Freeport-McMoRan 10-Q 2022-03-31

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

For the quarterly period ended March 31, 2022

OR

For the transition period from to

Commission file number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)

(602) 366-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

On April 29, 2022, there were issued and outstanding 1,449,262,382 shares of the registrant’s common stock, par value $0.10 per share.

Freeport-McMoRan Inc.

TABLE OF CONTENTS

Part I.FINANCIAL INFORMATION

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

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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, 2021 (2021 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 mineral 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.

Our results for first-quarter 2022 reflect strong operating and financial performance, cash flow generation and cash returns to shareholders. We remain focused on cost and capital management and are advancing our sustainability objectives. We achieved a 24 percent increase in copper sales and a 59 percent increase in gold sales, compared to first-quarter 2021. We plan to continue to execute our operating plans, which we expect will provide strong cash flows to support advancement of organic growth initiatives and continued cash returns to shareholders under our established financial policy, based on a favorable operational and market outlook.

As further discussed in “Operations,” first-quarter 2022 highlights include:

• Continued growth in operating rates at Lone Star toward achieving production of 300 million pounds of copper per year from oxide ores (compared with the initial design capacity of 200 million pounds per year).

• Strong performance from Cerro Verde's concentrator facilities, with milling rates averaging 394,400 metric tons of ore per day. Subject to ongoing monitoring of COVID-19 protocols, milling rates are currently expected to average approximately 400,000 metric tons of ore per day for the remainder of 2022.

*•*Increased milling rates from the underground mines at the Grasberg minerals district, which averaged 186,500 metric tons of ore per day, a 50 percent increase from milling rates in first-quarter 2021. Milling rates at the Grasberg minerals district are expected to average approximately 180,000 to 190,000 metric tons of ore per day for the remainder of 2022.

Net income attributable to common stock totaled $1.5 billion in first-quarter 2022, compared with $0.7 billion in first-quarter 2021, primarily reflecting higher copper and gold sales volumes and prices, partly offset by a higher provision for income taxes and increased energy and other input costs. Refer to “Consolidated Results” for further discussion.

At March 31, 2022, we had consolidated debt of $9.6 billion and consolidated cash and cash equivalents of $8.3 billion, resulting in net debt of $1.3 billion (including $0.6 billion of net debt for the Indonesia smelter projects). Refer to “Net Debt” for reconciliations of consolidated debt and consolidated cash and cash equivalents to net debt.

At March 31, 2022, we had no borrowings and $3.5 billion available under our revolving credit facility. At March 31, 2022, we had $1.4 billion of current debt, including $995 million of senior notes maturing in March 2023 (with redemption rights at par in December 2022) and $325 million under Cerro Verde’s Term Loan maturing in June 2022.

In April 2022, PT Freeport Indonesia (PT-FI) completed the sale of $3.0 billion of senior notes primarily in connection with its financing plans for construction of additional domestic smelting capacity.

In first-quarter 2022, we acquired 12.3 million shares of our common stock under the share repurchase program for a total cost of $541 million ($44.02 average cost per share). Through May 5, 2022, we acquired 28.7 million shares

of our common stock for a total cost of $1.2 billion ($41.64 average cost per share) and $1.8 billion remains available under the share repurchase program.

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 2021 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 2022:

a.Projected molybdenum sales include 30 million pounds produced by our Molybdenum mines and 50 million pounds produced by our North America and South America copper mines.

Consolidated sales volumes in second-quarter 2022 are expected to approximate 1.0 billion pounds of copper, 405 thousand ounces of gold and 21 million pounds of molybdenum. Projected sales volumes are dependent on operational performance, 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 2021 Form 10-K.

Consolidated Unit Net Cash Costs

Assuming average prices of $1,950 per ounce of gold and $19.00 per pound of molybdenum for the remainder of 2022 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 $1.44 per pound of copper for the year 2022 (including $1.41 per pound of copper in second-quarter 2022). The increase from the January 2022 estimate of $1.35 per pound of copper primarily reflects higher costs of energy and other consumables and currency exchange rates in South America, par

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There have been no material changes in our market risks during the three-month period ended March 31, 2022.

For additional information on market risks, refer to “Disclosures About Market Risks” included in Part II, Items 7. and 7A. of our 2021 Form 10-K. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook” in Part I, Item 2. of this quarterly report on Form 10-Q; for projected sensitivities of our provisionally priced copper sales to changes in commodity prices refer to “Consolidated Results – Revenues” in Part I, Item 2. of this quarterly report on Form 10-Q.

(a)Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective as of March 31, 2022.

(b)Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.OTHER INFORMATION

Item 1.Legal Proceedings.

We are involved in numerous legal proceedings that arise in the ordinary course of our business or are associated with environmental issues. We are also involved periodically in reviews, inquiries, investigations and other proceedings initiated by or involving government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

Management does not believe, based on currently available information, that the outcome of any legal proceeding reported in Part I, Item 3. “Legal Proceedings” and Note 12 of our 2021 Form 10-K, and Note 8 herein, will have a material adverse effect on our financial condition; although individual or cumulative outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period.

There have been no material changes to legal proceedings previously disclosed in Part I, Item 3. “Legal Proceedings” and Note 12 of our 2021 Form 10-K.

There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2021 Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the three months ended March 31, 2022.

The following table sets forth information with respect to shares of FCX common stock purchased by us during the three months ended March 31, 2022, and the approximate dollar value of shares that may yet be purchased pursuant to our share repurchase program:

a.On November 1, 2021, our Board approved a share repurchase program authorizing repurchases of up to $3.0 billion of our common stock. The share repurchase program does not obligate us to acquire any specific amount of shares and does not have an expiration date.

b.Includes 162,992 shares acquired in connection with stock option exercises during the period shown. All other share repurchases were made under our publicly announced program.

Item 4.Mine Safety Disclosures.

The safety and health of all employees is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. Our approach towards the safety and health of our workforce is to continuously improve performance through implementing robust management systems and providing adequate training, safety incentive and occupational health programs. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this quarterly report on Form 10-Q.

• The registrant agrees to furnish supplementally to the Securities and Exchange Commission (SEC) a copy of any omitted schedule or exhibit upon the request of the SEC in accordance with Item 601(a)(5) of Regulation S-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 5, 2022

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