Income Taxes

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Geographic sources of FCX’s (provision) benefit for income taxes follow:

	Six Months Ended
	June 30,
	2024		2023
U.S.	$	(4)	$	3
International	(1,262)		(1,041)
Total	$	(1,266)	$	(1,038)

FCX’s consolidated effective income tax rate is a function of the various rates in the jurisdictions where it operates and was 34% for the first six months of 2024, including a net benefit of $182 million related to closure of PT-FI’s 2021 corporate income tax audit and resolution of the framework for Indonesia disputed tax matters (see below for further discussion), and was 37% for the first six months of 2023. The 2023 effective income tax rate reflects the impact of pre-tax, nondeductible charges totaling $142 million for the first six months of 2023 associated with contested tax rulings issued by the Peruvian Supreme Court. At current copper prices, FCX expects its U.S. jurisdiction to generate net losses for the year 2024 that will not result in a realized tax benefit; accordingly, applicable accounting rules require FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S. net losses.

PT-FI Historical Tax Matters. During the first six months of 2024, in conjunction with closure of PT-FI’s 2021 corporate income tax audit and resolution of the framework for disputed tax matters, PT-FI recorded net credits of $215 million, including $199 million to provision for income taxes, $8 million to production and delivery and $8 million to interest expense, net. In addition, FCX recognized a charge of $17 million to provision for income taxes related to withholding taxes and a credit of $26 million in other income, net associated with the reduction in the related accrual to indemnify MIND ID from potential losses arising from historical tax disputes.

Resolution of the framework for disputed tax matters also resulted in a decrease of unrecognized tax benefits of $276 million and a decrease of $43 million in related interest and penalties, as well as a decrease in contingencies related to Indonesia tax matters of $179 million, including a $35 million decrease associated with penalties and interest. Refer to Notes 11 and 12 of FCX’s 2023 Form 10-K for further discussion.

Uncertain Tax Positions. As further discussed in Note 7, in May 2024, an arbitration tribunal rejected FCX and Cerro Verde’s claims relating to the assessment of mining royalties on ore processed by the Cerro Verde concentrator for the period from December 2006 to December 2013. Cerro Verde had previously paid the full amount of these disputed tax assessments, including the related interest and penalties, and a full reserve had been applied against these amounts; as such, the decision by the arbitration tribunal had no impact on FCX’s consolidated financial statements. FCX has reduced its unrecognized tax benefits by $269 million and related interest and penalties by $319 million (refer to Note 11 of FCX’s 2023 Form 10-K for a summary of unrecognized tax benefits and related interest and penalties).

U.S. Inflation Reduction Act of 2022. The provisions of the U.S. Inflation Reduction Act of 2022 (the Act) became applicable to FCX on January 1, 2023. The Act includes, among other provisions, a new Corporate Alternative Minimum Tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period. FCX has made interpretations of certain provisions of the Act, and based on these interpretations, determined that the provisions of the Act did not impact FCX’s financial results for the first six months of 2024 or for the year 2023.

Although the Internal Revenue Service (IRS) and U.S. Department of the Treasury (Treasury) published guidance in 2023 that provided some additional clarity on these rules, regulations are yet to be published and uncertainty remains regarding the application of the CAMT to FCX. Future regulations and guidance released by the IRS and Treasury may differ from FCX’s interpretations of the Act, which could be material and may further limit FCX’s ability to realize future benefits from its U.S. net operating losses.

Pillar Two of the Global Anti-Base Erosion Rules. In December 2021, the Organisation for Economic Co-operation and Development (OECD) published a framework for Pillar Two of the Global Anti-Base Erosion Rules, which was designed to coordinate participating jurisdictions in updating the international tax system to ensure that large multinational companies pay a minimum level of income tax. Recommendations from the OECD regarding a global minimum income tax and other changes are being considered and/or implemented in jurisdictions where FCX operates. At current metals market prices, FCX believes enactment of the recommended framework in jurisdictions where it operates will result in minimal impacts to its financial results in the near term.