Item 1. Financial Statements.

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Item 1. Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2023		December 31, 2022
	(In Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	5,745	$	8,146
Restricted cash and cash equivalents	697		111
Trade accounts receivable	792		1,336
Income and other tax receivables	488		459

Inventories:
Product	2,415		1,833
Materials and supplies, net	2,131		1,964
Mill and leach stockpiles	1,403		1,383

Other current assets	406		381

Total current assets	14,077		15,613
Property, plant, equipment and mine development costs, net	34,535		32,627


Long-term mill and leach stockpiles	1,327		1,252

Other assets	1,709		1,601

Total assets	$	51,648	$	51,093

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,724	$	4,027
Accrued income taxes	489		744
Current portion of environmental and asset retirement obligations (AROs)	395		320
Dividends payable	217		217

Current portion of debt	35		1,037
Total current liabilities	4,860		6,345
Long-term debt, less current portion	9,370		9,583
Environmental and AROs, less current portion	4,645		4,463
Deferred income taxes	4,399		4,269
Other liabilities	1,697		1,562

Total liabilities	24,971		26,222



Equity:
Stockholders’ equity:
Common stock	162		161
Capital in excess of par value	24,833		25,322
Accumulated deficit	(2,447)		(3,907)
Accumulated other comprehensive loss	(317)		(320)
Common stock held in treasury	(5,772)		(5,701)
Total stockholders’ equity	16,459		15,555
Noncontrolling interests	10,218		9,316
Total equity	26,677		24,871
Total liabilities and equity	$	51,648	$	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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(In Millions, Except Per Share Amounts)
Revenues	$	5,824	$	5,003	$	16,950	$	17,022
Cost of sales:
Production and delivery	3,548		3,366		10,260		9,519
Depreciation, depletion and amortization (DD&A)	533		508		1,479		1,504

Metals inventory adjustments	5		25		7		43
Total cost of sales	4,086		3,899		11,746		11,066
Selling, general and administrative expenses	118		98		359		313
Mining exploration and research expenses	30		38		103		87
Environmental obligations and shutdown costs	98		6		239		51
Net gain on sales of assets	—		—		—		(2)
Total costs and expenses	4,332		4,041		12,447		11,515
Operating income	1,492		962		4,503		5,507
Interest expense, net	(96)		(140)		(418)		(423)
Net gain on early extinguishment of debt	5		20		10		28

Other income, net	71		25		183		67
Income before income taxes and equity in affiliated companies’ net earnings	1,472		867		4,278		5,179
Provision for income taxes	(508)		(315)		(1,546)		(1,710)
Equity in affiliated companies’ net earnings	—		8		12		33


Net income	964		560		2,744		3,502

Net income attributable to noncontrolling interests	(510)		(156)		(1,284)		(731)


Net income attributable to common stockholders	$	454	$	404	$	1,460	$	2,771


Net income per share attributable to common stockholders:
Basic	$	0.31	$	0.28	$	1.01	$	1.91
Diluted	$	0.31	$	0.28	$	1.01	$	1.90




Weighted-average shares of common stock outstanding:
Basic	1,435		1,431		1,434		1,444
Diluted	1,443		1,439		1,443		1,455

Dividends declared per share of common stock	$	0.15	$	0.15	$	0.45	$	0.45

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(In Millions)
Net income	$	964	$	560	$	2,744	$	3,502

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		1		3		5
Foreign exchange losses	(1)		—		—		(1)


Other comprehensive income	—		1		3		3

Total comprehensive income	964		561		2,747		3,505
Total comprehensive income attributable to noncontrolling interests	(509)		(156)		(1,284)		(731)

Total comprehensive income attributable to common stockholders	$	455	$	405	$	1,463	$	2,774

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended
	September 30,
	2023		2022
	(In Millions)
Cash flow from operating activities:
Net income	$	2,744	$	3,502
Adjustments to reconcile net income to net cash provided by operating activities:
DD&A	1,479		1,504


Metals inventory adjustments	7		43

Net gain on sales of assets	—		(2)
Stock-based compensation	89		75
Net charges for environmental and AROs, including accretion	383		180
Payments for environmental and AROs	(181)		(197)
Net charges for defined pension and postretirement plans	44		28
Pension plan contributions	(10)		(52)
Net gain on early extinguishment of debt	(10)		(28)
Deferred income taxes	130		83

Deferred profit recognized on PT Freeport Indonesia’s (PT-FI) sales to PT Smelting	(112)		(34)







Other, net	109		(52)
Changes in working capital and other:
Accounts receivable	550		456
Inventories	(738)		(184)
Other current assets	7		(71)
Accounts payable and accrued liabilities	(180)		84
Accrued income taxes and timing of other tax payments	(352)		(1,265)
Net cash provided by operating activities	3,959		4,070

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(545)		(430)
South America	(259)		(203)
Indonesia mining	(1,274)		(1,148)
Indonesia smelter projects	(1,193)		(517)
Molybdenum mines	(43)		(16)

Other	(148)		(108)

Proceeds from sales of assets	16		102

Loans to PT Smelting for expansion	(109)		(51)

Other, net	(29)		(10)
Net cash used in investing activities	(3,584)		(2,381)

Cash flow from financing activities:
Proceeds from debt	1,186		5,366
Repayments of debt	(2,397)		(4,073)



Cash dividends and distributions paid:
Common stock	(647)		(652)
Noncontrolling interests	(407)		(625)
Treasury stock purchases	—		(1,347)
Contributions from noncontrolling interests	50		142
Proceeds from exercised stock options	41		106
Payments for withholding of employee taxes related to stock-based awards	(50)		(55)
Debt financing costs and other, net	(2)		(41)
Net cash used in financing activities	(2,226)		(1,179)

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents	(1,851)		510

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	$	6,539	$	8,824

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30


	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 June 30, 2023	1,618	$	162	$	25,028	$	(2,901)	$	(318)	184	$	(5,769)		$	16,202		$	9,825	$	26,027





Exercised and issued stock-based awards	—	—		7		—		—		—	—			7			—		7
Stock-based compensation, including the tender of shares	—	—		14		—		—		—	(3)			11			—		11



Dividends	—	—		(216)		—		—		—	—			(216)			(116)		(332)







Net income attributable to common stockholders	—	—		—		454		—		—	—			454			—		454
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—			—			510		510
Other comprehensive income (loss)	—	—		—		—		1		—	—			1			(1)		—
Balance at September 30, 2023	1,618	$	162	$	24,833	$	(2,447)	$	(317)	184	$	(5,772)		$	16,459		$	10,218	$	26,677


	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 June 30, 2022	1,612	$	161	$	25,661	$	(5,008)	$	(386)	177	$	(5,539)		$	14,889		$	9,158	$	24,047






Stock-based compensation, including the tender of shares	—	—		12		—		—		—	—			12			—		12
Treasury stock purchases	—	—		—		—		—		6	(162)			(162)			—		(162)


Dividends	—	—		(213)		—		—		—	—			(213)			(112)		(325)



Contributions from noncontrolling interests	—	—		23		—		—		—	—			23			25		48


Net income attributable to common stockholders	—	—		—		404		—		—	—			404			—		404
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—			—			156		156
Other comprehensive income	—	—		—		—		1		—	—			1			—		1
Balance at September 30, 2022	1,612	$	161	$	25,483	$	(4,604)	$	(385)	183	$	(5,701)		$	14,954		$	9,227	$	24,181

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (continued)

NINE MONTHS ENDED SEPTEMBER 30



	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		62		—		—		—	—			63			—		63
Stock-based compensation, including the tender of shares	—	—		74		—		—		1	(71)			3			(1)		2


Dividends	—	—		(649)		—		—		—	—			(649)			(407)		(1,056)

Contributions from noncontrolling interests	—	—		24		—		—		—	—			24			26		50
Net income attributable to common stockholders	—	—		—		1,460		—		—	—			1,460			—		1,460
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—			—			1,284		1,284
Other comprehensive income	—	—		—		—		3		—	—			3			—		3
Balance at September 30, 2023	1,618	$	162	$	24,833	$	(2,447)	$	(317)	184	$	(5,772)		$	16,459		$	10,218	$	26,677



	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		112		—		—		—	—			113			—		113
Stock-based compensation, including the tender of shares	—	—		75		—		—		2	(62)			13			(11)		2
Treasury stock purchases	—	—		—		—		—		35	(1,347)			(1,347)			—		(1,347)


Dividends	—	—		(648)		—		—		—	—			(648)			(605)		(1,253)



Contributions from noncontrolling interests	—	—		69		—		—		—	—			69			73		142

Net income attributable to common stockholders	—	—		—		2,771		—		—	—			2,771			—		2,771
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—			—			731		731
Other comprehensive income	—	—		—		—		3		—	—			3			—		3
Balance at September 30, 2022	1,612	$	161	$	25,483	$	(4,604)	$	(385)	183	$	(5,701)		$	14,954		$	9,227	$	24,181

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 nine-month period ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

PT-FI. 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 September 30, 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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income	$	964	$	560	$	2,744	$	3,502
Net income attributable to noncontrolling interests	(510)		(156)		(1,284)		(731)

Undistributed dividends and earnings allocated to participating securities	(5)		(5)		(5)		(6)







Net income attributable to common stockholders	$	449	$	399	$	1,455	$	2,765


Basic weighted-average shares of common stock outstanding	1,435		1,431		1,434		1,444
Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs)	8		8		9		11
Diluted weighted-average shares of common stock outstanding	1,443		1,439		1,443		1,455

Net income per share attributable to common stockholders:


Basic	$	0.31	$	0.28	$	1.01	$	1.91



Diluted	$	0.31	$	0.28	$	1.01	$	1.90

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 the

third quarter and first nine months of 2023, and 3 million shares and 1 million shares excluded for the third quarter and first nine months of 2022, respectively.

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

The components of inventories follow (in millions):


	September 30, 2023		December 31, 2022
Current inventories:
Raw materials (primarily copper concentrate)	$	467	$	443
Work-in-process	219		221
Finished goodsa	1,729		1,169
Total product	$	2,415	$	1,833

Total materials and supplies, netb	$	2,131	$	1,964

Mill stockpiles	$	165	$	216
Leach stockpiles	1,238		1,167
Total current mill and leach stockpiles	$	1,403	$	1,383

Long-term inventories:
Mill stockpiles	$	260	$	199
Leach stockpiles	1,067		1,053
Total long-term mill and leach stockpilesc	$	1,327	$	1,252

a.The increase in finished goods inventory at September 30, 2023, was primarily 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 copper concentrate sales agreement to a tolling arrangement beginning on January 1, 2023, and also included approximately 75 thousand ounces of gold available for sale pending approval of PT-FI’s export license for anode slimes. See Note 8 for further discussion.

b.Materials and supplies inventory was net of obsolescence reserves totaling $31 million at September 30, 2023, and $39 million at December 31, 2022.

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):


	Nine Months Ended
	September 30,
	2023		2022
U.S. operations	$	3	$	(5)
International operations	(1,549)		(1,705)		a
Total	$	(1,546)	$	(1,710)

a.Includes a credit of $31 million, primarily associated with completion of Cerro Verde’s 2016 tax audit.

FCX’s consolidated effective income tax rate was 36% for the first nine months of 2023 and 33% for the first nine months of 2022. A higher 2023 effective income tax rate primarily reflects the impact of pre-tax, nondeductible charges totaling $142 million for the first nine months of 2023 associated with contested tax rulings issued by the Peruvian Supreme Court. In addition, 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 tax impact for income or losses generated in the U.S.

The provisions of the U.S. Inflation Reduction Act of 2022 (the Act) became applicable to FCX on January 1, 2023. The Act 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. 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 financial results for the first nine months of 2023.

There has been limited guidance released by the U.S. Department of the Treasury (the Treasury) on how the CAMT provisions of the Act should be applied or otherwise administered, and uncertainty remains regarding their application. In October 2023, the Treasury stated publicly that it expects to issue proposed rules regarding the application of the CAMT by the end of 2023. Future guidance released by the Treasury may differ from FCX’s interpretations, which could be material and may further limit its ability to realize future benefits from its U.S. net operating losses.

NOTE 5. DEBT AND EQUITY

The components of debt follow (in millions):


	September 30, 2023		December 31, 2022



Senior notes and debentures:
Issued by FCX	$	6,004	$	7,225
Issued by PT-FI	2,980		2,978
Issued by Freeport Minerals Corporation	354		355



Other	67		62
Total debt	9,405		10,620
Less current portion of debt	(35)		(1,037)
Long-term debt	$	9,370	$	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 September 30, 2023, FCX had $7 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 and Cerro Verde has a $350 million unsecured revolving credit facility that matures in May 2027.

At September 30, 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.

Beginning in 2022 and through November 3, 2023, FCX has purchased $1.3 billion aggregate principal amount of its senior notes in open-market transactions for a total cost of $1.2 billion, including $102 million aggregate principal amount in third-quarter 2023 and $233 million in the first nine months of 2023. A summary of the senior note purchases and related gains on debt extinguishments for the first nine months of 2023 follows (in millions):



	Principal Amount		Discounts/Deferred Issuance Costs		Book Value		Redemption Value		Gain

5.00% Senior Notes due 2027	$	17	$	—	$	17	$	17	$	—
4.125% Senior Notes due 2028	61		—		61		58		3
4.375% Senior Notes due 2028	46		1		45		43		2
5.25% Senior Notes due 2029	31		—		31		31		—
4.25% Senior Notes due 2030	50		1		49		46		3
4.625% Senior Notes due 2030	28		—		28		26		2


	$	233	$	2	$	231	$	221	$	10

Interest Expense, Net. Consolidated interest costs (before capitalization) totaled $165 million in third-quarter 2023, $182 million in third-quarter 2022, $606 million for the first nine months of 2023 and $524 million for the first nine months of 2022. Consolidated interest costs (before capitalization) for the first nine months of 2023, includes

interest charges totaling $74 million associated with Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $69 million in third-quarter 2023, $42 million in third-quarter 2022, $188 million for the first nine months of 2023 and $101 million for the first nine months of 2022. The increase in capitalized interest costs in the 2023 periods, compared to the 2022 periods, primarily 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. Beginning in mid-2021 and through July 11, 2022, FCX 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). FCX has $3.2 billion available for repurchases under the program.

On September 20, 2023, FCX’s Board of Directors (Board) declared cash dividends totaling $0.15 per share on its common stock (including a $0.075 per share quarterly base cash dividend and a $0.075 per share quarterly variable, performance-based cash dividend), which was paid on November 1, 2023, to common stockholders of record as of October 13, 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 and management, respectively, and are subject to a number of factors, including not exceeding 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 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 nine-month periods ended September 30, 2023 and 2022. At September 30, 2023, FCX held copper futures and swap contracts that qualified for hedge accounting for 85 million pounds at an average contract price of $3.85 per pound, with maturities through May 2025.

Summary of Gains (Losses). A summary of the realized and unrealized 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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments	$	2	$	17	$	(9)	$	(61)
Hedged item – firm sales commitments	(2)		(17)		9		61

Realized losses:
Matured derivative financial instruments	(4)		(50)		(1)		(48)

Derivatives Not Designated as Hedging Instruments.

Embedded Derivatives. Certain FCX 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, cathode or anode slimes at the then-current LME copper, COMEX copper or London gold prices. 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, cathode and anode slime 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 September 30, 2023, follows:


	Open Positions		Average Price Per Unit					Maturities Through
		Contract			Market
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	553		$	3.78		$	3.75	February 2024
Gold (thousands of ounces)	209		1,925			1,884		December 2023
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	165		3.80			3.75		January 2024

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 September 30, 2023, Atlantic Copper held net copper forward purchase contracts for 19 million pounds at an average contract price of $3.77 per pound, with maturities through November 2023.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Embedded derivatives in provisional sales contracts:a
Copper	$	(30)	$	(272)	$	31	$	(774)
Gold and other metals	(10)		(34)		12		(45)
Copper forward contractsb	(1)		5		(3)		31

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):


	September 30, 2023		December 31, 2022
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	—	$	3
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional sales/purchase contracts	16		166
Copper forward contracts	—		1
Total derivative assets	$	16	$	170

Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	8	$	3
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional sales/purchase contracts	35		39


Copper forward contracts	1		—
Total derivative liabilities	$	44	$	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
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022

Gross amounts recognized:

Embedded derivatives in provisional
sales/purchase contracts	$	16	$	166	$	35	$	39

Copper derivatives	—		4		9		3
	16		170		44		42

Less gross amounts of offset:

Embedded derivatives in provisional
sales/purchase contracts	3		—		3		—


	3		—		3		—

Net amounts presented in balance sheet:

Embedded derivatives in provisional
sales/purchase contracts	13		166		32		39

Copper derivatives	—		4		9		3
	$	13	$	170	$	41	$	42

Balance sheet classification:
Trade accounts receivable	$	5	$	163	$	20	$	7
Other current assets	—		4		—		—


Accounts payable and accrued liabilities	8		3		21		34
Other liabilities	—		—		—		1
	$	13	$	170	$	41	$	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 September 30, 2023, the maximum amount of credit exposure associated with derivative transactions was $16 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 September 30, 2023, FCX had 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):


	September 30, 2023			December 31, 2022
Balance sheet components:
Cash and cash equivalentsa	$	5,745		$	8,146

Restricted cash and cash equivalents, current	697		b	111
Restricted cash and cash equivalents, long-term - included in other assets	97			133
Total cash, cash equivalents and restricted cash and cash equivalents presented in the consolidated statements of cash flows	$	6,539		$	8,390

a.Includes time deposits of $0.3 billion at September 30, 2023, and $0.5 billion at December 31, 2022, and cash designated for smelter development projects totaling $0.6 billion at September 30, 2023, and $1.8 billion at December 31, 2022.

b.Includes $0.5 billion associated with PT-FI’s export proceeds. See Note 8 for further discussion.

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 third-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 September 30, 2023
	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	5		5		—		5		—		—

Total	30		30		25		5		—		—

Legally restricted funds:a
U.S. core fixed income fund	61		61		61		—		—		—
Government mortgage-backed securities	43		43		—		—		43		—
Government bonds and notes	30		30		—		—		30		—
Corporate bonds	30		30		—		—		30		—
Money market funds	19		19		—		19		—		—
Asset-backed securities	15		15		—		—		15		—
Collateralized mortgage-backed securities	1		1		—		—		1		—

Total	199		199		61		19		119		—


Embedded derivatives in provisional sales/purchase contracts in a gross asset positionc	16		16		—		—		16		—









Contingent consideration for the sale of the Deepwater GOM oil and gas propertiesa	55		47		—		—		—		47



Liabilities
Derivatives:c
Embedded derivatives in provisional sales/purchase contracts in a gross liability position	35		35		—		—		35		—


Copper futures and swap contracts	8		8		—		6		2		—
Copper forward contracts	1		1		—		1		—		—


Total	44		44		—		7		37		—




Long-term debt, including current portiond	9,405		8,639		—		—		8,639		—


	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 amounts included in restricted cash and cash equivalents and other assets (which approximated fair value), primarily amounts associated with (i) PT-FI’s export proceeds ($0.5 billion at September 30, 2023), (ii) an assurance bond to support PT-FI’s commitment for additional smelter development in Indonesia ($135 million at September 30, 2023, and $133 million at December 31, 2022) and (iii) PT-FI’s mine closure and reclamation guarantees ($111 million at September 30, 2023, and $103 million at December 31, 2022).

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 2018. The contingent consideration included in (i) other current assets totaled $17 million at September 30, 2023, and $20 million at December 31, 2022, and (ii) other assets totaled $38 million at September 30, 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 September 30, 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 nine 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	(11)
Fair value at September 30, 2023	$	47

NOTE 8. CONTINGENCIES AND COMMITMENTS

Environmental

FCX recorded adjustments to environmental obligations totaling $83 million in third-quarter 2023 and $199 million for the first nine months of 2023, primarily related to Pinal Creek in Arizona for a refined engineering evaluation and Newtown Creek in New York based on a focused feasibility study for an early action in the East Branch tributary. Refer to Note 12 of FCX’s 2022 Form 10-K for further discussion of FCX’s environmental obligations.

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

Historical Smelter Sites. On January 30, 2017, a putative class action titled Juan Duarte, Betsy Duarte and N.D., Infant, by Parents and Natural Guardians Juan Duarte and Betsy Duarte, Leroy Nobles and Betty Nobles, on behalf of themselves and all others similarly situated v. United States Metals Refining Company, Freeport-McMoRan

Copper & Gold Inc. and Amax Realty Development, Inc., Docket No. 734-17, was filed in the Superior Court of New Jersey. In July 2023, the Court approved an agreement between the parties pursuant to which all claims were settled for an amount not material to FCX.

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 matters 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.

Asbestos and Talc Claims. As previously discussed in Note 12 of FCX’s 2022 Form 10-K, in 2021 Imerys Talc America (Imerys), an affiliate of Imerys S.A., filed the form of a settlement and release agreement to be entered into by Cyprus Amax Minerals Company (CAMC), an indirect wholly owned subsidiary of FCX, Cyprus Mines Corporation (Cyprus Mines), a wholly owned subsidiary of CAMC, FCX, Imerys and the other debtors, tort claimants’ committee and future claims representative in the Imerys bankruptcy. The bankruptcy court continues to temporarily stay approximately 950 talc-related lawsuits against CAMC, Cyprus Mines, FCX and Imerys but there can be no assurance that the bankruptcy court will continue to impose the interim stay.

In accordance with the global settlement agreement, among other things, (1) CAMC agreed to contribute a total of $130 million in cash to a settlement trust in seven annual installments, which will be guaranteed by FCX, and (2) CAMC and Cyprus Mines and their affiliates will contribute to the settlement trust all rights that they have to the proceeds of certain legacy insurance policies as well as indemnity rights they have against Johnson & Johnson. Mediation to resolve open issues in the Imerys and Cyprus Mines bankruptcy cases is ongoing, including the adequacy of the settlement and agreed contribution from CAMC, with a deadline for the parties to complete mediation by December 31, 2023, set by the bankruptcy court.

There can be no assurance that the global settlement will be successfully implemented.

Other Matters

Indonesia Regulatory Matters

Over the past several years, the Indonesia government has enacted various laws and regulations to promote downstream processing of various products, including copper concentrates.

Export License. On June 10, 2023, export licenses for several exporters, including PT-FI and PT Smelting, expired. During the second quarter and through July 2023, the Indonesia government issued various regulations to address exports of unrefined metals, including regulations by the Ministry of Energy and Mineral Resources (MEMR) to allow continued exports of copper concentrates through May 2024 for companies engaged in ongoing smelter development projects with construction progress greater than 50%, and regulations by the Ministry of Trade on the permitted export of various products, including copper concentrates.

On July 24, 2023, PT-FI was granted an export license through May 2024 for 1.7 million metric tons of copper concentrate.

Through June 10, 2023, PT-FI exported anode slimes under PT Smelting’s export license. A change in regulations during second-quarter 2023 requires PT-FI to follow a new administrative process for the export of anode slimes. The administrative process is advancing, and PT-FI expects to receive approval to resume exports of anode slimes during fourth-quarter 2023.

PT-FI will continue to work with the Indonesia government to obtain approvals to continue exports of copper concentrates and anode slimes beyond May 2024 and until the Indonesia smelter projects are fully commissioned and reach designed operating conditions.

Export Duties. Under PT-FI’s special mining license (IUPK), which was granted by the Indonesia government in 2018, export duties are determined based on regulations that were in effect in 2018 and no duties are required after smelter construction progress reached 50%. In March 2023, the Indonesia government verified that construction progress on the Manyar smelter exceeded 50% and PT-FI's export duties were eliminated effective March 29, 2023.

In July 2023, the Ministry of Finance issued a revised regulation on duties for various exported products, including copper concentrates. The revised regulation assesses export duties for copper concentrates at 7.5% in the second half of 2023 and 10% in 2024 for companies with smelter progress of 70% to 90%. For companies with smelter progress above 90%, export duties would be 5% in the second half of 2023 and 7.5% in 2024. During third-quarter 2023, PT-FI incurred $147 million in export duties under the revised regulation. PT-FI does not believe any export duties should be assessed under the revised regulation and continues to discuss the applicability of the revised regulation with the Indonesia government because of inconsistencies with its IUPK. Additionally, PT-FI is required by the Indonesia government to provide bank guarantees for unpaid export duties, which have been presented as current restricted cash and cash equivalents at September 30, 2023.

Smelter Development Progress. In 2018, PT-FI agreed to expand its domestic smelting and refining capacity to process all of its copper concentrates in Indonesia. PT-FI is advancing the construction of the Indonesia smelter projects and expanding capacity at PT Smelting. PT-FI estimates construction of the Manyar smelter to be complete in mid-2024 followed by commissioning of the facilities and a ramp-up schedule through year-end 2024.

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 (which included charges of $41 million recorded in first-quarter 2022) related to smelter development delays in light of the COVID-19 pandemic.

In May 2023, MEMR issued a decree prescribing a revised formula for administrative fines for delays in construction of smelter and refining facilities, taking into account allowances for certain delays associated with the COVID-19 pandemic as verified by a third-party. In mid-July 2023, PT-FI submitted its third-party verified calculation, which resulted in an accrual for a potential administrative fine of $55 million based on the formula prescribed by the decree related to the period from August 2020 through January 2022. PT-FI continues to discuss the applicability of this administrative fine with MEMR. Based on PT-FI’s revised smelter construction schedule, which was accepted by the Indonesia government in connection with the renewal of PT-FI's export license in early 2022, PT-FI does not believe any additional fines should be assessed under the decree.

Smelter Assurance. PT-FI has an assurance bond to support its commitment for additional smelter development in Indonesia, totaling $135 million at September 30, 2023, for which the terms have been fulfilled (refer to Note 7). In August 2023, PT-FI submitted a request to MEMR for release of the assurance bond and is awaiting a response.

The decree issued by MEMR in May 2023 also requires assurance in the form of an escrow account that will be released if smelter development progress reaches 90% of the construction plan by June 10, 2024. During third-quarter 2023, PT-FI deposited $10 million in a joint account with the Indonesia government while it continues to discuss the applicability of the May 2023 decree with the Indonesia government. If the May 2023 decree is determined to be applicable, PT-FI may be required to make an additional refundable deposit of approximately $370 million.

Export Proceeds. In accordance with a regulation issued by the Indonesia government that became effective August 1, 2023, 30% of PT-FI’s gross export proceeds are being temporarily deposited into Indonesia banks for a period of 90 days before withdrawal. At September 30, 2023, FCX had $0.5 billion in current restricted cash and cash equivalents deposited in Indonesia banks in accordance with this regulation.

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 mining operations to Atlantic Copper (and on 39.5% of PT-FI’s sales to PT Smelting for the 2022 periods) 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 changed from a copper concentrate sales agreement to a tolling arrangement. Under this arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its copper 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 impacts the timing of PT-FI’s sales and working capital requirements.

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 third quarter and first nine months of 2023 and 2022 follow (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Copper:
Concentrate	$	2,365	$	2,091	$	6,137	$	7,476
Cathode	1,331		1,255		4,016		3,873
Rod and other refined copper products	992		755		2,797		2,942
Purchased coppera	71		168		347		342
Gold	854		858		2,384		2,578
Molybdenum	479		304		1,562		1,059
Otherb	136		174		439		527
Adjustments to revenues:
Treatment chargesc	(151)		(132)		(394)		(404)
Royalty expensed	(80)		(83)		(234)		(289)
PT-FI export dutiese	(133)		(81)		(147)		(263)
Revenues from contracts with customers	5,864		5,309		16,907		17,841
Embedded derivativesf	(40)		(306)		43		(819)
Total consolidated revenues	$	5,824	$	5,003	$	16,950	$	17,022

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

b.Primarily includes revenues associated with silver.

c.Treatment charges for the third quarter and first nine months of 2023 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.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 September 30, 2023
Revenues:
Unaffiliated customers	$	17	$	22	$	39	$	822		$	203	$	1,025	$	2,030		$	—	$	1,566	$	692		$	472	a	$	5,824
Intersegment	624		994		1,618		219			—		219		65			147		12		8			(2,069)			—
Production and delivery	476		799		1,275		648			178		826		667			120		1,566		680			(1,586)			3,548
DD&A	47		63		110		94			17		111		271			14		2		7			18			533

Metals inventory adjustments	4		—		4		1			—		1		—			—		—		—			—			5
Selling, general and administrative expenses	—		1		1		3			—		3		32			—		—		6			76			118
Mining exploration and research expenses	—		1		1		—			—		—		—			—		—		—			29			30
Environmental obligations and shutdown costs	—		4		4		—			—		—		—			—		—		—			94			98

Operating income (loss)	114		148		262		295			8		303		1,125			13		10		7			(228)			1,492

Interest expense, net	—		1		1		(10)		b	—		(10)		10			—		—		8			87			96
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—			5			5
Other (expense) income, net	(2)		(9)		(11)		(9)			13		4		30			—		—		5			43			71
Provision for (benefit from) income taxes	—		—		—		119			12		131		419			—		—		—			(42)			508
Equity in affiliated companies' net (losses) earnings	—		—		—		—			—		—		(2)			—		—		—			2			—
Net income attributable to noncontrolling interests	—		—		—		84			14		98		392		c	—		—		—			20			510

Total assets at September 30, 2023	3,171		5,799		8,970		8,227			1,893		10,120		21,020			1,747		288		1,176			8,327			51,648
Capital expenditures	53		114		167		61			15		76		441			21		2		20			451		d	1,178

Three Months Ended September 30, 2022
Revenues:
Unaffiliated customers	$	18	$	74	$	92	$	666		$	215	$	881	$	1,726	e	$	—	$	1,436	$	604		$	264	a	$	5,003
Intersegment	551		805		1,356		83			—		83		72			127		7		5			(1,650)			—
Production and delivery	408		736		1,144		579			221		800		663			94		1,450		604			(1,389)			3,366
DD&A	44		56		100		84			14		98		265			18		1		8			18			508

Metals inventory adjustments	2		1		3		2			20		22		—			—		—		—			—			25
Selling, general and administrative expenses	—		1		1		2			—		2		26			—		—		6			63			98
Mining exploration and research expenses	—		—		—		—			—		—		—			—		—		—			38			38
Environmental obligations and shutdown costs	—		1		1		—			—		—		—			—		—		—			5			6

Operating income (loss)	115		84		199		82			(40)		42		844			15		(8)		(9)			(121)			962

Interest expense, net	—		1		1		5			—		5		15			—		—		4			115			140
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—			20			20
Other (expense) income, net	—		(8)		(8)		(21)			5		(16)		19			(1)		—		11			20			25
Provision for (benefit from) income taxes	—		—		—		3			(18)		(15)		343			—		—		—			(13)			315
Equity in affiliated companies' net earnings	—		—		—		—			—		—		7			—		—		—			1			8
Net income attributable to noncontrolling interests	—		—		—		29			11		40		105		c	—		—		—			11			156

Total assets at September 30, 2022	2,996		5,456		8,452		8,390			1,826		10,216		20,496			1,701		216		1,082			7,764			49,927
Capital expenditures	71		83		154		41			38		79		389			7		2		17			188		d	836

Financial Information by Business Segment (continued)


(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
Nine Months Ended September 30, 2023
Revenues:
Unaffiliated customers	$	75	$	133	$	208	$	2,563		$	627	$	3,190	$	5,268	e	$	—	$	4,552	$	2,185		$	1,547	a	$	16,950
Intersegment	1,787		2,922		4,709		638			—		638		432			520		28		19			(6,346)			—
Production and delivery	1,279		2,324		3,603		1,877			539		2,416		1,860		f	321		4,558		2,139			(4,637)			10,260
DD&A	132		180		312		302			48		350		694			48		4		21			50			1,479

Metals inventory adjustments	5		—		5		1			—		1		—			—		—		—			1			7
Selling, general and administrative expenses	1		2		3		7			—		7		90			—		—		21			238			359
Mining exploration and research expenses	—		2		2		—			—		—		—			—		—		—			101			103
Environmental obligations and shutdown costs	—		26		26		—			—		—		—			—		—		—			213			239


Operating income (loss)	445		521		966		1,014			40		1,054		3,056			151		18		23			(765)			4,503

Interest expense, net	—		1		1		74		b	—		74		32			—		—		22			289			418
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—			10			10
Other (expense) income, net	(4)		(8)		(12)		(36)			11		(25)		92			(1)		(1)		—			130			183
Provision for (benefit from) income taxes	—		—		—		419			19		438		1,159			—		—		—			(51)			1,546
Equity in affiliated companies' net earnings	—		—		—		—			—		—		9			—		—		—			3			12
Net income (loss) attributable to noncontrolling interests	—		—		—		242			34		276		1,031		c	—		—		—			(23)			1,284
Capital expenditures	176		369		545		179			80		259		1,274			43		9		43			1,289		d	3,462

Nine Months Ended September 30, 2022
Revenues:
Unaffiliated customers	$	125	$	159	$	284	$	2,474		$	555	$	3,029	$	5,972	e	$	—	$	4,932	$	1,755		$	1,050	a	$	17,022
Intersegment	1,992		2,978		4,970		325			—		325		208			399		24		5			(5,931)			—
Production and delivery	1,168		2,111		3,279		1,702			510		2,212		1,853		f	249		4,969		1,789		g	(4,832)			9,519
DD&A	132		175		307		262			35		297		775			52		3		20			50			1,504

Metals inventory adjustments	2		8		10		11			22		33		—			—		—		—			—			43
Selling, general and administrative expenses	1		2		3		6			—		6		83			—		—		19			202			313
Mining exploration and research expenses	—		1		1		—			—		—		—			—		—		—			86			87
Environmental obligations and shutdown costs	(13)		1		(12)		—			—		—		—			—		—		—			63			51

Net gain on sales of assets	—		—		—		—			—		—		—			—		—		—			(2)			(2)
Operating income (loss)	827		839		1,666		818			(12)		806		3,469			98		(16)		(68)			(448)			5,507

Interest expense, net	—		1		1		12			—		12		30			—		—		8			372			423
Net (loss) gain on early extinguishment of debt	—		—		—		—			—		—		(10)			—		—		—			38			28
Other (expense) income, net	(1)		(32)		(33)		(11)			12		1		27			(1)		(1)		29			45			67
Provision for (benefit from) income taxes	—		—		—		298			(11)		287		1,363			—		—		—			60			1,710
Equity in affiliated companies' net earnings	—		—		—		—			—		—		27			—		—		—			6			33
Net income attributable to noncontrolling interests	—		—		—		247			25		272		436		c	—		—		—			23			731
Capital expenditures	207		223		430		109			94		203		1,148			16		6		60			559		d	2,422

Financial Information by Business Segment (continued)

a.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.

b.The third quarter and first nine months of 2023 include a $13 million credit for the settlement of interest on Cerro Verde's historical profit sharing liability. The first nine months of 2023 also includes $74 million of interest charges associated with contested tax rulings issued by the Peruvian Supreme Court.

c.FCX’s economic interest in PT-FI is 48.76% and prior to January 1, 2023, it approximated 81%. Refer to Note 1 for further discussion of first-quarter 2023 gold sales volumes that were attributed approximately 81% to FCX in accordance with the PT-FI shareholders agreement.

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

e.Includes PT-FI sales to PT Smelting totaling $572 million in third-quarter 2022, $27 million for the first nine months of 2023 (reflecting adjustments to prior period provisionally priced concentrate sales) and $2.3 billion for the first nine months of 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).

f.Includes charges for administrative fines of $55 million for the first nine months of 2023 and $41 million for the first nine months of 2022. Refer to Note 8 for further discussion.

g.Includes maintenance charges and idle facility costs associated with major maintenance turnarounds totaling $41 million at Atlantic Copper for the first nine months of 2022.

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 September 30, 2023, the related consolidated statements of income, comprehensive income, and equity for the three- and nine-month periods ended September 30, 2023 and 2022, the related consolidated statements of cash flows for the nine-month periods ended September 30, 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

November 3, 2023

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