What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-05 compared with 2020-11-06 · 147 added, 363 removed, 482 unchanged (51% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30,

2021 December 31,

16 unchanged sentences

Accounts payable and accrued liabilities $ 2,866 $ 2,708

Current portion of environmental and asset retirement obligations 397 436

Accrued income taxes 119 119

Current portion of debt 656 34

Accrued income taxes 647 324

Current portion of environmental and asset retirement obligations 331 351

Dividends payable 111 —

18 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

(In millions, except per share amounts)

8 unchanged sentences

Environmental obligations and shutdown costs

Net loss (gain) on sales of assets 2 12 13 ( 13 )

Net loss on sales of assets — 11

Total costs and expenses 3,318 3,271

2 unchanged sentences

Net loss on early extinguishment of debt

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

Other income, net 11 20

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

723 ( 149 ) 328 ( 60 )

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

Equity in affiliated companies’ net earnings 6 5 12 7

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

Net gain from discontinued operations

Income (loss) before income taxes and equity in affiliated companies’ net (losses) earnings 1,398 ( 612 )

(Provision for) benefit from income taxes ( 443 ) 60

Equity in affiliated companies’ net (losses) earnings ( 2 ) 3

Net income (loss) 953 ( 549 )

Net (income) loss attributable to noncontrolling interests

( 103 ) 27 ( 116 ) ( 16 )

Net income (loss) attributable to common stockholders $ 718 $ ( 491 )

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

Continuing operations

Net income (loss) per share attributable to common stockholders:

$ 0.49 $ ( 0.34 )

Discontinued operations

$ 0.48 $ ( 0.34 )

Weighted-average common shares outstanding:

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

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

Dividends declared per share of common stock $ 0.075 $ —

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

(In millions)

Net income (loss) $ 953 $ ( 549 )

Other comprehensive (loss) income, net of taxes:

Other comprehensive income, net of taxes:

Defined benefit plans:

Actuarial losses arising during the period ( 1 ) —

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

Amortization of unrecognized amounts included in net periodic benefit costs 4 12

Foreign exchange losses ( 1 ) ( 5 )

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

Other comprehensive income 2 7

Total comprehensive income (loss) 955 ( 542 )

Total comprehensive (income) loss attributable to noncontrolling interests

( 103 ) 28 ( 115 ) ( 16 )

Total comprehensive income (loss) attributable to common stockholders

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

(In millions)

1 unchanged sentence

Net income (loss) $ 953 $ ( 549 )

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

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

Depreciation, depletion and amortization 419 341

Metals inventory adjustments 1 222

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

Net loss on sales of assets — 11

Stock-based compensation 41 27

5 unchanged sentences

Deferred income taxes 38 ( 118 )

Dividends received from PT Smelting 3 33

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

Payment for PT-FI environmental matter

Charges for Cerro Verde royalty dispute

7 unchanged sentences

Accrued income taxes and timing of other tax payments 286 ( 2 )

Net cash provided by operating activities 1,690 1,312

Net cash provided by (used in) operating activities 1,075 ( 38 )

Cash flow from investing activities:

11 unchanged sentences

Repayments of debt ( 32 ) ( 1,242 )

Cash dividends and distributions paid:

Common stock ( 73 ) ( 218 )

Noncontrolling interests — ( 79 )

Cash dividends paid on common stock — ( 73 )

Contributions from noncontrolling interests 41 32

Stock-based awards net payments

Proceeds from exercised stock options 106 1

Payments for withholding of employee taxes related to stock-based awards ( 19 ) ( 5 )

Debt financing costs and other, net ( 1 ) ( 18 )

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

Net cash provided by financing activities 225 173

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 932 ( 411 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30

THREE MONTHS ENDED MARCH 31

Stockholders’ Equity

9 unchanged sentences

(In millions)

Balance at June 30, 2020 1,583 $ 158 $ 25,905 $ ( 12,718 ) $ ( 652 ) 131 $ ( 3,739 ) $ 8,954 $ 8,201 $ 17,155

Balance at December 31, 2020 1,590 $ 159 $ 26,037 $ ( 11,681 ) $ ( 583 ) 132 $ ( 3,758 ) $ 10,174 $ 8,494 $ 18,668

Exercised and issued stock-based awards 7 1 105 — — — — 106 — 106

Stock-based compensation, including the tender of shares — — 29 — — 1 ( 19 ) 10 ( 3 ) 7

Change in ownership interests — — — — — — — — 1 1

Dividends — — ( 111 ) — — — — ( 111 ) ( 93 ) ( 204 )

Contributions from noncontrolling interests — — 20 — — — — 20 21 41

2 unchanged sentences

— — — — — — — — 235 235

Other comprehensive loss — — — — ( 76 ) — — ( 76 ) — ( 76 )

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

Stockholders’ Equity

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

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

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

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

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

Adjustment for deferred taxes

— — ( 22 ) — — — — ( 22 ) — ( 22 )

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

Net loss attributable to noncontrolling interests

— — — — — — — — ( 27 ) ( 27 )

Other comprehensive income (loss) — — — — 3 — — 3 ( 1 ) 2

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

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

NINE MONTHS ENDED SEPTEMBER 30

Stockholders’ Equity

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

Balance at December 31, 2019 1,582 $ 158 $ 25,830 $ ( 12,280 ) $ ( 676 ) 131 $ ( 3,734 ) $ 9,298 $ 8,150 $ 17,448

Exercised and issued stock-based awards 2 — 2 — — — — 2 — 2

Stock-based compensation, including the tender of shares — — 46 — — — ( 5 ) 41 1 42

Change in ownership interests — — — — — — — — 1 1

Contributions from noncontrolling interests

— — 56 — — — — 56 59 115

Net loss attributable to common stockholders — — — ( 109 ) — — — ( 109 ) — ( 109 )

Net income attributable to noncontrolling interests

— — — — — — — — 116 116

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

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

Balance at March 31, 2021 1,597 $ 160 $ 26,080 $ ( 10,963 ) $ ( 580 ) 133 $ ( 3,777 ) $ 10,920 $ 8,653 $ 19,573

Stockholders’ Equity

12 unchanged sentences

Stock-based compensation, including the tender of shares — — 29 — — — ( 5 ) 24 — 24

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

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

Contributions from noncontrolling interests — — 15 — — — — 15 17 32

Adjustments for deferred taxes

— — ( 22 ) — — — — ( 22 ) — ( 22 )

Net loss attributable to common stockholders — — — ( 491 ) — — — ( 491 ) — ( 491 )

Net income attributable to noncontrolling interests

Net loss attributable to noncontrolling interests

— — — — — — — — ( 58 ) ( 58 )

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

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

Other comprehensive income (loss) — — — — 8 — — 8 ( 1 ) 7

Balance at March 31, 2020 1,583 $ 158 $ 25,875 $ ( 12,771 ) $ ( 668 ) 131 $ ( 3,739 ) $ 8,855 $ 8,108 $ 16,963

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

6 unchanged sentences

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

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

Operations Update.

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

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

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

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

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

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

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

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

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

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

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

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

Pension Plan Amendment.

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

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

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

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

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

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

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

Operating results for the three-month period ended March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Trade Accounts Receivable Agreements.

In first-quarter 2021, PT Freeport Indonesia (PT-FI) entered into agreements to sell certain trade accounts receivables to unrelated third-party financial institutions.

The agreements were entered into in the normal course of business to fund the working capital for the additional quantity of copper to be supplied by PT-FI to PT Smelting (a smelter in Gresik, Indonesia owned 25 percent by PT-FI through April 30, 2020, and 39.5 percent thereafter.

See “Acquisition of Minority Interest in PT Smelting” below) beginning January 1, 2021.

The balances sold under the agreements were excluded from trade accounts receivable on the consolidated balance sheet at March 31, 2021.

Receivables are considered sold when (i) they are transferred beyond the reach of PT-FI and its creditors, (ii) the purchaser has the right to pledge or exchange the receivables, and (iii) PT-FI has no continuing involvement in the transferred receivables.

In addition, PT-FI provides no other forms of continued financial support to the purchaser of the receivables once the receivables are sold.

For the three-month period ended March 31, 2021, gross amounts sold under these arrangements totaled $ 52.5 million ($ 52.4 million net of discount).

Acquisition of Minority Interest in PT Smelting.

On April 30, 2021, PT-FI acquired 14.5 percent of the outstanding common stock of PT Smelting for $ 33 million, increasing its ownership interest from 25 percent to 39.5 percent.

The remaining shares of PT Smelting continue to be owned by Mitsubishi Materials Corporation.

PT-FI will continue to account for its investment in PT Smelting using the equity method since it does not have control over PT Smelting.

Subsequent Events.

FCX evaluated events after March 31, 2021, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

EARNINGS PER SHARE

3 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

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

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

( 103 ) 27 ( 116 ) ( 16 )

Three Months Ended

Net income (loss) $ 953 $ ( 549 )

Net (income) loss attributable to noncontrolling interests ( 235 ) 58

Undistributed earnings allocated to participating securities ( 4 ) ( 3 )

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

326 ( 211 ) ( 112 ) ( 253 )

Net income from discontinued operations attributable to common stockholders

Net income (loss) attributable to common stockholders $ 714 $ ( 494 )

Basic weighted-average shares of common stock outstanding

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

Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs) 15 — a

Diluted weighted-average shares of common stock outstanding

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

$ 0.49 $ ( 0.34 )

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

Continuing operations $ 0.22 $ ( 0.15 ) $ ( 0.08 ) $ ( 0.17 )

Discontinued operations — — — —

Diluted net income (loss) per share attributable to common stockholders:

$ 0.48 $ ( 0.34 )

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

Excludes approximately 10 million shares associated with outstanding stock options with exercise prices less than the average market price of FCX’s common stock and RSUs that were anti-dilutive.

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

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

Stock options for 10 million shares of common stock in first-quarter 2021 and 40 million shares of common stock in first-quarter 2020, were excluded.

INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Current inventories:

13 unchanged sentences

$ 1,475 $ 1,463

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

Materials and supplies inventory was net of obsolescence reserves totaling $ 35 million at March 31, 2021, and $ 32 million at December 31, 2020.

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

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

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

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

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

Nine Months Ended

September 30,

operations $ 56 a

International operations ( 389 ) c

Total $ ( 333 ) $ ( 181 ) d

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

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

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

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

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

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

FCX recorded net realizable value inventory adjustments to decrease long-term metals inventory carrying values totaling $ 1 million in first-quarter 2021, associated with lower market prices for molybdenum, and $ 222 million in first-quarter 2020, associated with lower market prices for copper ($ 205 million) and molybdenum ($ 17 million) (refer to Note 9 for metals inventory adjustments by business segment).

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

Three Months Ended

operations $ —

International operations ( 443 )

Total $ ( 443 ) $ 60

FCX’s consolidated effective income tax rate was 32 percent for first-quarter 2021 and 10 percent for first-quarter 2020.

Because FCX's U.S.

jurisdiction generated net losses in the first nine

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

jurisdiction generated pre-tax losses in the first three months of 2020 that did not result in a realized tax benefit, applicable accounting rules required FCX to adjust its estimated annual effective tax rate to exclude the impact of U.S.

pre-tax losses.

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

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

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

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

Such measures include the American Rescue Plan Act of 2021 (ARPA), enacted on March 11, 2021, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020.

None of these measures resulted in material impacts to FCX’s provision for income taxes for the three months ended March 31, 2021 and 2020.

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

2 unchanged sentences

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

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

FCX collected the remaining U.S.

alternative minimum tax credit refund of $ 23 million in March 2021.

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

2 unchanged sentences

The components of debt follow (in millions):

September 30,

2021 December 31, 2020

2 unchanged sentences

Issued by Freeport Minerals Corporation (FMC) 356 356

Cerro Verde credit facility 827 826

Cerro Verde Term Loan 524 523

Total debt 9,809 9,711

2 unchanged sentences

Revolving Credit Facility.

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

At March 31, 2021, FCX had no borrowings outstanding and approximately $ 10 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

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

In June 2020, FCX, PT-FI and Freeport-McMoRan Oil & Gas LLC (FM O&G LLC) amended the $ 3.5 billion unsecured revolving credit facility.

The key changes under the amendment include (i) a suspension of the total leverage ratio through June 30, 2021, followed by a limit of 5.25 x beginning with the quarter ending September 30, 2021, and stepping down to 3.75 x beginning January 1, 2022;

and (ii) a reduction in the interest expense coverage ratio to a minimum of 2.00 x through December 31, 2021, reverting to 2.25 x beginning January 1, 2022.

FCX also agreed to a minimum liquidity covenant of $ 1 billion (consisting of consolidated unrestricted cash and availability under the revolving credit facility) applicable to each quarter through June 30, 2021, and additional restrictions on priority debt and liens, and the payment of common stock dividends through December 31, 2021.

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

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

Senior Notes.

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

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

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

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

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

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

Interest on these senior notes is payable semiannually on March 1 and September 1 of each year.

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

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

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

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

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

In March 2021, FCX delivered a Covenant Reversion Notice (as defined in the third amendment to the revolving credit facility dated June 3, 2020), which provided notification of its election to end the Covenant Increase Period (as defined in the third amendment to the revolving credit facility dated June 3, 2020).

As a result, the leverage ratio limit reverted to 5.25 x through the quarter ending June 30, 2021 (stepping down to 3.75 x beginning with the quarter ending September 30, 2021), and the interest expense coverage ratio minimum reverted to 2.25 x.

Additionally, following FCX’s election to end the Covenant Increase Period, the additional limits on priority debt and liens, and the provisions related to minimum liquidity and restricted payments (which included restrictions on the payment of common stock dividends) are no longer applicable.

At March 31, 2021, FCX was in compliance with its revolving credit facility covenants.

Interest Expense, Net.

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

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

Consolidated interest costs (before capitalization) totaled $ 160 million in first-quarter 2021 and $ 171 million in first-quarter 2020.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 15 million in first-quarter 2021 and $ 44 million in first-quarter 2020.

The decrease in capitalized interest in first-quarter 2021, compared with first-quarter 2020, is primarily related to significant assets at PT-FI’s underground mines being placed in service.

Common Stock.

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

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

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

As noted above, in accordance with the June 2020 amendment to the revolving credit facility, FCX is restricted from declaring or paying common stock dividends through December 31, 2021, unless FCX, at its option, reverts to the previous covenant requirements which would also eliminate the restriction on the declaration or payment of common stock dividends.

In February 2021, FCX’s Board of Directors (the Board) reinstated a cash dividend on FCX’s common stock.

On March 24, 2021, FCX declared a quarterly cash dividend of $ 0.075 per share on its common stock, which was paid on May 3, 2021, to common stockholders of record as of April 15, 2021.

FINANCIAL INSTRUMENTS

5 unchanged sentences

Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions.

In April 2020, FCX entered into forward sales contracts for 150 million pounds of copper for settlement in May and June of 2020.

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

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

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

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

2 unchanged sentences

Some of FCX’s U.S.

copper rod customers request a fixed market price instead of the Commodity Exchange Inc.

copper rod and cathode customers request a fixed market price instead of the Commodity Exchange Inc.

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

2 unchanged sentences

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

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

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

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the three-month periods ended March 31, 2021 and 2020.

At March 31, 2021, FCX held copper futures and swap contracts that qualified for hedge accounting for 66 million pounds at an average contract price of $ 3.73 per pound, with maturities through March 2023.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Copper futures and swap contracts:

6 unchanged sentences

Embedded Derivatives.

Certain FCX concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) copper price or the COMEX copper price and the London Bullion Market Association (LBMA) gold price at the time of shipment as specified in the contract.

Certain FCX concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) copper price or the COMEX copper price and the London Bullion Market Association (London) gold price at the time of shipment as specified in the contract.

FCX receives market prices based on prices in the specified future month, which results in price fluctuations recorded in revenues until the date of settlement.

FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper prices and the LBMA gold prices as specified in the contracts, which results in an embedded derivative ( i.e.

FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper prices and the London gold prices as specified in the contracts, which results in an embedded derivative ( i.e.

, a pricing mechanism that is finalized after the time of delivery) that is required to be bifurcated from the host contract.

The host contract is the sale of the metals contained in the concentrate or cathode at the then-current LME or COMEX copper price, and the LBMA gold price.

The host contract is the sale of the metals contained in the concentrate or cathode at the then-current LME or COMEX copper price, and the London gold price.

FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host contract in its concentrate or cathode sales agreements since these contracts do not allow for net settlement and always result in physical delivery.

The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through earnings each period, using the period-end LME or COMEX copper forward prices and the adjusted LBMA gold prices, until the date of final pricing.

Similarly, FCX purchases copper under contracts that provide for provisional pricing.

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

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

A summary of FCX’s embedded derivatives at March 31, 2021, follows:

Open Positions Average Price

2 unchanged sentences

Embedded derivatives in provisional sales contracts:

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

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

Copper (millions of pounds) 486 $ 3.83 $ 3.99 August 2021

Gold (thousands of ounces) 151 1,755 1,689 June 2021

Embedded derivatives in provisional purchase contracts:

Copper (millions of pounds) 113 2.95 3.03 January 2021

Copper (millions of pounds) 123 3.77 3.99 July 2021

Copper Forward Contracts.

1 unchanged sentence

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

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

At March 31, 2021, Atlantic Copper held net copper forward purchase contracts for 23 million pounds at an average contract price of $ 4.09 per pound, with maturities through May 2021.

Summary of Gains (Losses).

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Embedded derivatives in provisional sales contracts:

2 unchanged sentences

Copper forward contracts b

( 7 ) — 12 ( 3 )

Amounts recorded in revenues.

2 unchanged sentences

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

September 30,

2021 December 31, 2020

7 unchanged sentences

Commodity Derivative Liabilities:

Derivatives designated as hedging instruments :

Copper futures and swap contracts $ — $ —

Derivatives not designated as hedging instruments :

6 unchanged sentences

Assets Liabilities

September 30,

2020 December 31, 2019 September 30,

2021 December 31, 2020 March 31,

2021 December 31, 2020

3 unchanged sentences

Copper derivatives 21 15 1 —

126 184 68 21

Less gross amounts of offset:

1 unchanged sentence

sales/purchase contracts 7 1 7 1

Copper derivatives 1 — 1 —

Net amounts presented in balance sheet:

6 unchanged sentences

Other current assets 19 15 — —

Other assets 1 — — —

Accounts payable and accrued liabilities 6 — 37 20

2 unchanged sentences

To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties.

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

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

As of March 31, 2021, the maximum amount of credit exposure associated with derivative transactions was $ 128 million.

Other Financial Instruments.

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

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

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

The carrying value for cash and cash equivalents (which included time deposits of $ 0.3 billion at March 31, 2021, and December 31, 2020), restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, as of March 31, 2021, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

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

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

September 30,

2021 December 31, 2020

8 unchanged sentences

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

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

FCX did not have any significant transfers in or out of Level 3 during first-quarter 2021.

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

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

At September 30, 2020

At March 31, 2021

Carrying Fair Value

6 unchanged sentences

core fixed income fund 63 63 63 — — —

Corporate bonds 43 43 — — 43 —

Government bonds and notes 46 46 — — 46 —

Corporate bonds 40 40 — — 40 —

Government mortgage-backed securities 28 28 — — 28 —

14 unchanged sentences

Embedded derivatives in provisional sales/purchase contracts in a gross liability position 67 67 — — 67 —

Copper forward contracts 1 1 — — 1 —

Total 68 68 — — 68 —

Long-term debt, including current portion d

9 unchanged sentences

core fixed income fund 65 65 65 — — —

Government mortgage-backed securities 43 43 — — 43 —

Government bonds and notes 49 49 — — 49 —

Corporate bonds 43 43 — — 43 —

Government mortgage-backed securities 30 30 — — 30 —

Asset-backed securities 16 16 — — 16 —

Collateralized mortgage-backed securities 7 7 — — 7 —

Money market funds 5 5 — 5 — —

Collateralized mortgage-backed securities 4 4 — — 4 —

Municipal bonds 1 1 — — 1 —

3 unchanged sentences

Copper futures and swap contracts c

Contingent consideration for the sale of onshore

California oil and gas properties a

15 15 — 13 2 —

4 unchanged sentences

Embedded derivatives in provisional sales/purchase contracts in a gross liability position 21 21 — — 21 —

Copper forward contracts 1 1 — — 1 —

Total 21 21 — — 21 —

Long-term debt, including current portion d

1 unchanged sentence

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

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

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 106 million at March 31, 2021, and $ 97 million at December 31, 2020, and (ii) other assets of $ 148 million at both March 31, 2021 and December 31, 2020, primarily associated with an assurance bond to support PT-FI’s commitment for the development of a greenfield smelter in Indonesia and PT-FI’s closure and reclamation guarantees.

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

9 unchanged sentences

Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales are valued using quoted monthly LME or COMEX copper forward prices and the adjusted LBMA gold prices at each reporting date based on the month of maturity (refer to Note 6 for further discussion);

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales are valued using quoted monthly LME or COMEX copper forward prices and the adjusted London gold prices at each reporting date based on the month of maturity (refer to Note 6 for further discussion);

however, FCX’s contracts themselves are not traded on an exchange.

2 unchanged sentences

Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy based on COMEX and LME forward prices.

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

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

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

Future changes in the fair value of this contingent consideration derivative will continue to be recorded in operating income.

Also, contingent consideration of $ 50 million was realized in 2018 and collected in first-quarter 2019 (included in proceeds from sales of assets in the consolidated statements of cash flows) because the average Brent crude oil price exceeded $ 70 per barrel for 2018.

Contingent consideration of $ 50 million was not realized in 2019 because the average Brent crude oil price did not exceed $ 70 per barrel for 2019.

The fair value at December 31, 2019, was calculated based on average commodity price forecasts through the applicable maturity date using a Monte-Carlo simulation model.

The model used various observable inputs, including Brent crude oil forward prices, volatilities and discount rates.

As a result, this contingent consideration asset was classified within Level 2 of the fair value hierarchy.

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

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

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

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

The contingent consideration included in (i) other current assets totaled $ 18 million at March 31, 2021, and $ 12 million at December 31, 2020, and (ii) other assets totaled $ 86 million at March 31, 2021, and $ 96 million at December 31, 2020.

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

3 unchanged sentences

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

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

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

There have been no changes in the techniques used at March 31, 2021, as compared with those techniques used at December 31, 2020.

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first three months of 2021 follows (in millions):

Fair value at January 1, 2021 $ 88

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

Fair value at September 30, 2020 $ 84

Net unrealized gain related to assets still held at the end of the period 5

Fair value at March 31, 2021 $ 88

CONTINGENCIES AND COMMITMENTS

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

Louisiana Parishes Coastal Erosion Cases.

As previously disclosed, in September 2019, affiliates of FCX reached an agreement in principle to settle all 13 cases filed in Louisiana state courts by six south Louisiana parishes (Cameron, Jefferson, Plaquemines, St.

John the Baptist and Vermilion) and the parties that intervened in the litigation in support of the parishes’ claims, including the state of Louisiana, alleging that certain oil and gas exploration and production operations and sulphur mining and production operations of the FCX affiliates damaged coastal wetlands and caused significant land loss along the Louisiana coast.

The agreement in principle does not include any admission of liability by FCX or its affiliates.

FCX recorded a charge in third-quarter 2019 for the initial payment of $ 15 million, which will be paid upon execution of the settlement agreement.

The settlement agreement has been executed by the FCX affiliates and several of the Louisiana parishes.

FCX expects the agreement to be executed by all parties;

however, execution has been delayed by the ongoing COVID-19 pandemic.

Upon execution of the settlement agreement by all parties, the FCX affiliates will be fully released and dismissed from all 13 pending cases.

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2020 Form 10-K, other than the matters discussed below.

Asbestos and Talc Claims .

As previously disclosed, there has been a significant increase in the number of cases alleging the presence of asbestos contamination in talc-based personal care products and in cases alleging exposure to talc products that are not alleged to be contaminated with asbestos.

The primary targets have been the producers of those products, but defendants in many of these cases also include talc miners.

Cyprus Amax Minerals Company (CAMC), an indirect wholly owned subsidiary of FCX, and Cyprus Mines Corporation (Cyprus Mines), a wholly owned subsidiary of CAMC, are among those targets.

Cyprus Mines was engaged in talc mining from 1964 until 1992 when it exited its talc business by conveying it to a third party in two related transactions.

Those transactions involved (i) a transfer by Cyprus Mines of the assets of its talc business to a newly formed subsidiary that assumed all pre-sale and post-sale talc liabilities, subject to limited reservations, and (ii) a sale of the stock of that subsidiary to the third party.

In 2011, the third party sold that subsidiary to Imerys Talc America (Imerys), an affiliate of Imerys S.A.

Cyprus Mines has contractual indemnification rights, subject to limited reservations, against Imerys, which has historically acknowledged those indemnification obligations, and had taken responsibility for all cases tendered to it.

However, on February 13, 2019, Imerys filed for Chapter 11 bankruptcy protection, which triggered an immediate automatic stay under the federal bankruptcy code prohibiting any party from continuing or initiating litigation or asserting new claims against Imerys.

As a result, Imerys is no longer defending the talc lawsuits against Cyprus Mines and CAMC.

In addition, Imerys has taken the position that it alone owns, and has the sole right to access, the proceeds of the legacy insurance coverage of Cyprus Mines and CAMC for talc liabilities.

In late March 2019, Cyprus Mines and CAMC challenged this position and obtained emergency relief from the bankruptcy court to gain access to the insurance until the question of ownership and contractual access can be decided in an adversary proceeding before the bankruptcy court, which was previously scheduled for March 2020, but has been put on hold.

During first-quarter 2019, in a case pending at the time Imerys filed bankruptcy, a California jury entered a $ 29 million verdict against Johnson & Johnson (J&J) and Cyprus Mines, of which approximately $ 2 million was attributed to Cyprus Mines.

Taking advantage of the temporary access to the insurance authorized by the bankruptcy court, Cyprus Mines used the insurance to fully resolve the case.

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

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

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

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

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

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

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

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

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

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

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

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

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

As previously disclosed, since approximately 1990, various FCX affiliates have been named as defendants in a large number of lawsuits alleging personal injury from, among other things, exposure to asbestos or talc allegedly contained in industrial products, and more recently alleging the presence of asbestos contamination in talc-based cosmetic and personal care products.

Cyprus Amax Minerals Company (CAMC), an indirect wholly owned subsidiary of FCX, and Cyprus Mines Corporation (Cyprus Mines), a wholly owned subsidiary of CAMC, are among the targets of such lawsuits.

Cyprus Mines and subsidiaries were engaged in talc mining and processing from 1964 until 1992 when Cyprus Mines exited its talc business.

On February 13, 2019, Imerys Talc America (Imerys), the current owner of the talc business assets and liabilities previously owned by Cyprus Mines, filed for Chapter 11 bankruptcy protection.

On December 22, 2020, Imerys filed an amended bankruptcy plan disclosing a global settlement with Cyprus Mines and CAMC, which provides a framework for a full and comprehensive resolution of all current and future potential liabilities arising out of the Cyprus Mines talc business,

including claims against FCX, its affiliates, Cyprus Mines, and CAMC.

On January 21, 2021, in connection with the proposed global settlement, Imerys sought an injunction temporarily staying up to approximately 950 talc-related lawsuits against CAMC and Cyprus Mines.

On February 22, 2021, the bankruptcy court granted the requested preliminary injunction, which is currently in place until June 30, 2021.

The global settlement is subject to, among other things, bankruptcy court approvals of both the Imerys bankruptcy plan and the Cyprus Mines bankruptcy plan, and there can be no assurance that the global settlement will be successfully implemented.

Other Matters

PT-FI and PT Smelting Export Licenses.

In March 2020, PT-FI received a one-year extension of its export license through March 15, 2021, and PT Smelting (PT-FI’s 25 percent-owned smelter and refinery in Indonesia) received an extension of its anode slimes export license through March 10, 2021.

Cerro Verde Royalty Dispute.

In November 2019, Cerro Verde filed a notice of intent to initiate international arbitration against the Peruvian government, which triggered a period for mandatory good faith settlement discussions.

The parties were unable to find an amicable resolution and, on February 28, 2020, FCX and Cerro Verde filed international arbitration proceedings against the Peruvian government.

In April 2020, SMM Cerro Verde Netherlands B.V.

(SMM), another shareholder of Cerro Verde, filed a parallel arbitration proceeding under a different investment treaty against the Peruvian government.

In March 2021, PT-FI received a one-year extension of its export license through March 15, 2022, and in January 2021, PT Smelting received a six-month extension of its anodes slimes export license, which currently expires July 18, 2021.

Development Progress of Greenfield Smelter at East Java .

On January 7, 2021, the Indonesia government levied an administrative fine of $ 149 million for the period from March 30, 2020, through September 30, 2020 (additional fines could be levied on exports after September 30, 2020), on PT-FI for failing to achieve physical development progress on the greenfield smelter as of July 31, 2020.

PT-FI responded to the Indonesia government objecting to the fine because of events outside of its control that caused a delay in development progress for the greenfield smelter at East Java.

PT-FI believes that its communications during 2020 with the Indonesia government were not properly considered before the administrative fine was levied.

PT-FI is continuing to discuss this matter with the Indonesia government as well as provide additional documentation to support its position on the cause of delays in development progress on the greenfield smelter.

During first-quarter 2021, PT-FI recorded a $ 13 million charge for a potential settlement of the administrative fine which is expected to include a revised construction schedule for the greenfield smelter.

The final settlement could differ from the amount recorded in first-quarter 2021.

BUSINESS SEGMENTS

FCX has organized its mining operations into four primary divisions – North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments.

Separately disclosed in the following tables are FCX’s reportable segments, which include the Morenci, Bagdad, Cerro Verde and Grasberg (Indonesia Mining) copper mines, the Rod & Refining operations and Atlantic Copper Smelting & Refining.

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

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

Separately disclosed in the following tables are FCX’s reportable segments, which include the Morenci, Cerro Verde and Grasberg (Indonesia Mining) copper mines, the Rod & Refining operations and Atlantic Copper Smelting & Refining.

Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale.

Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mines to other segments, including Atlantic Copper Smelting & Refining, and on 25 percent of PT-FI’s sales to PT Smelting, until final sales to third parties occur.

FCX defers recognizing profits on sales from its mines to other segments, including Atlantic Copper Smelting & Refining, and until April 30, 2021 on 25 percent of PT-FI’s sales to PT Smelting, until final sales to third parties occur.

See Note 1 regarding PT-FI’s increased ownership in PT Smelting as of April 30, 2021.

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

5 unchanged sentences

Product Revenues.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

FCX’s revenues attributable to the products it sold for the first quarters of 2021 and 2020 follow (in millions):

Three Months Ended

Concentrate $ 1,709 $ 849

2 unchanged sentences

Purchased copper a

167 210 568 872

Gold 497 415 1,108 1,111

Molybdenum 244 243

159 202 431 697

Adjustments to revenues:

3 unchanged sentences

Export duties d

( 23 ) ( 174 ) e

( 43 ) ( 201 ) e

Revenues from contracts with customers 4,671 3,029

Embedded derivatives f

109 ( 51 ) 57 ( 40 )

Embedded derivatives e

Total consolidated revenues $ 4,850 $ 2,798

3 unchanged sentences

Reflects PT-FI export duties.

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

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

4 unchanged sentences

Cerro Indonesia Molybdenum Rod & Smelting & Elimi- FCX

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

Three Months Ended September 30, 2020

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

Three Months Ended March 31, 2021

Unaffiliated customers $ 4 $ 28 $ 32 $ 917 $ 175 $ 1,092 $ 1,383 a

1 unchanged sentence

Intersegment 564 742 1,306 45 — 45 52 70 7 — ( 1,480 ) —

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

Production and delivery 269 480 749 436 103 539 455 57 1,316 673 ( 1,003 ) c

Depreciation, depletion and amortization

7 unchanged sentences

— — — — — — — — — — 5 5

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

Operating income (loss) 265 243 508 435 60 495 755 ( 3 ) ( 1 ) — ( 222 ) 1,532

1 unchanged sentence

Provision for (benefit from) income taxes — — — 173 21 194 315 — — — ( 66 ) 443

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

Total assets at March 31, 2021 2,629 5,283 7,912 8,723 1,738 10,461 17,551 1,753 235 997 4,734 43,643

Capital expenditures 10 16 26 20 1 21 310 1 1 6 5 370

Three Months Ended September 30, 2019

Three Months Ended March 31, 2020

Unaffiliated customers $ 2 $ 7 $ 9 $ 376 $ 98 $ 474 $ 445 a

14 unchanged sentences

Interest expense, net 1 — 1 28 — 28 1 — — 3 94 127

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

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

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

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

Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

(In millions)

Atlantic Corporate,

North America Copper Mines South America Mining Copper Other

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

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

Nine Months Ended September 30, 2020

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

$ — $ 3,491 $ 1,429 $ 780 b

Intersegment 1,473 532 1,144 3,149

156 — 156 38 171 24 16 ( 3,554 ) —

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

Depreciation, depletion and amortization 129 41 102 272 273 42 315 375 44 14 22 51 1,093

Metals inventory adjustments 4 — 48 52 — 3 3 — 8 3 — 26 92

Selling, general and administrative expenses

2 — 1 3 5 — 5 81 — — 15 169 273

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

Environmental obligations and shutdown costs

— — ( 3 ) ( 3 ) — — — — — 1 — 60 58

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

Operating income (loss) 359 124 ( 14 ) 469 205 ( 30 ) 175 603 ( 59 ) ( 32 ) 29 ( 457 ) 728

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

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

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

Nine Months Ended September 30, 2019

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

$ — $ 3,403 $ 1,554 $ 1,350 b

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

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

Depreciation, depletion and amortization 128 33 100 261 294 48 342 281 50 7 21 59 1,021

Metals inventory adjustments 1 — 38 39 2 — 2 — 1 — — 58 100

Selling, general and administrative expenses

2 1 1 4 6 — 6 91 — — 15 184 300

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

Environmental obligations and shutdown costs

— — — — — — — — — — — 85 85

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

Operating income (loss) 349 169 8 526 442 ( 42 ) 400 ( 48 ) 5 ( 1 ) 35 ( 601 ) 316

Interest expense, net 2 — 1 3 79 — 79 2 — — 17 300 401

Provision for (benefit from) income taxes — — — — 159 ( 10 ) 149 ( 9 ) — — 2 39 181

(Benefit from) provision for income taxes — — — ( 52 ) ( 26 ) ( 78 ) 12 — — — 6 ( 60 )

Total assets at March 31, 2020 2,814 5,093 7,907 8,471 1,655 10,126 16,711 1,788 231 635 2,821 40,219

Capital expenditures 44 140 184 59 15 74 326 7 2 6 11 610

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

Includes PT-FI's sales to PT Smelting totaling $ 792 million in first-quarter 2021 and $ 380 million in first-quarter 2020.

Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

NEW ACCOUNTING STANDARD

Financial Instruments.

In June 2016, the Financial Accounting Standards Board issued an Accounting Standards Update (ASU) that requires entities to estimate all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which requires consideration of historical experience, current conditions, and reasonable and supportable forecasts.

FCX adopted this ASU effective January 1, 2020, and the adoption of this ASU did not have a material impact on its consolidated financial statements.

SUBSEQUENT EVENTS

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

Includes charges associated with the major maintenance turnaround at the Miami smelter totaling $ 68 million.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

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

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

(the Company) as of March 31, 2021, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for the three-month periods ended March 31, 2021 and 2020, and the related notes (collectively referred to as the “consolidated interim financial statements”).

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

generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2019, the related consolidated statements of operations, comprehensive (loss) income, cash flows and equity for the year then ended, and the related notes (not presented herein);

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, the related consolidated statements of operations, comprehensive income (loss), cash flows and equity for the year then ended, and the related notes (not presented herein);

and in our report dated February 16, 2021, we expressed an unqualified audit opinion on those consolidated financial statements.

10 unchanged sentences

Phoenix, Arizona

November 6, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements