What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-06 · 325 added, 835 removed, 783 unchanged (60% of the section changed)

11 unchanged sentences

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.

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).

Our financial results for first-quarter 2021 reflect solid operational execution, building a strong foundation for near-term growth in volumes and cash flows and we have a favorable operational and market outlook.

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

The ramp-up of underground mining at PT Freeport Indonesia (PT-FI) is advancing on schedule and Cerro Verde's concentrator facilities exceeded planned milling rates, averaging 390,100 metric tons of ore per day.

Our Lone Star copper leach project, which was successfully completed in the second half of 2020, is on track to achieve expected annual copper production of approximately 200 million pounds beginning in 2021.

Refer to “Operations” for further discussion.

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.

Net income (loss) attributable to common stock totaled $718 million in first-quarter 2021 and $(491) million in first-quarter 2020.

First-quarter 2021 results, compared with first-quarter 2020, primarily reflect higher copper prices and volumes, partly offset by a higher provision for income taxes.

The first-quarter 2020 net loss included unfavorable metals inventory adjustments totaling $182 million .

Refer to “Consolidated Results” for further discussion.

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.

At March 31, 2021, we had $4.6 billion in consolidated cash and cash equivalents and $9.8 billion in total debt, with no borrowings and $3.5 billion available under our revolving credit facility.

In 2022, we have scheduled debt maturities associated with our 3.55% Senior Notes ($0.5 billion) and the Cerro Verde Term Loan ($0.5 billion).

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

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.

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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Refer to “Markets” below and “Risk Factors” in Part I, Item 1A.

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

herein for further discussion.

of our 2020 Form 10-K for further discussion.

Because we cannot control the prices of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs, operating cash flows and capital expenditures.

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Projected molybdenum sales include 25 million pounds produced by our Molybdenum mines and 60 million pounds produced by our North America and South America copper mines.

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.

Consolidated sales volumes in second-quarter 2021 are expected to approximate 975 million pounds of copper, 330 thousand ounces of gold and 21 million pounds of molybdenum.

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.

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

of our 2020 Form 10-K.

Consolidated Unit Net Cash Costs

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.

Assuming average prices of $1,750 per ounce of gold and $11.00 per pound of molybdenum for the remainder of 2021 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 $1.33 per pound of copper for the year 2021 (including $1.42 per pound of copper in second-quarter 2021).

The impact of price changes for the remainder of 2021 on consolidated unit net cash costs for the year 2021 would approximate $0.03 per pound of copper for each $100 per ounce change in the average price of gold and $0.02 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 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 $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.

Based on current sales volume and cost estimates, and assuming average prices of $4.00 per pound for copper, $1,750 per ounce for gold, and $11.00 per pound for molybdenum for the remainder of 2021, our consolidated operating cash flows are estimated to approximate $6.5 billion (net of $0.1 billion of working capital and other uses) for the year 2021.

Estimated consolidated operating cash flows for the year 2021 also reflect an estimated income tax provision of $2.3 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year 2021).

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.

The impact of price changes for the remainder of 2021 on operating cash flows would approximate $265 million for each $0.10 per pound change in the average price of copper, $70 million for each $100 per ounce change in the average price of gold and $90 million for each $2 per pound change in the average price of molybdenum.

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

Consolidated capital expenditures are expected to approximate $2.3 billion for the year 2021, including $1.4 billion for major projects, primarily associated with underground development activities in the Grasberg minerals district and exclude estimates associated with Indonesia smelter development.

We expect capital expenditures for the development of a greenfield smelter in East Java, Indonesia to approximate $0.1 billion in 2021.

PT-FI plans to finance the smelter development with debt which, pursuant to the shareholders agreement, would be shared 51 percent by PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID) and 49 percent by FCX.

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

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;

During the period from January 2011 through March 2021, 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 (London) 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;

and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of $17.88 per pound in 2011.

Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in “Risk Factors” contained in Part I, Item 1A.

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 September 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 $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 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 $1,882 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.

of our 2020 Form 10-K.

This graph presents LME copper settlement prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc., and the Shanghai Futures Exchange from January 2011 through March 2021.

During first-quarter 2021, LME copper settlement prices ranged from a low of $3.52 per pound to a high of $4.36 per pound, averaged $3.86 per pound and settled at $4.01 per pound on March 31, 2021.

Copper prices, which increased in 2020 as China’s economy began to recover from the COVID-19 pandemic, have continued to rise in 2021 on improved investor sentiment towards commodities, supported by forecasts for a strong post-pandemic recovery and copper’s prominent role in the clean energy transition.

The LME copper settlement price was $4.51 per pound on April 30, 2021.

Expectations for longer-term copper demand growth remain in place.

We expect future demand to be supported by the global transition to renewable energy and other carbon-reduction initiatives, and continued urbanization in developing countries.

The limited number of approved, large-scale projects scheduled, the long lead times required to permit and build new mines and declining ore grades at existing operations highlight the supply challenges for copper.

This graph presents London PM gold prices from January 2011 through March 2021.

During first-quarter 2021, London PM gold prices ranged from a low of $1,684 per ounce to a high of $1,943 per ounce, averaged $1,794 per ounce, and closed at $1,691 per ounce on March 31, 2021.

While the global economic recovery has put downward pressure on gold prices, many analysts expect gold prices to remain supported by the effects of elevated debt levels associated with large pandemic-related stimulus efforts, historically low U.S.

interest rates and a weaker U.S.

The London PM gold price was $1,767 per ounce on April 30, 2021.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2011 through March 2021.

During first-quarter 2021, the weekly average price of molybdenum ranged from a low of $10.09 per pound to a high of $12.46 per pound, averaged $11.33 per pound, and was $11.05 per pound on March 31, 2021.

Molybdenum prices have reacted to supply concerns as mines in both Chile and Peru reported lower production and logistics challenges continued globally.

The Metals Week Molybdenum Dealer Oxide weekly average price was $11.44 per pound on April 30, 2021.

CONSOLIDATED RESULTS

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

2020 2019 2020 2019

Three Months Ended March 31,

SUMMARY FINANCIAL DATA

(in millions, except per share amounts)

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

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

$ 4,850 $ 2,798

Operating income (loss) a,c,d

Net income (loss) attributable to common stock g

Diluted net income (loss) per share of common stock

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Diluted weighted-average common shares outstanding

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

Operating cash flows n

Operating cash flows k

$ 1,075 $ (38)

Capital expenditures

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

At September 30:

Cash and cash equivalents

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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 $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.

Includes favorable (unfavorable) adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $146 million ($57 million to net income attributable to common stock or $0.04 per share) in first-quarter 2021 and $(107) million ($(45) million to net loss attributable to common stock or $(0.03) per share) in first-quarter 2020 (refer to Note 6).

Includes net unfavorable metals inventory adjustments totaling $1 million ($1 million to net income attributable to common stock or less than $0.01 per share) in first-quarter 2021 and $222 million ($182 million to net loss attributable to common stock or $0.12 per share) in first-quarter 2020.

Includes net credits (charges) associated with environmental obligations and related litigation reserves totaling $3 million ($3 million to net income attributable to common stock or less than $0.01 per share) in first-quarter 2021 and $(14) million ($(14) million to net loss attributable to common stock or $(0.01) per share) in first-quarter 2020.

Includes net charges totaling $23 million ($20 million to net income attributable to common stock or $0.01 per share), primarily associated with employee separation charges, international tax matters and asset retirement obligation adjustments.

Includes net losses on sales of assets totaling $11 million ($11 million to net loss attributable to common stock or $0.01 per share).

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 $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

Includes net charges associated with contested matters at PT-FI totaling $20 million ($0.01 per share) associated with an administrative fine levied by the Indonesia government and historical tax audits.

These charges, before income taxes and noncontrolling interests, were recorded to production and delivery ($13 million), interest expense, net ($4 million) and other income, net ($5 million).

Includes after-tax net losses on early extinguishment of debt totaling $32 million ($0.02 per share).

Includes net charges totaling $17 million ($0.01 per share), primarily associated with (i) COVID-19-related net charges of $9 million associated with idle facility costs at Cerro Verde and contract cancellation costs at El Abra, and (ii) other net charges of $8 million, primarily related to a change in a tax position at Cerro Verde and asset impairments.

These charges, before income taxes and noncontrolling interests, were recorded to production and delivery ($25 million), depreciation, depletion and amortization ($8 million), interest expense, net ($7 million) and other income, net ($4 million).

Working capital and other (uses) sources totaled $(336) million in first-quarter 2021 and $119 million in first-quarter 2020.

Three Months Ended March 31,

SUMMARY OPERATING DATA

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Sales, excluding purchases

234 243 562 674

Average realized price per ounce $ 1,713 $ 1,606

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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.”

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.

Excludes COVID-19 related costs of $0.03 per pound of copper, primarily associated with idle facility costs at Cerro Verde and contract cancellation costs at El Abra.

Consolidated revenues totaled $4.9 billion in first-quarter 2021 and $2.8 billion in first-quarter 2020.

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 September 30 Nine Months Ended September 30

Three Months Ended March 31

Consolidated revenues - 2020 period $ 2,798

Higher (lower) sales volumes:

Copper 140 (135)

Gold (13) (155)

Molybdenum (6)

Higher (lower) average realized prices:

Copper 331 47

Higher average realized prices:

Molybdenum 11

Adjustments for prior period provisionally priced copper sales 253

Higher (lower) Atlantic Copper revenues 102 (114)

Higher Atlantic Copper revenues 247

Lower revenues from purchased copper (17)

Lower cobalt revenues (65) (245)

(Higher) lower treatment charges (7) 42

Lower royalties and export duties 119 129

Higher treatment charges (17)

Higher royalties and export duties (68)

Other, including intercompany eliminations (40)

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Sales Volumes.

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.

Consolidated copper and gold sales volumes increased in first-quarter 2021, compared to first-quarter 2020, primarily reflecting continued progress of the ramp-up of underground mining at PT-FI, partly offset by timing of shipments.

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 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.

Average realized prices for first-quarter 2021, compared with first-quarter 2020, were 62 percent higher for copper, 7 percent higher for gold and 5 percent higher for molybdenum.

Average realized copper prices include net favorable (unfavorable) adjustments to current period provisionally priced copper sales totaling $61 million in first-quarter 2021 and $(131) million in first-quarter 2020.

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 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 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.

, provisionally priced sales at December 31, 2020 and 2019) recorded in consolidated revenues totaled $146 million in first-quarter 2021 and $(107) million in first-quarter 2020.

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

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.

At March 31, 2021, we had provisionally priced copper sales totaling 276 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.99 per pound, subject to final pricing over the next several months.

We estimate that each $0.05 change in the price realized from the March 31, 2021, provisional price recorded would have an approximate $8 million effect on our 2021 net income attributable to common stock.

The LME copper price settled at $4.51 per pound on April 30, 2021.

Atlantic Copper Revenues.

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.

Atlantic Copper revenues totaled $687 million in first-quarter 2021, compared with $440 million in first-quarter 2020.

Higher revenues in first-quarter 2021, compared with first-quarter 2020, primarily reflect higher copper prices.

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 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 $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.

The volumes of copper purchases vary depending on cathode production from our operations and totaled 53 million pounds in first-quarter 2021 and 88 million pounds in first-quarter 2020.

Treatment Charges.

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Royalties are primarily on PT-FI sales and vary with the volume of metal sold and the prices of copper and gold.

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

Refer to “Operations – Indonesia Mining” for further discussion of the new smelter in Indonesia and to Note 9 for a summary of royalty expense and export duties.

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

Refer to “Operations – Indonesia Mining” for further discussion of the current progress on a greenfield smelter in Indonesia and to Note 9 for a summary of royalty expense and export duties.

Production and Delivery 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).

Consolidated production and delivery costs totaled $2.8 billion in first-quarter 2021 and $2.5 billion in first-quarter 2020.

Higher consolidated production and delivery costs in first-quarter 2021 primarily reflect higher sales volumes.

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 $1.77 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).

Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.86 per pound of copper in first-quarter 2021 and $2.19 per pound of copper in first-quarter 2020.

Consolidated site production and delivery costs per pound of copper for first-quarter 2020 exclude certain charges associated with the COVID-19 pandemic totaling $0.03 per pound of copper.

Lower consolidated site production and delivery costs per pound in the 2021 periods, compared with the 2020 periods, primarily reflect higher sales volumes and lower mining costs.

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 $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.

Consolidated depreciation, depletion and amortization (DD&A) totaled $419 million in first-quarter 2021 and $341 million in first-quarter 2020.

Higher DD&A in first-quarter 2021 primarily related to assets placed in service associated with the ramp-up of underground mining at PT-FI.

Metals Inventory Adjustments

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 $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 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 $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

Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates.

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 $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.

Unfavorable net realizable value metals inventory adjustments totaled $1 million in first-quarter 2021 and $222 million in first-quarter 2020.

Metals inventory adjustments in 2020 were related to volatility in copper and molybdenum prices associated with the COVID-19 pandemic.

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.

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.

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

Capitalized interest varies with the level of qualifying assets associated with our development projects and average interest rates on our borrowings, and 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.

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 (in millions, except percentages):

Nine Months Ended September 30,

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

Three Months Ended

Income (Loss) a

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Indonesia 757 42 % (315) (19) (63) % (12) 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

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

Rate adjustment h

Eliminations and other (37) N/A 4 60 N/A (11)

Rate adjustment f

— N/A 62 — N/A 1

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.

Consolidated FCX $ 1,398 32 % g

$ (443) $ (612) 10 % g,h

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

In addition to our North America mining operations, the U.S.

jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.

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

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

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.

Includes valuation allowance release on prior year unbenefited net operating losses.

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

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

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.

jurisdiction.

Because our U.S.

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.

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

Because of our U.S.

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.

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

jurisdiction generated net losses in the first three months of 2020 that did not result in a realized tax benefit;

applicable accounting rules required 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 $4.00 per pound for copper, $1,750 per ounce for gold and $11.00 per pound for molybdenum for the remainder of 2021, we estimate our consolidated effective tax rate for the year 2021 would approximate 32 percent.

Changes in projected sales volumes and average prices during 2021 would incur tax impacts at estimated effective rates of 40 percent for Peru, 38 percent for Indonesia and 0 percent for the U.S.

Responsible Production

2020 Annual Report on Sustainability.

In April 2021, we published our 2020 Annual Report on Sustainability, which is available on our website at fcx.com.

We have a long history of environmental, social and governance programs and are continuously striving to improve and embrace evolving stakeholder expectations.

This report marks our 20th year of reporting on our sustainability progress and our first year reporting in alignment with the Sustainability Accounting Standards Board (SASB) Metals & Mining industry framework.

We are committed to building upon our achievements in sustainability and seek to contribute positively to society by supplying the world with responsibly produced copper.

The Copper Mark.

In April 2021, the Morenci operations were awarded the Copper Mark - a new, robust assurance framework demonstrating the copper industry's responsible production practices and contribution to the United Nations Sustainable Development Goals.

We now have six sites that have achieved the Copper Mark (the Morenci operations, Miami smelter and mine, and El Paso refinery in North America;

Cerro Verde and El Abra mines in South America;

and Atlantic Copper smelter and refinery in Spain).

We have future plans to validate all of our copper producing sites against the Copper Mark requirement.

North America Copper Mines

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Operating and Development Activities.

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.

Our North America operating sites continue to focus on strong execution of operating plans.

We successfully completed the initial development of the Lone Star copper leach project in the second half of 2020, and we are on track to achieve expected annual copper production of approximately 200 million pounds beginning in 2021.

We are advancing studies for potential near-term incremental oxide expansions and long-term development options for our large-scale sulfide resources at Lone Star.

During first-quarter 2021, mining activities at the Chino mine were restarted at a rate of approximately 100 million pounds of copper per year (approximately 50 percent of capacity).

We have substantial resources in the U.S., primarily associated with existing mining operations, and will continue to assess options for further growth.

Operating Data.

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

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

2020 2019 2020 2019

Three Months Ended March 31,

Operating Data, Net of Joint Venture Interests

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Sales, excluding purchases 308 355

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

Average realized price per pound $ 3.88 $ 2.56

Molybdenum (millions of recoverable pounds)

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Copper production (millions of recoverable pounds) 151 178

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.

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.

Our consolidated production volumes from North America in first-quarter 2021 approximated first-quarter 2020.

Consolidated copper sales volumes of 308 million pounds in first-quarter 2021 were lower than first-quarter 2020 copper sales volumes of 355 million pounds, primarily reflecting the timing of shipments.

North America copper sales are estimated to approximate 1.5 billion pounds for the year 2021 compared to 1.4 billion pounds for the year 2020.

Unit Net Cash Costs.

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This information differs from measures of performance determined in accordance with U.S.

GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S.

generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S.

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 per Pound of Copper and Molybdenum

The following table summarizes unit net cash costs and gross profit per pound at our North America copper mines.

Gross Profit (Loss) per Pound of Copper and Molybdenum

The following table summarizes unit net cash costs and gross profit (loss) per pound at our North America copper mines.

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 September 30,

Three Months Ended March 31,

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

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Metals inventory adjustments — — — 0.41 0.40 —

Noncash and other costs, net 0.10 b

Noncash and other costs, net 0.13

0.13 0.06 0.10 0.09 0.23

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0.02 0.02 — (0.06) (0.06) —

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

Copper sales (millions of recoverable pounds) 378 378 394 394

Molybdenum sales (millions of recoverable pounds) a

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

By-product credits (0.19) — — (0.25) — —

Treatment charges 0.10 0.10 — 0.11 0.11 —

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 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

Other revenue adjustments, primarily for pricing on prior period open sales (0.01) (0.01) — — — —

Gross profit per pound $ 0.44 $ 0.41 $ 0.83 $ 0.50 $ 0.45 $ 1.43

Gross profit (loss) per pound $ 1.66 $ 1.54 $ 3.30 $ (0.31) $ (0.30) $ (0.20)

Copper sales (millions of recoverable pounds) 308 308 354 354

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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 $0.03 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) 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.

Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.85 per pound of copper in first-quarter 2021 were lower than unit net cash costs of $2.04 per pound in first-quarter 2020, primarily reflecting lower mining costs and higher by-product credits, partly offset by lower sales volumes.

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 $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.

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.92 per pound of copper for the year 2021, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $11.00 per pound for the remainder of 2021.

North America’s average unit net cash costs for the year 2021 would change by approximately $0.04 per pound for each $2 per pound change in the average price of molybdenum for the remainder of 2021.

South America Mining

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Operating and Development Activities.

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.

During first-quarter 2021, Cerro Verde's concentrator facilities exceeded planned milling rates and averaged 390,100 metric tons of ore per day.

Operating plan assumptions, which reflect strict COVID-19 restrictions and protocols, include an estimated milling rate of 360,000 metric tons of ore per day for the remainder of 2021, with plans to return to pre-COVID-19 pandemic levels of approximately 400,000 metric tons of ore per day in 2022.

El Abra is implementing plans to increase operating rates during 2021 to pre-COVID-19 pandemic levels, subject to ongoing monitoring of public health conditions in Chile.

Stacking rates at El Abra are expected to increase to over 100,000 metric tons of ore per day by mid-2022, resulting in incremental annual production of approximately 70 million pounds of copper.

We continue to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher copper recoveries.

El Abra's large sulfide resource could potentially support a major mill project similar to facilities constructed at Cerro Verde in 2015.

Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project in parallel with extending the life of the current leaching operation.

Operating Data.

Following is summary consolidated operating data for South America mining:

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

2020 2019 2020 2019

Three Months Ended March 31,

Copper (millions of recoverable pounds)

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Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde.

Cerro Verde mill operations were negatively impacted by 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.

Cerro Verde mill operations were impacted as a result of the Peruvian government's issuance of a Supreme Decree and declaration of a National Emergency in mid-March 2020 associated with its efforts to contain the outbreak of COVID-19.

Our consolidated copper sales volumes from South America of 259 million pounds in first-quarter 2021 were higher than first-quarter 2020 copper sales volumes of 247 million pounds, primarily reflecting higher milling rates at Cerro Verde.

Copper sales from South America mining are expected to approximate 1.0 billion pounds for the year 2021, consistent with the year 2020.

Unit Net Cash Costs.

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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 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.

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.

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 September 30,

Three Months Ended March 31,

Method Co-Product

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Noncash and other costs, net 0.04 0.03 0.12 a

0.04 0.08 0.08

Total unit costs 2.37 2.44 2.80 2.77

Revenue adjustments, primarily for pricing on prior period open sales 0.32 0.32 (0.30) (0.30)

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

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

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) —

Treatment charges 0.15 0.15 0.18 0.18

Royalty on metals 0.01 0.01 0.01 0.01

Unit net cash costs 1.84 1.88 1.74 1.85

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

(0.10) (0.10) 0.04 0.04

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

Gross profit (loss) per pound $ 1.91 $ 1.84 $ (0.77) $ (0.74)

Copper sales (millions of recoverable pounds) 259 259 247 247

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.

Includes COVID-19 related costs of $0.08 per pound of copper, primarily associated with idle facility costs at Cerro Verde and contract cancellation costs at El Abra.

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) 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.

Average unit net cash costs (net of by-product credits) for the South America copper mines of $1.94 per pound of copper in first-quarter 2021 were lower than unit net cash costs of $2.00 per pound in first-quarter 2020, primarily reflecting higher sales volumes and by-product credits and lower mining costs, partly offset by higher profit sharing costs.

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 $1.88 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.

Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.94 per pound of copper for the year 2021, based on current sales volume and cost estimates and assuming an average price of $11.00 per pound of molybdenum for the remainder of 2021.

Indonesia Mining

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

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).

During first-quarter 2021, 55 percent of PT-FI’s concentrate production was sold to PT Smelting.

Operating and Development Activities.

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

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.

Indonesian Smelter.

As a result of disruptions to work and travel schedules of international contractors and current restrictions on access to the proposed physical site in Gresik, Indonesia associated with COVID-19 mitigation measures, PT-FI has notified the Indonesian government of delays in achieving the completion timeline of December 2023.

PT-FI continues to discuss with the Indonesian government a deferred schedule for the project as well as other alternatives in light of COVID-19 and global economic conditions.

First-quarter 2021 highlights include:

• Production approximated 75 percent of the projected ultimate annualized level.

• A total of 50 new drawbells were constructed at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to over 420.

• Combined average production from the Grasberg Block Cave and DMLZ underground mines approximated 98,500 metric tons of ore per day.

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 attractive unit net cash cost, providing significant margins and cash flows.

PT-FI expects production for the year 2021 to approximate 1.3 billion pounds of copper and 1.3 million ounces of gold, which is nearly double 2020 levels.

PT-FI's estimated annual capital spending on underground mine development projects is expected to average approximately $0.9 billion per year for the two-year period 2021 through 2022, net of scheduled contributions from PT Inalum.

In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $1.1 billion per year for the two-year period 2021 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.

Additional Indonesia Smelter Capacity.

In connection with PT-FI’s 2018 agreement with the Indonesia government associated with the extension of its long-term mining rights, PT-FI committed to construct new domestic smelting capacity totaling 2 million metric tons of concentrate per year by December 2023.

Prior to the COVID-19 pandemic, PT-FI selected a site for a greenfield smelter in East Java and initiated ground preparation and commenced engineering and commercial negotiations.

During 2020, PT-FI notified the Indonesia government of schedule delays resulting from the COVID-19 pandemic and continues to discuss with the government a revised schedule for the greenfield smelter project at East Java.

On January 7, 2021, the Indonesia government levied an administrative fine of $149 million on PT-FI for failing to achieve physical development progress on the greenfield smelter as of July 31, 2020.

PT-FI does not think the fine is warranted and 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 for the greenfield smelter project.

During the first quarter of 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.

Refer to Note 8 for further discussion.

In addition, PT-FI has explored alternatives to the greenfield smelter and has advanced discussions with the other shareholders of the existing Indonesia smelter (PT Smelting) regarding an expansion to increase smelter concentrate treatment capacity by approximately 30 percent (300,000 metric tons of concentrate per year).

This additional capacity provided by the PT Smelting expansion is expected to reduce the commitment to additional smelter capacity in Indonesia from 2 million metric tons of concentrate per year to 1.7 million metric tons.

Commercial and financial arrangements for the PT Smelting expansion are being advanced and engineering is in progress.

The current estimate for the cost of the expansion, which would be funded by PT-FI, approximates $250 million.

We currently expect the expansion of PT Smelting to be completed by the end of 2023.

As part of its exploration of alternatives to the greenfield smelter at East Java, PT-FI has also engaged in discussions with a third party to develop the greenfield smelter capacity at an alternate location in Indonesia to fulfill its remaining smelter commitment.

To date, commercial discussions have not resulted in a mutually acceptable agreement.

In the interim, PT-FI is continuing planning for the development of a greenfield smelter and related refinery in East Java with a capacity to process approximately 1.7 million metric tons of concentrate per year.

The estimated capital cost associated with this project approximates $3 billion.

Under this option, PT-FI would finance development of the greenfield smelter with debt which, pursuant to the shareholders agreement, would be shared 51 percent by PT Inalum and 49 percent by us.

Construction of the greenfield smelter capacity would result in the elimination of export duties, providing an offset to the economic cost associated with such smelter development.

Operating Data.

Following is summary consolidated operating data for Indonesia mining:

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

2020 2019 2020 2019

Three Months Ended March 31,

Operating Data

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46,700 18,500

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

DOZ underground mine 18,600 20,200

Big Gossan underground mine 6,800 6,800

Grasberg open pit — 7,500 b

— 70,000 2,200 75,500

Total 124,100 c

121,900 80,500 122,600

Average ore grades:

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

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 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.

Represents ore from the Grasberg open-pit stockpiles.

Does not foot because of rounding.

Our consolidated sales from PT-FI of 258 million pounds of copper and 256 thousand ounces of gold in first-quarter 2021 were higher than first-quarter 2020 consolidated sales of 127 million pounds of copper and 139 thousand ounces of gold, primarily reflecting higher mining rates and ore grades.

Consolidated sales volumes from PT-FI are expected to approximate 1.34 billion pounds of copper and 1.3 million ounces of gold in 2021, compared with 0.8 billion pounds of copper and 0.8 million ounces of gold in 2020.

Unit Net Cash Costs.

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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 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.

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.

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 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

Site production and delivery, before net noncash and other costs shown below 1.71 1.01 639 2.44 1.21 695

Gold and silver credits (2.16) — — (2.64) — —

Treatment charges 0.26 0.16 98 0.25 0.13 72

Export duties 0.11 0.06 40 0.05 0.03 15

Royalty on metals 0.21 0.12 79 0.17 0.08 46

Unit net cash costs 0.13 1.35 856 0.27 1.45 828

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 (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

Nine Months Ended September 30,

Three Months Ended March 31,

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

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Revenues, excluding adjustments $ 4.00 $ 4.00 $ 1,713 $ 2.28 $ 2.28 $ 1,606

Site production and delivery, before net noncash and other costs shown below 2.05 1.19 773 3.00 1.72 879

Site production and delivery, before net noncash and other (credits) costs shown below 1.48 1.02 438 2.68 1.49 1,052

Gold and silver credits (1.79) — — (1.85) — —

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DD&A 0.77 0.53 228 0.79 0.44 310

Noncash and other costs, net 0.11 a

0.07 41 0.52 b

Noncash and other (credits) costs, net (0.03) a

(0.02) (10) 0.21

Total unit costs 1.03 1.94 834 2.31 2.33 1,623

Revenue adjustments, primarily for pricing on prior period open sales 0.25 0.25 (19) (0.16) (0.16) 33

(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

PT Smelting intercompany (loss) profit (0.20) (0.14) (56) 0.20 0.11 77

Gross profit (loss) per pound/ounce $ 3.02 $ 2.17 $ 804 $ 0.01 $ (0.10) $ 93

Copper sales (millions of recoverable pounds) 258 258 127 127

Gold sales (thousands of recoverable ounces) 256 139

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.

Primarily includes credits of $0.12 per pound of copper associated with adjustments to prior year treatment and refining costs and charges of $0.05 per pound of copper associated with a potential settlement of an administrative fine levied by the Indonesia government.

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.

PT-FI’s unit net cash costs (including gold and silver credits) of $0.29 per pound of copper in first-quarter 2021 were significantly lower than unit net cash costs of $1.31 per pound in first-quarter 2020, primarily reflecting higher sales volumes.

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 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.

PT-FI’s export duties totaled $29 million in first-quarter 2021 and $4 million in first-quarter 2020.

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

PT-FI’s royalties totaled $61 million in first-quarter 2021 and $19 million in first-quarter 2020.

The increase in export duties and royalties for first-quarter 2021, compared with first-quarter 2020, primarily reflects higher sales volumes and metals prices.

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 $0.68 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.

DD&A per pound of copper under the by-product method was $0.77 per pound in first-quarter 2021, compared with $0.79 per pound in first-quarter 2020.

The decrease in the rate per pound of copper primarily reflects the ramp up of underground mining, which resulted in significantly higher copper production and sales volumes, partly offset by increased underground development assets placed into service.

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

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

PT Smelting intercompany (loss) profit 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 $1,900 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.

Assuming an average gold price of $1,750 per ounce for the remainder of 2021 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 $0.21 per pound of copper for the year 2021.

PT-FI's unit net cash costs for the year 2021 would change by approximately $0.08 per pound for each $100 per ounce change in the average price of gold for the remainder of 2021.

PT-FI’s projected sales volumes and unit net cash costs for the year 2021 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 2021, PT-FI received a one-year extension of its export license through March 15, 2022.

Export licenses are valid for one year periods, subject to review and approval by the Indonesia government every six months, depending on smelter construction progress.

Refer to “Risk Factors” in our 2020 Form 10-K for a discussion of the ongoing discussions with the Indonesia government regarding a deferred schedule for the completion of the greenfield smelter project as well as other alternatives in light of the ongoing COVID-19 pandemic and volatile global economic conditions.

Molybdenum Mines

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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.

Production from the Molybdenum mines totaled 7 million pounds of molybdenum in both first-quarter 2021 and first-quarter 2020.

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.

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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.

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.

Average unit net cash costs for our Molybdenum mines of $8.98 per pound of molybdenum in first-quarter 2021 were lower than average unit net cash costs of $10.03 per pound in first-quarter 2020, primarily reflecting higher ore grades and lower input and labor costs.

Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $9.50 per pound of molybdenum for the year 2021.

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We wholly own and operate a smelter in Arizona (Miami smelter), a refinery in Texas (El Paso refinery) and a smelter and refinery in Spain (Atlantic Copper).

Additionally, PT-FI owns 25 percent of a smelter and refinery in Gresik, Indonesia (PT Smelting).

PT-FI also has an ownership interest in a smelter and refinery in Gresik, Indonesia (PT Smelting).

Effective April 30, 2021, PT-FI's ownership increased from 25 percent to 39.5 percent of PT Smelting (refer to Note 1).

Treatment charges for smelting and refining copper concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed.

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

During first-quarter 2021, we incurred charges totaling $68 million associated with a major maintenance turnaround at our Miami smelter.

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

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.

During first-quarter 2021, Atlantic Copper’s concentrate purchases included 27 percent from our copper mining operations and 73 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 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 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.

During first-quarter 2021, PT-FI supplied the substantial majority of PT Smelting’s concentrate requirements.

In January 2021, PT Smelting received a six-month extension of its anode slimes export license through July 18, 2021.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on PT-FI’s sales to PT Smelting (on 25 percent through April 30, 2021, and on 39.5 percent after April 30, 2021) 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 $(85) million ($(63) million to net income attributable to common stock) in first-quarter 2021 and $11 million ($7 million to net loss attributable to common stock) in first-quarter 2020.

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 $121 million at March 31, 2021.

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.

We currently expect second-quarter 2021 results to reflect an increase in net deferred profits, totaling an approximate $60 million reduction to net income, mostly associated with an anticipated increase in sales to Atlantic Copper, which will be recognized in future periods as Atlantic Copper sells final refined products to third parties.

CAPITAL RESOURCES AND LIQUIDITY

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and other factors.

In addition to the strong execution of operation plans, our first-quarter 2021 results and cash flows benefited from higher copper prices.

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 completed the Lone Star copper leach project 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.

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.

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,” 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.

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.

We believe that our cash generating capability and financial condition, together with our credit facility, will be adequate to meet our operating, investing and financing needs.

Subject to future commodity prices for copper, gold, and molybdenum, we expect estimated consolidated operating cash flows of $6.5 billion in 2021, plus available cash, to be sufficient to fund our capital expenditures of $2.3 billion in 2021, as well as projected spending on the greenfield smelter in Indonesia and other cash requirements for the year, including common stock dividends and noncontrolling interest distributions.

Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2021.

At March 31, 2021, we had $8.1 billion in liquidity, comprised of $4.6 billion in consolidated cash and $3.5 billion of availability under our revolving credit facility.

In February 2021, our Board of Directors (Board) adopted a financial policy for the allocation of cash flows aligned with our strategic objectives of maintaining a strong balance sheet, increasing cash returns to shareholders and advancing opportunities for future growth.

The policy includes a base dividend of $0.30 per share per year and a performance-based payout framework to be implemented following achievement of a net debt (total consolidated debt less total consolidated cash and cash equivalents) target in the range of $3 billion to $4 billion, excluding project debt for additional smelting capacity in Indonesia.

Under the performance-based payout framework, up to 50 percent of available cash flows generated after planned capital spending and distributions to noncontrolling interests would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to the Board’s discretion.

Available cash flows for such performance-based payout distributions in excess of the base dividend will be assessed at least annually (refer to “Cautionary Statement”).

As of March 31, 2021, our consolidated debt of $9.8 billion less our consolidated cash of $4.6 billion resulted in net debt of $5.2 billion.

Using current commodity prices for copper, gold and molybdenum, and based on current sales volumes and cost estimates, we currently expect to achieve a net debt target of $3 billion to $4 billion by the end of

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.

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 September 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 March 31, 2021 (in billions):

Cash at domestic companies $ 3.5

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

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.

The key changes under the amendment include a suspension of the total leverage ratio through June 30, 2021, and a reduction in the interest expense coverage ratio to a minimum of 2.0x through December 31, 2021.

We 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 on the payment of dividends through December 31, 2021.

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.

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.

At March 31, 2021, our consolidated debt totaled $9.8 billion, with a weighted-average interest rate of 4.6 percent.

We had no borrowings outstanding and approximately $10 million in letters of credit issued under our revolving credit facility, resulting in availability of approximately $3.5 billion.

In March 2021, we delivered a covenant reversion notice, which provided notification of our election to end the covenant increase period for our revolving credit facility.

Refer to Note 5 for further discussion.

Our 3.55% Senior Notes are due March 2022 ($524 million principal amount) and the Cerro Verde Term Loan matures in June 2022 ($525 million principal amount).

We have no other senior note maturities until March 2023.

Refer to Note 5 for further discussion of debt.

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Operating Activities

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.

We reported consolidated cash provided by (used in) operating activities of $1.1 billion (net of $0.3 billion of working capital and other uses) in first-quarter 2021 and $(38) million (including $0.1 billion from working capital and other sources) in first-quarter 2020.

Higher operating cash flows in first-quarter 2021 compared with first-quarter 2020, primarily reflect higher copper prices and sales volumes, partly offset by increases in accounts receivable and inventories.

Investing Activities

Capital Expenditures.

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.

Capital expenditures, including capitalized interest, totaled $0.4 billion in first-quarter 2021, including approximately $0.3 billion for major projects primarily associated with underground development activities in the Grasberg minerals district.

Capital expenditures, including capitalized interest, totaled $0.6 billion in first-quarter 2020, including approximately $0.3 billion for major projects.

Refer to “Outlook” for further discussion of projected capital expenditures for the year 2021.

Proceeds from Sales of Assets.

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.

Proceeds from sales of assets totaled $5 million in first-quarter 2021 and $66 million in first-quarter 2020, primarily associated with the contingent consideration of $60 million from the 2016 sale of TF Holdings Limited.

Financing Activities

Debt Transactions.

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.

Net borrowings of debt totaled $0.1 billion in first-quarter 2021 and $0.2 billion in first-quarter 2020.

During first-quarter 2020, we completed the sale of $1.3 billion in senior notes and used the 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.

We recorded losses on early extinguishment of debt totaling $32 million in first-quarter 2020 related to these transactions.

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 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.

We paid cash dividends on our common stock totaling $73 million in first-quarter 2020 associated with the $0.05 per share common stock cash dividend declared in December 2019.

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

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 nine months of 2020 and $79 million for the first nine months of 2019.

Refer to “Cautionary Statement” and, for a discussion of the allocation of cash flows, the discussion above regarding the financial policy adopted by the Board in February 2021.

There were no cash dividends or distributions paid to noncontrolling interests in the first quarters of 2021 or 2020.

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 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.

We received equity contributions totaling $41 million in first-quarter 2021 and $32 million in first-quarter 2020 from PT Inalum for their share of capital spending on PT-FI underground mine development projects and development of increased smelter capacity in Indonesia.

Stock-based awards.

Following an increase in our stock price, proceeds from exercised stock options totaled $106 million and payments for related employee taxes totaled $19 million during first-quarter 2021.

See Note 10 in our 2020 Form 10-K for a discussion of stock-based awards.

CONTRACTUAL OBLIGATIONS

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.

Refer to Note 5 for a discussion of the covenant reversion notice for our revolving credit facility that was delivered in March 2021.

There have been no other material changes in our contractual obligations since December 31, 2020.

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Refer to Note 12 in our 2020 Form 10-K, for further information regarding our environmental and asset retirement obligations.

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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of our 2020 Form 10-K, as updated by Note 8, for further information regarding legal proceedings, environmental and other matters.

NEW ACCOUNTING STANDARD

Refer to Note 10 for a summary of a recently adopted accounting standard.

NEW ACCOUNTING STANDARDS

There were no significant updates to previously reported accounting standards included in Note 1 of our 2020 Form 10-K.

PRODUCT REVENUES AND PRODUCTION COSTS

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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, long-lived asset impairments, idle facility costs, restructuring and/or unusual charges.

Noncash and other costs (credits), 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 (credits).

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 September 30, 2020

Three Months Ended March 31, 2021

(In millions) By-Product Co-Product Method

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DD&A 80 74 4 2 80

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

Noncash and other costs, net 37 c

Noncash and other costs, net 41

Total costs 689 725 60 26 811

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DD&A 0.26 0.24 0.46

Metals inventory adjustments (0.01) (0.01) —

Noncash and other costs, net 0.10 c

Noncash and other costs, net 0.13

Total unit costs 2.24 2.36 7.19

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Reconciliation to Amounts Reported

Revenues Production and Delivery DD&A Metals Inventory Adjustments

Revenues Production and Delivery DD&A

Totals presented above $ 1,315 $ 657 $ 80

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North America copper mines 1,338 749 80

Other mining d

Other mining c

4,645 3,040 323

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Includes gold and silver product revenues and production costs.

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 September 30, 2019

Three Months Ended March 31, 2020

(In millions) By-Product Co-Product Method

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

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

Gross loss $ (110) $ (105) $ (2) $ (3) $ (110)

Copper sales (millions of recoverable pounds) 354 354

Molybdenum sales (millions of recoverable pounds) a

Gross profit per pound of copper/molybdenum:

Gross loss per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.56 $ 2.56 $ 9.69

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on prior period open sales (0.06) (0.06) —

Gross profit per pound $ 0.30 $ 0.25 $ 1.49

Gross loss per pound $ (0.31) $ (0.30) $ (0.20)

Reconciliation to Amounts Reported

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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

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

and other costs shown below 2,106 1,963 173 44 2,180

By-product credits (209) — — — —

Treatment charges 109 105 — 4 109

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 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

Molybdenum sales (millions of recoverable pounds) a

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.67 c

$ 2.67 $ 8.57

Site production and delivery, before net noncash

and other costs shown below 1.91 1.78 7.05

By-product credits (0.19) — —

Treatment charges 0.10 0.10 —

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 0.10 d

Total unit costs 2.22 2.25 7.74

Other revenue adjustments, primarily for pricing

on prior period open sales (0.01) (0.01) —

Gross profit per pound $ 0.44 $ 0.41 $ 0.83

Reconciliation to Amounts Reported

Production Inventory

Revenues and Delivery DD&A Adjustments

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

Treatment charges (14) 95 — —

Noncash and other costs, net — 107 — —

Other revenue adjustments, primarily for pricing

on prior period open sales (22) — — —

Eliminations and other 24 33 — —

North America copper mines 3,210 2,415 272 52

Other mining e

9,267 7,665 770 14

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

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

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

Includes gold and silver product revenues and production costs.

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 $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

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

Site production and delivery, before net noncash

and other costs shown below 2,216 2,030 226 39 2,295

By-product credits (268) — — — —

Treatment charges 120 116 — 4 120

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

Molybdenum sales (millions of recoverable pounds) a

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.74 $ 2.74 $ 12.03

Site production and delivery, before net noncash

and other costs shown below 2.05 1.87 9.56

By-product credits (0.25) — —

Treatment charges 0.11 0.11 —

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 —

Noncash and other costs, net 0.05 0.05 0.29

Total unit costs 2.24 2.29 10.60

Other revenue adjustments, primarily for pricing

on prior period open sales — — —

Gross profit per pound $ 0.50 $ 0.45 $ 1.43

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

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

Treatment charges (48) 72 — —

Noncash and other costs, net — 64 — —

Other revenue adjustments, primarily for pricing

on prior period open sales 4 — — —

Eliminations and other 27 32 1 —

North America copper mines 3,294 2,463 261 39

Other mining c

9,501 8,294 701 3

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

As reported in our consolidated financial statements $ 10,491 $ 8,599 $ 1,021 $ 100

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

Includes gold and silver product revenues and production 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 September 30, 2020

(In millions) By-Product Co-Product Method

Method Copper Other a

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

Site production and delivery, before net noncash

and other costs shown below 459 432 38 470

By-product credits (42) — — —

Treatment charges 40 40 — 40

Royalty on metals 1 1 — 1

Net cash costs 458 473 38 511

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 $ 223 $ 216 $ 7 $ 223

Copper sales (millions of recoverable pounds) 250 250

Gross profit per pound of copper:

Revenues, excluding adjustments $ 3.02 $ 3.02

Site production and delivery, before net noncash

and other costs shown below 1.84 1.73

By-product credits (0.17) —

Treatment charges 0.15 0.15

Royalty on metals 0.01 0.01

Unit net cash costs 1.83 1.89

DD&A 0.42 0.39

Noncash and other costs, net 0.04 b

Total unit costs 2.29 2.32

Other revenue adjustments, primarily for pricing

on prior period open sales 0.16 0.16

Gross profit per pound $ 0.89 $ 0.86

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 807 $ 470 $ 105

Treatment charges (40) — —

Royalty on metals (1) — —

Noncash and other costs, net — 9 —

Other revenue adjustments, primarily for pricing

on prior period open sales 41 — —

Eliminations and other (1) (2) —

South America mining 806 477 105

Other mining c

4,122 3,022 268

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

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

Includes silver sales of 0.9 million ounces ($24.84 per ounce average realized price).

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

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 September 30, 2019

Three Months Ended March 31, 2021

(In millions) By-Product Co-Product Method

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DD&A 101 95 6 101

Metals inventory adjustments 2 2 — 2

Noncash and other costs, net 10

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DD&A 0.39 0.37

Metals inventory adjustments 0.01 0.01

Noncash and other costs, net 0.04

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Gross profit per pound $ 1.91 $ 1.84

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 1,091 $ 530 $ 101

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2020

(In millions) By-Product Co-Product Method

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on prior period open sales (75) (75) — (75)

Gross profit $ 178 $ 178 $ — $ 178

Gross loss $ (190) $ (184) $ (6) $ (190)

Copper sales (millions of recoverable pounds) 247 247

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on prior period open sales (0.30) (0.30)

Gross profit per pound $ 0.25 $ 0.25

Gross loss per pound $ (0.77) $ (0.74)

Reconciliation to Amounts Reported Metals

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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 $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

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

Site production and delivery, before net noncash

and other costs shown below 1,546 1,395 189 1,584

By-product credits (246) — — —

Treatment charges 153 153 — 153

Royalty on metals 5 4 1 5

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

Gross profit per pound of copper:

Revenues, excluding adjustments $ 2.67 $ 2.67

Site production and delivery, before net noncash

and other costs shown below 1.84 1.66

By-product credits (0.29) —

Treatment charges 0.18 0.18

Royalty on metals 0.01 0.01

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

Total unit costs 2.23 2.29

Other revenue adjustments, primarily for pricing

on prior period open sales 0.04 0.04

Gross profit per pound $ 0.48 $ 0.42

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

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

Treatment charges (153) — — —

Royalty on metals (5) — — —

Noncash and other costs, net — 68 — —

Other revenue adjustments, primarily for pricing

on prior period open sales 37 — — —

Eliminations and other (1) (4) — —

South America mining 2,398 1,648 342 2

Other mining b

10,397 9,109 620 40

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

As reported in our consolidated financial statements $ 10,491 $ 8,599 $ 1,021 $ 100

Includes silver sales of 3.4 million ounces ($15.90 per ounce average realized price).

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

Includes COVID-19 related costs of $20 million ($0.08 per pound of copper), primarily associated with idle facility costs at Cerro Verde and contract cancellation costs at El Abra.

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 September 30, 2020

Three Months Ended March 31, 2021

(In millions) By-Product Co-Product Method

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Site production and delivery, before net noncash

and other costs shown below 376 221 147 8 376

and other credits shown below 383 264 112 7 383

Gold and silver credits (462) — — — —

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DD&A 199 137 58 4 199

Noncash and other costs, net 24 b

Total costs 203 397 265 15 677

Other revenue adjustments, primarily for pricing

on prior period open sales 28 28 11 2 41

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

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

Copper sales (millions of recoverable pounds) 219 219

Gold sales (thousands of recoverable ounces) 230

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

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

Site production and delivery, before net noncash

and other costs shown below 1.71 1.01 639

Gold and silver credits (2.16) — —

Treatment charges 0.26 0.16 98

Export duties 0.11 0.06 40

Royalty on metals 0.21 0.12 79

Unit net cash costs 0.13 1.35 856

DD&A 0.68 0.40 256

Noncash and other costs, net 0.11 b

Total unit costs 0.92 1.81 1,152

Other revenue adjustments, primarily for pricing

on prior period open sales 0.13 0.13 49

PT Smelting intercompany loss (0.08) (0.05) (31)

Gross profit per pound/ounce $ 2.13 $ 1.27 $ 768

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Totals presented above $ 1,120 $ 376 $ 150

Treatment charges (58) — —

Export duties (24) — —

Royalty on metals (53) (8) —

Noncash and other costs, net — 24 —

Other revenue adjustments, primarily for pricing

on prior period open sales 41 — —

PT Smelting intercompany loss — 17 —

Indonesia mining 1,026 409 150

Other mining c

Noncash and other credits, net (8) b

(6) (2) — (8)

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

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

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

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 September 30, 2019

(In millions) By-Product Co-Product Method

Method Copper Gold Silver a

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

Site production and delivery, before net noncash

and other costs shown below 338 168 166 4 338

Gold and silver credits (367) — — — —

Treatment charges 35 17 17 1 35

Export duties 8 4 4 — 8

Royalty on metals 23 12 11 — 23

Net cash costs 37 201 198 5 404

DD&A 77 38 38 1 77

Noncash and other costs, net 192 b

Total costs 267 502 213 14 729

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Site production and delivery, before net noncash

and other costs shown below 2.44 1.21 695

and other credits shown below 1.48 1.02 438

Gold and silver credits (1.79) — —

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DD&A 0.77 0.53 228

Noncash and other costs, net 1.39 b

Noncash and other credits, net (0.03) b

Total unit costs 1.03 1.94 834

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Royalty on metals (61) — —

Noncash and other costs, net (165) 27 —

Noncash and other credits, net 31 23 —

Other revenue adjustments, primarily for pricing

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Includes silver sales of 1.2 million ounces ($24.61 per ounce average realized price).

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.

Primarily includes credits of $31 million ($0.12 per pound of copper) associated with adjustments to prior year treatment and refining costs and charges of $13 million ($0.05 per pound of copper) associated with a potential settlement of an administrative fine levied by the Indonesia government.

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

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2020

(In millions) By-Product Co-Product Method

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DD&A 101 56 43 2 101

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

Gold sales (thousands of recoverable ounces) 549

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

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

Site production and delivery, before net noncash

and other costs shown below 2.05 1.19 773

Gold and silver credits (2.02) — —

Treatment charges 0.28 0.16 104

Export duties 0.08 0.05 31

Royalty on metals 0.18 0.10 68

Unit net cash costs 0.57 1.50 976

DD&A 0.72 0.42 273

Noncash and other costs, net 0.11 b

Total unit costs 1.40 1.99 1,290

Other revenue adjustments, primarily for pricing

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

Treatment charges (143) — —

Export duties (43) — —

Royalty on metals (98) (6) —

Noncash and other costs, net 27

Other revenue adjustments, primarily for pricing

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

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

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

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

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

Site production and delivery, before net noncash

and other costs shown below 1,393 797 580 16 1,393

Gold and silver credits (938) — — — —

Treatment charges 125 72 52 1 125

Export duties 35 20 14 1 35

Royalty on metals 68 40 27 1 68

Net cash costs 683 929 673 19 1,621

DD&A 281 161 117 3 281

Noncash and other costs, net 240 b

137 100 3 240

Total costs 294 296 226 8 530

1 unchanged sentence

on prior period open sales (20) (20) 5 — (15)

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

Gross profit $ 43 $ 30 $ 13 $ — $ 43

PT Smelting intercompany profit 25 14 11 — 25

Gross profit (loss) $ 1 $ (12) $ 13 $ — $ 1

Copper sales (millions of recoverable pounds) 127 127

Gold sales (thousands of recoverable ounces) 139

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

Gross profit (loss) per pound of copper/per ounce of gold:

Revenues, excluding adjustments $ 2.28 $ 2.28 $ 1,606

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DD&A 0.79 0.44 310

Noncash and other costs, net 0.52 b

Noncash and other costs, net 0.21

Total unit costs 2.31 2.33 1,623

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on prior period open sales (0.16) (0.16) 33

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

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

PT Smelting intercompany profit 0.20 0.11 77

Gross profit (loss) per pound/ounce $ 0.01 $ (0.10) $ 93

Reconciliation to Amounts Reported

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on prior period open sales (15) — —

PT Smelting intercompany loss — 23 —

PT Smelting intercompany profit — (25) —

Indonesia mining 445 343 101

Other mining c

Other mining b

3,131 2,990 225

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Includes silver sales of 0.6 million ounces ($14.09 per ounce average realized price).

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 September 30,

Three Months Ended March 31,

(In millions) 2021 2020

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Metals inventory adjustments 1 4

Noncash and other costs, net 4 b

Noncash and other costs, net 3

Total costs 79 92

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Metals inventory adjustments 0.13 0.51

Noncash and other costs, net 0.54 b

Total unit costs 13.31 14.13

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

Reconciliation to Amounts Reported

Production Inventory

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

Totals presented above $ 47 $ 47 $ 13 $ 3

Treatment charges and other (5) — — —

Noncash and other costs, net 0.42

Molybdenum mines 42 51 13 3

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 September 30, 2019

Totals presented above $ 96 $ 83 $ 16 $ 1

Treatment charges and other (6) — — —

Noncash and other costs, net — 2 — —

Molybdenum mines 90 85 16 1

Other mining c

3,863 3,355 286 40

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

As reported in our consolidated financial statements $ 3,153 $ 2,670 $ 322 $ 41

Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing.

On a consolidated basis, realizations are based on the actual contract terms for sales to third parties;

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

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.

Also includes amounts associated with our 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.

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

Nine Months Ended September 30,

(In millions) 2020 2019

Revenues, excluding adjustments a

Site production and delivery, before net noncash

and other costs shown below 164 229

Treatment charges and other 16 21

Net cash costs 180 250

Metals inventory adjustments 8 1

Noncash and other costs, net 14 b

Total costs 246 306

Gross (loss) profit $ (59) $ 5

Molybdenum sales (millions of recoverable pounds) a

Gross (loss) profit per pound of molybdenum:

Revenues, excluding adjustments a

$ 9.92 $ 12.61

Site production and delivery, before net noncash

and other costs shown below 8.73 9.28

Treatment charges and other 0.85 0.85

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 0.72 b

Total unit costs 11.76 13.13

Gross (loss) profit per pound $ (3.13) $ 0.19

Gross loss per pound $ (0.38) $ (2.16)

Reconciliation to Amounts Reported

Production Inventory

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

Three Months Ended March 31, 2021 Revenues and Delivery DD&A Adjustments

Totals presented above $ 76 $ 54 $ 15 $ 1

2 unchanged sentences

Molybdenum mines 70 57 15 1

Other mining c

Other mining b

5,913 3,732 388 —

1 unchanged sentence

As reported in our consolidated financial statements $ 4,850 $ 2,786 $ 419 $ 1

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Totals presented above $ 77 $ 64 $ 16 $ 4

2 unchanged sentences

Molybdenum mines 71 66 16 4

Other mining c

Other mining b

3,505 3,267 310 205

4 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 $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.

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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.

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 March 31, 2021, and December 31, 2020, and for three months ended March 31, 2021.

FCX FM O&G LLC Non-guarantor Consolidated

Issuer Guarantor Subsidiaries Eliminations FCX

As of September 30, 2020

As of March 31, 2021

Current assets $ 187 $ 681 $ 10,880 $ (892) $ 10,856

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Noncurrent liabilities 9,433 11,208 15,075 (15,657) 20,059

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Revenues $ — $ 14 $ 4,836 $ — $ 4,850

Operating (loss) income (12) 4 1,540 — 1,532

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.

Net income (loss) 718 a

955 (675) 953

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

CAUTIONARY STATEMENT

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our financial policy;

cost savings;

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;

our expectations regarding PT-FI's ramp-up of underground mining activities and future cash flows through 2022;

PT-FI's development, financing, construction and completion of new domestic smelting capacity in Indonesia totaling 2 million metric tons of concentrate per year by December 2023;

our commitments to deliver responsibly produced copper, including plans to implement and validate all of our operating sites under specific frameworks;

improvements in operating procedures and technology;

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the impact of deferred intercompany profits on earnings;

reserve estimates;

execution of the settlement agreement associated with the Louisiana coastal erosion cases;

mineralization and reserve estimates;

execution of the settlement agreements associated with the Louisiana coastal erosion cases and talc-related litigation;

descriptions of our objectives, strategies, plans, goals or targets, including our net debt target;

and future dividend payments, share purchases and sales.

1 unchanged sentence

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.

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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;

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, and any related actions taken by governments and businesses;

our ability to contain and mitigate the risk of spread or major outbreak of COVID-19 at our operating sites, including at PT-FI’s remote operating site in Papua;

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the potential effects of violence in Indonesia generally and in the province of Papua;

the Indonesian government's extension of PT-FI's export license after March 15, 2021;

the Indonesia government's extension of PT-FI's export license after March 15, 2022;

risks associated with underground mining;

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;

the Indonesia government's approval of a deferred schedule for completion of new domestic smelting capacity in Indonesia;

expected results from improvements in operating procedures and technology, including innovation initiatives;

5 unchanged sentences

environmental risks;

litigation and potential settlement results;

litigation results;

cybersecurity incidents;

changes in general market, economic and industry conditions;

financial condition of our customers, suppliers, vendors, partners and affiliates, particularly during weak economic conditions and extended periods of low commodity prices;

financial condition of our customers, suppliers, vendors, partners and affiliates, particularly during weak economic conditions and extended periods of volatile commodity prices;

reductions in liquidity and access to capital;

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.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may not be able to control.

our ability to comply with its responsible production commitments under specific frameworks and any changes to such frameworks;

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

of our 2020 Form 10-K.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may not be able to control.

Further, we may make changes to our business plans that could affect our results.

We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.

We caution investors that we undertake no obligation to update any forward-looking statements, which speak only as of the date made, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes.

This report on Form 10-Q also contains financial measures such as net debt and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S.

Net debt equals consolidated debt less consolidated cash.

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.

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