Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our annual report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K), filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to income or losses per share are on a diluted basis.

OVERVIEW

We are a leading international mining company with headquarters in Phoenix, Arizona. We operate large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. We are one of the world’s largest publicly traded copper producers. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru.

We continue to monitor the impact of the COVID-19 pandemic on our business and maintain our vigilant operating protocols to contain and mitigate the risk of spread of COVID-19 at each of our operating sites. To date, our protocols have been effective in mitigating and preventing a major outbreak of COVID-19 at our operating sites. We will continue to monitor, assess and update our COVID-19 response and to provide assistance to employees in obtaining vaccinations.

Our results for the first nine months of 2021 reflect strong operating and financial performance, and cash flow generation. We believe we are well positioned to make investments in our business while providing shareholders with cash returns consistent with our financial policy. Refer to Note 5 and “Capital Resources and Liquidity” for further discussion of our financial policy. We continue to execute our operating plans in a safe, efficient and responsible manner and remain focused on building long-term value through solid management of our portfolio of long-lived and high-quality copper assets.

As further discussed in “Operations,” highlights for our mining operations during the first nine months of 2021 include:

*•*Continued success with the ramp-up of underground mining at PT Freeport Indonesia (PT-FI); on track to reach annualized metal production targets by year-end 2021.

Strong performance from Cerro Verde's concentrator facilities with milling rates averaging 381,500 metric tons of ore per day and rates are targeted to average approximately 400,000 metric tons of ore per day in 2022.
Current operations at the Lone Star copper leach project, which was successfully completed in the second half of 2020, are exceeding the initial design capacity of 200 million pounds of copper annually by approximately 25 percent.

We are advancing climate initiatives and recently published our updated Climate Report in September 2021, which details the work underway across our global business to reduce greenhouse gas (GHG) emissions, improve energy efficiency, advance the use of renewable energy and enhance our resilience to future climate-related risks.

Net income (loss) attributable to common stock totaled $1.4 billion in third-quarter 2021, $0.3 billion in third-quarter 2020, $3.2 billion for the first nine months of 2021 and $(0.1) billion for the first nine months of 2020. Results for the 2021 periods, compared with the 2020 periods, reflect higher copper prices and copper and gold sales volumes, partly offset by a higher provision for income taxes. The first nine months of 2020 also reflect charges directly associated with the COVID-19 pandemic and revised operating plans, including employee separation costs, totaling $178 million, losses on early extinguishment of debt totaling $100 million and metals inventory adjustments totaling $90 million. Refer to “Consolidated Results” for further discussion.

At September 30, 2021, we had consolidated debt of $9.7 billion and consolidated cash and cash equivalents of $7.7 billion, resulting in net debt of $2.0 billion. This represents a reduction in net debt of $4.1 billion from year-end 2020. Refer to “Net Debt” for reconciliations of debt and cash and cash equivalents to net debt.

At September 30, 2021, we had no borrowings and $3.5 billion available under our revolving credit facility. In September 2021, we prepaid $200 million of the Cerro Verde Term Loan and in October 2021, we announced that in December 2021 we expect to redeem our outstanding $524 million principal amount of our 3.55% Senior Notes due 2022. We have no other senior note maturities until March 2023.

In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility to advance projects associated with its obligation for additional domestic smelter capacity and a precious metals refinery (PMR) in Indonesia. As of September 30, 2021, $158 million ($146 million net of debt issuance costs) was drawn under this facility. Refer to Note 5 and “Capital Resources and Liquidity” for further discussion.

OUTLOOK

We continue to view the long-term outlook for our business positively, supported by limitations on supplies of copper and the requirements for copper in the world’s economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold and, to a lesser extent, molybdenum, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to “Markets” below and “Risk Factors” in Part I, Item 1A. of our 2020 Form 10-K for further discussion. Because we cannot control the prices of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs, operating cash flows and capital expenditures.

Consolidated Sales Volumes

Following are our projected consolidated sales volumes for the year 2021:


Copper (millions of recoverable pounds):
North America copper mines	1,455
South America mining	1,030
Indonesia mining	1,327
Total	3,812

Gold (millions of recoverable ounces)	1.3

Molybdenum (millions of recoverable pounds)	85	a

a.Projected molybdenum sales include 28 million pounds produced by our Molybdenum mines and 57 million pounds produced by our North America and South America copper mines.

Consolidated sales volumes in fourth-quarter 2021 are expected to approximate 1.025 billion pounds of copper, 375 thousand ounces of gold and 22 million pounds of molybdenum. Projected sales volumes are dependent on operational performance (including from underground mining at PT-FI), weather-related conditions, timing of shipments, and other factors detailed in the “Cautionary Statement” below.

For other important factors that could cause results to differ materially from projections, refer to “Risk Factors” contained in Part I, Item 1A. of our 2020 Form 10-K.

Consolidated Unit Net Cash Costs

Assuming average prices of $1,800 per ounce of gold and $19.00 per pound of molybdenum in fourth-quarter 2021 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $1.33 per pound of copper for the year 2021 (including $1.26 per pound of copper in fourth-quarter 2021). The impact of price changes during fourth-quarter 2021 on consolidated unit net cash costs for the year 2021 would approximate $0.015 per pound of copper for each $100 per ounce change in the average price of gold and $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum.

Consolidated Operating Cash Flows

Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. Based on current sales volume and cost estimates, and assuming average prices of $4.50 per pound for copper, $1,800 per ounce for gold, and $19.00 per pound for molybdenum in fourth-quarter 2021, our consolidated operating cash flows are estimated to approximate $7.5 billion for the year 2021. Estimated consolidated operating cash flows for the year 2021 also reflect an estimated income tax provision of $2.5 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year 2021). The impact of price changes during fourth-quarter 2021 on operating cash flows would approximate $100 million for each $0.10 per pound change in the average price of copper, $25 million for each $100 per ounce change in the average price of gold and $15 million for each $2 per pound change in the average price of molybdenum.

Consolidated Capital Expenditures

Consolidated capital expenditures for the year 2021 are expected to approximate $2.3 billion ($2.0 billion excluding capital expenditures for the new greenfield smelter and PMR (collectively, the Indonesia smelter project). Consolidated capital expenditures for the year 2021 are expected to include $1.3 billion for major mining projects, primarily associated with underground development activities in the Grasberg minerals district.

All costs associated with the Indonesia smelter project will be shared 49 percent by FCX and 51 percent by PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID), and will be largely offset by a phase-out of the 5 percent export duty currently paid to the Indonesia government as well as the tax deductibility of smelter costs by PT-FI. Current capital expenditures for the Indonesia smelter project are being funded through PT-FI's $1.0 billion unsecured bank credit facility, with additional debt financing being evaluated.

MARKETS

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2011 through September 2021, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.86 per pound in 2021; the London Bullion Market Association (London) PM gold price fluctuated from a low of $1,049 per ounce in 2015 to a record high of $2,067 per ounce in 2020; and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of $20.01 per pound in 2021. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in “Risk Factors” contained in Part I, Item 1A. of our 2020 Form 10-K.

This graph presents LME copper settlement prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc., and the Shanghai Futures Exchange from January 2011 through September 2021. During third-quarter 2021, LME copper settlement prices ranged from a low of $3.98 per pound to a high of $4.44 per pound, averaged $4.25 per pound and settled at $4.10 per pound on September 30, 2021. Copper prices were volatile during the quarter as a result of a strong U.S. dollar and prospects for slowing economic growth globally, and particularly in China, partly offset by falling exchange inventories and a positive long-term outlook supported by forecasts for a continued global economic recovery and copper’s prominent role in the clean energy transition. The LME copper settlement price was $4.52 per pound on October 29, 2021.

We believe expectations for longer-term copper demand growth remain in place. We expect future demand to be supported by the global transition to renewable energy and other carbon-reduction initiatives, and continued urbanization in developing countries. The historically low inventories; limited number of approved, large-scale projects scheduled; the long lead times required to permit and build new mines; and declining ore grades at existing operations highlight the supply challenges for copper.

This graph presents London PM gold prices from January 2011 through September 2021. During third-quarter 2021, London PM gold prices ranged from a low of $1,723 per ounce to a high of $1,829 per ounce, averaged $1,790 per ounce, and closed at $1,743 per ounce on September 30, 2021. While the global economic recovery has put downward pressure on gold prices, many analysts expect gold prices to remain supported by the effects of elevated debt levels associated with large pandemic-related stimulus efforts and historically low U.S. interest rates. The London PM gold price was $1,769 per ounce on October 29, 2021.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2011 through September 2021. During third-quarter 2021, the weekly average price of molybdenum ranged from a low of $17.84 per pound to a high of $20.01 per pound, averaged $19.09 per pound, and was $18.45 per pound on September 30, 2021. Molybdenum prices have reacted to supply constraints and increased demand, as mines in both Chile and Peru reported lower production, and logistics challenges continued globally. The Metals Week Molybdenum Dealer Oxide weekly average price was $19.34 per pound on October 29, 2021.

CONSOLIDATED RESULTS


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)
Revenuesa,b	$	6,083		$	3,851		$	16,681		$	9,703
Operating incomea	$	2,462		$	880		$	6,061		$	728


Net income (loss) attributable to common stockc	$	1,399	d	$	329	e	$	3,200	d	$	(109)	e
Diluted net income (loss) per share of common stock	$	0.94		$	0.22		$	2.16		$	(0.08)




Diluted weighted-average common shares outstanding	1,484			1,461			1,481			1,453

Operating cash flowsf	$	1,965		$	1,237		$	5,435		$	1,690
Capital expenditures	$	541		$	436		$	1,344		$	1,573
At September 30:
Cash and cash equivalents	$	7,672		$	2,403		$	7,672		$	2,403
Total debt, including current portion	$	9,665		$	10,030		$	9,665		$	10,030

a.Refer to Note 9 for a summary of revenues and operating income by operating division.

b.Includes (unfavorable) favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(9) million ($(3) million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2021, $71 million ($28 million to net income attributable to common stock or $0.02 per share) in third-quarter 2020, $169 million ($65 million to net income attributable to common stock or $0.05 per share) for the first nine months of 2021 and $(102) million ($(42) million to net loss attributable to common stock or $(0.03) per share) for the first nine months of 2020 (refer to Note 6 for further discussion).

c.We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to “Operations – Smelting and Refining” for a summary of net impacts from changes in these deferrals.

d.Includes net credits (charges) totaling $79 million ($0.05 per share) in third-quarter 2021 and $(16) million ($(0.01) per share) for the first nine months of 2021. Net credits in third-quarter 2021 were primarily associated with the release of valuation allowances at PT-FI and a gain on sale of our remaining cobalt business in Kokkola, Finland (Freeport Cobalt), partly offset by metals inventory adjustments. The first nine months of 2021 also included net charges primarily associated with nonrecurring labor-related charges at Cerro Verde and contested matters at PT-FI (including historical tax audits and an administrative fine levied by the Indonesia government).

e.Includes net charges totaling $101 million ($0.07 per share) in third-quarter 2020 and $347 million ($0.24 per share) for the first nine months of 2020, primarily associated with the COVID-19 pandemic and revised operating plans (including employee separation costs), net losses on early extinguishment of debt and metals inventory adjustments.

f.Working capital and other sources totaled $180 million in third-quarter 2021, $178 million in third-quarter 2020, $367 million for the first nine months of 2021 and $319 million for the first nine months of 2020.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021			2020
SUMMARY OPERATING DATA
Copper (millions of recoverable pounds)
Production	987		844			2,810			2,342
Sales, excluding purchases	1,033		848			2,787			2,336
Average realized price per pound	$	4.20	$	3.01		$	4.22		$	2.73
Site production and delivery costs per pounda	$	1.88	$	1.77	b	$	1.92	c	$	1.92	b
Unit net cash costs per pounda	$	1.24	$	1.32		$	1.36		$	1.55
Gold (thousands of recoverable ounces)
Production	374		237			976			584
Sales, excluding purchases	402		234			965			562
Average realized price per ounce	$	1,757	$	1,902		$	1,780		$	1,810
Molybdenum (millions of recoverable pounds)
Production	23		19			63			57
Sales, excluding purchases	20		20			63			59
Average realized price per pound	$	18.61	$	9.23		$	14.36		$	10.30

a.Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.”

b.Excludes charges totaling $0.04 per pound of copper in third-quarter 2020 and $0.09 per pound of copper for the first nine months of 2020, primarily associated with idle facility and contract cancellations costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans.

c.Includes $0.03 per pound of copper associated with nonrecurring labor-related costs at Cerro Verde for agreements reached with approximately 65 percent of its hourly employees. Refer to “Operations – South America Mining” for further discussion.

Revenues

Consolidated revenues totaled $6.1 billion in third-quarter 2021, $3.9 billion in third-quarter 2020, $16.7 billion for the first nine months of 2021 and $9.7 billion for the first nine months of 2020. Revenues from our mining operations primarily include the sale of copper concentrate, copper cathode, copper rod, gold in concentrate and molybdenum. Refer to Note 9 for a summary of product revenues.

Following is a summary of changes in our consolidated revenues between periods (in millions):


	Three Months Ended September 30		Nine Months Ended September 30

Consolidated revenues - 2020 period	$	3,851	$	9,703
Higher sales volumes:
Copper	554		1,231
Gold	319		730
Molybdenum	1		38

Higher (lower) average realized prices:
Copper	1,229		4,152
Gold	(58)		(29)
Molybdenum	186		254
Adjustments for prior period provisionally priced copper sales	(80)		271
Higher Atlantic Copper revenues	244		819
(Lower) higher revenues from purchased copper	(43)		84

Higher treatment charges	(31)		(74)
Higher royalties and export duties	(90)		(242)
Other, including intercompany eliminations	1		(256)
Consolidated revenues - 2021 period	$	6,083	$	16,681

Sales Volumes. Consolidated copper and gold sales volumes increased in the 2021 periods, compared to the 2020 periods, primarily reflecting the ramp-up of underground mining at PT-FI. Refer to “Operations” for further discussion of sales volumes at our mining operations.

Realized Prices. Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. Average realized prices for third-quarter 2021, compared with third-quarter 2020, were 40 percent higher for copper, 8 percent lower for gold and 102 percent higher for molybdenum and average realized prices for the first nine months of 2021, compared with the first nine months of 2020, were 55 percent higher for copper, 2 percent lower for gold and 39 percent higher for molybdenum.

Average realized copper prices include net (unfavorable) favorable adjustments to current period provisionally priced copper sales totaling $(93) million in third-quarter 2021, $23 million in third-quarter 2020, $54 million for the first nine months of 2021 and $120 million for the first nine months of 2020. As discussed in Note 6, substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average copper prices. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

Prior Period Provisionally Priced Copper Sales. Net (unfavorable) favorable adjustments to prior periods’ provisionally priced copper sales (i.e., provisionally priced sales at June 30, 2021 and 2020, and December 31,

2020 and 2019) recorded in consolidated revenues totaled $(9) million in third-quarter 2021, $71 million in third-quarter 2020, $169 million for the first nine months of 2021 and $(102) million for the first nine months of 2020. Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales.

At September 30, 2021, we had provisionally priced copper sales totaling 313 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $4.05 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the September 30, 2021, provisional price recorded would have an approximate $10 million effect on our 2021 net income attributable to common stock. The LME copper price settled at $4.52 per pound on October 29, 2021.

Atlantic Copper Revenues. Atlantic Copper revenues totaled $783 million in third-quarter 2021 and $2.3 billion for the first nine months of 2021, compared with $539 million in third-quarter 2020 and $1.4 billion for the first nine months of 2020. Higher revenues in the 2021 periods, compared with the 2020 periods, primarily reflect higher copper prices.

Purchased Copper. We purchase copper cathode primarily for processing by our Rod & Refining operations. The volumes of copper purchases vary depending on cathode production from our operations and totaled 28 million pounds in third-quarter 2021, 56 million pounds in third-quarter 2020, 149 million pounds for the first nine months of 2021 and 215 million pounds for the first nine months of 2020. The decrease in revenues associated with purchased copper in third-quarter 2021, compared to third-quarter 2020, primarily reflects lower volumes. The increase in revenues associated with purchased copper for the first nine months of 2021, compared to the first nine months of 2020 periods, reflects higher prices, partly offset by lower volumes.

Treatment Charges. Revenues from our concentrate sales are recorded net of treatment charges (i.e., fees paid to smelters that are generally negotiated annually), which will vary with the sales volumes and the price of copper.

Royalties and Export Duties. Royalties are primarily on PT-FI sales and vary with the volume of metal sold and the prices of copper and gold. PT-FI will continue to pay export duties until development progress for new domestic smelting with an annual capacity of 2 million metric tons of concentrate exceeds 50 percent. Refer to “Operations – Indonesia Mining” for further discussion of the current progress on a greenfield smelter in Indonesia and to Note 9 for a summary of royalty expense and export duties.

Production and Delivery Costs

Consolidated production and delivery costs totaled $3.0 billion in third-quarter 2021, $2.5 billion in third-quarter 2020, $8.9 billion for the first nine months of 2021 and $7.4 billion for the first nine months of 2020. Higher consolidated production and delivery costs in the 2021 periods primarily reflect higher sales volumes, higher milling and mining costs associated with the return to pre-COVID-19 operating rates and higher maintenance and input costs. The first nine months of 2021 also include nonrecurring labor-related charges at Cerro Verde totaling $74 million for agreements reached with approximately 65 percent of its hourly employees. The first nine months of 2020 also include charges totaling $202 million associated with the COVID-19 pandemic and revised operating plans.

Site Production and Delivery Costs Per Pound. Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives. Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.88 per pound of copper in third-quarter 2021, $1.77 per pound of copper in third-quarter 2020, $1.92 per pound of copper for both the first nine months of 2021 and 2020.

Consolidated site production and delivery costs per pound in the third quarter and first nine months of 2021 were higher, compared with the third quarter and first nine months of 2020, primarily reflecting higher mining and milling costs associated with the return to pre-COVID-19 operating rates and higher maintenance and input costs, partly offset by higher sales volumes and lower leach unit production costs associated with higher recoveries. Consolidated site production and delivery costs per pound for the first nine months of 2021 included nonrecurring labor-related charges at Cerro Verde for agreements reached with approximately 65 percent of its hourly employees and the first nine months of 2020 excluded charges associated with the COVID-19 pandemic and the April 2020 revised operating plans. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

Depreciation, Depletion and Amortization

Depreciation will vary under the unit-of-production (UOP) method as a result of changes in sales volumes and the related UOP rates at our mining operations. Consolidated depreciation, depletion and amortization (DD&A) totaled $528 million in third-quarter 2021, $394 million in third-quarter 2020, $1.4 billion for the first nine months of 2021 and $1.1 billion for the first nine months of 2020. Higher DD&A in the 2021 periods is primarily related to assets placed in service and higher sales volumes associated with the ramp-up of underground mining at PT-FI.

Metals Inventory Adjustments

Charges for metals inventory adjustments totaled $14 million in third-quarter 2021, $9 million in third-quarter 2020, $15 million for the first nine months of 2021 and $92 million for the first nine months of 2020. Metals inventory adjustments in the 2021 periods were primarily related to a leach stockpile adjustment. Metals inventory adjustments in the 2020 periods were related to volatility in copper and molybdenum prices associated with the COVID-19 pandemic.

Net (Gain) Loss on Sale of Assets

Net (gain) loss on sales of assets totaled $(60) million in third-quarter 2021, $2 million in third-quarter 2020, $(63) million for the first nine months of 2021 and $13 million for the first nine months of 2020. The gain on sales of assets in the 2021 periods primarily reflects the sale of Freeport Cobalt. Refer to Note 1 for further discussion.

Interest Expense, Net

Consolidated interest costs (before capitalization) totaled $157 million in third-quarter 2021, $160 million in third-quarter 2020, $482 million for the first nine months of 2021 and $490 million for the first nine months of 2020.

Capitalized interest varies with the level of qualifying assets associated with our development projects and average interest rates on our borrowings, and totaled $19 million in third-quarter 2021, $40 million in third-quarter 2020, $51 million for the first nine months of 2021 and $128 million for the first nine months of 2020. The decrease in capitalized interest in the 2021 periods, compared with the 2020 periods, is primarily related to significant assets at PT-FI’s underground mines being placed in service. Refer to “Capital Resources and Liquidity - Investing Activities” for discussion of capital expenditures associated with our major development projects.

Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision (in millions, except percentages):


	Nine Months Ended September 30,
	2021								2020
	Income (Loss)a		Effective Tax Rate			Income Tax (Provision) Benefit			Income (Loss)a		Effective Tax Rate			Income Tax (Provision) Benefit
U.S.b	$	1,324	1	%		$	(7)	c	$	(535)	10	%		$	56	d
South America	1,425		40	%		(576)			149		51	%		(76)
Indonesia	2,940		37	%		(1,101)		e	619		49	%		(302)		f


Eliminations and other	(3)		N/A			19			95		N/A			(28)
Rate adjustmentg	—		N/A			(9)			—		N/A			17


Consolidated FCX	$	5,686	29	%	h	$	(1,674)		$	328	102	%	h,i	$	(333)

a.Represents income (loss) before income taxes and equity in affiliated companies’ net (losses) earnings.

b.In addition to our North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.

c.Includes valuation allowance release on prior year unbenefited net operating losses (NOLs).

d.Includes tax credits of $53 million associated with the reversal of a year-end 2019 tax charge related to the sale of our interest in the lower zone of the Timok exploration project in Serbia and $6 million associated with the removal of a valuation allowance on deferred tax assets.

e.Includes net tax benefits totaling $83 million ($66 million net of noncontrolling interest), consisting of $69 million associated with the release of a portion of the valuation allowances recorded against PT Rio Tinto Indonesia (PT-FI’s wholly owned subsidiary) NOLs and $24 million primarily associated with the reversal of a tax reserve related to the treatment of prior year contractor support costs; partly offset by a tax charge of $10 million associated with the audit of PT-FI's 2019 tax returns.

f.Includes tax charges totaling $29 million ($24 million net of noncontrolling interest), consisting of $21 million associated with establishing a tax reserve related to the treatment of prior year contractor support costs and $8 million associated with an unfavorable 2012 Indonesia Supreme Court ruling.

g.In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our consolidated tax rate.

h.Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate.

i.Our U.S. jurisdiction generated net losses in the first nine months of 2020 that did not result in a realized tax benefit; applicable accounting rules required us to adjust our estimated annual effective tax rate to exclude the impact of U.S. net losses.

Assuming achievement of current sales volume and cost estimates and average fourth-quarter 2021 prices of $4.50 per pound for copper, $1,800 per ounce for gold and $19.00 per pound for molybdenum, we estimate our consolidated effective tax rate for the year 2021 would approximate 30 percent. Changes in projected sales volumes and average prices during 2021 would incur tax impacts at estimated effective rates of 40 percent for Peru, 38 percent for Indonesia and 0 percent for the U.S.

The net 0 percent U.S. estimated effective tax rate for the year 2021 includes approximately $190 million of valuation allowance reversal related to an expected $900 million use of U.S. federal NOLs during 2021.

OPERATIONS

Responsible Production

2020 Climate Report*.* In September 2021, we published our updated Climate Report, which details the work underway across our global business to reduce GHG emissions, improve energy efficiency, advance the use of renewable energy and enhance our resilience to future climate-related risks. The updated Climate Report reflects our continued progress towards alignment with the current recommendations of the Task Force on Climate-related Financial Disclosures.

The Copper Mark. We are committed to validating all of our copper producing sites with the Copper Mark. The Copper Mark is a robust assurance framework that demonstrates the copper industry's responsible production practices and contribution to the United Nations Sustainable Development Goals. Participating sites must complete an external assurance process to assess conformance with the Copper Mark’s 32 environmental, social and governance requirements, with a goal of being awarded the Copper Mark. We have six sites which have been certified, with five additional sites in progress.

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. We record our 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.

The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper production is sold as copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate, gold and silver are also produced by certain of our North America copper mines*.*

Operating and Development Activities. Our North America operating sites continue to achieve strong execution of operating plans. Current operations at the Lone Star copper leach project, which was completed in the second half of 2020, are exceeding the initial design capacity of 200 million pounds annually by approximately 25 percent. We continue to advance opportunities to increase Lone Star operating rates and are evaluating a potential additional incremental oxide expansion to increase volumes to over 300 million pounds of copper per year. The oxide project advances the opportunity for development of the large-scale sulfide resources at Lone Star. We are increasing exploration in the area to support metallurgical testing and mine development planning for a potential long-term investment in a concentrator.

We have substantial resources in North America, primarily associated with existing mining operations. Evaluations of project options for future growth are being advanced. In addition to Lone Star, we are reviewing and actively evaluating an additional concentrator to add new capacity at our long-lived Bagdad operation, and are utilizing data analytics and testing new applications to recover additional copper from existing leach stockpiles.

Operating Data. Following is summary consolidated operating data for the North America copper mines:


	Three Months Ended September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020
Operating Data, Net of Joint Venture Interests
Copper (millions of recoverable pounds)
Production	377		369		1,090		1,083
Sales, excluding purchases	375		379		1,072		1,102
Average realized price per pound	$	4.34	$	3.01	$	4.24	$	2.67

Molybdenum (millions of recoverable pounds)
Productiona	9		7		26		24

100% Operating Data
Leach operations
Leach ore placed in stockpiles (metric tons per day)	579,100		692,000		656,900		708,100
Average copper ore grade (percent)	0.30		0.26		0.29		0.27
Copper production (millions of recoverable pounds)	270		286		797		786

Mill operations
Ore milled (metric tons per day)	274,300		255,200		269,000		291,500
Average ore grade (percent):
Copper	0.39		0.36		0.38		0.35
Molybdenum	0.03		0.03		0.03		0.02
Copper recovery rate (percent)	81.6		84.4		80.9		85.4
Copper production (millions of recoverable pounds)	170		155		476		509

a.Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines.

Our consolidated copper sales volumes from North America totaled 375 million pounds in third-quarter 2021, 379 million pounds in third-quarter 2020, and 1.1 billion pounds for both the first nine months of 2021 and 2020. North America copper sales are estimated to approximate 1.46 billion pounds for the year 2021, compared with 1.4 billion pounds for the year 2020.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and Molybdenum

The following table summarizes unit net cash costs and gross profit per pound at our North America copper mines. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended September 30,
	2021								2020
	By- Product Method			Co-Product Method					By- Product Method			Co-Product Method
			Copper			Molyb- denuma			Copper			Molyb- denuma
Revenues, excluding adjustments	$	4.34		$	4.34		$	16.69	$	3.01		$	3.01	$	7.72

Site production and delivery, before net noncash and other costs shown below	2.12			1.93			8.97		1.76			1.67		5.52
By-product credits	(0.39)			—			—		(0.18)			—		—
Treatment charges	0.09			0.09			—		0.09			0.08		—
Unit net cash costs	1.82			2.02			8.97		1.67			1.75		5.52
DD&A	0.25			0.23			0.73		0.24			0.23		0.43
Metals inventory adjustments	0.03			0.03			—		(0.01)			(0.01)		—
Noncash and other costs, net	0.08			0.08			0.23		0.10		b	0.09		0.06
Total unit costs	2.18			2.36			9.93		2.00			2.06		6.01
Revenue adjustments, primarily for pricing on prior period open sales	(0.02)			(0.02)			—		—			—		—
Gross profit per pound	$	2.14		$	1.96		$	6.76	$	1.01		$	0.95	$	1.71

Copper sales (millions of recoverable pounds)	375			375					378			378
Molybdenum sales (millions of recoverable pounds)a							9							7


	Nine months ended September 30,
	2021								2020
	By- Product Method			Co-Product Method					By- Product Method			Co-Product Method
			Copper			Molyb- denuma			Copper			Molyb- denuma
Revenues, excluding adjustments	$	4.24		$	4.24		$	13.09	$	2.67		$	2.67	$	8.57

Site production and delivery, before net noncash and other costs shown below	2.11			1.95			7.54		1.91			1.78		7.05
By-product credits	(0.32)			—			—		(0.19)			—		—
Treatment charges	0.09			0.09			—		0.10			0.10		—
Unit net cash costs	1.88			2.04			7.54		1.82			1.88		7.05
DD&A	0.26			0.24			0.59		0.25			0.23		0.57
Metals inventory adjustments	0.01			0.01			—		0.05			0.04		—
Noncash and other costs, net	0.10			0.09			0.12		0.10		b	0.10		0.12
Total unit costs	2.25			2.38			8.25		2.22			2.25		7.74
Revenue adjustments, primarily for pricing on prior period open sales	0.01			0.01			—		(0.01)			(0.01)		—
Gross profit per pound	$	2.00		$	1.87		$	4.84	$	0.44		$	0.41	$	0.83

Copper sales (millions of recoverable pounds)	1,072			1,072					1,100			1,100
Molybdenum sales (millions of recoverable pounds)a							26							24

a.Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b.Includes charges totaling $0.03 per pound of copper for both third-quarter 2020 and the first nine months of 2020, primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic.

Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.82 per pound of copper in third-quarter 2021 and $1.88 per pound of copper for first nine months of 2021 were higher than unit net cash costs of $1.67 per pound in third-quarter 2020 and $1.82 per pound for the first nine months of 2020, primarily reflecting higher mining and milling costs associated with the return to pre-COVID-19 operating rates and higher maintenance and input costs, partly offset by higher by-product credits and lower leach unit production costs associated with higher recoveries.

Because certain assets are depreciated on a straight-line basis, North America’s average unit depreciation rate may vary with asset additions and the level of copper production and sales.

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.85 per pound of copper for the year 2021, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $19.00 per pound in fourth-quarter 2021. North America’s average unit net cash costs for the year 2021 would change by approximately $0.01 per pound for each $2 per pound change in the average price of molybdenum in fourth-quarter 2021.

South America Mining

We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest), which are consolidated in our financial statements.

South America mining includes open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or cathode under long-term contracts. Our South America mines also sell a portion of their copper concentrate production to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.

Cerro Verde Labor Agreement. Cerro Verde's collective labor agreement (CLA) expired on August 31, 2021, and as of September 30, 2021, approximately 65 percent of its hourly employees have signed new CLAs. Cerro Verde incurred nonrecurring charges for the first nine months of 2021 totaling $74 million associated with these agreements. Negotiations for new CLAs for Cerro Verde's remaining hourly employees are ongoing and may result in additional charges.

Operating and Development Activities. Milling rates at Cerro Verde's concentrator facilities averaged 381,500 metric tons of ore per day for the first nine months of 2021. Subject to ongoing monitoring of COVID-19 protocols, Cerro Verde is targeting milling rates to average approximately 400,000 metric tons of ore per day in 2022.

El Abra is increasing operating rates to pre-COVID-19 pandemic levels. Stacking rates at El Abra averaged 93,100 metric tons per day in third-quarter 2021, approximately 25 percent higher than third-quarter 2020. Increased stacking rates are expected to result in incremental annual production of approximately 70 million pounds of copper beginning in mid-2022, compared with 2020 levels. A new leach pad is under construction to accommodate planned stacking rates for the next several years.

We continue to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher copper recoveries. El Abra's large sulfide resource could potentially support a major mill project similar to facilities constructed at Cerro Verde in 2015. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project, and we are engaging stakeholders and preparing data required for submission of a robust permit application. We are monitoring potential changes in government regulatory and fiscal matters in Chile and will defer major investment decisions pending clarity on these matters.

Operating Data. Following is summary consolidated operating data for South America mining:


	Three Months Ended September 30,				Nine months ended September 30,

	2021		2020		2021		2020
Copper (millions of recoverable pounds)
Production	260		253		764		716
Sales	280		250		769		716
Average realized price per pound	$	4.12	$	3.02	$	4.21	$	2.79






Molybdenum (millions of recoverable pounds)
Productiona	5		6		14		14

Leach operations
Leach ore placed in stockpiles (metric tons per day)	171,600		172,400		171,900		165,600
Average copper ore grade (percent)	0.30		0.35		0.33		0.35
Copper production (millions of recoverable pounds)	62		55		188		180

Mill operations
Ore milled (metric tons per day)	380,300		351,000		381,500		317,600		b
Average ore grade (percent):
Copper	0.31		0.33		0.30		0.35
Molybdenum	0.01		0.01		0.01		0.01

Copper recovery rate (percent)	86.1		88.4		86.3		83.5
Copper production (millions of recoverable pounds)	199		198		576		536

a.Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde.

b.Cerro Verde mill operations were negatively impacted by COVID-19 restrictions.

Our consolidated copper sales volumes from South America totaled 280 million pounds in third-quarter 2021, 250 million pounds in third-quarter 2020, 769 million pounds for the first nine months of 2021 and 716 million pounds for the first nine months of 2020. Higher copper sales volumes in third-quarter 2021, compared with third-quarter 2020, primarily reflect timing of shipments. Higher copper sales volumes for the first nine months of 2021, compared with the first nine months of 2020, primarily reflect continued progress to return to pre-COVID-19 operating rates.

Copper sales from South America mining are expected to approximate 1.0 billion pounds for the year 2021, slightly higher than the year 2020.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper

The following table summarizes unit net cash costs and gross profit per pound of copper at our South America mining operations. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had sales of molybdenum and silver. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended September 30,
	2021					2020
	By-Product Method			Co-Product Method		By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	4.12		$	4.12	$	3.02		$	3.02

Site production and delivery, before net noncash and other costs shown below	2.14		a	1.96		1.84			1.73
By-product credits	(0.38)			—		(0.17)			—
Treatment charges	0.13			0.13		0.15			0.15
Royalty on metals	0.01			0.01		0.01			0.01
Unit net cash costs	1.90			2.10		1.83			1.89
DD&A	0.40			0.36		0.42			0.39

Noncash and other costs, net	0.07			0.06		0.04		b	0.04
Total unit costs	2.37			2.52		2.29			2.32
Revenue adjustments, primarily for pricing on prior period open sales	(0.03)			(0.03)		0.16			0.16
Gross profit per pound	$	1.72		$	1.57	$	0.89		$	0.86

Copper sales (millions of recoverable pounds)	280			280		250			250


	Nine months ended September 30,
	2021					2020
	By-Product Method			Co-Product Method		By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	4.21		$	4.21	$	2.79		$	2.79

Site production and delivery, before net noncash and other costs shown below	2.20		a	2.04		1.83			1.72
By-product credits	(0.31)			—		(0.15)			—
Treatment charges	0.13			0.13		0.15			0.15
Royalty on metals	0.01			0.01		0.01			0.01
Unit net cash costs	2.03			2.18		1.84			1.88
DD&A	0.40			0.36		0.44			0.41

Noncash and other costs, net	0.07			0.06		0.16		b	0.15
Total unit costs	2.50			2.60		2.44			2.44
Revenue adjustments, primarily for pricing on prior period open sales	0.13			0.13		(0.10)			(0.10)
Gross profit per pound	$	1.84		$	1.74	$	0.25		$	0.25

Copper sales (millions of recoverable pounds)	769			769		716			716

a.Includes $0.02 per pound of copper in third-quarter 2021 and $0.10 per pound of copper for the first nine months of 2021 associated with nonrecurring labor-related charges at Cerro Verde for agreements reached with approximately 65 percent of its hourly employees.

b.Third-quarter 2020 includes charges totaling $0.02 per pound of copper, primarily associated with the COVID-19 pandemic (including health and safety costs). The first nine months of 2020 includes charges totaling $0.13 per pound of copper, primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with the April 2020 revised operating plans.

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) for the South America copper mines were $1.90 per pound of copper in third-quarter 2021, $1.83 per pound of copper in third-quarter 2020, $2.03 per pound of copper for the first nine months of 2021 and $1.84 per pound of copper for the first nine months of 2020. Higher unit net cash costs in the 2021 periods, compared with the 2020 periods, primarily reflect increased milling activities, profit-sharing costs and higher maintenance and input costs, partly offset by higher sales volumes and by-product credits. The first nine months of 2021 also included nonrecurring labor-related charges at Cerro Verde ($0.10 per pound of copper) for new CLAs as discussed above.

Revenues from Cerro Verde’s concentrate sales are recorded net of treatment charges, which will vary with Cerro Verde’s sales volumes and the price of copper.

Because certain assets are depreciated on a straight-line basis, South America’s unit depreciation rate may vary with asset additions and the level of copper production and sales.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results – Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $2.04 per pound of copper for the year 2021, based on current sales volume and cost estimates and assuming an average price of $19.00 per pound of molybdenum in fourth-quarter 2021.

Indonesia Mining

PT-FI operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. We have a 48.76 percent interest in PT-FI and manage its mining operations. As further discussed in Note 2 of our 2020 Form 10-K, under the terms of the shareholders agreement, our economic interest in PT-FI approximates 81 percent through 2022. PT-FI’s results are consolidated in our financial statements.

PT-FI continues to operate with heightened protocols and travel restrictions designed to protect the health and safety of its workforce and the surrounding community during the COVID-19 pandemic. These measures have proven effective and have enabled PT-FI to operate reliably throughout the pandemic.

Substantially all of PT-FI’s copper concentrate is sold under long-term contracts. During the first nine months of 2021, 44 percent of PT-FI’s concentrate production was sold to PT Smelting (PT-FI’s 39.5-percent owned copper smelter and refinery in Gresik, Indonesia).

Operating and Development Activities. The ramp-up of underground production at the Grasberg minerals district in Indonesia continues to advance on schedule. Third-quarter 2021 highlights include:

Production approximated 90 percent of the projected ultimate annualized level and is expected to reach 100 percent by year-end 2021.
A total of 27 new drawbells were constructed at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to 490.
Combined average production from the Grasberg Block Cave and DMLZ underground mines approximated 136,200 metric tons of ore per day and PT-FI's milling rates averaged 157,400 metric tons of ore per day.

PT-FI’s milling rates averaged over 177,000 metric tons of ore per day for the month of September 2021. PT-FI expects milling rates to average approximately 175,000 metric tons of ore per day in fourth-quarter 2021 and to continue at that rate until additional milling facilities are installed as currently planned in 2023, which PT-FI expects will result in mill capacity of approximately 240,000 metric tons of ore per day.

PT-FI expects to generate average annual production of 1.55 billion pounds of copper and 1.6 million ounces of gold for the next several years at an attractive unit net cash cost, providing significant margins and cash flows. For the year 2021, PT-FI production is expected to approximate 1.3 billion pounds of copper and 1.3 million ounces of gold, nearly double 2020 levels.

PT-FI's estimated annual capital spending on underground mine development projects is expected to average approximately $0.9 billion per year for 2021 and 2022, net of scheduled contributions from PT Inalum. In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $1.1 billion per year for 2021 and 2022, will be reflected as an investing activity in our cash flow statement, and contributions from PT Inalum will be reflected as a financing activity.

Kucing Liar. PT-FI is planning to commence long-term mine development activities for its Kucing Liar deposit to produce approximately 6 billion pounds of copper and 6 million ounces of gold over the life of the project. Refer to our 2020 Form 10-K for further discussion of Kucing Liar. Similar to PT-FI's experience with large-scale, block-cave mines, pre-production development activities will occur over an approximate 10-year timeframe. At full operating rates, annual production from Kucing Liar is expected to exceed 500 million pounds of copper and 500,000 ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Capital investments for Kucing Liar over the next 10 years are expected to average approximately $400 million per year. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining.

Indonesia Smelter. As discussed in Note 13 of our 2020 Form 10-K, PT-FI committed to construct additional domestic smelting capacity totaling 2 million metric tons of concentrate per year. During 2020, PT-FI notified the Indonesia government of schedule delays for construction of the greenfield smelter resulting from the COVID-19 pandemic and continues to review with the government a revised schedule for the project.

To fulfill its obligation for additional domestic smelter capacity in Indonesia, PT-FI is planning the following:

Construction of a new greenfield smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of concentrate per year. In July 2021, PT-FI awarded a construction contract to Chiyoda with an estimated cost of $2.8 billion. The smelter construction is expected to be completed as soon as feasible in 2024, which is subject to, among other things, pandemic-related disruptions.
Expansion of annual capacity at PT Smelting by 300,000 metric tons of concentrate, a 30 percent increase. PT-FI is advancing agreements with the majority owner of PT Smelting to implement the expansion plans with a target completion date of year-end 2023. PT-FI would fund the cost of the expansion, estimated to approximate $250 million, and increase its ownership in PT Smelting to a majority ownership interest.
Construction of a PMR to process gold and silver from the new greenfield smelter and PT Smelting at an estimated cost of $250 million.

All costs of smelter development in Indonesia will be shared 49 percent by FCX and 51 percent by PT Inalum, and will be largely offset by a phase-out of the 5 percent export duty currently paid to the Indonesia government as well as the tax deductibility of smelter costs by PT-FI.

In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility to advance these projects. As of September 30, 2021, $158 million ($146 million net of debt issuance costs) was drawn under this facility. Additional debt financing is being evaluated to fund the projects. Refer to Note 5 and “Capital Resources and Liquidity” for further discussion of the credit facility. Capital expenditures for the Indonesia smelter project totaled $0.1 billion for the first nine months of 2021, and are expected to approximate $0.3 billion for the year 2021.

Operating Data. Following is summary consolidated operating data for Indonesia mining:


	Three Months Ended September 30,				Nine months ended September 30,

	2021		2020		2021		2020
Copper (millions of recoverable pounds)
Production	350		222		956		543
Sales	378		219		946		518
Average realized price per pound	$	4.11	$	3.00	$	4.21	$	2.79

Gold (thousands of recoverable ounces)
Production	371		236		968		577
Sales	399		230		957		549
Average realized price per ounce	$	1,757	$	1,902	$	1,780	$	1,810

Ore extracted and milled (metric tons per day):
Grasberg Block Cave underground minea	76,500		30,800		64,300		25,700
DMLZ underground minea	59,700		29,100		53,500		25,100
Deep Ore Zone underground mineb	2,700		20,700		10,600		20,900
Big Gossan underground mine	7,400		7,100		7,500		6,600

Other	11,100		(400)		5,700		2,200
Total	157,400		87,300		141,600		80,500
Average ore grades:
Copper (percent)	1.30		1.45		1.32		1.30
Gold (grams per metric ton)	1.05		1.20		1.04		1.08
Recovery rates (percent):
Copper	90.1		92.3		90.0		92.0
Gold	78.6		79.3		77.8		78.2

a.Includes ore from development activities that result in metal production.

b.Expected to cease production by December 31, 2021.

Our consolidated copper and gold sales from PT-FI totaled 378 million pounds and 399 thousand ounces in third-quarter 2021 and 946 million pounds and 957 thousand ounces for the first nine months of 2021, compared with copper and gold sales of 219 million pounds and 230 thousand ounces in third-quarter 2020 and 518 million pounds and 549 thousand ounces for the first nine months of 2020. The increase in sales volumes for the 2021 periods primarily reflects the ramp-up of underground mining at PT-FI and the timing of shipments.

Consolidated sales volumes from PT-FI are expected to approximate 1.3 billion pounds of copper and 1.3 million ounces of gold for the year 2021, compared with 0.8 billion pounds of copper and 0.8 million ounces of gold for the year 2020.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and per Ounce of Gold

The following table summarizes the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations. Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended September 30,
	2021								2020
	By-Product Method			Co-Product Method					By-Product Method			Co-Product Method
			Copper			Gold			Copper			Gold
Revenues, excluding adjustments	$	4.11		$	4.11		$	1,757	$	3.00		$	3.00	$	1,902

Site production and delivery, before net noncash and other costs shown below	1.46			0.99			424		1.71			1.01		639
Gold and silver credits	(1.97)			—			—		(2.16)			—		—
Treatment charges	0.24			0.16			69		0.26			0.16		98
Export duties	0.19			0.13			54		0.11			0.06		40
Royalty on metals	0.25			0.18			63		0.21			0.12		79
Unit net cash costs	0.17			1.46			610		0.13			1.35		856
DD&A	0.74			0.50			215		0.68			0.40		256
Noncash and other costs, net	—			—			—		0.11		a	0.06		40
Total unit costs	0.91			1.96			825		0.92			1.81		1,152
Revenue adjustments, primarily for pricing on prior period open sales	—			—			16		0.13			0.13		49
PT Smelting intercompany loss	(0.04)			(0.03)			(12)		(0.08)			(0.05)		(31)
Gross profit per pound/ounce	$	3.16		$	2.12		$	936	$	2.13		$	1.27	$	768

Copper sales (millions of recoverable pounds)	378			378					219			219
Gold sales (thousands of recoverable ounces)							399							230


	Nine Months Ended September 30,
	2021								2020
	By-Product Method			Co-Product Method					By-Product Method			Co-Product Method
			Copper			Gold			Copper			Gold
Revenues, excluding adjustments	$	4.21		$	4.21		$	1,780	$	2.79		$	2.79	$	1,810

Site production and delivery, before net noncash and other costs shown below	1.49			1.03			434		2.05			1.19		773
Gold and silver credits	(1.91)			—			—		(2.02)			—		—
Treatment charges	0.24			0.17			70		0.28			0.16		104
Export duties	0.15			0.10			45		0.08			0.05		31
Royalty on metals	0.26			0.18			66		0.18			0.10		68
Unit net cash costs	0.23			1.48			615		0.57			1.50		976
DD&A	0.76			0.52			222		0.72			0.42		273
Noncash and other costs, net	0.01		b	0.01			1		0.11		a	0.07		41
Total unit costs	1.00			2.01			838		1.40			1.99		1,290
Revenue adjustments, primarily for pricing on prior period open sales	0.08			0.08			(5)		(0.03)			(0.03)		8
PT Smelting intercompany loss	(0.11)			(0.08)			(33)		(0.04)			(0.02)		(13)
Gross profit per pound/ounce	$	3.18		$	2.20		$	904	$	1.32		$	0.75	$	515

Copper sales (millions of recoverable pounds)	946			946					518			518
Gold sales (thousands of recoverable ounces)							957							549

a.Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) totaling $0.05 per pound of copper in third-quarter 2020 and $0.03 per pound of copper for the first nine months of 2020.

b.Includes credits of $0.03 per pound of copper associated with adjustments to prior year treatment and refining charges and charges of $0.02 per pound of copper associated with a potential settlement of an administrative fine levied by the Indonesia government.

Because of the fixed nature of a large portion of PT-FI's costs, unit net cash costs depend on copper and gold volumes. PT-FI’s unit net cash costs (net of gold and silver credits) of $0.17 per pound of copper in third-quarter 2021 were higher than $0.13 per pound in third-quarter, primarily reflecting lower by-product credits and higher export duties and royalties associated with higher copper prices, partly offset by higher volumes. PT-FI’s unit net cash costs (net of gold and silver credits) of $0.23 per pound for the first nine months of 2021, were lower than $0.57 per pound for the first nine months of 2020, primarily reflecting higher sales volumes, partly offset by higher mining costs associated with the ramp-up of underground mining and higher export duties and royalties.

Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold.

PT-FI’s export duties totaled $71 million in third-quarter 2021, $24 million in third-quarter 2020, $145 million for the first nine months of 2021 and $43 million for the first nine months of 2020. PT-FI will continue to pay export duties until development progress for additional domestic smelting capacity of 2 million metric tons of concentrate per year exceeds 50 percent. PT-FI’s royalties totaled $94 million in third-quarter 2021, $45 million in third-quarter 2020, $234 million for the first nine months of 2021 and $92 million for the first nine months of 2020. The increase in export duties and royalties for the 2021 periods, compared with the 2020 periods, primarily reflect higher sales volumes and copper prices.

Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate may vary with asset additions and the level of copper production and sales. DD&A per pound of copper under the by-product method was $0.74 per pound in third-quarter 2021 and $0.76 per pound for the first nine months of 2021, compared with $0.68 per pound in third-quarter 2020 and $0.72 per pound for the first nine months of 2020. The increase in the rate per pound of copper for the 2021 periods, compared with the 2020 periods, primarily reflects the significant underground development assets placed into service.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods.

PT Smelting intercompany loss represents the change in the deferral of PT-FI’s profit on sales to PT Smelting (25 percent prior to April 30, 2021, and 39.5 percent thereafter). Refer to “Smelting and Refining” below for further discussion.

Assuming an average gold price of $1,800 per ounce in fourth-quarter 2021 and achievement of current sales volume and cost estimates, unit net cash costs (net of gold and silver credits) for PT-FI are expected to approximate $0.22 per pound of copper for the year 2021. The impact of prices changes during fourth-quarter 2021 on PT-FI's unit net cash costs for the year 2021 would approximate $0.04 per pound of copper for each $100 per ounce change in the average price of gold.

PT-FI’s projected sales volumes and unit net cash costs for the year 2021 are dependent on a number of factors, including continued progress of the ramp-up of underground mining, operational performance, timing of shipments and other factors detailed in the “Cautionary Statement” below.

Molybdenum Mines

We operate two wholly owned molybdenum mines in Colorado – the Henderson underground mine and the Climax open-pit mine. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North America and South America copper mines, is processed at our own conversion facilities.

Operating and Development Activities. Production from the Molybdenum mines of 9 million pounds of molybdenum in third-quarter 2021 and 23 million pounds for the first nine months of 2021, was higher than production of 6 million pounds of molybdenum in third-quarter 2020 and 19 million pounds for the first nine months of 2020, primarily reflecting higher milling rates at the Climax mine as it returns to pre-COVID-19 levels. FCX may increase rates at the Climax mine if necessary to satisfy increasing requirements for molybdenum. Refer to “Consolidated Results” for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our Molybdenum mines and from our North America and South America copper mines. Refer to “Outlook” for projected consolidated molybdenum sales volumes.

Unit Net Cash Costs Per Pound of Molybdenum. Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Average unit net cash costs for our Molybdenum mines of $8.54 per pound of molybdenum for both the third quarter and first nine months of 2021 were lower than average unit net cash costs of $9.72 per pound in third-quarter 2020 and $9.58 per pound for the first nine months of 2020, primarily reflecting higher volumes. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $9.10 per pound of molybdenum for the year 2021.

Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting and Refining

We wholly own and operate a smelter in Arizona (Miami smelter), a refinery in Texas (El Paso refinery) and a smelter and refinery in Spain (Atlantic Copper). PT-FI has a 39.5 percent ownership interest in PT Smelting. Treatment charges for smelting and refining copper concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter and El Paso refinery. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Our Miami smelter processes concentrate produced by our U.S. mines and also provides acid for copper leaching operations. During the first nine months of 2021, we incurred charges totaling $87 million associated with a major maintenance turnaround at our Miami smelter, which were higher than original estimates as a result of extended downtime to address additional required maintenance work, the COVID-19 pandemic and weather events. The next major maintenance turnaround is scheduled for the first half of 2024.

Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During the first nine months of 2021, Atlantic Copper’s concentrate purchases included 33 percent from our copper mining operations and 67 percent from third parties.

PT-FI’s contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum treatment charge rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first nine months of 2021, PT-FI supplied the substantial majority of PT Smelting’s concentrate requirements. In July 2021, PT Smelting received a six-month extension of its anodes slimes export license, which currently expires December 30, 2021.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on PT-FI’s sales to PT Smelting (on 25 percent through April 30, 2021, and on 39.5 percent thereafter) until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions (reductions) to operating income totaling $41 million ($48 million to net income attributable to common stock) in third-quarter 2021, $(21) million ($(21) million to net income attributable to common stock) in third-quarter 2020, $(144) million ($(97) million to net income attributable to common stock) for the first nine months of 2021 and $(27) million ($(20) million to net loss attributable to common stock) for the first nine months of 2020. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled $156 million at September 30, 2021. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings. Based on current estimates, in fourth-quarter 2021, we do not expect a significant change in our net deferred profits on intercompany copper sales but project a net deferral of profits on intercompany molybdenum sales of approximately $40 million ($30 million to net income attributable to common stock).

CAPITAL RESOURCES AND LIQUIDITY

We generated significant cash flows during the first nine months of 2021, reflecting strong operating and financial performance. With a favorable market outlook and a focus on executing our operating plans, we expect further increases in sales volumes and cash flows in 2022 and we believe we are well positioned to provide cash returns to shareholders consistent with our financial policy.

We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. The ramp-up of underground mining at PT-FI continues to be successful and is advancing on schedule, with production rates expected to reach the projected ultimate annualized levels by year-end 2021. With the success of the Grasberg Block Cave and DMLZ underground projects, PT-FI is planning to commence long-term mine development activities for its Kucing Liar deposit. We are also evaluating organic growth opportunities for expansion of certain of our operations in North America and South America, including at Bagdad, Lone Star and El Abra, the timing of which will be dependent on, among other things, market conditions.

Based on current sales volume, cost and metal price estimates discussed in “Outlook”, our projected consolidated operating cash flows of $7.5 billion for the year 2021 significantly exceed our expected consolidated capital expenditures of $2.3 billion (which include $0.3 billion of capital expenditures for the Indonesia smelter project) and other cash requirements for the year, including debt repayments, common stock dividends and noncontrolling interest distributions. We believe that our cash generating capability and financial condition, together with availability under our revolving credit facility, will be adequate to meet our operating, investing and financing needs. Expenditures for the Indonesia smelter project are currently being funded by PT-FI’s new $1.0 billion unsecured bank credit facility and additional debt financing for this project is being evaluated. Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2021 and to “Debt” below and Note 5 for further discussion of PT-FI’s credit facility.

At September 30, 2021, we had $11.2 billion in liquidity, comprised of $7.7 billion in consolidated cash and $3.5 billion of availability under our revolving credit facility.

Financial Policy. In February 2021, our Board of Directors (Board) adopted a financial policy for the allocation of cash flows aligned with our strategic objectives of maintaining a strong balance sheet and increasing cash returns to shareholders while advancing opportunities for future growth. The policy includes a base dividend and a performance-based payout framework whereby up to 50 percent of available cash flows generated after planned capital spending and distributions to noncontrolling interests would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to maintaining the net debt target described below.

In February 2021, the Board reinstated a cash dividend on our common stock (base dividend) at an annual rate of $0.30 per share, and on November 1, 2021, the Board approved (i) a new share repurchase program authorizing repurchases of up to $3.0 billion of our common stock and (ii) a variable cash dividend on common stock for 2022 at an annual rate of $0.30 per share. The combined annual rate of the base dividend and the variable dividend is expected to total $0.60 per share. The Board intends to declare quarterly dividends for 2022 of $0.15 per share (including the $0.075 variable component), with the initial quarterly dividend expected to be paid on February 1, 2022. Based on current shares outstanding totaling 1.47 billion, the total common stock dividend (base and variable) for 2022 currently expected to be paid approximates $0.9 billion. Refer to “Cautionary Statement.”

Our performance-based payout framework is designed to maintain net debt at a level not to exceed the range of $3 billion to $4 billion (excluding project debt for additional smelting capacity in Indonesia). The Board will review the structure and the amount of the performance-based payout framework at least annually.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at September 30, 2021 (in billions):


Cash at domestic companies	$	5.0
Cash at international operations	2.7
Total consolidated cash and cash equivalents	7.7
Noncontrolling interests’ share	(0.9)
Cash, net of noncontrolling interests’ share	6.8
Withholding taxes	(0.1)
Net cash available	$	6.7

Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayment, working capital and other tax payments, or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility. We have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share.

Debt

At September 30, 2021, our consolidated debt totaled $9.7 billion, with a weighted-average interest rate of 4.6 percent. We had no borrowings outstanding and $8 million in letters of credit issued under our revolving credit facility, resulting in availability of approximately $3.5 billion.

In September 2021, Cerro Verde elected to prepay $200 million on its term loan, reducing the outstanding balance to $325 million, which matures in June 2022.

In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility (consisting of a $667 million term loan and a $333 million revolving credit facility). Amounts may be drawn under the term loan within the first three years, and then the loan amortizes in four installments. The revolving credit facility is available for drawings until June 2026. The facility matures in July 2026 and amounts drawn bear interest at the London Interbank Offered Rate plus a margin of 1.875% or 2.125%, as defined by the agreement. As of September 30, 2021, $158 million ($146 million net of debt issuance costs) was drawn under the PT-FI Term Loan and no amounts were drawn under the revolving credit facility.

On October 21, 2021, we called for redemption on December 1, 2021, all of our outstanding $524 million principal amount of our 3.55% Senior Notes due 2022. We have no other senior note maturities until March 2023.

Refer to Note 5 for further discussion of the above items, and refer to Note 8 of our 2020 Form 10-K for additional information regarding our debt arrangements.

Operating Activities

We reported consolidated cash provided by operating activities of $5.4 billion (including $0.4 billion of working capital and other sources) for the first nine months of 2021 and $1.7 billion (including $0.3 billion from working capital and other sources) for the first nine months of 2020. Higher operating cash flows for the first nine months of 2021, compared with the first nine months of 2020, primarily reflect higher copper prices and copper and gold sales volumes.

In third-quarter 2021, Cerro Verde paid the balance of its royalty dispute liabilities (payments totaled $356 million in third-quarter 2021 and $421 million for the first nine months of 2021). Refer to Note 8 for further discussion.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $1.3 billion for the first nine months of 2021, including approximately $0.9 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and $0.1 billion for the Indonesia smelter project. Capital expenditures for the Indonesia smelter project are currently being funded by PT-FI's $1.0 billion unsecured bank credit facility and additional debt financing for this project is being evaluated. Refer to “Outlook” for further discussion of projected capital expenditures for the year 2021.

Capital expenditures, including capitalized interest, totaled $1.6 billion for the first nine months of 2020, including approximately $1.0 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and the Lone Star copper leach project.

Proceeds from Sale of Freeport Cobalt. On September 1, 2021, we completed the sale of Freeport Cobalt to Jervois Global Limited (Jervois) for $208 million, including net cash proceeds of $150 million and shares of Jervois. Refer to Note 1 for further discussion.

Proceeds from Sales of Other Assets. Proceeds from sales of other assets totaled $21 million for the first nine months of 2021 and $146 million for the first nine months of 2020. Proceeds from sales of other assets for the first nine months of 2020 are primarily associated with the contingent consideration of $60 million from the 2016 sale of TF Holdings Limited, the collection of $45 million related to the 2019 sale of the Timok exploration assets in Serbia, and $31 million associated with the sale of royalty assets.

Acquisition of Minority Interest in PT Smelting. On April 30, 2021, PT-FI acquired 14.5 percent of the outstanding common stock of PT Smelting for $33 million, increasing its ownership interest from 25 percent to 39.5 percent.

Financing Activities

Debt Transactions. Net repayments of debt totaled $39 million for the first nine months of 2021, primarily associated with Cerro Verde’s election to prepay $200 million on its term loan at the end of September 2021, partly offset by borrowings of $158 million under the PT-FI credit facility.

Net proceeds from debt totaled $131 million for the first nine months of 2020, primarily reflecting the issuance of $2.8 billion of new senior notes in July 2020 and March 2020, partly offset by the use of proceeds to purchase and redeem senior notes maturing in 2021, 2022, 2023 and 2024.

Refer to Note 5 for further discussion.

Cash Dividends and Distributions Paid. We paid cash dividends on our common stock totaling $220 million for the first nine months of 2021 and $73 million for the first nine months of 2020.

On September 22, 2021, we declared a quarterly cash dividend of $0.075 per share on our common stock, which was paid on November 1, 2021, to shareholders of record as of October 15, 2021. Refer to “Cautionary Statement” and the discussion above regarding our financial policy.

Cash dividends and distributions paid to noncontrolling interests at PT-FI and Cerro Verde totaled $187 million for the first nine months of 2021. There were no cash dividends or distributions to noncontrolling interests paid during the first nine months of 2020. Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries.

Contributions from Noncontrolling Interests. We received equity contributions totaling $135 million for the first nine months of 2021 and $115 million for the first nine months of 2020 from PT Inalum for their share of capital spending on PT-FI underground mine development projects and development of increased smelter capacity in Indonesia.

Stock-based awards. Following an increase in our stock price during 2021, proceeds from exercised stock options totaled $189 million and payments for related employee taxes totaled $19 million for the first nine months of 2021. See Note 10 in our 2020 Form 10-K for a discussion of stock-based awards.

CONTRACTUAL OBLIGATIONS

In July 2021, PT-FI awarded a contract to Chiyoda for the construction of a new greenfield smelter in Gresik, Indonesia, with an estimated contract cost of $2.8 billion. The smelter construction is expected to be completed as soon as feasible in 2024, which is subject to, among other things, potential pandemic-related disruptions.

Besides PT-FI’s $1.0 billion credit facility and the Chiyoda contract, there have been no other material changes in our contractual obligations since December 31, 2020.

CONTINGENCIES

Environmental and Asset Retirement Obligations

Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and asset retirement obligations and also review changes in facts and circumstances associated with these obligations at least quarterly.

There have been no material changes to our environmental and asset retirement obligations since December 31, 2020. Refer to Note 8 for updates associated with our Newtown Creek environmental obligation. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental obligations. We are planning a detailed review in fourth-quarter 2021 of our asset retirement obligations in Indonesia, specifically around our historical overburden stockpiles related to previous open-pit mining operations. Potential adjustments could be significant. Refer to Note 12 in our 2020 Form 10-K, for further information regarding our environmental and asset retirement obligations.

Litigation and Other Contingencies

There have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since December 31, 2020. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our 2020 Form 10-K, as updated by Note 8, for further information regarding legal proceedings, environmental and other matters.

NEW ACCOUNTING STANDARDS

There were no significant updates to previously reported accounting standards included in Note 1 of our 2020 Form 10-K.

NET DEBT

Net debt, which we define as consolidated debt less consolidated cash and cash equivalents, is intended to provide investors with information related to the performance-based payout framework in our financial policy, which requires achievement of a net debt target in the range of $3 billion to $4 billion (excluding project debt for additional smelting capacity in Indonesia). This information differs from consolidated debt determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for consolidated debt determined in accordance with U.S. GAAP. Our net debt follows, which may not be comparable to similarly titled measures reported by other companies (in millions):


	September 30, 2021			December 31, 2020
Current portion of debt	$	897		$	34
Long-term debt, less current portion	8,768			9,677
Consolidated debt	9,665		a	9,711
Less: consolidated cash and cash equivalents	7,672			3,657
Net debt	$	1,993		$	6,054

a.Includes $146 million, net of debt issuance costs, for the PT-FI Term Loan (refer to Note 5).

PRODUCT REVENUES AND PRODUCTION COSTS

Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.

We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce and (iv) it is the method used by our management and Board to monitor our mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.

We show revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs







Three Months Ended September 30, 2021
(In millions)	By-Product		Co-Product Method
	Method		Copper		Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	1,627	$	1,627	$	152	$	27	$	1,806
Site production and delivery, before net noncash and other costs shown below	795		724		82		20		826
By-product credits	(148)		—		—		—		—
Treatment charges	35		33		—		2		35
Net cash costs	682		757		82		22		861
DD&A	94		85		7		2		94
Metals inventory adjustments	13		13		—		—		13
Noncash and other costs, net	30		28		2		—		30
Total costs	819		883		91		24		998
Other revenue adjustments, primarily for pricing on prior period open sales	(7)		(7)		—		—		(7)
Gross profit	$	801	$	737	$	61	$	3	$	801

Copper sales (millions of recoverable pounds)	375		375
Molybdenum sales (millions of recoverable pounds)a					9

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	4.34	$	4.34	$	16.69
Site production and delivery, before net noncash and other costs shown below	2.12		1.93		8.97
By-product credits	(0.39)		—		—
Treatment charges	0.09		0.09		—
Unit net cash costs	1.82		2.02		8.97
DD&A	0.25		0.23		0.73
Metals inventory adjustments	0.03		0.03		—
Noncash and other costs, net	0.08		0.08		0.23
Total unit costs	2.18		2.36		9.93
Other revenue adjustments, primarily for pricing on prior period open sales	(0.02)		(0.02)		—
Gross profit per pound	$	2.14	$	1.96	$	6.76

Reconciliation to Amounts Reported

	Revenues		Production and Delivery		DD&A		Metals Inventory Adjustments
Totals presented above	$	1,806	$	826	$	94	$	13
Treatment charges	(4)		31		—		—
Noncash and other costs, net	—		30		—		—
Other revenue adjustments, primarily for pricing on prior period open sales	(7)		—		—		—
Eliminations and other	16		17		—		—
North America copper mines	1,811		904		94		13
Other miningc	5,903		3,735		418		—


Corporate, other & eliminations	(1,631)		(1,630)		16		1
As reported in our consolidated financial statements	$	6,083	$	3,009	$	528	$	14

a.Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b.Includes gold and silver product revenues and production costs.

c.Represents the combined total for our other segments, as presented in Note 9.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs



Three Months Ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	1,138		$	1,138	$	63	$	30	$	1,231
Site production and delivery, before net noncash and other costs shown below	667			630		45		16		691
By-product credits	(69)			—		—		—		—
Treatment charges	33			32		—		1		33
Net cash costs	631			662		45		17		724
DD&A	92			85		4		3		92
Metals inventory adjustments	(4)			(4)		—		—		(4)
Noncash and other costs, net	37		c	35		—		2		37
Total costs	756			778		49		22		849
Other revenue adjustments, primarily for pricing on prior period open sales	1			1		—		—		1
Gross profit	$	383		$	361	$	14	$	8	$	383

Copper sales (millions of recoverable pounds)	378			378
Molybdenum sales (millions of recoverable pounds)a						7

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.01		$	3.01	$	7.72
Site production and delivery, before net noncash and other costs shown below	1.76			1.67		5.52
By-product credits	(0.18)			—		—
Treatment charges	0.09			0.08		—
Unit net cash costs	1.67			1.75		5.52
DD&A	0.24			0.23		0.43
Metals inventory adjustments	(0.01)			(0.01)		—
Noncash and other costs, net	0.10		c	0.09		0.06
Total unit costs	2.00			2.06		6.01
Other revenue adjustments, primarily for pricing on prior period open sales	—			—		—
Gross profit per pound	$	1.01		$	0.95	$	1.71

Reconciliation to Amounts Reported
	Revenues			Production and Delivery		DD&A		Metals Inventory Adjustments
Totals presented above	$	1,231		$	691	$	92	$	(4)
Treatment charges	(4)			29		—		—
Noncash and other costs, net	—			37		—		—
Other revenue adjustments, primarily for pricing on prior period open sales	1			—		—		—
Eliminations and other	9			11		(1)		—
North America copper mines	1,237			768		91		(4)
Other miningd	3,691			2,731		282		5


Corporate, other & eliminations	(1,077)			(1,034)		21		8
As reported in our consolidated financial statements	$	3,851		$	2,465	$	394	$	9

a.Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b.Includes gold and silver product revenues and production costs.

c.Includes charges totaling $10 million ($0.03 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs).

d.Represents the combined total for our other segments, as presented in Note 9.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2021
(In millions)	By-Product		Co-Product Method
	Method		Copper		Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,538	$	4,538	337		93		4,968
Site production and delivery, before net noncash and other costs shown below	2,254		2,093		194		60		2,347
By-product credits	(337)		—		—		—		—
Treatment charges	98		93		—		5		98
Net cash costs	2,015		2,186		194		65		2,445
DD&A	275		254		15		6		275
Metals inventory adjustments	13		13		—		—		13
Noncash and other costs, net	103		99		3		1		103
Total costs	2,406		2,552		212		72		2,836
Other revenue adjustments, primarily for pricing on prior period open sales	7		7		—		—		7
Gross profit	$	2,139	$	1,993	$	125	$	21	$	2,139

Copper sales (millions of recoverable pounds)	1,072		1,072
Molybdenum sales (millions of recoverable pounds)a					26

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	4.24	$	4.24	$	13.09
Site production and delivery, before net noncash and other costs shown below	2.11		1.95		7.54
By-product credits	(0.32)		—		—
Treatment charges	0.09		0.09		—
Unit net cash costs	1.88		2.04		7.54
DD&A	0.26		0.24		0.59
Metals inventory adjustments	0.01		0.01		—
Noncash and other costs, net	0.10		0.09		0.12
Total unit costs	2.25		2.38		8.25
Other revenue adjustments, primarily for pricing on prior period open sales	0.01		0.01		—
Gross profit per pound	$	2.00	$	1.87	$	4.84

Reconciliation to Amounts Reported
							Metals
			Production				Inventory
	Revenues		and Delivery		DD&A		Adjustments
Totals presented above	$	4,968	$	2,347	$	275	$	13
Treatment charges	(21)		77		—		—
Noncash and other costs, net	—		103		—		—
Other revenue adjustments, primarily for pricing on prior period open sales	7		—		—		—
Eliminations and other	49		51		—		—
North America copper mines	5,003		2,578		275		13
Other miningc	16,068		10,425		1,108		1


Corporate, other & eliminations	(4,390)		(4,141)		47		1
As reported in our consolidated financial statements	$	16,681	$	8,862	$	1,430	$	15

a.Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b.Includes gold and silver product revenues and production costs.

c.Represents the combined total for our other segments, as presented in Note 9.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	2,939		$	2,939	210		73		3,222
Site production and delivery, before net noncash and other costs shown below	2,106			1,963		173		44		2,180
By-product credits	(209)			—		—		—		—
Treatment charges	109			105		—		4		109
Net cash costs	2,006			2,068		173		48		2,289
DD&A	272			251		14		7		272
Metals inventory adjustments	52			49		—		3		52
Noncash and other costs, net	107		c	101		3		3		107
Total costs	2,437			2,469		190		61		2,720
Other revenue adjustments, primarily for pricing on prior period open sales	(22)			(22)		—		—		(22)
Gross profit	$	480		$	448	$	20	$	12	$	480

Copper sales (millions of recoverable pounds)	1,100			1,100
Molybdenum sales (millions of recoverable pounds)a						24

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.67		$	2.67	$	8.57
Site production and delivery, before net noncash and other costs shown below	1.91			1.78		7.05
By-product credits	(0.19)			—		—
Treatment charges	0.10			0.10		—
Unit net cash costs	1.82			1.88		7.05
DD&A	0.25			0.23		0.57
Metals inventory adjustments	0.05			0.04		—
Noncash and other costs, net	0.10		c	0.10		0.12
Total unit costs	2.22			2.25		7.74
Other revenue adjustments, primarily for pricing on prior period open sales	(0.01)			(0.01)		—
Gross profit per pound	$	0.44		$	0.41	$	0.83

Reconciliation to Amounts Reported
								Metals
				Production				Inventory
	Revenues			and Delivery		DD&A		Adjustments
Totals presented above	$	3,222		$	2,180	$	272	$	52
Treatment charges	(14)			95		—		—
Noncash and other costs, net	—			107		—		—
Other revenue adjustments, primarily for pricing on prior period open sales	(22)			—		—		—
Eliminations and other	24			33		—		—
North America copper mines	3,210			2,415		272		52
Other miningd	9,267			7,665		770		14


Corporate, other & eliminations	(2,774)			(2,676)		51		26
As reported in our consolidated financial statements	$	9,703		$	7,404	$	1,093	$	92

a.Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

b.Includes gold and silver product revenues and production costs.

c.Includes charges totaling $32 million ($0.03 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs).

d.Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs






Three Months Ended September 30, 2021
(In millions)	By-Product			Co-Product Method
	Method			Copper		Othera		Total
Revenues, excluding adjustments	$	1,153		$	1,153	$	120	$	1,273
Site production and delivery, before net noncash and other costs shown below	597		b	546		64		610
By-product credits	(107)			—		—		—
Treatment charges	38			38		—		38
Royalty on metals	3			2		1		3
Net cash costs	531			586		65		651
DD&A	112			101		11		112

Noncash and other costs, net	20			19		1		20
Total costs	663			706		77		783
Other revenue adjustments, primarily for pricing on prior period open sales	(8)			(8)		—		(8)
Gross profit	$	482		$	439	$	43	$	482

Copper sales (millions of recoverable pounds)	280			280

Gross profit per pound of copper:

Revenues, excluding adjustments	$	4.12		$	4.12
Site production and delivery, before net noncash and other costs shown below	2.14		b	1.96
By-product credits	(0.38)			—
Treatment charges	0.13			0.13
Royalty on metals	0.01			0.01
Unit net cash costs	1.90			2.10
DD&A	0.40			0.36

Noncash and other costs, net	0.07			0.06
Total unit costs	2.37			2.52
Other revenue adjustments, primarily for pricing on prior period open sales	(0.03)			(0.03)
Gross profit per pound	$	1.72		$	1.57

Reconciliation to Amounts Reported
				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	1,273		$	610	$	112
Treatment charges	(38)			—		—
Royalty on metals	(3)			—		—
Noncash and other costs, net	—			20		—
Other revenue adjustments, primarily for pricing on prior period open sales	(8)			—		—
Eliminations and other	(1)			—		(1)
South America mining	1,223			630		111
Other miningc	6,491			4,009		401


Corporate, other & eliminations	(1,631)			(1,630)		16
As reported in our consolidated financial statements	$	6,083		$	3,009	$	528

a.Includes silver sales of 1.0 million ounces ($24.34 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

b.Includes nonrecurring charges totaling $5 million ($0.02 per pound of copper) associated with labor related charges at Cerro Verde.

c.Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs







Three Months Ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Othera		Total
Revenues, excluding adjustments	$	754		$	754	$	53	$	807
Site production and delivery, before net noncash and other costs shown below	459			432		38		470
By-product credits	(42)			—		—		—
Treatment charges	40			40		—		40
Royalty on metals	1			1		—		1
Net cash costs	458			473		38		511
DD&A	105			98		7		105

Noncash and other costs, net	9		b	8		1		9
Total costs	572			579		46		625
Other revenue adjustments, primarily for pricing on prior period open sales	41			41		—		41
Gross profit	$	223		$	216	$	7	$	223

Copper sales (millions of recoverable pounds)	250			250

Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.02		$	3.02
Site production and delivery, before net noncash and other costs shown below	1.84			1.73
By-product credits	(0.17)			—
Treatment charges	0.15			0.15
Royalty on metals	0.01			0.01
Unit net cash costs	1.83			1.89
DD&A	0.42			0.39

Noncash and other costs, net	0.04		b	0.04
Total unit costs	2.29			2.32
Other revenue adjustments, primarily for pricing on prior period open sales	0.16			0.16
Gross profit per pound	$	0.89		$	0.86

Reconciliation to Amounts Reported
				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	807		$	470	$	105
Treatment charges	(40)			—		—
Royalty on metals	(1)			—		—
Noncash and other costs, net	—			9		—
Other revenue adjustments, primarily for pricing on prior period open sales	41			—		—
Eliminations and other	(1)			(2)		—
South America mining	806			477		105
Other miningc	4,122			3,022		268


Corporate, other & eliminations	(1,077)			(1,034)		21
As reported in our consolidated financial statements	$	3,851		$	2,465	$	394

a.Includes silver sales of 0.9 million ounces ($24.84 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

b.Includes charges totaling $5 million ($0.02 per pound of copper), primarily associated with the COVID-19 pandemic (including health and safety costs).

c.Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2021
(In millions)	By-Product			Co-Product Method
	Method			Copper		Othera		Total
Revenues, excluding adjustments	$	3,238		$	3,238	$	267	$	3,505
Site production and delivery, before net noncash and other costs shown below	1,690		b	1,568		155		1,723
By-product credits	(234)			—		—		—
Treatment charges	101			101		—		101
Royalty on metals	8			7		1		8
Net cash costs	1,565			1,676		156		1,832
DD&A	306			282		24		306

Noncash and other costs, net	49			45		4		49
Total costs	1,920			2,003		184		2,187
Other revenue adjustments, primarily for pricing on prior period open sales	98			98		—		98
Gross profit	$	1,416		$	1,333	$	83	$	1,416

Copper sales (millions of recoverable pounds)	769			769

Gross profit per pound of copper:

Revenues, excluding adjustments	$	4.21		$	4.21
Site production and delivery, before net noncash and other costs shown below	2.20		b	2.04
By-product credits	(0.31)			—
Treatment charges	0.13			0.13
Royalty on metals	0.01			0.01
Unit net cash costs	2.03			2.18
DD&A	0.40			0.36

Noncash and other costs, net	0.07			0.06
Total unit costs	2.50			2.60
Other revenue adjustments, primarily for pricing on prior period open sales	0.13			0.13
Gross profit per pound	$	1.84		$	1.74

Reconciliation to Amounts Reported

				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	3,505		$	1,723	$	306
Treatment charges	(101)			—		—
Royalty on metals	(8)			—		—
Noncash and other costs, net	—			49		—
Other revenue adjustments, primarily for pricing on prior period open sales	98			—		—
Eliminations and other	(1)			(3)		—
South America mining	3,493			1,769		306
Other miningc	17,578			11,234		1,077


Corporate, other & eliminations	(4,390)			(4,141)		47
As reported in our consolidated financial statements	$	16,681		$	8,862	$	1,430

a.Includes silver sales of 2.7 million ounces ($25.81 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.

b.Includes nonrecurring charges totaling $74 million ($0.10 per pound of copper) associated with labor related charges at Cerro Verde for agreements reached with approximately 65 percent of its hourly employees.

c.Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Othera		Total
Revenues, excluding adjustments	$	1,994		$	1,994	$	139	$	2,133
Site production and delivery, before net noncash and other costs shown below	1,313			1,231		111		1,342
By-product credits	(110)			—		—		—
Treatment charges	111			111		—		111
Royalty on metals	4			4		—		4
Net cash costs	1,318			1,346		111		1,457
DD&A	316			294		22		316
Metals inventory adjustments	3			3		—		3
Noncash and other costs, net	109		b	103		6		109
Total costs	1,746			1,746		139		1,885
Other revenue adjustments, primarily for pricing on prior period open sales	(70)			(70)		—		(70)
Gross profit	$	178		$	178	$	—	$	178

Copper sales (millions of recoverable pounds)	716			716

Gross profit per pound of copper:

Revenues, excluding adjustments	$	2.79		$	2.79
Site production and delivery, before net noncash and other costs shown below	1.83			1.72
By-product credits	(0.15)			—
Treatment charges	0.15			0.15
Royalty on metals	0.01			0.01
Unit net cash costs	1.84			1.88
DD&A	0.44			0.41
Metals inventory adjustments	—			—
Noncash and other costs, net	0.16		b	0.15
Total unit costs	2.44			2.44
Other revenue adjustments, primarily for pricing on prior period open sales	(0.10)			(0.10)
Gross profit per pound	$	0.25		$	0.25

Reconciliation to Amounts Reported
								Metals
				Production				Inventory
	Revenues			and Delivery		DD&A		Adjustments
Totals presented above	$	2,133		$	1,342	$	316	$	3
Treatment charges	(111)			—		—		—
Royalty on metals	(4)			—		—		—
Noncash and other costs, net	—			109		—		—
Other revenue adjustments, primarily for pricing on prior period open sales	(70)			—		—		—
Eliminations and other	(1)			(2)		(1)		—
South America mining	1,947			1,449		315		3
Other miningc	10,530			8,631		727		63


Corporate, other & eliminations	(2,774)			(2,676)		51		26
As reported in our consolidated financial statements	$	9,703		$	7,404	$	1,093	$	92

a.Includes silver sales of 2.5 million ounces ($19.58 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.

b.Includes charges totaling $91 million ($0.13 per pound of copper) primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans.

c.Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs






Three Months Ended September 30, 2021
(In millions)	By-Product		Co-Product Method
	Method		Copper		Gold		Silvera		Total
Revenues, excluding adjustments	$	1,555	$	1,555	$	701	$	37	$	2,293
Site production and delivery, before net noncash and other costs shown below	553		375		169		9		553
Gold and silver credits	(744)		—		—		—		—
Treatment charges	90		61		27		2		90
Export duties	71		48		22		1		71
Royalty on metals	94		67		25		2		94
Net cash costs	64		551		243		14		808
DD&A	280		190		86		4		280


Total costs	344		741		329		18		1,088
Other revenue adjustments, primarily for pricing on prior period open sales	(2)		(2)		6		—		4
PT Smelting intercompany loss	(16)		(11)		(5)		—		(16)
Gross profit	$	1,193	$	801	$	373	$	19	$	1,193

Copper sales (millions of recoverable pounds)	378		378
Gold sales (thousands of recoverable ounces)					399

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	4.11	$	4.11	$	1,757
Site production and delivery, before net noncash and other costs shown below	1.46		0.99		424
Gold and silver credits	(1.97)		—		—
Treatment charges	0.24		0.16		69
Export duties	0.19		0.13		54
Royalty on metals	0.25		0.18		63
Unit net cash costs	0.17		1.46		610
DD&A	0.74		0.50		215


Total unit costs	0.91		1.96		825
Other revenue adjustments, primarily for pricing on prior period open sales	—		—		16
PT Smelting intercompany loss	(0.04)		(0.03)		(12)
Gross profit per pound/ounce	$	3.16	$	2.12	$	936

Reconciliation to Amounts Reported
			Production
	Revenues		and Delivery		DD&A
Totals presented above	$	2,293	$	553	$	280
Treatment charges	(90)		—		—
Export duties	(71)		—		—
Royalty on metals	(94)		—		—

Other revenue adjustments, primarily for pricing on prior period open sales	4		—		—
PT Smelting intercompany loss	—		16		—
Indonesia mining	2,042		569		280
Other miningb	5,672		4,070		232


Corporate, other & eliminations	(1,631)		(1,630)		16
As reported in our consolidated financial statements	$	6,083	$	3,009	$	528

a.Includes silver sales of 1.7 million ounces ($22.22 per ounce average realized price).

b.Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs






Three Months Ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Gold		Silvera		Total
Revenues, excluding adjustments	$	659		$	659	$	437	$	24	$	1,120
Site production and delivery, before net noncash and other costs shown below	376			221		147		8		376
Gold and silver credits	(474)			—		—		—		—
Treatment charges	58			34		23		1		58
Export duties	24			14		9		1		24
Royalty on metals	45			26		18		1		45
Net cash costs	29			295		197		11		503
DD&A	150			88		59		3		150
Noncash and other costs, net	24		b	14		9		1		24
Total costs	203			397		265		15		677
Other revenue adjustments, primarily for pricing on prior period open sales	28			28		11		2		41
PT Smelting intercompany loss	(17)			(10)		(7)		—		(17)
Gross profit	$	467		$	280	$	176	$	11	$	467

Copper sales (millions of recoverable pounds)	219			219
Gold sales (thousands of recoverable ounces)						230

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.00		$	3.00	$	1,902
Site production and delivery, before net noncash and other costs shown below	1.71			1.01		639
Gold and silver credits	(2.16)			—		—
Treatment charges	0.26			0.16		98
Export duties	0.11			0.06		40
Royalty on metals	0.21			0.12		79
Unit net cash costs	0.13			1.35		856
DD&A	0.68			0.40		256
Noncash and other costs, net	0.11		b	0.06		40
Total unit costs	0.92			1.81		1,152
Other revenue adjustments, primarily for pricing on prior period open sales	0.13			0.13		49
PT Smelting intercompany loss	(0.08)			(0.05)		(31)
Gross profit per pound/ounce	$	2.13		$	1.27	$	768

Reconciliation to Amounts Reported
				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	1,120		$	376	$	150
Treatment charges	(58)			—		—
Export duties	(24)			—		—
Royalty on metals	(53)			(8)		—
Noncash and other costs, net	—			24		—
Other revenue adjustments, primarily for pricing on prior period open sales	41			—		—
PT Smelting intercompany loss	—			17		—
Indonesia mining	1,026			409		150
Other miningc	3,902			3,090		223


Corporate, other & eliminations	(1,077)			(1,034)		21
As reported in our consolidated financial statements	$	3,851		$	2,465	$	394

a.Includes silver sales of 1.0 million ounces ($24.29 per ounce average realized price).

b.Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) totaling $10 million ($0.05 per pound of copper).

c.Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2021
(In millions)	By-Product			Co-Product Method
	Method			Copper		Gold		Silvera		Total
Revenues, excluding adjustments	$	3,989		$	3,989	$	1,703	$	104	$	5,796
Site production and delivery, before net noncash and other costs shown below	1,412			972		415		25		1,412
Gold and silver credits	(1,803)			—		—		—		—
Treatment charges	229			158		67		4		229
Export duties	145			99		43		3		145
Royalty on metals	234			167		63		4		234
Net cash costs	217			1,396		588		36		2,020
DD&A	726			499		213		14		726

Noncash and other costs, net	3		b	2		1		—		3
Total costs	946			1,897		802		50		2,749
Other revenue adjustments, primarily for pricing on prior period open sales	71			71		(4)		—		67
PT Smelting intercompany loss	(106)			(73)		(31)		(2)		(106)
Gross profit	$	3,008		$	2,090	$	866	$	52	$	3,008

Copper sales (millions of recoverable pounds)	946			946
Gold sales (thousands of recoverable ounces)						957

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	4.21		$	4.21	$	1,780
Site production and delivery, before net noncash and other costs shown below	1.49			1.03		434
Gold and silver credits	(1.91)			—		—
Treatment charges	0.24			0.17		70
Export duties	0.15			0.10		45
Royalty on metals	0.26			0.18		66
Unit net cash costs	0.23			1.48		615
DD&A	0.76			0.52		222

Noncash and other costs, net	0.01		b	0.01		1
Total unit costs	1.00			2.01		838
Other revenue adjustments, primarily for pricing on prior period open sales	0.08			0.08		(5)
PT Smelting intercompany loss	(0.11)			(0.08)		(33)
Gross profit per pound/ounce	$	3.18		$	2.20	$	904

Reconciliation to Amounts Reported
				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	5,796		$	1,412	$	726
Treatment charges	(229)			—		—
Export duties	(145)			—		—
Royalty on metals	(234)			—		—
Noncash and other costs, net	31			34		—
Other revenue adjustments, primarily for pricing on prior period open sales	67			—		—
PT Smelting intercompany loss	—			106		—
Indonesia mining	5,286			1,552		726
Other miningc	15,785			11,451		657


Corporate, other & eliminations	(4,390)			(4,141)		47
As reported in our consolidated financial statements	$	16,681		$	8,862	$	1,430

a.Includes silver sales of 4.3 million ounces ($24.50 per ounce average realized price).

b.Includes credits of $31 million ($0.03 per pound of copper) associated with adjustments to prior year treatment and refining charges and charges of $16 million ($0.02 per pound of copper) associated with a potential settlement of an administrative fine levied by the Indonesia government.

c.Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs



Nine months ended September 30, 2020
(In millions)	By-Product			Co-Product Method
	Method			Copper		Gold		Silvera		Total
Revenues, excluding adjustments	$	1,447		$	1,447	$	994	$	48	$	2,489
Site production and delivery, before net noncash and other costs shown below	1,062			617		424		21		1,062
Gold and silver credits	(1,046)			—		—		—		—
Treatment charges	143			83		57		3		143
Export duties	43			25		17		1		43
Royalty on metals	92			53		38		1		92
Net cash costs	294			778		536		26		1,340
DD&A	375			218		150		7		375

Noncash and other costs, net	56		b	33		22		1		56
Total costs	725			1,029		708		34		1,771
Other revenue adjustments, primarily for pricing on prior period open sales	(20)			(20)		4		—		(16)
PT Smelting intercompany loss	(18)			(11)		(7)		—		(18)
Gross profit	$	684		$	387	$	283	$	14	$	684

Copper sales (millions of recoverable pounds)	518			518
Gold sales (thousands of recoverable ounces)						549

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	2.79		$	2.79	$	1,810
Site production and delivery, before net noncash and other costs shown below	2.05			1.19		773
Gold and silver credits	(2.02)			—		—
Treatment charges	0.28			0.16		104
Export duties	0.08			0.05		31
Royalty on metals	0.18			0.10		68
Unit net cash costs	0.57			1.50		976
DD&A	0.72			0.42		273

Noncash and other costs, net	0.11		b	0.07		41
Total unit costs	1.40			1.99		1,290
Other revenue adjustments, primarily for pricing on prior period open sales	(0.03)			(0.03)		8
PT Smelting intercompany loss	(0.04)			(0.02)		(13)
Gross profit per pound/ounce	$	1.32		$	0.75	$	515

Reconciliation to Amounts Reported
				Production
	Revenues			and Delivery		DD&A
Totals presented above	$	2,489		$	1,062	$	375
Treatment charges	(143)			—		—
Export duties	(43)			—		—
Royalty on metals	(98)			(6)		—
Noncash and other costs, net	—			56		—
Other revenue adjustments, primarily for pricing on prior period open sales	(16)			—		—
PT Smelting intercompany loss	—			18		—
Indonesia mining	2,189			1,130		375
Other miningc	10,288			8,950		667


Corporate, other & eliminations	(2,774)			(2,676)		51
As reported in our consolidated financial statements	$	9,703		$	7,404	$	1,093

a.Includes silver sales of 2.3 million ounces ($20.73 per ounce average realized price).

b.Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) of $14 million ($0.03 per pound of copper).

c.Represents the combined total for our segments, as presented in Note 9.

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs








	Three Months Ended September 30,
(In millions)	2021		2020

Revenues, excluding adjustmentsa	$	158	$	47
Site production and delivery, before net noncash and other costs shown below	67		47
Treatment charges and other	7		5
Net cash costs	74		52
DD&A	19		13
Metals inventory adjustments	—		3
Noncash and other costs, net	3		4
Total costs	96		72
Gross profit (loss)	$	62	$	(25)

Molybdenum sales (millions of recoverable pounds)a	9		6

Gross profit (loss) per pound of molybdenum:

Revenues, excluding adjustmentsa	$	18.13	$	8.83
Site production and delivery, before net noncash and other costs shown below	7.70		8.88
Treatment charges and other	0.84		0.84
Unit net cash costs	8.54		9.72
DD&A	2.14		2.38
Metals inventory adjustments	—		0.67
Noncash and other costs, net	0.30		0.54
Total unit costs	10.98		13.31
Gross profit (loss) per pound	$	7.15	$	(4.48)

Reconciliation to Amounts Reported
							Metals
			Production				Inventory
Three Months Ended September 30, 2021	Revenues		and Delivery		DD&A		Adjustments
Totals presented above	$	158	$	67	$	19	$	—
Treatment charges and other	(7)		—		—		—
Noncash and other costs, net	—		3		—		—
Molybdenum mines	151		70		19		—
Other miningb	7,563		4,569		493		13


Corporate, other & eliminations	(1,631)		(1,630)		16		1
As reported in our consolidated financial statements	$	6,083	$	3,009	$	528	$	14

Three Months Ended September 30, 2020
Totals presented above	$	47	$	47	$	13	$	3
Treatment charges and other	(5)		—		—		—
Noncash and other costs, net	—		4		—		—


Molybdenum mines	42		51		13		3
Other miningb	4,886		3,448		360		(2)


Corporate, other & eliminations	(1,077)		(1,034)		21		8
As reported in our consolidated financial statements	$	3,851	$	2,465	$	394	$	9

a.Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.

b.Represents the combined total for our other segments, as presented in Note 9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs



	Nine months ended September 30,
(In millions)	2021		2020

Revenues, excluding adjustmentsa	$	329	$	187
Site production and delivery, before net noncash and other costs shown below	175		164
Treatment charges and other	19		16
Net cash costs	194		180
DD&A	51		44
Metals inventory adjustments	1		8
Noncash and other costs, net	8		14		b
Total costs	254		246
Gross profit (loss)	$	75	$	(59)

Molybdenum sales (millions of recoverable pounds)a	23		19

Gross profit (loss) per pound of molybdenum:

Revenues, excluding adjustmentsa	$	14.41	$	9.92
Site production and delivery, before net noncash and other costs shown below	7.69		8.73
Treatment charges and other	0.85		0.85
Unit net cash costs	8.54		9.58
DD&A	2.21		2.31
Metals inventory adjustments	0.04		0.44
Noncash and other costs, net	0.34		0.72		b
Total unit costs	11.13		13.05
Gross profit (loss) per pound	$	3.28	$	(3.13)

Reconciliation to Amounts Reported
								Metals
			Production					Inventory
Nine months ended September 30, 2021	Revenues		and Delivery			DD&A		Adjustments
Totals presented above	$	329	$	175		$	51	$	1
Treatment charges and other	(19)		—			—		—
Noncash and other costs, net	—		8			—		—
Molybdenum mines	310		183			51		1
Other miningc	20,761		12,820			1,332		13


Corporate, other & eliminations	(4,390)		(4,141)			47		1
As reported in our consolidated financial statements	$	16,681	$	8,862		$	1,430	$	15

Nine months ended September 30, 2020
Totals presented above	$	187	$	164		$	44	$	8
Treatment charges and other	(16)		—			—		—
Noncash and other costs, net	—		14			—		—


Molybdenum mines	171		178			44		8
Other miningc	12,306		9,902			998		58


Corporate, other & eliminations	(2,774)		(2,676)			51		26
As reported in our consolidated financial statements	$	9,703	$	7,404		$	1,093	$	92

b.Includes charges totaling $7 million ($0.36 per pound of molybdenum) primarily associated with contract cancellation costs related to the COVID-19 pandemic and employee separation costs associated with April 2020 revised operating plans.

c.Represents the combined total for our other segments, as presented in Note 9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

GUARANTOR SUMMARIZED FINANCIAL INFORMATION

All of the senior notes issued by FCX are fully and unconditionally guaranteed on a senior basis jointly and severally by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC), as guarantor, which is a 100-percent-owned subsidiary of FCX Oil & Gas LLC (FM O&G) and FCX. The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of FM O&G LLC, including indebtedness under our revolving credit facility. The guarantee ranks senior in right of payment with all of FM O&G LLC’s future subordinated obligations and is effectively subordinated in right of payment to any debt of FM O&G LLC’s subsidiaries. The indentures provide that FM O&G LLC’s guarantee obligations may be released or terminated upon: (i) the sale of all or substantially all of the equity interests or assets of FM O&G LLC to a third party that is not our subsidiary or our affiliate; (ii) FM O&G LLC no longer having any obligations under any FM O&G senior notes or any refinancing thereof and no longer being a co-borrower or guarantor of any of our obligations under the revolving credit facility or any other senior debt or, in each case, any refinancing thereof; or (iii) the discharge of our obligations under the indentures in accordance with their terms.

The following summarized financial data includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all our other non-guarantor subsidiaries at September 30, 2021, and December 31, 2020, and for the nine months ended September 30, 2021.


	FCX			FM O&G LLC			Non-guarantor				Consolidated
	Issuer			Guarantor			Subsidiaries		Eliminations		FCX
As of September 30, 2021
Current assets	$	151		$	745		$	13,815	$	(920)	$	13,791
Noncurrent assets	432			6			33,078		(390)		33,126
Current liabilities	717			39			5,635		(868)		5,523
Noncurrent liabilities	9,050			11,405			13,975		(15,567)		18,863

As of December 31, 2020
Current assets	$	65		$	697		$	9,287	$	(746)	$	9,303
Noncurrent assets	785			6			32,806		(756)		32,841
Current liabilities	187			31			3,964		(765)		3,417
Noncurrent liabilities	9,433			11,208			15,075		(15,657)		20,059

Nine Months Ended September 30, 2021
Revenues	$	—		$	41		$	16,640	$	—	$	16,681
Operating (loss) income	(33)			10			6,069		15		6,061
Net income (loss)	3,200		a	(133)		a	4,262		(3,322)		4,007

a.Net income (loss) equals net income (loss) attributable to common stockholders because net income attributable to noncontrolling interests is zero for issuer and guarantor.

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to ore grades and milling rates; business outlook; production and sales volumes; unit net cash costs; cash flows; capital expenditures; liquidity; operating costs; operating plans; the implementation of our financial policy; PT-FI's ramp-up of underground mining activities and future cash flows through 2022; PT-FI's development, financing, construction and completion of new domestic smelting capacity in Indonesia in accordance with the terms of the special mining license (IUPK); expectations regarding negotiations with hourly employees at Cerro Verde including completion of new CLAs; our commitments to deliver responsibly produced copper, including plans to implement and validate all of our operating sites under specific frameworks; execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business related thereto; improvements in operating procedures and technology; exploration efforts and results; development and production activities, rates and costs; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; mineralization and reserve estimates; execution of the settlement agreements associated with the Louisiana coastal erosion cases and talc-related litigation; descriptions of our objectives, strategies, plans, goals or targets and future returns to shareholders, including dividend payments (base or variable) and share repurchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “could,” “to be,” ”potential," “assumptions,” “guidance,” “future” and any similar expressions are intended to identify those assertions as forward-looking statements. The timing and amount of any share repurchases will be at the discretion of management and will depend on a variety of factors including, but not limited to, our operating performance, cash flow and financial position, the market price of the shares and general economic and market conditions. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion. The declaration and payment of dividends (base or variable) is also at the discretion of the Board and will depend on our financial results, cash requirements, business prospects, global economic conditions and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, changes in our credit rating; changes in our cash requirements, financial position, financing plans or investment plans; ability to continue to maintain our net debt at a level not to exceed the net debt target in our financial policy; changes in general market, economic, tax, regulatory or industry conditions; the duration and scope of and uncertainties associated with the COVID-19 pandemic (including new and emerging strains and variants of COVID-19), and the impact thereof on commodity prices, our business and any related actions taken by governments and businesses; our ability to contain and mitigate the risk of spread or major outbreak of COVID-19 at our operating sites, including at PT-FI’s remote operating site in Papua; supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; production rates; timing of shipments; results of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesia government's extension of PT-FI's export license after March 15, 2022; risks associated with underground mining; satisfaction of requirements in accordance with PT-FI's IUPK to extend mining rights from 2031 through 2041; the Indonesia government's approval of a deferred schedule for completion of new domestic smelting capacity in Indonesia; expected results from improvements in operating procedures and technology, including innovation initiatives; industry risks; regulatory changes; political and social risks; labor relations, including labor-related work stoppages and costs; weather- and climate-related risks; environmental risks; litigation results and completion of settlement agreements; cybersecurity incidents; changes in general market, economic and industry conditions; financial condition of our customers, suppliers, vendors, partners and affiliates; reductions in liquidity and access to capital; our ability to comply with our responsible production commitments under specific frameworks and any changes to such frameworks; our ability to consummate the redemption of senior notes and other factors described in more detail under the heading “Risk Factors” contained in Part I, Item 1A. of our 2020 Form 10-K.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs or technological solutions and innovation, some aspects of which we may not be able to control. Further, we may make changes to our business plans that could affect our results. We caution investors that we undertake no obligation to update any forward-looking statements, which speak only as of the date made, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes.

This report on Form 10-Q also contains financial measures such as net debt and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S. GAAP. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements. Refer to “Net Debt” for reconciliations of debt and consolidated cash and cash equivalents to net debt.

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