Item 1. Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

			March 31, 2023						December 31, 2022
			(In millions)
ASSETS
Current assets:
Cash and cash equivalents			$	6,852					$	8,146
Trade accounts receivable			1,134						1,336
Income and other tax receivables			550						459
Inventories:
Materials and supplies, net			2,056						1,964
Mill and leach stockpiles			1,440						1,383
Product			2,241						1,833
Other current assets			473						492
Total current assets			14,746						15,613
Property, plant, equipment and mine development costs, net			33,159						32,627
Long-term mill and leach stockpiles			1,235						1,252
Other assets			1,769						1,601
Total assets			$	50,909					$	51,093
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities			$	3,836					$	4,027
Accrued income taxes			846						744
Current portion of environmental and asset retirement obligations			333						320
Dividends payable			217						217
Current portion of debt			49						1,037
Total current liabilities			5,281						6,345
Long-term debt, less current portion			9,586						9,583
Environmental and asset retirement obligations, less current portion			4,493						4,463
Deferred income taxes			4,305						4,269
Other liabilities			1,596						1,562
Total liabilities			25,261						26,222
Equity:
Stockholders’ equity:
Common stock			162						161
Capital in excess of par value			25,227						25,322
Accumulated deficit			(3,244)						(3,907)
Accumulated other comprehensive loss			(319)						(320)
Common stock held in treasury			(5,769)						(5,701)
Total stockholders’ equity			16,057						15,555
Noncontrolling interests			9,591						9,316
Total equity			25,648						24,871
Total liabilities and equity			$	50,909					$	51,093

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

			Three Months Ended
			March 31,
			2023						2022
			(In millions, except per share amounts)
Revenues			$	5,389					$	6,603
Cost of sales:
Production and delivery			3,165						3,150
Depreciation, depletion and amortization			399						489
Total cost of sales			3,564						3,639
Selling, general and administrative expenses			126						115
Mining exploration and research expenses			31						24
Environmental obligations and shutdown costs			67						16
Total costs and expenses			3,788						3,794
Operating income			1,601						2,809
Interest expense, net			(151)						(127)
Other income, net			88						31
Income before income taxes and equity in affiliated companies’ net earnings			1,538						2,713
Provision for income taxes			(499)						(824)
Equity in affiliated companies’ net earnings			10						15
Net income			1,049						1,904
Net income attributable to noncontrolling interests			(386)						(377)
Net income attributable to common stockholders			$	663					$	1,527
Net income per share attributable to common stockholders:
Basic			$	0.46					$	1.05
Diluted			$	0.46					$	1.04
Weighted-average shares of common stock outstanding:
Basic			1,433						1,455
Diluted			1,443						1,469
Dividends declared per share of common stock			$	0.15					$	0.15

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

			Three Months Ended
			March 31,
			2023						2022
			(In millions)
Net income			$	1,049					$	1,904
Other comprehensive income, net of taxes:
Defined benefit plans:
Prior service costs arising during the period			—						(1)
Amortization of unrecognized amounts included in net periodic benefit costs			1						2
Foreign exchange gains			1						—
Other comprehensive income			2						1
Total comprehensive income			1,051						1,905
Total comprehensive income attributable to noncontrolling interests			(387)						(377)
Total comprehensive income attributable to common stockholders			$	664					$	1,528

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

			Three Months Ended
			March 31,
			2023						2022
			(In millions)
Cash flow from operating activities:
Net income			$	1,049					$	1,904
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			399						489
Stock-based compensation			53						49
Net charges for environmental and asset retirement obligations, including accretion			117						55
Payments for environmental and asset retirement obligations			(60)						(55)
Net charges for defined pension and postretirement plans			16						10
Pension plan contributions			(2)						(25)
Deferred income taxes			35						48
Change in deferred profit on sales to PT Smelting			(112)						53
Other, net			22						(26)
Changes in working capital and other:
Accounts receivable			157						(222)
Inventories			(457)						47
Other current assets			(20)						19
Accounts payable and accrued liabilities			(303)						(519)
Accrued income taxes and timing of other tax payments			156						(136)
Net cash provided by operating activities			1,050						1,691
Cash flow from investing activities:
Capital expenditures:
North America copper mines			(196)						(130)
South America			(100)						(56)
Indonesia mining			(449)						(379)
Indonesia smelter projects			(323)						(130)
Molybdenum mines			(9)						(1)
Other			(44)						(27)
Loans to PT Smelting for expansion			(24)						(9)
Other, net			(19)						18
Net cash used in investing activities			(1,164)						(714)
Cash flow from financing activities:
Proceeds from debt			284						604
Repayments of debt			(1,273)						(434)
Cash dividends and distributions paid:
Common stock			(217)						(220)
Noncontrolling interests			—						(204)
Treasury stock purchases			—						(541)
Contributions from noncontrolling interests			50						47
Proceeds from exercised stock options			31						101
Payments for withholding of employee taxes related to stock-based awards			(47)						(55)
Debt financing costs and other, net			—						(1)
Net cash used in financing activities			(1,172)						(703)
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents			(1,286)						274
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year			8,390						8,314
Cash, cash equivalents and restricted cash and cash equivalents at end of period			$	7,104					$	8,588

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED MARCH 31

			Stockholders’ Equity
			Common Stock																		Accum-ulated Deficit						Accumu- lated Other Compre- hensive Loss						Common Stock Held in Treasury												Total Stock-holders’ Equity
			Number of Shares						At Par Value						Capital in Excess of Par Value												Number of Shares						At Cost									Non- controlling Interests						Total Equity
			(In millions)
Balance at December 31, 2022			1,613						$	161					$	25,322					$	(3,907)					$	(320)					183						$	(5,701)					$	15,555					$	9,316					$	24,871
Exercised and issued stock-based awards			5						1						52						—						—						—						—						53						—						53
Stock-based compensation, including the tender of shares			—						—						46						—						—						1						(68)						(22)						(1)						(23)
Dividends			—						—						(217)						—						—						—						—						(217)						(137)						(354)
Contributions from noncontrolling interests			—						—						24						—						—						—						—						24						26						50
Net income attributable to common stockholders			—						—						—						663						—						—						—						663						—						663
Net income attributable to noncontrolling interests			—						—						—						—						—						—						—						—						386						386
Other comprehensive income			—						—						—						—						1						—						—						1						1						2
Balance at March 31, 2023			1,618						$	162					$	25,227					$	(3,244)					$	(319)					184						$	(5,769)					$	16,057					$	9,591					$	25,648

			Stockholders’ Equity
			Common Stock																		Accum-ulated Deficit						Accumu- lated Other Compre- hensive Loss						Common Stock Held in Treasury												Total Stock-holders’ Equity
			Number of Shares						At Par Value						Capital in Excess of Par Value												Number of Shares						At Cost									Non- controlling Interests						Total Equity
			(In millions)
Balance at December 31, 2021			1,603						$	160					$	25,875					$	(7,375)					$	(388)					146						$	(4,292)					$	13,980					$	9,039					$	23,019
Exercised and issued stock-based awards			9						1						107						—						—						—						—						108						—						108
Stock-based compensation, including the tender of shares			—						—						48						—						—						2						(62)						(14)						(10)						(24)
Treasury stock purchases			—						—						—						—						—						12						(541)						(541)						—						(541)
Dividends			—						—						(218)						—						—						—						—						(218)						(254)						(472)
Contributions from noncontrolling interests			—						—						23						—						—						—						—						23						24						47
Net income attributable to common stockholders			—						—						—						1,527						—						—						—						1,527						—						1,527
Net income attributable to noncontrolling interests			—						—						—						—						—						—						—						—						377						377
Other comprehensive income			—						—						—						—						1						—						—						1						—						1
Balance at March 31, 2022			1,612						$	161					$	25,835					$	(5,848)					$	(387)					160						$	(4,895)					$	14,866					$	9,176					$	24,042

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

Freeport-McMoRan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles in the United States (U.S.). Therefore, this information should be read in conjunction with Freeport-McMoRan Inc.’s (FCX) consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K). The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month period ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

PT Freeport Indonesia (PT-FI). Beginning January 1, 2023, FCX’s economic ownership interest in PT-FI is 48.76% and prior to January 1, 2023, FCX’s economic interest in PT-FI approximated 81%. As discussed in Note 3 of FCX’s 2022 Form 10-K, in accordance with provisions pertaining to PT-FI’s shareholders agreement, FCX's first-quarter 2023 net income included a $35 million net benefit associated with PT-FI sales volumes that were attributed to FCX at its previous approximate 81% economic ownership interest.

Subsequent Events. FCX evaluated events after March 31, 2023, and through the date the consolidated financial statements were issued and determined any events and transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

NOTE 2. EARNINGS PER SHARE

FCX calculates its basic net income per share of common stock under the two-class method and calculates its diluted net income per share of common stock using the more dilutive of the two-class method or the treasury-stock method. Basic net income per share of common stock was computed by dividing net income attributable to common stockholders (after deducting accumulated dividends and undistributed earnings to participating securities) by the weighted-average shares of common stock outstanding during the period. Diluted net income per share of common stock was calculated by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all potential dilutive shares of common stock, unless their effect would be antidilutive.

Reconciliations of net income and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted net income per share follow (in millions, except per share amounts):

			Three Months Ended
			March 31,
			2023						2022
Net income			$	1,049					$	1,904
Net income attributable to noncontrolling interests			(386)						(377)
Undistributed dividends and earnings allocated to participating securities			(5)						(5)
Net income attributable to common stockholders			$	658					$	1,522
Basic weighted-average shares of common stock outstanding			1,433						1,455
Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs)			10						14
Diluted weighted-average shares of common stock outstanding			1,443						1,469
Basic net income per share attributable to common stockholders			$	0.46					$	1.05
Diluted net income per share attributable to common stockholders			$	0.46					$	1.04

Shares associated with outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net income per share of common stock. There were no shares of common stock associated with outstanding stock options excluded in first-quarter 2023 and 2 million shares associated with outstanding stock options excluded in first-quarter 2022.

NOTE 3. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

			March 31, 2023						December 31, 2022
Current inventories:
Total materials and supplies, neta			$	2,056					$	1,964
Mill stockpiles			$	222					$	216
Leach stockpiles			1,218						1,167
Total current mill and leach stockpiles			$	1,440					$	1,383
Raw materials (primarily concentrate)			$	392					$	443
Work-in-process			245						221
Finished goodsb			1,604						1,169
Total product			$	2,241					$	1,833
Long-term inventories:
Mill stockpiles			$	206					$	199
Leach stockpiles			1,029						1,053
Total long-term mill and leach stockpilesc			$	1,235					$	1,252

a.Materials and supplies inventory was net of obsolescence reserves totaling $28 million at March 31, 2023, and $39 million at December 31, 2022.

b.The increase in finished goods inventory at March 31, 2023, was associated with the change in PT-FI's commercial arrangement with PT Smelting (PT-FI’s 39.5% owned copper smelter and refinery in Gresik, Indonesia) from a concentrate sales agreement to a tolling arrangement beginning on January 1, 2023. As a result of the arrangement, a portion of PT-FI’s first-quarter 2023 production was deferred in inventory and will be sold as refined metal in future periods.

c.Estimated metals in stockpiles not expected to be recovered within the next 12 months.

NOTE 4. INCOME TAXES

Geographic sources of FCX’s benefit (provision) for income taxes follow (in millions):

			Three Months Ended
			March 31,
			2023						2022
U.S. operations			$	4					$	(3)
International operations			(503)						(821)
Total			$	(499)					$	(824)

FCX’s consolidated effective income tax rate was 32% for first-quarter 2023 and 30% for first-quarter 2022. Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate. Because of its U.S. tax position, FCX does not record a financial statement impact for income or losses generated in the U.S.

In August 2022, the U.S. Inflation Reduction Act of 2022 (Act) was signed into law, which includes, among other provisions, a new Corporate Alternative Minimum Tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period. The provisions of the Act became applicable to FCX on January 1, 2023. As limited guidance related to how the CAMT provisions of the Act should be applied or otherwise administered has been released by the U.S. Department of the Treasury (Treasury), uncertainty remains regarding the application of the CAMT. FCX has made interpretations of certain provisions of the Act, and based on these interpretations, determined that the provisions of the Act did not impact FCX’s first-quarter 2023 financial results. However, future guidance released by the Treasury may differ from FCX’s interpretations, which could be material and could further limit FCX’s ability to realize future benefits from its U.S. net operating losses.

NOTE 5. DEBT AND EQUITY

The components of debt follow (in millions):

						March 31, 2023						December 31, 2022
Senior notes and debentures:
Issued by FCX						$	6,232					$	7,225
Issued by PT-FI						2,978						2,978
Issued by Freeport Minerals Corporation						354						355
Other						71						62
Total debt						9,635						10,620
Less current portion of debt						(49)						(1,037)
Long-term debt						$	9,586					$	9,583

Revolving Credit Facilities.

FCX and PT-FI have a $3.0 billion, unsecured revolving credit facility that matures in October 2027. Under the terms of the revolving credit facility, FCX may obtain loans and issue letters of credit in an aggregate amount of up to $3.0 billion with PT-FI’s capacity limited to $500 million, and letters of credit issuance limited to $1.5 billion. At March 31, 2023, FCX had $8 million in letters of credit issued under its revolving credit facility.

PT-FI has a $1.3 billion unsecured revolving credit facility that matures in July 2026.

Cerro Verde has a $350 million unsecured revolving credit facility that matures in May 2027.

At March 31, 2023, FCX, PT-FI and Cerro Verde had no borrowings outstanding under their respective revolving credit facilities and were in compliance with their respective covenants.

Senior Notes.

In March 2023, FCX repaid in full the outstanding principal balance of its 3.875% Senior Notes totaling $996 million at maturity.

Interest Expense, Net. Consolidated interest costs (before capitalization) totaled $207 million in first-quarter 2023 and $153 million in first-quarter 2022. The increase in consolidated interest costs (before capitalization) is primarily related to interest associated with PT-FI’s $3.0 billion of senior notes that were issued in April 2022 and a charge of $25 million related to contested tax matters in Peru.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $56 million in first-quarter 2023 and $26 million in first-quarter 2022. The increase in capitalized interest costs resulted from increased construction and development projects in process, primarily at the Manyar smelter and precious metals refinery in Indonesia (collectively, the Indonesia smelter projects).

Share Repurchase Program and Dividends. Since mid-2021, FCX has acquired 47.8 million shares of its common stock under the share repurchase program for a total cost of $1.8 billion ($38.35 average cost per share), including 12.3 million shares in first-quarter 2022 for a cost of $541 million. No shares have been purchased since July 11, 2022. As of May 4, 2023, FCX has $3.2 billion available for repurchases under the program.

On March 22, 2023, FCX declared quarterly cash dividends totaling $0.15 per share ($0.075 per share base dividend and $0.075 per share variable dividend) on its common stock, which were paid on May 1, 2023, to common stockholders of record as of April 14, 2023.

The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases are at the discretion of FCX’s Board of Directors (Board) and management, respectively, and are subject to a number of factors, including maintaining FCX’s net debt target, capital availability, FCX’s financial results, cash requirements, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by FCX’s Board or management, as applicable. FCX’s share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion.

NOTE 6. FINANCIAL INSTRUMENTS

FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates.

Commodity Contracts. From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions.

A discussion of FCX’s other derivative contracts and programs follows.

Derivatives Designated as Hedging Instruments - Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod and cathode customers request a fixed market price instead of the Commodity Exchange Inc. (COMEX) average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures or swap contracts. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the three-month periods ended March 31, 2023 and 2022. At March 31, 2023, FCX held copper futures and swap contracts that qualified for hedge accounting for 96 million pounds at an average contract price of $3.94 per pound, with maturities through December 2024.

A summary of gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, including on the related hedged item follows (in millions):

			Three Months Ended
			March 31,
			2023						2022
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments			$	14					$	12
Hedged item – firm sales commitments			(14)						(12)
Realized gains:
Matured derivative financial instruments			8						14

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. Certain FCX concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) copper price or the COMEX copper price and the London Bullion Market Association (London) gold price at the time of shipment as specified in the contract. FCX receives market prices based on prices in the specified future month, which results in price fluctuations recorded in revenues until the date of settlement. FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper prices and the London gold price as specified in the contracts, which results in an embedded derivative (i.e., a pricing mechanism that is finalized after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale of the metals contained in the concentrate or cathode at the then-current LME or COMEX copper price, and the London gold price. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host contract in its concentrate or cathode sales agreements since these contracts do not allow for net settlement and always result in physical delivery. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through earnings each period, using the period-end LME or COMEX copper forward prices and the adjusted London gold price, until the date of final pricing. Similarly, FCX purchases copper under contracts that provide for provisional pricing. Mark-to-market price fluctuations from these embedded derivatives are recorded through the settlement date and are reflected in revenues for sales contracts and in inventory for purchase contracts.

A summary of FCX’s embedded derivatives at March 31, 2023, follows:

			Open Positions						Average Price Per Unit												Maturities Through
						Contract						Market
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)			547						$	3.92					$	4.08					August 2023
Gold (thousands of ounces)			199						1,876						1,991						June 2023
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)			78						4.01						4.06						August 2023

Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into copper forward contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in production and delivery costs. At March 31, 2023, Atlantic Copper held net copper forward sales contracts for 12 million pounds at an average contract price of $4.01 per pound, with maturities through May 2023.

Summary of Gains (Losses). A summary of the realized and unrealized gains (losses) recognized in operating income for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):

			Three Months Ended
			March 31,
			2023						2022
Embedded derivatives in provisional sales contracts:a
Copper			$	231					$	218
Gold and other metals			42						22
Copper forward contractsb			(2)						4

a.Amounts recorded in revenues.

b.Amounts recorded in cost of sales as production and delivery costs.

Unsettled Derivative Financial Instruments

A summary of the fair values of unsettled commodity derivative financial instruments follows (in millions):

						March 31, 2023						December 31, 2022
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Copper futures and swap contracts						$	15					$	3
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional sales/purchase contracts						119						166
Copper forward contracts						—						1
Total derivative assets						$	134					$	170
Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Copper futures and swap contracts						$	—					$	3
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional sales/purchase contracts						10						39
Copper forward contracts						1						—
Total derivative liabilities						$	11					$	42

FCX’s commodity contracts have netting arrangements with counterparties with which the right of offset exists, and it is FCX’s policy to generally offset balances by contract on its balance sheet. FCX’s embedded derivatives on provisional sales/purchase contracts are netted with the corresponding outstanding receivable/payable balances.

A summary of these unsettled commodity contracts that are offset in the balance sheet follows (in millions):

						Assets												Liabilities
						March 31, 2023						December 31, 2022						March 31, 2023						December 31, 2022
Gross amounts recognized:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts						$	119					$	166					$	10					$	39
Copper derivatives						15						4						1						3
						134						170						11						42
Less gross amounts of offset:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts						3						—						3						—
						3						—						3						—
Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts						116						166						7						39
Copper derivatives						15						4						1						3
						$	131					$	170					$	8					$	42
Balance sheet classification:
Trade accounts receivable						$	108					$	163					$	3					$	7
Other current assets						15						4						—						—
Accounts payable and accrued liabilities						8						3						5						34
Other liabilities						—						—						—						1
						$	131					$	170					$	8					$	42

Credit Risk. FCX is exposed to credit loss when financial institutions with which it has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties. As of March 31, 2023, the maximum amount of credit exposure associated with derivative transactions was $134 million.

Other Financial Instruments. Other financial instruments include cash, cash equivalents, restricted cash and cash equivalents, accounts receivable, investment securities, legally restricted trust assets, accounts payable and accrued liabilities, accrued income taxes, dividends payable and debt. The carrying value for these financial instruments classified as current assets or liabilities approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and debt).

In addition, as of March 31, 2023, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents. The following table provides a reconciliation of total cash, cash equivalents and restricted cash and cash equivalents presented in the consolidated statements of cash flows (in millions):

						March 31, 2023						December 31, 2022
Balance sheet components:
Cash and cash equivalentsa,b						$	6,852					$	8,146
Restricted cash and cash equivalents included in:
Other current assets						118						111
Other assets						134						133
Total cash, cash equivalents and restricted cash and cash equivalents presented in the consolidated statements of cash flows						$	7,104					$	8,390

a.Includes time deposits of $0.3 billion at March 31, 2023, and $0.5 billion at December 31, 2022.

b.Includes cash designated for smelter development projects totaling $1.5 billion at March 31, 2023, and $1.8 billion at December 31, 2022.

NOTE 7. FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). FCX did not have any significant transfers in or out of Level 3 during first-quarter 2023.

FCX’s financial instruments are recorded on the consolidated balance sheets at fair value except for contingent consideration associated with the sale of the Deepwater Gulf of Mexico (GOM) oil and gas properties (which was recorded under the loss recovery approach) and debt. A summary of the carrying amount and fair value of FCX’s financial instruments (including those measured at net asset value (NAV) as a practical expedient), other than cash, cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, accrued income taxes and dividends payable (refer to Note 6) follows (in millions):

			At March 31, 2023
			Carrying						Fair Value
			Amount						Total						NAV						Level 1						Level 2						Level 3
Assets
Investment securities:a,b
U.S. core fixed income fund			$	26					$	26					$	26					$	—					$	—					$	—
Equity securities			7						7						—						7						—						—
Total			33						33						26						7						—						—
Legally restricted funds:a
U.S. core fixed income fund			63						63						63						—						—						—
Government mortgage-backed securities			38						38						—						—						38						—
Government bonds and notes			32						32						—						—						32						—
Corporate bonds			31						31						—						—						31						—
Money market funds			21						21						—						21						—						—
Asset-backed securities			19						19						—						—						19						—
Collateralized mortgage-backed securities			2						2						—						—						2						—
Total			206						206						63						21						122						—
Derivatives:c
Embedded derivatives in provisional sales/purchase contracts in a gross asset position			119						119						—						—						119						—
Copper futures and swap contracts			15						15						—						14						1						—
Total			134						134						—						14						120						—
Contingent consideration for the sale of the Deepwater GOM oil and gas propertiesa			63						54						—						—						—						54
Liabilities
Derivatives:c
Embedded derivatives in provisional sales/purchase contracts in a gross liability position			10						10						—						—						10						—
Copper forward contracts			1						1						—						—						1						—
Total			11						11						—						—						11						—
Long-term debt, including current portiond			9,635						9,336						—						—						9,336						—

			At December 31, 2022
			Carrying						Fair Value
			Amount						Total						NAV						Level 1						Level 2						Level 3
Assets
Investment securities:a,b
U.S. core fixed income fund			$	25					$	25					$	25					$	—					$	—					$	—
Equity securities			7						7						—						7						—						—
Total			32						32						25						7						—						—
Legally restricted funds:a
U.S. core fixed income fund			56						56						56						—						—						—
Government mortgage-backed securities			37						37						—						—						37						—
Government bonds and notes			34						34						—						—						34						—
Corporate bonds			31						31						—						—						31						—
Asset-backed securities			17						17						—						—						17						—
Money market funds			3						3						—						3						—						—
Collateralized mortgage-backed securities			3						3						—						—						3						—
Total			181						181						56						3						122						—
Derivatives:c
Embedded derivatives in provisional sales/purchase contracts in a gross asset position			166						166						—						—						166						—
Copper futures and swap contracts			3						3						—						3						—						—
Copper forward contracts			1						1						—						1						—						—
Total			170						170						—						4						166						—
Contingent consideration for the sale of the Deepwater GOM oil and gas propertiesa			67						57						—						—						—						57
Liabilities
Derivatives:c
Embedded derivatives in provisional sales/purchase contracts in a gross liability position			39						39						—						—						39						—
Copper forward contracts			3						3						—						—						3						—
Total			42						42						—						—						42						—
Long-term debt, including current portiond			10,620						10,097						—						—						10,097						—

a.Current portion included in other current assets and long-term portion included in other assets.

b.Excludes time deposits (which approximated fair value) included in (i) other current assets of $118 million at both March 31, 2023, and December 31, 2022, and (ii) other assets of $133 million at both March 31, 2023, and December 31, 2022, primarily associated with an assurance bond to support PT-FI’s commitment for additional domestic smelter development in Indonesia and PT-FI’s closure and reclamation guarantees.

c.Refer to Note 6 for further discussion and balance sheet classifications.

d.Recorded at cost except for debt assumed in acquisitions, which are recorded at fair value at the respective acquisition dates.

Valuation Techniques. The U.S. core fixed income fund is valued at NAV. The fund strategy seeks total return consisting of income and capital appreciation primarily by investing in a broad range of investment-grade debt securities, including U.S. government obligations, corporate bonds, mortgage-backed securities, asset-backed securities and money market instruments. There are no restrictions on redemptions (which are usually within one business day of notice).

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded and, as such, are classified within Level 1 of the fair value hierarchy.

Fixed income securities (government securities, corporate bonds, asset-backed securities and collateralized mortgage-backed securities) are valued using a bid-evaluation price or a mid-evaluation price. These evaluations are based on quoted prices, if available, or models that use observable inputs and, as such, are classified within Level 2 of the fair value hierarchy.

Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales are valued using quoted monthly LME or COMEX copper forward prices and the adjusted London gold price at each reporting date based on the month of maturity (refer to Note 6 for further discussion); however, FCX’s contracts themselves are not traded on an exchange. As a result, these derivatives are classified within Level 2 of the fair value hierarchy.

FCX’s derivative financial instruments for copper futures and swap contracts and copper forward contracts that are traded on the respective exchanges are classified within Level 1 of the fair value hierarchy because they are valued using quoted monthly COMEX or LME prices at each reporting date based on the month of maturity (refer to Note 6 for further discussion). Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy based on COMEX and LME forward prices.

In December 2016, FCX’s sale of its Deepwater GOM oil and gas properties included up to $150 million in contingent consideration that was recorded at the total amount under the loss recovery approach. The contingent consideration is being received over time as cash flows are realized from a third-party production handling agreement for an offshore platform, with the related payments commencing in third-quarter 2018. The contingent consideration included in (i) other current assets totaled $17 million at March 31, 2023, and $20 million at December 31, 2022, and (ii) other assets totaled $46 million at March 31, 2023, and $47 million at December 31, 2022. The fair value of this contingent consideration was calculated based on a discounted cash flow model using inputs that include third-party estimates for reserves, production rates and production timing, and discount rates. Because significant inputs are not observable in the market, the contingent consideration is classified within Level 3 of the fair value hierarchy.

Long-term debt, including current portion, is primarily valued using available market quotes and, as such, is classified within Level 2 of the fair value hierarchy.

The techniques described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the techniques used at March 31, 2023, as compared with those techniques used at December 31, 2022.

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first three months of 2023 follows (in millions):

Fair value at January 1, 2023			$	57
Net unrealized gain related to assets still held at the end of the period			1
Settlements			(4)
Fair value at March 31, 2023			$	54

NOTE 8. CONTINGENCIES AND COMMITMENTS

Litigation

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2022 Form 10-K, other than the matter discussed below.

Louisiana Parishes Coastal Erosion Cases. Certain FCX affiliates were named as defendants, along with numerous co-defendants, in 13 cases out of a total of 42 cases filed in Louisiana state courts by 6 south Louisiana parishes (Cameron, Jefferson, Plaquemines, St. Bernard, St. John the Baptist and Vermilion), alleging that certain oil and gas exploration and production operations and sulfur mining and production operations in coastal Louisiana contaminated and damaged coastal wetlands and caused significant land loss along the Louisiana coast. In 2019, affiliates of FCX reached an agreement in principle to settle all 13 cases and, as of October 2022, all parties have executed the settlement agreement. On March 16, 2023, a non-plaintiff coastal parish included in the settlement (Terrebonne), filed an amended petition titled Terrebonne Parish Consolidated Government vs. Louisiana

Department of Natural Resources et al., Docket No. 185576, in the 32nd Judicial District Court, Terrebonne Parish, State of Louisiana, adding the settling FCX affiliates to a lawsuit that challenges whether Terrebonne Parish is validly bound to the settlement agreement and seeks to have the court declare the settlement void. FCX is evaluating and exploring options to resolve this dispute and will vigorously defend this matter.

Other Matters

Smelter Development Progress. As disclosed in Note 12 of FCX’s 2022 Form 10-K, in March 2022, PT-FI paid the Indonesia government an administrative fine totaling $57 million related to lack of smelter development in light of the COVID-19 pandemic (first-quarter 2022 included charges of $41 million associated with the administrative fine). Based on PT-FI’s revised smelter construction schedule, PT-FI does not believe any additional fines should be applied and will dispute any attempts by the Indonesia government to levy additional fines, which could be significant.

PT-FI Export License. Indonesia regulations require PT-FI and PT Smelting to renew their export licenses annually, subject to review by the Indonesia government every six months, depending on smelter construction progress. In March 2023, PT-FI received an extension of its export license through June 10, 2023. PT-FI's special mining license provides that exports may continue through 2023, subject to force majeure considerations. PT-FI is working with the Indonesia government to obtain approval to continue exports as required for PT-FI’s operations until the Indonesia smelter projects are fully commissioned and reach designed operating conditions.

PT-FI Export Duties. In late 2022, PT-FI’s export duty rate declined from 5% to 2.5% as a result of smelter development progress. In March 2023, the Indonesia government verified that construction progress on the Manyar smelter exceeded 50%, allowing PT-FI’s export duties to be eliminated effective March 29, 2023.

NOTE 9. BUSINESS SEGMENTS

FCX has organized its mining operations into four primary divisions - North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX’s reportable segments, which include the Morenci and Cerro Verde copper mines, the Grasberg minerals district (Indonesia Mining), the Rod & Refining operations and Atlantic Copper Smelting & Refining.

Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mines to other segments, including Atlantic Copper Smelting & Refining and, through December 31, 2022, on 39.5% of PT-FI’s sales to PT Smelting, until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX’s net deferred profits and quarterly earnings.

Beginning January 1, 2023, PT-FI's commercial arrangement with PT Smelting converted from a concentrate sales agreement to a tolling arrangement. Under this arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its concentrate and PT-FI retains title to all products for sale to third parties (i.e., there are no further sales from PT-FI to PT Smelting). While the new tolling agreement with PT Smelting does not significantly change PT-FI’s economics, it impacted the timing of PT-FI’s first-quarter 2023 sales and working capital requirements, as a portion of PT-FI’s first-quarter 2023 production was deferred in inventory and will be sold as refined metal in future periods.

FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs, along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following Financial Information by Business Segment reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

Product Revenues. FCX’s revenues attributable to the products it sold for the first quarters of 2023 and 2022 follow (in millions):

			Three Months Ended
			March 31,
			2023						2022
Copper:
Concentrate			$	1,587					$	2,691
Cathode			1,327						1,435
Rod and other refined copper products			921						1,116
Purchased coppera			204						70
Molybdenum			592						378
Gold			531						811
Otherb			133						188
Adjustments to revenues:
Treatment chargesc			(101)						(133)
Royalty expensed			(60)						(95)
PT-FI export dutiese			(18)						(98)			f
Revenues from contracts with customers			5,116						6,363
Embedded derivativesg			273						240
Total consolidated revenues			$	5,389					$	6,603

a.FCX purchases copper cathode primarily for processing by its Rod & Refining operations.

b.Primarily includes revenues associated with silver.

c.First-quarter 2023 treatment charges exclude tolling costs paid to PT Smelting, which are recorded as production costs in the consolidated statements of income.

d.Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold and prices.

e.Refer to Note 8 for further discussion of PT-FI export duties.

f.Includes a charge of $18 million associated with an adjustment to prior-period export duties.

g.Refer to Note 6 for discussion of embedded derivatives related to FCX’s provisionally priced copper concentrate and cathode sales contracts.

Financial Information by Business Segment

(In millions)
																																																																					Atlantic																								Corporate,
			North America Copper Mines																		South America Mining																																										Copper																								Other
																											Cerro																		Indonesia												Molybdenum						Rod &						Smelting																								& Elimi-						FCX
			Morenci												Other						Total						Verde						Other						Total						Mining												Mines						Refining						& Refining																								nations						Total
Three Months Ended March 31, 2023
Revenues:
Unaffiliated customers			$	32											$	97					$	129					$	958					$	234					$	1,192					$	1,199		a									$	—					$	1,523					$	749																							$	597		b			$	5,389
Intersegment			593												948						1,541						244						—						244						169												223						6						7																								(2,190)						—
Production and delivery			381												781						1,162						620						187						807						335												96						1,527						734																								(1,496)						3,165
Depreciation, depletion and amortization			43												60						103						91						16						107						148												20						1						7																								13						399
Selling, general and administrative expenses			—												1						1						2						—						2						28												—						—						8																								87						126
Mining exploration and research expenses			—												—						—						—						—						—						—												—						—						—																								31						31
Environmental obligations and shutdown costs			—												21						21						—						—						—						—												—						—						—																								46						67
Operating income (loss)			201												182						383						489						31						520						857												107						1						7																								(274)						1,601
Interest expense, net			—												—						—						29						—						29						9												—						—						6																								107						151
Provision for (benefit from) income taxes			—												—						—						187						7						194						330												—						—						—																								(25)						499
Net income attributable to noncontrolling interests			—												—						—						140						18						158						271			c									—						—						—																								(43)						386
Total assets at March 31, 2023			3,142												5,668						8,810						8,612						1,871						10,483						21,046												1,707						221						1,152																								7,490						50,909
Capital expenditures			56												140						196						61						39						100						449												9						5						12																								350			d			1,121
Three Months Ended March 31, 2022
Revenues:
Unaffiliated customers			$	90											$	55					$	145					$	1,106					$	160					$	1,266					$	2,326		a									$	—					$	1,743					$	718																							$	405		b			$	6,603
Intersegment			711												1,095						1,806						108						—						108						78												128						9						—																								(2,129)						—
Production and delivery			363												655						1,018						558						112						670						626												75						1,754						722																								(1,715)						3,150
Depreciation, depletion and amortization			44												61						105						87						10						97						248												16						1						6																								16						489
Selling, general and administrative expenses			—												1						1						2						—						2						27												—						—						8																								77						115
Mining exploration and research expenses			—												—						—						—						—						—						—												—						—						—																								24						24
Environmental obligations and shutdown costs			—												—						—						—						—						—						—												—						—						—																								16						16
Operating income (loss)			394												433						827						567						38						605						1,503												37						(3)						(18)																								(142)						2,809
Interest expense, net			—												—						—						3						—						3						2												—						—						2																								120						127
Provision for (benefit from) income taxes			—												—						—						227						14						241						586												—						—						—																								(3)						824
Net income attributable to noncontrolling interests			—												—						—						168						6						174						190			c									—						—						—																								13						377
Total assets at March 31, 2022			2,773												5,284						8,057						8,678						1,925						10,603						19,338												1,702						299						1,045																								7,788						48,832
Capital expenditures			73												57						130						33						23						56						379												1						2						11																								144			d			723

a.Includes PT-FI sales to PT Smelting totaling $27 million in first-quarter 2023 (reflecting adjustments to prior period provisionally priced concentrate sales) and $917 million in first-quarter 2022. Beginning January 1, 2023, there are no sales from PT-FI to PT Smelting (refer to above discussion of the tolling arrangement between PT-FI and PT Smelting).

b.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

c.Beginning January 1, 2023, FCX’s economic and equity ownership interest in PT-FI is 48.76%. Prior to January 1, 2023, FCX's economic interest in PT-FI approximated 81%. As discussed in Note 3 of FCX’s 2022 Form 10-K, in accordance with provisions pertaining to PT-FI’s shareholders agreement, FCX's first-quarter 2023 net income included a $35 million net benefit associated with PT-FI sales volumes that were attributed to FCX at its previous approximate 81% economic ownership interest.

d.Primarily includes capital expenditures for the Indonesia smelter projects.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Freeport-McMoRan Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Freeport-McMoRan Inc. (the Company) as of March 31, 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, the related consolidated statements of income, comprehensive income, equity and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated February 15, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Ernst & Young LLP

Phoenix, Arizona

May 4, 2023