What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 311 added, 163 removed, 534 unchanged (47% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30,

2020 December 31,

(In millions)

5 unchanged sentences

Mill and leach stockpiles 1,004 1,143

Product 1,278 1,281

Other current assets 419 655

2 unchanged sentences

Long-term mill and leach stockpiles 1,463 1,425

Other assets 1,654 1,885

Total assets $ 41,099 $ 40,809

LIABILITIES AND EQUITY

2 unchanged sentences

Current portion of environmental and asset retirement obligations 397 436

Current portion of debt

Accrued income taxes 119 119

Current portion of debt 47 5

Dividends payable — 73

6 unchanged sentences

Stockholders’ equity:

Common stock 158 158

Capital in excess of par value 25,934 25,830

4 unchanged sentences

Noncontrolling interests 8,326 8,150

Total equity 17,562 17,448

Total liabilities and equity $ 41,099 $ 40,809

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(In millions, except per share amounts)

Revenues $ 3,851 $ 3,153 $ 9,703 $ 10,491

Cost of sales:

11 unchanged sentences

Net loss on early extinguishment of debt

( 59 ) ( 21 ) ( 100 ) ( 27 )

Other income, net 22 33 62 52

Income (loss) from continuing operations before income taxes and equity in affiliated companies’ net earnings

(Provision for) benefit from income taxes

723 ( 149 ) 328 ( 60 )

Provision for income taxes ( 297 ) ( 91 ) ( 333 ) ( 181 )

Equity in affiliated companies’ net earnings 6 5 12 7

3 unchanged sentences

Net (income) loss attributable to noncontrolling interests

( 103 ) 27 ( 116 ) ( 16 )

Net income (loss) attributable to common stockholders $ 329 $ ( 207 ) $ ( 109 ) $ ( 248 )

1 unchanged sentence

Continuing operations

$ 0.22 $ ( 0.15 ) $ ( 0.08 ) $ ( 0.17 )

Discontinued operations

$ 0.22 $ ( 0.15 ) $ ( 0.08 ) $ ( 0.17 )

Weighted-average common shares outstanding:

1,453 1,452 1,453 1,451

1,461 1,452 1,453 1,451

Dividends declared per share of common stock $ — $ 0.05 $ — $ 0.15

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(In millions)

Net income (loss) $ 432 $ ( 234 ) $ 7 $ ( 232 )

Other comprehensive income, net of taxes:

Other comprehensive (loss) income, net of taxes:

Defined benefit plans:

Amortization of unrecognized amounts included in net periodic benefit costs

Foreign exchange gains (losses)

Other comprehensive income

Actuarial losses arising during the period ( 89 ) — ( 89 ) —

Amortization or curtailment of unrecognized amounts included in net periodic benefit costs 14 11 38 35

Foreign exchange losses ( 1 ) — ( 2 ) —

Other comprehensive (loss) income ( 76 ) 11 ( 53 ) 35

Total comprehensive income (loss) 356 ( 223 ) ( 46 ) ( 197 )

Total comprehensive (income) loss attributable to noncontrolling interests

( 103 ) 28 ( 115 ) ( 16 )

Total comprehensive income (loss) attributable to common stockholders

$ 253 $ ( 195 ) $ ( 161 ) $ ( 213 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended

Nine Months Ended

September 30,

(In millions)

Cash flow from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net income (loss) $ 7 $ ( 232 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization 1,093 1,021

8 unchanged sentences

Deferred income taxes 119 71

PT Freeport Indonesia (PT-FI) surface water tax settlement

Dividends received from PT Smelting 3 33

Settlements of PT Freeport Indonesia (PT-FI) environmental and surface water tax matters ( 19 ) 28

Payment for PT-FI environmental matter

Charges for Cerro Verde royalty dispute

Payments for Cerro Verde royalty dispute ( 119 ) ( 126 )

Other, net ( 23 ) 20

Changes in working capital and other:

Accounts receivable 132 210

Inventories 59 224

Other current assets ( 17 ) 15

6 unchanged sentences

South America ( 156 ) ( 176 )

Indonesia ( 959 ) ( 992 )

Molybdenum mines ( 14 ) ( 11 )

Other ( 46 ) ( 97 )

Proceeds from sales of assets 146 102

Other, net ( 6 ) ( 10 )

Net cash used in investing activities ( 1,433 ) ( 1,825 )

3 unchanged sentences

Cash dividends and distributions paid:

Common stock ( 73 ) ( 218 )

Noncontrolling interests — ( 79 )

3 unchanged sentences

Net cash provided by (used in) financing activities 120 ( 1,430 )

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 377 ( 1,943 )

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year 2,278 4,455

3 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED JUNE 30

THREE MONTHS ENDED SEPTEMBER 30

Stockholders’ Equity

Accum-ulated Deficit

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Held in Treasury

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

Balance at March 31, 2020

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

1 unchanged sentence

Net income attributable to noncontrolling interests

Other comprehensive income

Balance at June 30, 2020

— — — — — — — — 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

Stockholders’ Equity

Accum-ulated Deficit

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Held in Treasury

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

Balance at March 31, 2019

Balance at June 30, 2019 1,582 $ 158 $ 25,949 $ ( 12,082 ) $ ( 582 ) 131 $ ( 3,734 ) $ 9,709 $ 8,108 $ 17,817

Stock-based compensation, including the tender of shares — — 9 — — — ( 1 ) 8 1 9

Dividends — — ( 72 ) — — — — ( 72 ) — ( 72 )

Contributions from noncontrolling interests — — 16 — — — — 16 17 33

Adjustment for deferred taxes

— — ( 22 ) — — — — ( 22 ) — ( 22 )

Net loss attributable to common stockholders — — — ( 207 ) — — — ( 207 ) — ( 207 )

Net loss attributable to noncontrolling interests

Other comprehensive income

Balance at June 30, 2019

— — — — — — — — ( 27 ) ( 27 )

Other comprehensive income (loss) — — — — 12 — — 12 ( 1 ) 11

Balance at September 30, 2019 1,582 $ 158 $ 25,880 $ ( 12,289 ) $ ( 570 ) 131 $ ( 3,735 ) $ 9,444 $ 8,098 $ 17,542

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

SIX MONTHS ENDED JUNE 30

NINE MONTHS ENDED SEPTEMBER 30

Stockholders’ Equity

Accum-ulated Deficit

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Held in Treasury

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

2 unchanged sentences

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

Other comprehensive income (loss)

Balance at June 30, 2020

— — — — — — — — 116 116

Other comprehensive loss — — — — ( 52 ) — — ( 52 ) ( 1 ) ( 53 )

Balance at September 30, 2020 1,584 $ 158 $ 25,934 $ ( 12,389 ) $ ( 728 ) 131 $ ( 3,739 ) $ 9,236 $ 8,326 $ 17,562

Stockholders’ Equity

Accum-ulated Deficit

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Held in Treasury

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

2 unchanged sentences

Stock-based compensation, including the tender of shares — — 42 — — 1 ( 8 ) 34 1 35

Dividends — — ( 218 ) — — — — ( 218 ) ( 70 ) ( 288 )

Change in ownership interests — — ( 1 ) — — — — ( 1 ) ( 11 ) ( 12 )

Contributions from noncontrolling interests — — 65 — — — — 65 68 133

Adjustments for deferred taxes

— — ( 22 ) — — — — ( 22 ) — ( 22 )

Net loss attributable to common stockholders — — — ( 248 ) — — — ( 248 ) — ( 248 )

Net income attributable to noncontrolling interests

— — — — — — — — 16 16

Other comprehensive income — — — — 35 — — 35 — 35

Balance at June 30, 2019

Balance at September 30, 2019 1,582 $ 158 $ 25,880 $ ( 12,289 ) $ ( 570 ) 131 $ ( 3,735 ) $ 9,444 $ 8,098 $ 17,542

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

6 unchanged sentences

All such adjustments are, in the opinion of management, of a normal recurring nature.

Operating results for the six -month period ended June 30, 2020 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 .

Operating results for the nine-month period ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Operations Update.

2 unchanged sentences

FCX also continues to work closely with communities where it operates across the globe and has provided monetary support and in-kind contributions of medical supplies, equipment and food.

FCX achieved significant progress at Cerro Verde during second-quarter 2020 to restore operations following COVID-19 restrictions imposed by the Peruvian government in March 2020.

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.

FCX is currently assessing options and future timing of restart of the Chino mine in New Mexico, which will take into account public health and market conditions.

Following COVID-19 restrictions imposed by the Peruvian government in March 2020, Cerro Verde, FCX’s mine in Peru, implemented strict health protocols and a plan to restore its operations was approved by the Peruvian government in second-quarter 2020.

Cerro Verde continued to make progress toward restoring operations during third-quarter 2020.

FCX completed a review of options for restarting its Chino mine in New Mexico and currently expects to restart Chino at a reduced rate beginning in 2021.

During second-quarter 2020, FCX implemented a series of actions to reduce administrative and centralized support costs in conjunction with its April 2020 revised operating plans.

Cost savings initiatives included a temporary reduction in certain employee benefits, the initiation of furloughs and an employee separation program, and reductions in third party service costs, facilities costs, travel and other expenses.

FCX recognized charges totaling $ 196 million in second-quarter 2020 and $ 224 million for the first six months of 2020 associated with the COVID-19 pandemic and revised operating plans, including employee separation charges.

These charges, none of which were capitalized into inventory, were recorded to production and delivery ( $ 153 million in second-quarter 2020 and $ 173 million for the first six months of 2020);

depreciation, depletion and amortization ( $ 21 million in second-quarter 2020 and $ 29 million for the first six months of 2020);

selling, general and administrative ( $ 15 million for each of the second quarter and first six months of 2020) and mining exploration and research expense ( $ 7 million for each of the second quarter and first six months of 2020).

Cost savings initiatives included a temporary reduction in certain employee benefits, furloughs and an employee separation program, and reductions in third party service costs, facilities costs, travel and other expenses.

FCX recognized charges totaling $ 34 million in third-quarter 2020 and $ 258 million for the first nine months of 2020 associated with the COVID-19 pandemic and revised operating plans, including employee separation charges.

These charges, none of which were capitalized into inventory, were recorded to production and delivery ($ 30 million in third-quarter 2020 and $ 202 million for the first nine months of 2020);

depreciation, depletion and amortization ($ 3 million in third-quarter 2020 and $ 32 million for the first nine months of 2020);

selling, general and administrative expenses (less than $1 million in third-quarter 2020 and $ 15 million for the first nine months of 2020) and mining exploration and research expenses (less than $1 million in third-quarter 2020 and $ 8 million for the first nine months of 2020).

Pension Plan Amendment.

In August 2020, the FMC Retirement Plan (the Plan) was amended such that, effective September 1, 2020, participants will no longer accrue any additional benefits under the Plan.

As a result, FCX remeasured its pension assets and benefit obligation as of July 31, 2020.

The discount rate and expected long-term rate of return on the plan assets used for the July 31, 2020, remeasurement were 2.40 percent and 6.25 percent, respectively, compared to 3.40 percent and 6.50 percent, respectively at December 31, 2019.

The rate of compensation increase was unchanged ( 3.25 percent).

The remeasurement and curtailment resulted in the projected benefit obligation increasing by $ 184 million and plan assets increasing by $ 103 million.

In addition, FCX recognized a curtailment loss of $ 4 million in third-quarter 2020.

As of September 30, 2020, the funded status of the Plan was a net liability of $ 888 million (included in other liabilities in the consolidated balance sheet).

EARNINGS PER SHARE

1 unchanged sentence

Basic net income (loss) per share of common stock was computed by dividing net income (loss) attributable to common stockholders (after deducting accumulated dividends and undistributed earnings to participating securities) by the weighted-average shares of common stock outstanding during the period.

Diluted net income (loss) per share of common stock was calculated by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all potential dilutive shares of common stock, unless their effect would be anti-dilutive.

Reconciliations of net income (loss) and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted net income (loss) per share follow (in millions, except per share amounts):

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net income (loss) from continuing operations $ 432 $ ( 235 ) $ 7 $ ( 234 )

Net (income) loss from continuing operations attributable to noncontrolling interests

( 103 ) 27 ( 116 ) ( 16 )

Undistributed earnings allocated to participating securities ( 3 ) ( 3 ) ( 3 ) ( 3 )

Net income (loss) from continuing operations attributable to common stockholders

326 ( 211 ) ( 112 ) ( 253 )

Net income from discontinued operations attributable to common stockholders

1 unchanged sentence

Basic weighted-average shares of common stock outstanding

Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs)

1,453 1,452 1,453 1,451

Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs) a

Diluted weighted-average shares of common stock outstanding

1,461 1,452 1,453 1,451

Basic and diluted net income (loss) per share attributable to common stockholders:

1 unchanged sentence

Discontinued operations — — — —

Excludes approximately 10 million shares in second-quarter 2019 , 10 million shares for the first six months of 2020 and 12 million shares for the first six months of 2019 associated with outstanding stock options with exercise prices less than the average market price of FCX’s common stock and RSUs that were anti-dilutive.

$ 0.22 $ ( 0.15 ) $ ( 0.08 ) $ ( 0.17 )

Excludes approximately 2 million shares in third-quarter 2020, 10 million shares in third-quarter 2019, 13 million shares for the first nine months of 2020 and 11 million shares for the first nine months of 2019 associated with outstanding stock options with exercise prices less than the average market price of FCX’s common stock and RSUs that were anti-dilutive.

Outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net income (loss) per share of common stock.

Stock options for 38 million shares of common stock in second-quarter 2020 , 43 million shares of common stock in second-quarter 2019 , 39 million shares of common stock for first six months of 2020 and 41 million shares of common stock for the first six months of 2019 were excluded.

Stock options for 28 million shares of common stock in third-quarter 2020, 43 million shares of common stock in third-quarter 2019, 35 million shares of common stock for first nine months of 2020 and 42 million shares of common stock for the first nine months of 2019 were excluded.

INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

December 31, 2019

September 30, 2020 December 31, 2019

Current inventories:

Total materials and supplies, net a

$ 1,610 $ 1,649

Mill stockpiles $ 185 $ 220

9 unchanged sentences

Total long-term mill and leach stockpiles b

Materials and supplies inventory was net of obsolescence reserves totaling $ 31 million at June 30, 2020 , and $ 24 million at December 31, 2019 .

$ 1,463 $ 1,425

Materials and supplies inventory was net of obsolescence reserves totaling $ 32 million at September 30, 2020, and $ 24 million at December 31, 2019.

Estimated metals in stockpiles not expected to be recovered within the next 12 months.

During second-quarter 2020, FCX recorded net favorable adjustments to increase long-term metals inventory carrying values by $ 139 million , including an increase to long-term copper inventories ( $ 144 million ), primarily related to the reversal of net realizable value adjustments recorded on long-term copper inventories in first-quarter 2020 because of higher copper market prices at June 30, 2020 , and a decrease to long-term molybdenum inventories ( $ 5 million ) because of lower molybdenum market prices at June 30, 2020 .

Net realizable value inventory adjustments to decrease metals inventory carrying values totaled $ 83 million for the first six months of 2020 associated with lower market prices for copper ( $ 61 million ) and molybdenum ( $ 22 million ).

Net realizable value inventory adjustments to decrease metals inventory carrying values totaled $ 2 million in second-quarter 2019 and $ 59 million for the first six months of 2019, primarily for cobalt inventories because of lower cobalt market prices (refer to Note 9 for metals inventory adjustments by business segment).

G eographic sources of FCX’s benefit from (provision for) income taxes follow (in millions):

Six Months Ended

International operations

During third-quarter 2020, FCX recorded net realizable value inventory adjustments to decrease long-term metals inventory carrying values by $ 9 million, primarily for molybdenum inventories because of lower market prices at September 30, 2020.

Net realizable value inventory adjustments to decrease metals inventory carrying values totaled $ 92 million for the first nine months of 2020 associated with lower market prices for copper ($ 58 million) and molybdenum ($ 34 million).

Net realizable value inventory adjustments to decrease metals inventory carrying values totaled $ 41 million in third-quarter 2019, primarily for copper inventories, and $ 100 million for the first nine months of 2019, primarily for cobalt inventories ($ 58 million) and copper inventories ($ 41 million), because of lower market prices (refer to Note 9 for metals inventory adjustments by business segment).

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

Nine Months Ended

September 30,

operations $ 56 a

International operations ( 389 ) c

Total $ ( 333 ) $ ( 181 ) d

Includes a tax credit of $ 53 million associated with the reversal of a year-end 2019 tax charge related to the sale of FCX’s interest in the lower zone of the Timok exploration project in Serbia.

Includes a tax credit of $18 million primarily associated with state law changes.

FCX’s consolidated effective income tax rate was ( 9 ) percent for the first six months of 2020 and 101 percent for the first six months of 2019 .

Because FCX's U.S.

jurisdiction generated net losses in the first six months of 2020 and 2019 that will not result in a realized tax benefit, applicable accounting rules require FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S.

Includes tax credits totaling $ 24 million primarily associated with state law changes and settlement of state income tax examinations.

Includes a tax charge of $ 21 million ($ 17 million net of noncontrolling interests) associated with establishing a tax reserve related to the treatment of prior year contractor support costs.

Includes net tax charges totaling $ 49 million primarily to adjust deferred taxes on historical balance sheet items in accordance with tax accounting principles.

Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate.

FCX’s consolidated effective income tax rate was 102 percent for the first nine months of 2020 and 302 percent for the first nine months of 2019.

Because FCX's U.S.

jurisdiction generated net losses in the first nine

months of 2020 and 2019 that will not result in a realized tax benefit, applicable accounting rules require FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S.

In connection with the negative impacts of the COVID-19 pandemic on the global economy, governments throughout the world are announcing measures that are intended to provide tax and other financial relief.

Such measures include the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law by President Trump on March 27, 2020.

None of these measures, including the CARES Act, resulted in material impacts to FCX’s provision for income taxes for the six months ended June 30, 2020.

Some of these measures will provide FCX with the opportunity to accelerate the timing of cash collections, primarily those associated with the U.S.

alternative minimum tax credit refunds.

FCX collected $ 221 million of U.S.

alternative minimum tax credit refunds in July 2020, and expects to collect the outstanding balance ( $ 47 million ) within the next 12 months.

FCX continues to evaluate income tax accounting considerations of additional measures as they develop, including any impact on its measurement of existing deferred tax assets and deferred tax liabilities.

None of these measures resulted in material impacts to FCX’s provision for income taxes for the nine months ended September 30, 2020.

However, certain provisions of the CARES Act provided FCX with the opportunity to accelerate collections of tax refunds, primarily those associated with the U.S.

alternative minimum tax.

FCX collected U.S.

alternative minimum tax credit refunds of $ 221 million in July 2020 and $ 24 million in October 2020.

FCX expects to collect an additional $ 23 million within the next 12 months.

FCX continues to evaluate income tax accounting considerations of COVID-19 measures as they develop, including any impact on its measurement of existing deferred tax assets and deferred tax liabilities.

FCX will recognize any impact from COVID-19 related changes to tax laws in the period in which the new legislation is enacted.

1 unchanged sentence

The components of debt follow (in millions):

September 30,

2020 December 31, 2019

3 unchanged sentences

Cerro Verde credit facility 827 826

Total debt 10,030 9,826

Less current portion of debt ( 47 ) ( 5 )

1 unchanged sentence

Revolving Credit Facility.

At June 30, 2020 , FCX had no borrowings outstanding and $ 13 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion , of which approximately $ 1.5 billion could be used for additional letters of credit.

At September 30, 2020, FCX had no borrowings outstanding and $ 13 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

Availability under FCX’s revolving credit facility consists of $ 3.28 billion maturing April 2024 and $ 220 million maturing April 2023.

4 unchanged sentences

FCX retained the option to revert to the previous covenant requirements if it is determined additional flexibility is no longer needed.

At June 30, 2020 , FCX was in compliance with its revolving credit facility covenants.

At September 30, 2020, FCX was in compliance with its revolving credit facility covenants.

Senior Notes.

On July 27, 2020, FCX completed the sale of $ 650 million of 4.375 % Senior Notes due 2028 and $ 850 million of 4.625 % Senior Notes due 2030 for proceeds, net of underwriting fees, totaling $ 1.485 billion.

Interest on these senior notes is payable semiannually on February 1 and August 1 of each year.

These senior notes rank equally with FCX’s other existing and future unsecured and unsubordinated indebtedness.

FCX used $ 1.4 billion of the net proceeds from this offering to purchase a portion of its 3.55 % Senior Notes due 2022, 3.875 % Senior Notes due 2023 and 4.55 % Senior Notes due 2024, and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions.

The remaining net proceeds from this offering will be used for general corporate purposes, which may include repurchases or redemptions of outstanding senior notes.

On March 4, 2020, FCX completed the sale of $ 700 million of 4.125 % Senior Notes due 2028 and $ 600 million of 4.25 % Senior Notes due 2030 for proceeds, net of underwriting fees, totaling $ 1.285 billion.

1 unchanged sentence

These senior notes rank equally with FCX’s other existing and future unsecured and unsubordinated indebtedness.

FCX used a portion of the net proceeds from this offering to purchase a portion of its 4.00 % Senior Notes due 2021 and its 3.55 % Senior Notes due 2022 and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions.

FCX used a portion of the net proceeds from this offering to purchase a portion of its 4.00 % Senior Notes due 2021 and its 3.55 % Senior Notes

due 2022 and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions.

On April 3, 2020, FCX used the remaining net proceeds to fund the make-whole redemption of all of its remaining 4.00 % Senior Notes due 2021 and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with the transaction.

As a result of these transactions, FCX recorded a loss on early extinguishment of debt of $ 9 million in second-quarter 2020 and $ 41 million for the six months ended June 30, 2020.

Interest on these senior notes is payable semiannually on February 1 and August 1 of each year.

These senior notes rank equally with FCX’s other existing and future unsecured and unsubordinated indebtedness.

FCX used $ 1.3 billion of the net proceeds from this offering to purchase a portion of its 3.55 % Senior Notes due 2022, 3.875 % Senior Notes due 2023 and 4.55 % Senior Notes due 2024, in connection with the early settlement of its previously announced tender offers, and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions.

Depending on the final tender results, FCX may use all or a portion of the remaining net proceeds from this offering to purchase more of certain existing senior notes in the tender offers and expects the final settlement of the tender offers, if any, to occur on August 11, 2020.

Any net proceeds not used for the tender offers will be used for general corporate purposes, which may include repurchases or redemptions of FCX’s notes.

FCX expects to record a loss on early extinguishment of debt of approximately $ 60 million in third-quarter 2020 related to the early settlement of the tender offers.

As a result of these transactions, FCX recorded losses on early extinguishment of debt totaling $ 59 million in third-quarter 2020 and $ 100 million for the nine months ended September 30, 2020.

Interest Expense, Net.

Consolidated interest costs (before capitalization) totaled $ 159 million in second-quarter 2020 , $ 167 million in second-quarter 2019 , $ 330 million for the first six months of 2020 and $ 345 million for the first six months of 2019 .

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 44 million in second-quarter 2020 , $ 35 million in second-quarter 2019 , $ 88 million for the first six months of 2020 and $ 67 million for the first six months of 2019 .

Consolidated interest costs (before capitalization) totaled $ 160 million in third-quarter 2020, $ 163 million in third-quarter 2019, $ 490 million for the first nine months of 2020 and $ 508 million for the first nine months of 2019.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 40 million in both third-quarter 2020 and third-quarter 2019, $ 128 million for the first nine months of 2020 and $ 107 million for the first nine months of 2019.

Common Stock.

In March 2020, in response to the COVID-19 pandemic and resulting global economic uncertainties, the FCX Board of Directors (the Board) suspended FCX’s quarterly cash dividend of $ 0.05 per share previously planned for May 1, 2020.

Under current market and economic conditions, the Board does not expect to declare common stock dividends during 2020.

The Board does not expect to declare common stock dividends during 2020.

The declaration and payment of future dividends is at the discretion of the Board and will be assessed on an ongoing basis, taking into account FCX’s financial results, cash requirements, future prospects, global economic conditions and other factors deemed relevant by the Board.

9 unchanged sentences

The forward sales provided for fixed pricing of $ 2.34 per pound of copper on approximately 60 percent of North America's sales volumes for May and June 2020.

These contracts resulted in hedging losses totaling $ 24 million in second-quarter 2020 and for the six months ended June 30, 2020.

There were no remaining forward sales contracts as of June 30, 2020.

A discussion of FCX’s other derivative contracts and programs follow.

These contracts resulted in hedging losses totaling $ 24 million for the nine months ended September 30, 2020.

There were no remaining forward sales contracts after June 30, 2020.

A discussion of FCX’s other derivative contracts and programs follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

3 unchanged sentences

(COMEX) average copper price in the month of shipment.

FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while

the customers pay the fixed price they requested.

FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested.

FCX accomplishes this by entering into copper futures or swap contracts.

Hedging gains or losses from these copper futures and swap contracts are recorded in revenues.

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the six -month periods ended June 30, 2020 and 2019 .

At June 30, 2020 , FCX held copper futures and swap contracts that qualified for hedge accounting for 54 million pounds at an average contract price of $ 2.50 per pound, with maturities through December 2021 .

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the nine-month periods ended September 30, 2020 and 2019.

At September 30, 2020, FCX held copper futures and swap contracts that qualified for hedge accounting for 50 million pounds at an average contract price of $ 2.76 per pound, with maturities through December 2021.

A summary of gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, including the unrealized gains (losses) on the related hedged item follows (in millions):

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Copper futures and swap contracts:

2 unchanged sentences

Hedged item – firm sales commitments ( 1 ) 2 ( 8 ) ( 3 )

Realized losses:

Realized gains (losses):

Matured derivative financial instruments 15 ( 8 ) ( 1 ) ( 9 )

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Mark-to-market price fluctuations from these embedded derivatives are recorded through the settlement date and are reflected in revenues for sales contracts and in inventory for purchase contracts.

A summary of FCX’s embedded derivatives at June 30, 2020 , follows:

Open Positions

Average Price

Maturities Through

A summary of FCX’s embedded derivatives at September 30, 2020, follows:

Open Positions Average Price

Per Unit Maturities Through

Contract Market

Embedded derivatives in provisional sales contracts:

Copper (millions of pounds)

November 2020

Gold (thousands of ounces)

Copper (millions of pounds) 381 $ 2.91 $ 3.03 March 2021

Gold (thousands of ounces) 116 1,941 1,891 January 2021

Embedded derivatives in provisional purchase contracts:

Copper (millions of pounds)

September 2020

Copper (millions of pounds) 113 2.95 3.03 January 2021

Copper Forward Contracts.

Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into copper forward contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match.

These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in cost of sales.

At June 30, 2020 , Atlantic Copper held net copper forward purchase contracts for 16 million pounds at an average contract price of $ 2.62 per pound, with maturities through August 2020 .

These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in production and delivery costs.

At September 30, 2020, Atlantic Copper held net copper forward purchase contracts for 26 million pounds at an average contract price of $ 3.05 per pound, with maturities through November 2020.

Summary of Gains (Losses).

A summary of the realized and unrealized gains (losses) recognized in operating income for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Embedded derivatives in provisional sales contracts:

Copper $ 94 $ ( 57 ) $ 18 $ ( 57 )

Gold and other metals 15 6 39 17

Copper forward contracts b

( 7 ) — 12 ( 3 )

Amounts recorded in revenues.

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A summary of the fair values of unsettled commodity derivative financial instruments follows (in millions):

September 30,

2020 December 31, 2019

3 unchanged sentences

Derivatives not designated as hedging instruments :

Embedded derivatives in provisional

sales/purchase contracts

Embedded derivatives in provisional sales/purchase contracts 51 68

Copper forward contracts 1 —

Total derivative assets $ 65 $ 74

3 unchanged sentences

Derivatives not designated as hedging instruments :

Embedded derivatives in provisional

sales/purchase contracts

Embedded derivatives in provisional sales/purchase contracts 20 20

Copper forward contracts — 1

3 unchanged sentences

A summary of these unsettled commodity contracts that are offset in the balance sheets follows (in millions):

December 31, 2019

Assets Liabilities

September 30,

2020 December 31, 2019 September 30,

2020 December 31, 2019

4 unchanged sentences

Less gross amounts of offset:

Copper derivatives

Embedded derivatives in provisional

sales/purchase contracts 3 — 3 —

Net amounts presented in balance sheet:

2 unchanged sentences

Copper derivatives 14 6 — 1

$ 62 $ 74 $ 17 $ 21

Balance sheet classification:

2 unchanged sentences

Accounts payable and accrued liabilities 2 2 12 21

$ 62 $ 74 $ 17 $ 21

FCX is exposed to credit loss when financial institutions with which it has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay.

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FCX does not anticipate that any of the counterparties it deals with will default on their obligations.

As of June 30, 2020 , the maximum amount of credit exposure associated with derivative transactions was $ 88 million .

As of September 30, 2020, the maximum amount of credit exposure associated with derivative transactions was $ 52 million.

Other Financial Instruments.

Other financial instruments include cash and cash equivalents, restricted cash, restricted cash equivalents, accounts receivable, investment securities, legally restricted funds, accounts payable and accrued liabilities, dividends payable and long-term debt.

The carrying value for cash and cash equivalents (which included time deposits of $ 0.3 billion at June 30, 2020 , and $ 1.3 billion at December 31, 2019 ), restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, as of June 30, 2020, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

The carrying value for cash and cash equivalents (which included time deposits of $ 0.2 billion at September 30, 2020, and $ 1.3 billion at December 31, 2019), restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, as of September 30, 2020, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents.

The following table provides a reconciliation of total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows (in millions):

September 30,

2020 December 31, 2019

3 unchanged sentences

Other current assets 103 100

Other assets 149 158

Total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows $ 2,655 $ 2,278

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The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

FCX did not have any significant transfers in or out of Level 3 during second-quarter 2020 .

FCX did not have any significant transfers in or out of Level 3 during third-quarter 2020.

FCX’s financial instruments are recorded on the consolidated balance sheets at fair value except for contingent consideration associated with the sale of the Deepwater Gulf of Mexico (GOM) oil and gas properties (which was recorded under the loss recovery approach) and debt.

A summary of the carrying amount and fair value of FCX’s financial instruments (including those measured at net asset value (NAV) as a practical expedient), other than cash and cash equivalents, restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable (refer to Note 6) follows (in millions):

At June 30, 2020

At September 30, 2020

Carrying Fair Value

Amount Total NAV Level 1 Level 2 Level 3

Investment securities:

1 unchanged sentence

Equity securities 6 6 — 6 — —

Total 35 35 29 6 — —

Legally restricted funds:

1 unchanged sentence

Corporate bonds 43 43 — — 43 —

Government mortgage-backed securities

Government bonds and notes 42 42 — — 42 —

Government mortgage-backed securities 33 33 — — 33 —

Asset-backed securities 15 15 — — 15 —

2 unchanged sentences

Municipal bonds 1 1 — — 1 —

Total 211 211 64 9 138 —

Embedded derivatives in provisional sales/purchase contracts in a gross asset position c

51 51 — — 51 —

Copper futures and swap contracts c

13 13 — 12 1 —

Copper forward contracts c

Total 65 65 — 13 52 —

Contingent consideration for the sale of the

Deepwater GOM oil and gas properties a

113 84 — — — 84

Embedded derivatives in provisional sales/purchase contracts in a gross liability position 20 20 — — 20 —

Copper forward contracts

Long-term debt, including current portion d

10,030 10,735 — — 10,735 —

At December 31, 2019

Carrying Fair Value

Amount Total NAV Level 1 Level 2 Level 3

Investment securities:

1 unchanged sentence

Equity securities 4 4 — 4 — —

Total 31 31 27 4 — —

Legally restricted funds:

7 unchanged sentences

Municipal bonds 1 1 — — 1 —

Total 196 196 59 3 134 —

Embedded derivatives in provisional sales/purchase contracts in a gross asset position c

68 68 — — 68 —

Copper futures and swap contracts c

1 unchanged sentence

California oil and gas properties a

11 11 — — 11 —

Total 85 85 — 5 80 —

Contingent consideration for the sale of the

Deepwater GOM oil and gas properties a

122 108 — — — 108

Embedded derivatives in provisional sales/purchase contracts in a gross liability position 20 20 — — 20 —

Copper forward contracts 1 1 — — 1 —

Total 21 21 — — 21 —

Long-term debt, including current portion d

9,826 10,239 — — 10,239 —

Current portion included in other current assets and long-term portion included in other assets.

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 132 million at June 30, 2020 , and $ 100 million at December 31, 2019 , and (ii) other assets of $ 131 million at June 30, 2020 , and $ 157 million at December 31, 2019 , primarily associated with an assurance bond to support PT-FI’s commitment for the development of a new smelter in Indonesia and PT-FI’s closure and reclamation guarantees.

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 103 million at September 30, 2020, and $ 100 million at December 31, 2019, and (ii) other assets of $ 148 million at September 30, 2020, and $ 157 million at December 31, 2019, primarily associated with an assurance bond to support PT-FI’s commitment for the development of a new smelter in Indonesia and PT-FI’s closure and reclamation guarantees.

Refer to Note 6 for further discussion and balance sheet classifications.

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In 2016, FCX completed the sale of its onshore California oil and gas properties, which included contingent consideration of up to $ 150 million, consisting of $ 50 million per year for 2018, 2019 and 2020 if the price of Brent crude oil averages over $ 70 per barrel in each of these calendar years.

Based on current and forecasted oil prices for the remainder of 2020, FCX has concluded the fair value of the last tranche of this contingent consideration derivative approximates zero at June 30, 2020 .

The fair value of the contingent consideration derivative was $ 11 million (included in other assets in the consolidated balance sheets) at December 31, 2019.

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In December 2016, FCX’s sale of its Deepwater GOM oil and gas properties included up to $ 150 million in contingent consideration that was recorded at the total amount under the loss recovery approach.

The contingent consideration will be received over time as future cash flows are realized from a third-party production handling agreement for an offshore platform, with the related payments commencing in third-quarter 2018.

The contingent consideration included in (i) other current assets totaled $ 12 million at June 30, 2020 , and $ 18 million at December 31, 2019 , and (ii) other assets totaled $ 103 million at June 30, 2020 , and $ 104 million at December 31, 2019 .

The contingent consideration is being received over time as future cash flows are realized from a third-party production handling agreement for an offshore platform, with the related payments commencing in third-quarter 2018.

The contingent consideration included in (i) other current assets totaled $ 12 million at September 30, 2020, and $ 18 million at December 31, 2019, and (ii) other assets totaled $ 101 million at September 30, 2020, and $ 104 million at December 31, 2019.

The fair value of this contingent consideration was calculated based on a discounted cash flow model using inputs that include third-party estimates for reserves, production rates and production timing, and discount rates.

3 unchanged sentences

Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

There have been no changes in the techniques used at June 30, 2020 , as compared with those techniques used at December 31, 2019 .

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first six months of 2020 follows (in millions):

There have been no changes in the techniques used at September 30, 2020, as compared with those techniques used at December 31, 2019.

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first nine months of 2020 follows (in millions):

Fair value at January 1, 2020 $ 108

Net unrealized loss related to assets still held at the end of the period

Fair value at June 30, 2020

Fair value at September 30, 2020 $ 84

CONTINGENCIES AND COMMITMENTS

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2019 Form 10-K, other than the matters below, which were updated in Note 8 of FCX’s quarterly report on Form 10-Q for the quarter ended March 31, 2020.

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2019 Form 10-K, other than the matters discussed below, which previously were updated in Note 8 of FCX’s quarterly report on Form 10-Q for the quarters ended March 31, 2020, and June 30, 2020, and are further updated here.

Louisiana Parishes Coastal Erosion Cases.

22 unchanged sentences

Cyprus Mines and the insurers also settled several other cases and secured delays or dismissals in other cases.

Multiple trials previously scheduled over the first half of 2020 have been postponed because of the ongoing COVID-19 pandemic.

Other cases remain

scheduled for trial in the second half of 2020, and postponed cases may be reset prior to the adversary proceeding regarding the legacy insurance, which is currently on hold.

Cyprus Mines and CAMC also have contractual indemnification rights against J&J, which J&J disputes.

In June 2020, Cyprus Mines and CAMC filed a complaint in the Imerys bankruptcy case asserting that J&J was required to indemnify Cyprus Mines and CAMC for liabilities related to J&J products.

FCX believes that Cyprus Mines and CAMC each has strong defenses to legal liability and that both should have access to the legacy insurance to cover defense costs, settlements and judgments, at least until the bankruptcy court decides otherwise or the insurance is exhausted.

At this time, FCX cannot estimate the range of possible loss associated with these proceedings, but it does not currently believe the amount of any such losses are material to its consolidated financial statements.

However, there can be no assurance that future developments will not alter this conclusion.

Environmental

On August 5, 2020, the co-conveners of the Global Tailings Review, which included the International Council on Mining and Metals (ICMM), an industry group of which FCX is a founding member, published the first Global Industry Standard on Tailings Management (the Standard).

The Standard includes 77 requirements across six key areas including the design, construction, operation and monitoring of tailings facilities, management and governance, emergency response and long-term recovery, and public disclosure.

As a member of ICMM, which has endorsed the Standard, FCX will move toward implementing it and will begin undertaking an extensive, multi-year analysis of its tailings facilities to ensure conformance with the Standard.

Compliance with the new Standard will require incremental future costs.

J&J filed a motion to dismiss which is currently pending and has not been heard.

FCX continues to believe that Cyprus Mines and CAMC each has strong defenses to legal liability and that both should have access to the remaining legacy insurance to cover defense costs, settlements and judgments relating to talc proceedings, at least until the bankruptcy court decides otherwise or the insurance is exhausted.

FCX recorded legal defense and settlement costs associated with talc-related litigation totaling approximately $ 20 million for the first nine months of 2020 and $ 28 million for the year 2019.

Multiple trials previously scheduled during 2020 have been postponed because of the ongoing COVID-19 pandemic.

Postponed cases may be reset prior to the adversary proceeding regarding the legacy insurance, which is currently on hold.

Cyprus Mines and CAMC are exploring a possible global settlement framework through the Imerys bankruptcy process to release Cyprus Mines and CAMC and their respective affiliates from all present and future talc claims.

The outcome of any such global settlement may result in future charges that could be material to FCX’s results of operations for the relevant period during which any such agreement is reached.

However, there can be no assurance that a global settlement will be reached and, if an agreement among the parties is reached, the implementation of a global settlement would require, among other things, further proceedings in the bankruptcy court and judicial approval.

Given the uncertainties and complexities involved, Cyprus Mines and CAMC continue to prepare for trial with respect to the postponed cases and intend to vigorously defend themselves in all such cases.

At this time, FCX believes a loss is reasonably possible but due to the number of cases pending, the number of potential future claimants, the complexity of the issues, the possibility of success at trial, whether any settlement(s) will be reached and, if reached, the amount and terms of any such settlement(s), and other factors, FCX cannot estimate the range of possible loss.

Other Matters

10 unchanged sentences

Beginning in fourth-quarter 2019, the Bagdad copper mine became a reportable segment.

As a result, FCX revised its segment disclosure for the three and six months ended June 30, 2019 , to conform with the current year presentation.

As a result, FCX revised its segment disclosure for the three and nine months ended September 30, 2019, to conform with the current year presentation.

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.

8 unchanged sentences

Product Revenues.

FCX’s revenues attributable to the products it sold for the second quarters and first six months of 2020 and 2019 follow (in millions):

Three Months Ended

Six Months Ended

FCX’s revenues attributable to the products it sold for the third quarters and first nine months of 2020 and 2019 follow (in millions):

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Concentrate $ 1,185 $ 952 $ 2,783 $ 3,251

Cathode 1,085 878 3,046 2,696

Rod and other refined copper products 634 537 1,479 1,560

Purchased copper a

167 210 568 872

Gold 497 415 1,108 1,111

Molybdenum 189 295 626 910

159 202 431 697

Adjustments to revenues:

1 unchanged sentence

Royalty expense c

( 56 ) ( 24 ) ( 102 ) ( 73 )

Export duties d

( 23 ) ( 174 ) e

( 43 ) ( 201 ) e

Revenues from contracts with customers 3,742 3,204 9,646 10,531

Embedded derivatives e

Embedded derivatives f

109 ( 51 ) 57 ( 40 )

Total consolidated revenues $ 3,851 $ 3,153 $ 9,703 $ 10,491

3 unchanged sentences

Reflects PT-FI export duties.

Includes charges totaling $ 166 million primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

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

1 unchanged sentence

(In millions)

North America Copper Mines

South America Mining

Three Months Ended June 30, 2020

Unaffiliated customers

Atlantic Corporate,

North America Copper Mines South America Mining Copper Other

Cerro Indonesia Molybdenum Rod & Smelting & Elimi- FCX

Morenci Bagdad Other Total Verde Other Total Mining Mines Refining & Refining nations Total

Three Months Ended September 30, 2020

Unaffiliated customers $ 4 $ — $ 12 $ 16 $ 632 $ 108 $ 740 $ 1,023 a

$ — $ 1,270 $ 536 $ 266 b

Intersegment 584 207 430 1,221 66 — 66 3 42 8 3 ( 1,343 ) —

Production and delivery 308 123 337 768 394 83 477 409 51 1,272 522 ( 1,034 ) 2,465

Depreciation, depletion and amortization

42 14 35 91 92 13 105 150 13 6 8 21 394

Metals inventory adjustments

— — ( 4 ) ( 4 ) — — — — 3 2 — 8 9

Selling, general and administrative expenses

1 — — 1 2 — 2 25 — — 5 39 72

Mining exploration and research expenses — — — — — — — — — — — 8 8

Environmental obligations and shutdown costs

— — ( 3 ) ( 3 ) — — — — — — — 24 21

Net loss on sales of assets — — — — — — — — — — — 2 2

Operating income (loss) 237 70 77 384 210 12 222 442 ( 25 ) ( 2 ) 4 ( 145 ) 880

1 unchanged sentence

Provision for (benefit from) income taxes — — — — 105 4 109 211 — — — ( 23 ) 297

Total assets at June 30, 2020

Total assets at September 30, 2020 2,654 785 4,352 7,791 8,569 1,640 10,209 17,098 1,770 251 877 3,103 41,099

Capital expenditures 21 7 38 66 26 5 31 325 3 1 6 4 436

Three Months Ended June 30, 2019

Unaffiliated customers

Three Months Ended September 30, 2019

Unaffiliated customers $ 61 $ — $ 19 $ 80 $ 504 $ 117 $ 621 $ 488 a

$ — $ 1,104 $ 437 $ 423 b

Intersegment 462 209 389 1,060 65 — 65 — 90 8 — ( 1,223 ) —

Production and delivery 377 140 379 896 417 111 528 399 85 1,111 421 ( 770 ) 2,670

Depreciation, depletion and amortization

45 12 34 91 93 16 109 77 16 2 7 20 322

Metals inventory adjustments

1 — 37 38 2 — 2 — 1 — — — 41

Selling, general and administrative expenses

1 1 — 2 2 — 2 31 — — 5 61 101

Mining exploration and research expenses — — — — — — — — — — — 25 25

Environmental obligations and shutdown costs

— — — — — — — — — — — 20 20

Net loss on sales of assets — — — — — — — — — — — 12 12

2 unchanged sentences

Provision for (benefit from) income taxes — — — — 29 4 33 ( 8 ) — — ( 1 ) 67 91

Total assets at June 30, 2019

Total assets at September 30, 2019 2,943 769 4,236 7,948 8,500 1,723 10,223 16,447 1,786 236 680 3,623 40,943

Capital expenditures 61 42 121 224 61 7 68 334 5 1 9 25 666

Includes PT-FI's sales to PT Smelting totaling $ 433 million in second-quarter 2020 and $ 470 million in second-quarter 2019 .

Includes PT-FI's sales to PT Smelting totaling $ 506 million in third-quarter 2020 and $ 475 million in third-quarter 2019.

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.

Includes hedging losses totaling $ 24 million related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $ 2.34 per pound.

(In millions)

North America Copper Mines

South America Mining

Six Months Ended June 30, 2020

Unaffiliated customers

Atlantic Corporate,

North America Copper Mines South America Mining Copper Other

Other Cerro Other Indonesia Molybdenum Rod & Smelting & Elimi- FCX

Morenci Bagdad Mines Total Verde Mines Total Mining Mines Refining & Refining nations Total

Nine Months Ended September 30, 2020

Unaffiliated customers $ 26 $ — $ 35 $ 61 $ 1,479 $ 312 $ 1,791 $ 2,151 a

$ — $ 3,491 $ 1,429 $ 780 b

Intersegment 1,473 532 1,144 3,149

156 — 156 38 171 24 16 ( 3,554 ) —

Production and delivery 1,005 367 1,043 2,415 1,152 297 1,449 1,130 178 3,529 1,379 ( 2,676 ) 7,404

2 unchanged sentences

Selling, general and administrative expenses

2 — 1 3 5 — 5 81 — — 15 169 273

Mining exploration and research expenses — — 2 2 — — — — — — — 40 42

Environmental obligations and shutdown costs

— — ( 3 ) ( 3 ) — — — — — 1 — 60 58

Net loss on sales of assets — — — — — — — — — — — 13 13

1 unchanged sentence

Interest expense, net 2 — — 2 69 — 69 2 — — 4 285 362

(Benefit from) provision for income taxes

Provision for (benefit from) income taxes — — — — 82 ( 6 ) 76 302 — — 1 ( 46 ) 333

Capital expenditures 92 44 262 398 116 40 156 959 14 5 17 24 1,573

Six Months Ended June 30, 2019

Unaffiliated customers

Nine Months Ended September 30, 2019

Unaffiliated customers $ 89 $ — $ 183 $ 272 $ 1,793 $ 343 $ 2,136 $ 1,776 a

$ — $ 3,403 $ 1,554 $ 1,350 b

Intersegment 1,411 591 1,020 3,022 262 — 262 57 290 18 5 ( 3,654 ) —

Production and delivery 1,020 388 1,055 2,463 1,311 337 1,648 1,509 234 3,415 1,488 ( 2,158 ) 8,599

2 unchanged sentences

Selling, general and administrative expenses

2 1 1 4 6 — 6 91 — — 15 184 300

Mining exploration and research expenses — — 1 1 — — — — — — — 82 83

Environmental obligations and shutdown costs

— — — — — — — — — — — 85 85

Net gain on sales of assets — — — — — — — — — — — ( 13 ) ( 13 )

3 unchanged sentences

Capital expenditures 172 100 369 641 160 16 176 992 11 3 18 76 1,917

Includes PT-FI's sales to PT Smelting totaling $ 813 million for the first six months of 2020 and $ 879 million for the first six months of 2019 .

Includes PT-FI's sales to PT Smelting totaling $ 1.3 billion for the first nine months of 2020 and $ 1.4 billion for the first nine months of 2019.

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.

Includes hedging losses totaling $ 24 million related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $ 2.34 per pound.

NEW ACCOUNTING STANDARD

3 unchanged sentences

SUBSEQUENT EVENTS

FCX evaluated events after June 30, 2020 , and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

FCX evaluated events after September 30, 2020, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

We have reviewed the accompanying consolidated balance sheet of Freeport-McMoRan Inc.

(the Company) as of June 30, 2020 , the related consolidated statements of operations, comprehensive income (loss), and equity for the three- and six-month periods ended June 30, 2020 and 2019 , the consolidated statements of cash flows for the six -month periods ended June 30, 2020 and 2019 , and the related notes (collectively referred to as the “consolidated interim financial statements”).

(the Company) as of September 30, 2020, the related consolidated statements of operations, comprehensive income (loss), and equity for the three- and nine-month periods ended September 30, 2020 and 2019, the consolidated statements of cash flows for the nine-month periods ended September 30, 2020 and 2019, and the related notes (collectively referred to as the “consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S.

13 unchanged sentences

Phoenix, Arizona

August 7, 2020

November 6, 2020

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.

What changed 10-Q

Item 1. Financial Statements