Business Segments

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTSFCX has organized its mining operations into four primary divisions - North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX’s reportable segments, which include the

Morenci and Cerro Verde copper mines, the Grasberg minerals district (Indonesia Mining), the Rod & Refining operations and Atlantic Copper Smelting & Refining.

Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mining operations to Atlantic Copper (and on 39.5% of PT-FI’s sales to PT Smelting for the 2022 periods) until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX’s net deferred profits and quarterly earnings.

Beginning January 1, 2023, PT-FI's commercial arrangement with PT Smelting changed from a copper concentrate sales agreement to a tolling arrangement. Under this arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its copper concentrate and PT-FI retains title to all products for sale to third parties (i.e., there are no further sales from PT-FI to PT Smelting). While the new tolling agreement with PT Smelting does not significantly change PT-FI’s economics, it impacts the timing of PT-FI’s sales and working capital requirements.

FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs, along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following Financial Information by Business Segment reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

Product Revenues. FCX’s revenues attributable to the products it sold for the third quarter and first nine months of 2023 and 2022 follow (in millions):

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

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

b.Primarily includes revenues associated with silver.

c.Treatment charges for the third quarter and first nine months of 2023 exclude tolling costs paid to PT Smelting, which are recorded as production costs in the consolidated statements of income.

d.Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold and prices.

e.Refer to Note 8 for further discussion of PT-FI export duties.

f.Refer to Note 6 for discussion of embedded derivatives related to FCX’s provisionally priced copper concentrate and cathode sales contracts.

Financial Information by Business Segment

(in Millions)																					Atlantic		Corporate,
	North America Copper Mines						South America Mining														Copper		Other
							Cerro							Indonesia			Molybdenum		Rod &		Smelting		& Elimi-			FCX
	Morenci		Other		Total		Verde			Other		Total		Mining			Mines		Refining		& Refining		nations			Total
Three Months Ended September 30, 2023
Revenues:
Unaffiliated customers	$	17	$	22	$	39	$	822		$	203	$	1,025	$	2,030		$	—	$	1,566	$	692	$	472	a	$	5,824
Intersegment	624		994		1,618		219			—		219		65			147		12		8		(2,069)			—
Production and delivery	476		799		1,275		648			178		826		667			120		1,566		680		(1,586)			3,548
DD&A	47		63		110		94			17		111		271			14		2		7		18			533
Metals inventory adjustments	4		—		4		1			—		1		—			—		—		—		—			5
Selling, general and administrative expenses	—		1		1		3			—		3		32			—		—		6		76			118
Mining exploration and research expenses	—		1		1		—			—		—		—			—		—		—		29			30
Environmental obligations and shutdown costs	—		4		4		—			—		—		—			—		—		—		94			98
Operating income (loss)	114		148		262		295			8		303		1,125			13		10		7		(228)			1,492
Interest expense, net	—		1		1		(10)		b	—		(10)		10			—		—		8		87			96
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—		5			5
Other (expense) income, net	(2)		(9)		(11)		(9)			13		4		30			—		—		5		43			71
Provision for (benefit from) income taxes	—		—		—		119			12		131		419			—		—		—		(42)			508
Equity in affiliated companies' net (losses) earnings	—		—		—		—			—		—		(2)			—		—		—		2			—
Net income attributable to noncontrolling interests	—		—		—		84			14		98		392		c	—		—		—		20			510
Total assets at September 30, 2023	3,171		5,799		8,970		8,227			1,893		10,120		21,020			1,747		288		1,176		8,327			51,648
Capital expenditures	53		114		167		61			15		76		441			21		2		20		451		d	1,178
Three Months Ended September 30, 2022
Revenues:
Unaffiliated customers	$	18	$	74	$	92	$	666		$	215	$	881	$	1,726	e	$	—	$	1,436	$	604	$	264	a	$	5,003
Intersegment	551		805		1,356		83			—		83		72			127		7		5		(1,650)			—
Production and delivery	408		736		1,144		579			221		800		663			94		1,450		604		(1,389)			3,366
DD&A	44		56		100		84			14		98		265			18		1		8		18			508
Metals inventory adjustments	2		1		3		2			20		22		—			—		—		—		—			25
Selling, general and administrative expenses	—		1		1		2			—		2		26			—		—		6		63			98
Mining exploration and research expenses	—		—		—		—			—		—		—			—		—		—		38			38
Environmental obligations and shutdown costs	—		1		1		—			—		—		—			—		—		—		5			6
Operating income (loss)	115		84		199		82			(40)		42		844			15		(8)		(9)		(121)			962
Interest expense, net	—		1		1		5			—		5		15			—		—		4		115			140
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—		20			20
Other (expense) income, net	—		(8)		(8)		(21)			5		(16)		19			(1)		—		11		20			25
Provision for (benefit from) income taxes	—		—		—		3			(18)		(15)		343			—		—		—		(13)			315
Equity in affiliated companies' net earnings	—		—		—		—			—		—		7			—		—		—		1			8
Net income attributable to noncontrolling interests	—		—		—		29			11		40		105		c	—		—		—		11			156
Total assets at September 30, 2022	2,996		5,456		8,452		8,390			1,826		10,216		20,496			1,701		216		1,082		7,764			49,927
Capital expenditures	71		83		154		41			38		79		389			7		2		17		188		d	836

Financial Information by Business Segment (continued)    

(In Millions)
																					Atlantic			Corporate,
	North America Copper Mines						South America Mining														Copper			Other
							Cerro							Indonesia			Molybdenum		Rod &		Smelting			& Elimi-			FCX
	Morenci		Other		Total		Verde			Other		Total		Mining			Mines		Refining		& Refining			nations			Total
Nine Months Ended September 30, 2023
Revenues:
Unaffiliated customers	$	75	$	133	$	208	$	2,563		$	627	$	3,190	$	5,268	e	$	—	$	4,552	$	2,185		$	1,547	a	$	16,950
Intersegment	1,787		2,922		4,709		638			—		638		432			520		28		19			(6,346)			—
Production and delivery	1,279		2,324		3,603		1,877			539		2,416		1,860		f	321		4,558		2,139			(4,637)			10,260
DD&A	132		180		312		302			48		350		694			48		4		21			50			1,479
Metals inventory adjustments	5		—		5		1			—		1		—			—		—		—			1			7
Selling, general and administrative expenses	1		2		3		7			—		7		90			—		—		21			238			359
Mining exploration and research expenses	—		2		2		—			—		—		—			—		—		—			101			103
Environmental obligations and shutdown costs	—		26		26		—			—		—		—			—		—		—			213			239
Operating income (loss)	445		521		966		1,014			40		1,054		3,056			151		18		23			(765)			4,503
Interest expense, net	—		1		1		74		b	—		74		32			—		—		22			289			418
Net gain on early extinguishment of debt	—		—		—		—			—		—		—			—		—		—			10			10
Other (expense) income, net	(4)		(8)		(12)		(36)			11		(25)		92			(1)		(1)		—			130			183
Provision for (benefit from) income taxes	—		—		—		419			19		438		1,159			—		—		—			(51)			1,546
Equity in affiliated companies' net earnings	—		—		—		—			—		—		9			—		—		—			3			12
Net income (loss) attributable to noncontrolling interests	—		—		—		242			34		276		1,031		c	—		—		—			(23)			1,284
Capital expenditures	176		369		545		179			80		259		1,274			43		9		43			1,289		d	3,462
Nine Months Ended September 30, 2022
Revenues:
Unaffiliated customers	$	125	$	159	$	284	$	2,474		$	555	$	3,029	$	5,972	e	$	—	$	4,932	$	1,755		$	1,050	a	$	17,022
Intersegment	1,992		2,978		4,970		325			—		325		208			399		24		5			(5,931)			—
Production and delivery	1,168		2,111		3,279		1,702			510		2,212		1,853		f	249		4,969		1,789		g	(4,832)			9,519
DD&A	132		175		307		262			35		297		775			52		3		20			50			1,504
Metals inventory adjustments	2		8		10		11			22		33		—			—		—		—			—			43
Selling, general and administrative expenses	1		2		3		6			—		6		83			—		—		19			202			313
Mining exploration and research expenses	—		1		1		—			—		—		—			—		—		—			86			87
Environmental obligations and shutdown costs	(13)		1		(12)		—			—		—		—			—		—		—			63			51
Net gain on sales of assets	—		—		—		—			—		—		—			—		—		—			(2)			(2)
Operating income (loss)	827		839		1,666		818			(12)		806		3,469			98		(16)		(68)			(448)			5,507
Interest expense, net	—		1		1		12			—		12		30			—		—		8			372			423
Net (loss) gain on early extinguishment of debt	—		—		—		—			—		—		(10)			—		—		—			38			28
Other (expense) income, net	(1)		(32)		(33)		(11)			12		1		27			(1)		(1)		29			45			67
Provision for (benefit from) income taxes	—		—		—		298			(11)		287		1,363			—		—		—			60			1,710
Equity in affiliated companies' net earnings	—		—		—		—			—		—		27			—		—		—			6			33
Net income attributable to noncontrolling interests	—		—		—		247			25		272		436		c	—		—		—			23			731
Capital expenditures	207		223		430		109			94		203		1,148			16		6		60			559		d	2,422

Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

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

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

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

e.Includes PT-FI sales to PT Smelting totaling $572 million in third-quarter 2022, $27 million for the first nine months of 2023 (reflecting adjustments to prior period provisionally priced concentrate sales) and $2.3 billion for the first nine months of 2022. Beginning January 1, 2023, there are no sales from PT-FI to PT Smelting (refer to above discussion of the tolling arrangement between PT-FI and PT Smelting).

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

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