UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from	to
Commission File Number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-2480931
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
333 North Central Avenue
Phoenix, AZ	85004-2189
(Address of principal executive offices)	(Zip Code)
(602) 366-8100
(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer þ	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨
	Emerging growth company ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	FCX	The New York Stock Exchange

On April 30, 2019, there were issued and outstanding 1,450,634,551 shares of the registrant’s common stock, par value $0.10 per share.

FREEPORT-McMoRan INC.

TABLE OF CONTENTS

	Page
Part I. Financial Information	3
Item 1. Financial Statements:	3
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Income (Unaudited)	4
Consolidated Statements of Comprehensive Income (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Consolidated Statements of Equity (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	8
Report of Independent Registered Public Accounting Firm	28
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	56
Item 4. Controls and Procedures	56
Part II. Other Information	56
Item 1. Legal Proceedings	56
Item 1A. Risk Factors	56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 4. Mine Safety Disclosures	56
Item 6. Exhibits	57
Signature	S-1

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31, 2019			December 31, 2018
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2,833		$	4,217
Trade accounts receivable	781			829
Income and other tax receivables	410			493
Inventories:
Materials and supplies, net	1,595			1,528
Mill and leach stockpiles	1,374			1,453
Product	1,492			1,778
Other current assets	560			422
Total current assets	9,045			10,720
Property, plant, equipment and mine development costs, net	28,497			28,010
Long-term mill and leach stockpiles	1,343			1,314
Other assets	2,174			2,172
Total assets	$	41,059		$	42,216
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,599		$	2,625
Accrued income taxes	150			165
Current portion of environmental and asset retirement obligations	422			449
Dividends payable	73			73
Current portion of debt	3			17
Total current liabilities	3,247			3,329
Long-term debt, less current portion	9,902			11,124
Deferred income taxes	4,067			4,032
Environmental and asset retirement obligations, less current portion	3,632			3,609
Other liabilities	2,370			2,230
Total liabilities	23,218			24,324
Equity:
Stockholders’ equity:
Common stock	158			158
Capital in excess of par value	25,963			26,013
Accumulated deficit	(12,010		)	(12,041		)
Accumulated other comprehensive loss	(594		)	(605		)
Common stock held in treasury	(3,734		)	(3,727		)
Total stockholders’ equity	9,783			9,798
Noncontrolling interests	8,058			8,094
Total equity	17,841			17,892
Total liabilities and equity	$	41,059		$	42,216

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

3

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended
	March 31,
	2019			2018
	(In millions, except per share amounts)
Revenues	$	3,792		$	4,868
Cost of sales:
Production and delivery	2,919			2,808
Depreciation, depletion and amortization	347			451
Metals inventory adjustments	57			—
Total cost of sales	3,323			3,259
Selling, general and administrative expenses	112			131
Mining exploration and research expenses	27			21
Environmental obligations and shutdown costs	42			9
Net gain on sales of assets	(33		)	(11		)
Total costs and expenses	3,471			3,409
Operating income	321			1,459
Interest expense, net	(146		)	(151		)
Net loss on early extinguishment of debt	(6		)	(1		)
Other income, net	14			29
Income from continuing operations before income taxes and equity in affiliated companies’ net losses	183			1,336
Provision for income taxes	(105		)	(506		)
Equity in affiliated companies’ net losses	(3		)	(2		)
Net income from continuing operations	75			828
Net gain (loss) from discontinued operations	1			(11		)
Net income	76			817
Net income attributable to noncontrolling interests	(45		)	(125		)
Net income attributable to common stockholders	$	31		$	692
Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations	$	0.02		$	0.48
Discontinued operations	—			(0.01		)
	$	0.02		$	0.47
Weighted-average common shares outstanding:
Basic	1,451			1,449
Diluted	1,457			1,458
Dividends declared per share of common stock	$	0.05		$	0.05

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

4

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended
	March 31,
	2019			2018
	(In millions)
Net income	$	76		$	817
Other comprehensive income, net of taxes:
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	11			12
Foreign exchange losses	—			(1		)
Other comprehensive income	11			11
Total comprehensive income	87			828
Total comprehensive income attributable to noncontrolling interests	(45		)	(124		)
Total comprehensive income attributable to common stockholders	$	42		$	704

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

5

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 31,
	2019			2018
	(In millions)
Cash flow from operating activities:
Net income	$	76		$	817
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	347			451
Metals inventory adjustments	57			—
Net gain on sales of assets	(33		)	(11		)
Stock-based compensation	29			49
Net charges for environmental and asset retirement obligations, including accretion	64			53
Payments for environmental and asset retirement obligations	(46		)	(38		)
Net charges for defined pension and postretirement plans	26			18
Pension plan contributions	(16		)	(24		)
Net loss on early extinguishment of debt	6			1
Deferred income taxes	33			22
(Gain) loss on disposal of discontinued operations	(1		)	11
(Increase) decrease in long-term mill and leach stockpiles	(29		)	22
Other, net	48			19
Changes in working capital and other tax payments:
Accounts receivable	19			136
Inventories	221			(142		)
Other current assets	42			(42		)
Accounts payable and accrued liabilities	(247		)	(96		)
Accrued income taxes and timing of other tax payments	(62		)	123
Net cash provided by operating activities	534			1,369
Cash flow from investing activities:
Capital expenditures:
North America copper mines	(210		)	(92		)
South America	(61		)	(67		)
Indonesia	(319		)	(203		)
Molybdenum mines	(4		)	(1		)
Other	(28		)	(39		)
Proceeds from sales of oil and gas properties	84			—
Intangible water rights and other, net	(8		)	(90		)
Net cash used in investing activities	(546		)	(492		)
Cash flow from financing activities:
Proceeds from debt	114			122
Repayments of debt	(1,356		)	(1,633		)
Cash dividends and distributions paid:
Common stock	(73		)	—
Noncontrolling interests	(9		)	(80		)
Stock-based awards net (payments) proceeds	(7		)	3
Net cash used in financing activities	(1,331		)	(1,588		)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(1,343		)	(711		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	4,455			4,710
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	3,112		$	3,999

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

6

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

	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, 2018	1,579	$	158	$	26,013		$	(12,041	)	$	(605	)	130	$	(3,727	)	$	9,798		$	8,094		$	17,892
Exercised and issued stock-based awards	3	—		1			—			—			—	—			1			—			1
Stock-based compensation, including the tender of shares	—	—		23			—			—			1	(7		)	16			—			16
Dividends	—	—		(73		)	—			—			—	—			(73		)	(70		)	(143		)
Changes in noncontrolling interests	—	—		(1		)	—			—			—	—			(1		)	(11		)	(12		)
Net income attributable to common stockholders	—	—		—			31			—			—	—			31			—			31
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			45			45
Other comprehensive income	—	—		—			—			11			—	—			11			—			11
Balance at March 31, 2019	1,582	$	158	$	25,963		$	(12,010	)	$	(594	)	131	$	(3,734	)	$	9,783		$	8,058		$	17,841

	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, 2017	1,578	$	158	$	26,751		$	(14,722	)	$	(487	)	130	$	(3,723	)	$	7,977		$	3,319		$	11,296
Exercised and issued stock-based awards	1	—		6			—			—			—	—			6			—			6
Stock-based compensation, including the tender of shares	—	—		44			—			—			—	(3		)	41			—			41
Dividends	—	—		(72		)	—			—			—	—			(72		)	(173		)	(245		)
Net income attributable to common stockholders	—	—		—			692			—			—	—			692			—			692
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			125			125
Other comprehensive income (loss)	—	—		—			—			12			—	—			12			(1		)	11
Balance at March 31, 2018	1,579	$	158	$	26,729		$	(14,030	)	$	(475	)	130	$	(3,726	)	$	8,656		$	3,270		$	11,926

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

7

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 (GAAP) 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, 2018 (2018 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, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Attribution of PT Freeport Indonesia (PT-FI) Net Income. FCX has concluded that the attribution of PT-FI’s net income or loss from the date of the divestment transaction (i.e., December 21, 2018) through December 31, 2022 (the Initial Period), should be based on the economics replacement agreement, which provides for FCX and the other pre-transaction PT-FI shareholders (i.e., PT Indonesia Asahan Aluminium (Persero) (PT Inalum) and PT Indonesia Papua Metal Dan Mineral (PTI)) to retain the economics of the revenue and cost sharing arrangements under PT-FI’s joint venture formerly with Rio Tinto plc (refer to Note 2 of FCX’s 2018 Form 10-K). The economics replacement agreement entitles FCX to approximately 81 percent of PT-FI dividends paid during the Initial Period, with the remaining 19 percent paid to the noncontrolling interests. For first-quarter 2019, PT-FI’s net income totaled $52 million, of which $43 million was attributed to FCX. PT-FI’s cumulative net loss since the December 21, 2018, transaction date through March 31, 2019, totaled $(84) million, of which $(68) million was attributed to FCX.

The above-described attribution of PT-FI’s net income or loss applies only through the Initial Period. Beginning January 1, 2023, the attribution of PT-FI’s net income or loss will be based on equity ownership percentages (48.76 percent for FCX, 26.24 percent for PT Inalum and 25.00 percent for PTI). For all of its other partially owned consolidated subsidiaries, FCX attributes net income or loss based on equity ownership percentages.

8

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 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 anti-dilutive.

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,
	2019			2018
Net income from continuing operations	$	75		$	828
Net income from continuing operations attributable to noncontrolling interests	(45		)	(125		)
Undistributed earnings allocated to participating securities	(3		)	(4		)
Net income from continuing operations attributable to common stockholders	27			699
Net income (loss) from discontinued operations attributable to common stockholders	1			(11		)
Net income attributable to common stockholders	$	28		$	688
Basic weighted-average shares of common stock outstanding	1,451			1,449
Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock unitsa	6			9
Diluted weighted-average shares of common stock outstanding	1,457			1,458
Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations	$	0.02		$	0.48
Discontinued operations	—			(0.01		)
	$	0.02		$	0.47

a. Excludes approximately 3 million shares of common stock in first-quarter 2019 and 4 million in first-quarter 2018 associated with outstanding stock options with exercise prices less than the average market price of FCX’s common stock that were anti-dilutive.

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. Stock options for 39 million shares of common stock in first-quarter 2019 and 33 million shares of common stock in first-quarter 2018 were excluded.

9

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

The components of inventories follow (in millions):

	March 31, 2019		December 31, 2018
Current inventories:
Total materials and supplies, neta	$	1,595	$	1,528
Mill stockpiles	$	247	$	282
Leach stockpiles	1,127		1,171
Total current mill and leach stockpiles	$	1,374	$	1,453
Raw materials (primarily concentrate)	$	273	$	260
Work-in-process	137		192
Finished goods	1,082		1,326
Total product	$	1,492	$	1,778
Long-term inventories:
Mill stockpiles	$	265	$	265
Leach stockpiles	1,078		1,049
Total long-term mill and leach stockpilesb	$	1,343	$	1,314

a. Materials and supplies inventory was net of obsolescence reserves totaling $23 million at March 31, 2019, and $24 million at December 31, 2018.

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

FCX recorded charges for adjustments to cobalt metals inventory carrying values of $57 million in first-quarter 2019 because of lower cobalt prices.

NOTE 4. INCOME TAXES

Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate. FCX’s consolidated effective income tax rate was 57 percent for first-quarter 2019 and 38 percent for first-quarter 2018. Geographic sources of FCX’s benefit from (provision for) income taxes follow (in millions):

	Three Months Ended
	March 31,
	2019			2018
U.S. operations	$	2		$	3
International operations	(107		)	(509		)
Total	$	(105	)	$	(506	)

FCX's first-quarter 2019 consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which FCX operates, excluding the U.S. jurisdiction. Because FCX's U.S. jurisdiction generated net losses in first-quarter 2019 that will not result in a realized tax benefit, applicable accounting rules require FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S. net losses.

10

NOTE 5. DEBT AND EQUITY

The components of debt follow (in millions):

	March 31, 2019			December 31, 2018
Senior notes and debentures:
Issued by FCX	$	8,595		$	9,594
Issued by Freeport Minerals Corporation (FMC)	357			358
Cerro Verde credit facility	825			1,023
Other	128			166
Total debt	9,905			11,141
Less current portion of debt	(3		)	(17		)
Long-term debt	$	9,902		$	11,124

Revolving Credit Facility. At March 31, 2019, there were no borrowings outstanding and $13 million in letters of credit issued under FCX’s revolving credit facility, resulting in availability of approximately $3.5 billion, of which approximately $1.5 billion could be used for additional letters of credit.

On May 2, 2019, FCX’s $3.5 billion revolving credit facility was amended to extend $3.26 billion of the facility by one year to April 20, 2024. The remaining $240 million matures on April 20, 2023 (the scheduled maturity date). In addition, the revolving credit facility was amended to modify the calculation of the total debt component used to determine the total leverage ratio by increasing the amount of unrestricted cash that may be applied to reduce the amount of total debt. There were no other substantive modifications to the revolving credit facility.

Senior Notes.  On March 27, 2019, FCX redeemed all of its outstanding $1.0 billion aggregate principal amount of 3.100% Senior Notes due 2020. Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest up to the redemption date. As a result of this redemption, FCX recorded a loss on early extinguishment of debt totaling $5 million in first-quarter 2019.

Cerro Verde Credit Facility.  In March 2019, Cerro Verde prepaid $200 million of its credit facility, which resulted in a $1 million loss recorded to early extinguishment of debt.

Interest Expense, Net. Consolidated interest costs totaled $178 million in first-quarter 2019 and $176 million in first-quarter 2018. Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $32 million in first-quarter 2019 and $25 million in first-quarter 2018.

Common Stock.  On March 27, 2019, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which was paid on May 1, 2019, to common stockholders of record as of April 15, 2019.

11

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. As of March 31, 2019, and December 31, 2018, FCX had no price protection contracts relating to its mine production. 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 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, 2019 and 2018. At March 31, 2019, FCX held copper futures and swap contracts that qualified for hedge accounting for 66 million pounds at an average contract price of $2.81 per pound, with maturities through November 2020.

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 the unrealized (losses) gains on the related hedged item follows (in millions):

	Three Months Ended
	March 31,
	2019			2018
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments	$	18		$	(15	)
Hedged item – firm sales commitments	(18		)	15
Realized gains:
Matured derivative financial instruments	2			2

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 (LBMA) 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 LBMA gold prices 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 LBMA 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 LBMA gold prices, until the date of final pricing. Similarly, FCX purchases copper and cobalt 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.

12

A summary of FCX’s embedded derivatives at March 31, 2019, follows:

	Open Positions	Average Price Per Unit				Maturities Through
		Contract		Market
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	613	$	2.83	$	2.94	September 2019
Gold (thousands of ounces)	131	1,300		1,296		May 2019
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	100	2.81		2.94		July 2019
Cobalt (millions of pounds)	3	14.98		9.24		June 2019

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 cost of sales. At March 31, 2019, Atlantic Copper held net copper forward purchase contracts for 11 million pounds at an average contract price of $2.92 per pound, with maturities through June 2019.

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,
	2019			2018
Embedded derivatives in provisional sales contracts:a
Copper	$	122		$	(135	)
Gold and other metals	(2		)	18
Copper forward contractsb	1			2

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, 2019		December 31, 2018
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	9	$	—
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper, gold and cobalt
sales/purchase contracts	85		23
Copper forward contracts	1		—
Total derivative assets	$	95	$	23
Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	—	$	9
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper, gold and cobalt
sales/purchase contracts	14		39
Copper forward contracts