fcx-20210930

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)


Delaware						74-2480931
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)

333 North Central Avenue

Phoenix

85004-2189

(Address of principal executive offices)

(Zip Code)

(602) 366-8100

(Registrant’s telephone number, including area code)

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


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

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

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

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


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

On October 29, 2021, there were issued and outstanding 1,468,473,516 shares of the registrant’s common stock, par value $0.10 per share.

Freeport-McMoRan Inc.

TABLE OF CONTENTS



			Page

Part I. Financial Information			3

Item 1. Financial Statements:			3

Consolidated Balance Sheets (Unaudited)			3

Consolidated Statements of Operations (Unaudited)			4

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)			5

Consolidated Statements of Cash Flows (Unaudited)			6

Consolidated Statements of Equity (Unaudited)			7

Notes to Consolidated Financial Statements (Unaudited)			9

Report of Independent Registered Public Accounting Firm			26

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			27

Item 3. Quantitative and Qualitative Disclosures About Market Risk			71

Item 4. Controls and Procedures			71

Part II. Other Information			71

Item 1. Legal Proceedings			71

Item 1A. Risk Factors			72

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			72

Item 4. Mine Safety Disclosures			72

Item 5. Other Information			72

Item 6. Exhibits			74

Signature			S-1

Table of Contents

Part I.FINANCIAL INFORMATION

Item 1.Financial Statements.

Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2021		December 31, 2020
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7,672	$	3,657
Trade accounts receivable	931		892
Income and other tax receivables	591		520

Inventories:
Materials and supplies, net	1,617		1,594
Mill and leach stockpiles	1,086		1,014
Product	1,417		1,285
Other current assets	477		341

Total current assets	13,791		9,303
Property, plant, equipment and mine development costs, net	30,102		29,818


Long-term mill and leach stockpiles	1,450		1,463

Other assets	1,574		1,560

Total assets	$	46,917	$	42,144

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,949	$	2,708
Accrued income taxes	1,237		324
Current portion of debt	897		34
Current portion of environmental and asset retirement obligations	329		351
Dividends payable	111		—

Total current liabilities	5,523		3,417
Long-term debt, less current portion	8,768		9,677
Deferred income taxes	4,500		4,408
Environmental and asset retirement obligations, less current portion	3,688		3,705
Other liabilities	1,907		2,269

Total liabilities	24,386		23,476



Equity:
Stockholders’ equity:
Common stock	160		159
Capital in excess of par value	26,023		26,037
Accumulated deficit	(8,481)		(11,681)
Accumulated other comprehensive loss	(572)		(583)
Common stock held in treasury	(3,777)		(3,758)
Total stockholders’ equity	13,353		10,174
Noncontrolling interests	9,178		8,494
Total equity	22,531		18,668
Total liabilities and equity	$	46,917	$	42,144

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(In millions, except per share amounts)
Revenues	$	6,083	$	3,851	$	16,681	$	9,703
Cost of sales:
Production and delivery	3,009		2,465		8,862		7,404
Depreciation, depletion and amortization	528		394		1,430		1,093

Metals inventory adjustments	14		9		15		92
Total cost of sales	3,551		2,868		10,307		8,589
Selling, general and administrative expenses	102		72		289		273
Mining exploration and research expenses	15		8		36		42
Environmental obligations and shutdown costs	13		21		51		58
Net (gain) loss on sales of assets	(60)		2		(63)		13
Total costs and expenses	3,621		2,971		10,620		8,975
Operating income	2,462		880		6,061		728
Interest expense, net	(138)		(120)		(431)		(362)
Net loss on early extinguishment of debt	—		(59)		—		(100)
Other income, net	36		22		56		62
Income before income taxes and equity in affiliated companies’ net (losses) earnings	2,360		723		5,686		328
Provision for income taxes	(628)		(297)		(1,674)		(333)
Equity in affiliated companies’ net (losses) earnings	(9)		6		(5)		12


Net income	1,723		432		4,007		7

Net income attributable to noncontrolling interests	(324)		(103)		(807)		(116)


Net income (loss) attributable to common stockholders	$	1,399	$	329	$	3,200	$	(109)


Net income (loss) per share attributable to common stockholders:
Basic	$	0.95	$	0.22	$	2.18	$	(0.08)
Diluted	$	0.94	$	0.22	$	2.16	$	(0.08)




Weighted-average common shares outstanding:
Basic	1,469		1,453		1,466		1,453
Diluted	1,484		1,461		1,481		1,453

Dividends declared per share of common stock	$	0.075	$	—	$	0.225	$	—

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(In millions)
Net income	$	1,723	$	432	$	4,007	$	7

Other comprehensive income (loss), net of taxes:

Defined benefit plans:
Actuarial losses arising during the period	—		(89)		(1)		(89)
Amortization of unrecognized amounts included in net periodic benefit costs	4		14		12		38
Foreign exchange losses	—		(1)		(1)		(2)


Other comprehensive income (loss)	4		(76)		10		(53)

Total comprehensive income (loss)	1,727		356		4,017		(46)
Total comprehensive income attributable to noncontrolling interests	(324)		(103)		(806)		(115)

Total comprehensive income (loss) attributable to common stockholders	$	1,403	$	253	$	3,211	$	(161)

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

Table of Contents

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended
	September 30,
	2021		2020
	(In millions)
Cash flow from operating activities:
Net income	$	4,007	$	7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	1,430		1,093


Metals inventory adjustments	15		92

Net (gain) loss on sales of assets	(63)		13
Stock-based compensation	79		60
Net charges for environmental and asset retirement obligations, including accretion	131		166
Payments for environmental and asset retirement obligations	(184)		(162)
Net charges for defined pension and postretirement plans	3		59
Pension plan contributions	(75)		(30)
Net loss on early extinguishment of debt	—		100
Deferred income taxes	96		119







Charges for Cerro Verde royalty dispute	11		26
Payments for Cerro Verde royalty dispute	(421)		(119)
Other, net	39		(53)
Changes in working capital and other:
Accounts receivable	(218)		132
Inventories	(310)		59
Other current assets	(77)		(17)
Accounts payable and accrued liabilities	123		40
Accrued income taxes and timing of other tax payments	849		105
Net cash provided by operating activities	5,435		1,690

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(211)		(398)
South America	(94)		(156)
Indonesia mining	(904)		(865)
Indonesia smelter development	(79)		(94)
Molybdenum mines	(4)		(14)

Other	(52)		(46)
Proceeds from sale of Freeport Cobalt	150		—

Proceeds from sales of other assets	21		146
Acquisition of minority interest in PT Smelting	(33)		—
Other, net	(25)		(6)
Net cash used in investing activities	(1,231)		(1,433)

Cash flow from financing activities:
Proceeds from debt	633		3,236
Repayments of debt	(672)		(3,105)


Cash dividends and distributions paid:
Common stock	(220)		(73)
Noncontrolling interests	(187)		—
Contributions from noncontrolling interests	135		115
Proceeds from exercised stock options	189		3
Payments for withholding of employee taxes related to stock-based awards	(19)		(5)
Debt financing costs and other, net	(47)		(51)
Net cash (used in) provided by financing activities	(188)		120

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents	4,016		377

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	3,903		2,278
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	7,919	$	2,655

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

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Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30


	Stockholders’ Equity
	Common Stock					Accum-ulated Deficit		Accumu- lated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value						Number of Shares	At Cost				Non- controlling Interests		Total Equity

	(In millions)
Balance at June 30, 2021	1,601	$	160	$	26,084	$	(9,880)	$	(576)	133	$	(3,777)	$	12,011	$	8,924	$	20,935





Exercised and issued stock-based awards	—	—		6		—		—		—	—		6		—		6
Stock-based compensation, including the tender of shares	—	—		21		—		—		—	—		21		—		21



Dividends	—	—		(111)		—		—		—	—		(111)		(94)		(205)



Contributions from noncontrolling interests	—	—		23		—		—		—	—		23		24		47



Net income attributable to common stockholders	—	—		—		1,399		—		—	—		1,399		—		1,399
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		324		324
Other comprehensive income	—	—		—		—		4		—	—		4		—		4
Balance at September 30, 2021	1,601	$	160	$	26,023	$	(8,481)	$	(572)	133	$	(3,777)	$	13,353	$	9,178	$	22,531


	Stockholders’ Equity
	Common Stock					Accum-ulated Deficit		Accumu- lated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value						Number of Shares	At Cost				Non- controlling Interests		Total Equity

	(In millions)
Balance at June 30, 2020	1,583	$	158	$	25,905	$	(12,718)	$	(652)	131	$	(3,739)	$	8,954	$	8,201	$	17,155





Exercised and issued stock-based awards	1	—		1		—		—		—	—		1		—		1
Stock-based compensation, including the tender of shares	—	—		8		—		—		—	—		8		—		8






Change in ownership interests	—	—		—		—		—		—	—		—		1		1
Contributions from noncontrolling interests	—	—		20		—		—		—	—		20		21		41


Net income attributable to common stockholders	—	—		—		329		—		—	—		329		—		329
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		103		103
Other comprehensive loss	—	—		—		—		(76)		—	—		(76)		—		(76)
Balance at September 30, 2020	1,584	$	158	$	25,934	$	(12,389)	$	(728)	131	$	(3,739)	$	9,236	$	8,326	$	17,562

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

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Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

NINE MONTHS ENDED SEPTEMBER 30



	Stockholders’ Equity
	Common Stock					Accum-ulated Deficit		Accumu- lated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value						Number of Shares	At Cost				Non- controlling Interests		Total Equity

	(In millions)
Balance at December 31, 2020	1,590	$	159	$	26,037	$	(11,681)	$	(583)	132	$	(3,758)	$	10,174	$	8,494	$	18,668



Exercised and issued stock-based awards	11	1		189		—		—		—	—		190		—		190
Stock-based compensation, including the tender of shares	—	—		64		—		—		1	(19)		45		(4)		41


Dividends	—	—		(333)		—		—		—	—		(333)		(187)		(520)

Contributions from noncontrolling interests	—	—		66		—		—		—	—		66		69		135
Net income attributable to common stockholders	—	—		—		3,200		—		—	—		3,200		—		3,200
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		807		807
Other comprehensive income (loss)	—	—		—		—		11		—	—		11		(1)		10
Balance at September 30, 2021	1,601	$	160	$	26,023	$	(8,481)	$	(572)	133	$	(3,777)	$	13,353	$	9,178	$	22,531



	Stockholders’ Equity
	Common Stock					Accum-ulated Deficit		Accumu- lated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value						Number of Shares	At Cost				Non- controlling Interests		Total Equity

	(In millions)
Balance at December 31, 2019	1,582	$	158	$	25,830	$	(12,280)	$	(676)	131	$	(3,734)	$	9,298	$	8,150	$	17,448





Exercised and issued stock-based awards	2	—		2		—		—		—	—		2		—		2
Stock-based compensation, including the tender of shares	—	—		46		—		—		—	(5)		41		1		42






Change in ownership interests	—	—		—		—		—		—	—		—		1		1
Contributions from noncontrolling interests	—	—		56		—		—		—	—		56		59		115

Net loss attributable to common stockholders	—	—		—		(109)		—		—	—		(109)		—		(109)
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		—		116		116
Other comprehensive loss	—	—		—		—		(52)		—	—		(52)