Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

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

	Nine Months Ended
	September 30,
	2024		2023
U.S.	$	30	$	3
International	(2,033)		(1,549)
Total	$	(2,003)	$	(1,546)

FCX’s consolidated effective income tax rate is a function of the various rates in the jurisdictions where it operates and was 35% for the first nine months of 2024, and 36% for the first nine months of 2023. The 2024 effective income tax rate reflects net benefits of (i) $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 (ii) $36 million associated with the closure of FCX’s 2017 and 2018 U.S. federal income tax exams. The 2023 effective income tax rate reflects the impact of pre-tax, nondeductible charges totaling $142 million for the first nine months of 2023 associated with contested tax rulings issued by the Peruvian Supreme Court.

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. In conjunction with closure of PT-FI’s 2021 corporate income tax audit and resolution of the framework for Indonesia disputed tax matters in first-quarter 2024, 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 Indonesia 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’s 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 annual AFSI exceeding $1.0 billion over a three-year period.

In September 2024, the Internal Revenue Service (IRS) issued proposed regulations that provide guidance on the application of CAMT, which is not final and subject to change. Based on the proposed guidance released by the IRS, FCX has determined that the provisions of the Act would not impact its financial results for the first nine months of 2024 or for the year 2023.

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 does not expect enactment of the recommended framework in jurisdictions where it operates to materially impact its financial results.