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There have been no material changes to our risk factors previously disclosed in Part I, Item 1A.
−Removed: “Risk Factors” of our 2019 Form 10-K, except for the new and updated risk factors included below which should be read in conjunction with the risk factors set forth in our 2019 Form 10-K.
−Removed: However, the risks and uncertainties that we face are not limited to those described below and those set forth in our 2019 Form 10-K.
+Added: “Risk Factors” of our 2019 Form 10-K, except for the updated risk factors included below, which should be read in conjunction with the risk factors set forth in our 2019 Form 10-K.
+Added: However, the risks and uncertainties that we face are not limited to those described in our 2019 Form 10-K or as updated below.
Additional risks and uncertainties related to the impact of and attempts to contain the COVID-19 pandemic, but currently unknown or believed not to be material by us, may also adversely affect our business and the trading price of our securities.
The ongoing COVID-19 pandemic and resulting negative impact on the global economy and financial markets has had and will likely continue to have an adverse impact on our business and results of operations, the duration and extent of which is highly uncertain and could be material.
−Removed: The ongoing COVID-19 pandemic is adversely affecting the global economy and creating significant volatility in the financial markets, including the copper markets.
+Added: The ongoing COVID-19 pandemic continues to have an adverse impact on the global economy and is creating significant volatility in the financial markets, including the copper markets.
The duration and scope of and uncertainties associated with the ongoing COVID-19 pandemic and the related impact on commodity prices, our business and the global economy are evolving and beyond our control.
The extent and duration of adverse impacts that the pandemic may have on supply, demand and prices of the commodities we produce, on our suppliers, vendors, customers and employees and on global financial markets is unknown at this time, but could be both material and prolonged.
−Removed: Prolonged unfavorable economic conditions, and any resulting recession or slowed global economic growth, may result in lower demand for the commodities we produce, as well as the inability of various customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our business and results of operations.
−Removed: In April 2020, we revised our near-term operating plans to maximize cash flow and protect liquidity in a weak and uncertain economic environment and to preserve asset values.
−Removed: A series of actions have been implemented to significantly reduce costs and capital spending and adjust mine plans and corresponding mining and milling rates to maximize cash flow at lower commodity prices.
+Added: Prolonged unfavorable economic conditions, and any resulting slowed global economic growth, including the current U.S.
+Added: recession, may result in lower demand for the commodities we produce, as well as the inability of various customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our business and results of operations.
+Added: On April 24, 2020, we announced revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.
+Added: Our April 2020 revised operating plans continue to focus on safeguarding our business in an uncertain public health and economic environment, advancing the ramp-up of underground production at Grasberg to establish large-scale, low-cost copper and gold production, and advancing initiatives in North America and South America to position us for significant increases in cash flows in 2021 and beyond.
For additional information, refer to Part 1, Item 2.
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For example, in mid-March 2020, the Peruvian government issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19, and subsequently extended the order through May 10, 2020.
+Added: The Peruvian government also extended the quarantine measures instituted in mid-March 2020 through August 31, 2020, for certain cities in Peru (including Arequipa).
To comply with the government’s requirements, we temporarily transitioned our Cerro Verde mine to care and maintenance status and adjusted operations to prioritize critical activities.
−Removed: During April 2020, Cerro Verde operated at an average of approximately one-third of planned rates.
−Removed: Beginning in late April 2020, operating rates increased to over 50 percent of capacity.
−Removed: In early May, the Peruvian government updated its State of Emergency to allow major mining operations to gradually increase activities.
−Removed: Cerro Verde is in discussions with the Peruvian government to clarify the requirements for gradual resumption of normal operations.
−Removed: Prolonged or additional suspension or reduction of operations at one or more of our mines could significantly reduce our production and sales volumes, which could have a material adverse effect on our business and results of operations.
+Added: Strict health protocols have been implemented and a plan for Cerro Verde to restore operations was approved by the Peruvian government in second-quarter 2020.
+Added: Cerro Verde's operating rates averaged 251,800 metric tons of ore per day in second-quarter 2020, including an average of 316,800 metric tons of ore per day in June 2020.
+Added: We currently expect operations during the second half of 2020 to average approximately 350,000 metric tons of ore per day.
These and other impacts of COVID-19 or other global or regional health pandemics, epidemics or similar public health threats could also have the effect of heightening many of the other risks described in Part I, Item 1A.
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Our financial results vary with fluctuations in the market prices of the commodities we produce, primarily copper and gold, and to a lesser extent molybdenum.
−Removed: The COVID-19 pandemic and resulting negative impact on the global economy is creating significant volatility in the financial markets, including the copper market.
−Removed: Since February 2020, copper prices have declined significantly and exchange inventories have increased significantly.
−Removed: An extended decline in market prices of these commodities could have a material adverse effect on our financial results and the value of our assets and may further depress the price of our common stock and may have a material adverse effect on our ability to comply with financial and other covenants in our debt agreements, repay our debt and meet our other fixed obligations.
−Removed: In April 2020, due to the decline in market prices of copper and, to a lesser extent, the further decline in market prices of molybdenum, we revised our near-term operating plans, which included reductions in (i) estimated operating costs, (ii) estimated capital expenditures, (iii) estimated exploration and administrative costs, and (iv) estimated sales volumes in our North America and South America operations, as well as a reduction in production of molybdenum by approximately 50 percent at our Climax open-pit mine in North America and discontinuing certain exploration and development programs.
−Removed: If market prices for our primary commodities further decline or remain low for a sustained period of time, we may have to further revise our operating plans.
+Added: The COVID-19 pandemic and resulting negative impact on the global economy has created significant volatility in the financial markets, including the copper market.
+Added: In second-quarter 2020, copper prices recovered from the sharp decline that occurred during first-quarter 2020, reflecting the combination of supply curtailments related to the COVID-19 pandemic and an improving economic outlook in second-quarter 2020.
+Added: An extended decline in market prices of these commodities could have a material adverse effect on our financial results and the value of our assets and may depress the price of our common stock and may have a material adverse effect on our ability to comply with financial and other covenants in our debt agreements, repay our debt and meet our other obligations.
+Added: On April 24, 2020, we announced revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.
+Added: Our April 2020 revised operating plans included reductions in (i) estimated operating costs, (ii) estimated capital expenditures, (iii) estimated exploration and administrative costs, and (iv) estimated sales volumes in our North America and South America operations, as well as a reduction in production of molybdenum by approximately 50 percent at our Climax open-pit mine in North America and discontinuing certain exploration and development programs.
+Added: If market prices for our primary commodities decline again and remain low for a sustained period of time, we may have to further revise our operating plans.
We may be unable to decrease our costs in an amount sufficient to offset reductions in revenues, in which case we may incur losses, and those losses may be material.
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Copper prices have fluctuated historically, with London Metal Exchange (LME) copper settlement prices ranging from $2.48 per pound to $3.29 per pound during the three years ended December 31, 2019.
−Removed: During first-quarter 2020, LME copper settlement prices ranged from a high of $2.86 per pound to a low of $2.09 per pound.
−Removed: The LME copper settlement price of $2.18 per pound at March 31, 2020, decreased by 22 percent from the December 31, 2019, price of $2.79 per pound.
−Removed: The LME copper settlement price was $2.37 per pound on April 30, 2020.
+Added: During the first six months of 2020 , LME copper settlement prices ranged from a low of $2.09 per pound to a high of $2.86 per pound.
+Added: The LME copper settlement price was $2.74 per pound on June 30, 2020, and $2.92 per pound on July 31, 2020.
Factors affecting gold prices may include the relative strength of the U.S.
dollar to other currencies, inflation and interest rate expectations, purchases and sales of gold by governments and central banks, demand from China and India, two of the world’s largest consumers of gold, and global demand for jewelry containing gold.
−Removed: The London PM gold price was $1,515 per ounce on December 30, 2019 (there was no London PM gold price quote on December 31, 2019), and $1,609 per ounce on March 31, 2020.
−Removed: During the first quarter of 2020, London PM gold prices ranged from a low of $1,474 per ounce to a high of $1,684 per ounce.
−Removed: The London PM gold price was $1,703 per ounce on April 30, 2020.
−Removed: During first-quarter 2020, the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a high of $10.79 per pound to a low of $8.17 per pound.
−Removed: The Metals Week Molybdenum Dealer Oxide weekly average price of $8.17 per pound on March 31, 2020, was 11 percent lower than the December 31, 2019, weekly average price of $9.23 per pound.
−Removed: The Metals Week Molybdenum Dealer Oxide weekly average price was $8.41 per pound on April 30, 2020.
−Removed: The recent decline in copper and molybdenum prices resulted in metals inventory adjustments of $222 million during first-quarter 2020.
−Removed: Our evaluation of long-lived assets (other than indefinite-lived intangible assets) did not result in the recognition of significant impairments as of March 31, 2020.
−Removed: Further or prolonged declines in prices of commodities that we sell, particularly copper, could result in additional metals inventory adjustments and impairment charges for our long-lived assets.
+Added: The London PM gold price was $1,515 per ounce on December 30, 2019 (there was no London PM gold price quote on December 31, 2019), and $1,768 per ounce on June 30, 2020.
+Added: During the first six months of 2020 , London PM gold prices ranged from a low of $1,474 per ounce to a high of $1,772 per ounce.
+Added: The London PM gold price was $1,965 per ounce on July 31, 2020.
+Added: During the first six months of 2020 , the weekly average price of molybdenum ranged from a low of $7.65 per pound to a high of $10.79 per pound.
+Added: The Metals Week Molybdenum Dealer Oxide weekly average price of $8.40 per pound on June 30, 2020, was 9 percent lower than the December 31, 2019, weekly average price of $9.23 per pound.
+Added: The Metals Week Molybdenum Dealer Oxide weekly average price was $7.18 per pound on July 31, 2020 .
+Added: Declines in prices of commodities we sell could result in metals inventory adjustments and impairment charges for our long-lived assets.
+Added: During the first six months of 2020, we recorded unfavorable metals inventory adjustments totaling $83 million associated with lower market prices for copper and molybdenum.
+Added: Refer to Note 3 for additional information regarding metals inventory adjustments.
Other events that could result in impairment of our long-lived assets include, but are not limited to, decreases in estimated proven and probable mineral reserves and any event that might have a material adverse effect on current and future expected mine production costs.
−Removed: Refer to Note 1 for additional information on impairment evaluations and Note 3 for additional information regarding metals inventory adjustments.
Violence, including shooting incidents, civil and religious strife, activism and labor unrest could result in loss of life and/or disrupt our operations and may adversely affect our business, financial condition, results of operations and prospects.
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The next shooting incident occurred in August 2017, and a series of shooting incidents continued on a sporadic basis within the PT-FI project area and in nearby areas through January 2020, resulting in 2 fatalities and 25 injuries.
−Removed: In December 2018, a mass shooting incident targeting a highway construction crew occurred in a remote mountain area approximately 100 miles east of the PT-FI project area, resulting in at least 19 fatalities and several reported as missing.
+Added: In addition, in December 2018, a mass shooting incident targeting a highway construction crew occurred in a remote mountain area approximately 100 miles east of the PT-FI project area, resulting in at least 19 fatalities and several reported as missing.
Separatist security incidents, including shootings, continue to be sporadically reported, and PT-FI continues to monitor the occurrence of incidents in the region.
−Removed: During first-quarter 2020 and April 2020, there has been an escalation in shooting incidents in PT-FI’s area of operations.
+Added: During first-quarter 2020 and April 2020, there was an escalation in shooting incidents in PT-FI’s area of operations.
In late March 2020, a shooting incident occurred near PT-FI’s administrative offices in the lowlands in Papua, Indonesia, resulting in the death of one PT-FI employee and injuries to two other workers.
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During 2019, both Peru and Chile experienced significant and prolonged civil unrest unrelated to our operations.
−Removed: Production and sales for the third quarter and first nine months of 2019 were impacted by protests associated with an unaffiliated copper development project in Peru that blocked access to the shipping ports and main transportation routes.
+Added: Production and sales for the third
+Added: quarter and first nine months of 2019 were impacted by protests associated with an unaffiliated copper development project in Peru that blocked access to the shipping ports and main transportation routes.
While the civil unrest did not significantly impact our results for 2019, if it continues, our South America operations could be materially impacted, and as a result, we may not be able to meet our production and sales targets.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.