What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-07 · 589 added, 419 removed, 1029 unchanged (49% of the section changed)

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and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru.

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.

The April 2020 revised operating plans included significant reductions to operating costs, capital expenditures and exploration and administrative costs for the year 2020.

We proactively implemented operating protocols at each of our operating sites to contain and mitigate the risk of spread of COVID-19.

We continue to work closely with communities where we operate across the globe and have provided monetary support and in-kind contributions of medical supplies, equipment and food.

We 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.

The ramp-up of underground production at the Grasberg minerals district continues to advance on schedule, and the Lone Star project in North America is substantially complete and on track to produce approximately 200 million pounds of copper per year beginning in the second half of 2020.

We 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.

Our operating sites continue to focus on strong execution of our April 2020 revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.

Protecting the health of our workforce and communities where we operate is a top priority and we continue to provide monetary support and in-kind contributions of medical supplies, equipment and food.

During third-quarter 2020, we continued to focus on safeguarding our business in an uncertain public health and economic environment.

The ramp-up of underground mining at PT Freeport Indonesia (PT-FI) is advancing on schedule, production from the recently completed Lone Star copper leach project is ramping up and remains on track to produce approximately 200 million pounds of copper annually and Cerro Verde continues to make progress toward restoring operations (operating rates averaged 351,000 metric tons of ore per day during third-quarter 2020, approximately 90 percent of the 2019 annual average).

Refer to “Operations” for further discussion.

With a focus on cost and capital management, our second-quarter 2020 results reflected strong execution of the April 2020 revised operating plans.

Our second-quarter 2020 consolidated sales exceeded the April 2020 estimates by 10 percent for copper and 12 percent for gold.

Net income (loss) attributable to common stock totaled $53 million in second-quarter 2020 , $(72) million in second-quarter 2019 , $(438) million for the first six months of 2020 and $(41) million for the first six months of 2019 .

The results for second-quarter 2020 , compared with second-quarter 2019 , primarily reflect lower unit net cash costs, partly offset by lower copper prices, lower copper and gold sales volumes and charges associated with the COVID-19 pandemic and revised operating plans.

The results for the first six months of 2020, compared with the first six months of 2019, primarily reflect lower copper and gold sales volumes, lower copper prices and charges associated with the COVID-19 pandemic and revised operating plans, partly offset by lower unit net cash costs.

The 2020 periods also included favorable metals inventory adjustments of $139 million in second-quarter 2020 and unfavorable metals inventory adjustments of $83 million for the first six months of 2020.

Our third-quarter 2020 results reflect strong cash flows and effective cost and capital expenditures management.

Consolidated sales volumes exceeded our July 2020 estimates by 7 percent for copper and 6 percent for gold.

Net income (loss) attributable to common stock totaled $329 million in third-quarter 2020, $(207) million in third-quarter 2019, $(109) million for the first nine months of 2020 and $(248) million for the first nine months of 2019.

The results for third-quarter 2020, compared with third-quarter 2019, primarily reflect higher copper and gold prices, higher copper sales volumes, and lower production and delivery costs.

The results for the first nine months of 2020, compared with the first nine months of 2019, primarily reflect lower production and delivery costs and higher gold prices, partly offset by lower copper, gold and molybdenum sales volumes and lower molybdenum prices.

The 2020 periods were also impacted by a higher income tax provision.

Refer to “Consolidated Results” for further discussion.

At June 30, 2020 , we had $1.5 billion in consolidated cash and cash equivalents and $9.9 billion in total debt.

At June 30, 2020 , we had no borrowings and $3.5 billion was available under our revolving credit facility.

We have a strong liquidity position to manage market volatility, especially in light of the fact that we have no senior note maturities until 2022.

In July 2020, we completed an offering of $1.5 billion of senior notes in two tranches in an underwritten registered public offering.

We used a portion of the net proceeds from the offering to purchase certain existing senior notes in connection with the early settlement of our previously announced tender offers.

Depending on the final tender results, we may use all or a portion of the the remaining net proceeds from the offering to purchase more of certain existing senior notes in the tender offers.

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

These transactions will further enhance financial flexibility and extend debt maturities.

At September 30, 2020, we had $2.4 billion in consolidated cash and cash equivalents and $10.0 billion in total debt.

At September 30, 2020, we had no borrowings and $3.5 billion was available under our revolving credit facility.

We have a strong liquidity position to manage market volatility, and have no senior note maturities until 2022.

In July 2020, we 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.

We used $1.4 billion of the net proceeds to purchase a portion of our senior notes due 2022, 2023 and 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.

In connection with our financings from August 2019 through July 2020, we’ve issued a total of $4.0 billion in new senior notes and used most of the net proceeds to purchase and redeem outstanding senior notes.

As a result, we have extended maturities and strengthened our financial flexibility.

Refer to Note 5 and “Capital Resources and Liquidity” for further discussion.

Despite the rapid change in market conditions and unfavorable changes to the global economy as a result of the COVID-19 pandemic, we continue to view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy.

Despite volatile market conditions and unfavorable changes to the global economy as a result of the COVID-19 pandemic, we continue to view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy.

Our financial results vary as a result of fluctuations in market prices primarily for copper, gold and, to a lesser extent, molybdenum, as well as other factors.

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Projected molybdenum sales include 25 million pounds produced by our Molybdenum mines and 55 million pounds produced by our North America and South America copper mines.

Consolidated sales volumes for third-quarter 2020 are expected to approximate 790 million pounds of copper, 220 thousand ounces of gold and 18 million pounds of molybdenum.

As PT-FI continues to ramp-up production from its significant underground ore bodies, metal production is expected to improve significantly in 2021, with estimated consolidated sales of 3.8 billion pounds of copper and 1.4 million ounces of gold.

Projected sales volumes are dependent on operational performance, impacts and the duration of the COVID-19 pandemic, weather-related conditions, timing of shipments and other factors.

Consolidated sales volumes in fourth-quarter 2020 are expected to approximate 840 million pounds of copper, 270 thousand ounces of gold and 21 million pounds of molybdenum.

Metal production and sales are expected to improve significantly in 2021 with projected consolidated sales of 3.85 billion pounds of copper and 1.4 million ounces of gold for the year 2021.

Projected sales volumes are dependent on operational performance, continued progress of the ramp-up of underground mining at PT-FI, impacts and duration of the COVID-19 pandemic, weather-related conditions, timing of shipments, and other factors.

For other important factors that could cause results to differ materially from projections, refer to “Cautionary Statement” and “Risk Factors” contained in Part I, Item 1A.

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Consolidated Unit Net Cash Costs

Assuming average prices of $1,800 per ounce of gold and $7.00 per pound of molybdenum for the second half of 2020 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $1.53 per pound of copper for the year 2020 , (including $1.40 per pound of copper for the second half of 2020 ).

The impact of price changes during the second half of 2020 on consolidated unit net cash costs for the year 2020 would approximate $0.01 per pound of copper for each $50 per ounce change in the average price of gold and $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum.

Assuming average prices of $1,900 per ounce of gold and $8.00 per pound of molybdenum in fourth-quarter 2020 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $1.49 per pound of copper for the year 2020 (including $1.32 per pound of copper in fourth-quarter 2020).

The impact of price changes during fourth-quarter 2020 on consolidated unit net cash costs for the year 2020 would approximate $0.01 per pound of copper for each $50 per ounce change in the average price of gold and $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum.

Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum.

We expect consolidated unit net cash costs to decline in 2021, following a ramp-up period at PT-FI.

We expect consolidated unit net cash costs to be lower in 2021, as the underground mines at PT-FI reach planned operating rates.

Consolidated Operating Cash Flows

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and other factors.

Based on current sales volume and cost estimates, and assuming average prices of $2.85 per pound for copper, $1,800 per ounce for gold, and $7.00 per pound for molybdenum for the second half of 2020, our consolidated operating cash flows are estimated to approximate $2.6 billion (including $0.5 billion of working capital and other sources) for the year 2020 .

Based on current sales volume and cost estimates, and assuming average prices of $3.00 per pound for copper, $1,900 per ounce for gold, and $8.00 per pound for molybdenum during fourth-quarter 2020, our consolidated operating cash flows are estimated to approximate $2.9 billion (including $0.6 billion from working capital and other sources) for the year 2020.

Estimated consolidated operating cash flows for the year 2020 also reflect an estimated income tax provision of $0.7 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year 2020).

The impact of price changes during the second half of 2020 on operating cash flows for the year 2020 would approximate $165 million for each $0.10 per pound change in the average price of copper, $25 million for each $50 per ounce change in the average price of gold and $35 million for each $2 per pound change in the average price of molybdenum.

The impact of price changes during fourth-quarter 2020 on operating cash flows for the year 2020 would approximate $90 million for each $0.10 per pound change in the average price of copper, $13 million for each $50 per ounce change in the average price of gold and $14 million for each $2 per pound change in the

average price of molybdenum.

With anticipated increases in copper and gold sales volumes and decreases in unit net cash costs, operating cash flows in 2021 are expected to be significantly higher than 2020 levels.

Consolidated Capital Expenditures

Consolidated capital expenditures are expected to approximate $2.0 billion for the year 2020 , including $1.3 billion for major projects, primarily associated with underground development activities in the Grasberg minerals district and completion of the Lone Star copper leach project, and exclude estimates associated with the new smelter in Indonesia.

Consolidated capital expenditures are expected to approximate $2.0 billion for the year 2020, including $1.3 billion for major projects, primarily associated with underground development activities in the Grasberg minerals district and the now completed Lone Star copper leach project.

A large portion of the capital expenditures relates to projects that are expected to add significant production and cash flow in future periods, enabling us to generate operating cash flows exceeding capital expenditures in future years.

We have cash on hand and the financial flexibility to fund these expenditures and will continue to be disciplined in deploying capital.

Corporate Items and Other

Corporate and Other

During second-quarter 2020, we implemented a series of actions to reduce administrative and centralized support costs in conjunction with our 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.

During second-quarter 2020, we recognized charges totaling approximately $82 million ($60 million in production and delivery costs, $15 million in selling, general and administrative costs, and $7 million in mining exploration and research expenses) associated with the employee separation program.

Annual savings associated with this program are expected to be in excess of $100 million.

As part of the cost savings initiatives initiated in second-quarter 2020, the Board of Directors (the Board) approved a 25 percent reduction in the salary of each of our Chief Executive Officer and Chief Financial Officer through the end 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.

Annual savings associated with the employee separation program are expected to be in excess of $100 million.

As part of the cost savings initiatives introduced in second-quarter 2020, the Board of Directors (the Board) approved a 25 percent reduction in the salary of each of our Chief Executive Officer and Chief Financial Officer through the end of 2020.

Each of these executives also agreed to forgo substantially all their reduced cash salary for the remainder of 2020, which was substituted with an award of restricted stock units that will vest at the end of the year.

Selling, general and administrative expense, excluding costs of the employee separation program, are expected to approximate $355 million for the year 2020.

Selling, general and administrative expenses are expected to approximate $350 million ($335 million excluding charges associated with the employee separation program) for the year 2020.

World prices for copper, gold and molybdenum can fluctuate significantly.

During the period from January 2010 through June 2020 , the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.60 per pound in 2011;

During the period from January 2010 through September 2020, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.60 per pound in 2011;

the London Bullion Market Association (LBMA) PM gold price fluctuated from a low of $1,049 per ounce in 2015 to a record high of $2,067 per ounce in 2020;

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of our 2019 Form 10-K and Part II, 1A.

This graph presents LME copper settlement prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc., a division of the New York Mercantile Exchange, and the Shanghai Futures Exchange from January 2010 through June 2020 .

During second-quarter 2020 , LME copper settlement prices ranged from a low of $2.16 per pound to a high of $2.74 per pound, averaged $2.43 per pound and settled at $2.74 per pound on June 30, 2020.

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 during second-quarter 2020.

During third-quarter 2020, LME copper settlement prices ranged from a low of $2.73 per pound to a high of $3.10 per pound, averaged $2.96 per pound and settled at $3.00 per pound on September 30, 2020.

In third-quarter 2020, copper prices continued their upward momentum following the sharp decline that occurred in first-quarter 2020, reflecting a positive economic outlook lead by China’s continued recovery, decreasing inventories and supply curtailments related to the COVID-19 pandemic.

The COVID-19 pandemic continues to cause substantial disruption and uncertainty in global economies and markets.

The LME copper settlement price was $2.92 per pound on July 31, 2020 .

While we acknowledge unfavorable changes to the global economy as a result of the ongoing COVID-19 pandemic, we continue to believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment attributable to difficulty in replacing existing large mines’ output with new production sources.

Future copper prices are expected to be volatile and are likely to be influenced by the world’s response to the COVID-19 pandemic, demand from China and emerging markets, as well as economic activity in the U.S.

The LME copper settlement price was $3.04 per pound on October 30, 2020.

While we acknowledge the global economic turmoil associated with the ongoing COVID-19 pandemic, we continue to believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment attributable to difficulty in replacing existing large mines’ output with new production sources.

Future copper prices are expected to be volatile and are likely to be influenced by the COVID-19 pandemic, demand from China and emerging markets, as well as economic activity in the U.S.

and other industrialized countries, the timing of the development of new supplies of copper and the production levels of mines and copper smelters.

This graph presents LBMA PM gold prices from January 2010 through June 2020 .

During second-quarter 2020 , LBMA PM gold prices ranged from a low of $1,577 per ounce to a high of $1,772 per ounce, averaged $1,711 per ounce, and closed at $1,768 per ounce on June 30, 2020.

This graph presents LBMA PM gold prices from January 2010 through September 2020.

During third-quarter 2020, LBMA PM gold prices ranged from a low of $1,771 per ounce to a high of $2,067 per ounce, averaged $1,909 per ounce, and closed at $1,887 per ounce on September 30, 2020.

Concerns about the global economy related to the COVID-19 pandemic, historically low U.S.

interest rates and the anticipated effects of global stimulus efforts have driven increased demand for gold.

The LBMA PM gold price was $1,965 per ounce on July 31, 2020 .

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2010 through June 2020 .

During second-quarter 2020 , the weekly average price of molybdenum ranged from a low of $7.65 per pound to a high of $9.05 per pound, averaged $8.40 per pound, and was $7.65 per pound on June 30, 2020.

Molybdenum prices continued to be negatively impacted by economic uncertainty associated with the COVID-19 pandemic during second-quarter 2020.

The Metals Week Molybdenum Dealer Oxide weekly average price was $7.18 per pound on July 31, 2020 .

The LBMA PM gold price was $1,882 per ounce on October 30, 2020.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2010 through September 2020.

During third-quarter 2020, the weekly average price of molybdenum ranged from a low of $7.01 per pound to a high of $8.37 per pound, averaged $7.68 per pound, and was $8.32 per pound on September 30, 2020.

Molybdenum prices gradually improved in third-quarter 2020 as a result of increases in spot sale activity in Europe and China after being negatively impacted by economic uncertainty associated with the COVID-19 pandemic.

The Metals Week Molybdenum Dealer Oxide weekly average price was $8.73 per pound on October 30, 2020.

CONSOLIDATED RESULTS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

SUMMARY FINANCIAL DATA

(in millions, except per share amounts)

Operating income (loss) a,c,d

Net income (loss) attributable to common stock h,i

Operating income (loss) a,e,f,g

Net income (loss) attributable to common stock k,l,m

Diluted net income (loss) per share of common stock

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

Diluted weighted-average common shares outstanding

Operating cash flows l

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

Operating cash flows n

$ 1,237 $ 224 $ 1,690 $ 1,312

Capital expenditures

$ 436 $ 666 $ 1,573 $ 1,917

At September 30:

Cash and cash equivalents

$ 2,403 $ 2,247 $ 2,403 $ 2,247

Total debt, including current portion

$ 10,030 $ 9,919 $ 10,030 $ 9,919

Refer to Note 9 for a summary of revenues and operating income (loss) by operating division.

Includes favorable (unfavorable) adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $55 million ( $19 million to net income attributable to common stock or $0.01 per share) in second-quarter 2020 , $(83) million ( $(35) million to net loss attributable to common stock or $(0.02) per share) in second-quarter 2019 , $(102) million ( $(43) million to net loss attributable to common stock or $(0.03) per share) for the first six months of 2020 and $58 million ( $23 million to net loss attributable to common stock or $0.02 per share) for the first six months of 2019 (refer to Note 6).

The second-quarter and first six months of 2020 also include reductions to revenues totaling $24 million ($24 million to net income (loss) attributable to common stock or $0.02 per share) related to forward sales contracts (refer to Note 6).

Includes metals inventory adjustments totaling $139 million ( $101 million to net income attributable to common stock or $0.07 per share) in second-quarter 2020 , $(2) million ( $(1) million to net loss attributable to common stock or less than $0.01 per share) in second-quarter 2019 , $(83) million ( $(81) million to net loss attributable to common stock or $(0.06) per share) for the first six months of 2020 and $ (59) million ( $(27) million to net loss attributable to common stock or $(0.02) per share) for the first six months of 2019 .

Includes net charges to environmental obligations and related litigation reserves totaling $1 million ( $1 million to net income attributable to common stock or less than $0.01 per share) in second-quarter 2020 , $9 million ( $9 million to net loss attributable to common stock or $0.01 per share) in second-quarter 2019 , $15 million ( $15 million to net loss attributable to common stock or $0.01 per share) for the first six months of 2020 and $44 million ( $44 million to net loss attributable to common stock or $0.03 per share) for the first six months of 2019 .

Includes charges totaling $196 million ($144 million to net income attributable to common stock or $0.10 per share) in second-quarter 2020 and $224 million ($153 million to net loss attributable to common stock or $0.11 per share) for the first six months of 2020 associated with the COVID-19 pandemic and revised operating plans, including employee separation costs.

These charges 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).

Includes a charge of $28 million ( $14 million to net loss attributable to common stock or $0.01 per share) for the second-quarter and first six months of 2019 for an adjustment to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

Includes net (losses) gains on sales of assets totaling $(8) million ( $(8) million to net loss attributable to common stock or $(0.01) per share) in second-quarter 2019 , $(11) million ( $(11) million to net loss attributable to common stock or $(0.01) per share) for the first six months of 2020 and $25 million ( $25 million to net loss attributable to common stock or $0.02 per share) for the first six months of 2019 (refer to Note 7 for discussion of adjustments to the estimated fair value of contingent consideration related to the 2016 sale of onshore California oil and gas properties).

Includes net tax credits of $53 million ( $0.04 per share) in second-quarter 2020 , $18 million ( $0.01 per share) in second-quarter 2019 , $52 million ( $0.04 per share) for the first six months of 2020 and $24 million ( $0.02 per share) for the first six months of 2019 .

Refer to “Income Taxes” for further discussion of these net tax credits.

Includes favorable (unfavorable) adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $71 million ($28 million to net income attributable to common stock or $0.02 per share) in third-quarter 2020, $(42) million ($(17) million to net loss attributable to common stock or $(0.01) per share) in third-quarter 2019, $(102) million ($(42)

million to net loss attributable to common stock or $(0.03) per share) for the first nine months of 2020 and $58 million ($23 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2019 (refer to Note 6).

The first nine months of 2020 also include reductions to revenues totaling $24 million ($24 million to net loss attributable to common stock or $0.02 per share) related to forward sales contracts (refer to Note 6).

Includes other net credits totaling $18 million ($19 million to net income attributable to common stock or $0.01 per share) in third-quarter 2020 and $20 million ($22 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2020, primarily associated with the sale of royalty assets and accrual adjustments at PT-FI, partly offset by charges associated with a PT-FI royalty adjustment and asset impairments.

These net (charges) credits were recorded to revenues ($(9) million for third-quarter 2020 and $(7) million for the first nine months of 2020), production and delivery ($(4) million for third-quarter 2020 and $(9) million for the first nine months of 2020), interest expense ($(5) million for the first nine months of 2020) and to other income ($31 million for third-quarter 2020 and $41 million for the first nine months of 2020).

Includes charges totaling $166 million ($82 million to net loss attributable to common stock or $0.06 per share) primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

Includes net unfavorable metals inventory adjustments totaling $9 million ($9 million to net income attributable to common stock or $0.01 per share) in third-quarter 2020, $41 million ($40 million to net loss attributable to common stock or $0.03 per share) in third-quarter 2019, $92 million ($90 million to net loss attributable to common stock or $0.06 per share) for the first nine months of 2020 and $100 million ($67 million to net loss attributable to common stock or $0.04 per share) for the first nine months of 2019.

Includes net charges to environmental obligations and related litigation reserves totaling $7 million ($7 million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2020, $19 million ($19 million to net loss attributable to common stock or $0.01 per share) in third-quarter 2019, $22 million ($22 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2020 and $63 million ($63 million to net loss attributable to common stock or $0.04 per share) for the first nine months of 2019.

Includes net (losses) gains on sales of assets totaling $(2) million ($(2) million to net income attributable to common stock or less than $(0.01) per share) in third-quarter 2020, $(12) million ($(12) million to net loss attributable to common stock or $(0.01) per share) in third-quarter 2019, $(13) million ($(13) million to net loss attributable to common stock or $(0.01) per share) for the first nine months of 2020 and $13 million ($13 million to net loss attributable to common stock or $0.01 per share) for the first nine months of 2019.

Refer to Note 7 for discussion of adjustments to the estimated fair value of contingent consideration related to the 2016 sale of onshore California oil and gas properties.

Includes charges directly related to the COVID-19 pandemic totaling $17 million ($8 million to net income attributable to common stock or $0.01 per share) in third-quarter 2020 and $129 million ($60 million to net loss attributable to common stock or $0.04 per share) for the first nine months of 2020, which were recorded primarily to production and delivery ($16 million in third-quarter 2020 and $110 million for the first nine months of 2020) and to depreciation, depletion and amortization ($18 million for the first nine months of 2020).

Charges for third-quarter 2020 primarily included health and safety related costs and one-time incremental employee benefits.

Charges for the first nine months of 2020 also included idle facility costs (Cerro Verde), contract cancellation and other charges directly related to the COVID-19 pandemic.

Includes charges associated with our April 2020 revised operating plans (primarily related to employee separation charges) totaling $17 million ($17 million to net income attributable to common stock or $0.01 per share) in third-quarter 2020 and $129 million ($118 million to net loss attributable to common stock or $0.08 per share) for the first nine months of 2020.

These charges were recorded to production and delivery ($14 million in third-quarter 2020 and $92 million for the first nine months of 2020), depreciation, depletion and amortization ($3 million in third-quarter 2020 and $14 million for the first nine months of 2020), selling, general and administrative expenses ($15 million for the first nine months of 2020), and mining exploration and research expenses ($8 million for the first nine months of 2020).

Includes other net charges totaling $13 million ($8 million to net loss attributable to common stock or $0.01 per share) in third-quarter 2019 primarily associated with asset impairment.

The first nine months of 2019 includes net charges totaling $65 million ($32 million to net loss attributable to common stock or $0.02 per share) primarily associated with an adjustment to the settlement of the historical surface water tax disputes in Indonesia, weather-related issues at El Abra and for oil and gas inventory adjustments, partly offset by a credit for an asset retirement obligation adjustment.

Includes net tax (charges) credits totaling $(17) million ($(0.01) per share) in third-quarter 2020, $(19) million ($(0.01) per share) in third-quarter 2019, $35 million ($0.02 per share) for the first nine months of 2020 and $5 million (less than $0.01 per share) for the first nine months of 2019.

Refer to “Income Taxes” for further discussion of these net tax (charges) credits.

We defer recognizing profits on intercompany sales until final sales to third parties occur.

Refer to “Operations – Smelting and Refining” for a summary of net impacts from changes in these deferrals.

Includes after-tax net losses on early extinguishment of debt totaling $9 million ( $0.01 per share) in second-quarter 2020 , $41 million ( $0.03 per share) for the first six months of 2020 and $5 million (less than $0.01 per share) for the first six months of 2019 (refer to Note 5).

Includes other net credits (charges) totaling $10 million ( $0.01 per share) in second quarter 2020, $2 million (less than $0.01 per share) for the first six months of 2020 and $(10) million ($(0.01) per share) for the first six months of 2019.

Working capital and other sources totaled $22 million in second-quarter 2020 , $304 million in second-quarter 2019 , $141 million for the first six months of 2020 and $248 million for the first six months of 2019 .

Three Months Ended June 30,

Six Months Ended June 30,

Includes after-tax net losses on early extinguishment of debt totaling $59 million ($0.04 per share) in third-quarter 2020, $21 million ($0.01 per share) in third-quarter 2019, $100 million ($0.07 per share) for the first nine months of 2020 and $26 million ($0.02 per share) for the first nine months of 2019 (refer to Note 5 for discussion of our 2020 debt transactions).

Working capital and other sources totaled $178 million in third-quarter 2020, $26 million in third-quarter 2019, $319 million for the first nine months of 2020 and $274 million for the first nine months of 2019.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

SUMMARY OPERATING DATA

Copper (millions of recoverable pounds)

Production 844 864 2,342 2,420

Sales, excluding purchases 848 795 2,336 2,386

Average realized price per pound $ 3.01 $ 2.62 $ 2.73 $ 2.71

Site production and delivery costs per pound b

Unit net cash costs per pound b

Site production and delivery costs per pound a

$ 2.05 $ 1.92 b

Unit net cash costs per pound a

$ 1.32 $ 1.59 $ 1.55 $ 1.76

Gold (thousands of recoverable ounces)

Production 237 333 584 659

Sales, excluding purchases

234 243 562 674

Average realized price per ounce $ 1,902 $ 1,487 $ 1,810 $ 1,380

Molybdenum (millions of recoverable pounds)

Production 19 21 57 69

Sales, excluding purchases

Average realized price per pound $ 9.23 $ 12.89 $ 10.30 $ 12.92

Includes reductions to average realized prices of $0.03 per pound of copper in second-quarter 2020 and $0.02 per pound of copper for the first six months of 2020 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 (refer to Note 6).

There are no remaining forward sales contracts.

Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs.

For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.”

Consolidated revenues totaled $3.1 billion in second-quarter 2020 , $3.5 billion in second-quarter 2019 , $5.9 billion for the first six months of 2020 and $7.3 billion for the first six months of 2019 .

Excludes $0.04 per pound of copper in third-quarter and $0.09 per pound of copper for the first nine months of 2020 associated with the COVID-19 pandemic (including costs for health and safety, idle facility and contract cancellation) and our April 2020 revised operating plans (including employee separation costs).

Consolidated revenues totaled $3.9 billion in third-quarter 2020, $3.2 billion in third-quarter 2019, $9.7 billion for the first nine months of 2020 and $10.5 billion for the first nine months of 2019.

Revenues from our mining operations primarily include the sale of copper concentrate, copper cathode, copper rod, gold in concentrate and molybdenum.

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Following is a summary of changes in our consolidated revenues between periods (in millions):

Three Months Ended June 30

Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

Consolidated revenues - 2019 period $ 3,153 $ 10,491

Lower sales volumes:

(Lower) higher average realized prices:

Higher (lower) sales volumes:

Copper 140 (135)

Gold (13) (155)

Molybdenum (34) (125)

Higher (lower) average realized prices:

Copper 331 47

Molybdenum (72) (154)

Adjustments for prior period provisionally priced copper sales 113 (160)

Lower Atlantic Copper revenues

Higher (lower) Atlantic Copper revenues 102 (114)

Lower revenues from purchased copper (44) (304)

Lower cobalt revenues (65) (245)

Lower treatment charges

(Higher) lower royalties and export duties

(Higher) lower treatment charges (7) 42

Lower royalties and export duties 119 129

Other, including intercompany eliminations 31 144

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Sales Volumes.

Consolidated copper and gold sales volumes decreased in the 2020 periods, compared to the 2019 periods, primarily reflecting lower operating rates at Cerro Verde associated with COVID-19 restrictions and timing of shipments.

Consolidated copper sales volumes increased in third-quarter 2020, compared to third-quarter 2019, primarily reflecting higher copper ore grades in Indonesia, partly offset by lower sales from North America and South America as a result of lower mining rates associated with our April 2020 revised operating plans.

Consolidated copper sales volumes slightly decreased for the first nine months of 2020, compared to the first nine

months of 2019, primarily reflecting lower operating rates at Cerro Verde associated with COVID-19 restrictions, partly offset by higher ore grades in Indonesia.

Consolidated gold sales volumes decreased in the 2020 periods, compared to the 2019 periods, primarily reflecting lower mining and milling rates associated with the ramp-up of underground mining at PT-FI.

Refer to “Operations” for further discussion of sales volumes at our mining operations.

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Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum.

Average realized prices for second-quarter 2020 , compared with second-quarter 2019 , were 7 percent lower for copper, 29 percent higher for gold and 20 percent lower for molybdenum, and average realized prices for the first six months of 2020 , compared with the first six months of 2019 , were 9 percent lower for copper, 30 percent higher for gold and 16 percent lower for molybdenum.

Average realized copper prices include net favorable (unfavorable) adjustments to current period provisionally priced copper sales totaling $107 million in second-quarter 2020 , $(39) million in second-quarter 2019 , $26 million for the first six months of 2020 and $(58) million for the first six months of 2019 .

Average realized prices for third-quarter 2020, compared with third-quarter 2019, were 15 percent higher for copper, 28 percent higher for gold and 28 percent lower for molybdenum, and average realized prices for the first nine months of 2020, compared with the first nine months of 2019, were 1 percent higher for copper, 31 percent higher for gold and 20 percent lower for molybdenum.

Average realized copper prices include net favorable (unfavorable) adjustments to current period provisionally priced copper sales totaling $23 million in third-quarter 2020, $(15) million in third-quarter 2019, $120 million for the first nine months of 2020 and $(115) million for the first nine months of 2019.

As discussed in Note 6, substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average copper prices.

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in times of falling copper prices, the opposite occurs.

Average realized prices for the second quarter and first six months of 2020 also included reductions totaling $24 million related to forward sales contracts (refer to Note 6).

Average realized prices for the first nine months of 2020 also included reductions totaling $24 million related to forward sales contracts (refer to Note 6).

Prior Period Provisionally Priced Copper Sales.

Net favorable (unfavorable) adjustments to prior periods’ provisionally priced copper sales ( i.e.

, provisionally priced sales at March 31, 2020 and 2019, and December 31, 2019 and 2018) recorded in consolidated revenues totaled $55 million in second-quarter 2020 and $(83) million in second-quarter 2019 , $(102) million for the first six months of 2020 and $58 million for the first six months of 2019 .

, provisionally priced sales at June 30, 2020 and 2019, and December 31, 2019 and 2018) recorded in consolidated revenues totaled $71 million in third-quarter 2020 and $(42) million in third-quarter 2019, $(102) million for the first nine months of 2020 and $58 million for the first nine months of 2019.

Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales.

At June 30, 2020 , we had provisionally priced copper sales totaling 183 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $2.73 per pound, subject to final pricing over the next several months.

We estimate that each $0.05 change in the price realized from the June 30, 2020 ,

provisional price recorded would have an approximate $6 million effect on our 2020 net income attributable to common stock.

The LME copper price settled at $2.92 per pound on July 31, 2020 .

At September 30, 2020, we had provisionally priced copper sales totaling 226 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.03 per pound, subject to final pricing over the next several months.

We estimate that each $0.05 change in the price realized from the September 30, 2020, provisional price recorded would have an approximate $7 million effect on our 2020 net income attributable to common stock.

The LME copper price settled at $3.04 per pound on October 30, 2020.

Atlantic Copper Revenues.

Atlantic Copper revenues totaled $466 million in second-quarter 2020 and $906 million for the first six months of 2020 , compared with $546 million in second-quarter 2019 and $1.1 billion for the first six months of 2019 .

Lower revenues in the 2020 periods, compared with the 2019 periods, primarily reflect lower copper prices.

Atlantic Copper revenues totaled $539 million in third-quarter 2020 and $1.4 billion for the first nine months of 2020, compared with $437 million in third-quarter 2019 and $1.6 billion for the first nine months of 2019.

Higher revenues in third-quarter 2020, compared with third-quarter 2019, primarily reflect higher copper sales volumes and prices, and the impact of a scheduled short-term general maintenance turnaround in third-quarter 2019.

Lower revenues for the first nine months of 2020, compared with the first nine months of 2019, primarily reflect lower gold sales volumes.

Purchased Copper.

We purchase copper cathode primarily for processing by our Rod & Refining operations.

The volumes of copper purchases vary depending on cathode production from our operations and totaled 71 million pounds in second-quarter 2020 , 114 million pounds in second-quarter 2019 , 159 million pounds for the first six months of 2020 and 231 million pounds for the first six months of 2019 .

The volumes of copper purchases vary depending on cathode production from our operations and totaled 56 million pounds in third-quarter 2020, 79 million pounds in third-quarter 2019, 215 million pounds for the first nine months of 2020 and 310 million pounds for the first nine months of 2019.

Cobalt Revenues.

Cobalt revenues totaled $47 million in second-quarter 2020 and $112 million for the first six months of 2020 , compared with $131 million in second-quarter 2019 and $292 million for the first six months of 2019 .

Cobalt revenues totaled $51 million in third-quarter 2020 and $162 million for the first nine months of 2020, compared with $116 million in third-quarter 2019 and $407 million for the first nine months of 2019.

Lower revenues in the 2020 periods, compared with the 2019 periods, primarily reflect the sale of our cobalt refinery and related cobalt cathode precursor business in fourth-quarter 2019.

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Production and Delivery Costs

Consolidated production and delivery costs totaled $2.4 billion in second-quarter 2020 , $3.0 billion in second-quarter 2019 , $4.9 billion for the first six months of 2020 and $5.9 billion for the first six months of 2019 .

Lower consolidated production and delivery costs in the 2020 periods primarily reflects lower mining costs in Indonesia (reflecting lower mining and milling rates associated with the completion of mining the Grasberg open pit) and in South America (reflecting lower operating rates associated with COVID-19 restrictions).

The 2020 periods also included charges totaling $153 million in second-quarter 2020 and $173 million for the first six months of 2020 associated with the COVID-19 pandemic and revised operating plans, including employee separation costs.

Consolidated production and delivery costs totaled $2.5 billion in third-quarter 2020, $2.7 billion in third-quarter 2019, $7.4 billion for the first nine months of 2020 and $8.6 billion for the first nine months of 2019.

Lower consolidated production and delivery costs in the 2020 periods primarily reflect lower mining and milling rates in Indonesia (associated with the ramp-up of underground mining at PT-FI) and in North America (associated with our April 2020 revised operating plans).

The first nine months of 2020 also reflect lower mining rates at Cerro Verde associated with COVID-19 restrictions.

The 2020 periods include charges totaling $30 million in the third quarter and $202 million for the first nine months associated with the COVID-19 pandemic and revised operating plans (including employee separation costs).

Site Production and Delivery Costs Per Pound.

Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives.

Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.82 per pound of copper in second-quarter 2020 , $2.26 per pound of copper in second-quarter 2019 , $2.00 per pound of copper for the first six months of 2020 and $2.21 per pound of copper for the first six months of 2019 .

Lower consolidated site production and delivery costs per pound in the 2020 periods, compared with the 2019 periods, primarily reflect lower costs in Indonesia and South America (for the same reasons discussed in the paragraph above).

Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.77 per pound of copper in third-quarter 2020, $2.05 per pound of copper in third-quarter 2019, $1.92 per pound of copper for the first nine months of 2020 and $2.16 per pound of copper for the first nine months of 2019.

Consolidated site production and delivery costs per pound of copper exclude certain charges associated with the COVID-19 pandemic and our April 2020 revised operating plans totaling $0.04 per pound of copper in third-quarter 2020 and $0.09 per pound of copper for the first nine months of 2020.

Lower consolidated site production and delivery costs per pound in the 2020 periods, compared with the 2019 periods, primarily reflect lower costs in Indonesia, North America and South America (for the same reasons discussed in the paragraph above).

Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

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Depreciation will vary under the unit-of-production (UOP) method as a result of changes in sales volumes and the related UOP rates at our mining operations.

Consolidated depreciation, depletion and amortization (DD&A) totaled $358 million in second-quarter 2020 , $352 million in second-quarter 2019 and $699 million for each of the first six months of 2020 and 2019.

Consolidated depreciation, depletion and amortization (DD&A) totaled $394 million in third-quarter 2020, $322 million in third-quarter 2019, $1.1 billion for the first nine months of 2020 and $1.0 billion for the first nine months of 2019.

Higher DD&A in the 2020 periods primarily relates to assets placed in service associated with the ramp-up of underground mining at PT-FI.

Metals Inventory Adjustments

Net realizable value metals inventory adjustments totaled a net credit of $139 million in second-quarter 2020 (primarily related to the reversal of net realizable value adjustments recorded on long-term copper inventories in first-quarter 2020), and charges of $2 million in second-quarter 2019 , $83 million for the first six months of 2020 and $59 million for the first six months of 2019 .

Metals inventory adjustments in the 2020 periods were related to

volatility in copper and molybdenum prices.

Charges for the first six months of 2019 were mostly related to decreases in cobalt prices.

Unfavorable net realizable value metals inventory adjustments totaled $9 million in third-quarter 2020, $41 million in third-quarter 2019, $92 million for the first nine months of 2020 and $100 million for the first nine months of 2019.

Metals inventory adjustments in the 2020 periods were related to volatility in copper and molybdenum prices.

Metals inventory adjustments in the 2019 periods were mostly related to volatility in copper and cobalt prices.

Selling, general and administrative expenses

Selling, general and administrative expenses totaled $91 million in second-quarter 2020 , $92 million in second-quarter 2019 , $201 million for the first six months of 2020 and $199 million for the first six months of 2019 .

Selling, general and administrative expenses totaled $72 million in third-quarter 2020, $101 million in third-quarter 2019, $273 million for the first nine months of 2020 and $300 million for the first nine months of 2019.

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

Selling, general and administrative expenses include charges totaling $15 million associated with the employee separation program.

Selling, general and administrative expense, excluding charges for the employee separation program, are expected to approximate $355 million for the year 2020.

Selling, general and administrative expenses are expected to approximate $350 million for the year 2020 ($335 million excluding charges associated with the employee separation program).

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled $18 million in second-quarter 2020 , $31 million in second-quarter 2019 , $34 million for the first six months of 2020 and $58 million for the first six months of 2019 .

Mining exploration and research expenses included employee separation charges totaling $7 million for each of the second quarter and first six months of 2020.

Our April 2020 revised operating plans prioritize existing mine operations.

Exploration expenditures for the year 2020 are expected to approximate $30 million , approximately 60 percent below 2019 expenditures.

Consolidated exploration and research expenses for our mining operations totaled $8 million in third-quarter 2020, $25 million in third-quarter 2019, $42 million for the first nine months of 2020 and $83 million for the first nine months of 2019.

Exploration expenditures for the year 2020 are expected to approximate $31 million ($23 million excluding charges associated with the employee separation program), approximately 60 percent below 2019 expenditures.

Environmental Obligations and Shutdown Costs

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Shutdown costs include care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations.

Net charges for environmental obligations and shutdown costs totaled $11 million in second-quarter 2020 , $23 million in second-quarter 2019 , $37 million for the first six months of 2020 and $65 million for the first six months of 2019 .

Net charges for environmental obligations and shutdown costs totaled $21 million in third-quarter 2020, $20 million in third-quarter 2019, $58 million for the first nine months of 2020 and $85 million for the first nine months of 2019.

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 .

Refer to Note 5 for further discussion of our 2020 debt transactions.

Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings, and 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.

Refer to Note 5 for discussion of our 2020 debt transactions.

Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $40 million in each of 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.

Refer to “Capital Resources and Liquidity - Investing Activities” for discussion of capital expenditures associated with our major development projects.

Following is a summary of the approximate amounts used in the calculation of our consolidated income tax (provision) benefit (in millions, except percentages):

Six Months Ended June 30,

Income (Loss) a

Income Tax (Provision) Benefit

Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision (in millions, except percentages):

Nine Months Ended September 30,

Income (Loss) a

Income Tax (Provision) Benefit

Tax Rate Income Tax (Provision) Benefit Income (Loss) a

Tax Rate Income Tax (Provision) Benefit

$ (535) 10% $ 56 c

$ (384) 7% $ 26 d

South America 149 51% (76) 335 44% (149)

Indonesia 619 49% (302) e

135 37% (50) f

PT-FI export duty matter — N/A — (155) 38% 59

Adjustment to deferred taxes — N/A — — N/A (49) g

Eliminations and other

Rate adjustment g

Consolidated FCX

95 N/A (28) 9 N/A (31)

Rate adjustment h

— N/A 17 — N/A 13

Consolidated FCX $ 328 102% i

$ (333) $ (60) 302% $ (181)

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

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Also includes a tax credit of $6 million associated with the removal of a valuation allowance on deferred tax assets.

Includes tax credits totaling $18 million primarily associated with state law changes.

Includes a tax charge of $8 million ($7 million net of noncontrolling interest) associated with an unfavorable 2012 Indonesia Supreme Court ruling.

Includes a tax credit of $8 million ($6 million net of noncontrolling interest) associated with the reduction in PT-FI's statutory tax rates in accordance with its special mining license (IUPK).

In accordance with applicable accounting rules, we adjust our interim provision for income taxes to equal our consolidated tax rate.

Includes tax credits totaling $12 million associated with the settlement of state income tax examinations and $12 million associated with state law changes.

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

Also includes a tax charge of $8 million ($7 million net of noncontrolling interest) associated with an unfavorable 2012 Indonesia Supreme Court ruling.

Includes a tax charge of $5 million ($4 million net of noncontrolling interest) for non-deductible penalties related to PT-FI's surface water tax settlement.

Includes net tax charges totaling $49 million ($15 million net of noncontrolling interests) primarily to adjust deferred taxes on historical balance sheet items in accordance with tax accounting principles.

In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our consolidated tax rate.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate, excluding the U.S.

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Because our U.S.

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

Assuming achievement of current sales volume and cost estimates and average prices of $2.85 per pound for copper, $1,800 per ounce for gold and $7.00 per pound for molybdenum for the second half of 2020 , we estimate our consolidated effective tax rate for the year 2020 would approximate 60 percent .

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

Assuming achievement of current sales volume and cost estimates and average prices of $3.00 per pound for copper, $1,900 per ounce for gold and $8.00 per pound for molybdenum in fourth-quarter 2020, we estimate our consolidated effective tax rate for the year 2020 would approximate 54 percent.

Changes in sales volumes and average prices during 2020 would incur tax impacts at estimated effective rates of 38 percent for Indonesia, 38 percent for Peru and 0 percent for the U.S.

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tax position, we do not record a financial statement impact for income or losses generated in the U.S.

During third-quarter 2020, we announced our commitment to the Copper Mark.

The Copper Mark is a new, comprehensive assurance framework that demonstrates the industry’s responsible production practices and contribution to the United Nations Sustainable Development Goals.

It is the first and only framework developed specifically for the copper industry and enables each site to demonstrate to customers, investors and other stakeholders their responsible production performance.

We have commenced the validation process for six of our copper operating sites and have future plans to validate all of our copper operating sites against the Copper Mark requirements.

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico.

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico.

In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver.

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Operating and Development Activities.

The April 2020 revised operating plans were effectively implemented across our North America operating sites and production, costs and capital management were in line or better than the April 2020 estimates.

The Lone Star project is substantially complete and on track to produce approximately 200 million pounds of copper per year beginning in the second half of 2020.

The April 2020 revised operating plans take into account the impact of currently suspended operations at the Chino mine.

We are currently assessing options and future timing of the restart of the Chino mine, which will take into account public health and market conditions.

Our North America operating sites continue to focus on strong execution of our April 2020 revised operating plans.

We completed the Lone Star copper leach project in third-quarter 2020, with production ramping-up and remaining on track to produce approximately 200 million pounds of copper annually .

We reviewed options for restarting the Chino mine and currently expect to restart Chino at a reduced rate of approximately 50 percent of capacity (approximately 100 million pounds of copper per year) beginning in 2021.

Operating Data.

Following is summary consolidated operating data for the North America copper mines:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Operating Data, Net of Joint Venture Interests

Copper (millions of recoverable pounds)

Production 369 390 1,083 1,096

Sales, excluding purchases 379 395 1,102 1,084

Average realized price per pound

Average realized price per pound $ 3.01 $ 2.65 $ 2.67 a

Molybdenum (millions of recoverable pounds)

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Average ore grade (percent):

Copper 0.36 0.33 0.35 0.34

Molybdenum 0.03 0.02 0.02 0.02

Copper recovery rate (percent) 84.4 88.5 85.4 87.9

Copper production (millions of recoverable pounds) 155 198 509 569

Includes reductions to average realized prices of $0.06 per pound of copper in second-quarter 2020 and $0.03 per pound of copper for the first six months of 2020 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.

Includes reductions to average realized prices of $0.02 per pound of copper 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.

There are no remaining forward sales contracts.

Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines.

North America’s consolidated copper sales volumes totaled 368 million pounds in second-quarter 2020 , 369 million pounds in second-quarter 2019 , 723 million pounds for the first six months of 2020 and 689 million pounds for the first six months of 2019 .

Higher sales volumes for the first six months of 2020 , compared with the first six months of 2019 , primarily reflect timing of shipments.

Our consolidated copper sales volumes from North America totaled 379 million pounds in third-quarter 2020, 395 million pounds in third-quarter 2019 and 1.1 billion pounds for both the first nine months of 2020 and 2019.

Lower copper sales volumes in third-quarter 2020, compared to third-quarter 2019, primarily reflect lower mining rates associated with our April 2020 revised operating plans, partly offset by production from Lone Star.

North America copper sales are estimated to approximate 1.4 billion pounds for the year 2020, similar to the year 2019.

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Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Three Months Ended June 30,

By- Product Method

Co-Product Method

By- Product Method

Co-Product Method

Three Months Ended September 30,

By- Product Method Co-Product Method By- Product Method Co-Product Method

Copper Molyb-

Revenues, excluding adjustments $ 3.01 $ 3.01 $ 7.72 $ 2.65 $ 2.65 $ 11.98

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and other costs shown below

1.76 1.67 5.52 2.03 1.88 9.28

By-product credits (0.18) — — (0.22) — —

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Unit net cash costs 1.67 1.75 5.52 1.92 1.99 9.28

DD&A 0.24 0.23 0.43 0.22 0.22 0.76

Metals inventory adjustments (0.01) (0.01) — 0.10 0.10 —

Noncash and other costs, net

Noncash and other costs, net 0.10 b

0.09 0.06 0.08 0.06 0.45

Total unit costs 2.00 2.06 6.01 2.32 2.37 10.49

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on prior period open sales

— — — (0.03) (0.03) —

Gross profit per pound $ 1.01 $ 0.95 $ 1.71 $ 0.30 $ 0.25 $ 1.49

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Molybdenum sales (millions of recoverable pounds) a

Six Months Ended June 30,

By- Product Method

Co-Product Method

By- Product Method

Co-Product Method

Revenues, excluding adjustments

Nine Months Ended September 30,

By- Product Method Co-Product Method By- Product Method Co-Product Method

Copper Molyb-

Revenues, excluding adjustments $ 2.67 c

$ 2.67 $ 8.57 $ 2.74 $ 2.74 $ 12.03

Site production and delivery, before net noncash and other costs shown below 1.91 1.78 7.05 2.05 1.87 9.56

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Unit net cash costs 1.82 1.88 7.05 1.91 1.98 9.56

DD&A 0.25 0.23 0.57 0.24 0.22 0.75

Metals inventory adjustments 0.05 0.04 — 0.04 0.04 —

Noncash and other costs, net

Noncash and other costs, net 0.10 b

0.10 0.12 0.05 0.05 0.29

Total unit costs 2.22 2.25 7.74 2.24 2.29 10.60

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Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

Includes charges totaling $0.06 per pound of copper in second-quarter 2020 and $0.03 per pound of copper for the first six months of 2020 , primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic.

Includes charges totaling $0.03 per pound of copper for both the third quarter and first nine months of 2020, primarily associated with our April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs).

There are no remaining forward sales contracts.

Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors.

Average unit net cash costs (net of by-product credits) of $1.78 per pound of copper in second-quarter 2020 were lower than unit net cash costs of $1.90 per pound of copper in second-quarter 2019 , primarily reflecting lower mining costs and cost reductions associated with the April 2020 revised operating plans.

Average unit net cash costs of $1.91 per pound for the first six months of 2020 approximated unit net cash costs of $1.90 per pound of copper for the first six months of 2019 .

Average unit net cash costs (net of by-product credits) for the North America copper mines were $1.67 per pound of copper in third-quarter 2020 and $1.82 per pound for the first nine months of 2020, compared with $1.92 per pound in third-quarter 2019 and $1.91 per pound for the first nine months of 2019.

The decrease in the 2020 periods, compared to the 2019 periods, primarily reflects lower mining rates and input costs, and cost reductions associated with our April 2020 revised operating plans, partly offset by lower by-product credits.

Because certain assets are depreciated on a straight-line basis, North America’s average unit depreciation rate may vary with asset additions and the level of copper production and sales.

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.81 per pound of copper for the year 2020 , based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $7.00 per pound for the second half of 2020 .

America’s average unit net cash costs for the year 2020 would change by approximately $0.02 per pound of copper for each $2 per pound change in the average price of molybdenum for the second half of 2020 .

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.81 per pound of copper for the year 2020, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $8.00 per pound in fourth-quarter 2020.

North America’s average unit net cash costs for the year 2020 would change by approximately $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum in fourth-quarter 2020.

South America Mining

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Operating and Development Activities.

Cerro Verde achieved significant progress 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.

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 (which is approximately 80 percent of the 2019 annual average).

We currently expect operations during the second half of 2020 to average approximately 350,000 metric tons of ore per day.

We are continuing to operate El Abra consistent with the April 2020 revised operating plans while closely monitoring public health conditions in Chile.

Cerro Verde continued to make progress toward restoring operations during third-quarter 2020, with operating rates averaging 351,000 metric tons of ore per day (approximately 90 percent of the 2019 annual average).

We are continuing to operate El Abra consistent with our April 2020 revised operating plans (third-quarter 2020 operating rates were approximately 60 percent of the 2019 annual average) while closely monitoring public health conditions in Chile.

Operating Data.

Following is summary consolidated operating data for South America mining:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Copper (millions of recoverable pounds)

Production 253 283 716 863

Sales 250 261 716 838

Average realized price per pound $ 3.02 $ 2.61 $ 2.79 $ 2.67

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Mill operations

Ore milled (metric tons per day)

Ore milled (metric tons per day) 351,000 381,200 317,600 b

Average ore grade (percent):

Copper 0.33 0.35 0.35 0.36

Molybdenum 0.01 0.02 0.01 0.02

Copper recovery rate (percent) 88.4 81.5 83.5 83.5

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Cerro Verde mill operations were negatively impacted by COVID-19 restrictions.

South America’s consolidated copper sales volumes totaled 219 million pounds in second-quarter 2020 , 287 million pounds in second-quarter 2019 , 466 million pounds for the first six months of 2020 and 577 million pounds for the first six months of 2019 .

Lower sales volumes for the 2020 periods, compared to the 2019 periods, primarily reflect lower operating rates at Cerro Verde associated with COVID-19 restrictions.

Our consolidated copper sales volumes from South America totaled 250 million pounds in third-quarter 2020, 261 million pounds in third-quarter 2019, 716 million pounds for the first nine months of 2020 and 838 million pounds for the first nine months of 2019.

Lower copper sales volumes for third-quarter 2020, compared to third-quarter 2019, primarily reflect lower mining rates associated with our April 2020 revised operating plans at El Abra and COVID-19 protocols at Cerro Verde.

Lower copper sales volumes for the first nine months of 2020, compared to the first nine months of 2019, primarily reflect lower milling rates associated with COVID-19 restrictions at Cerro Verde.

Copper sales from South America mines are expected to approximate 950 million pounds for the year 2020, compared with 1.2 billion pounds of copper for the year 2019.

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This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit (Loss) per Pound of Copper

The following table summarizes unit net cash costs and gross profit (loss) per pound of copper at our South America mining operations.

Gross Profit per Pound of Copper

The following table summarizes unit net cash costs and gross profit per pound of copper at our South America mining operations.

Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had sales of molybdenum and silver.

Three Months Ended June 30,

Three Months Ended September 30,

Method Co-Product

Method By-Product

Method Co-Product

Revenues, excluding adjustments $ 3.02 $ 3.02 $ 2.61 $ 2.61

Site production and delivery, before net noncash

and other costs shown below

Site production and delivery, before net noncash and other costs shown below 1.84 1.73 1.89 1.71

By-product credits (0.17) — (0.26) —

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Unit net cash costs 1.83 1.89 1.81 1.88

DD&A 0.42 0.39 0.42 0.38

Metals inventory adjustments — — 0.01 0.01

Noncash and other costs, net

Noncash and other costs, net 0.04 a

0.04 0.08 0.08

Total unit costs 2.29 2.32 2.32 2.35

Revenue adjustments, primarily for pricing

on prior period open sales

Revenue adjustments, primarily for pricing on prior period open sales 0.16 0.16 (0.11) (0.11)

Gross profit per pound $ 0.89 $ 0.86 $ 0.18 $ 0.15

Copper sales (millions of recoverable pounds) 250 250 261 261

Six Months Ended June 30,

Nine Months Ended September 30,

Method Co-Product

Method By-Product

Method Co-Product

Revenues, excluding adjustments $ 2.79 $ 2.79 $ 2.67 $ 2.67

Site production and delivery, before net noncash and other costs shown below

1.83 1.72 1.84 1.66

By-product credits (0.15) — (0.29) —

2 unchanged sentences

Unit net cash costs 1.84 1.88 1.74 1.85

Metals inventory adjustments

Noncash and other costs, net

DD&A 0.44 0.41 0.41 0.36

Noncash and other costs, net 0.16 a

0.15 0.08 0.08

Total unit costs 2.44 2.44 2.23 2.29

Other revenue adjustments, primarily for pricing on prior period open sales

Gross (loss) profit per pound

(0.10) (0.10) 0.04 0.04

Gross profit per pound $ 0.25 $ 0.25 $ 0.48 $ 0.42

Copper sales (millions of recoverable pounds) 716 716 838 838

Includes charges totaling $0.30 per pound of copper in second-quarter 2020 and $0.18 per pound of copper for the first six months of 2020 , primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with the April 2020 revised operating plans.

Third-quarter 2020 includes charges totaling $0.02 per pound of copper, primarily associated with the COVID-19 pandemic (including health and safety costs).

The first nine months of 2020 includes charges totaling $0.13 per pound of copper, primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with our April 2020 revised operating plans.

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors.

Average unit net cash costs (net of by-product credits) of $1.68 per pound of copper in second-quarter 2020 were lower than unit net cash costs of $1.83 per pound of copper in second-quarter 2019 , primarily reflecting reduced mining and milling activities at Cerro Verde, partly offset by lower sales volumes and lower by-product credits.

Average unit net cash costs (net of by-product credits) of $1.85 per pound for the first six months of 2020 were higher than unit net cash costs of $1.71 per pound for the first six months of 2019 , primarily reflecting lower sales volumes and lower by-product credits, partly offset by reduced mining and milling activities at Cerro Verde.

Average unit net cash costs (net of by-product credits) for the South America copper mines were $1.83 per pound of copper in third-quarter 2020 and $1.84 per pound for the first nine months of 2020, compared to $1.81 per pound in third-quarter 2019 and $1.74 per pound for the first nine months of 2019.

The slight increase in third-quarter 2020, compared to third-quarter 2019, primarily reflects lower by-product credits and sales volumes, partly offset by lower mining rates.

The increase for the first nine months of 2020, compared to the first nine months of 2019, primarily reflects lower sales volumes and by-product credits, partly offset by reduced mining and milling activities at Cerro Verde.

Revenues from Cerro Verde’s concentrate sales are recorded net of treatment charges, which will vary with Cerro Verde’s sales volumes and the price of copper.

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Refer to “Consolidated Results – Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.92

per pound of copper for the year 2020 , based on current sales volume and cost estimates and assuming an average price of $7.00 per pound of molybdenum for the second half of 2020 .

Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.88 per pound of copper for the year 2020, based on current sales volume and cost estimates and assuming an average price of $8.00 per pound of molybdenum in fourth-quarter 2020.

Indonesia Mining

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Substantially all of PT-FI’s copper concentrate is sold under long-term contracts.

During the first six months of 2020 , 70 percent of PT-FI’s concentrate production was sold to PT Smelting (PT-FI’s 25-percent-owned smelter and refinery in Gresik, Indonesia).

During the first nine months of 2020, 74 percent of PT-FI’s concentrate production was sold to PT Smelting (PT-FI’s 25-percent-owned smelter and refinery in Gresik, Indonesia).

Operating and Development Activities.

The ramp-up of underground production at the Grasberg minerals district in Indonesia continues to advance on schedule.

During second-quarter 2020, a total of 46 new drawbells were added at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to 261.

Combined average daily production from Grasberg Block Cave and DMLZ mines totaled 54,800 metric tons of ore per day during second-quarter 2020, approximately 9 percent above the April 2020 estimate and 46 percent above the first-quarter 2020 average (and increased to a combined daily production average of approximately 70,000 metric tons of ore per day at the end of June 2020).

PT-FI expects its 2021 copper and gold production to approximate 1.4 billion pounds of copper and 1.4 million ounces of gold, nearly double projected 2020 levels.

During third-quarter 2020, a total of 55 new drawbells were added at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to over 300.

Combined average production from the Grasberg Block Cave and DMLZ mines approximated 60,000 metric tons of ore per day during third-quarter 2020, 9 percent above the second-quarter 2020 average but approximately 15 percent below the July 2020 estimate, primarily reflecting unplanned downtime and a brief labor-related work stoppage.

However, metal volume targets were achieved during third-quarter 2020 as a result of higher ore grades.

For the month of September 2020, combined average production from the Grasberg Block Cave and DMLZ mines totaled approximately 75,000 metric tons of ore per day and the ramp-up schedule remains on track.

PT-FI expects its 2021 production to approximate 1.4 billion pounds of copper and 1.4 million ounces of gold, which is nearly double projected 2020 levels.

The successful completion of this ramp up is expected to enable PT-FI to generate average annual production for the next several years of 1.55 billion pounds of copper and 1.6 million ounces of gold at an average unit net cash cost of approximately $0.20 per pound of copper assuming an average price of $1,400 per ounce of gold and achievement of projected sales volumes and cost estimates.

PT-FI's estimated annual capital spending on underground mine development projects is expected to average approximately $0.9 billion per year for the three-year period 2020 through 2022, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum).

In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $1.0 billion per year for the three-year period 2020 through 2022, will be reflected as an investing activity in our cash flow statement, and contributions from PT Inalum will be reflected as a financing activity.

In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $1.0 billion per

year for the three-year period 2020 through 2022, will be reflected as an investing activity in our cash flow statement, and contributions from PT Inalum will be reflected as a financing activity.

Indonesian Smelter.

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Following is summary consolidated operating data for Indonesia mining:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Operating Data

Copper (millions of recoverable pounds)

Production 222 191 543 461

Sales 219 139 518 464

Average realized price per pound $ 3.00 $ 2.59 $ 2.79 $ 2.70

Gold (thousands of recoverable ounces)

Production 236 329 577 645

Sales 230 239 549 659

Average realized price per ounce $ 1,902 $ 1,487 $ 1,810 $ 1,380

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Ore extracted and milled (metric tons per day):

Grasberg open pit a

DOZ underground mine b

Grasberg Block Cave underground mine b

DMLZ underground mine b

Big Gossan underground mine b

Grasberg Block Cave underground mine a

30,800 10,600 25,700 7,700

DMLZ underground mine a

29,100 9,800 25,100 8,100

DOZ underground mine a

20,700 24,500 20,900 25,300

Big Gossan underground mine a

7,100 7,000 6,600 6,000

Grasberg open pit b

— 70,000 2,200 75,500

Total 87,300 c

121,900 80,500 122,600

Average ore grades:

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Recovery rates (percent):

Includes ore from the Grasberg open-pit stockpile.

Copper 92.3 89.4 92.0 87.6

Gold 79.3 75.6 78.2 73.5

Reflects ore extracted, including ore from development activities that result in metal production.

Does not foot because of rounding.

PT-FI’s consolidated copper sales of 172 million pounds in second-quarter 2020 were higher than second-quarter 2019 consolidated copper sales of 151 million pounds, primarily reflecting higher ore grades, partly offset by anticipated lower mill rates as PT-FI continues to ramp-up production from its underground ore bodies.

PT-FI’s consolidated copper sales of 299 million pounds for the first six months of 2020 were lower than consolidated copper sales of 325 million pounds for first six months of 2019 , primarily reflecting timing of shipments, partly offset by higher ore grades.

PT-FI’s consolidated gold sales of 180 thousand ounces of gold in second-quarter 2020 and 319 thousand ounces of gold for the first six months of 2020 were lower than second-quarter 2019 consolidated sales of 185 thousand ounces of gold and 420 thousand ounces of gold for the first six months of 2019 , primarily reflecting timing of shipments, partly offset by higher ore grades.

Includes ore from the Grasberg open-pit stockpile.

Does not foot because of changes in stockpile ore.

Our consolidated copper sales volumes from PT-FI totaled 219 million pounds in third-quarter 2020, 139 million pounds in third-quarter 2019, 518 million pounds for the first nine months of 2020 and 464 million pounds for first nine months of 2019.

Higher sales volumes for third-quarter 2020, compared to third-quarter 2019, primarily reflect higher copper ore grades and timing of shipments in third-quarter 2019, partly offset by anticipated lower mining and milling rates associated with the ramp-up of underground mining at PT-FI.

Higher sales volumes for the first nine months of 2020, compared to the first nine months of 2019, primarily reflect higher copper ore grades, partly offset by anticipated lower mining and milling rates associated with the ramp-up of underground mining at PT-FI.

Our consolidated gold sales volumes from PT-FI totaled 230 thousand ounces in third-quarter 2020, 239 thousand ounces in third-quarter 2019, 549 thousand ounces for the first nine months of 2020 and 659 thousand ounces for the first nine months of 2019.

Lower sales volumes for third-quarter 2020, compared to third-quarter 2019, primarily reflects lower mining and milling rates, partly offset by timing of shipments in third-quarter 2019.

Lower sales volumes for the first nine months of 2020, compared to the first nine months of 2019, primarily reflect lower mining and milling rates, partly offset by higher gold ore grades.

Consolidated sales volumes from PT-FI are expected to approximate 790 million pounds of copper and 0.8 million ounces of gold in 2020.

As PT-FI continues to ramp-up production from its underground ore bodies, metal production is expected to improve significantly in 2021.

As the ramp-up of underground mining at PT-FI continues to advance, metal production is expected to improve significantly in 2021, compared with 2020 and 2019.

Unit Net Cash Costs.

4 unchanged sentences

This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit (Loss) per Pound of Copper and per Ounce of Gold

The following table summarizes the unit net cash costs and gross profit (loss) per pound of copper and per ounce of gold at our Indonesia mining operations.

Gross Profit per Pound of Copper and per Ounce of Gold

The following table summarizes the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations.

Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Three Months Ended June 30,

By-Product Method

Co-Product Method

By-Product Method

Co-Product Method

Three Months Ended September 30,

By-Product Method Co-Product Method By-Product Method Co-Product Method

Copper Gold Copper Gold

Revenues, excluding adjustments $ 3.00 $ 3.00 $ 1,902 $ 2.59 $ 2.59 $ 1,487

5 unchanged sentences

Unit net cash costs 0.13 1.35 856 0.27 1.45 828

Noncash and other costs, net

DD&A 0.68 0.40 256 0.55 0.27 158

Noncash and other costs, net 0.11 a

0.06 40 1.39 b

Total unit costs 0.92 1.81 1,152 2.21 2.41 1,381

Revenue adjustments, primarily for pricing on prior period open sales 0.13 0.13 49 (0.05) (0.05) 8

PT Smelting intercompany (loss) profit

Gross profit (loss) per pound/ounce

PT Smelting intercompany loss (0.08) (0.05) (31) (0.24) (0.12) (69)

Gross profit per pound/ounce $ 2.13 $ 1.27 $ 768 $ 0.09 $ 0.01 $ 45

Copper sales (millions of recoverable pounds) 219 219 139 139

Gold sales (thousands of recoverable ounces) 230 239

Six Months Ended June 30,

By-Product Method

Co-Product Method

By-Product Method

Co-Product Method

Nine Months Ended September 30,

By-Product Method Co-Product Method By-Product Method Co-Product Method

Copper Gold Copper Gold

Revenues, excluding adjustments $ 2.79 $ 2.79 $ 1,810 $ 2.70 $ 2.70 $ 1,380

5 unchanged sentences

Unit net cash costs 0.57 1.50 976 1.47 2.00 1,021

Noncash and other costs, net

DD&A 0.72 0.42 273 0.61 0.35 177

Noncash and other costs, net 0.11 a

0.07 41 0.52 b

Total unit costs 1.40 1.99 1,290 2.60 2.64 1,350

Other revenue adjustments, primarily for pricing on prior period open sales

PT Smelting intercompany profit

Revenue adjustments, primarily for pricing on prior period open sales

(0.03) (0.03) 8 0.04 0.04 3

PT Smelting intercompany loss (0.04) (0.02) (13) (0.05) (0.03) (14)

Gross profit per pound/ounce $ 1.32 $ 0.75 $ 515 $ 0.09 $ 0.07 $ 19

1 unchanged sentence

Gold sales (thousands of recoverable ounces) 549 659

Includes COVID-19 related costs of $0.03 per pound of copper in second-quarter 2020 and $0.01 per pound of copper for the first six months of 2020.

Includes charges of $0.18 per pound of copper in second-quarter 2019 and $0.09 per pound of copper for the first six months of 2019 associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

A significant portion of PT-FI’s costs are fixed and unit costs vary depending on volumes and other factors.

PT-FI’s unit net cash costs (including gold and silver credits) of $0.56 per pound of copper in second-quarter 2020 and $0.88 per pound for the first six months of 2020 were lower than unit net cash costs of $2.15 per pound of copper in second-quarter 2019 and $1.99 per pound for the first six months of 2019 , primarily reflecting reduced site production costs and higher gold prices.

The decrease in unit net cash costs in second-quarter 2020 also reflected higher copper sales volumes.

Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) totaling $0.05 per pound of copper in third-quarter 2020 and $0.03 per pound of copper for the first nine months of 2020.

Includes charges totaling $1.19 per pound of copper in third-quarter 2019 and $0.36 per pound of copper for the first nine months of 2019, primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

The first nine months also includes charges totaling $0.06 per pound of copper associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

Because of the fixed nature of a large portion of PT-FI's costs, unit net cash costs can vary significantly from quarter to quarter depending on copper and gold volumes.

PT-FI’s unit net cash costs (including gold and silver credits) of $0.13 per pound of copper in third-quarter 2020 and $0.57 per pound for the first nine months of 2020 were lower than unit net cash costs of $0.27 per pound of copper in third-quarter 2019 and $1.47 per pound for the first nine months of 2019, primarily reflecting higher copper sales volumes and lower mining and milling rates.

Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold.

PT-FI’s export duties totaled $24 million in third-quarter 2020, $8 million in third-quarter 2019, $43 million for the first nine months of 2020 and $35 million for the first nine months of 2019.

PT-FI will continue to pay export duties until development progress for the new smelter in Indonesia exceeds 50 percent.

PT-FI’s export duties totaled $16 million in second-quarter 2020 , $10 million in second-quarter 2019 , $20 million for the first six months of 2020 and $27 million for the first six months of 2019 .

PT-FI’s royalties totaled $25 million in second-quarter 2020 , $17 million in second-quarter 2019 , $44 million for the first six months of 2020 and $45 million for the first six months of 2019 .

PT-FI’s royalties totaled $45 million in third-quarter 2020, $23 million in third-quarter 2019, $92 million for the first nine months of 2020 and $68 million for the first nine months of 2019.

Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate may vary with asset additions and the level of copper production and sales.

DD&A per pound of copper under the by-product method was $0.72 per pound in second-quarter 2020 , $0.65 per pound in second-quarter 2019 , $0.75 for the first six months of 2020 and $0.63 per pound for the first six months of 2019 .

DD&A per pound of copper under the by-product method was $0.68 per pound in third-quarter 2020, $0.55 per pound in third-quarter 2019, $0.72 for the first nine months of 2020 and $0.61 per pound for the first nine months of 2019.

The increase in the 2020 periods, compared with the 2019 periods, primarily reflects underground development assets placed in service.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods.

PT Smelting intercompany (loss) profit represents the change in the deferral of 25 percent of PT-FI’s profit on sales to PT Smelting.

PT Smelting intercompany loss represents the change in the deferral of 25 percent of PT-FI’s profit on sales to PT Smelting.

Refer to “Smelting and Refining” below for further discussion.

Assuming an average gold price of $1,800 per ounce for the second half of 2020 and achievement of current sales volume and cost estimates, unit net cash costs (including gold and silver credits) for PT-FI are expected to

approximate $0.54 per pound of copper for the year 2020 (including $0.34 per pound of copper for the second half of 2020 ).

The impact of price changes during the second half of 2020 on PT-FI's average unit net cash costs for the year 2020 would approximate $0.03 per pound of copper for each $50 per ounce change in the average price of gold.

PT-FI’s projected sales volumes and unit net cash costs for the year 2020 are dependent on a number of factors, including underground development progress, operational performance and timing of shipments.

Assuming an average gold price of $1,900 per ounce in fourth-quarter 2020 and achievement of current sales volume and cost estimates, unit net cash costs (including gold and silver credits) for PT-FI are expected to

approximate $0.45 per pound of copper for the year 2020.

The impact of price changes during fourth-quarter 2020 on PT-FI's average unit net cash costs for the year 2020 would approximate $0.02 per pound of copper for each $50 per ounce change in the average price of gold.

PT-FI’s projected sales volumes and unit net cash costs for the year 2020 are dependent on a number of factors, including continued progress of the ramp-up of underground mining, operational performance and timing of shipments.

In March 2020, PT-FI received a one-year extension of its export license through March 15, 2021.

3 unchanged sentences

The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North America and South America copper mines, is processed at our own conversion facilities.

Production from the Molybdenum mines totaled 6 million pounds of molybdenum in second-quarter 2020 , 9 million pounds in second-quarter 2019 , 13 million pounds for the first six months of 2020 and 17 million pounds for the first six months of 2019 .

The decrease in the 2020 periods, compared with the 2019 periods, primarily reflects lower production in response to market conditions.

Operating and Development Activities.

Production from the Molybdenum mines totaled 6 million pounds of molybdenum in third-quarter 2020, 7 million pounds in third-quarter 2019, 19 million pounds for the first nine months of 2020 and 24 million pounds for the first nine months of 2019.

The decrease in the 2020 periods, compared with the 2019 periods, primarily reflects lower operating rates pursuant to our April 2020 revised operating plans in response to current market conditions.

Refer to “Consolidated Results” for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our Molybdenum mines and from our North America and South America copper mines.

Refer to “Outlook” for projected consolidated molybdenum sales volumes.

Operating and Development Activities .

The April 2020 revised operating plans for our molybdenum business have been effectively implemented, with site production and delivery costs declining by approximately 20 percent compared to first-quarter 2020.

Unit Net Cash Costs Per Pound of Molybdenum.

4 unchanged sentences

This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Average unit net cash costs for our Molybdenum mines of $8.97 per pound of molybdenum in second-quarter 2020 were lower than unit net cash costs of $9.15 per pound in second-quarter 2019 , primarily reflecting lower operating costs associated with the April 2020 revised operating plans.

Average unit net cash costs of $9.52 per pound of molybdenum for the first six months of 2020 were higher than unit net cash costs of $9.45 per pound for the first six months of 2019 , primarily reflecting lower sales volumes, partly offset by lower operating costs associated with the April 2020 revised operating plans.

Average unit net cash costs for our Molybdenum mines do not include noncash and other costs, which include charges totaling $1.00 per pound of molybdenum in second-quarter 2020 and $0.48 per pound of molybdenum for the first six months of 2020, primarily associated with the April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic.

Average unit net cash costs for our Molybdenum mines were $9.72 per pound of molybdenum in third-quarter 2020 and $9.58 per pound for the first nine months of 2020, compared to $11.64 per pound in third-quarter 2019 and $10.13 per pound for the first nine months of 2019.

The decrease in the 2020 periods, compared to the 2019 periods, primarily reflects lower operating costs associated with our April 2020 revised operating plans.

Average unit net cash costs for our Molybdenum mines do not include noncash and other costs, which include charges totaling $0.05 per pound of molybdenum in third-quarter 2020 and $0.36 per pound of molybdenum for the first nine months of 2020.

Charges for third-quarter 2020 were primarily associated with employee separation costs related to our April 2020 revised operating plans, and charges for the first nine months of 2020 were primarily associated with our April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic.

Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $9.75 per pound of molybdenum for the year 2020.

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Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations.

Our North America copper mines are less

significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter and El Paso refinery.

Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter and El Paso refinery.

Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes.

During the first six months of 2020 , Atlantic Copper’s concentrate purchases include 20 percent from our copper mining operations and 80 percent from third parties.

During the first nine months of 2020, Atlantic Copper’s concentrate purchases include 20 percent from our copper mining operations and 80 percent from third parties.

PT-FI’s contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum treatment charge rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis.

PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually.

During the first six months of 2020 , PT-FI supplied substantially all of PT Smelting’s concentrate requirements.

During the first nine months of 2020, PT-FI supplied most of PT Smelting’s concentrate requirements.

In March 2020, PT Smelting received a one-year extension of its anode slimes export license through March 10, 2021.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of PT-FI’s sales to PT Smelting until final sales to third parties occur.

Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to operating income (loss) totaling $(17) million ( $(6) million to net income attributable to common stock) in second-quarter 2020 , $11 million ( $(2) million to net loss attributable to common stock) in second-quarter 2019 , $(6) million ( $1 million to net loss attributable to common stock) for the first six months of 2020 and $(20) million ( $(15) million to net loss attributable to common stock) for the first six months of 2019 .

Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled $28 million at June 30, 2020 .

Changes in these deferrals attributable to variability in intercompany volumes resulted in net reductions to operating income (loss) totaling $21 million ($21 million to net income attributable to common stock) in third-quarter 2020, $4 million ($4 million to net loss attributable to common stock) in third-quarter 2019, $27 million ($20 million to net loss attributable to common stock) for the first nine months of 2020 and $24 million ($20 million to net loss attributable to common stock) for the first nine months of 2019.

Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled $57 million at September 30, 2020.

Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.

CAPITAL RESOURCES AND LIQUIDITY

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We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value.

PT-FI has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies and we have substantially completed a project to develop the Lone Star leachable ores near our Safford operation in eastern Arizona.

PT-FI has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies and we have completed the Lone Star copper leach project near our Safford operation in eastern Arizona.

We are also evaluating other opportunities to enhance net present values, and we continue to consider future development of our copper resources, the timing of which will be dependent on market conditions.

In April 2020 we announced revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.

During second quarter 2020, we announced revised operating plans in response to the global COVID-19 pandemic and resulting negative impact on the global economy.

The revised operating plans are focused on maximizing cash flow and protecting liquidity in a weak and uncertain economic environment and to preserve asset values for anticipated improved copper prices as economic conditions recover.

As presented in “Outlook,” projected operating cash flows for the year 2020 of $2.6 billion are expected to exceed projected capital expenditures for the year 2020 by $0.6 billion.

The increase in expected operating cash flows for the year 2020, compared to the April 2020 estimate, primarily reflects an increase in copper prices.

As presented in “Outlook,” for the year 2020, projected operating cash flows of $2.9 billion are expected to exceed projected capital expenditures of $2.0 billion.

A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods.

We have cash on hand and the financial flexibility to fund these expenditures and will continue to be disciplined in deploying capital.

At June 30, 2020, we had $5.0 billion in liquidity, comprised of $1.5 billion in consolidated cash and $3.5 billion of availability under our revolving credit facility.

With continued successful execution of the revised operating plans, we expect operating cash flows to improve significantly in 2021.

In March 2020, we completed the sale of $1.3 billion in new 8-year and 10-year senior notes and used the net proceeds to purchase and redeem a portion of certain existing senior notes.

In July 2020, we completed the sale of $1.5 billion in new 8-year and 10-year senior notes.

We used the net proceeds from the July offering to purchase $1.3 billion of certain existing senior notes in connection with the early settlement of our tender offers.

Depending on our final tender results, we may use all or a portion of the remaining net proceeds from the offering to purchase more of certain senior notes in the tender offers.

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

Refer to Note 5 and below for further discussion.

These transactions will further enhance financial flexibility and extend debt maturities.

With anticipated increases in copper and gold sales volumes and decreases in unit net cash costs, operating cash flows in 2021 are expected to be significantly higher than 2020 levels.

At September 30, 2020, we had $5.9 billion in liquidity, comprised of $2.4 billion in consolidated cash and $3.5 billion of availability under our revolving credit facility.

As a result, we have extended maturities and strengthened our financial flexibility.

With continued strong financial performance and successful execution of our operating plans, management expects to recommend to the Board the resumption of common stock dividends during 2021 and anticipates an ongoing ability to increase cash returns to shareholders in the future.

As further discussed in Note 5, we are currently restricted from declaring or paying common stock dividends under our revolving credit facility.

Following is a summary of the U.S.

and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at June 30, 2020 (in billions):

and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at September 30, 2020 (in billions):

Cash at domestic companies $ 1.6

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Cash, net of noncontrolling interests’ share 2.1

Withholding taxes

Withholding taxes — a

Net cash available $ 2.1

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through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share.

At June 30, 2020 , our consolidated debt totaled $9.9 billion , with a weighted-average interest rate of 4.5 percent and no senior note maturities until 2022.

At June 30, 2020 , we had no borrowings, $13 million in letters of credit issued and $3.5 billion of availability under our revolving credit facility and were in compliance with our revolving credit facility covenants.

At September 30, 2020, our consolidated debt totaled $10.0 billion, with a weighted-average interest rate of 4.6 percent and no senior note maturities until 2022.

At September 30, 2020, we had no borrowings, $13 million in letters of credit issued and $3.5 billion of availability under our revolving credit facility.

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

In June 2020, we amended our revolving credit facility to provide additional flexibility on certain financial covenants.

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We retained the option to revert to the previous covenant requirements (which would, among other things, remove the dividend restriction) if we determine additional flexibility is no longer needed.

In March 2020, we completed the sale of $1.3 billion of senior notes, consisting of $700 million of 4.125% Senior Notes due 2028 and $600 million of 4.25% Senior Notes due 2030.

We used a portion of the net proceeds from these senior notes to purchase a portion of our 4.00% Senior Notes due 2021 and 3.55% Senior Notes due 2022.

In April 2020, we used the remaining net proceeds to fund the make-whole redemption of all of our remaining 4.00% Senior Notes due 2021.

In July 2020, we completed the sale of $1.5 billion of senior notes, consisting of $650 million of 4.375% Senior Notes due 2028 and $850 million of 4.625% Senior Notes due 2030.

We used $1.3 billion of the net proceeds from these senior notes to purchase a portion of our 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 our previously announced tender offers.

Depending on the final tender results, we may use all or a portion of the remaining net proceeds from the offering to purchase more of such series of notes in the tender offers.

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

At September 30, 2020, we were in compliance with our revolving credit facility covenants.

In July 2020, we completed the sale of $1.5 billion of senior notes, consisting of $650 million of 4.375% Senior Notes due 2028 and $850 million of 4.625% Senior Notes due 2030 and used $1.4 billion of the net proceeds to purchase senior notes maturing in 2022, 2023 and 2024.

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

In March 2020, we completed the sale of $1.3 billion of senior notes, consisting of $700 million of 4.125% Senior Notes due 2028 and $600 million of 4.25% Senior Notes due 2030 and used the net proceeds to purchase and redeem senior notes maturing in 2021 and 2022.

We may reduce outstanding debt obligations, including senior notes, through prepayments, redemptions or repurchases from time to time, subject to market conditions.

Refer to Note 5 for further discussion of debt.

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Operating Activities

We generated consolidated operating cash flows of $453 million (including $141 million of working capital and other sources) for the first six months of 2020 and $1.1 billion (including $248 million in working capital and other sources) for the first six months of 2019 .

Lower operating cash flows for the first six months of 2020 compared with

the first six months of 2019 , primarily reflect lower copper prices and sales volumes, partly offset by reduced site production costs.

We generated consolidated operating cash flows of $1.7 billion (including $0.3 billion from working capital and other sources) for the first nine months of 2020 and $1.3 billion (including $0.3 billion from working capital and other sources) for the first nine months of 2019.

Higher operating cash flows for the first nine months of 2020 compared with the first nine months of 2019, primarily reflect lower production and delivery costs associated with lower mining rates, and cost reductions associated with our April 2020 revised operating plans.

Investing Activities

Capital Expenditures.

Capital expenditures, including capitalized interest, totaled $1.1 billion for the first six months of 2020 , including approximately $0.6 billion for major projects primarily associated with underground development activities in the Grasberg minerals district and the Lone Star copper leach project.

Capital expenditures, including capitalized interest, totaled $1.25 billion for the first six months of 2019 , including approximately $0.7 billion for major projects.

Capital expenditures, including capitalized interest, totaled $1.6 billion for the first nine months of 2020, including approximately $1.0 billion for major projects primarily associated with underground development activities in the Grasberg minerals district and the now completed Lone Star copper leach project.

Capital expenditures, including capitalized interest, totaled $1.9 billion for the first nine months of 2019, including approximately $1.1 billion for major projects.

A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods, enabling us to generate operating cash flows exceeding capital expenditures in future years.

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Proceeds from Sales of Assets.

Proceeds from sales of assets totaled $116 million for the first six months of 2020 , primarily related to $60 million of contingent consideration associated with the 2016 sale of the Tenke Fungurume Mining assets in the Democratic Republic of Congo and the collection of $45 million related to the 2019 sale of the Timok exploration assets in Serbia.

Proceeds from sales of assets totaled $94 million for the first six months of 2019 , primarily associated with sales of oil and gas properties, including $50 million in contingent consideration associated with the 2016 sale of onshore California oil and gas properties.

Proceeds from sales of assets totaled $146 million for the first nine months of 2020, primarily related to $60 million of contingent consideration associated with the 2016 sale of the Tenke Fungurume Mining assets in the Democratic Republic of Congo, the collection of $45 million related to the 2019 sale of the Timok exploration assets in Serbia and $31 million associated with the third-quarter 2020 sale of royalty assets.

Proceeds from sales of assets totaled $102 million for the first nine months of 2019, primarily associated with sales of oil and gas properties, including $50 million in contingent consideration associated with the 2016 sale of onshore California oil and gas properties.

Financing Activities

Debt Transactions.

Net borrowings of debt for the first six months of 2020 totaled $58 million .

During first-quarter 2020, we completed the sale of $1.3 billion in senior notes and used the net proceeds to purchase a portion of our senior notes due 2021 and 2022.

On April 3, 2020, we used the remaining net proceeds to redeem the remainder of our senior notes due 2021.

Net repayments of debt for the first six months of 2019 totaled $1.2 billion , consisting of the redemption of $1.0 billion aggregate principal amount of our 3.100% Senior Notes due 2020 and the repayment of $200 million under Cerro Verde’s credit facility.

Net proceeds from debt for the first nine months of 2020 totaled $131 million, primarily reflecting the issuance of $2.8 billion of new senior notes in July 2020 and March 2020, partly offset by the use of proceeds to purchase and redeem senior notes maturing in 2021, 2022, 2023 and 2024.

Refer to Note 5 for further discussion.

Net repayments of debt for the first nine months of 2019 totaled $1.2 billion, consisting of the redemption of $1.0 billion aggregate principal amount of our 3.100% Senior Notes due 2020 and the repayment of $200 million under Cerro Verde’s credit facility.

Cash Dividends and Distributions Paid.

We paid cash dividends on our common stock totaling $73 million for the first six months of 2020 (associated with the $0.05 per share of common stock cash dividend declared in December 2019), and $146 million for the first six months of 2019 .

We paid cash dividends on our common stock totaling $73 million for the first nine months of 2020 (associated with the $0.05 per share common stock cash dividend declared in December 2019), and $218 million for the first nine months of 2019.

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

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

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 our financial results, cash requirements, future prospects, global economic conditions, and other factors deemed relevant by the Board.

See Note 5 for further discussion of the suspension of our quarterly dividends and the current restriction on payment of dividends under our revolving credit facility.

There were no cash dividends or distributions paid to noncontrolling interests for the first six months of 2020 and $79 million for the first six months of 2019 .

There were no cash dividends or distributions paid to noncontrolling interests for the first nine months of 2020 and $79 million for the first nine months of 2019.

Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries.

Contributions from Noncontrolling Interests.

During the first six months of 2020, we received equity contributions totaling $74 million from PT Inalum for their share of capital spending on PT-FI underground mine development projects and costs for the new smelter in Indonesia.

During the first nine months of 2020, we received equity contributions totaling $115 million from PT Inalum for their share of capital spending on PT-FI underground mine development projects and costs for the new smelter in Indonesia.

CONTRACTUAL OBLIGATIONS

During the first six-months of 2020, we completed the sale of $1.3 billion in new 8-year and 10-year senior notes at a weighted-average interest rate of 4.2 percent.

In July 2020, we completed the sale of $1.5 billion in new 8-year and 10-year senior notes at a weighted-average interest rate of 4.5 percent.

The net proceeds from these transactions were used or are expected to be used to purchase and redeem a portion of certain existing senior notes.

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

As discussed above, during the first nine-months of 2020, we completed the sale of $2.8 billion of new 8-year and 10-year senior notes at a weighted-average interest rate of 4.36 percent.

Refer to Note 5 for further discussion of these transactions.

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Refer to Note 12 in our 2019 Form 10-K, for further information regarding our environmental and asset retirement obligations.

In addition, as discussed in Note 8, we are moving toward implementing a new standard on tailings management.

Compliance with the standard will require incremental future costs.

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 we are 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, we will move toward implementing it and will begin undertaking an extensive, multi-year analysis of our tailings facilities to ensure conformance with the Standard.

We are assessing the costs of complying with the new standard.

Litigation and Other Contingencies

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Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales.

Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, inventory adjustments, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges.

Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges.

As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method.

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2020

(In millions)

Co-Product Method

Three Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Molybdenum a

Revenues, excluding adjustments $ 1,138 $ 1,138 $ 63 $ 30 $ 1,231

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Net cash costs 631 662 45 17 724

DD&A 92 85 4 3 92

Metals inventory adjustments (4) (4) — — (4)

Noncash and other costs, net

Noncash and other costs, net 37 c

Total costs 756 778 49 22 849

Other revenue adjustments, primarily for pricing

on prior period open sales 1 1 — — 1

Gross profit $ 383 $ 361 $ 14 $ 8 $ 383

Copper sales (millions of recoverable pounds) 378 378

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Unit net cash costs 1.67 1.75 5.52

DD&A 0.24 0.23 0.43

Metals inventory adjustments (0.01) (0.01) —

Noncash and other costs, net

Noncash and other costs, net 0.10 c

Total unit costs 2.00 2.06 6.01

3 unchanged sentences

Reconciliation to Amounts Reported

Production and Delivery

Metals Inventory Adjustments

Revenues Production and Delivery DD&A Metals Inventory Adjustments

Totals presented above $ 1,231 $ 691 $ 92 $ (4)

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North America copper mines 1,237 768 91 (4)

Other mining e

Other mining d

3,691 2,731 282 5

Corporate, other & eliminations (1,077) (1,034) 21 8

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Includes gold and silver product revenues and production costs.

Includes reductions to revenues and average realized prices totaling $24 million ($0.06 per pound of copper) 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.

Includes charges totaling $22 million ($0.06 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic.

Includes charges totaling $10 million ($0.03 per pound of copper) primarily associated with our April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs).

Represents the combined total for our other segments, as presented in Note 9.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2019

(In millions)

Co-Product Method

Three Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Molybdenum a

Revenues, excluding adjustments $ 1,044 $ 1,044 $ 93 $ 20 $ 1,157

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Net cash costs

757 785 72 13 870

DD&A 90 83 6 1 90

Metals inventory adjustments 38 38 — — 38

Noncash and other costs, net 31 27 3 1 31

916 933 81 15 1,029

Other revenue adjustments, primarily for pricing

on prior period open sales (11) (11) — — (11)

Gross profit $ 117 $ 100 $ 12 $ 5 $ 117

Copper sales (millions of recoverable pounds) 394 394

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Unit net cash costs

1.92 1.99 9.28

DD&A 0.22 0.22 0.76

Metals inventory adjustments 0.10 0.10 —

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Total unit costs

2.32 2.37 10.49

Other revenue adjustments, primarily for pricing

2 unchanged sentences

Reconciliation to Amounts Reported

Production and Delivery

Metals Inventory Adjustments

Revenues Production and Delivery DD&A Metals Inventory Adjustments

Totals presented above $ 1,157 $ 826 $ 90 $ 38

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Other mining c

2,813 2,544 211 3

Corporate, other & eliminations (800) (770) 20 —

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2020

(In millions)

Co-Product Method

Revenues, excluding adjustments

Nine Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Molybdenum a

Revenues, excluding adjustments $ 2,939 c

$ 2,939 $ 210 $ 73 $ 3,222

Site production and delivery, before net noncash

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Net cash costs 2,006 2,068 173 48 2,289

DD&A 272 251 14 7 272

Metals inventory adjustments 52 49 — 3 52

Noncash and other costs, net

Noncash and other costs, net 107 d

Total costs 2,437 2,469 190 61 2,720

Other revenue adjustments, primarily for pricing

on prior period open sales (22) (22) — — (22)

Gross profit $ 480 $ 448 $ 20 $ 12 $ 480

Copper sales (millions of recoverable pounds) 1,100 1,100

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Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments

Revenues, excluding adjustments $ 2.67 c

$ 2.67 $ 8.57

Site production and delivery, before net noncash

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Unit net cash costs 1.82 1.88 7.05

DD&A 0.25 0.23 0.57

Metals inventory adjustments 0.05 0.04 —

Noncash and other costs, net

Noncash and other costs, net 0.10 d

Total unit costs 2.22 2.25 7.74

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Reconciliation to Amounts Reported

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 3,222 $ 2,180 $ 272 $ 52

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Other mining e

9,267 7,665 770 14

Corporate, other & eliminations (2,774) (2,676) 51 26

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Includes reductions to revenues and average realized prices totaling $24 million ($0.02 per pound of copper) 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.

Includes charges totaling $22 million ($0.03 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic.

Includes charges totaling $32 million ($0.03 per pound of copper) primarily associated with our April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs).

Represents the combined total for our other segments, as presented in Note 9.

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2019

(In millions)

Co-Product Method

Nine Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Molybdenum a

Revenues, excluding adjustments $ 2,964 $ 2,964 $ 284 $ 63 $ 3,311

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Net cash costs 2,068 2,146 226 43 2,415

DD&A 260 237 18 5 260

Metals inventory adjustments 39 39 — — 39

Noncash and other costs, net 64 55 7 2 64

Total costs 2,431 2,477 251 50 2,778

Other revenue adjustments, primarily for pricing

on prior period open sales 4 4 — — 4

Gross profit $ 537 $ 491 $ 33 $ 13 $ 537

Copper sales (millions of recoverable pounds) 1,084 1,084

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Unit net cash costs 1.91 1.98 9.56

DD&A 0.24 0.22 0.75

Metals inventory adjustments 0.04 0.04 —

4 unchanged sentences

Gross profit per pound $ 0.50 $ 0.45 $ 1.43

Reconciliation to Amounts Reported

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 3,311 $ 2,295 $ 260 $ 39

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Other mining c

9,501 8,294 701 3

Corporate, other & eliminations (2,304) (2,158) 59 58

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South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2020

(In millions)

Co-Product Method

Three Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Other a

Revenues, excluding adjustments $ 754 $ 754 $ 53 $ 807

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Net cash costs 458 473 38 511

Metals inventory adjustments

Noncash and other costs, net

DD&A 105 98 7 105

Noncash and other costs, net 9 b

Total costs 572 579 46 625

Other revenue adjustments, primarily for pricing

on prior period open sales 41 41 — 41

Gross profit (loss)

Gross profit $ 223 $ 216 $ 7 $ 223

Copper sales (millions of recoverable pounds) 250 250

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Unit net cash costs 1.83 1.89

Metals inventory adjustments

Noncash and other costs, net

DD&A 0.42 0.39

Noncash and other costs, net 0.04 b

Total unit costs 2.29 2.32

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Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 807 $ 470 $ 105

7 unchanged sentences

Other mining c

4,122 3,022 268

Corporate, other & eliminations (1,077) (1,034) 21

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Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

Includes charges totaling $66 million ($0.30 per pound of copper), primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with the April 2020 revised operating plans.

Includes charges totaling $5 million ($0.02 per pound of copper), primarily associated with the COVID-19 pandemic (including health and safety costs).

Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2019

(In millions)

Co-Product Method

Three Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Other a

Revenues, excluding adjustments $ 681 $ 681 $ 80 $ 761

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Net cash costs 473 492 61 553

DD&A 109 98 11 109

Metals inventory adjustments 2 2 — 2

Noncash and other costs, net 22 20 2 22

Total costs 606 612 74 686

Other revenue adjustments, primarily for pricing

on prior period open sales (29) (29) — (29)

Gross profit $ 46 $ 40 $ 6 $ 46

Copper sales (millions of recoverable pounds) 261 261

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Unit net cash costs 1.81 1.88

DD&A 0.42 0.38

Metals inventory adjustments 0.01 0.01

Noncash and other costs, net 0.08 0.08

3 unchanged sentences

Gross profit per pound $ 0.18 $ 0.15

Reconciliation to Amounts Reported

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 761 $ 507 $ 109 $ 2

7 unchanged sentences

Other mining b

3,267 2,912 193 39

Corporate, other & eliminations (800) (770) 20 —

4 unchanged sentences

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2020

(In millions)

Co-Product Method

Nine Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Other a

Revenues, excluding adjustments $ 1,994 $ 1,994 $ 139 $ 2,133

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Net cash costs 1,318 1,346 111 1,457

DD&A 316 294 22 316

Metals inventory adjustments 3 3 — 3

Noncash and other costs, net

Noncash and other costs, net 109 b

Total costs 1,746 1,746 139 1,885

Other revenue adjustments, primarily for pricing

on prior period open sales (70) (70) — (70)

Gross profit $ 178 $ 178 $ — $ 178

Copper sales (millions of recoverable pounds) 716 716

Gross loss per pound of copper:

Gross profit per pound of copper:

Revenues, excluding adjustments $ 2.79 $ 2.79

5 unchanged sentences

Unit net cash costs 1.84 1.88

DD&A 0.44 0.41

Metals inventory adjustments — —

Noncash and other costs, net

Noncash and other costs, net 0.16 b

Total unit costs 2.44 2.44

1 unchanged sentence

on prior period open sales (0.10) (0.10)

Gross loss per pound

Reconciliation to Amounts Reported

Gross profit per pound $ 0.25 $ 0.25

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 2,133 $ 1,342 $ 316 $ 3

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Other mining c

10,530 8,631 727 63

Corporate, other & eliminations (2,774) (2,676) 51 26

2 unchanged sentences

Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

Includes charges totaling $86 million ($0.18 per pound of copper) primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with the April 2020 revised operating plans.

Includes charges totaling $91 million ($0.13 per pound of copper) primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with our April 2020 revised operating plans.

Represents the combined total for our other segments, as presented in Note 9.

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2019

(In millions)

Co-Product Method

Nine Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Other a

Revenues, excluding adjustments $ 2,236 $ 2,236 $ 284 $ 2,520

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Net cash costs 1,458 1,552 190 1,742

DD&A 342 305 37 342

Metals inventory adjustments 2 2 — 2

Noncash and other costs, net 68 65 3 68

Total costs 1,870 1,924 230 2,154

Other revenue adjustments, primarily for pricing

on prior period open sales 37 37 — 37

Gross profit $ 403 $ 349 $ 54 $ 403

Copper sales (millions of recoverable pounds) 838 838

7 unchanged sentences

Unit net cash costs 1.74 1.85

DD&A 0.41 0.36

Metals inventory adjustments — —

Noncash and other costs, net 0.08 0.08

3 unchanged sentences

Gross profit per pound $ 0.48 $ 0.42

Reconciliation to Amounts Reported

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 2,520 $ 1,584 $ 342 $ 2

7 unchanged sentences

Other mining b

10,397 9,109 620 40

Corporate, other & eliminations (2,304) (2,158) 59 58

4 unchanged sentences

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2020

(In millions)

Co-Product Method

Three Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Gold Silver a

Revenues, excluding adjustments $ 659 $ 659 $ 437 $ 24 $ 1,120

6 unchanged sentences

Net cash costs 29 295 197 11 503

Noncash and other costs, net

DD&A 150 88 59 3 150

Noncash and other costs, net 24 b

Total costs 203 397 265 15 677

Other revenue adjustments, primarily for pricing

1 unchanged sentence

PT Smelting intercompany loss (17) (10) (7) — (17)

Gross profit $ 467 $ 280 $ 176 $ 11 $ 467

Copper sales (millions of recoverable pounds) 219 219

9 unchanged sentences

Unit net cash costs 0.13 1.35 856

Noncash and other costs, net

DD&A 0.68 0.40 256

Noncash and other costs, net 0.11 b

Total unit costs 0.92 1.81 1,152

4 unchanged sentences

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 1,120 $ 376 $ 150

8 unchanged sentences

Other mining c

3,902 3,090 223

Corporate, other & eliminations (1,077) (1,034) 21

1 unchanged sentence

Includes silver sales of 1.0 million ounces ($24.29 per ounce average realized price).

Includes COVID-19 related costs totaling $4 million ($0.03 per pound of copper).

Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) totaling $10 million ($0.05 per pound of copper).

Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2019

(In millions)

Co-Product Method

Three Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Gold Silver a

Revenues, excluding adjustments $ 360 $ 360 $ 356 $ 8 $ 724

6 unchanged sentences

Net cash costs 37 201 198 5 404

Noncash and other costs, net

DD&A 77 38 38 1 77

Noncash and other costs, net 192 b

Total costs 306 334 331 8 673

Other revenue adjustments, primarily for pricing

on prior period open sales (8) (8) 2 1 (5)

PT Smelting intercompany profit

PT Smelting intercompany loss (34) (17) (17) — (34)

Gross profit $ 12 $ 1 $ 10 $ 1 $ 12

Copper sales (millions of recoverable pounds) 139 139

Gold sales (thousands of recoverable ounces) 239

Gross loss per pound of copper/per ounce of gold:

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments $ 2.59 $ 2.59 $ 1,487

6 unchanged sentences

Unit net cash costs 0.27 1.45 828

Noncash and other costs, net

DD&A 0.55 0.27 158

Noncash and other costs, net 1.39 b

Total unit costs 2.21 2.41 1,381

1 unchanged sentence

on prior period open sales (0.05) (0.05) 8

PT Smelting intercompany profit

Gross loss per pound/ounce

PT Smelting intercompany loss (0.24) (0.12) (69)

Gross profit per pound/ounce $ 0.09 $ 0.01 $ 45

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 724 $ 338 $ 77

5 unchanged sentences

on prior period open sales (5) — —

PT Smelting intercompany profit

PT Smelting intercompany loss — 34 —

Indonesia mining 488 399 77

Other mining c

3,465 3,041 225

Corporate, other & eliminations (800) (770) 20

1 unchanged sentence

Includes silver sales of 0.5 million ounces ($17.30 per ounce average realized price).

Includes charges totaling $28 million ( $0.18 per pound of copper) associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

Includes charges totaling $166 million ($1.19 per pound of copper) primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

Represents the combined total for our other segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2020

(In millions)

Co-Product Method

Nine Months Ended September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Gold Silver a

Revenues, excluding adjustments $ 1,447 $ 1,447 $ 994 $ 48 $ 2,489

6 unchanged sentences

Net cash costs 294 778 536 26 1,340

Noncash and other costs, net

DD&A 375 218 150 7 375

Noncash and other costs, net 56 b

Total costs 725 1,029 708 34 1,771

Other revenue adjustments, primarily for pricing

on prior period open sales (20) (20) 4 — (16)

PT Smelting intercompany loss (18) (11) (7) — (18)

Gross profit $ 684 $ 387 $ 283 $ 14 $ 684

Copper sales (millions of recoverable pounds) 518 518

9 unchanged sentences

Unit net cash costs 0.57 1.50 976

Noncash and other costs, net

DD&A 0.72 0.42 273

Noncash and other costs, net 0.11 b

Total unit costs 1.40 1.99 1,290

1 unchanged sentence

on prior period open sales (0.03) (0.03) 8

PT Smelting intercompany loss (0.04) (0.02) (13)

Gross profit per pound/ounce $ 1.32 $ 0.75 $ 515

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 2,489 $ 1,062 $ 375

5 unchanged sentences

on prior period open sales (16) — —

PT Smelting intercompany loss — 18 —

Indonesia mining 2,189 1,130 375

Other mining c

10,288 8,950 667

Corporate, other & eliminations (2,774) (2,676) 51

1 unchanged sentence

Includes silver sales of 2.3 million ounces ($20.73 per ounce average realized price).

Includes COVID-19 related costs of $4 million ($0.01 per pound of copper).

Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) of $14 million ($0.03 per pound of copper).

Represents the combined total for our segments, as presented in Note 9.

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2019

(In millions)

Co-Product Method

Nine Months Ended September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Gold Silver a

Revenues, excluding adjustments $ 1,252 $ 1,252 $ 910 $ 26 $ 2,188

6 unchanged sentences

Net cash costs 683 929 673 19 1,621

Noncash and other costs, net

DD&A 281 161 117 3 281

Noncash and other costs, net 240 b

137 100 3 240

Total costs 1,204 1,227 890 25 2,142

Other revenue adjustments, primarily for pricing

on prior period open sales 18 18 2 — 20

PT Smelting intercompany profit

PT Smelting intercompany loss (23) (13) (9) (1) (23)

Gross profit $ 43 $ 30 $ 13 $ — $ 43

Copper sales (millions of recoverable pounds) 464 464

9 unchanged sentences

Unit net cash costs 1.47 2.00 1,021

Noncash and other costs, net

DD&A 0.61 0.35 177

Noncash and other costs, net 0.52 b

Total unit costs 2.60 2.64 1,350

1 unchanged sentence

on prior period open sales 0.04 0.04 3

PT Smelting intercompany profit

PT Smelting intercompany loss (0.05) (0.03) (14)

Gross profit per pound/ounce $ 0.09 $ 0.07 $ 19

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 2,188 $ 1,393 $ 281

5 unchanged sentences

on prior period open sales 20 — —

PT Smelting intercompany profit

PT Smelting intercompany loss — 23 —

Indonesia mining 1,833 1,509 281

Other mining c

10,962 9,248 681

Corporate, other & eliminations (2,304) (2,158) 59

1 unchanged sentence

Includes silver sales of 1.6 million ounces ($15.58 per ounce average realized price).

Includes charges totaling $28 million ($0.09 per pound of copper) associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

Includes charges totaling $166 million ($0.36 per pound of copper) primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

Also includes charges totaling $28 million ($0.06 per pound of copper) associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

Represents the combined total for our other segments, as presented in Note 9.

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30,

Three Months Ended September 30,

(In millions) 2020 2019

5 unchanged sentences

Metals inventory adjustments 3 1

Noncash and other costs, net

Gross (loss) profit

Noncash and other costs, net 4 b

Total costs 72 108

Gross loss $ (25) $ (12)

Molybdenum sales (millions of recoverable pounds) a

Gross (loss) profit per pound of molybdenum:

Gross loss per pound of molybdenum:

Revenues, excluding adjustments a

$ 8.83 $ 12.57

Site production and delivery, before net noncash

2 unchanged sentences

Unit net cash costs 9.72 11.64

DD&A 2.38 2.06

Metals inventory adjustments 0.67 0.17

Noncash and other costs, net

Noncash and other costs, net 0.54 b

Total unit costs 13.31 14.13

Gross (loss) profit per pound

Gross loss per pound $ (4.48) $ (1.56)

Reconciliation to Amounts Reported

Three Months Ended June 30, 2020

Production Inventory

Three Months Ended September 30, 2020 Revenues and Delivery DD&A Adjustments

Totals presented above $ 47 $ 47 $ 13 $ 3

3 unchanged sentences

Other mining c

4,886 3,448 360 (2)

Corporate, other & eliminations (1,077) (1,034) 21 8

As reported in our consolidated financial statements $ 3,851 $ 2,465 $ 394 $ 9

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Totals presented above $ 96 $ 83 $ 16 $ 1

3 unchanged sentences

Other mining c

3,863 3,355 286 40

Corporate, other & eliminations (800) (770) 20 —

3 unchanged sentences

as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.

Includes charges totaling $6 million ($1.00 per pound of molybdenum) primarily associated with the April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic.

Includes charges totaling $0.3 million ($0.05 per pound of molybdenum) primarily for employee separation costs associated with our April 2020 revised operating plans.

Represents the combined total for our other segments, as presented in Note 9.

1 unchanged sentence

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2020 2019

5 unchanged sentences

Metals inventory adjustments 8 1

Noncash and other costs, net

Noncash and other costs, net 14 b

Total costs 246 306

Gross (loss) profit $ (59) $ 5

2 unchanged sentences

Revenues, excluding adjustments a

$ 9.92 $ 12.61

Site production and delivery, before net noncash

2 unchanged sentences

Unit net cash costs 9.58 10.13

DD&A 2.31 2.05

Metals inventory adjustments 0.44 0.05

Noncash and other costs, net

Noncash and other costs, net 0.72 b

Total unit costs 13.05 12.42

1 unchanged sentence

Reconciliation to Amounts Reported

Six Months Ended June 30, 2020

Production Inventory

Nine Months Ended September 30, 2020 Revenues and Delivery DD&A Adjustments

Totals presented above $ 187 $ 164 $ 44 $ 8

3 unchanged sentences

Other mining c

12,306 9,902 998 58

Corporate, other & eliminations (2,774) (2,676) 51 26

As reported in our consolidated financial statements $ 9,703 $ 7,404 $ 1,093 $ 92

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Totals presented above $ 311 $ 229 $ 50 $ 1

3 unchanged sentences

Other mining c

12,505 10,523 912 41

Corporate, other & eliminations (2,304) (2,158) 59 58

3 unchanged sentences

as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.

Includes charges totaling $6 million ($0.48 per pound of molybdenum) primarily associated with the April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic.

Includes charges totaling $7 million ($0.36 per pound of molybdenum) primarily associated with our April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic.

Represents the combined total for our other segments, as presented in Note 9.

2 unchanged sentences

All of the senior notes issued by FCX are fully and unconditionally guaranteed on a senior basis jointly and severally by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC), as guarantor, which is a 100-percent-owned subsidiary of FCX Oil & Gas LLC (FM O&G) and FCX.

The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of FM O&G LLC, including indebtedness under FCX’s revolving credit facility.

The guarantee ranks senior in right of payment with all of FM O&G LLC’s future subordinated obligations and is effectively subordinated in right of payment to any debt of FM O&G LLC’s subsidiaries.

The indentures provide that FM O&G LLC’s guarantee obligations may be released or terminated upon:

(i) the sale of all or substantially all of the equity interests or assets of FM O&G LLC to a third party that is not a subsidiary or an affiliate of FCX;

(ii) FM O&G LLC no longer having any obligations under any FM O&G senior notes or any refinancing thereof and no longer being a co-borrower or guarantor of any obligations of FCX under the revolving credit facility or any other senior debt or, in each case, any refinancing thereof;

or (iii) the discharge of FCX’s obligations under the indentures in accordance with their terms.

The following summarized financial information includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all other non-guarantor subsidiaries of FCX at June 30, 2020 , and December 31, 2019 , and for six months ended June 30, 2020 .

Non-guarantor

As of June 30, 2020

(i) the sale of all or substantially all of the equity interests or assets of FM O&G LLC to a third party that is not our subsidiary or our affiliate;

(ii) FM O&G LLC no longer having any obligations under any FM O&G senior notes or any refinancing thereof and no longer being a co-borrower or guarantor of any of our obligations under the revolving credit facility or any other senior debt or, in each case, any refinancing thereof;

or (iii) the discharge of our obligations under the indentures in accordance with their terms.

The following summarized financial data includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all our other non-guarantor subsidiaries at September 30, 2020, and December 31, 2019, and for nine months ended September 30, 2020.

FCX FM O&G LLC Non-guarantor Consolidated

Issuer Guarantor Subsidiaries Eliminations FCX

As of September 30, 2020

Current assets $ 11 $ 679 $ 8,077 $ (696) $ 8,071

7 unchanged sentences

Noncurrent liabilities 9,180 10,892 15,975 (15,895) 20,152

Six Months Ended June 30, 2020

Operating loss

Net (loss) income

Nine Months Ended September 30, 2020

Revenues $ — $ 18 $ 9,685 $ — $ 9,703

Operating (loss) income (21) (29) 786 (8) 728

Net (loss) income (109) a

Net loss equals net loss attributable to common stockholders because net loss attributable to noncontrolling interests is zero for issuer and guarantor.

2 unchanged sentences

Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to ore grades and milling rates;

forecasts or expectations regarding business outlook;

business outlook;

production and sales volumes;

3 unchanged sentences

operating plans;

our financial policy;

cost savings;

the consummation of the tender offers;

the use of proceeds from the notes offering;

our expectations regarding our share of PT-FI's net income (loss) and future cash flows through 2022;

our expectations regarding our share of PT-FI's net income and future cash flows through 2022;

PT-FI's development, financing, construction and completion of a new smelter in Indonesia;

our aim to deliver responsibly produced copper and our Copper Mark ambitions and plans to validate all of our operating sites;

improvements in operating procedures and technology;

8 unchanged sentences

The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “could,” “to be,” ”potential," “assumptions,” “guidance,” “future” and any similar expressions are intended to identify those assertions as forward-looking statements.

The declaration of future dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

In accordance with the June 2020 amendment to the revolving credit facility, we are currently restricted from declaring or paying common stock dividends.

The declaration of future dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, global economic conditions, and other factors deemed relevant by the Board.

In accordance with the June 2020 amendment to the revolving credit facility, we are currently restricted from declaring or paying common stock dividends through December 31, 2021, unless we, at our option, revert to the previous covenant requirements, which would also eliminate the restriction on the declaration or payment of common stock dividends.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements.

Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, our ability to consummate the tender offers;

Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, changes in our credit rating;

changes in our cash requirements, financial position, financing plans or investment plans;

changes in general market, economic, tax, regulatory or industry conditions;

the duration and scope of and uncertainties associated with the COVID-19 pandemic, and the impact thereof on commodity prices, our business and the global economy, which are evolving and beyond our control, and any related actions taken by governments and businesses;

11 unchanged sentences

risks associated with underground mining;

satisfaction of requirements in accordance with PT-FI's IUPK to extend mining rights from 2031 through 2041;

satisfaction of requirements in accordance with PT-FI's special mining license to extend mining rights from 2031 through 2041;

the Indonesian government's approval of a deferred schedule for completion of the new smelter in Indonesia;

3 unchanged sentences

political and social risks;

labor relations;

labor relations, including labor-related work stoppages;

weather- and climate-related risks;

environmental risks;

litigation results;

litigation and potential settlement results;

cybersecurity incidents;

2 unchanged sentences

reductions in liquidity and access to capital;

and other factors described in more detail as described further in “Risk Factors” contained in Part I, Item 1A.

our ability to comply with Copper Mark requirements and any changes to such requirements;

and other factors described in more detail as described under the heading “Risk Factors” contained in Part I, Item 1A.

of our 2019 Form 10-K and Part II, Item 1A.

3 unchanged sentences

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 2. Management’s Discussion and Analysis