity” for further discussion).

Concerns about the global economy, and particularly the weakening of the Chinese economy, have dominated financial market sentiment and negatively impacted commodity prices, including copper.

Oil prices have weakened to multi-year lows in response to excess global supplies and relatively weak economic conditions.

Current market conditions and uncertainty about the timing of economic and commodity price recovery require us to continue taking actions to strengthen our financial position, reduce debt and re-focus our portfolio of assets.

Our business strategy is focused on our position as a leading global copper producer.

We will continue to manage our production activities, spending on capital projects and operations, and the administration of our business to enhance cash flows, and intend to complete significant asset sale transactions to reduce debt.

| Total assets | $ | 58,795 | | | $ | 63,473 | | | $ | 35,440 | | | $ | 32,070 | | | $ | 29,386 | | |

| Total debt, including current portion | $ | 18,970 | | | $ | 20,706 | | | $ | 3,527 | | | $ | 3,537 | | | $ | 4,755 | | |

You should read this data in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and Notes thereto contained in this annual report.

| d. | Includes transaction and related costs principally associated with our oil and gas acquisitions totaling $80 million ($50 million to net income attributable to common stockholders or $0.05 per share). |

| Production | 33 | | | | 32 | | | | 36 | | | | 35 | | | | 25 | | | |

| Production | 11 | | | | 13 | | | | 8 | | | | 10 | | | | 7 | | | |

| Production | 29 | | | | 28 | | | | 26 | | | | 25 | | | | 20 | | | |

For the ratio of earnings to fixed charges and preferred stock dividends calculation, we assumed that our preferred stock dividend requirements were equal to the pre-tax earnings that would be required to cover those dividend requirements.

We computed those pre-tax earnings using the effective tax rate for each year.

| Ratio of earnings to fixed charges | | | | | | | | | |

| and preferred stock dividends | — | a | 7.4x | | 19.8x | | 20.7x | | 13.9x |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Indonesia | 16% | | 93% | | — | |

| | 100% | | 100% | | 100% | |

During 2014, we commenced operations at the Morenci mill expansion and continued construction on the Cerro Verde mill expansion, with completion expected in late 2015.

These projects are expected to significantly increase our copper production in future periods.

Our portfolio includes a broad range of development opportunities and high-potential exploration prospects.

These charges were partly offset by a gain on the sale of Candelaria/Ojos and net noncash mark-to-market gains on oil and gas derivative contracts.

At December 31, 2014, we had $19.0 billion in total debt and $464 million in consolidated cash and cash equivalents.

During 2014, we continued our efforts to manage debt by completing several transactions that will reduce future interest costs and defer debt maturities.

We remain committed to a strong balance sheet and are taking aggressive actions to reduce or defer capital expenditures and other costs and have initiated efforts to obtain third-party funding for a significant portion of our oil and gas capital expenditures to maintain financial strength and flexibility in response to recent sharp declines in oil prices.

In addition, we are monitoring copper markets and will be responsive to market conditions.

As a first step, we have reduced budgeted 2015 capital expenditures, exploration and other costs by a total of $2 billion.

We have a broad set of natural resource assets that provide many alternatives for future actions to enhance our financial flexibility.

Additional capital cost reductions, potential additional divestitures or monetizations and other actions will be pursued as required to maintain a strong balance sheet while preserving a strong resource position and portfolio of assets with attractive long-term growth prospects.

The outlook for each of these measures follows.

| Africa mining | 445 | | | 425 | | |

| | 4,270 | | | 3,888 | | |

| Indonesia mining | 1,285 | | | 1,168 | | |

| | 1,285 | | | 1,248 | | |

From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories.

Copper prices have also come under pressure as financial investors take positions in the metal consistent with a view on declining global growth and the resulting general weak commodity prices.

By the end of 2008, financial turmoil in the U.S. contributed to a global economic slowdown and a decline in many commodity prices.

Crude oil prices rebounded after 2008, supported by a gradually improving global economy and demand outlook.

Since mid-2014, oil prices have significantly declined associated with global oversupply primarily attributable to U.S. shale production and increased Brazilian and Libyan output, coupled with weak economic data in Europe and slowing Chinese demand.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Consolidated reserves at December 31, 2012 | | 116.5 | | | 32.5 | | 3.42 |

| Production | | (4.1 | ) | | (1.2) | | (0.09) |

Based on our management’s assessment, management concluded that, as of December 31, [removed: 2014,] [added: 2015,] our Company’s internal control over financial reporting is effective based on the COSO criteria.

We have audited Freeport-McMoRan Inc.’s [removed: (formerly Freeport-McMoRan Copper & Gold Inc.)] internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] 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. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Freeport-McMoRan Inc. as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] and our report dated February [removed: 27, 2015] [added: 26, 2016] expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheets of Freeport-McMoRan Inc. [removed: (formerly Freeport-McMoRan Copper & Gold Inc.)] as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2014.][added: 2015.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Freeport-McMoRan Inc. at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] 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), Freeport-McMoRan Inc.'s internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] 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 [removed: 27, 2015] [added: 26, 2016] expressed an unqualified opinion thereon.

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Revenues | $ | [removed: 21,438] [added: 15,877] | | | $ | [removed: 20,921] [added: 21,438] | | | $ | [removed: 18,010] [added: 20,921] | |

| Production and delivery | [removed: 11,904] | [added: 18] | | | [removed: 11,840] | [added: 28] | | | [removed: 10,382] | [added: 28] | | [added: |]

| Depreciation, depletion and amortization | [removed: 3,863] [added: 3,497] | | | | [removed: 2,797] [added: 3,863] | | | | [removed: 1,179] [added: 2,797] | | |

| Impairment of oil and gas properties | [removed: 3,737] [added: 13,144] | | | | [removed: —] [added: 3,737] | | | | — | | |

| Total cost of sales | [removed: 19,504] [added: 28,524] | | | | [removed: 14,637] [added: 19,504] | | | | [removed: 11,561] [added: 14,637] | | |

| Selling, general and administrative expenses | [removed: 592] [added: 569] | | | | [removed: 657] [added: 592] | | | | [removed: 431] [added: 657] | | |

| Mining exploration and research expenses | [removed: 126] [added: 127] | | | | [removed: 210] [added: 126] | | | | [removed: 285] [added: 210] | | |

| Environmental obligations and shutdown costs | [removed: 119] [added: 78] | | | | [removed: 66] [added: 119] | | | | [removed: (22] [added: 66] | | [removed: )] |

| Goodwill impairment | [removed: 1,717] [added: —] | | | | [removed: —] [added: 1,717] | | | | — | | |

| Net gain on sales of assets | [removed: (717] [added: (39] | | ) | | [removed: —] [added: (717] | | [added: )] | | — | | |

| Total costs and expenses | [removed: 21,341] [added: 29,259] | | | | [removed: 15,570] [added: 21,341] | | | | [removed: 12,196] [added: 15,570] | | |

| Operating [added: (loss)] income | [removed: 97] [added: (13,382] | | [added: )] | | [removed: 5,351] [added: 97] | | | | [removed: 5,814] [added: 5,351] | | |

| Interest expense, net | [removed: (630] [added: (645] | | ) | | [removed: (518] [added: (630] | | ) | | [removed: (186] [added: (518] | | ) |

| Net gain (loss) on early extinguishment of debt | [removed: 73] [added: —] | | | | [removed: (35] [added: 73] | | [removed: )] | | [removed: (168] [added: (35] | | ) |

| Gain on investment in McMoRan Exploration Co. (MMR) | — | | | | [removed: 128] [added: —] | | | | [removed: —] [added: 128] | | |

| Other income (expense), net | [removed: 36] [added: 6] | | | | [removed: (13] [added: 36] | | [removed: )] | | [removed: 27] [added: (13] | | [added: )] |

| (Loss) income before income taxes and equity in affiliated companies' net [added: (losses)] earnings | [removed: (424] [added: (14,021] | | ) | | [removed: 4,913] [added: (424] | | [added: )] | | [removed: 5,487] [added: 4,913] | | |

| [removed: Provision for] [added: Benefit from (provision for)] income taxes | [removed: (324] [added: 1,935] | | [removed: )] | | [removed: (1,475] [added: (324] | | ) | | [removed: (1,510] [added: (1,475] | | ) |

| Equity in affiliated companies’ net [added: (losses)] earnings | [removed: 3] [added: (3] | | [added: )] | | 3 | | | | 3 | | |

| Net (loss) income | [removed: (745] [added: (12,089] | | ) | | [removed: 3,441] [added: (745] | | [added: )] | | [removed: 3,980] [added: 3,441] | | |

| Net income attributable to noncontrolling interests | [removed: (523] [added: (106] | | ) | | [removed: (761] [added: (523] | | ) | | [removed: (939] [added: (761] | | ) |

| Preferred dividends attributable to redeemable noncontrolling interest | [removed: (40] [added: (41] | | ) | | [removed: (22] [added: (40] | | ) | | [removed: —] [added: (22] | | [added: )] |

| Net (loss) income attributable to [removed: FCX] common stockholders | $ | [removed: (1,308] [added: (12,236] | ) | | $ | [removed: 2,658] [added: (1,308] | [added: )] | | $ | [removed: 3,041] [added: 2,658] | |

| Net (loss) income per share attributable to [removed: FCX] common stockholders: | | | | | | | | | | | |

| Basic | $ | [removed: (1.26] [added: (11.31] | ) | | $ | [removed: 2.65] [added: (1.26] | [added: )] | | $ | [removed: 3.20] [added: 2.65] | |

| Diluted | $ | [removed: (1.26] [added: (11.31] | ) | | $ | [removed: 2.64] [added: (1.26] | [added: )] | | $ | [removed: 3.19] [added: 2.64] | |

| Basic | [removed: 1,039] [added: 1,082] | | | | [removed: 1,002] [added: 1,039] | | | | [removed: 949] [added: 1,002] | | |

| Diluted | [removed: 1,039] [added: 1,082] | | | | [removed: 1,006] [added: 1,039] | | | | [removed: 954] [added: 1,006] | | |

| Dividends declared per share of common stock | $ | [removed: 1.25] [added: 0.2605] | | | $ | [removed: 2.25] [added: 1.25] | | | $ | [removed: 1.25] [added: 2.25] | |

| Net (loss) income | $ | [removed: (745] [added: (12,089] | ) | | $ | [removed: 3,441] [added: (745] | [added: )] | | $ | [removed: 3,980] [added: 3,441] | |

| Other comprehensive [removed: (loss) income,] [added: income (loss),] net of taxes: | | | | | | | | | | | |

| Actuarial (losses) gains arising during the period | [removed: (161] [added: (5] | | ) | | [removed: 73] [added: (166] | | [added: )] | | [removed: (69] [added: 73] | | [removed: )] |

February 26, 2016

February 26, 2016

| Copper and molybdenum inventory adjustments | 338 | | | | 6 | | | | 3 | | |

| Preferred dividends attributable to redeemable noncontrolling interest | (41 | | ) | | (40 | | ) | | (22 | | ) |

| Copper and molybdenum inventory adjustments | | 338 | | | | 6 | | | | 3 | | |

| Other asset impairments, inventory write-downs, restructuring and other | | 256 | | | | 18 | | | | — | | |

| Net proceeds from sale of common stock | | 1,936 | | | | — | | | | — | | |

| Other assets | 2,242 | | | | 1,956 | | |

| Total assets | $ | 46,577 | | | $ | 58,674 | |

| Total liabilities | 33,769 | | | | 35,449 | | |

| | (In millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Common Stock | | | | | | | | | | | (Accumulated Deficit) Retained Earnings | | | | Accumu- lated Other Compre-hensive Loss | | | | Common Stock Held in Treasury | | | | | | | Total Stock- holders’ Equity | | | | | | | | | | |

| | (In millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at December 31, 2014 | 1,167 | | | $ | 117 | | | $ | 22,281 | | | $ | 128 | | | $ | (544 | ) | | 128 | | | $ | (3,695 | ) | | $ | 18,287 | | | $ | 4,187 | | | $ | 22,474 | |

| Sale of common stock | 206 | | | 20 | | | | 1,916 | | | | — | | | | — | | | | — | | | — | | | | 1,936 | | | | — | | | | 1,936 | | |

| Noncontrolling interests' share of contributed capital in subsidiary | — | | | — | | | | (7 | | ) | | — | | | | — | | | | — | | | — | | | | (7 | | ) | | 7 | | | | — | | |

| Net loss attributable to common stockholders | — | | | — | | | | — | | | | (12,236 | | ) | | — | | | | — | | | — | | | | (12,236 | | ) | | — | | | | (12,236 | | ) |

| Other comprehensive income | — | | | — | | | | — | | | | — | | | | 41 | | | | — | | | — | | | | 41 | | | | — | | | | 41 | | |

| Balance at December 31, 2015 | 1,374 | | | $ | 137 | | | $ | 24,283 | | | $ | (12,387 | ) | | $ | (503 | ) | | 128 | | | $ | (3,702 | ) | | $ | 7,828 | | | $ | 4,216 | | | $ | 12,044 | |

FCX's reportable segments include the Morenci, Cerro Verde, Grasberg and Tenke Fungurume copper mines, the Rod & Refining operations and the United States (U.S.) Oil & Gas operations.

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 development costs, are translated at historical rates.

Gains and losses resulting from translation of such account balances are included in other income (expense), as are gains and losses from foreign currency transactions.

Foreign currency losses totaled $93 million in 2015, $4 million in 2014 and $36 million in 2013.

Prior to third-quarter 2015, inventories were stated at the lower of weighted-average cost or market (refer to "New Accounting Standards" in this note for discussion of the change in accounting principle).

Product inventories include raw materials, work-in-process and finished goods.

probable reserves, including shafts, adits, drifts, ramps, permanent excavations, infrastructure and removal of overburden.

Impairment of Long-Lived Mining Assets.

The

Including amounts determined to be impaired, FCX transferred $6.4 billion of costs associated with unevaluated properties to the full cost pool in 2015, $2.5 billion in 2014 and $0.7 billion for the seven-month period from June 1, 2013, through December 31, 2013.

Impairment of Oil and Gas Properties.

The twelve-month average WTI reference oil price was $50.28 per barrel at December 31, 2015, compared with $94.99 per barrel at December 31, 2014.

remove platforms, tanks, production equipment and flow lines; and restore the wellsite (refer to Note 12 for further discussion).

FCX engaged in discussions with its molybdenum chemical product customers during the second half of 2015 and established floor index prices or prices that adjust within certain ranges for its chemical products to promote continuation of chemical-grade production.

TFM and Cerro Verde are subsidiaries of FMC.

No receivables are recorded for those

Excluded stock options totaled 45 million shares of common stock in 2015, 31 million in 2014 and 30 million in 2013.

New Accounting Standards.

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) that provides a single comprehensive revenue recognition model, which will replace most existing revenue recognition guidance, and also requires expanded disclosures.

February 27, 2015

| Gain on insurance settlement | — | | | | — | | | | (59 | | ) |

| Adjustment to deferred tax valuation allowance | (5 | | ) | | — | | | | (1 | | ) |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Goodwill | — | | | | 1,916 | | |

| Other assets | 2,077 | | | | 1,798 | | |

| Total assets | $ | 58,795 | | | $ | 63,473 | |

| Total liabilities | 35,570 | | | | 37,526 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at January 1, 2012 | 1,071 | | | $ | 107 | | | $ | 19,007 | | | $ | 546 | | | $ | (465 | ) | | 123 | | | $ | (3,553 | ) | | $ | 15,642 | | | $ | 2,911 | | | $ | 18,553 | |

| Change in ownership interests | — | | | — | | | | (17 | | ) | | — | | | | — | | | | — | | | — | | | | (17 | | ) | | 17 | | | | — | | |

Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis for its mining operations.

Therefore, FCX concluded that its operating segments include individual mines or operations relative to its mining operations.

Operating segments that meet certain financial thresholds are reportable segments.

the ore body, at which time it is allocated to inventory cost and then included as a component of cost of goods sold.

Asset Impairment for Mining Operations.

A significant sale of oil and gas properties may represent a triggering event that requires goodwill to be evaluated for impairment.

Excluded stock options totaled 31 million with a weighted-average exercise price of $40.52 per option in 2014; 30 million with a weighted-average exercise price of $40.23 per option in 2013; and 17 million with a weighted-average exercise price of $44.73 per option in 2012.

Based on preliminary valuations, and including purchase price adjustments and transaction costs, FCX recorded capitalized costs for oil and gas properties not subject to amortization of $509 million.

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2013 | | | | 2012 | | | |

| Total long-term mill and leach stockpilesc | $ | 2,179 | | | $ | 2,386 | | |

| a. | Amount is net of a $76 million charge associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles. |

| PT-FI | $ | 279 | | | $ | 255 | |

| Debt issue costs | 141 | | | | 107 | | |

| Other | 214 | | | | 151 | | |

| Rio Tinto's share of joint venture cash flows | 29 | | | | 33 | | |

| Commodity derivative contracts | 43 | | | | 205 | | |

| Other | 179 | | | | 177 | | |

Debt included $226 million of fair value adjustments related to the debt assumed in the acquisition of PXP at December 31, 2014, and $653 million at December 31, 2013.

| Subsidiary credit facility | 425 | | | | — | | |

| 1.40% Senior Notes due 2015 | — | | | | 500 | | |

| Issued by FM O&G: | | | | | | | |

| 8.625% Senior Notes due 2019 | — | | | | 447 | | |

There has been no change in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2014,] [added: 2015,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On February [removed: 27, 2015, FCX] [added: 26, 2016, Freeport-McMoRan Inc. (FCX)] and [removed: FM] [added: Freeport-McMoRan Oil & Gas LLC (FM] O&G [removed: LLC,] [added: LLC),] as borrowers, JPMorgan Chase Bank, N.A., as administrative [added: agent and collateral] agent, Bank of America, N.A., as syndication agent, and each of the lenders party thereto entered into [removed: the First Amendment] [added: an agreement] to [added: amend and restate the] Term Loan Agreement dated as of February [removed: 27, 2015 (First Amendment) to] [added: 14, 2013, as amended by] the [removed: Term Loan Agreement] [added: First Amendment] dated as of February [removed: 14, 2013,] [added: 27, 2015, and the Second Amendment dated as of December 9, 2015,] among the borrowers, the administrative agent, the syndication agent, and each of the lenders party [removed: thereto.][added: thereto (Amended and Restated Term Loan).]

On February [removed: 27, 2015,] [added: 26, 2016,] FCX, [removed: PT-FI,] [added: PT Freeport Indonesia (PT-FI),] and FM O&G LLC, as borrowers, JPMorgan Chase Bank, [removed: N.A.,] [added: N.A.] as administrative agent, [added: collateral agent and swingline lender,] Bank of America, N.A., as syndication [removed: agent,] [added: agent] and each of the lenders party thereto entered into [removed: the Second Amendment to Revolving Credit Agreement dated as of February 27, 2015 (Second Amendment)] [added: an agreement] to [added: amend and restate] the Revolving Credit Agreement dated as of February 14, 2013, as amended by the First Amendment [removed: to Revolving Credit Agreement] dated as of May 30, 2014, [added: the Second Amendment dated as of February 27, 2015, and the Third Amendment dated as of December 9, 2015,] among the borrowers, the administrative agent, the syndication agent, and each of the lenders party [removed: thereto.][added: thereto (Amended and Restated Revolving Credit Facility).]

As of February 26, [removed: 2015, there were] [added: 2016, outstanding] borrowings [removed: of $1.1 billion] [added: totaled $515 million] and [removed: $44] [added: $38] million of letters of credit [added: were] issued under the revolving credit facility, resulting in [added: current] availability of approximately $2.9 billion, of which [added: approximately] $1.5 billion could be used for additional letters of credit.

[removed: For] [added: Refer to Note 8 for] additional information about the [removed: Term Loan] [added: term loan] and the revolving credit [removed: facility, refer to Note 8.][added: facility.]

Amended and Restated Term Loan

The changes made pursuant to the Amended and Restated Term Loan include modification of the maximum total leverage ratio from 5.90x to 8.00x for the quarters ending March 31, 2016, and June 30, 2016, from 5.75x to 8.00x for the quarter ending September 30, 2016, and from 5.00x to 6.00x for the quarter ending December 31, 2016.

There was no change to the maximum total leverage ratio for 2017 (remains 4.25x) or thereafter (reverts to 3.75x).

The minimum interest expense coverage ratio (ratio of consolidated EBITDAX, as defined in the Amended and Restated Term Loan, to consolidated cash interest expense) was also decreased from 2.50x to 2.25x.

In addition, the mandatory prepayment provision was modified to provide that 100 percent (rather than the current 50 percent) of the net proceeds received on or prior to December 31, 2016, in excess of the first $1.0 billion from asset sales, subject to certain exceptions, must be applied to repay the term loan if the lenders are unsecured and the total leverage ratio is equal to or greater than 6.00x.

A springing collateral and guarantee trigger was also added to provide that if FCX has not entered into definitive agreements for asset sales totaling $3.0 billion in aggregate by June 30, 2016, that are reasonably expected to close by December 31, 2016, FCX will be required to guarantee and secure the term loan with a mutually acceptable collateral and guarantee package.

The springing collateral and guarantee trigger will also go into effect if such asset sales totaling $3.0 billion in aggregate have not been consummated by December 31, 2016.

The term loan contains a number of negative covenants that, among other things, restrict, subject to certain exceptions, the ability of FCX’s subsidiaries that are not borrowers or guarantors to incur additional indebtedness (including guarantee obligations) and FCX’s ability or the ability of FCX’s subsidiaries to: create liens on assets; enter into sale and leaseback transactions; engage in mergers, liquidations and dissolutions; or sell assets.

Many of the exceptions to the subsidiary indebtedness restrictions and the lien restrictions have been narrowed significantly through March 31, 2017.

In addition, on or prior to March 31, 2017, FCX is not permitted to pay dividends on its common stock or make other restricted payments.

The pricing under the amended term loan is also changed.

If the total leverage ratio is greater than 6.0x, then the existing interest rate will be increased by 0.50 percent, with an additional increase of 0.50 percent (i.e., a total increase of 1.0 percent above the existing interest rate) if the total leverage ratio is greater than 7.0x.

Amended and Restated Revolving Credit Facility

The changes pursuant to the Amended and Restated Revolving Credit Facility include modification of the maximum total leverage ratio, the minimum interest expense coverage ratio, the addition of the springing collateral and guarantee trigger, the addition of certain temporary negative covenants and certain existing negative covenants have been temporarily narrowed significantly, and pricing changes, all of which are consistent with the changes to the Amended and Restated Term Loan described above.

The commitments under the Amended and Restated Revolving Credit Facility have been reduced by $500 million from $4.0 billion to $3.5 billion.

First Amendment to Term Loan

Pursuant to the First Amendment, the amortization schedule was extended such that, as amended, the Term Loan’s scheduled payments total $225 million in 2016, $269 million in 2017, $1.1 billion in 2018, $299 million in 2019 and $1.2 billion in 2020, compared with $650 million in 2016, $200 million in 2017 and $2.2 billion in 2018.

In addition, the maximum total leverage ratio was modified consistent with the revolving credit facility amendment described below.

Second Amendment to Revolving Credit Facility

Pursuant to the Second Amendment, the maximum total leverage ratio (Debt/EBITDA) was modified to 4.75x in 2015 and 2016 (from the previous limit of 3.75x) with a step-down in 2017, reverting back to 3.75x in 2018.

The information set forth under the captions “Information About Director Nominees” and “Section 16(a) Beneficial Ownership Reporting Compliance” of our definitive proxy statement to be filed with the United States Securities and Exchange Commission (SEC), relating to our [removed: 2015] [added: 2016] annual meeting of stockholders, is incorporated herein by reference.