EX-99.1 3 a2q2019exhibit991.htm EXHIBIT 99.1 Exhibit


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Freeport-McMoRan
Reports Second-Quarter and Six-Month 2019 Results
 
 
 
Net loss attributable to common stock totaled $72 million, $0.05 per share, in second-quarter 2019. After adjusting for net charges of $14 million, $0.01 per share, second-quarter 2019 adjusted net loss attributable to common stock totaled $58 million, $0.04 per share.
Consolidated sales totaled 807 million pounds of copper, 189 thousand ounces of gold and 24 million pounds of molybdenum in second-quarter 2019.
Consolidated sales for the year 2019 are expected to approximate 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum, including 830 million pounds of copper, 230 thousand ounces of gold and 25 million pounds of molybdenum in third-quarter 2019.
Several positive milestones were achieved during second-quarter 2019 related to the underground production ramp-up in the Grasberg minerals district, which is expected to produce large-scale quantities of copper and gold in future years.
Average realized prices in second-quarter 2019 were $2.75 per pound for copper, $1,351 per ounce for gold and $13.15 per pound for molybdenum.
Average unit net cash costs in second-quarter 2019 were $1.92 per pound of copper and are expected to approximate $1.75 per pound of copper for the year 2019.
Operating cash flows totaled $554 million (including $308 million of working capital sources and timing of other tax payments) in second-quarter 2019 and $1.1 billion (including $281 million of working capital sources and timing of other tax payments) for the first six months of 2019. Based on current sales volume and cost estimates, and assuming average prices of $2.75 per pound for copper, $1,400 per ounce for gold and $12.00 per pound for molybdenum for the second half of 2019, operating cash flows are expected to approximate $1.9 billion (including $0.3 billion of working capital sources and timing of other tax payments) for the year 2019.
Capital expenditures totaled $0.6 billion (including approximately $0.4 billion for major mining projects) in second-quarter 2019 and $1.25 billion (including approximately $0.7 billion for major mining projects) for the first six months of 2019. Capital expenditures for the year 2019 are expected to approximate $2.6 billion, including $1.6 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district in Indonesia and development of the Lone Star copper leach project in Arizona.
At June 30, 2019, consolidated debt totaled $9.9 billion and consolidated cash totaled $2.6 billion. FCX had no borrowings and $3.5 billion available under its revolving credit facility at June 30, 2019.
On June 26, 2019, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which will be paid on August 1, 2019.

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PHOENIX, AZ, July 24, 2019 - Freeport-McMoRan Inc. (NYSE: FCX) reported net losses attributable to common stock of $72 million ($0.05 per share) in second-quarter 2019 and $41 million ($0.03 per share) for the first six months of 2019. After adjusting for net charges of $14 million ($0.01 per share), adjusted net loss attributable to common stock totaled $58 million ($0.04 per share) in second-quarter 2019. For additional information, refer to the supplemental schedule, "Adjusted Net (Loss) Income," on page VII, which is available on FCX's website, "fcx.com."

Richard C. Adkerson, President and Chief Executive Officer, said, "We are pleased to report that execution of the underground ramp-up at Grasberg is advancing according to plan and recent milestones are encouraging as we target increasing volumes and cash flows from the Grasberg minerals district. We are also progressing our Lone Star copper leach project in Arizona and remain optimistic about the long-term opportunities for this large resource. We are focused on enhancing value for shareholders through our well-defined strategy of maximizing the value of our existing resource base through rigorous cost management, productivity and technology, successful execution of the underground ramp-up at Grasberg, generating cash flows to increase shareholder returns and creating value organically from our large undeveloped resource position in a disciplined manner.”

SUMMARY FINANCIAL DATA
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(in millions, except per share amounts)
 
Revenuesa,b
$
3,546

 
$
5,168

 
$
7,338

 
$
10,036

 
Operating incomea
$
33

 
$
1,664

 
$
354

 
$
3,123

 
Net (loss) income from continuing operations
$
(74
)
 
$
1,039

 
$
1

 
$
1,867

 
Net (loss) income attributable to common stockc,d
$
(72
)
 
$
869

 
$
(41
)
 
$
1,561

 
Diluted net (loss) income per share of common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
(0.05
)
 
$
0.59

 
$
(0.03
)
 
$
1.08

 
Discontinued operations

 

 

 
(0.01
)
 
 
$
(0.05
)
 
$
0.59

 
$
(0.03
)
 
$
1.07

 
 
 
 
 
 
 
 
 
 
Diluted weighted-average common shares outstanding
1,451

 
1,458

 
1,451

 
1,458

 
Operating cash flowse
$
554

 
$
1,309

 
$
1,088

 
$
2,678

 
Capital expenditures
$
629

 
$
482

 
$
1,251

 
$
884

 
At June 30:
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
2,623

 
$
3,894

 
$
2,623

 
$
3,894

 
Total debt, including current portion
$
9,916

 
$
11,277

 
$
9,916

 
$
11,277

 
 
 
 
 
 
 
 
 
 
a.
For segment financial results, refer to the supplemental schedules, "Business Segments," beginning on page X, which are available on FCX's website, "fcx.com."
b.
Includes (unfavorable) favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(83) million ($(35) million to net loss attributable to common stock or $(0.02) per share) in second-quarter 2019, $23 million ($9 million to net income attributable to common stock or $0.01 per share) in second-quarter 2018, $58 million ($23 million to net loss attributable to common stock or $0.02 per share) for the first six months of 2019 and $(70) million ($(31) million to net income attributable to common stock or $(0.02) per share) for the first six months of 2018. For further discussion, refer to the supplemental schedule, "Derivative Instruments," on page IX, which is available on FCX's website, "fcx.com."
c.
Includes net (charges) gains of $(14) million ($(0.01) per share) in second-quarter 2019, $16 million ($0.01 per share) in second-quarter 2018, $(50) million ($(0.03) per share) for the first six months of 2019 and $27 million ($0.02 per share) for the first six months of 2018 that are described in the supplemental schedule, "Adjusted Net (Loss) Income," on page VII, which is available on FCX's website, "fcx.com."
d.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page IX, which is available on FCX's website, "fcx.com."
e.
Net of working capital sources (uses) and timing of other tax payments of $308 million in second-quarter 2019, $(192) million in second-quarter 2018, $281 million for the first six months of 2019 and $(213) million for the first six months of 2018.

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SUMMARY OPERATING DATA
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
776

 
1,014

 
1,556

 
1,966

 
Sales, excluding purchases
 
807

 
989

 
1,591

 
1,982

 
Average realized price per pound
 
$
2.75

 
$
3.08

 
$
2.78

 
$
3.10

 
Site production and delivery costs per pounda
 
$
2.26

 
$
1.69

 
$
2.21

 
$
1.68

 
Unit net cash costs per pounda
 
$
1.92

 
$
0.96

 
$
1.85

 
$
0.97

 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
160

 
746

 
326

 
1,345

 
Sales, excluding purchases
 
189

 
676

 
431

 
1,286

 
Average realized price per ounce
 
$
1,351

 
$
1,274

 
$
1,315

 
$
1,291

 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
25

 
24

 
48

 
46

 
Sales, excluding purchases
 
24

 
24

 
46

 
48

 
Average realized price per pound
 
$
13.15

 
$
12.89

 
$
12.93

 
$
12.42

 
a.
Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII, which are available on FCX's website, "fcx.com."
Consolidated Sales Volumes
Second-quarter 2019 copper sales of 807 million pounds were in line with the April 2019 estimate of 800 million pounds, with higher copper volumes from North America and South America offsetting lower copper volumes from PT Freeport Indonesia (PT-FI). Mine sequencing changes in the Grasberg open pit resulted in lower second-quarter 2019 gold sales of 189 thousand ounces, compared with the April 2019 estimate of 265 thousand ounces of gold. During second-quarter 2019, PT-FI opened an additional area to extend mining in the Grasberg open pit into third-quarter 2019 and potentially longer. The mine sequencing changes in the open pit delayed access to the high-grade material previously expected to be produced during second-quarter 2019.
Second-quarter 2019 copper and gold sales were lower than second-quarter 2018 sales primarily reflecting anticipated lower mill rates and ore grades as PT-FI transitions mining from the open pit to underground.
Second-quarter 2019 molybdenum sales of 24 million pounds approximated the April 2019 estimate of 25 million pounds and second-quarter 2018 sales of 24 million pounds.
Consolidated sales volumes for the year 2019 are expected to approximate 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum, including 830 million pounds of copper, 230 thousand ounces of gold and 25 million pounds of molybdenum in third-quarter 2019. As PT-FI transitions mining from the open pit to underground, metal production is expected to improve by 2021.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines were $1.92 per pound of copper in second-quarter 2019. As anticipated, average unit net cash costs were higher than the second-quarter 2018 average of $0.96 per pound, primarily reflecting lower sales volumes as PT-FI transitions mining from the open pit to underground. Unit net cash costs were 15 percent higher than the April 2019 estimate because of production deferrals in the Grasberg open pit.
Assuming average prices of $1,400 per ounce of gold and $12.00 per pound of molybdenum for the second half of 2019 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.75 per pound of copper for the year 2019,

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(including $1.67 per pound of copper for the second half of 2019). The impact of price changes on consolidated unit net cash costs for the year 2019 would approximate $0.01 per pound for each $50 per ounce change in the average price of gold and $0.015 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2019. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum. FCX expects consolidated unit net cash costs to decline by 2021 following a ramp-up period at PT-FI.
MINING OPERATIONS
North America Copper Mines. FCX operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of FCX's North America copper mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. Future investments will be undertaken based on the results of economic and technical feasibility studies, and are dependent on market conditions. FCX continues to pursue projects to enhance productivity through innovative technologies and to study opportunities to reduce the capital intensity of its potential long-term development projects.
Through exploration drilling, FCX has identified a significant resource at its wholly owned Lone Star project located near the Safford operation in eastern Arizona. An initial project to develop the Lone Star leachable ores commenced in 2018, with first production expected by the end of 2020. Initial production from the Lone Star leachable ores is expected to average approximately 200 million pounds of copper per year, with the potential for future expansion options. Total capital costs for the initial project, including mine equipment and pre-production stripping, are expected to approximate $850 million and will benefit from the utilization of existing infrastructure at the adjacent Safford operation. As of June 30, 2019, approximately $480 million has been incurred for this project. The project also advances exposure to a significant sulfide resource. FCX expects to incorporate recent positive drilling and ongoing results in its future development plans.
Operating Data. Following is summary consolidated operating data for the North America copper mines:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
370

 
354

 
706

 
702

 
Sales, excluding purchases
 
369

 
361

 
689

 
745

 
Average realized price per pound
 
$
2.78

 
$
3.12

 
$
2.80

 
$
3.14

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
9

 
8

 
16

 
15

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
2.05

 
$
1.94

 
$
2.05

 
$
1.89

 
By-product credits
 
(0.26
)
 
(0.25
)
 
(0.26
)
 
(0.22
)
 
Treatment charges
 
0.11

 
0.10

 
0.11

 
0.10

 
Unit net cash costs
 
$
1.90

 
$
1.79

 
$
1.90

 
$
1.77

 
 
 
 
 
 
 
 
 
 
 
a.
Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which includes sales of molybdenum produced at the North America copper mines.
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII, which are available on FCX's website, "fcx.com."

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North America's consolidated copper sales volumes totaled 369 million pounds in second-quarter 2019 and 361 million pounds in second-quarter 2018. North America copper sales are estimated to approximate 1.4 billion pounds for the year 2019.
Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.90 per pound of copper in second-quarter 2019 were slightly lower than forecast, but higher than second-quarter 2018 unit net cash costs of $1.79 per pound, primarily reflecting higher mining rates, maintenance activities and higher cost of consumables, primarily sulphuric acid.
Average unit net cash costs (net of by-product credits) for the North America copper mines are expected to approximate $1.91 per pound of copper for the year 2019, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $12.00 per pound for the second half of 2019. North America's average unit net cash costs for the year 2019 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2019.

South America Mining. FCX operates two copper mines in South America - Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). These operations are consolidated in FCX's financial statements. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.    
Operating and Development Activities. Cerro Verde's expanded operations benefit from its large-scale, long-lived reserves and cost efficiencies. Cerro Verde's concentrator facilities have continued to perform well, with average mill throughput rates of 407,700 metric tons of ore per day in second-quarter 2019. Debottlenecking projects and additional initiatives to enhance operating rates continue to be advanced.
FCX continues to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher recoveries. El Abra's large sulfide resource could potentially support a major mill project similar to facilities constructed at Cerro Verde. Technical and economic studies continue to be advanced to determine the optimal scope and timing for the project.
Operating Data. Following is summary consolidated operating data for South America mining:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
281

 
313

 
580

 
606

 
Sales
 
287

 
312

 
577

 
602

 
Average realized price per pound
 
$
2.72

 
$
3.07

 
$
2.75

 
$
3.09

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
7

 
7

 
15

 
13

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.92

 
$
1.77

 
$
1.82

 
$
1.78

 
By-product credits
 
(0.28
)
 
(0.22
)
 
(0.31
)
 
(0.24
)
 
Treatment charges
 
0.18

 
0.18

 
0.19

 
0.19

 
Royalty on metals
 
0.01

 
0.01

 
0.01

 
0.01

 
Unit net cash costs
 
$
1.83

 
$
1.74

 
$
1.71

 
$
1.74

 
 
 
 
 
 
 
 
 
 
 
a.
Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales, which includes sales of        molybdenum produced at Cerro Verde.
b.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII, which are available on FCX's website, "fcx.com."
    

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South America's consolidated copper sales volumes of 287 million pounds in second-quarter 2019 were lower than second-quarter 2018 copper sales volumes of 312 million pounds, primarily reflecting lower ore grades and recovery rates at Cerro Verde. Sales from South America mining are expected to approximate 1.2 billion pounds of copper for the year 2019.
Average unit net cash costs (net of by-product credits) for South America mining of $1.83 per pound of copper in second-quarter 2019 were higher than unit net cash costs of $1.74 per pound in second-quarter 2018, primarily reflecting lower copper volumes.
Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.68 per pound of copper for the year 2019, based on current sales volume and cost estimates and assuming an average price of $12.00 per pound of molybdenum for the second half of 2019.
Indonesia Mining. PT-FI's assets include one of the world's largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76 percent ownership interest in PT-FI and manages its mining operations. PT-FI is consolidated in FCX's financial statements. As a result of the December 2018 transaction regarding PT-FI's long-term mining rights and share ownership, FCX’s economic interest in PT-FI is expected to approximate 81 percent through 2022.
Operating and Development Activities. PT-FI continues to mine the final stages of the Grasberg open pit. During second-quarter 2019, PT-FI opened an additional area to extend mining in the Grasberg open pit into third-quarter 2019 and potentially longer. The mine sequencing changes in the open pit delayed access to the high-grade material previously expected to be produced during second-quarter 2019, but are expected to meet previous estimates for copper and gold production for the year 2019. PT-FI will continue to monitor geotechnical conditions to determine the extent of mining in the open pit. Material not mined from the open pit is expected to be available to be mined from the Grasberg Block Cave underground mine.
During second-quarter 2019, PT-FI achieved important milestones related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit. PT-FI's estimated annual capital spending on underground mine development projects is expected to average $0.7 billion per year for the four-year period 2019 through 2022, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum). In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $0.9 billion per year for the four-year period 2019 through 2022, will be reflected as an investing activity in FCX's cash flow statement, and contributions from PT Inalum will be reflected as a financing activity. Considering the long-term nature and size of these projects, actual costs could vary from these estimates.
Grasberg Block Cave. PT-FI has commenced extraction of ore from the Grasberg Block Cave underground mine, which is the same ore body historically mined from the surface in the Grasberg open pit. During second-quarter 2019, undercutting, drawbell construction and ore extraction activities in the Grasberg Block Cave underground mine exceeded expectations. Ore extraction from the Grasberg Block Cave underground mine averaged 7,400 metric tons of ore per day in second-quarter 2019 and is expected to ramp up to 15,000 metric tons of ore per day by the end of 2019. Monitoring data on cave propagation in the Grasberg Block Cave underground mine is providing increased confidence in growing production rates over time. As existing drawpoints mature and additional drawpoints are added, cave expansion is expected to accelerate production rates from an average of 30,000 metric tons of ore per day in 2020 to 130,000 metric tons of ore per day in 2023 from five production blocks spanning 335,000 square meters.
Deep Mill Level Zone (DMLZ). The DMLZ underground mine, located east of the Grasberg ore body and below the Deep Ore Zone (DOZ) underground mine, has commenced production. Hydraulic fracturing operations have been effective in managing rock stresses and pre-conditioning the cave following mining-induced seismic activity experienced in 2017 and 2018. In second-quarter 2019, undercutting and drawbell construction were in line with expectations, and ore extraction exceeded expectations. Ore extraction from the DMLZ underground mine averaged 7,700 metric tons of ore per day in second-quarter 2019 and is expected to ramp up to 11,000 metric tons of ore per day by the end of 2019. Ongoing hydraulic fracturing operations combined with continued undercutting and drawbell openings in the two production blocks are expected to expand the cave, supporting higher production

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rates that are expected to average 28,000 metric tons of ore per day in 2020 and 80,000 metric tons of ore per day in 2022 from three production blocks. 
Estimates of timing of future production continue to be reviewed and may be modified as additional information becomes available.  
In connection with the extension of PT-FI's mining rights from 2031 to 2041, PT-FI committed to construct a new smelter in Indonesia by December 21, 2023. A site for the new smelter has been selected and ground preparation is in progress. Engineering and front-end engineering and design for the selected process technology are ongoing, with construction of the smelter expected to begin in 2020. The preliminary capital cost estimate for the project is in the $3 billion range, and PT-FI is pursuing financing, commercial and potential partner arrangements for this project. The economics of PT-FI’s share of the new smelter will be shared by PT-FI’s shareholders according to their respective share ownership percentages.
Operating Data. Following is summary consolidated operating data for Indonesia mining:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
125

 
347

 
270

 
658

 
Sales
 
151

 
316

 
325

 
635

 
Average realized price per pound
 
$
2.71

 
$
3.05

 
$
2.77

 
$
3.07

 
 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
154

 
740

 
316

 
1,335

 
Sales
 
185

 
671

 
420

 
1,274

 
Average realized price per ounce
 
$
1,350

 
$
1,274

 
$
1,314

 
$
1,291

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs (credits) per pound of coppera
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
3.40

 
$
1.33

 
$
3.24

 
$
1.34

 
Gold and silver credits
 
(1.69
)
 
(2.76
)
 
(1.75
)
 
(2.67
)
 
Treatment charges
 
0.26

 
0.26

 
0.28

 
0.25

 
Export duties
 
0.07

 
0.18

 
0.08

 
0.16

 
Royalty on metals
 
0.11

 
0.22

 
0.14

 
0.22

 
Unit net cash costs (credits)
 
$
2.15

 
$
(0.77
)
 
$
1.99

 
$
(0.70
)
 
 
 
 
 
 
 
 
 
 
 
a.
For a reconciliation of unit net cash costs (credits) per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII, which are available on FCX's website, "fcx.com."
PT-FI's consolidated sales of 151 million pounds of copper and 185 thousand ounces of gold in second-quarter 2019 were lower than second-quarter 2018 sales of 316 million pounds of copper and 671 thousand ounces of gold, reflecting anticipated lower mill rates and ore grades as it transitions mining from the open pit to underground.
Consolidated sales volumes from PT-FI are expected to approximate 0.6 billion pounds of copper and 0.8 million ounces of gold in 2019. PT-FI will continue to monitor geotechnical conditions to determine the extent of mining in the Grasberg open pit. As PT-FI transitions mining from the open pit to underground, metal production is expected to improve by 2021.
During the first half of 2019, PT-FI utilized its approved export quota of approximately 180,000 dry metric tons of concentrate for the current export period, which expires March 8, 2020. PT-FI has requested approval from the Indonesian government to increase its export quota for the current export period for expected higher production volumes associated with changes to PT-FI's production plan. PT-FI expects to receive approval during third-quarter 2019.

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Because of the fixed nature of a large portion of PT-FI's costs, unit net cash costs can vary significantly from quarter to quarter depending on copper and gold volumes. PT-FI's unit net cash costs (including gold and silver credits) of $2.15 per pound of copper in second-quarter 2019, compared with unit net cash credits of $0.77 per pound in second-quarter 2018, primarily reflected lower copper and gold volumes.     
Assuming an average gold price of $1,400 per ounce for the second half of 2019 and achievement of current sales volume and cost estimates, unit net cash costs (including gold and silver credits) for PT-FI are expected to approximate $1.55 per pound of copper for the year 2019, (including $1.14 per pound of copper for the second half of 2019). PT-FI's unit net cash costs for the second half of 2019 are expected to benefit from access to higher grade ore from the Grasberg open pit. PT-FI's unit net cash costs for the year 2019 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of gold for the second half of 2019.
PT-FI's projected sales volumes and unit net cash costs for the year 2019 are dependent on a number of factors, including operational performance, mine sequencing changes, timing of shipments and export quotas.

Molybdenum Mines. FCX has two wholly owned molybdenum mines in Colorado - the Henderson underground mine and the Climax open-pit mine. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from FCX's North America and South America copper mines, is processed at FCX's conversion facilities.
Operating and Development Activities. Production from the Molybdenum mines totaled 9 million pounds of molybdenum in both second-quarter 2019 and 2018. Refer to summary operating data on page 3 for FCX's consolidated molybdenum sales and average realized prices, which includes sales of molybdenum produced at the Molybdenum mines and from FCX's North America and South America copper mines.
Unit net cash costs for the Molybdenum mines averaged $9.15 per pound of molybdenum in second-quarter 2019 and $8.36 per pound in second-quarter 2018. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $9.60 per pound of molybdenum for the year 2019.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XIII, which are available on FCX's website, "fcx.com."
Mining Exploration Activities.     FCX's mining exploration activities are generally associated with its existing mines, focusing on opportunities to expand reserves and resources to support development of additional future production capacity. A drilling program to further delineate the Lone Star resource continues to indicate significant additional mineralization in this district, with higher ore grades than FCX's other North America copper mines. Exploration results continue to indicate opportunities for significant future potential reserve additions in North America and South America. Exploration spending is expected to approximate $75 million for the year 2019, compared with $78 million in 2018.
CASH FLOWS, ASSET SALES, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $554 million (including $308 million of working capital sources and timing of other tax payments) in second-quarter 2019 and $1.1 billion (including $281 million of working capital sources and timing of other tax payments) for the first six months of 2019.
Based on current sales volume and cost estimates, and assuming average prices of $2.75 per pound of copper, $1,400 per ounce of gold and $12.00 per pound of molybdenum for the second half of 2019, FCX's consolidated operating cash flows are estimated to approximate $1.9 billion (including $0.3 billion of working capital sources and changes in timing of other tax payments) for the year 2019. The impact of price changes during the second half of 2019 on operating cash flows would approximate $185 million for each $0.10 per pound change in the average price of copper, $20 million for each $50 per ounce change in the average price of gold and $55 million for each $2 per pound change in the average price of molybdenum.

fcx2019blueline.jpg
Freeport-McMoRan
 
        8


fcx2019header.jpg

Capital Expenditures. Capital expenditures totaled $0.6 billion in second-quarter 2019 (including approximately $0.4 billion for major mining projects) and $1.25 billion for the first six months of 2019 (including approximately $0.7 billion for major mining projects).
Capital expenditures are expected to approximate $2.6 billion for the year 2019, including $1.6 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and development of the Lone Star project, and exclude estimates associated with the new smelter in Indonesia. A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods, enabling FCX to generate operating cash flows exceeding capital expenditures in future years. FCX has cash on hand and the financial flexibility to fund these expenditures and will continue to be disciplined in deploying capital.
Asset Sales. In second-quarter 2019, FCX entered into an agreement to sell its cobalt refinery in Kokkola, Finland, and related cobalt cathode precursor business for total consideration of approximately $150 million, plus working capital at the time of closing. FCX and its partners will retain Freeport Cobalt’s remaining cobalt business. The transaction is expected to close by year-end 2019, and FCX expects to report a gain on the transaction. In addition to customary closing conditions, including regulatory approvals, prior to completing the transaction, Freeport Cobalt is required to be segregated into two separate businesses. FCX evaluated the criteria required for assets held for sale classification and concluded that this transaction did not meet all of the criteria at June 30, 2019.
Cash. Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests' share, taxes and other costs at June 30, 2019 (in billions):
Cash at domestic companies
$
1.6

 
Cash at international operations
1.0

 
Total consolidated cash and cash equivalents
2.6

 
Noncontrolling interests' share
(0.4
)
 
Cash, net of noncontrolling interests' share
$
2.2

 
Withholding taxes and other

a 
Net cash available
$
2.2

 
 
 
 
a.
Rounds to less than $0.1 billion.
Debt. At June 30, 2019, FCX's consolidated debt totaled $9.9 billion, with a related weighted-average interest rate of 4.7 percent. FCX had no borrowings, $13 million in letters of credit issued and $3.5 billion available under its revolving credit facility at June 30, 2019.    
In May 2019, FCX amended its $3.5 billion revolving credit facility to, among other things, extend $3.26 billion of the facility by one year to April 20, 2024. The remaining $240 million matures on April 20, 2023.

FINANCIAL POLICY
On June 26, 2019, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which will be paid on August 1, 2019 to shareholders of record as of July 15, 2019. The declaration of dividends is at the discretion of the Board of Directors (Board) and will depend upon FCX’s financial results, cash requirements, future prospects and other factors deemed relevant by the Board.


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Freeport-McMoRan
 
        9


fcx2019header.jpg

WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's second-quarter 2019 results is scheduled for today at 10:00 a.m. Eastern Time. The conference call will be broadcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides by accessing “fcx.com.” A replay of the webcast will be available through Friday, August 24, 2019.
-----------------------------------------------------------------------------------------------------------
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is one of the world's largest publicly traded copper producers.
FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. Additional information about FCX is available on FCX's website at "fcx.com."
Cautionary Statement and Regulation G Disclosure: This press release contains forward-looking statements in which FCX discusses its potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; operating cash flows; capital expenditures; FCX's expectations regarding its share of PT-FI's net (loss) income and future cash flows through 2022; PT-FI's development, financing, construction and completion of a new smelter in Indonesia; PT-FI's compliance with environmental standards under the framework established by Indonesia's Ministry of Environment and Forestry; exploration efforts and results; development and production activities, rates and costs; liquidity; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; reserve estimates; consummation of the pending Freeport Cobalt transaction; and future dividend payments, share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “to be,” ”potential" and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.
FCX cautions readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; changes in mine plans; production rates; timing of shipments; results of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; satisfaction of customary closing conditions, including receipt of regulatory approvals to consummate the pending Freeport Cobalt transaction; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesian government's approval of an increase in PT-FI's export quota for the current export period ending March 8, 2020, and extension of PT-FI's export license after March 8, 2020; risks associated with underground mining; satisfaction of requirements in accordance with PT-FI's special mining license (IUPK) to extend mining rights from 2031 through 2041; industry risks; regulatory changes; political and social risks; labor relations; weather- and climate-related risks; environmental risks; litigation results; cybersecurity incidents; and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (SEC).
Investors are cautioned that many of the assumptions upon which FCX's forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may not be able to control. Further, FCX may make changes to its business plans that could affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in its assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements.
This press release also contains certain financial measures such as adjusted net (loss) income and unit net cash costs (credits) per pound of copper and molybdenum, which are not recognized under U.S. generally accepted accounting principles. As required by SEC Regulation G, reconciliations of these measures to amounts reported in FCX's consolidated financial statements are in the supplemental schedules of this press release, which are also available on FCX's website, "fcx.com."



fcx2019blueline.jpg
Freeport-McMoRan
 
        10



Freeport-McMoRan Inc.
SELECTED OPERATING DATA
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
MINING OPERATIONS:
Production
 
Sales
 
COPPER (millions of recoverable pounds)
 
 
 
 
(FCX's net interest in %)
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
181

 
182

 
181

 
183

 
Bagdad (100%)
57

 
48

 
58

 
48

 
Safford (100%)
28

 
29

 
29

 
32

 
Sierrita (100%)
39

 
36

 
39

 
38

 
Miami (100%)
4

 
4

 
4

 
4

 
Chino (100%)
48

 
42

 
45

 
43

 
Tyrone (100%)
13

 
13

 
13

 
13

 
Other (100%)

 

 

 

 
Total North America
370

 
354

 
369

 
361

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
239

 
262

 
240

 
258

 
El Abra (51%)
42

 
51

 
47

 
54

 
Total South America
281

 
313

 
287

 
312

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (48.76%)b
125

 
347

 
151

 
316

 
Total
776

 
1,014

 
807

c 
989

c 
Less noncontrolling interests
155

 
179

 
163

 
176

 
Net
621

 
835

 
644

 
813

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
2.75

 
$
3.08

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
6

 
6

 
4

 
5

 
Indonesia (48.76%)b
154

 
740

 
185

 
671

 
Consolidated
160

 
746

 
189

 
676

 
Less noncontrolling interests
30

 
70

 
35

 
63

 
Net
130

 
676

 
154

 
613

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,351

 
$
1,274

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
4

 
3

 
N/A

 
N/A

 
Climax (100%)
5

 
6

 
N/A

 
N/A

 
North America copper mines (100%)a
9

 
8

 
N/A

 
N/A

 
Cerro Verde (53.56%)
7

 
7

 
N/A

 
N/A

 
Consolidated
25

 
24

 
24

 
24

 
Less noncontrolling interests
3

 
3

 
4

 
4

 
Net
22

 
21

 
20

 
20

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
13.15

 
$
12.89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partners' interests.
 
 
 
 
 
 
 
 
 
b. Effective December 21, 2018, FCX's share ownership in PT Freeport Indonesia (PT-FI) is 48.76 percent. FCX’s economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.76 percent thereafter.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 114 million pounds in second-quarter 2019 and 90 million pounds in second-quarter 2018.
 
 
 
 
 
 
 
 
 


I


Freeport-McMoRan Inc.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
MINING OPERATIONS:
Production
 
Sales
 
Copper (millions of recoverable pounds)
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
348

 
351

 
337

 
370

 
Bagdad (100%)
112

 
97

 
109

 
99

 
Safford (100%)
56

 
62

 
56

 
68

 
Sierrita (100%)
75

 
77

 
73

 
82

 
Miami (100%)
7

 
8

 
7

 
9

 
Chino (100%)
83

 
80

 
82

 
88

 
Tyrone (100%)
25

 
26

 
25

 
28

 
Other (100%)

 
1

 

 
1

 
Total North America
706

 
702

 
689

 
745

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
500

 
505

 
496

 
500

 
El Abra (51%)
80

 
101

 
81

 
102

 
Total South America
580

 
606

 
577

 
602

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (48.76%)b
270

 
658

 
325

 
635

 
Total
1,556

 
1,966

 
1,591

c 
1,982

c 
Less noncontrolling interests
322

 
346

 
331

 
342

 
Net
1,234

 
1,620

 
1,260

 
1,640

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
2.78

 
$
3.10

 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
10

 
10

 
11

 
12

 
Indonesia (48.76%)b
316

 
1,335

 
420

 
1,274

 
Consolidated
326

 
1,345

 
431

 
1,286

 
Less noncontrolling interests
60

 
125

 
79

 
120

 
Net
266

 
1,220

 
352

 
1,166

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,315

 
$
1,291

 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
8

 
7

 
N/A

 
N/A

 
Climax (100%)
9

 
11

 
N/A

 
N/A

 
North America (100%)a
16

 
15

 
N/A

 
N/A

 
Cerro Verde (53.56%)
15

 
13

 
N/A

 
N/A

 
Consolidated
48

 
46

 
46

 
48

 
Less noncontrolling interests
7

 
6

 
7

 
7

 
Net
41

 
40

 
39

 
41

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
12.93

 
$
12.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partners' interests.
 
 
 
 
 
 
 
 
 
b. Effective December 21, 2018, FCX's share ownership in PT-FI is 48.76 percent. FCX’s economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.76 percent thereafter.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 231 million pounds for the first six months of 2019 and 164 million pounds for the first six months of 2018.
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 


II


Freeport-McMoRan Inc.
SELECTED OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
 
100% North America Copper Mines
 
 
 
 
 
 
 
 
Leach Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
797,600

 
689,500

 
751,600

 
682,100

 
Average copper ore grade (percent)
0.23

 
0.24

 
0.23

 
0.26

 
Copper production (millions of recoverable pounds)
245

 
241

 
471

 
480

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
320,300

 
307,000

 
317,900

 
297,900

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.36

 
0.35

 
0.34

 
0.35

 
Molybdenum
0.02

 
0.02

 
0.02

 
0.02

 
Copper recovery rate (percent)
87.4

 
89.1

 
87.6

 
88.5

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
195

 
184

 
371

 
358

 
Molybdenum
9

 
9

 
17

 
16

 
 
 
 
 
 
 
 
 
 
100% South America Mining
 
 
 
 
 
 
 
 
Leach Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
187,000

 
246,700

 
178,400

 
207,600

 
Average copper ore grade (percent)
0.38

 
0.30

 
0.36

 
0.32

 
Copper production (millions of recoverable pounds)
63

 
75

 
122

 
142

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
407,700

 
385,200

 
397,200

 
385,300

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.34

 
0.38

 
0.36

 
0.39

 
Molybdenum
0.02

 
0.01

 
0.02

 
0.01

 
Copper recovery rate (percent)
81.7

 
84.4

 
84.5

 
81.7

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
218

 
238

 
458

 
464

 
Molybdenum
7

 
7

 
15

 
13

 
 
 
 
 
 
 
 
 
 
100% Indonesia Mining
 
 
 
 
 
 
 
 
Ore extracted and milled (metric tons per day):
 
 
 
 
 
 
 
 
Grasberg open pita
54,000

 
148,400

 
78,300

 
136,800

 
Deep Ore Zone underground mineb
21,100

 
29,200

 
25,700

 
34,300

 
Deep Mill Level Zone underground mineb
7,700

 
2,700

 
7,200

 
2,700

 
Grasberg Block Cave underground mineb
7,400

 
3,800

 
6,200

 
3,900

 
Big Gossan underground mineb
5,400

 
3,800

 
5,500

 
3,100

 
Total
95,600

 
187,900

 
122,900

 
180,800

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
0.80

 
1.06

 
0.69

 
1.09

 
Gold (grams per metric ton)
0.79

 
1.77

 
0.66

 
1.71

 
Recovery rates (percent):
 
 
 
 
 
 
 
 
Copper
88.3

 
92.7

 
86.3

 
92.4

 
Gold
74.9

 
86.1

 
71.6

 
85.5

 
Production (recoverable):
 
 
 
 
 
 
 
 
Copper (millions of pounds)
125

 
353

 
270

 
693

 
Gold (thousands of ounces)
154

 
816

 
316

 
1,489

 
 
 
 
 
 
 
 
 
 
100% Molybdenum Mines
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
35,200

 
28,900

 
31,500

 
26,000

 
Average molybdenum ore grade (percent)
0.15

 
0.18

 
0.16

 
0.19

 
Molybdenum production (millions of recoverable pounds)
9

 
9

 
17

 
18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Includes ore from related stockpiles.
 
 
 
 
 
 
 
 
 
b. Reflects ore extracted, including ore from development activities that result in metal production.
 
 
 
 
 
 
 
 
 
 


III



Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(In Millions, Except Per Share Amounts)
 
Revenuesa
$
3,546

 
$
5,168

 
$
7,338

 
$
10,036

 
Cost of sales:
 
 
 
 
 
 
 
 
Production and deliveryb
3,002

 
2,915

 
5,978

 
5,723

 
Depreciation, depletion and amortization
352

 
442

 
699

 
893

 
Total cost of sales
3,354

 
3,357

 
6,677

 
6,616

 
Selling, general and administrative expenses
97

 
109

 
209

 
240

 
Mining exploration and research expenses
31

 
24

 
58

 
45

 
Environmental obligations and shutdown costs
23

 
59

 
65

 
68

 
Net loss (gain) on sales of assets
8

 
(45
)
 
(25
)
 
(56
)
 
Total costs and expenses
3,513

 
3,504

 
6,984

 
6,913

 
Operating income
33

 
1,664

 
354

 
3,123

 
Interest expense, netc
(132
)
 
(142
)
 
(278
)
 
(293
)
 
Net gain (loss) on early extinguishment of debt

 
9

 
(6
)
 
8

 
Other income, net
5

 
20

 
19

 
49

d 
(Loss) income from continuing operations before income taxes and equity in affiliated companies' net earnings
(94
)
 
1,551

 
89

 
2,887

 
Benefit from (provision for) income taxese
15

 
(515
)
 
(90
)
 
(1,021
)
 
Equity in affiliated companies' net earnings
5

 
3

 
2

 
1

 
Net (loss) income from continuing operations
(74
)
 
1,039

 
1

 
1,867

 
Net (loss) gain from discontinued operations

 
(4
)
 
1

 
(15
)
 
Net (loss) income
(74
)
 
1,035

 
2

 
1,852

 
Net loss (income) attributable to noncontrolling interests
2

 
(166
)
 
(43
)
 
(291
)
 
Net (loss) income attributable to common stockholdersf
$
(72
)
 
$
869

 
$
(41
)
 
$
1,561

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net (loss) income per share attributable to common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
(0.05
)
 
$
0.59

 
$
(0.03
)
 
$
1.08

 
Discontinued operations

 

 

 
(0.01
)
 
 
$
(0.05
)
 
$
0.59

 
$
(0.03
)
 
$
1.07

 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
1,451

 
1,449

 
1,451

 
1,449

 
Diluted
1,451

 
1,458

 
1,451

 
1,458

 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.05

 
$
0.05

 
$
0.10

 
$
0.10

 
 
 
 
 
 
 
 
 
 
a.
Includes adjustments to provisionally priced concentrate and cathode sales. For a summary of adjustments to provisionally priced copper sales, refer to the supplemental schedule, "Derivative Instruments," on page IX.
b.
Includes PT-FI charges, metals inventory adjustments and other net (charges) credits, which are summarized in the supplemental schedules, "Adjusted Net (Loss) Income," on page VII.
c.
Consolidated interest costs (before capitalization) totaled $167 million in second-quarter 2019, $165 million in second-quarter 2018, $345 million for the first six months of 2019 and $341 million for the first six months of 2018.
d.
Includes interest received with the refund of PT-FI's prior years' tax receivables. Refer to the supplemental schedule, "Adjusted Net (Loss) Income," on page VII.
e.
For a summary of FCX's benefit from (provision for) income taxes, refer to the supplemental schedule, "Income Taxes," on page VIII.
f.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to the supplemental schedule, "Deferred Profits," on page IX.

IV



Freeport-McMoRan Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
 
 
 
 
 
 
June 30, 2019
 
December 31, 2018
 
 
(In Millions)
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
2,623

 
$
4,217

 
Trade accounts receivable
725

 
829

 
Income and other tax receivables
245

 
493

 
Inventories:
 
 
 
 
Materials and supplies, net
1,634

 
1,528

 
Mill and leach stockpiles
1,352

 
1,453

 
Product
1,391

 
1,778

 
Other current assets
760

 
422

 
Total current assets
8,730

 
10,720

 
Property, plant, equipment and mine development costs, net
28,841

 
28,010

 
Long-term mill and leach stockpiles
1,347

 
1,314

 
Other assets
2,168

 
2,172

 
Total assets
$
41,086

 
$
42,216

 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
$
2,721

 
$
2,625

 
Current portion of environmental and asset retirement obligations
425

 
449

 
Dividends payable
73

 
73

 
Accrued income taxes
63

 
165

 
Current portion of debt
4

 
17

 
Total current liabilities
3,286

 
3,329

 
Long-term debt, less current portion
9,912

 
11,124

 
Deferred income taxes
4,055

 
4,032

 
Environmental and asset retirement obligations, less current portion
3,617

 
3,609

 
Other liabilities
2,399

 
2,230

 
Total liabilities
23,269

 
24,324

 
 
 
 
 
 
Equity:
 
 
 
 
Stockholders' equity:
 
 
 
 
Common stock
158

 
158

 
Capital in excess of par value
25,949

 
26,013

 
Accumulated deficit
(12,082
)
 
(12,041
)
 
Accumulated other comprehensive loss
(582
)
 
(605
)
 
Common stock held in treasury
(3,734
)
 
(3,727
)
 
Total stockholders' equity
9,709

 
9,798

 
Noncontrolling interestsa
8,108

 
8,094

 
Total equity
17,817

 
17,892

 
Total liabilities and equity
$
41,086

 
$
42,216

 
 
 
 
 
 
a. Includes $4.6 billion associated with the December 2018 PT-FI transaction.

V



Freeport-McMoRan Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
 
 
June 30,
 
 
 
2019
 
2018
 
 
 
(In Millions)
 
Cash flow from operating activities:
 
 
 
 
 
Net income
 
$
2

 
$
1,852

 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation, depletion and amortization
 
699

 
893

 
Metals inventory adjustments
 
59

 
2

 
Net gain on sales of assets
 
(25
)
 
(56
)
 
Stock-based compensation
 
40

 
60

 
Net charges for environmental and asset retirement obligations, including accretion
 
109

 
152

 
Payments for environmental and asset retirement obligations
 
(100
)
 
(110
)
 
Net charges for defined pension and postretirement plans
 
53

 
38

 
Pension plan contributions
 
(33
)
 
(44
)
 
Net loss (gain) on early extinguishment of debt
 
6

 
(8
)
 
Deferred income taxes
 
20

 
61

 
(Gain) loss on discontinued operations
 
(1
)
 
15

 
(Increase) decrease in long-term mill and leach stockpiles
 
(33
)
 
38

 
PT-FI surface water tax settlement
 
28

 

 
Cerro Verde royalty dispute
 
28

 
4

 
Payments for Cerro Verde royalty dispute
 
(86
)
 
(21
)
 
Other, net
 
41

 
15

 
Changes in working capital and other tax payments:
 
 
 
 

 
Accounts receivable
 
256

 
309

 
Inventories
 
287

 
(468
)
 
Other current assets
 
(26
)
 
(20
)
 
Accounts payable and accrued liabilities
 
9

 
114

 
Accrued income taxes and timing of other tax payments
 
(245
)
 
(148
)
 
Net cash provided by operating activities
 
1,088

 
2,678

 
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
North America copper mines
 
(417
)
 
(232
)
 
South America
 
(108
)
 
(138
)
 
Indonesia
 
(658
)
 
(449
)
 
Molybdenum mines
 
(6
)
 
(2
)
 
Other
 
(62
)
 
(63
)
 
Proceeds from sales of oil and gas properties
 
91

 

 
Intangible water rights and other, net
 
(7
)
 
(86
)
 
Net cash used in investing activities
 
(1,167
)
 
(970
)
 
 
 
 
 
 
 
Cash flow from financing activities:
 
 
 
 
 
Proceeds from debt
 
328

 
352

 
Repayments of debt
 
(1,563
)
 
(2,297
)
 
Cash dividends and distributions paid:
 
 
 
 
 
Common stock
 
(146
)
 
(73
)
 
Noncontrolling interests
 
(79
)
 
(241
)
 
Contributions from noncontrolling interests
 
100

 

 
Stock-based awards net (payments) proceeds
 
(6
)
 
5

 
Debt financing costs and other, net
 
(4
)
 
(23
)
 
Net cash used in financing activities
 
(1,370
)
 
(2,277
)
 
 
 
 
 
 
 
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(1,449
)
 
(569
)
 
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 perioda
 
$
3,006

 
$
4,141

 
 
 
 
 
 
 
a.
Includes restricted cash and restricted cash equivalents of $383 million at June 30, 2019, and $247 million at June 30, 2018.

VI



Freeport-McMoRan Inc.
ADJUSTED NET (LOSS) INCOME
Adjusted net (loss) income is intended to provide investors and others with information about FCX's recurring operating performance. This information differs from net (loss) income attributable to common stock determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. FCX's adjusted net (loss) income follows, which may not be comparable to similarly titled measures reported by other companies (in millions, except per share amounts).
 
Three Months Ended June 30,
 
 
2019
 
2018
 
 
Pre-tax
 
After-taxa
 
Per Share
 
Pre-tax
 
After-taxa
 
Per Share
 
Net (loss) income attributable to common stock
N/A

 
$
(72
)
 
$
(0.05
)
 
N/A

 
$
869

 
$
0.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
PT-FI chargesb
$
(28
)
 
$
(14
)
 
$
(0.01
)
 
$

 
$

 
$

 
Metals inventory adjustments
(2
)
 
(1
)
 

 
(2
)
 
(2
)
 

 
Other net (charges) credits
(2
)
 

 

 
16

 
11

 
0.01

 
Net adjustments to environmental obligations and related litigation reserves
(9
)
 
(9
)
 
(0.01
)
 
(50
)
 
(50
)
 
(0.03
)
 
Net (loss) gain on sales of assetsc
(8
)
 
(8
)
 
(0.01
)
 
45

 
45

 
0.03

 
Net gain on early extinguishment of debt

 

 

 
9

 
9

 
0.01

 
Net tax creditsd
N/A

 
18

 
0.01

 
N/A

 
7

 

 
Loss on discontinued operationse

 

 

 
(4
)
 
(4
)
 

 
 
$
(49
)
 
$
(14
)
 
$
(0.01
)
f 
$
14

 
$
16

 
$
0.01

f 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net (loss) income attributable to common stock
N/A
 
$
(58
)
 
$
(0.04
)
 
N/A
 
$
853

 
$
0.58

 
 
Six Months Ended June 30,
 
 
2019
 
2018
 
 
Pre-tax
 
After-taxa
 
Per Share
 
Pre-tax
 
After-taxa
 
Per Share
 
Net (loss) income attributable to common stock
N/A

 
$
(41
)
 
$
(0.03
)
 
N/A

 
$
1,561

 
$
1.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
PT-FI chargesb
$
(28
)
 
$
(14
)
 
$
(0.01
)
 
$

 
$

 
$

 
Metals inventory adjustments
(59
)
 
(27
)
 
(0.02
)
 
(2
)
 
(2
)
 

 
Other net (charges) credits
(24
)
 
(10
)
 
(0.01
)
 
12

 
10

 
0.01

 
Net adjustments to environmental obligations and related litigation reserves
(44
)
 
(44
)
 
(0.03
)
 
(50
)
 
(50
)
 
(0.03
)
 
Net gain on sales of assetsc
25

 
25

 
0.02

 
56

 
56

 
0.04

 
Net (loss) gain on early extinguishment of debt
(6
)
 
(5
)
 

 
8

 
8

 

 
PT-FI interest on tax refunds

 

 

 
24

 
13

 
0.01

 
Net tax creditsd
N/A

 
24

 
0.02

 
N/A

 
7

 

 
Gain (loss) on discontinued operationse
1

 
1

 

 
(15
)
 
(15
)
 
(0.01
)
 
 
$
(135
)
 
$
(50
)
 
$
(0.03
)
 
$
33

 
$
27

 
$
0.02

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income attributable to common stock
N/A
 
$
9

 
$
0.01

f 
N/A
 
$
1,534

 
$
1.05

 
a.
Reflects impact to FCX net (loss) income attributable to common stock (i.e., net of any taxes and noncontrolling interests).
b.
Reflects an adjustment to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.
c.
Includes adjustments to the fair value of the potential contingent consideration related to the 2016 sale of onshore California oil and gas properties, which will continue to be adjusted through December 31, 2020. FCX would receive additional contingent consideration related to this transaction consisting of $50 million per year for 2019 and 2020 if the price of Brent crude oil averages over $70 per barrel in each of these calendar years. The first six months of 2019 also included a $20 million gain on sales of oil and gas assets.
d.
Refer to "Income Taxes" on page VIII for further discussion of net tax credits.
e.
Primarily reflects adjustments to the estimated fair value of contingent consideration related to the 2016 sale of FCX’s interest in TF Holdings Limited, which will continue to be adjusted through December 31, 2019.
f.
Does not foot because of rounding.

VII



Freeport-McMoRan Inc.
INCOME TAXES
Following is a summary of the approximate amounts used in the calculation of FCX's consolidated income tax benefit (provision) (in millions, except percentages):
 
Three Months Ended June 30,
 
 
2019
 
2018
 
 
 
 
 
 
Income Tax
 
 
 
 
 
Income Tax
 
 
Income
 
Effective
 
(Provision)
 
 
 
Effective
 
(Provision)
 
 
(Loss)a
 
Tax Rate
 
Benefit
 
Incomea
 
Tax Rate
 
Benefit
 
U.S.b
$
(86
)
 
21%
 
$
18

c 
$
141

 
(4)%
 
$
5

c 
South America
31

 
39%
 
(12
)
 
276

 
39%
 
(108
)
d 
Indonesia
(92
)
 
38%
 
35

 
1,012

 
42%
 
(429
)
 
Eliminations and other
53

 
N/A
 
(20
)
 
122

 
N/A
 
(28
)
 
Rate adjustmente

 
N/A
 
(6
)
 

 
N/A
 
45

 
Continuing operations
$
(94
)
 
16%
 
$
15

 
$
1,551

 
33%
 
$
(515
)
 
 
Six Months Ended June 30,
 
 
2019
 
2018
 
 
 
 
 
 
Income Tax
 
 
 
 
 
Income Tax
 
 
Income
 
Effective
 
(Provision)
 
 
 
Effective
 
(Provision)
 
 
(Loss)a
 
Tax Rate
 
Benefit
 
Incomea
 
Tax Rate
 
Benefit
 
U.S.b
$
(183
)
 
10%
 
$
19

c 
$
311

 
(3)%
 
$
9

c 
South America
294

 
40%
 
(117
)
 
459

 
39%
 
(180
)
d 
Indonesia
(13
)
 
69%
 
9

f 
1,945

 
43%
 
(830
)
 
Eliminations and other
(9
)
 
N/A
 
(10
)
 
172

 
N/A
 
(31
)
 
Rate adjustmente

 
N/A
 
9

 

 
N/A
 
11

 
Continuing operations
$
89

 
101%
g 
$
(90
)
 
$
2,887

 
35%
 
$
(1,021
)
 
a.
Represents (loss) income from continuing operations before income taxes and equity in affiliated companies' net earnings.
b.
In addition to FCX's North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.
c.
The second quarter and first six months of 2019 include tax credits totaling $18 million primarily associated with state law changes. The second quarter and first six months of 2018 include a tax credit of $5 million associated with the settlement of a state income tax examination.
d.
The second quarter and first six months of 2018 include a tax credit of $5 million ($2 million net of noncontrolling interest) associated with Cerro Verde's disputed royalties and other related mining taxes.
e.
In accordance with applicable accounting rules, FCX adjusts its interim provision for income taxes equal to its consolidated tax rate.
f.
The first six months of 2019 includes a tax credit of $8 million ($6 million net of noncontrolling interest) associated with the reduction in PT-FI's statutory tax rates in accordance with its special mining license (IUPK).
g.
The 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 the first six months of 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.
Assuming achievement of current sales volume and cost estimates and average prices of $2.75 per pound for copper, $1,400 per ounce for gold and $12.00 per pound for molybdenum for the second half of 2019, FCX estimates its consolidated effective tax rate for the year 2019 would approximate 57 percent (comprised of an estimated effective rate of 42 percent on South America income, 39 percent on Indonesia income and 0 percent for the U.S.). Variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. Because of FCX's U.S. tax position, it does not record a financial statement impact for income or losses generated in the U.S., therefore, the consolidated effective tax rate is generally higher than the international rates at lower copper prices and lower than international rates at higher copper prices.



VIII



Freeport-McMoRan Inc.
DERIVATIVE INSTRUMENTS
For the first six months of 2019, FCX's mined copper was sold 58 percent in concentrate, 21 percent as cathode and 21 percent as rod from North America operations. Substantially all of FCX's copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted London Metal Exchange (LME) monthly average copper prices. FCX records revenues and invoices customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. LME copper settlement prices averaged $2.77 per pound during second-quarter 2019 and settled at $2.71 per pound on June 28, 2019. Because a significant portion of FCX's copper concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of the average recorded copper price for the period. FCX's average realized copper price was $2.75 per pound in second-quarter 2019. Following is a summary of the adjustments to prior period and current period provisionally priced copper sales (in millions, except per share amounts):
 
Three Months Ended June 30,
 
2019
 
2018
 
Prior
Perioda
 
Current
Periodb
 
Total
 
Prior
Perioda
 
Current
Periodb
 
Total
Revenues
$
(83
)
 
$
(39
)
 
$
(122
)
 
$
23

 
$
(37
)
 
$
(14
)
Net income attributable to common stock
$
(35
)
 
$
(18
)
 
$
(53
)
 
$
9

 
$
(15
)
 
$
(6
)
Net income per share of common stock
$
(0.02
)
 
$
(0.01
)
 
$
(0.04
)
 
$
0.01

 
$
(0.01
)
 
$

a.
Reflects adjustments to prior period provisionally priced copper sales at March 31, 2019 and 2018.
b.
Reflects adjustments to provisionally priced copper sales in the second quarters of 2019 and 2018.
 
Six Months Ended June 30,
 
2019
 
2018
 
Prior
Perioda
 
Current
Periodb
 
Total
 
Prior
Perioda
 
Current
Periodb
 
Total
Revenues
$
58

 
$
(58
)
 
$

 
$
(70
)
 
$
(79
)
 
$
(149
)
Net income attributable to common stock
$
23

 
$
(27
)
 
$
(4
)
 
$
(31
)
 
$
(33
)
 
$
(64
)
Net income per share of common stock
$
0.02

 
$
(0.02
)
 
$

 
$
(0.02
)
 
$
(0.02
)
 
$
(0.04
)
a.
Reflects adjustments to provisionally priced copper sales at December 31, 2018 and 2017.
b.
Reflects adjustments to provisionally priced copper sales for the first six months of 2019 and 2018.
At June 30, 2019, FCX had provisionally priced copper sales at its copper mining operations totaling 285 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $2.72 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the quarter-end provisional price would have an approximate $10 million effect on 2019 net income attributable to common stock. The LME copper price settled at $2.71 per pound on July 23, 2019.

DEFERRED PROFITS
FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 25 percent of PT-FI's sales to PT Smelting (PT-FI's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to net income attributable to common stock totaling $(1) million in second-quarter 2019, $27 million in second-quarter 2018, $(15) million for the first six months of 2019 and $20 million for the first six months of 2018. FCX's net deferred profits on its inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $23 million at June 30, 2019. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings. In third-quarter 2019, FCX expects increased intercompany sales volumes to Atlantic Copper and PT Smelting, resulting in the deferral of approximately $30 million of net income until final sales occur.



IX



Freeport-McMoRan Inc.
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, Cerro Verde and Grasberg (Indonesia Mining) copper mines, 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, the timing of sales to unaffiliated customers and transportation premiums.
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 segment information 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.


X



Freeport-McMoRan Inc.
BUSINESS SEGMENTS (continued)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
Corporate,
 
 
 
 
North America Copper Mines
 
South America Mining
 
 
 
 
 
 
 
Copper
 
Other
 
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
Indonesia
 
Molybdenum
 
Rod &
 
Smelting
 
& Elimi-
 
FCX
 
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Mining
 
Mines
 
Refining
 
& Refining
 
nations
 
Total
 
Three Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
16

 
$
69

 
$
85

 
$
562

 
$
128

 
$
690

 
$
583

a 
$

 
$
1,171

 
$
546

 
$
471

b 
$
3,546

 
Intersegment
491

 
544

 
1,035

 
71

 

 
71

 
(1
)
 
109

 
4

 

 
(1,218
)
 

 
Production and delivery
348

 
477

 
825

 
455

 
126

 
581

 
554

 
78

 
1,171

 
515

 
(722
)
 
3,002

 
Depreciation, depletion and amortization
43

 
44

 
87

 
101

 
18

 
119

 
99

 
18

 
3

 
7

 
19

 
352

 
Selling, general and administrative expenses

 

 

 
2

 

 
2

 
30

 

 

 
5

 
60

 
97

 
Mining exploration and research expenses

 
1

 
1

 

 

 

 

 

 

 

 
30

 
31

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 

 
23

 
23

 
Net loss on sales of assets

 

 

 

 

 

 

 

 

 

 
8

 
8

 
Operating income (loss)
116

 
91

 
207

 
75

 
(16
)
 
59

 
(101
)
 
13

 
1

 
19

 
(165
)
 
33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 

 
1

 
25

 

 
25

 
1

 

 

 
6

 
99

 
132

 
Provision for (benefit from) income taxes

 

 

 
20

 
(9
)
 
11

 
(35
)
 

 

 
2

 
7

 
(15
)
 
Total assets at June 30, 2019
2,917

 
4,921

 
7,838

 
8,571

 
1,699

 
10,270

 
16,261

 
1,792

 
250

 
764

 
3,911

 
41,086

 
Capital expenditures
49

 
158

 
207

 
43

 
4

 
47

 
339

 
2

 
1

 
5

 
28

 
629

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
25

 
$
13

 
$
38

 
$
719

 
$
171

 
$
890

 
$
1,639

a 
$

 
$
1,387

 
$
602

 
$
612

b 
$
5,168

 
Intersegment
568

 
641

 
1,209

 
100

 

 
100

 
1

 
111

 
8

 

 
(1,429
)
 

 
Production and delivery
298

 
491

 
789

 
445

 
133

 
578

 
425

 
71

 
1,389

 
579

 
(916
)
 
2,915

 
Depreciation, depletion and amortization
44

 
48

 
92

 
109

 
24

 
133

 
172

 
21

 
3

 
7

 
14

 
442

 
Selling, general and administrative expenses
1

 

 
1

 
2

 

 
2

 
28

 

 

 
5

 
73

 
109

 
Mining exploration and research expenses

 

 

 

 

 

 

 

 

 

 
24

 
24

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 

 
59

 
59

 
Net gain on sale of assets

 

 

 

 

 

 

 

 

 

 
(45
)
 
(45
)
 
Operating income (loss)
250

 
115

 
365

 
263

 
14

 
277

 
1,015

 
19

 
3

 
11

 
(26
)
 
1,664

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 

 
1

 
16

 

 
16

 

 

 

 
6

 
119

 
142

 
Provision for (benefit from) income taxes

 

 

 
102

 
6

 
108

 
429

 

 

 

 
(22
)
 
515

 
Total assets at June 30, 2018
2,819

 
4,374

 
7,193

 
8,630

 
1,715

 
10,345

 
10,911

 
1,820

 
278

 
931

 
5,550

 
37,028

 
Capital expenditures
41

 
99

 
140

 
68

 
3

 
71

 
246

 
1

 
1

 
3

 
20

 
482

 
a.
Includes PT-FI's sales to PT Smelting totaling $470 million in second-quarter 2019 and $649 million in second-quarter 2018.
b.
Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


XI



Freeport-McMoRan Inc.
BUSINESS SEGMENTS (continued)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
Corporate,
 
 
 
 
North America Copper Mines
 
South America Mining
 
 
 
 
 
 
 
Copper
 
Other
 
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
Indonesia
 
Molybdenum
 
Rod &
 
Smelting
 
& Elimi-
 
FCX
 
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Mining
 
Mines
 
Refining
 
& Refining
 
nations
 
Total
 
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
28

 
$
164

 
$
192

 
$
1,289

 
$
226

 
$
1,515

 
$
1,288

a 
$

 
$
2,299

 
$
1,117

 
$
927

b 
$
7,338

 
Intersegment
949

 
1,013

 
1,962

 
197

 

 
197

 
57

 
200

 
10

 
5

 
(2,431
)
 

 
Production and delivery
643

 
925

 
1,568

 
894

 
226

 
1,120

 
1,110

 
149

 
2,304

 
1,067

 
(1,340
)
 
5,978

 
Depreciation, depletion and amortization
83

 
87

 
170

 
201

 
32

 
233

 
204

 
34

 
5

 
14

 
39

 
699

 
Selling, general and administrative expenses
1

 
1

 
2

 
4

 

 
4

 
60

 

 

 
10

 
133

 
209

 
Mining exploration and research expenses

 
1

 
1

 

 

 

 

 

 

 

 
57

 
58

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 

 
65

 
65

 
Net gain on sales of assets

 

 

 

 

 

 

 

 

 

 
(25
)
 
(25
)
 
Operating income (loss)
250

 
163

 
413

 
387

 
(32
)
 
355

 
(29
)
 
17

 

 
31

 
(433
)
 
354

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
2

 

 
2

 
54

 

 
54

 
1

 

 

 
12

 
209

 
278

 
Provision for (benefit from) income taxes

 

 

 
130

 
(14
)
 
116

 
(9
)
 

 

 
3

 
(20
)
 
90

 
Capital expenditures
111

 
306

 
417

 
99

 
9

 
108

 
658

 
6

 
2

 
9

 
51

 
1,251

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
28

 
$
28

 
$
56

 
$
1,344

 
$
321

 
$
1,665

 
$
3,160

a 
$

 
$
2,772

 
$
1,179

 
$
1,204

b 
$
10,036

 
Intersegment
1,169

 
1,330

 
2,499

 
202

 

 
202

 
53

 
206

 
16

 
2

 
(2,978
)
 

 
Production and delivery
588

 
992

 
1,580

 
872

 
249

 
1,121

 
882

 
138

 
2,777

 
1,135

 
(1,910
)
 
5,723

 
Depreciation, depletion and amortization
90

 
96

 
186

 
214

 
46

 
260

 
353

 
40

 
5

 
14

 
35

 
893

 
Selling, general and administrative expenses
2

 
2

 
4

 
4

 

 
4

 
67

 

 

 
11

 
154

 
240

 
Mining exploration and research expenses

 
1

 
1

 

 

 

 

 

 

 

 
44

 
45

 
Environmental obligations and shutdown costs

 

 

 

 

 

 

 

 

 

 
68

 
68

 
Net gain on sales of assets

 

 

 

 

 

 

 

 

 

 
(56
)
 
(56
)
 
Operating income (loss)
517

 
267

 
784

 
456

 
26

 
482

 
1,911

 
28

 
6

 
21

 
(109
)
 
3,123

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
2

 

 
2

 
33

 

 
33

 

 

 

 
11

 
247

 
293

 
Provision for income taxes

 

 

 
170

 
10

 
180

 
830

 

 

 
1

 
10

 
1,021

 
Capital expenditures
88

 
144

 
232

 
131

 
7

 
138

 
449

 
2

 
2

 
7

 
54


884

 
a.
Includes PT-FI's sales to PT Smelting totaling $879 million for the first six months of 2019 and $1.3 billion for the first six months of 2018.
b.
Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.





XII


Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS

Unit net cash costs (credits) per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of FCX's mining operations expressed on a basis relating to the primary metal product for the respective operations. FCX uses this measure for the same purpose and for monitoring operating performance by its mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although FCX's measures may not be comparable to similarly titled measures reported by other companies.

FCX presents gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. FCX uses the by-product method in its presentation of gross profit per pound of copper because (i) the majority of its revenues are copper revenues, (ii) it mines ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of FCX's costs to revenues from the copper, gold, molybdenum and other metals it produces and (iv) it is the method used by FCX's management and Board to monitor FCX's mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent FCX's metals sales volumes and realized prices change.

FCX shows revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs (credits), consist of items such as stock-based compensation costs, start-up costs, inventory adjustments, long-lived asset impairments, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in FCX's consolidated financial statements.

XIII



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended June 30, 2019
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,026

 
$
1,026

 
$
103

 
$
20

 
$
1,149

 
Site production and delivery, before net noncash
and other costs shown below
 
758

 
692

 
79

 
13

 
784

 
By-product credits
 
(97
)
 

 

 

 

 
Treatment charges
 
40

 
39

 

 
1

 
40

 
Net cash costs
 
701

 
731

 
79

 
14

 
824

 
Depreciation, depletion and amortization (DD&A)
 
88

 
79

 
7

 
2

 
88

 
Noncash and other costs, net
 
10

 
8

 
2

 

 
10

 
Total costs
 
799

 
818

 
88

 
16

 
922

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(16
)
 
(16
)
 

 

 
(16
)
 
Gross profit
 
$
211

 
$
192

 
$
15

 
$
4

 
$
211

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
369

 
369

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.78

 
$
2.78

 
$
12.39

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.05

 
1.88

 
9.53

 
 
 
 
 
By-product credits
 
(0.26
)
 

 

 
 
 
 
 
Treatment charges
 
0.11

 
0.10

 

 
 
 
 
 
Unit net cash costs
 
1.90

 
1.98

 
9.53

 
 
 
 
 
DD&A
 
0.24

 
0.22

 
0.77

 
 
 
 
 
Noncash and other costs, net
 
0.03

 
0.02

 
0.23

 
 
 
 
 
Total unit costs
 
2.17

 
2.22

 
10.53

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.04
)
 
(0.04
)
 

 
 
 
 
 
Gross profit per pound
 
$
0.57

 
$
0.52

 
$
1.86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
1,149

 
$
784

 
$
88

 
 
 
 
 
Treatment charges
 
(19
)
 
21

 

 
 
 
 
 
Noncash and other costs, net
 

 
10

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(16
)
 

 

 
 
 
 
 
Eliminations and other
 
6

 
10

 
(1
)
 
 
 
 
 
North America copper mines
 
1,120

 
825

 
87

 
 
 
 
 
Other miningc
 
3,173

 
2,899

 
246

 
 
 
 
 
Corporate, other & eliminations
 
(747
)
 
(722
)
 
19

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
3,546

 
$
3,002

 
$
352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XIV



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,126

 
$
1,126

 
$
91

 
$
22

 
$
1,239

 
Site production and delivery, before net noncash
and other costs shown below
 
701

 
644

 
68

 
12

 
724

 
By-product credits
 
(90
)
 

 

 

 

 
Treatment charges
 
37

 
36

 

 
1

 
37

 
Net cash costs
 
648

 
680

 
68

 
13

 
761

 
DD&A
 
91

 
83

 
6

 
2

 
91

 
Noncash and other costs, net
 
23

 
21

 
1

 
1

 
23

 
Total costs
 
762

 
784

 
75

 
16

 
875

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
1

 
1

 

 

 
1

 
Gross profit
 
$
365

 
$
343

 
$
16

 
$
6

 
$
365

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
361

 
361

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.12

 
$
3.12

 
$
12.13

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.94

 
1.78

 
9.09

 
 
 
 
 
By-product credits
 
(0.25
)
 

 

 
 
 
 
 
Treatment charges
 
0.10

 
0.10

 

 
 
 
 
 
Unit net cash costs
 
1.79

 
1.88

 
9.09

 
 
 
 
 
DD&A
 
0.25

 
0.23

 
0.80

 
 
 
 
 
Noncash and other costs, net
 
0.07

 
0.06

 
0.15

 
 
 
 
 
Total unit costs
 
2.11

 
2.17

 
10.04

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 

 

 

 
 
 
 
 
Gross profit per pound
 
$
1.01

 
$
0.95

 
$
2.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
1,239

 
$
724

 
$
91

 
 
 
 
 
Treatment charges
 
(5
)
 
32

 

 
 
 
 
 
Noncash and other costs, net
 

 
23

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
1

 

 

 
 
 
 
 
Eliminations and other
 
12

 
10

 
1

 
 
 
 
 
North America copper mines
 
1,247

 
789

 
92

 
 
 
 
 
Other miningc
 
4,738

 
3,042

 
336

 
 
 
 
 
Corporate, other & eliminations
 
(817
)
 
(916
)
 
14

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
5,168

 
$
2,915

 
$
442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.




XV



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Six Months Ended June 30, 2019
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,931

 
$
1,931

 
$
190

 
$
43

 
$
2,164

 
Site production and delivery, before net noncash
and other costs shown below
 
1,416

 
1,288

 
153

 
28

 
1,469

 
By-product credits
 
(180
)
 

 

 

 

 
Treatment charges
 
76

 
73

 

 
3

 
76

 
Net cash costs
 
1,312

 
1,361

 
153

 
31

 
1,545

 
DD&A
 
170

 
155

 
12

 
3

 
170

 
Noncash and other costs, net
 
33

 
29

 
3

 
1

 
33

 
Total costs
 
1,515

 
1,545

 
168

 
35

 
1,748

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
4

 
4

 

 

 
4

 
Gross profit
 
$
420

 
$
390

 
$
22

 
$
8

 
$
420

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
689

 
689

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.80

 
$
2.80

 
$
12.06

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
2.05

 
1.87

 
9.69

 
 
 
 
 
By-product credits
 
(0.26
)
 

 

 
 
 
 
 
Treatment charges
 
0.11

 
0.11

 

 
 
 
 
 
Unit net cash costs
 
1.90

 
1.98

 
9.69

 
 
 
 
 
DD&A
 
0.25

 
0.22

 
0.75

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.04

 
0.22

 
 
 
 
 
Total unit costs
 
2.20

 
2.24

 
10.66

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.01

 
0.01

 

 
 
 
 
 
Gross profit per pound
 
$
0.61

 
$
0.57

 
$
1.40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
2,164

 
$
1,469

 
$
170

 
 
 
 
 
Treatment charges
 
(32
)
 
44

 

 
 
 
 
 
Noncash and other costs, net
 

 
33

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
4

 

 

 
 
 
 
 
Eliminations and other
 
18

 
22

 

 
 
 
 
 
North America copper mines
 
2,154

 
1,568

 
170

 
 
 
 
 
Other miningc
 
6,688

 
5,750

 
490

 
 
 
 
 
Corporate, other & eliminations
 
(1,504
)
 
(1,340
)
 
39

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
7,338

 
$
5,978

 
$
699

 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.

XVI



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
2,337

 
$
2,337

 
$
167

 
$
45

 
$
2,549

 
Site production and delivery, before net noncash
and other costs shown below
 
1,405

 
1,304

 
123

 
25

 
1,452

 
By-product credits
 
(165
)
 

 

 

 

 
Treatment charges
 
74

 
71

 

 
3

 
74

 
Net cash costs
 
1,314

 
1,375

 
123

 
28

 
1,526

 
DD&A
 
185

 
171

 
10

 
4

 
185

 
Noncash and other costs, net
 
42

 
40

 
2

 

 
42

 
Total costs
 
1,541

 
1,586

 
135

 
32

 
1,753

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(5
)
 
(5
)
 

 

 
(5
)
 
Gross profit
 
$
791

 
$
746

 
$
32

 
$
13

 
$
791

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
744

 
744

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.14

 
$
3.14

 
$
11.52

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.89

 
1.75

 
8.47

 
 
 
 
 
By-product credits
 
(0.22
)
 

 

 
 
 
 
 
Treatment charges
 
0.10

 
0.10

 

 
 
 
 
 
Unit net cash costs
 
1.77

 
1.85

 
8.47

 
 
 
 
 
DD&A
 
0.25

 
0.23

 
0.74

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
0.12

 
 
 
 
 
Total unit costs
 
2.07

 
2.13

 
9.33

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.01
)
 
(0.01
)
 

 
 
 
 
 
Gross profit per pound
 
$
1.06

 
$
1.00

 
$
2.19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
2,549

 
$
1,452

 
$
185

 
 
 
 
 
Treatment charges
 
(13
)
 
61

 

 
 
 
 
 
Noncash and other costs, net
 

 
42

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(5
)
 

 

 
 
 
 
 
Eliminations and other
 
24

 
25

 
1

 
 
 
 
 
North America copper mines
 
2,555

 
1,580

 
186

 
 
 
 
 
Other miningc
 
9,255

 
6,053

 
672

 
 
 
 
 
Corporate, other & eliminations
 
(1,774
)
 
(1,910
)
 
35

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
10,036

 
$
5,723

 
$
893

 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XVII



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended June 30, 2019
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Othera
 
Total
Revenues, excluding adjustments
 
$
781

 
$
781

 
$
92

 
$
873

Site production and delivery, before net noncash
and other costs shown below
 
550

 
498

 
64

 
562

By-product credits
 
(80
)
 

 

 

Treatment charges
 
52

 
52

 

 
52

Royalty on metals
 
2

 
2

 

 
2

Net cash costs
 
524

 
552

 
64

 
616

DD&A
 
119

 
107

 
12

 
119

Noncash and other costs, net
 
21

 
20

 
1

 
21

Total costs
 
664

 
679

 
77

 
756

Other revenue adjustments, primarily for pricing
on prior period open sales
 
(57
)
 
(57
)
 

 
(57
)
Gross profit
 
$
60

 
$
45

 
$
15

 
$
60

 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
287

 
287

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.72

 
$
2.72

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.92

 
1.74

 
 
 
 
By-product credits
 
(0.28
)
 

 
 
 
 
Treatment charges
 
0.18

 
0.18

 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
Unit net cash costs
 
1.83

 
1.93

 
 
 
 
DD&A
 
0.41

 
0.37

 
 
 
 
Noncash and other costs, net
 
0.07

 
0.07

 
 
 
 
Total unit costs
 
2.31

 
2.37

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.20
)
 
(0.20
)
 
 
 
 
Gross profit per pound
 
$
0.21

 
$
0.15

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
873

 
$
562

 
$
119

 
 
Treatment charges
 
(52
)
 

 

 
 
Royalty on metals
 
(2
)
 

 

 
 
Noncash and other costs, net
 

 
21

 

 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(57
)
 

 

 
 
Eliminations and other
 
(1
)
 
(2
)
 

 
 
South America mining
 
761

 
581

 
119

 
 
Other miningb
 
3,532

 
3,143

 
214

 
 
Corporate, other & eliminations
 
(747
)
 
(722
)
 
19

 
 
As reported in FCX's consolidated financial statements
 
$
3,546

 
$
3,002

 
$
352

 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 1.2 million ounces ($15.39 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XVIII



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues and Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Othera
 
Total
 
Revenues, excluding adjustments
 
$
958

 
$
958

 
$
81

 
$
1,039

 
Site production and delivery, before net noncash
and other costs shown below
 
552

 
513

 
50

 
563

 
By-product credits
 
(70
)
 

 

 

 
Treatment charges
 
59

 
59

 

 
59

 
Royalty on metals
 
2

 
2

 

 
2

 
Net cash costs
 
543

 
574

 
50

 
624

 
DD&A
 
133

 
123

 
10

 
133

 
Noncash and other costs, net
 
17

 
17

 

 
17

 
Total costs
 
693

 
714

 
60

 
774

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
13

 
13

 

 
13

 
Gross profit
 
$
278

 
$
257

 
$
21

 
$
278

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
312

 
312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.07

 
$
3.07

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.77

 
1.65

 
 
 
 
 
By-product credits
 
(0.22
)
 

 
 
 
 
 
Treatment charges
 
0.18

 
0.18

 
 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
 
Unit net cash costs
 
1.74

 
1.84

 
 
 
 
 
DD&A
 
0.43

 
0.40

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
 
 
 
 
Total unit costs
 
2.22

 
2.29

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.04

 
0.04

 
 
 
 
 
Gross profit per pound
 
$
0.89

 
$
0.82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
1,039

 
$
563

 
$
133

 
 
 
Treatment charges
 
(59
)
 

 

 
 
 
Royalty on metals
 
(2
)
 

 

 
 
 
Noncash and other costs, net
 

 
17

 

 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
13

 

 

 
 
 
Eliminations and other
 
(1
)
 
(2
)
 

 
 
 
South America mining
 
990

 
578

 
133

 
 
 
Other miningb
 
4,995

 
3,253

 
295

 
 
 
Corporate, other & eliminations
 
(817
)
 
(916
)
 
14

 
 
 
As reported in FCX's consolidated financial statements
 
$
5,168

 
$
2,915

 
$
442

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 1.1 million ounces ($16.38 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.




XIX



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Six Months Ended June 30, 2019
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Othera
 
Total
Revenues, excluding adjustments
 
$
1,584

 
$
1,584

 
$
204

 
$
1,788

Site production and delivery, before net noncash
and other costs shown below
 
1,053

 
949

 
129

 
1,078

By-product credits
 
(179
)
 

 

 

Treatment charges
 
108

 
108

 

 
108

Royalty on metals
 
3

 
3

 

 
3

Net cash costs
 
985

 
1,060

 
129

 
1,189

DD&A
 
233

 
207

 
26

 
233

Noncash and other costs, net
 
46

 
45

 
1

 
46

Total costs
 
1,264

 
1,312

 
156

 
1,468

Other revenue adjustments, primarily for pricing
on prior period open sales
 
37

 
37

 

 
37

Gross profit
 
$
357

 
$
309

 
$
48

 
$
357

 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
577

 
577

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.75

 
$
2.75

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.82

 
1.64

 
 
 
 
By-product credits
 
(0.31
)
 

 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
Unit net cash costs
 
1.71

 
1.84

 
 
 
 
DD&A
 
0.40

 
0.35

 
 
 
 
Noncash and other costs, net
 
0.08

 
0.08

 
 
 
 
Total unit costs
 
2.19

 
2.27

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.06

 
0.06

 
 
 
 
Gross profit per pound
 
$
0.62

 
$
0.54

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
1,788

 
$
1,078

 
$
233

 
 
Treatment charges
 
(108
)
 

 

 
 
Royalty on metals
 
(3
)
 

 

 
 
Noncash and other costs, net
 

 
46

 

 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
37

 

 

 
 
Eliminations and other
 
(2
)
 
(4
)
 

 
 
South America mining
 
1,712

 
1,120

 
233

 
 
Other miningb

7,130

 
6,198

 
427

 
 
Corporate, other & eliminations

(1,504
)
 
(1,340
)
 
39

 
 
As reported in FCX's consolidated financial statements
 
$
7,338

 
$
5,978

 
$
699

 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 2.5 million ounces ($15.58 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.
 



XX



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Othera
 
Total
 
Revenues, excluding adjustments
 
$
1,859

 
$
1,859

 
$
167

 
$
2,026

 
Site production and delivery, before net noncash
and other costs shown below
 
1,069

 
990

 
102

 
1,092

 
By-product credits
 
(144
)
 

 

 

 
Treatment charges
 
117

 
117

 

 
117

 
Royalty on metals
 
4

 
4

 

 
4

 
Net cash costs
 
1,046

 
1,111

 
102

 
1,213

 
DD&A
 
260

 
239

 
21

 
260

 
Noncash and other costs, net
 
32

 
32

 

 
32

 
Total costs
 
1,338

 
1,382

 
123

 
1,505

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(37
)
 
(37
)
 

 
(37
)
 
Gross profit
 
$
484

 
$
440

 
$
44

 
$
484

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
602

 
602

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.09

 
$
3.09

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.78

 
1.64

 
 
 
 
 
By-product credits
 
(0.24
)
 

 
 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
 
Unit net cash costs
 
1.74

 
1.84

 
 
 
 
 
DD&A
 
0.43

 
0.40

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
 
 
 
 
Total unit costs
 
2.22

 
2.29

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.06
)
 
(0.06
)
 
 
 
 
 
Gross profit per pound
 
$
0.81

 
$
0.74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
2,026

 
$
1,092

 
$
260

 
 
 
Treatment charges
 
(117
)
 

 

 
 
 
Royalty on metals
 
(4
)
 

 

 
 
 
Noncash and other costs, net
 

 
32

 

 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(37
)
 

 

 
 
 
Eliminations and other
 
(1
)
 
(3
)
 

 
 
 
South America mining
 
1,867

 
1,121

 
260

 
 
 
Other miningb
 
9,943

 
6,512


598

 
 
 
Corporate, other & eliminations
 
(1,774
)
 
(1,910
)
 
35

 
 
 
As reported in FCX's consolidated financial statements
 
$
10,036

 
$
5,723

 
$
893

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 2.1 million ounces ($16.45 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XXI



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended June 30, 2019
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
Revenues, excluding adjustments
 
$
412

 
$
412

 
$
250

 
$
8

 
$
670

Site production and delivery, before net noncash
and other costs shown below
 
516

 
317

 
193

 
6

 
516

Gold and silver credits
 
(256
)
 

 

 

 

Treatment charges
 
40

 
25

 
14

 
1

 
40

Export duties
 
10

 
6

 
4

 

 
10

Royalty on metals
 
17

 
12

 
5

 

 
17

Net cash costs
 
327

 
360

 
216

 
7

 
583

DD&A
 
99

 
61

 
37

 
1

 
99

Noncash and other costs, net
 
45

b 
28

 
17

 

 
45

Total costs
 
471

 
449

 
270

 
8

 
727

Other revenue adjustments, primarily for pricing
on prior period open sales
 
(19
)
 
(19
)
 
(2
)
 

 
(21
)
PT Smelting intercompany profit
 
7

 
4

 
3

 

 
7

Gross loss
 
$
(71
)
 
$
(52
)
 
$
(19
)
 
$

 
$
(71
)
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
151

 
151

 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross loss per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.71

 
$
2.71

 
$
1,350

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
3.40

 
2.09

 
1,041

 
 
 
 
Gold and silver credits
 
(1.69
)
 

 

 
 
 
 
Treatment charges
 
0.26

 
0.16

 
80

 
 
 
 
Export duties
 
0.07

 
0.04

 
20

 
 
 
 
Royalty on metals
 
0.11

 
0.08

 
28

 
 
 
 
Unit net cash costs
 
2.15

 
2.37

 
1,169

 
 
 
 
DD&A
 
0.65

 
0.40

 
199

 
 
 
 
Noncash and other costs, net
 
0.30

b 
0.18

 
91

 
 
 
 
Total unit costs
 
3.10

 
2.95

 
1,459

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.13
)
 
(0.13
)
 
(7
)
 
 
 
 
PT Smelting intercompany profit
 
0.06

 
0.03

 
16

 
 
 
 
Gross loss per pound/ounce
 
$
(0.46
)
 
$
(0.34
)
 
$
(100
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
670

 
$
516

 
$
99

 
 
 
 
Treatment charges
 
(40
)
 

 

 
 
 
 
Export duties
 
(10
)
 

 

 
 
 
 
Royalty on metals
 
(17
)
 

 

 
 
 
 
Noncash and other costs, net
 

 
45

 

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(21
)
 

 

 
 
 
 
PT Smelting intercompany profit
 

 
(7
)
 

 
 
 
 
Indonesia mining
 
582

 
554

 
99

 
 
 
 
Other miningc
 
3,711

 
3,170

 
234

 
 
 
 
Corporate, other & eliminations
 
(747
)
 
(722
)
 
19

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
3,546

 
$
3,002

 
$
352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 0.5 million ounces ($14.57 per ounce average realized price).
b.
Includes charges of $28 million ($0.18 per pound of copper) associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XXII



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
 
Revenues, excluding adjustments
 
$
965

 
$
965

 
$
855

 
$
17

 
$
1,837

 
Site production and delivery, before net noncash
and other costs shown below
 
420

 
221

 
195

 
4

 
420

 
Gold and silver credits
 
(871
)
 

 

 

 

 
Treatment charges
 
82

 
43

 
38

 
1

 
82

 
Export duties
 
55

 
29

 
26

 

 
55

 
Royalty on metals
 
71

 
36

 
34

 
1

 
71

 
Net cash (credits) costs
 
(243
)
 
329

 
293

 
6

 
628

 
DD&A
 
172

 
90

 
80

 
2

 
172

 
Noncash and other credits, net
 
(3
)
 
(1
)
 
(2
)
 

 
(3
)
 
Total (credits) costs
 
(74
)
 
418

 
371

 
8

 
797

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
12

 
12

 
(2
)
 
1

 
11

 
PT Smelting intercompany loss
 
(8
)
 
(4
)
 
(4
)
 

 
(8
)
 
Gross profit
 
$
1,043

 
$
555

 
$
478

 
$
10

 
$
1,043

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
316

 
316

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
671

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.05

 
$
3.05

 
$
1,274

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.33

 
0.70

 
291

 
 
 
 
 
Gold and silver credits
 
(2.76
)
 

 

 
 
 
 
 
Treatment charges
 
0.26

 
0.14

 
57

 
 
 
 
 
Export duties
 
0.18

 
0.09

 
38

 
 
 
 
 
Royalty on metals
 
0.22

 
0.11

 
51

 
 
 
 
 
Unit net cash (credits) costs
 
(0.77
)
 
1.04

 
437

 
 
 
 
 
DD&A
 
0.54

 
0.28

 
119

 
 
 
 
 
Noncash and other credits, net
 
(0.01
)
 

 
(2
)
 
 
 
 
 
Total unit (credits) costs
 
(0.24
)
 
1.32

 
554

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.04

 
0.04

 
(2
)
 
 
 
 
 
PT Smelting intercompany loss
 
(0.03
)
 
(0.01
)
 
(6
)
 
 
 
 
 
Gross profit per pound/ounce
 
$
3.30

 
$
1.76

 
$
712

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
1,837

 
$
420

 
$
172

 
 
 
 
 
Treatment charges
 
(82
)
 

 

 
 
 
 
 
Export duties
 
(55
)
 

 

 
 
 
 
 
Royalty on metals
 
(71
)
 

 

 
 
 
 
 
Noncash and other credits, net
 

 
(3
)
 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
11

 

 

 
 
 
 
 
PT Smelting intercompany loss
 

 
8

 

 
 
 
 
 
Indonesia mining
 
1,640

 
425

 
172

 
 
 
 
 
Other miningb
 
4,345

 
3,406


256

 
 
 
 
 
Corporate, other & eliminations
 
(817
)
 
(916
)
 
14

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
5,168

 
$
2,915

 
$
442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 1.1 million ounces ($15.89 per ounce average realized price).
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.



XXIII



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Six Months Ended June 30, 2019
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
Revenues, excluding adjustments
 
$
900

 
$
900

 
$
552

 
$
17

 
$
1,469

Site production and delivery, before net noncash
and other costs shown below
 
1,054

 
646

 
396

 
12

 
1,054

Gold and silver credits
 
(571
)
 

 

 

 

Treatment charges
 
91

 
56

 
34

 
1

 
91

Export duties
 
27

 
17

 
10

 

 
27

Royalty on metals
 
45

 
28

 
16

 
1

 
45

Net cash costs
 
646

 
747

 
456

 
14

 
1,217

DD&A
 
204

 
125

 
77

 
2

 
204

Noncash and other costs, net
 
48

b 
29

 
18

 
1

 
48

Total costs
 
898

 
901

 
551

 
17

 
1,469

Other revenue adjustments, primarily for pricing
on prior period open sales
 
18

 
18

 
2

 

 
20

PT Smelting intercompany profit
 
11

 
7

 
4

 

 
11

Gross profit
 
$
31

 
$
24

 
$
7

 
$

 
$
31

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
325

 
325

 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
420

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.77

 
$
2.77

 
$
1,314

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
3.24

 
1.99

 
944

 
 
 
 
Gold and silver credits
 
(1.75
)
 

 

 
 
 
 
Treatment charges
 
0.28

 
0.17

 
81

 
 
 
 
Export duties
 
0.08

 
0.05

 
24

 
 
 
 
Royalty on metals
 
0.14

 
0.09

 
38

 
 
 
 
Unit net cash costs
 
1.99

 
2.30

 
1,087

 
 
 
 
DD&A
 
0.63

 
0.38

 
183

 
 
 
 
Noncash and other costs, net
 
0.14

b 
0.09

 
43

 
 
 
 
Total unit costs
 
2.76

 
2.77

 
1,313

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
0.05

 
0.05

 
5

 
 
 
 
PT Smelting intercompany profit
 
0.04

 
0.02

 
10

 
 
 
 
Gross profit per pound/ounce
 
$
0.10

 
$
0.07

 
$
16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
1,469

 
$
1,054

 
$
204

 
 
 
 
Treatment charges
 
(72
)
 
19

 

 
 
 
 
Export duties
 
(27
)
 

 

 
 
 
 
Royalty on metals
 
(45
)
 

 

 
 
 
 
Noncash and other costs, net
 

 
48

 

 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
20

 

 

 
 
 
 
PT Smelting intercompany profit
 

 
(11
)
 

 
 
 
 
Indonesia mining
 
1,345

 
1,110

 
204

 
 
 
 
Other miningc
 
7,497

 
6,208

 
456

 
 
 
 
Corporate, other & eliminations
 
(1,504
)
 
(1,340
)
 
39

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
7,338

 
$
5,978

 
$
699

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 1.1 million ounces ($14.66 per ounce average realized price).
b.
Includes charges of $28 million ($0.09 per pound of copper) associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.
c.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XXIV



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues and Production Costs and Unit Net Cash (Credits) Costs
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
 
Revenues, excluding adjustments
 
$
1,949

 
$
1,949

 
$
1,644

 
$
36

 
$
3,629

 
Site production and delivery, before net noncash
and other costs shown below
 
853

 
458

 
387

 
8

 
853

 
Gold and silver credits
 
(1,697
)
 

 

 

 

 
Treatment charges
 
160

 
86

 
72

 
2

 
160

 
Export duties
 
101

 
54

 
46

 
1

 
101

 
Royalty on metals
 
138

 
73

 
64

 
1

 
138

 
Net cash (credits) costs
 
(445
)
 
671

 
569

 
12

 
1,252

 
DD&A
 
353

 
189

 
160

 
4

 
353

 
Noncash and other costs, net
 
12

 
7

 
5

 

 
12

 
Total (credits) costs
 
(80
)
 
867

 
734

 
16

 
1,617

 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(34
)
 
(34
)
 
17

 

 
(17
)
 
PT Smelting intercompany loss
 
(17
)
 
(9
)
 
(8
)
 

 
(17
)
 
Gross profit
 
$
1,978

 
$
1,039

 
$
919

 
$
20

 
$
1,978

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
635

 
635

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
1,274

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
3.07

 
$
3.07

 
$
1,291

 
 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
1.34

 
0.72

 
304

 
 
 
 
 
Gold and silver credits
 
(2.67
)
 

 

 
 
 
 
 
Treatment charges
 
0.25

 
0.14

 
57

 
 
 
 
 
Export duties
 
0.16

 
0.09

 
36

 
 
 
 
 
Royalty on metals
 
0.22

 
0.11

 
50

 
 
 
 
 
Unit net cash (credits) costs
 
(0.70
)
 
1.06

 
447

 
 
 
 
 
DD&A
 
0.55

 
0.30

 
125

 
 
 
 
 
Noncash and other costs, net
 
0.02

 
0.01

 
4

 
 
 
 
 
Total unit (credits) costs
 
(0.13
)
 
1.37

 
576

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(0.05
)
 
(0.05
)
 
13

 
 
 
 
 
PT Smelting intercompany loss
 
(0.04
)
 
(0.01
)
 
(7
)
 
 
 
 
 
Gross profit per pound/ounce
 
$
3.11

 
$
1.64

 
$
721

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
3,629

 
$
853

 
$
353

 
 
 
 
 
Treatment charges
 
(160
)
 

 

 
 
 
 
 
Export duties
 
(101
)
 

 

 
 
 
 
 
Royalty on metals
 
(138
)
 

 

 
 
 
 
 
Noncash and other costs, net
 

 
12

 

 
 
 
 
 
Other revenue adjustments, primarily for pricing
on prior period open sales
 
(17
)
 

 

 
 
 
 
 
PT Smelting intercompany loss
 

 
17

 

 
 
 
 
 
Indonesia mining
 
3,213

 
882

 
353

 
 
 
 
 
Other miningb
 
8,597

 
6,751

 
505

 
 
 
 
 
Corporate, other & eliminations
 
(1,774
)
 
(1,910
)
 
35

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
10,036

 
$
5,723

 
$
893

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 2.3 million ounces ($15.93 per ounce average realized price).
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X.


XXV



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
(In millions)
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
117

 
$
119

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
76

 
71

 
 
 
 
Treatment charges and other
 
8

 
8

 
 
 
 
Net cash costs
 
84

 
79

 
 
 
 
DD&A
 
18

 
21

 
 
 
 
Noncash and other costs, net
 
2

 

 
 
 
 
Total costs
 
104

 
100

 
 
 
 
Gross profit
 
$
13

 
$
19

 
 
 
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
9

 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
12.74

 
$
12.72

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
8.31

 
7.51

 
 
 
 
Treatment charges and other
 
0.84

 
0.85

 
 
 
 
Unit net cash costs
 
9.15

 
8.36

 
 
 
 
DD&A
 
2.07

 
2.24

 
 
 
 
Noncash and other costs, net
 
0.15

 
0.05

 
 
 
 
Total unit costs
 
11.37

 
10.65

 
 
 
 
Gross profit per pound
 
$
1.37

 
$
2.07

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
Three Months Ended June 30, 2019
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
117

 
$
76

 
$
18

 
 
Treatment charges and other
 
(8
)
 

 

 
 
Noncash and other costs, net
 

 
2

 

 
 
Molybdenum mines
 
109

 
78

 
18

 
 
Other miningb
 
4,184

 
3,646

 
315

 
 
Corporate, other & eliminations
 
(747
)
 
(722
)
 
19

 
 
As reported in FCX's consolidated financial statements
 
$
3,546

 
$
3,002

 
$
352

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Totals presented above
 
$
119

 
$
71

 
$
21

 
 
Treatment charges and other
 
(8
)
 

 

 
 
Noncash and other costs, net
 

 

 

 
 
Molybdenum mines
 
111

 
71

 
21

 
 
Other miningb
 
5,874

 
3,760

 
407

 
 
Corporate, other & eliminations
 
(817
)
 
(916
)
 
14

 
 
As reported in FCX's consolidated financial statements
 
$
5,168

 
$
2,915

 
$
442

 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X. Also includes amounts associated with 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.


XXVI



Freeport-McMoRan Inc.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
(In millions)
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
215

 
$
221

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
146

 
136

 
 
 
 
Treatment charges and other
 
15

 
15

 
 
 
 
Net cash costs
 
161

 
151

 
 
 
 
DD&A
 
34

 
40

 
 
 
 
Noncash and other costs, net
 
3

 
2

 
 
 
 
Total costs
 
198

 
193

 
 
 
 
Gross profit
 
$
17

 
$
28

 
 
 
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
17

 
18

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
12.63

 
$
12.38

 
 
 
 
Site production and delivery, before net noncash
and other costs shown below
 
8.60

 
7.61

 
 
 
 
Treatment charges and other
 
0.85

 
0.85

 
 
 
 
Unit net cash costs
 
9.45

 
8.46

 
 
 
 
DD&A
 
2.04

 
2.24

 
 
 
 
Noncash and other costs, net
 
0.15

 
0.10

 
 
 
 
Total unit costs
 
11.64

 
10.80

 
 
 
 
Gross profit per pound
 
$
0.99

 
$
1.58

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
Six Months Ended June 30, 2019
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
215

 
$
146

 
$
34

 
 
Treatment charges and other
 
(15
)
 

 

 
 
Noncash and other costs, net
 

 
3

 

 
 
Molybdenum mines
 
200

 
149

 
34

 
 
Other miningb
 
8,642

 
7,169

 
626

 
 
Corporate, other & eliminations
 
(1,504
)
 
(1,340
)
 
39

 
 
As reported in FCX's consolidated financial statements
 
$
7,338

 
$
5,978

 
$
699

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Totals presented above
 
$
221

 
$
136

 
$
40

 
 
Treatment charges and other
 
(15
)
 

 

 
 
Noncash and other costs, net
 

 
2

 

 
 
Molybdenum mines
 
206

 
138

 
40

 
 
Other miningb
 
11,604

 
7,495

 
818

 
 
Corporate, other & eliminations
 
(1,774
)
 
(1,910
)
 
35

 
 
As reported in FCX's consolidated financial statements
 
$
10,036

 
$
5,723

 
$
893

 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.
Represents the combined total for FCX's other mining operations as presented in the supplemental schedule, "Business Segments," beginning on page X. Also includes amounts associated with 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.


XXVII