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, 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 the first six months of 2022 reflect solid operating results, with strong margins and cash flow generation, despite the decline in copper prices that began in second-quarter 2022. We believe the actions we have taken in recent years to build a strong balance sheet, successfully expand low-cost operations, and maintain flexible growth options while maintaining sufficient liquidity will allow us to continue to execute our business plans in a prudent manner, despite current economic uncertainty, while preserving substantial future asset values. While we recognize the near-term volatility in our markets, we are optimistic about our portfolio of assets, our strong management and operating teams, and the long-term prospects for the copper markets we serve.

The London Metal Exchange (LME) copper settlement price averaged $4.43 per pound for the first six months of 2022 and reached a record high of $4.87 per pound in March 2022, supported by copper's increasingly important role in decarbonization technologies and limited mine supply. Beginning in second-quarter 2022, a series of macro-economic factors (concerns about the global economy, higher U.S. interest rates and currency exchange rates among other factors) led to a precipitous decline in copper prices. The LME copper settlement price declined from $4.69 per pound at March 31, 2022, to $3.74 per pound at June 30, 2022, and was $$3.54 per pound on July 29, 2022. Physical market fundamentals remain tight as evidenced by low levels of global exchange stocks. Our global customer base reports healthy demand for copper. We believe the outlook for copper fundamentals in the medium- and long-term remain favorable, with studies indicating that demand for copper may double in 15 years based on the global movement towards decarbonization. We also believe substantial new mine supply development will be required to meet the goals of the global energy transition, and current prices for copper are insufficient to support new mine supply development, which is expected to add to future supply deficits.

Our management team and global organization have substantial experience and success in executing under volatile market conditions. We believe we benefit from a diversified operations portfolio with an attractive cost structure, long-lived reserves, optionality in our project pipeline and a strong balance sheet and liquidity position.

We are closely monitoring market conditions and will adjust our operating plans to protect our liquidity and preserve our asset values, as necessary. We expect to maintain a strong balance sheet and liquidity position as we focus on building long-term value in our business, executing our operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures.

Net income attributable to common stock totaled $0.8 billion in second-quarter 2022, compared with $1.1 billion in second-quarter 2021, primarily reflecting lower copper prices and unfavorable adjustments to provisionally priced copper sales, partly offset by higher copper and gold sales volumes. Net income attributable to common stock totaled $2.4 billion for the first six months of 2022, compared with $1.8 billion for the first six months of 2021, primarily reflecting higher copper and gold sales volumes, partly offset by a higher provision for income taxes and lower copper prices. The results for the 2022 periods, compared with the 2021 periods, also reflect increased energy and other input costs. Refer to “Consolidated Results” for further discussion.

At June 30, 2022, we had consolidated debt of $11.1 billion and consolidated cash and cash equivalents of $9.5 billion, resulting in net debt of $1.6 billion ($1.0 billion excluding 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 June 30, 2022, we had $3.5 billion of availability under our revolving credit facility, and PT-FI and Cerro Verde have $1.3 billion and $350 million, respectively, of availability under their revolving credit facilities.

Refer to Note 5 and “Capital Resources and Liquidity” for further discussion.

OUTLOOK

Despite uncertain market conditions in the near-term, we continue to believe the medium- and long-term outlook for our business is positive, supported by limitations on supplies of copper and the expected 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. Copper prices, in particular, experienced a significant drop beginning in second-quarter 2022. 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:

Copper (millions of recoverable pounds):
North America copper mines			1,505
South America mining			1,160
Indonesia mining			1,549
Total			4,214
Gold (millions of recoverable ounces)			1.7
Molybdenum (millions of recoverable pounds)			80			a

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 third-quarter 2022 are expected to approximate 1.0 billion pounds of copper, 400 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 $1,700 per ounce of gold and $16.00 per pound of molybdenum for the second half 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 $1.50 per pound of copper for the year 2022 (including $1.67 per pound of copper in third-quarter 2022). The increase from previous estimates primarily reflects lower by-product credits caused by lower projected gold and molybdenum prices. We also continue to experience significant cost inflation, principally associated with higher energy prices (which represents about 20 percent of our site operating costs) and increased costs for other consumables such as sulfuric acid, explosives and steel. The impact of price changes during the second half of 2022 on consolidated unit net cash costs for the year 2022 would approximate $0.02 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 $2.00 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 $3.25 per pound for copper, $1,700 per ounce for gold, and $16.00 per pound for molybdenum for the second half of 2022, our consolidated operating cash flows are estimated to approximate $4.5 billion (net of $1.4 billion of working capital and other uses) for the year 2022. Estimated consolidated operating cash flows for the year 2022 also reflect an estimated income tax provision of $2.0 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year 2022). The impact of price changes for the second half of 2022 on operating cash flows would approximate $230 million for each $0.10 per pound change in the average price of copper, $80 million for each $100 per ounce change in the average price of gold and $50 million for each $2.00 per pound change in the average price of molybdenum.

Consolidated Capital Expenditures

Capital expenditures are expected to approximate $4.5 billion for the year 2022 (including $1.9 billion for major mining projects and $1.4 billion for the greenfield smelter and precious metals refinery (PMR) - collectively, the Indonesia smelter projects). Projected capital expenditures for major mining projects include $1.3 billion for planned projects primarily associated with underground mine development in the Grasberg minerals district and supporting mill and power capital costs and $0.6 billion for discretionary growth projects. We closely monitor market conditions and will adjust our operating plans, including capital expenditures, as necessary.

Capital expenditures for the Indonesia smelter projects are being funded with PT-FI's senior notes and its available revolving credit facility. Construction of the additional domestic smelter capacity will result in the elimination of export duties, providing an offset to the economic cost associated with the Indonesia smelter projects. Based on current development progress of additional smelting capacity, PT-FI expects export duties to be reduced from the current rate of 5 percent to 2.5 percent by the end of 2022, and eliminated in the second half of 2023.

MARKETS

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2012 through June 2022, the LME copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.87 per pound in 2022; the London Bullion Market Association (London) PM gold price fluctuated from a low of $1,049 per ounce in 2015 to a record high of $2,067 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 2021 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 2012 through June 2022. During second-quarter 2022, LME copper settlement prices ranged from a low of $3.74 per pound to a high of $4.73 per pound, averaged $4.31 per pound and settled at $3.74 per pound on June 30, 2022. Beginning in June 2022, copper prices declined sharply as a result of a series of macro-economic factors, including concerns about the global economy, Chinese economic data, rising U.S. interest rates and currency exchange rates related to the strength of the U.S. dollar. The LME copper settlement price was $3.54 per pound on July 29, 2022. Future copper prices may continue to be volatile and are expected to be influenced by, among other things, demand from China and economic activity, including the possibility of global recession.

We believe the weakness in current financial market sentiment is inconsistent with physical markets and longer-term fundamentals. We continue to believe future demand will be supported by copper’s role in the global transition to renewable power, electric vehicles and other carbon-reduction initiatives, and continued urbanization in developing countries. The small number of approved, large-scale projects scheduled beyond those that have been announced, the long lead times required to permit and build new mines and declining ore grades at existing operations continue to highlight the fundamental supply challenges for copper. The current copper price weakness is expected to add to the already significant barriers to future copper supply development.

This graph presents London PM gold prices from January 2012 through June 2022. During second-quarter 2022, London PM gold prices ranged from a low of $1,810 per ounce to a high of $1,977 per ounce, averaged $1,871 per ounce, and closed at $1,817 per ounce on June 30, 2022. The strength of the U.S. dollar has negatively impacted gold prices as the U.S. dollar index reached a 20-year high in June 2022. The London PM gold price was $1,753 per ounce on July 29, 2022.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2012 through June 2022. During second-quarter 2022, the weekly average price of molybdenum ranged from a low of $17.08 per pound to a high of $19.31 per pound, averaged $18.42 per pound, and was $17.08 per pound on June 30, 2022. During second-quarter 2022, concerns about China’s zero-COVID-19 policies, inflation and anticipated lower summer steel production prompted price weakness that has continued into July 2022. The Metals Week Molybdenum Dealer Oxide weekly average price was $15.15 per pound on July 29, 2022.

CONSOLIDATED RESULTS

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
SUMMARY FINANCIAL DATA			(in millions, except per share amounts)
Revenuesa,b			$	5,416					$	5,748					$	12,019					$	10,598
Operating incomea			$	1,736					$	2,067					$	4,545					$	3,599
Net income attributable to common stockc			$	840		d			$	1,083		e			$	2,367		d			$	1,801		e
Diluted net income per share of common stock			$	0.57					$	0.73					$	1.61					$	1.21
Diluted weighted-average shares of common stock outstanding			1,457						1,483						1,463						1,480
Operating cash flowsf			$	1,621					$	2,395					$	3,312					$	3,470
Capital expenditures			$	863					$	433					$	1,586					$	803
At June 30:
Cash and cash equivalents			$	9,492					$	6,313					$	9,492					$	6,313
Total debt, including current portion			$	11,092					$	9,695					$	11,092					$	9,695

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 $(355) million ($(154) million to net income attributable to common stock or $(0.10) per share) in second-quarter 2022, $173 million ($66 million to net income attributable to common stock or $0.05 per share) in second-quarter 2021, $65 million ($27 million to net income attributable to common stock or $0.02 per share) for the first six months of 2022 and $169 million ($65 million to net income attributable to common stock or $0.04 per share) for the first six months of 2021. 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 charges totaling $14 million ($0.01 per share) in second-quarter 2022 and $52 million ($0.04 per share) for the first six months of 2022. Net charges for second-quarter 2022 were primarily associated with environmental obligations and metals inventory adjustments, partly offset by a net gain on early extinguishment of debt. Net charges for the first six months of 2022 also included the settlement of an administrative fine and an adjustment to prior-period export duties at PT-FI, and asset retirement obligation (ARO) adjustments.

e.Includes net charges totaling $56 million ($0.04 per share) in second-quarter 2021 and $94 million ($0.06 per share) for the first six months of 2021, primarily associated with contested matters at PT-FI (including historical tax audits and an administrative fine levied by the Indonesia government), nonrecurring labor-related costs at Cerro Verde and adjustments to environmental obligations and AROs.

f.Working capital and other sources (uses) totaled $100 million in second-quarter 2022, $523 million in second-quarter 2021, $(711) million for the first six months of 2022 and $187 million for the first six months of 2021.

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
SUMMARY OPERATING DATA
Copper (millions of recoverable pounds)
Production			1,075						913						2,084						1,823
Sales, excluding purchases			1,087						929						2,111						1,754
Average realized price per pound			$	4.03					$	4.34					$	4.18					$	4.25
Site production and delivery costs per pounda			$	2.09					$	2.02		b			$	2.06					$	1.94		b
Unit net cash costs per pounda			$	1.41					$	1.48					$	1.37					$	1.44
Gold (thousands of recoverable ounces)
Production			476						305						891						602
Sales, excluding purchases			476						305						885						563
Average realized price per ounce			$	1,827					$	1,794					$	1,861					$	1,785
Molybdenum (millions of recoverable pounds)
Production			23						20						44						40
Sales, excluding purchases			20						22						39						43
Average realized price per pound			$	19.44					$	13.11					$	19.37					$	12.38

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 (credits) 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.Includes $0.07 per pound of copper in second-quarter 2021 and $0.04 per pound of copper for the first six months of 2021 associated with nonrecurring labor-related costs at Cerro Verde. Refer to “Operations – South America Mining” for further discussion.

Revenues

Consolidated revenues totaled $5.4 billion in second-quarter 2022, $5.7 billion in second-quarter 2021, $12.0 billion for the first six months of 2022 and $10.6 billion for the first six months of 2021. 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 June 30						Six Months Ended June 30
Consolidated revenues - 2021 period			$	5,748					$	10,598
Higher (lower) sales volumes:
Copper			681						1,515
Gold			305						575
Molybdenum			(34)						(49)
(Lower) higher average realized prices:
Copper			(337)						(148)
Gold			16						67
Molybdenum			121						270
Adjustments for prior period provisionally priced copper sales			(528)						(104)
Lower Atlantic Copper revenues			(361)						(330)
Lower revenues from purchased copper			(206)						(354)
Higher treatment charges			(38)						(74)
Higher royalties and export duties			(69)						(170)
Other, including intercompany eliminations			118						223
Consolidated revenues - 2022 period			$	5,416					$	12,019

Sales Volumes. Consolidated copper and gold sales volumes increased in the 2022 periods, compared with the 2021 periods, primarily reflecting increased operating rates at the Grasberg minerals district and Cerro Verde. 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 in second-quarter 2022, compared with second-quarter 2021, were 7 percent lower for copper, 2 percent higher for gold and 48 percent higher for molybdenum, and average realized prices for the first six months of 2022, compared with the first six months of 2021, were 2 percent lower for copper, 4 percent higher for gold and 56 percent higher for molybdenum.

Average realized copper prices include net (unfavorable) favorable adjustments to current period provisionally priced copper sales totaling $(365) million in second-quarter 2022, $(55) million in second-quarter 2021, $(567) million for the first six months of 2022 and $156 million for the first six months of 2021. 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 March 31, 2022 and 2021, and December 31, 2021 and 2020) recorded in consolidated revenues totaled $(355) million in second-quarter 2022, $173 million in second-quarter 2021, $65 million for the first six months of 2022 and $169 million for the first six months of 2021. Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales.

At June 30, 2022, we had provisionally priced copper sales totaling 447 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.75 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the June 30, 2022, provisional price recorded would have an approximate $14 million effect on our 2022 net income attributable to common stock. The LME copper price settled at $$3.54 per pound on July 29, 2022.

Atlantic Copper Revenues. Atlantic Copper revenues totaled $433 million in second-quarter 2022 and $1.2 billion for the first six months of 2022, compared with $794 million in second-quarter 2021 and $1.5 billion for the first six months of 2021. Lower revenues in the 2022 periods, compared with 2021 periods, primarily reflects reduced operations as a result of a scheduled major maintenance turnaround that began in second-quarter 2022.

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 23 million pounds in second-quarter 2022, 68 million pounds in second-quarter 2021, 38 million pounds for the first six months of 2022 and 121 million pounds for the first six months of 2021. The decrease in revenues associated with purchased copper in the 2022 periods, compared to the 2021 periods, reflects the impact of lower purchases and copper prices.

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. The increase in the treatment charges in the 2022 periods primarily reflects higher copper sales volumes.

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. Higher royalties and export duties in the 2022 periods, compared to the 2021 periods, are primarily associated with increased copper and gold sales volumes. PT-FI currently pays duties on concentrate exports of 5 percent, declining to 2.5 percent when development progress for additional smelting capacity in Indonesia exceeds 30 percent, and eliminated when development progress for additional smelting capacity in Indonesia exceeds 50 percent. Based on current development progress of additional smelting capacity, PT-FI expects export duties to be reduced from the current rate of 5 percent to 2.5 percent by the end of 2022, and eliminated in the second half of 2023. Refer to “Operations – Indonesia Mining” for further discussion of the current progress on additional smelting capacity 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 second-quarter 2022, $3.1 billion in second-quarter 2021, $6.2 billion for the first six months of 2022 and $5.9 billion for the first six months of 2021. We continue to experience significant cost inflation, principally associated with higher energy prices (which represents approximately 20 percent of our site operating costs) and increased costs for other consumables such as sulfuric acid, explosives and steel. These higher costs were partly offset by lower costs at Atlantic Copper related to reduced operations as a result of a scheduled major maintenance turnaround that began in second-quarter 2022.

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 sulfuric acid, explosives, steel, reagents, liners and tires. Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $2.09 per pound of copper in second-quarter 2022, $2.02 per pound of copper in second-quarter 2021, $2.06 for the first six months of 2022 and $1.94 for the first six months of 2021.

Higher consolidated site production and delivery costs per pound of copper for the second quarter and first six months of 2022, compared with the second quarter and first six months of 2021, primarily reflect higher costs associated with energy, input costs (including operating supplies such as sulfuric acid, explosives and steel) and maintenance. 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 $507 million in second-quarter 2022, $483 million in second-quarter 2021, $996 million for the first six months of 2022 and $902 million for the first six months of 2021. Higher DD&A in the 2022 periods primarily reflects higher sales volumes and assets placed in service associated with the ramp-up of underground mining at PT-FI.

Metals Inventory Adjustments

Metals inventory adjustments totaled $18 million for the second quarter and first six months of 2022 and $1 million for the first six months of 2021. Metals inventory adjustments in the 2022 periods include net realizable value (NRV) inventory adjustments related to lower market prices for copper ($9 million) and a stockpile write-off at Cerro Verde ($9 million).

As discussed in “Markets,” there has been a sharp decline in the price of copper in recent months. The LME copper settlement price was $3.74 per pound on June 30, 2022, and $3.54 per pound on July 29, 2022. Prolonged or further declines in the prices of the commodities that we sell, particularly copper, could result in additional NRV inventory adjustments, which could be significant.

Interest Expense, Net

Consolidated interest costs (before capitalization) totaled $189 million in second-quarter 2022, $165 million in second-quarter 2021, $342 million for the first six months of 2022 and $325 million for the first six months of 2021. Higher interest costs (before capitalization) in the 2022 periods are primarily related to PT-FI's senior notes that were issued in April 2022. Nearly all of our outstanding debt is fixed rate.

Capitalized interest varies with the level of qualifying assets associated with our development projects and average interest rates on our borrowings. Capitalized interest totaled $33 million in second-quarter 2022, $17 million in second-quarter 2021, $59 million for the first six months of 2022 and $32 million for the first six months of 2021. The increase in capitalized interest in the 2022 periods, compared with the 2021 periods, is related to major mining projects primarily associated with underground development activities in the Grasberg minerals district and development of the greenfield smelter in Indonesia. Refer to “Capital Resources and Liquidity - Investing Activities” for discussion of capital expenditures associated with our major development projects.

Net Gain on Early Extinguishment of Debt

Net gain on extinguishment of debt totaled $8 million in the second quarter and first six months of 2022, consisting of $18 million associated with senior note purchases, partly offset by a charge of $10 million associated with the repayment of the PT-FI term loan. Refer to Note 5 for further discussion.

Income Taxes

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

			Six Months Ended June 30,
			2022																		2021
			Income (Loss)a						Effective Tax Rate						Income Tax (Provision) Benefit						Income (Loss)a						Effective Tax Rate						Income Tax (Provision) Benefit
U.S.b			$	909					1		%	c			$	(5)					$	743					—		%	c			$	(3)
South America			776						39		%				(302)						923						39		%				(356)
Indonesia			2,625						39		%				(1,020)						1,759						41		%				(719)
Eliminations and other			2						N/A						(7)						(99)						N/A						5
Rate adjustmentd			—						N/A						(61)						—						N/A						27
Consolidated FCX			$	4,312					32		%				$	(1,395)					$	3,326					31		%				$	(1,046)

a.Represents income before income taxes and equity in affiliated companies’ net 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.

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

Assuming achievement of current sales volume and cost estimates and average prices of $3.25 per pound for copper, $1,700 per ounce for gold and $16.00 per pound for molybdenum for the second half of 2022, we estimate our consolidated effective tax rate for the year 2022 would approximate 34 percent (which would result in a 47 percent effective tax rate in third-quarter 2022). The consolidated effective tax rate would decrease with higher prices - for example, we estimate that an increase in the average price of copper to $3.50 per pound for the second half of 2022 would result in an estimated effective tax rate of approximately 33 percent for the year 2022 (which would result in a 38 percent effective tax rate in third-quarter 2022). Changes in projected sales volumes and average prices during 2022 would incur tax impacts at estimated effective rates of 39 percent for Peru, 38 percent for Indonesia and 0 percent for the U.S.

OPERATIONS

Responsible Production

2021 Annual Report on Sustainability. In April 2022, we published our 2021 Annual Report on Sustainability, which is available on our website at fcx.com/sustainability. We have a long history of environmental, social and governance (ESG) programs, and we are focused on leading as a responsible copper producer.

The Copper Mark. We are committed to validating all of our copper producing sites with the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry's responsible production practices. To achieve the Copper Mark, each site is required to complete an external assurance process to assess conformance with 32 ESG requirements. During second-quarter 2022, Safford and Sierrita were awarded the Copper Mark. To date, we have achieved the Copper Mark at all 11 of our eligible copper producing sites in North America, South America and Europe, and PT-FI has signed a letter of commitment and initiated the validation process.

Leaching Innovation Initiatives

We are advancing efforts to improve copper recovery from all ore types using leach processes. Several initiatives ongoing across our North America and South America operations incorporate new applications, technologies and data analytics. We believe these leach innovation initiatives provide potential opportunities to produce incremental copper from our large existing leach stockpiles and lower-grade material currently classified as waste. Initial results support the potential for incremental low-cost additions to our production and reserve profile.

Feasibility and Optimization Studies

We are engaged in various studies associated with potential future expansion projects primarily in North America and South America. The costs for these studies are charged to production and delivery costs as incurred and totaled $31 million in second-quarter 2022, $11 million in second-quarter 2021, $50 million for the first six months of 2022 and $16 million for the first six months of 2021. We estimate the costs of these studies will approximate $180 million for the year 2022 (including approximately $60 million in third-quarter 2022), compared with approximately $60 million for the year 2021, subject to market conditions and other factors.

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. 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. We have substantial reserves and future opportunities in the U.S., primarily associated with existing mining operations.

Lone Star is increasing its operating rates to achieve targeted production of approximately 300 million pounds of copper per year in 2023 from oxide ores (compared with the initial design capacity of 200 million pounds per year). The oxide project at Lone Star advances the opportunity for development of the underlying, large-scale sulfide resources. We are also increasing exploration in the area to support metallurgical testing and mine development planning for a potential significant long-term investment to build additional scale on an economically attractive basis.

We are planning an expansion to double the concentrator capacity of our Bagdad operation in northwest Arizona. We are engaging stakeholders and have commenced a feasibility study, which is expected to be completed in 2023, for this project.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Operating Data, Net of Joint Venture Interests
Copper (millions of recoverable pounds)
Production			382						360						736						713
Sales, excluding purchases			389						389						770						697
Average realized price per pound			$	4.36					$	4.42					$	4.46					$	4.19
Molybdenum (millions of recoverable pounds)
Productiona			8						9						15						17
100% Operating Data
Leach operations
Leach ore placed in stockpiles (metric tons per day)			722,900						688,000						715,800						696,500
Average copper ore grade (percent)			0.29						0.30						0.29						0.29
Copper production (millions of recoverable pounds)			254						265						499						527
Mill operations
Ore milled (metric tons per day)			306,900						264,700						299,200						266,300
Average ore grade (percent):
Copper			0.39						0.36						0.38						0.37
Molybdenum			0.02						0.03						0.02						0.03
Copper recovery rate (percent)			83.2						82.4						82.1						80.5
Copper production (millions of recoverable pounds)			195						155						364						306

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 389 million pounds in both second-quarter 2022 and second-quarter 2021, 770 million pounds for the first six months of 2022 and 697 million pounds for the first six months of 2021. The changes in production and sales volumes for the 2022 periods, compared with the 2021 periods, primarily reflect timing of shipments.

North America copper sales are estimated to approximate 1.5 billion pounds for the year 2022.

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 June 30,
			2022																		2021
			By- Product Method						Co-Product Method												By- Product Method						Co-Product Method
						Copper						Molyb- denuma									Copper						Molyb- denuma
Revenues, excluding adjustments			$	4.36					$	4.36					$	18.75					$	4.42					$	4.42					$	11.75
Site production and delivery, before net noncash and other costs shown below			2.50						2.30						12.42						2.14						2.03						6.86
By-product credits			(0.35)						—						—						(0.25)						—						—
Treatment charges			0.11						0.11						—						0.08						0.07						—
Unit net cash costs			2.26						2.41						12.42						1.97						2.10						6.86
DD&A			0.27						0.24						0.81						0.26						0.25						0.55
Metals inventory adjustments			0.02						0.02						0.16						—						—						—
Noncash and other costs, net			0.09						0.08						0.32						0.08						0.08						0.06
Total unit costs			2.64						2.75						13.71						2.31						2.43						7.47
Revenue adjustments, primarily for pricing on prior period open sales			(0.10)						(0.10)						—						0.02						0.02						—
Gross profit per pound			$	1.62					$	1.51					$	5.04					$	2.13					$	2.01					$	4.28
Copper sales (millions of recoverable pounds)			389						389												389						389
Molybdenum sales (millions of recoverable pounds)a															8																		9

			Six Months Ended June 30,
			2022																		2021
			By- Product Method						Co-Product Method												By- Product Method						Co-Product Method
						Copper						Molyb- denuma									Copper						Molyb- denuma
Revenues, excluding adjustments			$	4.46					$	4.46					$	18.36					$	4.19					$	4.19					$	11.12
Site production and delivery, before net noncash and other costs shown below			2.44						2.25						11.68						2.09						1.96						6.76
By-product credits			(0.35)						—						—						(0.27)						—						—
Treatment charges			0.10						0.10						—						0.09						0.09						—
Unit net cash costs			2.19						2.35						11.68						1.91						2.05						6.76
DD&A			0.27						0.25						0.85						0.26						0.24						0.51
Metals inventory adjustments			0.01						0.01						0.08						—						—						—
Noncash and other costs, net			0.09						0.07						0.23						0.11						0.11						0.06
Total unit costs			2.56						2.68						12.84						2.28						2.40						7.33
Revenue adjustments, primarily for pricing on prior period open sales			(0.01)						(0.01)						—						0.01						0.01						—
Gross profit per pound			$	1.89					$	1.77					$	5.52					$	1.92					$	1.80					$	3.79
Copper sales (millions of recoverable pounds)			770						770												697						697
Molybdenum sales (millions of recoverable pounds)a															15																		17

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

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. Our mining operations continue to experience significant cost inflation, principally associated with higher energy and other input costs. In addition to these higher costs, average unit net cash costs (net of by-product credits) for the North America copper mines of $2.26 per pound of copper in second-quarter 2022 and $2.19 per pound for the first six months of 2022, compared with $1.97 per pound in second-quarter 2021 and $1.91 per pound for the first six months of 2021, reflect higher operating rates, partly offset by higher by-product credits.

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.

Second-quarter 2022 revenue adjustments at our North America copper mines primarily reflect the impact of declining copper prices on provisionally priced copper sales, which include intercompany sales that are eliminated upon consolidation.

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $2.25 per pound of copper for the year 2022, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $16.00 per pound for the second half of 2022. North America’s average unit net cash costs for the year 2022 would change by approximately $0.02 per pound for each $2.00 per pound change in the average price of molybdenum for the second half of 2022.

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.

Operating and Development Activities. The first six months of 2022 reflected strong performance from Cerro Verde's concentrator facilities, including achievement of a quarterly record milling average of 427,100 metric tons of ore per day during second-quarter 2022. Subject to ongoing monitoring of COVID-19 protocols, milling rates at Cerro Verde are currently expected to average over 400,000 metric tons of ore per day for the second half of 2022.

Operating rates at El Abra have returned to pre-COVID-19 levels and increased mining and stacking activities are expected to result in an approximate 30 percent increase in El Abra copper production for the year 2022, compared with the year 2021.

El Abra's large sulfide resource supports a potential major mill project similar to the large-scale concentrator 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. We are considering options to invest in water infrastructure to provide options to extend existing operations, while we continue to monitor potential changes in Chile’s regulatory and fiscal matters. We will defer major investment decisions pending clarity on Chile’s regulatory and fiscal matters.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Copper (millions of recoverable pounds)
Production			286						245						560						504
Sales			288						230						552						489
Average realized price per pound			$	3.83					$	4.31					$	4.00					$	4.28
Molybdenum (millions of recoverable pounds)
Productiona			7						4						14						9
Leach operations
Leach ore placed in stockpiles (metric tons per day)			157,700						190,200						148,800						172,100
Average copper ore grade (percent)			0.37						0.33						0.36						0.34
Copper production (millions of recoverable pounds)			71						65						132						126
Mill operations
Ore milled (metric tons per day)			427,100						374,100						410,800						382,100
Average ore grade (percent):
Copper			0.31						0.29						0.32						0.30
Molybdenum			0.01						0.01						0.02						0.01
Copper recovery rate (percent)			84.4						85.2						85.5						86.4
Copper production (millions of recoverable pounds)			215						179						428						377

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

Our consolidated copper sales volumes from South America totaled 288 million pounds in second-quarter 2022, 230 million pounds in second-quarter 2021, 552 million pounds for the first six months of 2022 and 489 million pounds for the first six months of 2021. Higher copper sales volumes in the 2022 periods, compared with the 2021 periods, primarily reflect higher mining and milling rates at Cerro Verde.

Copper sales from South America mining are expected to approximate 1.2 billion pounds for the year 2022.

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. 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 June 30,
			2022												2021
			By-Product Method						Co-Product Method						By-Product Method						Co-Product Method
Revenues, excluding adjustments			$	3.83					$	3.83					$	4.31					$	4.31
Site production and delivery, before net noncash and other costs shown below			2.48						2.29						2.48			a			2.30
By-product credits			(0.35)						—						(0.31)						—
Treatment charges			0.15						0.15						0.13						0.13
Royalty on metals			0.01						0.01						0.01						0.01
Unit net cash costs			2.29						2.45						2.31						2.44
DD&A			0.35						0.32						0.40						0.37
Metals inventory adjustments			0.04			b			0.03						—						—
Noncash and other costs, net			0.06						0.06						0.08						0.07
Total unit costs			2.74						2.86						2.79						2.88
Revenue adjustments, primarily for pricing on prior period open sales			(0.53)						(0.53)						0.38						0.38
Gross profit per pound			$	0.56					$	0.44					$	1.90					$	1.81
Copper sales (millions of recoverable pounds)			288						288						230						230

			Six Months Ended June 30,
			2022												2021
			By-Product Method						Co-Product Method						By-Product Method						Co-Product Method
Revenues, excluding adjustments			$	4.00					$	4.00					$	4.28					$	4.28
Site production and delivery, before net noncash and other costs shown below			2.45						2.26						2.23			a			2.09
By-product credits			(0.38)						—						(0.26)						—
Treatment charges			0.15						0.15						0.13						0.13
Royalty on metals			0.01						0.01						0.01						0.01
Unit net cash costs			2.23						2.42						2.11						2.23
DD&A			0.36						0.32						0.40						0.37
Metals inventory adjustments			0.02			b			0.02						—						—
Noncash and other costs, net			0.06						0.06						0.06						0.05
Total unit costs			2.67						2.82						2.57						2.65
Revenue adjustments, primarily for pricing on prior period open sales			0.06						0.06						0.20						0.20
Gross profit per pound			$	1.39					$	1.24					$	1.91					$	1.83
Copper sales (millions of recoverable pounds)			552						552						489						489

a.Includes $0.30 per pound of copper in second-quarter 2021 and $0.14 per pound of copper for the first six months of 2021 associated with nonrecurring labor-related costs at Cerro Verde.

b.Primarily reflects a stockpile write-off at Cerro Verde.

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Our mining operations continue to experience significant cost inflation, principally associated with higher energy and other input costs. In addition to higher overall costs, average unit net cash costs (net of by-product credits) for South America mining of $2.29 per pound of copper in second-quarter 2022 and $2.23 per pound of copper for the first six months of 2022, compared with $2.31 per pounds of copper in second-quarter 2021 and $2.11 per pound of copper for the first six months of 2021, reflect higher sales volumes and by-product credits. Average unit net cash costs for the 2022 periods also reflect the impact of a change in estimate of copper recoveries in a leach stockpile at El Abra (refer to Note 3) and the 2021 periods reflect nonrecurring labor-related costs at Cerro Verde.

As discussed in Note 3, the change in estimate of recoverable copper in the existing leach stockpile at El Abra resulted in a 135-million-pound reduction to its work in-process inventory volumes, which resulted in a higher average cost per pound of copper. Refer to “Consolidated Results - Metals Inventory Adjustments” for discussion of potential future NRV adjustments that may result because of prolonged or further declines in the price of copper.

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 $2.31 per pound of copper for the year 2022, based on current sales volume and cost estimates and assuming an average price of $16.00 per pound of molybdenum for the second half of 2022.

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 2021 Form

10-K, under the terms of the 2018 shareholders agreement, our economic interest in PT-FI approximates 81 percent through 2022, and 48.76 percent thereafter. PT-FI’s results are consolidated in our financial statements.

Substantially all of PT-FI’s copper concentrate is sold under long-term contracts. During first six months of 2022, 37 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. PT-FI currently has three underground operating mines in the Grasberg minerals district: Grasberg Block Cave, Deep Mill Level Zone (DMLZ) and Big Gossan. In late 2021, PT-FI achieved quarterly copper and gold volumes approximating 100 percent of projected annualized levels of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold.

PT-FI's milling rates for ore produced from its underground mines averaged 191,800 metric tons of ore per day for the first six months of 2022, and PT-FI expects milling rates to average approximately 190,000 metric tons of ore per day for the second half of 2022. The installation of additional milling facilities at PT-FI is currently expected to be completed in 2023, which would increase milling capacity to approximately 240,000 metric tons of ore per day and provide for continued annualized copper and gold production volumes of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold. PT-FI is also advancing a mill recovery project with the installation of a new copper cleaner circuit that is expected to be completed in the first half of 2024, and is expected to provide incremental metal production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year.

For the year 2022, PT-FI's estimated capital spending on the Grasberg Block Cave and DMLZ underground projects, including construction of a dual-fuel power plant, is expected to approximate $1.0 billion, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID). In accordance with applicable accounting guidance, the aggregate costs (before scheduled contributions from PT Inalum), expected to approximate $1.2 billion for the year 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 commenced long-term mine development activities for its Kucing Liar deposit during 2021, which is expected to produce over 6 billion pounds of copper and 5 million ounces of gold over the life of the project. Pre-production development activities will occur over an approximate 10-year timeframe, and capital investments are expected to average approximately $400 million per year (including approximately $200 million for the year 2022). At full operating rates, annual production from Kucing Liar is expected to approximate 600 million pounds of copper and 500 thousand ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining.

Indonesia Smelter. In connection with PT-FI’s 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI committed to construct additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (subject to force majeure provisions).

PT-FI is actively engaged in the following projects for additional domestic smelting capacity:

*•*Construction of a greenfield smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of copper concentrate per year. In July 2021, PT-FI awarded a construction contract to a third-party contractor with an estimated cost of $2.8 billion. The greenfield smelter construction, currently approximately 30 percent complete, is expected to be completed as soon as feasible in 2024.

• Expansion of PT Smelting's capacity by 30 percent to 1.3 million metric tons of concentrate per year, which is expected to be completed by the end of 2023. PT-FI completed agreements in November 2021 with the majority owner of PT Smelting to implement the expansion plans. PT-FI is funding the cost of the expansion, estimated to approximate $250 million, with a loan that is expected to convert to equity, increasing ownership in PT Smelting from a 39.5 percent ownership interest to a majority ownership interest once the expansion is complete.

*•*Construction of a PMR to process gold and silver from the greenfield smelter and PT Smelting at an estimated cost of $400 million.

Capital expenditures for the Indonesia smelter projects, which are being funded with PT-FI’s senior notes and available revolving credit facility, totaled $0.3 billion for the first six months of 2022 and are expected to approximate $1.4 billion for the year 2022.

Construction of the additional domestic smelter capacity will result in the elimination of export duties, providing an offset to the economic cost associated with the Indonesia smelter projects. Based on current development progress of additional smelting capacity, PT-FI expects export duties to be reduced from the current rate of 5 percent to 2.5 percent by the end of 2022, and eliminated in the second half of 2023.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Copper (millions of recoverable pounds)
Production			407						308						788						606
Sales			410						310						789						568
Average realized price per pound			$	3.86					$	4.27					$	4.04					$	4.29
Gold (thousands of recoverable ounces)
Production			473						303						885						597
Sales			474						302						880						558
Average realized price per ounce			$	1,827					$	1,795					$	1,861					$	1,785
Ore extracted and milled (metric tons per day):
Grasberg Block Cave underground mine			101,800						64,400						101,100						58,100
DMLZ underground mine			77,300						53,900						77,800						50,300
Big Gossan underground mine			7,400						8,200						7,500						7,500
Deep Ore Zone underground minea and other			10,500						16,500						5,400						17,700
Total			197,000						143,000						191,800						133,600
Average ore grades:
Copper (percent)			1.22						1.28						1.22						1.34
Gold (grams per metric ton)			1.08						1.00						1.05						1.03
Recovery rates (percent):
Copper			89.8						88.8						89.6						90.0
Gold			79.0						75.9						78.2						77.4

a.Ore body depleted in 2021.

Our consolidated copper and gold sales from PT-FI totaled 410 million pounds and 474 thousand ounces in second-quarter 2022 and 789 million pounds and 880 thousand ounces for the first six months of 2022, compared with copper and gold sales of 310 million pounds and 302 thousand ounces in second-quarter 2021 and 568 million pounds and 558 thousand ounces for the first six months of 2021. The increase in sales volumes for the 2022 periods, primarily reflects increased operating rates at the Grasberg minerals district.

Consolidated sales volumes from PT-FI are expected to approximate 1.5 billion pounds of copper and 1.7 million ounces of gold for the year 2022.

Unit Net Cash (Credits) Costs. Unit net cash (credits) 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 (credits) 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 June 30,
			2022																		2021
			By-Product Method						Co-Product Method												By-Product Method						Co-Product Method
						Copper						Gold									Copper						Gold
Revenues, excluding adjustments			$	3.86					$	3.86					$	1,827					$	4.27					$	4.27					$	1,795
Site production and delivery, before net noncash and other costs shown below			1.43						0.91						433						1.54						1.07						449
Gold and silver credits			(2.17)						—						—						(1.93)						—						—
Treatment charges			0.24						0.15						72						0.24						0.16						70
Export duties			0.21						0.13						63						0.14						0.10						42
Royalty on metals			0.27						0.18						74						0.26						0.19						66
Unit net cash (credits) costs			(0.02)						1.37						642						0.25						1.52						627
DD&A			0.63						0.41						193						0.79						0.55						232
Noncash and other costs, net			0.01						0.01						2						0.04						0.03						11
Total unit costs			0.62						1.79						837						1.08						2.10						870
Revenue adjustments, primarily for pricing on prior period open sales			(0.49)						(0.49)						(17)						0.28						0.28						53
PT Smelting intercompany profit (loss)			0.06						0.04						19						(0.13)						(0.09)						(39)
Gross profit per pound/ounce			$	2.81					$	1.62					$	992					$	3.34					$	2.36					$	939
Copper sales (millions of recoverable pounds)			410						410												310						310
Gold sales (thousands of recoverable ounces)															474																		302

			Six Months Ended June 30,
			2022																		2021
			By-Product Method						Co-Product Method												By-Product Method						Co-Product Method
						Copper						Gold									Copper						Gold
Revenues, excluding adjustments			$	4.04					$	4.04					$	1,861					$	4.29					$	4.29					$	1,785
Site production and delivery, before net noncash and other costs shown below			1.42						0.92						426						1.51						1.05						439
Gold and silver credits			(2.17)						—						—						(1.86)						—						—
Treatment charges			0.24						0.16						73						0.24						0.17						71
Export duties			0.21						0.14						63						0.13						0.09						37
Royalty on metals			0.26						0.17						72						0.25						0.18						68
Unit net cash (credits) costs			(0.04)						1.39						634						0.27						1.49						615
DD&A			0.64						0.42						194						0.78						0.55						228
Noncash and other costs, net			0.04						0.03						11						0.01						—						1
Total unit costs			0.64						1.84						839						1.06						2.04						844
Revenue adjustments, primarily for pricing on prior period open sales			0.04						0.04						3						0.12						0.12						(8)
PT Smelting intercompany (loss)			(0.03)						(0.02)						(10)						(0.16)						(0.11)						(46)
Gross profit per pound/ounce			$	3.41					$	2.22					$	1,015					$	3.19					$	2.26					$	887
Copper sales (millions of recoverable pounds)			789						789												568						568
Gold sales (thousands of recoverable ounces)															880																		558

For the 2022 periods, PT-FI’s gold and silver credits exceeded its cash costs resulting in unit net cash credits of $0.02 per pound of copper in second-quarter 2022 and $0.04 per pound for the first six months of 2022, compared to unit net cash costs of $0.25 per pound in second-quarter 2021 and $0.27 per pound for the first six months of 2021.

Lower site production and delivery unit costs (before net noncash and other costs) in the 2022 periods primarily reflect higher sales volumes, partly offset by higher operating rates, energy and other input costs.

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 $85 million in second-quarter 2022, $44 million in second-quarter 2021, $164 million for the first six months of 2022 and $73 million for the first six months of 2021. The increase in export duties for the 2022 periods, compared with the 2021 periods, primarily reflects higher export sales volumes.

PT-FI’s royalties totaled $108 million in second-quarter 2022, $80 million in second-quarter 2021, $201 million for the first six months of 2022 and $140 million for the first six months of 2021. The increase in royalties for the 2022 periods, compared with the 2021 periods, primarily reflects higher sales volumes.

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. The decrease in the DD&A rate per pound of copper for the 2022 periods, compared with the 2021 periods, primarily reflects depletion of the Deep Ore Zone underground mine during 2021 and higher volumes associated with increased operating rates, partly offset by 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 profit (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 $1,700 per ounce for the second half of 2022 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 $0.18 per pound of copper for the year 2022. PT-FI’s unit net cash costs for the year 2022 would change by approximately $0.07 per pound of copper for each $100 per ounce change in the average price of gold for the second half of 2022.

PT-FI’s projected sales volumes and unit net cash costs for the year 2022 are dependent on a number of factors, including operational performance and timing of shipments.

Molybdenum Mines

We operate two wholly owned molybdenum mines in Colorado – the Climax open-pit mine and the Henderson underground mine. The Climax and Henderson 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 Climax and Henderson mines, as well as from our North America and South America copper mines, is processed at our conversion facilities.

Operating and Development Activities. Production from the Molybdenum mines totaled 8 million pounds of molybdenum in second-quarter 2022, 15 million pounds for the first six months of 2022, 7 million pounds in second-quarter 2021 and 14 million pounds for the first six months of 2021. 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 $10.62 per pound of molybdenum in second-quarter 2022 and $10.75 per pound for the first six months of 2022 were higher than average unit net cash costs of $8.14 per pound in second-quarter 2021 and $8.53 per pound for the first six months of 2021, primarily reflecting higher energy, outside service costs and other input costs, and increased development costs at the Henderson mine. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $11.75 per pound of molybdenum for the year 2022.

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 the Miami smelter in Arizona, the El Paso refinery in Texas and Atlantic Copper, a smelter and refinery in Spain. Additionally, PT-FI has a 39.5 percent ownership interest in PT Smelting and expects its ownership to increase to a majority interest upon completion of the expansion of PT Smelting’s smelting capacity. 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.

Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During the first six months of 2022, Atlantic Copper’s concentrate purchases included 37 percent from our copper mining operations and 63 percent from third parties.

Atlantic Copper’s major maintenance turnarounds typically occur approximately every eight years, with shorter-term maintenance turnarounds in the interim. In second-quarter 2022, Atlantic Copper substantially completed a 78-day major maintenance turnaround and incurred maintenance charges and idle facility costs totaling $40 million.

Our Miami smelter completed a major maintenance turnaround in second-quarter 2021 and incurred maintenance charges and idle facility costs totaling $19 million in second-quarter 2021 and $87 million for the first six months of 2021. Major maintenance turnarounds at the Miami smelter are anticipated to occur approximately every two or three years, with the next major maintenance turnaround scheduled for the first half of 2024.

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. In November 2021, PT-FI entered into a tolling agreement with PT Smelting that will be effective January 1, 2023, and will replace the current concentrate sales agreement, as amended. Under the tolling agreement, PT-FI will pay PT Smelting to smelt and refine its concentrate and will retain title to all products for sale to third parties.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 39.5 percent of PT-FI’s sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to operating income totaling $(7) million (less than $1 million to net income attributable to common stock) in second-quarter 2022, $(99) million ($(81) million to net income attributable to common stock) in second-quarter 2021, $40 million ($23 million to net income attributable to common stock) for the first six months of 2022 and $(185) million ($(145) million to net income attributable to common stock) for the first six months of 2021. 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 $157 million at June 30, 2022. 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.

CAPITAL RESOURCES AND LIQUIDITY

Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. We generated operating cash flows totaling $3.3 billion during the first six months of 2022, reflecting solid operating and financial performance. We believe the actions we have taken in recent years to build a strong balance sheet, successfully expand low-cost operations and maintain flexible growth options while maintaining sufficient liquidity, will allow us to continue to execute our business plans in a prudent manner despite current economic uncertainty while preserving substantial future asset values. We are closely monitoring market conditions and will be prepared to adjust our operating plans if required. We will maintain a strong balance sheet and liquidity position as we focus on building

long-term value in our business, executing our operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures.

Based on current sales volume, cost and metal price estimates discussed in “Outlook,” our projected consolidated operating cash flows for the year 2022 of $4.5 billion are expected to exceed projected capital expenditures of $3.1 billion, which includes $1.9 billion for major mining projects but excludes $1.4 billion of projected capital expenditures for the Indonesia smelter projects that are being funded with PT-FI’s senior notes and its available revolving credit facility. We have cash on hand and the financial flexibility to fund these expenditures as well as our other cash requirements for the year, including noncontrolling interest distributions, income tax payments, debt repayments, common stock dividends (base and variable) and any share repurchases.

Our cash generating capability and financial condition at June 30, 2022, which includes $9.5 billion of consolidated cash and cash equivalents (including $2.4 billion from PT-FI’s senior notes), together with $3.5 billion of availability under our revolving credit facility, is expected to be adequate to meet our operating, investing and financing needs for the foreseeable future. In addition, PT-FI and Cerro Verde have $1.3 billion and $350 million, respectively, of availability under their revolving credit facilities.

Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for the year 2022 and to “Debt” below.

Financial Policy. Our financial policy is 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 interest would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to us maintaining our net debt at a level not to exceed the net debt target of $3.0 billion to $4.0 billion (excluding project debt for additional smelting capacity in Indonesia). The Board will review the structure of the performance-based payout framework at least annually.

At June 30, 2022, our net debt, excluding net debt for the Indonesia smelter projects, totaled $1.0 billion. Refer to "Net Debt."

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 June 30, 2022 (in billions):

Cash at domestic companies			$	5.1
Cash at international operations			4.4			a
Total consolidated cash and cash equivalents			9.5
Noncontrolling interests’ share			(1.1)
Cash, net of noncontrolling interests’ share			8.4
Withholding taxes			(0.3)
Net cash available			$	8.1

*a.*Includes $2.4 billion from PT-FI's senior notes that is expected to be used to finance its smelter projects.

Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayments, 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 June 30, 2022, we had consolidated debt of $11.1 billion, with a weighted-average interest rate of 5.0 percent. Nearly all of our outstanding debt is fixed rate. We had no borrowings outstanding and $8 million in letters of credit issued under our $3.5 billion revolving credit facility. Additionally, at June 30, 2022, no amounts were drawn under PT-FI’s $1.3 billion revolving credit facility or Cerro Verde’s $350 million revolving credit facility.

Refer to Note 5 for further discussion.

Operating Activities

We reported consolidated cash provided by operating activities of $3.3 billion (net of $0.7 billion of working capital and other uses) for the first six months of 2022 and $3.5 billion (including $0.2 billion of working capital and other sources) for the first six months of 2021. Lower operating cash flows for the first six months of 2022, compared with the first six months of 2021, primarily reflect an increase in income tax payments at our international operations, partly offset by higher copper and gold sales volumes and other working capital changes.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $1.6 billion for the first six months of 2022, including approximately $0.8 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and $0.3 billion for the Indonesia smelter projects. Capital expenditures for the Indonesia smelter projects are being funded by PT-FI's senior notes and its available revolving credit facility. Refer to “Outlook” for further discussion of projected capital expenditures for the year 2022.

Capital expenditures, including capitalized interest, totaled $0.8 billion for the first six months of 2021, including approximately $0.6 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district.

Proceeds from Sales of Assets. Proceeds from sales of assets totaled $96 million for the first six months of 2022 and $16 million for the first six months of 2021. In May 2022, we sold all of the shares we owned in Jervois Global Limited for proceeds of $60 million (refer to Note 1).

Acquisition of Minority Interest in PT Smelting. In April 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.

Loans to PT Smelting for Expansion. PT-FI made loans to PT Smelting totaling $34 million during the first six months of 2022 to fund PT Smelting’s expansion project.

Financing Activities

Debt Transactions. Net borrowings of debt totaled $1.7 billion for the first six months of 2022 and net payments of debt totaled $19 million for the first six months of 2021. Net borrowings for the first six months of 2022 primarily reflected borrowings under PT-FI’s $3.0 billion senior note offering that was completed in April 2022, partly offset by the repayment of borrowings under PT-FI’s term loan ($0.6 billion) and Cerro Verde’s term loan ($0.3 billion). In addition, during the second quarter and first six months of 2022, we completed open-market purchases of $582 million aggregate principal amount of FCX senior notes for a total cost of $558 million. From July 1, 2022, through August 5, 2022, we purchased an additional $291 million aggregate principal amount of our senior notes in open-market transactions, for a total redemption value of $273 million.

Refer to Note 5 for further discussion of our debt.

Cash Dividends and Distributions Paid. We paid cash dividends on our common stock totaling $438 million for the first six months of 2022 and $111 million for the first six months of 2021. The declaration and payment of dividends (base or variable) is 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. Refer to Note 5, Item 1A. “Risk Factors” contained in Part I of our 2021 Form 10-K, “Cautionary Statement” below and discussion of our financial policy above.

Cash dividends and distributions paid to noncontrolling interests at our international operations totaled $513 million for the first six months of 2022 and $93 million for the first six months of 2021. Based on the estimates discussed in “Outlook,” we currently expect cash dividends and distributions paid to noncontrolling interests to approximate $0.9

billion for the year 2022. Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries.

Treasury Stock Purchases. During the first six months of 2022, we acquired 29.4 million shares of our common stock under our share repurchase program for a total cost of $1.2 billion ($40.32 average cost per share). In July 2022, the Board authorized an increase in the share repurchase program from up to $3.0 billion to up to $5.0 billion. Through August 5, 2022, we acquired 47.9 million shares of our common stock for a total cost of $1.8 billion ($38.35 average cost per share) and $3.2 billion remains available under the share repurchase program. The timing and amount of share repurchases is at the discretion of management and will depend on a variety of factors. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion. Refer to Item 1A. “Risk Factors” contained in Part I of our 2021 Form 10-K, “Cautionary Statement” below and discussion of our financial policy above.

Contributions from Noncontrolling Interests. We received equity contributions totaling $94 million for the first six months of 2022 and $88 million for the first six months of 2021 from PT Inalum for their share of capital spending on underground mine development projects in the Grasberg minerals district.

Stock-based awards. Proceeds from exercised stock options totaled $106 million for the first six months of 2022 and $184 million for the first six months of 2021, and payments for related employee taxes totaled $55 million for the first six months of 2022 and $19 million for the first six months of 2021. See Note 10 in our 2021 Form 10-K for a discussion of stock-based awards.

CONTRACTUAL OBLIGATIONS

Refer to Note 5 for further discussion of PT-FI’s $3.0 billion aggregate principal amount of unsecured senior notes issued in April 2022, and the repayment of borrowings under PT-FI’s term loan and Cerro Verde’s term loan. There have been no other material changes in our contractual obligations since December 31, 2021. Refer to Note 13 and Part II, Items 7. and 7A. in our 2021 Form 10-K, for information regarding our contractual obligations.

CONTINGENCIES

Environmental Liabilities and AROs

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 liabilities and AROs and also review changes in facts and circumstances associated with these obligations at least quarterly.

Refer to Note 8 for further discussion of increases in our ARO at the Bagdad mine. There have been no other significant changes to our environmental liabilities and AROs since December 31, 2021. 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. Refer to Note 12 in our 2021 Form 10-K, for further information regarding our environmental liabilities and AROs.

Litigation and Other Contingencies

There have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since December 31, 2021. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our 2021 Form 10-K, as updated by Note 8, for further information regarding AROs, 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 2021 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):

			June 30, 2022						December 31, 2021
Current portion of debt			$	1,038					$	372
Long-term debt, less current portion			10,054						9,078
Consolidated debt			11,092						9,450
Less: consolidated cash and cash equivalents			9,492						8,068
Net debt			$	1,600					$	1,382
Less: net debt for Indonesia smelter projectsa			585						207
FCX net debt, excluding Indonesia smelter projects			$	1,015					$	1,175

a.Includes consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $2.4 billion as of June 30, 2022, and consolidated debt of $0.4 billion and consolidated cash and cash equivalents of $0.2 billion as of December 31, 2021.

PRODUCT REVENUES AND PRODUCTION COSTS

Unit net cash costs (credits) 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, net, which are removed from site production and delivery costs in the calculation of unit net cash costs (credits), consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges (credits). 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 June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Molybdenuma						Otherb						Total
Revenues, excluding adjustments						$	1,697					$	1,697					$	144					$	30					$	1,871
Site production and delivery, before net noncash and other costs shown below						975						897						95						21						1,013
By-product credits						(136)						—						—						—						—
Treatment charges						41						40						—						1						41
Net cash costs						880						937						95						22						1,054
DD&A						103						95						7						1						103
Metals inventory adjustments						7						6						1						—						7
Noncash and other costs, net						36						33						2						1						36
Total costs						1,026						1,071						105						24						1,200
Other revenue adjustments, primarily for pricing on prior period open sales						(37)						(37)						—						—						(37)
Gross profit						$	634					$	589					$	39					$	6					$	634
Copper sales (millions of recoverable pounds)						389						389
Molybdenum sales (millions of recoverable pounds)a																		8
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments						$	4.36					$	4.36					$	18.75
Site production and delivery, before net noncash and other costs shown below						2.50						2.30						12.42
By-product credits						(0.35)						—						—
Treatment charges						0.11						0.11						—
Unit net cash costs						2.26						2.41						12.42
DD&A						0.27						0.24						0.81
Metals inventory adjustments						0.02						0.02						0.16
Noncash and other costs, net						0.09						0.08						0.32
Total unit costs						2.64						2.75						13.71
Other revenue adjustments, primarily for pricing on prior period open sales						(0.10)						(0.10)						—
Gross profit per pound						$	1.62					$	1.51					$	5.04
Reconciliation to Amounts Reported
						Revenues						Production and Delivery						DD&A						Metals Inventory Adjustments
Totals presented above						$	1,871					$	1,013					$	103					$	7
Treatment charges						(5)						36						—						—
Noncash and other costs, net						—						36						—						—
Other revenue adjustments, primarily for pricing on prior period open sales						(37)						—						—						—
Eliminations and other						26						32						(1)						—
North America copper mines						1,855						1,117						102						7
Other miningc						5,332						3,614						389						11
Corporate, other & eliminations						(1,771)						(1,728)						16						—
As reported in our consolidated financial statements						$	5,416					$	3,003					$	507					$	18

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 June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Molybdenuma						Otherb						Total
Revenues, excluding adjustments						$	1,717					$	1,717					$	97					$	32					$	1,846
Site production and delivery, before net noncash and other costs shown below						833						789						56						18						863
By-product credits						(99)						—						—						—						—
Treatment charges						31						29						—						2						31
Net cash costs						765						818						56						20						894
DD&A						102						95						5						2						102
Noncash and other costs, net						31						30						1						—						31
Total costs						898						943						62						22						1,027
Other revenue adjustments, primarily for pricing on prior period open sales						8						8						—						—						8
Gross profit						$	827					$	782					$	35					$	10					$	827
Copper sales (millions of recoverable pounds)						389						389
Molybdenum sales (millions of recoverable pounds)a																		9
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments						$	4.42					$	4.42					$	11.75
Site production and delivery, before net noncash and other costs shown below						2.14						2.03						6.86
By-product credits						(0.25)						—						—
Treatment charges						0.08						0.07						—
Unit net cash costs						1.97						2.10						6.86
DD&A						0.26						0.25						0.55
Noncash and other costs, net						0.08						0.08						0.06
Total unit costs						2.31						2.43						7.47
Other revenue adjustments, primarily for pricing on prior period open sales						0.02						0.02						—
Gross profit per pound						$	2.13					$	2.01					$	4.28
Reconciliation to Amounts Reported
						Revenues						Production and Delivery						DD&A
Totals presented above						$	1,846					$	863					$	102
Treatment charges						(12)						19						—
Noncash and other costs, net						—						31						—
Other revenue adjustments, primarily for pricing on prior period open sales						8						—						—
Eliminations and other						12						12						(1)
North America copper mines						1,854						925						101
Other miningc						5,520						3,650						367
Corporate, other & eliminations						(1,626)						(1,508)						15
As reported in our consolidated financial statements						$	5,748					$	3,067					$	483

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

Six Months Ended June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Molybdenuma						Otherb						Total
Revenues, excluding adjustments						$	3,440					$	3,440					$	282					$	57					$	3,779
Site production and delivery, before net noncash and other costs shown below						1,883						1,735						179						39						1,953
By-product credits						(269)						—						—						—						—
Treatment charges						77						75						—						2						77
Net cash costs						1,691						1,810						179						41						2,030
DD&A						207						192						13						2						207
Metals inventory adjustments						7						6						1						—						7
Noncash and other costs, net						65						60						4						1						65
Total costs						1,970						2,068						197						44						2,309
Other revenue adjustments, primarily for pricing on prior period open sales						(7)						(7)						—						—						(7)
Gross profit						$	1,463					$	1,365					$	85					$	13					$	1,463
Copper sales (millions of recoverable pounds)						770						770
Molybdenum sales (millions of recoverable pounds)a																		15
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments						$	4.46					$	4.46					$	18.36
Site production and delivery, before net noncash and other costs shown below						2.44						2.25						11.68
By-product credits						(0.35)						—						—
Treatment charges						0.10						0.10						—
Unit net cash costs						2.19						2.35						11.68
DD&A						0.27						0.25						0.85
Metals inventory adjustments						0.01						0.01						0.08
Noncash and other costs, net						0.09						0.07						0.23
Total unit costs						2.56						2.68						12.84
Other revenue adjustments, primarily for pricing on prior period open sales						(0.01)						(0.01)						—
Gross profit per pound						$	1.89					$	1.77					$	5.52
Reconciliation to Amounts Reported
																								Metals
												Production												Inventory
						Revenues						and Delivery						DD&A						Adjustments
Totals presented above						$	3,779					$	1,953					$	207					$	7
Treatment charges						(9)						68						—						—
Noncash and other costs, net						—						65						—						—
Other revenue adjustments, primarily for pricing on prior period open sales						(7)						—						—						—
Eliminations and other						43						49						—						—
North America copper mines						3,806						2,135						207						7
Other miningc						11,708						7,461						757						11
Corporate, other & eliminations						(3,495)						(3,443)						32						—
As reported in our consolidated financial statements						$	12,019					$	6,153					$	996					$	18

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

Six Months Ended June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Molybdenuma						Otherb						Total
Revenues, excluding adjustments						$	2,919					$	2,919					$	185					$	67					$	3,171
Site production and delivery, before net noncash and other costs shown below						1,459						1,369						113						40						1,522
By-product credits						(189)						—						—						—						—
Treatment charges						63						60						—						3						63
Net cash costs						1,333						1,429						113						43						1,585
DD&A						181						169						8						4						181
Noncash and other costs, net						73						71						1						1						73
Total costs						1,587						1,669						122						48						1,839
Other revenue adjustments, primarily for pricing on prior period open sales						7						7						—						—						7
Gross profit						$	1,339					$	1,257					$	63					$	19					$	1,339
Copper sales (millions of recoverable pounds)						697						697
Molybdenum sales (millions of recoverable pounds)a																		17
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments						$	4.19					$	4.19					$	11.12
Site production and delivery, before net noncash and other costs shown below						2.09						1.96						6.76
By-product credits						(0.27)						—						—
Treatment charges						0.09						0.09						—
Unit net cash costs						1.91						2.05						6.76
DD&A						0.26						0.24						0.51
Noncash and other costs, net						0.11						0.11						0.06
Total unit costs						2.28						2.40						7.33
Other revenue adjustments, primarily for pricing on prior period open sales						0.01						0.01						—
Gross profit per pound						$	1.92					$	1.80					$	3.79
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	3,171					$	1,522					$	181
Treatment charges						(17)						46						—
Noncash and other costs, net						—						73						—
Other revenue adjustments, primarily for pricing on prior period open sales						7						—						—
Eliminations and other						31						33						—
North America copper mines						3,192						1,674						181
Other miningc						10,165						6,690						690
Corporate, other & eliminations						(2,759)						(2,511)						31
As reported in our consolidated financial statements						$	10,598					$	5,853					$	902

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.

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

Three Months Ended June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Othera						Total
Revenues, excluding adjustments						$	1,102					$	1,102					$	116					$	1,218
Site production and delivery, before net noncash and other costs shown below						712						658						69						727
By-product credits						(101)						—						—						—
Treatment charges						44						44						—						44
Royalty on metals						3						3						—						3
Net cash costs						658						705						69						774
DD&A						101						91						10						101
Metals inventory adjustments						11						10						1						11
Noncash and other costs, net						18						17						1						18
Total costs						788						823						81						904
Other revenue adjustments, primarily for pricing on prior period open sales						(154)						(154)						—						(154)
Gross profit						$	160					$	125					$	35					$	160
Copper sales (millions of recoverable pounds)						288						288
Gross profit per pound of copper:
Revenues, excluding adjustments						$	3.83					$	3.83
Site production and delivery, before net noncash and other costs shown below						2.48						2.29
By-product credits						(0.35)						—
Treatment charges						0.15						0.15
Royalty on metals						0.01						0.01
Unit net cash costs						2.29						2.45
DD&A						0.35						0.32
Metals inventory adjustments						0.04						0.03
Noncash and other costs, net						0.06						0.06
Total unit costs						2.74						2.86
Other revenue adjustments, primarily for pricing on prior period open sales						(0.53)						(0.53)
Gross profit per pound						$	0.56					$	0.44
Reconciliation to Amounts Reported																								Metals
												Production												Inventory
						Revenues						and Delivery						DD&A						Adjustments
Totals presented above						$	1,218					$	727					$	101					$	11
Treatment charges						(44)						—						—						—
Royalty on metals						(3)						—						—						—
Noncash and other costs, net						—						18						—						—
Other revenue adjustments, primarily for pricing on prior period open sales						(154)						—						—						—
Eliminations and other						(1)						(3)						1						—
South America mining						1,016						742						102						11
Other miningb						6,171						3,989						389						7
Corporate, other & eliminations						(1,771)						(1,728)						16						—
As reported in our consolidated financial statements						$	5,416					$	3,003					$	507					$	18

a.Includes silver sales of 1.1 million ounces ($23.26 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

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

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

Three Months Ended June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Othera						Total
Revenues, excluding adjustments						$	995					$	995					$	82					$	1,077
Site production and delivery, before net noncash and other costs shown below						573			b			531						52						583
By-product credits						(72)						—						—						—
Treatment charges						29						29						—						29
Royalty on metals						2						2						—						2
Net cash costs						532						562						52						614
DD&A						94						86						8						94
Noncash and other costs, net						18						17						1						18
Total costs						644						665						61						726
Other revenue adjustments, primarily for pricing on prior period open sales						88						88						—						88
Gross profit						$	439					$	418					$	21					$	439
Copper sales (millions of recoverable pounds)						230						230
Gross profit per pound of copper:
Revenues, excluding adjustments						$	4.31					$	4.31
Site production and delivery, before net noncash and other costs shown below						2.48			b			2.30
By-product credits						(0.31)						—
Treatment charges						0.13						0.13
Royalty on metals						0.01						0.01
Unit net cash costs						2.31						2.44
DD&A						0.40						0.37
Noncash and other costs, net						0.08						0.07
Total unit costs						2.79						2.88
Other revenue adjustments, primarily for pricing on prior period open sales						0.38						0.38
Gross profit per pound						$	1.90					$	1.81
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	1,077					$	583					$	94
Treatment charges						(29)						—						—
Royalty on metals						(2)						—						—
Noncash and other costs, net						—						18						—
Other revenue adjustments, primarily for pricing on prior period open sales						88						—						—
Eliminations and other						(1)						(1)						—
South America mining						1,133						600						94
Other miningc						6,241						3,975						374
Corporate, other & eliminations						(1,626)						(1,508)						15
As reported in our consolidated financial statements						$	5,748					$	3,067					$	483

a.Includes silver sales of 0.8 million ounces ($27.33 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 $69 million ($0.30 per pound of copper) associated with labor related costs 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

Six Months Ended June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Othera						Total
Revenues, excluding adjustments						$	2,204					$	2,204					$	240					$	2,444
Site production and delivery, before net noncash and other costs shown below						1,352						1,244						135						1,379
By-product credits						(213)						—						—						—
Treatment charges						84						84						—						84
Royalty on metals						6						5						1						6
Net cash costs						1,229						1,333						136						1,469
DD&A						198						179						19						198
Metals inventory adjustments						11						10						1						11
Noncash and other costs, net						35						33						2						35
Total costs						1,473						1,555						158						1,713
Other revenue adjustments, primarily for pricing on prior period open sales						35						35						—						35
Gross profit						$	766					$	684					$	82					$	766
Copper sales (millions of recoverable pounds)						552						552
Gross profit per pound of copper:
Revenues, excluding adjustments						$	4.00					$	4.00
Site production and delivery, before net noncash and other costs shown below						2.45						2.26
By-product credits						(0.38)						—
Treatment charges						0.15						0.15
Royalty on metals						0.01						0.01
Unit net cash costs						2.23						2.42
DD&A						0.36						0.32
Metals inventory adjustments						0.02						0.02
Noncash and other costs, net						0.06						0.06
Total unit costs						2.67						2.82
Other revenue adjustments, primarily for pricing on prior period open sales						0.06						0.06
Gross profit per pound						$	1.39					$	1.24
Reconciliation to Amounts Reported
																								Metals
												Production												Inventory
						Revenues						and Delivery						DD&A						Adjustments
Totals presented above						$	2,444					$	1,379					$	198					$	11
Treatment charges						(84)						—						—						—
Royalty on metals						(6)						—						—						—
Noncash and other costs, net						—						35						—						—
Other revenue adjustments, primarily for pricing on prior period open sales						35						—						—						—
Eliminations and other						1						(2)						1						—
South America mining						2,390						1,412						199						11
Other miningb						13,124						8,184						765						7
Corporate, other & eliminations						(3,495)						(3,443)						32						—
As reported in our consolidated financial statements						$	12,019					$	6,153					$	996					$	18

a.Includes silver sales of 2.1 million ounces ($23.31 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

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

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

Six Months Ended June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Othera						Total
Revenues, excluding adjustments						$	2,093					$	2,093					$	147					$	2,240
Site production and delivery, before net noncash and other costs shown below						1,092			b			1,022						91						1,113
By-product credits						(126)						—						—						—
Treatment charges						64						64						—						64
Royalty on metals						4						4						—						4
Net cash costs						1,034						1,090						91						1,181
DD&A						195						181						14						195
Noncash and other costs, net						28						26						2						28
Total costs						1,257						1,297						107						1,404
Other revenue adjustments, primarily for pricing on prior period open sales						99						99						—						99
Gross profit						$	935					$	895					$	40					$	935
Copper sales (millions of recoverable pounds)						489						489
Gross profit per pound of copper:
Revenues, excluding adjustments						$	4.28					$	4.28
Site production and delivery, before net noncash and other costs shown below						2.23			b			2.09
By-product credits						(0.26)						—
Treatment charges						0.13						0.13
Royalty on metals						0.01						0.01
Unit net cash costs						2.11						2.23
DD&A						0.40						0.37
Noncash and other costs, net						0.06						0.05
Total unit costs						2.57						2.65
Other revenue adjustments, primarily for pricing on prior period open sales						0.20						0.20
Gross profit per pound						$	1.91					$	1.83
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	2,240					$	1,113					$	195
Treatment charges						(64)						—						—
Royalty on metals						(4)						—						—
Noncash and other costs, net						—						28						—
Other revenue adjustments, primarily for pricing on prior period open sales						99						—						—
Eliminations and other						(1)						(2)						—
South America mining						2,270						1,139						195
Other miningc						11,087						7,225						676
Corporate, other & eliminations						(2,759)						(2,511)						31
As reported in our consolidated financial statements						$	10,598					$	5,853					$	902

a.Includes silver sales of 1.7 million ounces ($26.67 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 $69 million ($0.14 per pound of copper) associated with labor related costs at Cerro Verde.

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

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs

Three Months Ended June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Gold						Silvera						Total
Revenues, excluding adjustments						$	1,582					$	1,582					$	865					$	32					$	2,479
Site production and delivery, before net noncash and other costs shown below						587						374						205						8						587
Gold and silver credits						(888)						—						—						—						—
Treatment charges						98						63						34						1						98
Export duties						85						54						30						1						85
Royalty on metals						108						72						35						1						108
Net cash (credits) costs						(10)						563						304						11						878
DD&A						262						167						91						4						262
Noncash and other costs, net						3						2						1						—						3
Total costs						255						732						396						15						1,143
Other revenue adjustments, primarily for pricing on prior period open sales						(201)						(201)						(8)						(1)						(210)
PT Smelting intercompany profit						26						17						9						—						26
Gross profit						$	1,152					$	666					$	470					$	16					$	1,152
Copper sales (millions of recoverable pounds)						410						410
Gold sales (thousands of recoverable ounces)																		474
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments						$	3.86					$	3.86					$	1,827
Site production and delivery, before net noncash and other costs shown below						1.43						0.91						433
Gold and silver credits						(2.17)						—						—
Treatment charges						0.24						0.15						72
Export duties						0.21						0.13						63
Royalty on metals						0.27						0.18						74
Unit net cash (credits) costs						(0.02)						1.37						642
DD&A						0.63						0.41						193
Noncash and other costs, net						0.01						0.01						2
Total unit costs						0.62						1.79						837
Other revenue adjustments, primarily for pricing on prior period open sales						(0.49)						(0.49)						(17)
PT Smelting intercompany profit						0.06						0.04						19
Gross profit per pound/ounce						$	2.81					$	1.62					$	992
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	2,479					$	587					$	262
Treatment charges						(98)						—						—
Export duties						(85)						—						—
Royalty on metals						(108)						—						—
Noncash and other costs, net						—						3						—
Other revenue adjustments, primarily for pricing on prior period open sales						(210)						—						—
PT Smelting intercompany profit						—						(26)						—
Indonesia mining						1,978						564						262
Other miningb						5,209						4,167						229
Corporate, other & eliminations						(1,771)						(1,728)						16
As reported in our consolidated financial statements						$	5,416					$	3,003					$	507

a.Includes silver sales of 1.6 million ounces ($20.71 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 June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Gold						Silvera						Total
Revenues, excluding adjustments						$	1,323					$	1,323					$	543					$	37					$	1,903
Site production and delivery, before net noncash and other costs shown below						476						331						136						9						476
Gold and silver credits						(597)						—						—						—						—
Treatment charges						74						52						21						2						75
Export duties						44						30						13						1						44
Royalty on metals						80						59						20						1						80
Net cash costs						77						472						190						13						675
DD&A						247						172						70						5						247
Noncash and other costs, net						11						8						3						—						11
Total costs						335						652						263						18						933
Other revenue adjustments, primarily for pricing on prior period open sales						87						87						16						2						105
PT Smelting intercompany loss						(41)						(28)						(12)						(1)						(41)
Gross profit						$	1,034					$	730					$	284					$	20					$	1,034
Copper sales (millions of recoverable pounds)						310						310
Gold sales (thousands of recoverable ounces)																		302
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments						$	4.27					$	4.27					$	1,795
Site production and delivery, before net noncash and other costs shown below						1.54						1.07						449
Gold and silver credits						(1.93)						—						—
Treatment charges						0.24						0.16						70
Export duties						0.14						0.10						42
Royalty on metals						0.26						0.19						66
Unit net cash costs						0.25						1.52						627
DD&A						0.79						0.55						232
Noncash and other costs, net						0.04						0.03						11
Total unit costs						1.08						2.10						870
Other revenue adjustments, primarily for pricing on prior period open sales						0.28						0.28						53
PT Smelting intercompany loss						(0.13)						(0.09)						(39)
Gross profit per pound/ounce						$	3.34					$	2.36					$	939
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	1,903					$	476					$	247
Treatment charges						(75)						—						—
Export duties						(44)						—						—
Royalty on metals						(80)						—						—
Noncash and other costs, net						—						11						—
Other revenue adjustments, primarily for pricing on prior period open sales						105						—						—
PT Smelting intercompany loss						—						41						—
Indonesia mining						1,809						528						247
Other miningb						5,565						4,047						221
Corporate, other & eliminations						(1,626)						(1,508)						15
As reported in our consolidated financial statements						$	5,748					$	3,067					$	483

a.Includes silver sales of 1.4 million ounces ($26.08 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 (Credits) Costs

Six Months Ended June 30, 2022
(In millions)						By-Product						Co-Product Method
						Method						Copper						Gold						Silvera						Total
Revenues, excluding adjustments						$	3,184					$	3,184					$	1,638					$	69					$	4,891
Site production and delivery, before net noncash and other costs shown below						1,121						730						375						16						1,121
Gold and silver credits						(1,710)						—						—						—						—
Treatment charges						191						124						64						3						191
Export duties						164						107						55						2						164
Royalty on metals						201						135						64						2						201
Net cash (credits) costs						(33)						1,096						558						23						1,677
DD&A						510						332						171						7						510
Noncash and other costs, net						30			b			20						10						—						30
Total costs						507						1,448						739						30						2,217
Other revenue adjustments, primarily for pricing on prior period open sales						32						32						3						—						35
PT Smelting intercompany loss						(27)						(17)						(9)						(1)						(27)
Gross profit						$	2,682					$	1,751					$	893					$	38					$	2,682
Copper sales (millions of recoverable pounds)						789						789
Gold sales (thousands of recoverable ounces)																		880
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments						$	4.04					$	4.04					$	1,861
Site production and delivery, before net noncash and other costs shown below						1.42						0.92						426
Gold and silver credits						(2.17)						—						—
Treatment charges						0.24						0.16						73
Export duties						0.21						0.14						63
Royalty on metals						0.26						0.17						72
Unit net cash (credits) costs						(0.04)						1.39						634
DD&A						0.64						0.42						194
Noncash and other costs, net						0.04			b			0.03						11
Total unit costs						0.64						1.84						839
Other revenue adjustments, primarily for pricing on prior period open sales						0.04						0.04						3
PT Smelting intercompany loss						(0.03)						(0.02)						(10)
Gross profit per pound/ounce						$	3.41					$	2.22					$	1,015
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	4,891					$	1,121					$	510
Treatment charges						(191)						—						—
Export duties						(164)						—						—
Royalty on metals						(201)						—						—
Noncash and other costs, net						12						42						—
Other revenue adjustments, primarily for pricing on prior period open sales						35						—						—
PT Smelting intercompany loss						—						27						—
Indonesia mining						4,382						1,190						510
Other miningc						11,132						8,406						454
Corporate, other & eliminations						(3,495)						(3,443)						32
As reported in our consolidated financial statements						$	12,019					$	6,153					$	996

a.Includes silver sales of 3.1 million ounces ($22.18 per ounce average realized price).

b.Includes credits of $30 million ($0.04 per pound of copper) associated with adjustments to prior year treatment and refining charges and a charge of $41 million ($0.05 per pound of copper) associated with a settlement of an administrative fine levied by the Indonesia government. Also includes a charge of $18 million ($0.02 per pound of copper) to reserve for exposure associated with export duties in prior periods.

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

Six Months Ended June 30, 2021
(In millions)						By-Product						Co-Product Method
						Method						Copper						Gold						Silvera						Total
Revenues, excluding adjustments						$	2,435					$	2,435					$	995					$	68					$	3,498
Site production and delivery, before net noncash and other costs shown below						859						598						244						17						859
Gold and silver credits						(1,059)						—						—						—						—
Treatment charges						140						97						40						3						140
Export duties						73						51						21						1						73
Royalty on metals						140						100						38						2						140
Net cash costs						153						846						343						23						1,212
DD&A						446						310						127						9						446
Noncash and other costs, net						3			b			2						1						—						3
Total costs						602						1,158						471						32						1,661
Other revenue adjustments, primarily for pricing on prior period open sales						72						72						(4)						—						68
PT Smelting intercompany loss						(90)						(63)						(25)						(2)						(90)
Gross profit						$	1,815					$	1,286					$	495					$	34					$	1,815
Copper sales (millions of recoverable pounds)						568						568
Gold sales (thousands of recoverable ounces)																		558
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments						$	4.29					$	4.29					$	1,785
Site production and delivery, before net noncash and other credits shown below						1.51						1.05						439
Gold and silver credits						(1.86)						—						—
Treatment charges						0.24						0.17						71
Export duties						0.13						0.09						37
Royalty on metals						0.25						0.18						68
Unit net cash costs						0.27						1.49						615
DD&A						0.78						0.55						228
Noncash and other costs, net						0.01			b			—						1
Total unit costs						1.06						2.04						844
Other revenue adjustments, primarily for pricing on prior period open sales						0.12						0.12						(8)
PT Smelting intercompany loss						(0.16)						(0.11)						(46)
Gross profit per pound/ounce						$	3.19					$	2.26					$	887
Reconciliation to Amounts Reported
												Production
						Revenues						and Delivery						DD&A
Totals presented above						$	3,498					$	859					$	446
Treatment charges						(140)						—						—
Export duties						(73)						—						—
Royalty on metals						(140)						—						—
Noncash and other costs, net						31						34						—
Other revenue adjustments, primarily for pricing on prior period open sales						68						—						—
PT Smelting intercompany loss						—						90						—
Indonesia mining						3,244						983						446
Other miningc						10,113						7,381						425
Corporate, other & eliminations						(2,759)						(2,511)						31
As reported in our consolidated financial statements						$	10,598					$	5,853					$	902

a.Includes silver sales of 2.6 million ounces ($26.05 per ounce average realized price).

b.Includes credits of $31 million ($0.05 per pound of copper) associated with adjustments to prior year treatment and refining charges and a charge of $16 million ($0.03 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.

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

			Three Months Ended June 30,
(In millions)			2022						2021
Revenues, excluding adjustmentsa			$	151					$	95
Site production and delivery, before net noncash and other costs shown below			78						54
Treatment charges and other			7						6
Net cash costs			85						60
DD&A			18						17
Noncash and other costs, net			2						2
Total costs			105						79
Gross profit			$	46					$	16
Molybdenum sales (millions of recoverable pounds)a			8						7
Gross profit per pound of molybdenum:
Revenues, excluding adjustmentsa			$	18.87					$	12.77
Site production and delivery, before net noncash and other costs shown below			9.77						7.29
Treatment charges and other			0.85						0.85
Unit net cash costs			10.62						8.14
DD&A			2.27						2.29
Noncash and other costs, net			0.30						0.30
Total unit costs			13.19						10.73
Gross profit per pound			$	5.68					$	2.04
Reconciliation to Amounts Reported
									Production
Three Months Ended June 30, 2022			Revenues						and Delivery						DD&A
Totals presented above			$	151					$	78					$	18
Treatment charges and other			(7)						—						—
Noncash and other costs, net			—						2						—
Molybdenum mines			144						80						18
Other miningb			7,043						4,651						473
Corporate, other & eliminations			(1,771)						(1,728)						16
As reported in our consolidated financial statements			$	5,416					$	3,003					$	507
Three Months Ended June 30, 2021
Totals presented above			$	95					$	54					$	17
Treatment charges and other			(6)						—						—
Noncash and other costs, net			—						2						—
Molybdenum mines			89						56						17
Other miningb			7,285						4,519						451
Corporate, other & eliminations			(1,626)						(1,508)						15
As reported in our consolidated financial statements			$	5,748					$	3,067					$	483

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

						Six Months Ended June 30,
(In millions)						2022						2021
Revenues, excluding adjustmentsa						$	285					$	171
Site production and delivery, before net noncash and other costs shown below						150						108
Treatment charges and other						13						12
Net cash costs						163						120
DD&A						34						32
Metals inventory adjustments						—						1
Noncash and other costs, net						5						5
Total costs						202						158
Gross profit						$	83					$	13
Molybdenum sales (millions of recoverable pounds)a						15						14
Gross profit per pound of molybdenum:
Revenues, excluding adjustmentsa						$	18.81					$	12.12
Site production and delivery, before net noncash and other costs shown below						9.90						7.68
Treatment charges and other						0.85						0.85
Unit net cash costs						10.75						8.53
DD&A						2.27						2.27
Metals inventory adjustments						—						0.06
Noncash and other costs, net						0.34						0.36
Total unit costs						13.36						11.22
Gross profit per pound						$	5.45					$	0.90
Reconciliation to Amounts Reported
																								Metals
												Production												Inventory
Six Months Ended June 30, 2022						Revenues						and Delivery						DD&A						Adjustments
Totals presented above						$	285					$	150					$	34					$	—
Treatment charges and other						(13)						—						—						—
Noncash and other costs, net						—						5						—						—
Molybdenum mines						272						155						34						—
Other miningb						15,242						9,441						930						18
Corporate, other & eliminations						(3,495)						(3,443)						32						—
As reported in our consolidated financial statements						$	12,019					$	6,153					$	996					$	18
Six Months Ended June 30, 2021
Totals presented above						$	171					$	108					$	32					$	1
Treatment charges and other						(12)						—						—						—
Noncash and other costs, net						—						5						—						—
Molybdenum mines						159						113						32						1
Other miningb						13,198						8,251						839						—
Corporate, other & eliminations						(2,759)						(2,511)						31						—
As reported in our consolidated financial statements						$	10,598					$	5,853					$	902					$	1

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.

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 business outlook, strategy, goals or targets; global market conditions; ore grades and milling rates; production and sales volumes; unit net cash costs; capital expenditures; operating costs; operating plans; cash flows; liquidity; PT-FI’s financing, construction and completion of additional domestic smelting capacity in Indonesia in accordance with the terms of the special mining license (IUPK); our commitments to deliver responsibly produced copper, including plans to implement and validate all of our operating sites under the Copper Mark and to comply with other disclosure frameworks; execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business related thereto; achievement of climate commitments and net zero aspiration; improvements in operating procedures and technology innovations; exploration efforts and results; development and production activities, rates and costs; future organic growth opportunities; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; mineral reserve and mineral resource estimates; final resolution of settlements associated with ongoing legal proceedings; debt repurchases and the ongoing implementation of our financial policy and future returns to shareholders, including dividend payments (base or variable) and share repurchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “could,” “to be,” ”potential," “assumptions,” “guidance,” “aspirations,” “future” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases is at the discretion of the Board and management, respectively, and is subject to a number of factors, including maintaining our net debt target, capital availability, our financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by the Board or management, as applicable. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of the commodities we produce, primarily copper; changes in our cash requirements, financial position, financing or investment plans; changes in general market, economic, tax, regulatory or industry conditions, including as a result of Russia’s invasion of Ukraine or potential global economic downturn or recession; reductions in liquidity and access to capital; the ongoing COVID-19 pandemic and any future public health crisis; political and social risks; operational risks inherent in mining, with higher inherent risks in underground mining; fluctuations in price and availability of commodities purchased; constraints on supply, logistics and transportation services; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; production rates; timing of shipments; results of technical, economic or 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 19, 2023; 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 additional domestic smelting capacity in Indonesia; cybersecurity incidents; labor relations, including labor-related work stoppages and costs; the results of the human health assessment to evaluate the potential impacts of tailings and mining waste, and compliance with applicable environmental, health and safety laws and regulations; weather- and climate-related risks; environmental risks and litigation results; our ability to comply with our responsible production commitments under specific frameworks and any changes to such frameworks and other factors described in more detail under the heading “Risk Factors” contained in Part I, Item 1A. of our 2021 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 (credits) per pound of copper and molybdenum, which are not recognized under U.S. GAAP. Refer to “Operations – Unit Net

Cash Costs (Credits)” for further discussion of unit net cash costs (credits) 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.