FAIR VALUE MEASUREMENT (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Measurement Inputs Disclosure

A summary of the carrying amount and fair value of FCX’s financial instruments (including those measured at NAV as a practical expedient), other than cash and cash equivalents, accounts receivable, restricted cash, and accounts payable and accrued liabilities (refer to Note 14) follows:



	At December 31, 2017
	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	55		55		55		—		—			—
Government bonds and notes	40		40		—		—		40			—
Corporate bonds	32		32		—		—		32			—
Government mortgage-backed securities	27		27		—		—		27			—
Asset-backed securities	15		15		—		—		15			—
Money market funds	11		11		—		11		—			—
Collateralized mortgage-backed securities	8		8		—		—		8			—
Municipal bonds	1		1		—		—		1			—
Total	189		189		55		11		123			—

Derivatives:
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position^c	155		155		—		—		155			—
Copper futures and swap contracts^c	11		11		—		9		2			—
Copper forward contracts^c	1		1		—		—		1		—	—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a	108		108		—		—		108			—
Total	275		275		—		9		266			—

Contingent consideration for the sale of the Deepwater GOM oil and gas properties^a	150		134		—		—		—			134




Liabilities
Derivatives:^c
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position^d	$	31	$	31	$	—	$	—	$	31	$	—
Copper forward contracts	2		2		—		1		1		—
Total	33		33		—		1		32		—

Long-term debt, including current portion^e	13,117		13,269		—		—		13,269		—



	At December 31, 2016
	Carrying		Fair Value
	Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	23	$	23	$	23	$	—	$	—	$	—
Money market funds	22		22		—		22		—		—
Equity securities	5		5		—		5		—		—
Total	50		50		23		27		—		—

Legally restricted funds:^a
U.S. core fixed income fund	53		53		53		—		—		—
Government bonds and notes	36		36		—		—		36		—
Corporate bonds	32		32		—		—		32		—
Government mortgage-backed securities	25		25		—		—		25		—
Asset-backed securities	16		16		—		—		16		—
Money market funds	12		12		—		12		—		—
Collateralized mortgage-backed securities	8		8		—		—		8		—
Municipal bonds	1		1		—		—		1		—
Total	183		183		53		12		118		—

Derivatives:
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position^c	137		137		—		—		137		—
Copper futures and swap contracts^c	9		9		—		8		1		—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a	46		46		—		—		46		—
Total	192		192		—		8		184		—

Contingent consideration for the sale of the
Deepwater GOM oil and gas properties^a	150		135		—		—		—		135

Liabilities
Derivatives:^c
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position	$	56	$	56	$	—	$	—	$	56	$	—
Copper futures and swap contracts	2		2		—		2		—		—
Total	58		58		—		2		56		—

Contingent payments for the settlements of drilling rig contracts^f	23		23		—		—		23		—

Long-term debt, including current portion^e	16,027		15,196		—		—		15,196		—


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

Excludes time deposits (which approximated fair value) included in (i) other current assets of $52 million at December 31, 2017, and $28 million at December 31, 2016, and (ii) other assets of $123 million at December 31, 2017, and $122 million at December 31, 2016, primarily associated with an assurance bond to support PT-FI’s commitment for smelter development in Indonesia (refer to Note 13 for further discussion).


c.	Refer to Note 14 for further discussion and balance sheet classifications.


d.	Excludes $24 million of embedded derivatives in provisional cobalt purchase contracts (refer to Note 14 for further discussion).


e.	Recorded at cost except for debt assumed in acquisitions, which are recorded at fair value at the respective acquisition dates. In addition, debt excludes $112 million at December 31, 2017, and $98 million at December 31, 2016, related to assets held for sale (which approximated fair value).


f.	Included in accounts payable and accrued liabilities.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

A summary of the changes in the fair value of FCX’s Level 3 instruments for the years ended December 31 follows:



	Contingent Consideration^a					Crude Oil Options
	2017			2016		2015
Balance at beginning of year	$	135		$	—	$	316
Net realized gains	—			—		86			^b
Net unrealized (losses) gains related to assets still held at the end of the year	(1		)	135		—
Net settlements	—			—		(402		)	^c
Balance at the end of the year	$	134		$	135	$	—


a.	Reflects contingent consideration associated with the sale of the Deepwater GOM oil and gas properties in December 2016 (refer to Note 2 for further discussion).


b.	Includes net realized gains of $87 million recorded in revenues and interest expense associated with deferred premiums of $1 million.


c.	Includes interest payments of $4 million.