FREEPORT-MCMORAN INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our annual report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K), filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to income or losses per share are on a diluted basis. OVERVIEW We are a leading international mining company with headquarters in Phoenix, Arizona. We operate large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. We are one of the world’s largest publicly traded copper producers. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; 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 results for the first six months of 2021 reflect strong operating and financial performance, and cash flow generation. We achieved the balance sheet targets outlined in our financial policy adopted earlier this year, and believe that we are well positioned to increase cash returns to shareholders and for investments in long-term future growth. We continue to execute our operating plans in a safe, efficient and responsible manner and remain focused on building long-term value through solid management of our portfolio of long-lived and high-quality copper assets. The ramp-up of underground mining at PT Freeport Indonesia (PT-FI) is advancing on schedule and Cerro Verde's concentrator facilities have performed well with milling rates averaging 382,100 metric tons of ore per day for the first six months of 2021. Our Lone Star copper leach project, which was successfully completed in the second half of 2020, has achieved design capacity approximating 200 million pounds of copper annually with potential for further increases. Refer to “Operations” for further discussion. Net income (loss) attributable to common stock totaled $1.1 billion in second-quarter 2021, $53 million in second-quarter 2020, $1.8 billion for the first six months of 2021 and $(438) million for the first six months of 2020. Results for the 2021 periods, compared with the 2020 periods, reflect higher copper prices and volumes, partly offset by a higher provision for income taxes. The results for the 2020 periods also reflect charges directly associated with the COVID-19 pandemic and revised operating plans, including employee separation costs, totaling $144 million in second-quarter 2020 and $153 million for the first six months of 2020. Refer to “Consolidated Results” for further discussion. We continue to monitor the impact of the COVID-19 pandemic on our business and maintain our vigilant operating protocols to contain and mitigate the risk of spread of COVID-19 at each of our operating sites. To date, our protocols have been effective in mitigating and preventing a major outbreak of COVID-19 at our operating sites. We will continue to monitor, assess and update our COVID-19 response and to provide assistance to employees in obtaining vaccinations. At June 30, 2021, we had consolidated debt of $9.7 billion and consolidated cash and cash equivalents of $6.3 billion, resulting in net debt of $3.4 billion. This represents a reduction in net debt of $2.7 billion from year-end 2020. Refer to “Net Debt” for reconciliations of debt and cash and cash equivalents to net debt. At June 30, 2021, we had no borrowings and $3.5 billion available under our revolving credit facility. We have $1.1 billion in debt maturities through 2022, including 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. 25 Table of Contents OUTLOOK 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. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to “Markets” below and “Risk Factors” in Part I, Item 1A. 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. Consolidated Sales Volumes Following are our projected consolidated sales volumes for the year 2021: Copper (millions of recoverable pounds): North America copper mines 1,465 South America mining 1,050 Indonesia mining 1,335 Total 3,850 Gold (millions of recoverable ounces) 1.3 Molybdenum (millions of recoverable pounds) 86 a a. Projected molybdenum sales include 28 million pounds produced by our Molybdenum mines and 58 million pounds produced by our North America and South America copper mines. Consolidated sales volumes in third-quarter 2021 are expected to approximate 1.035 billion pounds of copper, 360 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 2020 Form 10-K. Consolidated Unit Net Cash Costs Assuming average prices of $1,800 per ounce of gold and $16.00 per pound of molybdenum for the second half 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 $1.35 per pound of copper for the year 2021 (including $1.33 per pound of copper in third-quarter 2021). The impact of price changes for the second half of 2021 on consolidated unit net cash costs for the year 2021 would approximate $0.02 per pound of copper for each $100 per ounce change in the average price of gold and $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum. Consolidated Operating Cash Flows Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. Based on current sales volume and cost estimates, and assuming average prices of $4.25 per pound for copper, $1,800 per ounce for gold, and $16.00 per pound for molybdenum for the second half of 2021, our consolidated operating cash flows are estimated to approximate $7.5 billion (including $0.4 billion of working capital and other sources) for the year 2021. Estimated consolidated operating cash flows for the year 2021 also reflect an estimated income tax provision of $2.5 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 for the second half of 2021 on operating cash flows would approximate $200 million for each $0.10 per pound change in the average price of copper, $50 million for each $100 per ounce change in the average price of gold and $55 million for each $2 per pound change in the average price of molybdenum. 26 Table of Contents Consolidated Capital Expenditures Consolidated capital expenditures, excluding estimated expenditures associated with Indonesia smelter development, are expected to approximate $2.2 billion for the year 2021, including $1.4 billion for major projects, primarily associated with underground development activities in the Grasberg minerals district. Indonesia smelter development expenditures are currently expected to approximate $0.4 billion for the year 2021 (including $0.3 billion during the second half of 2021). All costs of smelter development in Indonesia will be shared 49 percent by FCX and 51 percent by PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID), and will be largely offset by a phase-out of the 5 percent export duty currently paid to the Indonesia government as well as the tax deductibility of smelter costs by PT-FI. PT-FI plans to use its $1 billion, five-year, unsecured credit facility (refer to Note 5) and additional debt financing to fund these projects. MARKETS World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2011 through June 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 $4.86 per pound in 2021; 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 $19.90 per pound in 2021. 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 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 June 2021. During second-quarter 2021, LME copper settlement prices ranged from a low of $3.98 per pound to a high of $4.86 per pound, averaged $4.40 per pound and settled at $4.26 per pound on June 30, 2021. As China's economy began to recover from the COVID-19 pandemic, copper prices increased throughout 2020 and reached a record high during second-quarter 2021 before moderating in June 2021 as a result of a strengthening U.S. dollar and China's announcement that it would begin selling stockpiled metal commodities, including copper, to curb rising commodity costs. The LME copper settlement price was $4.42 per pound on July 30, 2021. 27 Table of Contents 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 June 2021. During second-quarter 2021, London PM gold prices ranged from a low of $1,726 per ounce to a high of $1,903 per ounce, averaged $1,816 per ounce, and closed at $1,763 per ounce on June 30, 2021. While the continued 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. dollar. The London PM gold price was $1,826 per ounce on July 30, 2021. 28 Table of Contents This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2011 through June 2021. During second-quarter 2021, the weekly average price of molybdenum ranged from a low of $10.99 per pound to a high of $19.90 per pound, averaged $13.81 per pound, and was $18.95 per pound on June 30, 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 $18.13 per pound on July 30, 2021. 29 Table of Contents CONSOLIDATED RESULTS Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 SUMMARY FINANCIAL DATA (in millions, except per share amounts) Revenues a,b $ 5,748 $ 3,054 $ 10,598 $ 5,852 Operating income (loss) a,c $ 2,067 d,e,f $ 321 g $ 3,599 d,e,f,g $ (152) e,g Net income (loss) attributable to common stock h $ 1,083 i $ 53 j,k,l $ 1,801 i $ (438) j,k,l Diluted net income (loss) per share of common stock $ 0.73 $ 0.03 $ 1.21 $ (0.30) Diluted weighted-average common shares outstanding 1,483 1,458 1,480 1,453 Operating cash flows m $ 2,395 $ 491 $ 3,470 $ 453 Capital expenditures $ 433 $ 527 $ 803 $ 1,137 At June 30: Cash and cash equivalents $ 6,313 $ 1,465 $ 6,313 $ 1,465 Total debt, including current portion $ 9,695 $ 9,914 $ 9,695 $ 9,914 a. Refer to Note 9 for a summary of revenues and operating income (loss) by operating division. b. Includes favorable (unfavorable) adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $173 million ($66 million to net income attributable to common stock or $0.05 per share) in second-quarter 2021, $55 million ($19 million to net income attributable to common stock or $0.01 per share) in second-quarter 2020, $169 million ($65 million to net income attributable to common stock or $0.04 per share) for the first six months of 2021 and $(102) million ($(43) million to net loss attributable to common stock or $(0.03) per share) for the first six months of 2020 (refer to Note 6 for further discussion). c. Includes net charges associated with environmental obligations and related litigation reserves totaling $20 million ($20 million to net income attributable to common stock or $0.01 per share) in second-quarter 2021, $1 million ($1 million to net income attributable to common stock or less than $0.01 per share) in second-quarter 2020, $17 million ($17 million to net income attributable to common stock or $0.01 per share) for the first six months of 2021 and $15 million ($15 million to net loss attributable to common stock or $0.01 per share) for the first six months of 2020. d. The second quarter and first six months of 2021 include nonrecurring labor-related charges totaling $69 million ($22 million to net income attributable to common stock or $0.01 per share) at Cerro Verde for agreements reached with 57 percent of its hourly employees. Refer to “Operations – South America Mining” for further discussion. e. Includes net gains (losses) on sales of assets totaling $3 million ($3 million to net income attributable to common stock or less than $0.01 per share) for the second quarter and first six months of 2021 and $(11) million ($(11) million to net loss attributable to common stock or $0.01 per share) for the first six months of 2020. f. Second-quarter 2021 includes net credits totaling $10 million ($10 million to net income attributable to common stock or $0.01 per share) associated with asset retirement obligation adjustments. The first six months of 2021 also include other 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. g. Includes metals inventory adjustments totaling $139 million ($101 million to net income attributable to common stock or $0.07 per share) in second-quarter 2020, $(1) million ($(1) million to net income attributable to common stock or less than $(0.01) per share) for the first six months of 2021 and $(83) million ($(81) million to net loss attributable to common stock or $(0.06) per share) for the first six months of 2020. h. 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. i. Includes net charges associated with contested matters at PT-FI totaling $32 million ($28 million to net income attributable to common stock or 0.02 per share) in second-quarter 2021 and $54 million ($48 million to net income attributable to common stock or 0.03 per share) for the first six months of 2021. These charges were recorded to production and delivery ($17 million in second-quarter 2021 and $30 million for the first six months of 2021), interest expense, net ($4 million in second-quarter 2021 and $8 million for the first six months of 2021) and other income, net ($11 million in second-quarter 2021 and $16 million for the first six months of 2021). j. Includes after-tax net losses on early extinguishment of debt totaling $9 million ($0.01 per share) in second-quarter 2020 and $41 million ($0.03 per share) for the first six months of 2020. k. Includes charges totaling $196 million ($144 million to net income attributable to common stock or $0.10 per share) in second-quarter 2020 and $224 million ($153 million to net loss attributable to common stock or $0.11 per share) for the first six months of 2020 associated with the COVID-19 pandemic and revised operating plans, including employee separation costs. These charges were recorded to production and delivery ($153 million in second-quarter 2020 and $173 million for the first six months of 2020); depreciation, depletion and amortization ($21 million in second-quarter 2020 and $29 million for 30 Table of Contents the first six months of 2020); selling, general and administrative ($15 million for each of the second quarter and first six months of 2020) and mining exploration and research expense ($7 million for each of the second quarter and first six months of 2020). l. Includes net tax credits of $53 million ($0.04 per share) in second-quarter 2020 and $52 million ($0.04 per share) for the first six months of 2020. Refer to “Income Taxes” for further discussion of these net tax credits. m. Working capital and other sources totaled $523 million in second-quarter 2021, $22 million in second-quarter 2020, $187 million for the first six months of 2021 and $141 million for the first six months of 2020. Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 SUMMARY OPERATING DATA Copper (millions of recoverable pounds) Production 913 767 1,823 1,498 Sales, excluding purchases 929 759 1,754 1,488 Average realized price per pound $ 4.34 $ 2.55 a $ 4.25 $ 2.53 a Site production and delivery costs per pound b $ 2.02 c $ 1.82 d $ 1.94 c $ 2.00 d Unit net cash costs per pound b $ 1.48 $ 1.47 $ 1.44 $ 1.68 Gold (thousands of recoverable ounces) Production 305 191 602 347 Sales, excluding purchases 305 184 563 328 Average realized price per ounce $ 1,794 $ 1,749 $ 1,785 $ 1,709 Molybdenum (millions of recoverable pounds) Production 20 19 40 38 Sales, excluding purchases 22 18 43 39 Average realized price per pound $ 13.11 $ 10.53 $ 12.38 $ 10.84 a. Includes reductions to average realized prices of $0.03 per pound of copper in second-quarter 2020 and $0.02 per pound of copper for the first six months of 2020 related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $2.34 per pound. There are no remaining forward sales contracts. b. Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.” c. Includes $0.07 per pound of copper in second-quarter 2021 and $0.04 per pound of copper for the first six months of 2021 associated with nonrecurring labor-related charges at Cerro Verde for agreements reached with 57 percent of its hourly employees. Refer to “Operations – South America Mining” for further discussion. d. Excludes charges totaling $0.20 per pound of copper in second-quarter 2020 and $0.12 per pound of copper for the first six months of 2020, primarily associated with idle facility and contract cancellations costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans. 31 Table of Contents Revenues Consolidated revenues totaled $5.7 billion in second-quarter 2021, $3.1 billion in second-quarter 2020, $10.6 billion for the first six months of 2021 and $5.9 billion for the first six months of 2020. Revenues from our mining operations primarily include the sale of copper concentrate, copper cathode, copper rod, gold in concentrate and molybdenum. Refer to Note 9 for a summary of product revenues. Following is a summary of changes in our consolidated revenues between periods (in millions): Three Months Ended June 30 Six Months Ended June 30 Consolidated revenues - 2020 period $ 3,054 $ 5,852 Higher sales volumes: Copper 435 674 Gold 215 402 Molybdenum 43 38 Higher average realized prices: Copper 1,664 3,017 Gold 14 43 Molybdenum 56 66 Adjustments for prior period provisionally priced copper sales 118 271 Higher Atlantic Copper revenues 328 575 Higher revenues from purchased copper 144 127 Higher treatment charges (26) (43) Higher royalties and export duties (84) (152) Other, including intercompany eliminations (213) (272) Consolidated revenues - 2021 period $ 5,748 $ 10,598 Sales Volumes. Consolidated copper and gold sales volumes increased in the 2021 periods, compared to the 2020 periods, primarily reflecting continued progress of the ramp-up of underground mining at PT-FI. Refer to “Operations” for further discussion of sales volumes at our mining operations. Realized Prices. Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. Average realized prices for second-quarter 2021, compared with second-quarter 2020, were 70 percent higher for copper, 3 percent higher for gold and 25 percent higher for molybdenum and average realized prices for the first six months of 2021, compared with the first six months of 2020, were 68 percent higher for copper, 4 percent higher for gold and 14 percent higher for molybdenum. Average realized copper prices include net (unfavorable) favorable adjustments to current period provisionally priced copper sales totaling $(55) million in second-quarter 2021, $107 million in second-quarter 2020, $156 million for the first six months of 2021 and $26 million for the first six months of 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. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs. Prior Period Provisionally Priced Copper Sales. Net favorable (unfavorable) adjustments to prior periods’ provisionally priced copper sales ( i.e. , provisionally priced sales at March 31, 2021 and 2020, and December 31, 2020 and 2019) recorded in consolidated revenues totaled $173 million in second-quarter 2021, $55 million in second-quarter 2020, $169 million for the first six months of 2021 and $(102) million for the first six months of 2020. Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales. 32 Table of Contents At June 30, 2021, we had provisionally priced copper sales totaling 368 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $4.25 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the June 30, 2021, provisional price recorded would have an approximate $12 million effect on our 2021 net income attributable to common stock. The LME copper price settled at $4.42 per pound on July 30, 2021. Atlantic Copper Revenues. Atlantic Copper revenues totaled $794 million in second-quarter 2021 and $1.5 billion for the first six months of 2021, compared with $466 million in second-quarter 2020 and $906 million for the first six months of 2020. Higher revenues in the 2021 periods, compared with the 2020 periods, 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 68 million pounds in second-quarter 2021, 71 million pounds in second-quarter 2020, 121 million pounds for the first six months of 2021 and 159 million pounds for the first six months of 2020. The increase in revenues associated with purchased copper in the 2021 periods, compared to the 2020 periods, reflects higher copper prices. Treatment Charges. Revenues from our concentrate sales are recorded net of treatment charges ( i.e., fees paid to smelters that are generally negotiated annually), which will vary with the sales volumes and the price of copper. Royalties and Export Duties. 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 new domestic smelting with an annual capacity of 2 million metric tons of concentrate 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 $3.1 billion in second-quarter 2021, $2.4 billion in second-quarter 2020, $5.9 billion for the first six months of 2021 and $4.9 billion for the first six months of 2020. Higher consolidated production and delivery costs in the 2021 periods primarily reflect higher sales volumes, higher milling and mining costs and nonrecurring labor-related charges at Cerro Verde for agreements reached with 57 percent of its hourly employees. The 2020 periods also include charges associated with the COVID-19 pandemic and revised operating plans. 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 $2.02 per pound of copper in second-quarter 2021, $1.82 per pound of copper in second-quarter 2020, $1.94 per pound of copper for the first six months of 2021 and $2.00 per pound of copper for the first six months of 2020. Consolidated site production and delivery costs per pound in the second quarter and first six months of 2021, compared with the second quarter and first six months of 2020, primarily reflected higher mining and milling costs and nonrecurring labor-related charges at Cerro Verde, partly offset by higher sales volumes. Consolidated site production and delivery costs for the 2020 periods excluded charges primarily associated with the COVID-19 pandemic and the April 2020 revised operating plans. 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. 33 Table of Contents Depreciation, Depletion and Amortization 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 $483 million in second-quarter 2021, $358 million in second-quarter 2020, $902 million for the first six months of 2021 and $699 million for the first six months of 2020. Higher DD&A in the 2021 periods is primarily related to assets placed in service and higher sales volumes associated with the ramp-up of underground mining at PT-FI. Metals Inventory Adjustments Net realizable value metals inventory adjustments totaled a net credit of $139 million in second-quarter 2020 and net charges of $1 million for the first six months of 2021 and $83 million for the first six months of 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 $165 million in second-quarter 2021, $159 million in second-quarter 2020, $325 million for the first six months of 2021 and $330 million for the first six months of 2020. Capitalized interest varies with the level of qualifying assets associated with our development projects and average interest rates on our borrowings, and totaled $17 million in second-quarter 2021, $44 million in second-quarter 2020, $32 million for the first six months of 2021 and $88 million for the first six months of 2020. The decrease in capitalized interest in the 2021 periods, compared with the 2020 periods, 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. Income Taxes Following is a summary of the approximate amounts used in the calculation of our consolidated income tax (provision) benefit (in millions, except percentages): Six Months Ended June 30, 2021 2020 Income (Loss) a Effective Tax Rate Income Tax (Provision) Benefit Income (Loss) a Effective Tax Rate Income Tax (Provision) Benefit U.S. b $ 743 — % $ (3) c $ (581) 10 % $ 58 d South America 923 39 % (356) (57) 58 % 33 Indonesia 1,759 41 % (719) 169 54 % (91) e Eliminations and other (99) N/A 5 74 N/A (16) Rate adjustment f — N/A 27 — N/A (20) Consolidated FCX $ 3,326 31 % g $ (1,046) $ (395) (9) % g,h $ (36) a. Represents income (loss) before income taxes and equity in affiliated companies’ net earnings. b. 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. c. Includes valuation allowance release on prior year unbenefited net operating losses. d. 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. e. Includes a tax charge of $8 million ($7 million net of noncontrolling interest) associated with an unfavorable 2012 Indonesia Supreme Court ruling. f. In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our consolidated tax rate. g. Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. h. Our U.S. jurisdiction generated net losses in the first six 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. net losses. Assuming achievement of current sales volume and cost estimates and average prices of $4.25 per pound for copper, $1,800 per ounce for gold and $16.00 per pound for molybdenum for the second half of 2021, we estimate 34 Table of Contents our consolidated effective tax rate for the year 2021 would approximate 31 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. The net 0 percent U.S. estimated effective tax rate for the year 2021 includes approximately $175 million of valuation allowance reversal related to an expected $850 million use of U.S. federal net operating losses during 2021. OPERATIONS 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 (ESG) programs and are continuously striving to improve and respond to evolving stakeholder expectations. This report marked our 20th year of reporting on our sustainability progress and our first year reporting in alignment with the Sustainability Accounting Standards Board Metals & Mining 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. The Copper Mark is a robust assurance framework that demonstrates the copper industry's responsible production practices and contribution to the United Nations Sustainable Development Goals. To date, we 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). In June 2021, we commenced the Copper Mark assessment process at five additional operating sites, including Bagdad, Chino, Tyrone, Safford and Sierrita. Each of these sites will complete an external assurance process to assess conformance with the Copper Mark’s 32 ESG requirements, with a goal of being awarded the Copper Mark. We have future plans to validate all of our copper producing sites with the Copper Mark requirements. North America Copper Mines We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. We record our 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method. The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper production is sold as copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate, gold and silver are also produced by certain of our North America copper mines . Operating and Development Activities. Our North America operating sites continue to achieve 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 current operations are exceeding initial design capacity approximating 200 million pounds annually. We continue to advance opportunities to increase operating rates and for development of the large-scale sulfide resource at Lone Star, including evaluating a potential additional incremental oxide expansion to increase volumes to over 300 million pounds of copper per year. We have substantial resources in the U.S., primarily associated with existing mining operations. Evaluation of project options for future growth are under way. In addition to Lone Star, we are actively advancing studies to add new capacity at our long-lived Bagdad operation in northwest Arizona. 35 Table of Contents Operating Data. Following is summary consolidated operating data for the North America copper mines: Three Months Ended June 30, Six months ended June 30, 2021 2020 2021 2020 Operating Data, Net of Joint Venture Interests Copper (millions of recoverable pounds) Production 360 368 713 714 Sales, excluding purchases 389 368 697 723 Average realized price per pound $ 4.42 $ 2.42 a $ 4.19 $ 2.50 a Molybdenum (millions of recoverable pounds) Production b 9 9 17 17 100% Operating Data Leach operations Leach ore placed in stockpiles (metric tons per day) 688,000 744,000 696,500 736,100 Average copper ore grade (percent) 0.30 0.28 0.29 0.28 Copper production (millions of recoverable pounds) 265 265 527 500 Mill operations Ore milled (metric tons per day) 264,700 286,200 266,300 309,800 Average ore grade (percent): Copper 0.36 0.37 0.37 0.34 Molybdenum 0.03 0.02 0.03 0.02 Copper recovery rate (percent) 82.4 84.6 80.5 85.8 Copper production (millions of recoverable pounds) 155 176 306 354 a. Includes reductions to average realized prices of $0.06 per pound of copper in second-quarter 2020 and $0.03 per pound of copper for the first six months of 2020 related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $2.34 per pound. There are no remaining forward sales contracts. b. 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 389 million pounds in second-quarter 2021, 368 million pounds in second-quarter 2020, 697 million pounds for the first six months of 2021 and 723 million pounds for the first six months of 2020. The changes in sales volumes for the 2021 periods, compared with the 2020 periods, primarily reflect timing of shipments. North America copper sales are estimated to approximate 1.47 billion pounds for the year 2021, compared with 1.4 billion pounds for the year 2020. Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from 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. GAAP. 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. 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. 36 Table of Contents Three Months Ended June 30, 2021 2020 By- Product Method Co-Product Method By- Product Method Co-Product Method Copper Molyb- denum a Copper Molyb- denum a Revenues, excluding adjustments $ 4.42 $ 4.42 $ 11.75 $ 2.42 b $ 2.42 $ 8.33 Site production and delivery, before net noncash and other costs shown below 2.14 2.03 6.86 1.85 1.73 6.76 By-product credits (0.25) — — (0.17) — — Treatment charges 0.08 0.07 — 0.10 0.10 — Unit net cash costs 1.97 2.10 6.86 1.78 1.83 6.76 DD&A 0.26 0.25 0.55 0.24 0.22 0.55 Metals inventory adjustments — — — (0.24) (0.24) — Noncash and other costs, net 0.08 0.08 0.06 0.09 c 0.09 0.08 Total unit costs 2.31 2.43 7.47 1.87 1.90 7.39 Revenue adjustments, primarily for pricing on prior period open sales 0.02 0.02 — 0.02 0.02 — Gross profit per pound $ 2.13 $ 2.01 $ 4.28 $ 0.57 $ 0.54 $ 0.94 Copper sales (millions of recoverable pounds) 389 389 368 368 Molybdenum sales (millions of recoverable pounds) a 9 9 Six months ended June 30, 2021 2020 By- Product Method Co-Product Method By- Product Method Co-Product Method Copper Molyb- denum a Copper Molyb- denum a Revenues, excluding adjustments $ 4.19 $ 4.19 $ 11.12 $ 2.50 b $ 2.50 $ 8.99 Site production and delivery, before net noncash and other costs shown below 2.09 1.96 6.76 2.00 1.85 7.81 By-product credits (0.27) — — (0.19) — — Treatment charges 0.09 0.09 — 0.10 0.10 — Unit net cash costs 1.91 2.05 6.76 1.91 1.95 7.81 DD&A 0.26 0.24 0.51 0.25 0.23 0.64 Metals inventory adjustments — — — 0.08 0.07 — Noncash and other costs, net 0.11 0.11 0.06 0.09 c 0.09 0.15 Total unit costs 2.28 2.40 7.33 2.33 2.34 8.60 Revenue adjustments, primarily for pricing on prior period open sales 0.01 0.01 — (0.03) (0.03) — Gross profit per pound $ 1.92 $ 1.80 $ 3.79 $ 0.14 $ 0.13 $ 0.39 Copper sales (millions of recoverable pounds) 697 697 722 722 Molybdenum sales (millions of recoverable pounds) a 17 17 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes reductions to average realized prices of $0.06 per pound of copper in second-quarter 2020 and $0.03 per pound of copper for the first six months of 2020 related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $2.34 per pound. There are no remaining forward sales contracts. c. Includes charges totaling $0.06 per pound of copper in second-quarter 2020 and $0.03 per pound of copper for the first six months of 2020, primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic. 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 of $1.97 per pound of copper in second-quarter 2021 were higher than unit net cash costs of $1.78 per pound in second-quarter 2020, primarily reflecting costs associated with higher mining and milling rates and higher maintenance and input costs, partly offset by higher by-product credits. Average unit net cash costs (net of by-product credits) of $1.91 per pound of copper for first six months of 2021 approximated average unit net cash costs for the first six months of 2020. 37 Table of Contents 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 $1.91 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 $16.00 per pound for the second half of 2021. North America’s average unit net cash costs for the year 2021 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2021. South America Mining We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest), which are consolidated in our financial statements. South America mining includes open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or cathode under long-term contracts. Our South America mines also sell a portion of their copper concentrate production to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver. Cerro Verde Labor Agreement. During second-quarter 2021, Cerro Verde reached agreements with 57 percent of its hourly employees (including early agreement of a new four-year collective labor agreement (CLA) with one of its three unions) and incurred nonrecurring charges totaling $69 million associated with these agreements. Negotiations for new CLAs for Cerro Verde's remaining hourly employees are ongoing. The current CLA is scheduled to expire on August 31, 2021. Operating and Development Activities. Cerro Verde's concentrator facilities have continued to perform well with milling rates averaging 382,100 metric tons of ore per day for the first six months of 2021. Cerro Verde expects milling rates to return to pre-COVID-19 pandemic levels of approximately 400,000 metric tons of ore per day in 2022. El Abra continues to implement plans to increase operating rates to pre-COVID-19 pandemic levels, subject to ongoing monitoring of public health conditions in Chile. Stacking rates at El Abra averaged 94,200 metric tons per day in second-quarter 2021, approximately 25 percent higher than second-quarter 2020. Increased stacking rates are expected to result in incremental annual production of approximately 70 million pounds of copper beginning in mid-2022, compared with 2020 levels. A new leach pad is under construction to accommodate planned stacking rates for the next several years. 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. We are monitoring potential changes in government fiscal matters in Chile and will defer major investment decisions pending clarity on these matters. 38 Table of Contents Operating Data. Following is summary consolidated operating data for South America mining: Three Months Ended June 30, Six months ended June 30, 2021 2020 2021 2020 Copper (millions of recoverable pounds) Production 245 218 504 463 Sales 230 219 489 466 Average realized price per pound $ 4.31 $ 2.67 $ 4.28 $ 2.57 Molybdenum (millions of recoverable pounds) Production a 4 4 9 8 Leach operations Leach ore placed in stockpiles (metric tons per day) 190,200 141,900 172,100 162,200 Average copper ore grade (percent) 0.33 0.33 0.34 0.35 Copper production (millions of recoverable pounds) 65 62 126 125 Mill operations Ore milled (metric tons per day) 374,100 251,800 b 382,100 300,700 b Average ore grade (percent): Copper 0.29 0.39 0.30 0.36 Molybdenum 0.01 0.01 0.01 0.01 Copper recovery rate (percent) 85.2 83.9 86.4 80.8 Copper production (millions of recoverable pounds) 179 156 377 338 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde. b. Cerro Verde mill operations were negatively impacted by COVID-19 restrictions. Our consolidated copper sales volumes from South America totaled 230 million pounds in second-quarter 2021, 219 million pounds in second-quarter 2020, 489 million pounds for the first six months of 2021 and 466 million pounds for the first six months of 2020. Higher copper sales volumes in the 2021 periods, compared with the 2020 periods, primarily reflect higher milling rates at Cerro Verde, partly offset by timing of shipments. Copper sales from South America mining are expected to approximate 1.05 billion pounds for the year 2021, slightly higher than the year 2020. Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. 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. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Gross Profit (Loss) per Pound of Copper The following table summarizes unit net cash costs and gross profit (loss) per pound of copper at our South America mining operations. 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. 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. 39 Table of Contents Three Months Ended June 30, 2021 2020 By-Product Method Co-Product Method By-Product Method Co-Product Method Revenues, excluding adjustments $ 4.31 $ 4.31 $ 2.67 $ 2.67 Site production and delivery, before net noncash and other costs shown below 2.48 a 2.30 1.64 1.57 By-product credits (0.31) — (0.11) — Treatment charges 0.13 0.13 0.15 0.15 Royalty on metals 0.01 0.01 — — Unit net cash costs 2.31 2.44 1.68 1.72 DD&A 0.40 0.37 0.47 0.44 Metals inventory adjustments — — (0.26) (0.26) Noncash and other costs, net 0.08 0.07 0.32 b 0.30 Total unit costs 2.79 2.88 2.21 2.20 Revenue adjustments, primarily for pricing on prior period open sales 0.38 0.38 0.20 0.20 Gross profit per pound $ 1.90 $ 1.81 $ 0.66 $ 0.67 Copper sales (millions of recoverable pounds) 230 230 219 219 Six months ended June 30, 2021 2020 By-Product Method Co-Product Method By-Product Method Co-Product Method Revenues, excluding adjustments $ 4.28 $ 4.28 $ 2.57 $ 2.57 Site production and delivery, before net noncash and other costs shown below 2.23 a 2.09 1.84 1.72 By-product credits (0.26) — (0.14) — Treatment charges 0.13 0.13 0.15 0.15 Royalty on metals 0.01 0.01 — — Unit net cash costs 2.11 2.23 1.85 1.87 DD&A 0.40 0.37 0.45 0.42 Metals inventory adjustments — — 0.01 0.01 Noncash and other costs, net 0.06 0.05 0.21 b 0.20 Total unit costs 2.57 2.65 2.52 2.50 Revenue adjustments, primarily for pricing on prior period open sales 0.20 0.20 (0.15) (0.15) Gross profit (loss) per pound $ 1.91 $ 1.83 $ (0.10) $ (0.08) Copper sales (millions of recoverable pounds) 489 489 466 466 a. Includes $0.30 per pound of copper in second-quarter 2021 and $0.14 per pound of copper for the first six months of 2021 associated with nonrecurring labor-related charges at Cerro Verde Verde for agreements reached with 57 percent of its hourly employees. b. Includes charges totaling $0.30 per pound of copper in second-quarter 2020 and $0.18 per pound of copper for the first six months of 2020, primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans. 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 $2.31 per pound of copper in second-quarter 2021, $1.68 per pound of copper in second-quarter 2020, $2.11 per pound of copper for the first six months of 2021 and $1.85 per pound of copper for the first six months of 2020. Higher unit net cash costs in the 2021 periods, compared with the 2020 periods, primarily reflect increased mining and milling activities and non-recurring labor-related costs at Cerro Verde ($0.30 per pound in second-quarter 2021 and $0.14 per pound for the first six months of 2021), partly offset by higher volumes. 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. 40 Table of Contents Because certain assets are depreciated on a straight-line basis, South America’s unit depreciation rate may vary with asset additions and the level of copper production and sales. Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. 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 $2.02 per pound of copper for the year 2021, based on current sales volume and cost estimates and assuming an average price of $16.00 per pound of molybdenum for the second half of 2021. Indonesia Mining PT-FI operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. We have a 48.76 percent interest in PT-FI and manage its mining operations. As further discussed in Note 2 of our 2020 Form 10-K, under the terms of the shareholders agreement, our economic interest in PT-FI approximates 81 percent through 2022. PT-FI’s results are consolidated in our financial statements. PT-FI continues to operate with protocols designed to protect the health and safety of its workforce during the COVID-19 pandemic. During second-quarter 2021, PT-FI began to administer vaccines to its workforce and expects this program to accelerate through the second half of 2021. Following an increase in COVID-19 cases in Indonesia, PT-FI has recently reinstituted heightened protocols and travel restrictions to protect the health of its workforce and the surrounding community. Substantially all of PT-FI’s copper concentrate is sold under long-term contracts. During first six months of 2021, 46 percent of PT-FI’s concentrate production was sold to PT Smelting (PT-FI’s 39.5-percent owned copper smelter and refinery in Gresik, Indonesia). Operating and Development Activities. The ramp-up of underground production at the Grasberg minerals district in Indonesia continues to advance on schedule. Second-quarter 2021 highlights include: • Production approximated 78 percent of the projected ultimate annualized level and is expected to reach 100 percent by year-end 2021. • A total of 41 new drawbells were constructed at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to over 460. • Combined average production from the Grasberg Block Cave and DMLZ underground mines approximated 118,300 metric tons of ore per day. During second-quarter 2021, Grasberg Block Cave achieved a daily record of 107,000 metric tons of ore per day. The successful completion of this ramp up is expected to enable PT-FI to generate average annual production of 1.55 billion pounds of copper and 1.6 million ounces of gold for the next several years 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, 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 2021 and 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 2021 and 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. 41 Table of Contents Indonesia Smelter. As discussed in Note 13 of our 2020 Form 10-K, PT-FI committed to construct new domestic smelting capacity totaling 2 million metric tons of concentrate per year by December 2023. To fulfill its obligation for new domestic smelter capacity in Indonesia, PT-FI is planning the following: • Expansion of annual capacity at PT Smelting by 300,000 metric tons of concentrate, a 30 percent increase. PT-FI is advancing agreements with the majority owner of PT Smelting to implement the expansion plans with a target completion date of year-end 2023. PT-FI would fund the cost of the expansion, estimated to approximate $250 million, and increase its ownership in PT Smelting to a majority ownership interest. • Construction of a new greenfield smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of concentrate per year. In July 2021, PT-FI awarded a construction contract to Chiyoda with an estimated contract cost of $2.8 billion. The smelter construction is expected to be completed as soon as feasible in 2024, which is dependent on no further pandemic-related disruptions. • Construction of a precious metals refinery to process gold and silver from PT Smelting and the new greenfield smelter in Gresik, at an estimated cost of $250 million. All costs of smelter development in Indonesia will be shared 49 percent by FCX and 51 percent by PT Inalum, and will be largely offset by a phase-out of the 5 percent export duty currently paid to the Indonesia government as well as the tax deductibility of smelter costs by PT-FI. In July 2021, PT-FI entered into a $1 billion, five-year, unsecured credit facility to advance these project and additional debt financing is being evaluated. Refer to Note 5 and “Capital Resources and Liquidity” for further discussion of the credit facility. Operating Data. Following is summary consolidated operating data for Indonesia mining: Three Months Ended June 30, Six months ended June 30, 2021 2020 2021 2020 Copper (millions of recoverable pounds) Production 308 181 606 321 Sales 310 172 568 299 Average realized price per pound $ 4.27 $ 2.67 $ 4.29 $ 2.54 Gold (thousands of recoverable ounces) Production 303 189 597 341 Sales 302 180 558 319 Average realized price per ounce $ 1,795 $ 1,748 $ 1,785 $ 1,709 Ore extracted and milled (metric tons per day): Grasberg Block Cave underground mine a 64,400 27,200 58,100 23,100 DMLZ underground mine a 53,900 27,600 50,300 23,100 DOZ underground mine 10,800 21,600 14,700 20,900 Big Gossan underground mine 8,200 5,900 7,500 6,300 Grasberg open pit — — — 3,600 b Other 5,700 (400) 3,000 — Total 143,000 81,900 133,600 77,000 Average ore grades: Copper (percent) 1.28 1.27 1.34 1.21 Gold (grams per metric ton) 1.00 1.04 1.03 1.02 Recovery rates (percent): Copper 88.8 91.7 90.0 91.7 Gold 75.9 78.3 77.4 77.6 a. Includes ore from development activities that result in metal production. b. Represents ore from the Grasberg open-pit stockpiles. Our consolidated copper and gold sales from PT-FI totaled 310 million pounds and 302 thousand ounces in second quarter 2021 and 568 million pounds and 558 thousand ounces for the first six months of 2021, compared with copper and gold sales of 172 million pounds and 180 thousand ounces in second-quarter 2020 and 299 million pounds and 319 thousand ounces for the first six months of 2020. The increase in sales volumes for the 2021 periods primarily reflects the ramp-up of underground mining at PT-FI. 42 Table of Contents Consolidated sales volumes from PT-FI are expected to approximate 1.33 billion pounds of copper and 1.3 million ounces of gold for the year 2021, compared with 0.8 billion pounds of copper and 0.8 million ounces of gold for the year 2020. Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. 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. GAAP. 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. Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Three Months Ended June 30, 2021 2020 By-Product Method Co-Product Method By-Product Method Co-Product Method Copper Gold Copper Gold Revenues, excluding adjustments $ 4.27 $ 4.27 $ 1,795 $ 2.67 $ 2.67 $ 1,748 Site production and delivery, before net noncash and other costs shown below 1.54 1.07 449 2.00 1.17 766 Gold and silver credits (1.93) — — (1.95) — — Treatment charges 0.24 0.16 70 0.27 0.16 105 Export duties 0.14 0.10 42 0.09 0.05 35 Royalty on metals 0.26 0.19 66 0.15 0.08 65 Unit net cash costs 0.25 1.52 627 0.56 1.46 971 DD&A 0.79 0.55 232 0.72 0.42 276 Noncash and other costs, net 0.04 0.03 11 0.05 a 0.03 17 Total unit costs 1.08 2.10 870 1.33 1.91 1,264 Revenue adjustments, primarily for pricing on prior period open sales 0.28 0.28 53 0.07 0.07 41 PT Smelting intercompany loss (0.13) (0.09) (39) (0.15) (0.09) (57) Gross profit per pound/ounce $ 3.34 $ 2.36 $ 939 $ 1.26 $ 0.74 $ 468 Copper sales (millions of recoverable pounds) 310 310 172 172 Gold sales (thousands of recoverable ounces) 302 180 43 Table of Contents Six Months Ended June 30, 2021 2020 By-Product Method Co-Product Method By-Product Method Co-Product Method Copper Gold Copper Gold Revenues, excluding adjustments $ 4.29 $ 4.29 $ 1,785 $ 2.54 $ 2.54 $ 1,709 Site production and delivery, before net noncash and other costs shown below 1.51 1.05 439 2.29 1.31 884 Gold and silver credits (1.86) — — (1.91) — — Treatment charges 0.24 0.17 71 0.28 0.17 110 Export duties 0.13 0.09 37 0.07 0.04 25 Royalty on metals 0.25 0.18 68 0.15 0.08 58 Unit net cash costs 0.27 1.49 615 0.88 1.60 1,077 DD&A 0.78 0.55 228 0.75 0.43 289 Noncash and other costs, net 0.01 b — 1 0.12 a 0.06 45 Total unit costs 1.06 2.04 844 1.75 2.09 1,411 Revenue adjustments, primarily for pricing on prior period open sales 0.12 0.12 (8) (0.07) (0.07) 14 PT Smelting intercompany loss (0.16) (0.11) (46) — — — Gross profit per pound/ounce $ 3.19 $ 2.26 $ 887 $ 0.72 $ 0.38 $ 312 Copper sales (millions of recoverable pounds) 568 568 299 299 Gold sales (thousands of recoverable ounces) 558 319 a. Includes COVID-19 related costs of $0.03 per pound of copper in second-quarter 2020 and $0.01 per pound of copper for the first six months of 2020. b. Includes credits of $0.05 per pound of copper associated with adjustments to prior year treatment and refining charges and charges of $0.03 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 $0.25 per pound of copper in second-quarter 2021 and $0.27 per pound for the first six months of 2021, were lower than $0.56 per pound in second-quarter 2020 and $0.88 per pound for the first six months of 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 $44 million in second-quarter 2021, $16 million in second-quarter 2020, $73 million for the first six months of 2021 and $20 million for the first six months of 2020. PT-FI will continue to pay export duties until development progress for new domestic smelting with an annual capacity of 2 million metric tons of concentrate exceeds 50 percent. PT-FI’s royalties totaled $80 million in second-quarter 2021, $25 million in second-quarter 2020, $140 million for the first six months of 2021 and $44 million for the first six months of 2020. The increase in export duties and royalties for the 2021 periods, compared with the 2020 periods, primarily reflect higher sales volumes and copper 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 $0.79 per pound in second-quarter 2021 and $0.78 per pound for the first six months of 2021, compared with $0.72 per pound in second-quarter 2020 and $0.75 per pound for the first six months of 2020. The increase in the rate per pound of copper for the 2021 periods, compared with the 2020 periods, primarily reflects the impact of an ongoing ramp up of underground mining, which resulted in significantly higher copper production and sales volumes and a related unit of production depreciation rate increase resulting from significant underground development assets placed into service. Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. 44 Table of Contents PT Smelting intercompany loss represents the change in the deferral of PT-FI’s profit on sales to PT Smelting (25 percent prior to April 30, 2021, and 39.5 percent thereafter). Refer to “Smelting and Refining” below for further discussion. Assuming an average gold price of $1,800 per ounce for the second half 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 $0.19 per pound of copper for the year 2021. PT-FI's unit net cash costs for the year 2021 would change by approximately $0.06 per pound for each $100 per ounce change in the average price of gold for the second half 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, impacts and duration of the COVID-19 pandemic and timing of shipments. Molybdenum Mines We operate two wholly owned molybdenum mines in Colorado – the Henderson underground mine and the Climax open-pit mine. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North America and South America copper mines, is processed at our own conversion facilities. Operating and Development Activities. Production from the Molybdenum mines of 7 million pounds of molybdenum in second-quarter 2021 and 14 million pounds for the first six months of 2021, was slightly higher than production of 6 million pounds of molybdenum in second-quarter 2020 and 13 million pounds for the first six months of 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. Refer to “Outlook” for projected consolidated molybdenum sales volumes. Unit Net Cash Costs Per Pound of Molybdenum. Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. 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. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Average unit net cash costs for our Molybdenum mines of $8.14 per pound of molybdenum in second-quarter 2021 and $8.53 per pound for the first six months of 2021 were lower than average unit net cash costs of $8.97 per pound in second-quarter 2020 and $9.52 per pound for the first six months of 2020, primarily reflecting higher volumes. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $9.65 per pound of molybdenum for the year 2021. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Smelting and Refining 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). PT-FI also has a 39.5 percent ownership interest in a smelter and refinery in Gresik, Indonesia (PT Smelting). 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. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter and El Paso refinery. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production. 45 Table of Contents Our Miami smelter processes concentrate produced by our U.S. mines and also provides acid for copper leaching operations. During the first six months of 2021, we incurred charges totaling $87 million associated with a major maintenance turnaround at our Miami smelter, which were higher than original estimates as a result of extended downtime to address additional required maintenance work, the COVID-19 pandemic and weather events. The next major maintenance turnaround is scheduled for the first half of 2024. Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During the first six months of 2021, Atlantic Copper’s concentrate purchases included 38 percent from our copper mining operations and 62 percent from third parties. PT-FI’s contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum treatment charge rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first six months of 2021, PT-FI supplied the substantial majority of PT Smelting’s concentrate requirements. In July 2021, PT Smelting received a six-month extension of its anodes slimes export license, which currently expires December 30, 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 thereafter) 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 $(99) million ($(81) million to net income attributable to common stock) in second-quarter 2021 and $(17) million ($(6) million to net income attributable to common stock) in second-quarter 2020, $(185) million ($(145) million to net income attributable to common stock) for the first six months of 2021 and $(6) million ($1 million to net loss attributable to common stock) for the first six months of 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 $207 million at June 30, 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 estimate that approximately 40 percent of the net deferred profit balance will be recognized as income in the second half of 2021. CAPITAL RESOURCES AND LIQUIDITY Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. We generated significant cash flows during the first six months of 2021, reflecting strong operating and financial performance and favorable market conditions. This strong performance allowed us to achieve the balance sheet targets outlined in our financial policy discussed below earlier than originally projected. Accordingly, we are well positioned to increase cash returns to shareholders and for investments in long-term growth. 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 that are progressing on schedule. We are also evaluating opportunities in North America and South America 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. We believe that our cash generating capability and financial condition, together with availability under our revolving credit facility, will be adequate to meet our operating, investing and financing needs. Subject to future commodity prices for copper, gold, and molybdenum, our projected consolidated operating cash flows of $7.5 billion for the year 2021 significantly exceed our expected consolidated capital expenditures of $2.2 billion (which excludes capital expenditures for smelter development in Indonesia) and other cash requirements for the year, including common stock dividends and noncontrolling interest distributions. We plan to fund our smelter development projects in Indonesia with PT-FI’s new $1 billion, unsecured bank credit facility (see “Debt” below and Note 5) and additional debt financing. Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2021. At June 30, 2021, we had $9.8 billion in liquidity, comprised of $6.3 billion in consolidated cash and $3.5 billion of availability under our revolving credit facility. 46 Table of Contents Financial Policy. In February 2021, our Board adopted a new 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 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 performance-based payout distributions in excess of the base dividend will be assessed by the Board at least annually. With the recent achievement of our net debt target, we expect the Board to consider the amount of additional cash returns to shareholders following its 2021 annual results. As of June 30, 2021, our consolidated net debt totaled $3.4 billion, a $2.7 billion reduction from December 31, 2020 (refer to “Net Debt” for further discussion). Cash Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at June 30, 2021 (in billions): Cash at domestic companies $ 4.1 Cash at international operations 2.2 Total consolidated cash and cash equivalents 6.3 Noncontrolling interests’ share (0.8) Cash, net of noncontrolling interests’ share 5.5 Withholding taxes (0.1) Net cash available $ 5.4 Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayment, working capital and other tax payments, or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility. We have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share. Debt At June 30, 2021, our consolidated debt totaled $9.7 billion, with a weighted-average interest rate of 4.6 percent. We had no borrowings outstanding and $8 million in letters of credit issued under our revolving credit facility, resulting in availability of approximately $3.5 billion. On July 19, 2021, PT-FI entered into a $1 billion, five-year, unsecured bank credit facility (consisting of a $667 million term loan and a $333 million revolving credit facility ) . Amounts may be drawn under the term loan within the first three years. The loans mature in July 2026 and bear interest at the London Interbank Offered Rate plus a margin of 1.875% or 2.125%, as defined in the agreement. Refer to Note 5 for further discussion of the above items. We have $1.1 billion in maturities through June 2022, including our 3.55% Senior Notes ($0.5 billion due March 2022) and the final maturity of the Cerro Verde Term Loan ($0.5 billion due June 2022). We do not have any other senior note maturities until 2023. For additional information regarding our debt arrangements, refer to Note 8 included in our 2020 Form 10-K. Operating Activities We reported consolidated cash provided by operating activities of $3.5 billion (including $0.2 billion of working capital and other sources) for the first six months of 2021 and $453 million (including $0.1 billion from working capital and other sources) for the first six months of 2020. Higher operating cash flows for the first six months of 2021, compared with the first six months of 2020, primarily reflect higher copper prices and sales volumes. 47 Table of Contents Investing Activities Capital Expenditures. Capital expenditures, including capitalized interest, totaled $0.8 billion for the first six months of 2021, including approximately $0.6 billion for major projects primarily associated with underground development activities in the Grasberg minerals district. Capital expenditures, including capitalized interest, totaled $1.1 billion for the first six months of 2020, including approximately $0.6 billion for major projects primarily associated with underground development activities in the Grasberg minerals district and the Lone Star copper leach project. 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 $16 million for the first six months of 2021 and $116 million for the first six months of 2020, primarily associated with the contingent consideration of $60 million from the 2016 sale of TF Holdings Limited and the collection of $45 million related to the 2019 sale of the Timok exploration assets in Serbia. Acquisition of Minority Interest in PT Smelting. On April 30, 2021, PT-FI acquired 14.5 percent of the outstanding common stock of PT Smelting for $33 million, increasing its ownership interest from 25 percent to 39.5 percent. Financing Activities Debt Transactions. Net repayments of debt totaled $19 million for the first six months of 2021 and net borrowings totaled $58 million for the first six months of 2020. During the first six months of 2020, we completed the sale of $1.3 billion in senior notes and used net proceeds to purchase or redeem our senior notes due 2021 and to purchase a portion of our senior notes due 2022. We recorded losses on early extinguishment of debt totaling $41 million for the first six months of 2020 related to these transactions. Cash Dividends and Distributions Paid. We paid cash dividends on our common stock totaling $111 million for the first six months of 2021 and $73 million for the first six months of 2020. On June 23, 2021, we declared a quarterly cash dividend of $0.075 per share on our common stock, which was paid on August 2, 2021, to shareholders of record as of July 15, 2021. 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. 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. Cash dividends and distributions paid to noncontrolling interests totaled $93 million for the first six months of 2021. There were no cash dividends or distributions to noncontrolling interests paid during the first six months of 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. We received equity contributions totaling $88 million for the first six months of 2021 and $74 million for the first six months of 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 during 2021, proceeds from exercised stock options totaled $184 million and payments for related employee taxes totaled $19 million for the first six months of 2021. See Note 10 in our 2020 Form 10-K for a discussion of stock-based awards. CONTRACTUAL OBLIGATIONS In July 2021, PT-FI awarded a construction contract to Chiyoda for the construction of a new greenfield smelter in Gresik, Indonesia, with an estimated contract cost of $2.8 billion. The smelter construction is expected to be completed as soon as feasible in 2024, which is dependent on no further pandemic-related disruptions. There have been no other material changes in our contractual obligations since December 31, 2020. 48 Table of Contents CONTINGENCIES Environmental and Asset Retirement Obligations Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and asset retirement obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. There have been no material changes to our environmental and asset retirement obligations since December 31, 2020. Refer to Note 8 for updates associated with our Newtown Creek environmental obligation. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental obligations. Refer to Note 12 in our 2020 Form 10-K, for further information regarding our environmental and asset retirement obligations. Litigation and Other Contingencies There have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since December 31, 2020. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our 2020 Form 10-K, as updated by Note 8, for further information regarding legal proceedings, environmental and other matters. NEW ACCOUNTING STANDARDS There were no significant updates to previously reported accounting standards included in Note 1 of our 2020 Form 10-K. NET DEBT Net debt, which we define as consolidated debt less consolidated cash and cash equivalents, is intended to provide investors with information related to the performance-based payout framework in our financial policy, which requires achievement of a net debt target in the range of $3 billion to $4 billion (excluding project debt for additional smelting capacity in Indonesia). This information differs from consolidated debt determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for consolidated debt determined in accordance with U.S. GAAP. Our net debt follows, which may not be comparable to similarly titled measures reported by other companies (in millions): June 30, 2021 December 31, 2020 Current portion of debt $ 1,057 $ 34 Long-term debt, less current portion 8,638 9,677 Consolidated debt 9,695 9,711 Less: consolidated cash and cash equivalents 6,313 3,657 Net debt $ 3,382 $ 6,054 49 Table of Contents PRODUCT REVENUES AND PRODUCTION COSTS Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. 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. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies. We present gross profit (loss) per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit (loss) per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce and (iv) it is the method used by our management and Board to monitor our mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change. We show revenue adjustments for prior period open sales as a separate line item. 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. 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. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements. 50 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 1,717 $ 1,717 $ 97 $ 32 $ 1,846 Site production and delivery, before net noncash and other costs shown below 833 789 56 18 863 By-product credits (99) — — — — Treatment charges 31 29 — 2 31 Net cash costs 765 818 56 20 894 DD&A 102 95 5 2 102 Noncash and other costs, net 31 30 1 — 31 Total costs 898 943 62 22 1,027 Other revenue adjustments, primarily for pricing on prior period open sales 8 8 — — 8 Gross profit $ 827 $ 782 $ 35 $ 10 $ 827 Copper sales (millions of recoverable pounds) 389 389 Molybdenum sales (millions of recoverable pounds) a 9 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 4.42 $ 4.42 $ 11.75 Site production and delivery, before net noncash and other costs shown below 2.14 2.03 6.86 By-product credits (0.25) — — Treatment charges 0.08 0.07 — Unit net cash costs 1.97 2.10 6.86 DD&A 0.26 0.25 0.55 Noncash and other costs, net 0.08 0.08 0.06 Total unit costs 2.31 2.43 7.47 Other revenue adjustments, primarily for pricing on prior period open sales 0.02 0.02 — Gross profit per pound $ 2.13 $ 2.01 $ 4.28 Reconciliation to Amounts Reported Revenues Production and Delivery DD&A Totals presented above $ 1,846 $ 863 $ 102 Treatment charges (12) 19 — Noncash and other costs, net — 31 — Other revenue adjustments, primarily for pricing on prior period open sales 8 — — Eliminations and other 12 12 (1) North America copper mines 1,854 925 101 Other mining c 5,520 3,650 367 Corporate, other & eliminations (1,626) (1,508) 15 As reported in our consolidated financial statements $ 5,748 $ 3,067 $ 483 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Represents the combined total for our other segments, as presented in Note 9. 51 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 888 c $ 888 $ 71 $ 18 $ 977 Site production and delivery, before net noncash and other costs shown below 678 636 57 10 703 By-product credits (64) — — — — Treatment charges 37 36 — 1 37 Net cash costs 651 672 57 11 740 DD&A 88 82 5 1 88 Metals inventory adjustments (89) (89) — — (89) Noncash and other costs, net 36 d 34 1 1 36 Total costs 686 699 63 13 775 Other revenue adjustments, primarily for pricing on prior period open sales 6 6 — — 6 Gross profit $ 208 $ 195 $ 8 $ 5 $ 208 Copper sales (millions of recoverable pounds) 368 368 Molybdenum sales (millions of recoverable pounds) a 9 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 2.42 c $ 2.42 $ 8.33 Site production and delivery, before net noncash and other costs shown below 1.85 1.73 6.76 By-product credits (0.17) — — Treatment charges 0.10 0.10 — Unit net cash costs 1.78 1.83 6.76 DD&A 0.24 0.22 0.55 Metals inventory adjustments (0.24) (0.24) — Noncash and other costs, net 0.09 d 0.09 0.08 Total unit costs 1.87 1.90 7.39 Other revenue adjustments, primarily for pricing on prior period open sales 0.02 0.02 — Gross profit per pound $ 0.57 $ 0.54 $ 0.94 Reconciliation to Amounts Reported Revenues Production and Delivery DD&A Metals Inventory Adjustments Totals presented above $ 977 $ 703 $ 88 $ (89) Treatment charges (2) 35 — — Noncash and other costs, net — 36 — — Other revenue adjustments, primarily for pricing on prior period open sales 6 — — — Eliminations and other 7 13 1 — North America copper mines 988 787 89 (89) Other mining e 2,985 2,461 254 (55) Corporate, other & eliminations (919) (854) 15 5 As reported in our consolidated financial statements $ 3,054 $ 2,394 $ 358 $ (139) a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes reductions to revenues and average realized prices totaling $24 million ($0.06 per pound of copper) related to forward sales contracts covering 150 million pounds of copper sales for May and June 2020 at a fixed price of $2.34 per pound. d. Includes charges totaling $22 million ($0.06 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic. e. Represents the combined total for our other segments, as presented in Note 9. 52 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 2,919 $ 2,919 185 67 3,171 Site production and delivery, before net noncash and other costs shown below 1,459 1,369 113 40 1,522 By-product credits (189) — — — — Treatment charges 63 60 — 3 63 Net cash costs 1,333 1,429 113 43 1,585 DD&A 181 169 8 4 181 Noncash and other costs, net 73 71 1 1 73 Total costs 1,587 1,669 122 48 1,839 Other revenue adjustments, primarily for pricing on prior period open sales 7 7 — — 7 Gross profit $ 1,339 $ 1,257 $ 63 $ 19 $ 1,339 Copper sales (millions of recoverable pounds) 697 697 Molybdenum sales (millions of recoverable pounds) a 17 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 4.19 $ 4.19 $ 11.12 Site production and delivery, before net noncash and other costs shown below 2.09 1.96 6.76 By-product credits (0.27) — — Treatment charges 0.09 0.09 — Unit net cash costs 1.91 2.05 6.76 DD&A 0.26 0.24 0.51 Noncash and other costs, net 0.11 0.11 0.06 Total unit costs 2.28 2.40 7.33 Other revenue adjustments, primarily for pricing on prior period open sales 0.01 0.01 — Gross profit per pound $ 1.92 $ 1.80 $ 3.79 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 3,171 $ 1,522 $ 181 Treatment charges (17) 46 — Noncash and other costs, net — 73 — Other revenue adjustments, primarily for pricing on prior period open sales 7 — — Eliminations and other 31 33 — North America copper mines 3,192 1,674 181 Other mining c 10,165 6,690 690 Corporate, other & eliminations (2,759) (2,511) 31 As reported in our consolidated financial statements $ 10,598 $ 5,853 $ 902 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Represents the combined total for our other segments, as presented in Note 9. 53 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 1,799 c $ 1,799 147 44 1,990 Site production and delivery, before net noncash and other costs shown below 1,439 1,333 128 28 1,489 By-product credits (141) — — — — Treatment charges 76 73 — 3 76 Net cash costs 1,374 1,406 128 31 1,565 DD&A 180 166 10 4 180 Metals inventory adjustments 56 54 — 2 56 Noncash and other costs, net 69 d 65 2 2 69 Total costs 1,679 1,691 140 39 1,870 Other revenue adjustments, primarily for pricing on prior period open sales (22) (22) — — (22) Gross profit $ 98 $ 86 $ 7 $ 5 $ 98 Copper sales (millions of recoverable pounds) 722 722 Molybdenum sales (millions of recoverable pounds) a 17 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 2.50 c $ 2.50 $ 8.99 Site production and delivery, before net noncash and other costs shown below 2.00 1.85 7.81 By-product credits (0.19) — — Treatment charges 0.10 0.10 — Unit net cash costs 1.91 1.95 7.81 DD&A 0.25 0.23 0.64 Metals inventory adjustments 0.08 0.07 — Noncash and other costs, net 0.09 d 0.09 0.15 Total unit costs 2.33 2.34 8.60 Other revenue adjustments, primarily for pricing on prior period open sales (0.03) (0.03) — Gross profit per pound $ 0.14 $ 0.13 $ 0.39 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 1,990 $ 1,489 $ 180 $ 56 Treatment charges (10) 66 — — Noncash and other costs, net — 69 — — Other revenue adjustments, primarily for pricing on prior period open sales (22) — — — Eliminations and other 15 23 1 — North America copper mines 1,973 1,647 181 56 Other mining e 5,576 4,934 488 9 Corporate, other & eliminations (1,697) (1,642) 30 18 As reported in our consolidated financial statements $ 5,852 $ 4,939 $ 699 $ 83 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes reductions to revenues and average realized prices totaling $24 million ($0.03 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. d. Includes charges totaling $22 million ($0.03 per pound of copper) primarily associated with the April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic. e. Represents the combined total for our other segments, as presented in Note 9. 54 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 995 $ 995 $ 82 $ 1,077 Site production and delivery, before net noncash and other costs shown below 573 b 531 52 583 By-product credits (72) — — — Treatment charges 29 29 — 29 Royalty on metals 2 2 — 2 Net cash costs 532 562 52 614 DD&A 94 86 8 94 Noncash and other costs, net 18 17 1 18 Total costs 644 665 61 726 Other revenue adjustments, primarily for pricing on prior period open sales 88 88 — 88 Gross profit $ 439 $ 418 $ 21 $ 439 Copper sales (millions of recoverable pounds) 230 230 Gross profit per pound of copper: Revenues, excluding adjustments $ 4.31 $ 4.31 Site production and delivery, before net noncash and other costs shown below 2.48 b 2.30 By-product credits (0.31) — Treatment charges 0.13 0.13 Royalty on metals 0.01 0.01 Unit net cash costs 2.31 2.44 DD&A 0.40 0.37 Noncash and other costs, net 0.08 0.07 Total unit costs 2.79 2.88 Other revenue adjustments, primarily for pricing on prior period open sales 0.38 0.38 Gross profit per pound $ 1.90 $ 1.81 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 1,077 $ 583 $ 94 Treatment charges (29) — — Royalty on metals (2) — — Noncash and other costs, net — 18 — Other revenue adjustments, primarily for pricing on prior period open sales 88 — — Eliminations and other (1) (1) — South America mining 1,133 600 94 Other mining c 6,241 3,975 374 Corporate, other & eliminations (1,626) (1,508) 15 As reported in our consolidated financial statements $ 5,748 $ 3,067 $ 483 a. Includes silver sales of 0.8 million ounces ($27.33 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Includes nonrecurring charges totaling $69 million ($0.30 per pound of copper) associated with labor-related charges at Cerro Verde. c. Represents the combined total for our other segments, as presented in Note 9. 55 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 586 $ 586 $ 32 $ 618 Site production and delivery, before net noncash and other costs shown below 360 343 24 367 By-product credits (25) — — — Treatment charges 32 32 — 32 Royalty on metals 1 1 — 1 Net cash costs 368 376 24 400 DD&A 103 98 5 103 Metals inventory adjustments (57) (57) — (57) Noncash and other costs, net 71 b 67 4 71 Total costs 485 484 33 517 Other revenue adjustments, primarily for pricing on prior period open sales 44 44 — 44 Gross profit (loss) $ 145 $ 146 $ (1) $ 145 Copper sales (millions of recoverable pounds) 219 219 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 1.64 1.57 By-product credits (0.11) — Treatment charges 0.15 0.15 Royalty on metals — — Unit net cash costs 1.68 1.72 DD&A 0.47 0.44 Metals inventory adjustments (0.26) (0.26) Noncash and other costs, net 0.32 b 0.30 Total unit costs 2.21 2.20 Other revenue adjustments, primarily for pricing on prior period open sales 0.20 0.20 Gross profit per pound $ 0.66 $ 0.67 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 618 $ 367 $ 103 $ (57) Treatment charges (32) — — — Royalty on metals (1) — — — Noncash and other costs, net — 71 — — Other revenue adjustments, primarily for pricing on prior period open sales 44 — — — Eliminations and other — — (1) — South America mining 629 438 102 (57) Other mining c 3,344 2,810 241 (87) Corporate, other & eliminations (919) (854) 15 5 As reported in our consolidated financial statements $ 3,054 $ 2,394 $ 358 $ (139) a. Includes silver sales of 0.6 million ounces ($14.55 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Includes charges totaling $66 million ($0.30 per pound of copper), primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans. c. Represents the combined total for our other segments, as presented in Note 9. 56 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 2,093 $ 2,093 $ 147 $ 2,240 Site production and delivery, before net noncash and other costs shown below 1,092 b 1,022 91 1,113 By-product credits (126) — — — Treatment charges 64 64 — 64 Royalty on metals 4 4 — 4 Net cash costs 1,034 1,090 91 1,181 DD&A 195 181 14 195 Noncash and other costs, net 28 26 2 28 Total costs 1,257 1,297 107 1,404 Other revenue adjustments, primarily for pricing on prior period open sales 99 99 — 99 Gross profit $ 935 $ 895 $ 40 $ 935 Copper sales (millions of recoverable pounds) 489 489 Gross profit per pound of copper: Revenues, excluding adjustments $ 4.28 $ 4.28 Site production and delivery, before net noncash and other costs shown below 2.23 b 2.09 By-product credits (0.26) — Treatment charges 0.13 0.13 Royalty on metals 0.01 0.01 Unit net cash costs 2.11 2.23 DD&A 0.40 0.37 Noncash and other costs, net 0.06 0.05 Total unit costs 2.57 2.65 Other revenue adjustments, primarily for pricing on prior period open sales 0.20 0.20 Gross profit per pound $ 1.91 $ 1.83 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 2,240 $ 1,113 $ 195 Treatment charges (64) — — Royalty on metals (4) — — Noncash and other costs, net — 28 — Other revenue adjustments, primarily for pricing on prior period open sales 99 — — Eliminations and other (1) (2) — South America mining 2,270 1,139 195 Other mining c 11,087 7,225 676 Corporate, other & eliminations (2,759) (2,511) 31 As reported in our consolidated financial statements $ 10,598 $ 5,853 $ 902 a. Includes silver sales of 1.7 million ounces ($26.67 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing. b. Includes nonrecurring charges totaling $69 million ($0.14 per pound of copper) associated with labor-related charges at Cerro Verde. c. Represents the combined total for our other segments, as presented in Note 9. 57 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 1,199 $ 1,199 $ 86 $ 1,285 Site production and delivery, before net noncash and other costs shown below 853 800 73 873 By-product credits (66) — — — Treatment charges 72 72 — 72 Royalty on metals 2 2 — 2 Net cash costs 861 874 73 947 DD&A 210 195 15 210 Metals inventory adjustments 3 3 — 3 Noncash and other costs, net 100 b 95 5 100 Total costs 1,174 1,167 93 1,260 Other revenue adjustments, primarily for pricing on prior period open sales (70) (70) — (70) Gross loss $ (45) $ (38) $ (7) $ (45) Copper sales (millions of recoverable pounds) 466 466 Gross loss per pound of copper: Revenues, excluding adjustments $ 2.57 $ 2.57 Site production and delivery, before net noncash and other costs shown below 1.84 1.72 By-product credits (0.14) — Treatment charges 0.15 0.15 Royalty on metals — — Unit net cash costs 1.85 1.87 DD&A 0.45 0.42 Metals inventory adjustments 0.01 0.01 Noncash and other costs, net 0.21 b 0.20 Total unit costs 2.52 2.50 Other revenue adjustments, primarily for pricing on prior period open sales (0.15) (0.15) Gross loss per pound $ (0.10) $ (0.08) Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 1,285 $ 873 $ 210 $ 3 Treatment charges (72) — — — Royalty on metals (2) — — — Noncash and other costs, net — 100 — — Other revenue adjustments, primarily for pricing on prior period open sales (70) — — — Eliminations and other — (1) — — South America mining 1,141 972 210 3 Other mining c 6,408 5,609 459 62 Corporate, other & eliminations (1,697) (1,642) 30 18 As reported in our consolidated financial statements $ 5,852 $ 4,939 $ 699 $ 83 a. Includes silver sales of 1.5 million ounces ($16.37 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing. b. Includes charges totaling $86 million ($0.18 per pound of copper) primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic and employee separation costs associated with the April 2020 revised operating plans. c. Represents the combined total for our other segments, as presented in Note 9. 58 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 1,323 $ 1,323 $ 543 $ 37 $ 1,903 Site production and delivery, before net noncash and other costs shown below 476 331 136 9 476 Gold and silver credits (597) — — — — Treatment charges 74 52 21 2 75 Export duties 44 30 13 1 44 Royalty on metals 80 59 20 1 80 Net cash costs 77 472 190 13 675 DD&A 247 172 70 5 247 Noncash and other costs, net 11 8 3 — 11 Total costs 335 652 263 18 933 Other revenue adjustments, primarily for pricing on prior period open sales 87 87 16 2 105 PT Smelting intercompany loss (41) (28) (12) (1) (41) Gross profit $ 1,034 $ 730 $ 284 $ 20 $ 1,034 Copper sales (millions of recoverable pounds) 310 310 Gold sales (thousands of recoverable ounces) 302 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 4.27 $ 4.27 $ 1,795 Site production and delivery, before net noncash and other costs shown below 1.54 1.07 449 Gold and silver credits (1.93) — — Treatment charges 0.24 0.16 70 Export duties 0.14 0.10 42 Royalty on metals 0.26 0.19 66 Unit net cash costs 0.25 1.52 627 DD&A 0.79 0.55 232 Noncash and other costs, net 0.04 0.03 11 Total unit costs 1.08 2.10 870 Other revenue adjustments, primarily for pricing on prior period open sales 0.28 0.28 53 PT Smelting intercompany loss (0.13) (0.09) (39) Gross profit per pound/ounce $ 3.34 $ 2.36 $ 939 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 1,903 $ 476 $ 247 Treatment charges (75) — — Export duties (44) — — Royalty on metals (80) — — Noncash and other costs, net — 11 — Other revenue adjustments, primarily for pricing on prior period open sales 105 — — PT Smelting intercompany loss — 41 — Indonesia mining 1,809 528 247 Other mining b 5,565 4,047 221 Corporate, other & eliminations (1,626) (1,508) 15 As reported in our consolidated financial statements $ 5,748 $ 3,067 $ 483 a. Includes silver sales of 1.4 million ounces ($26.08 per ounce average realized price). b. Represents the combined total for our other segments, as presented in Note 9. 59 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 458 $ 458 $ 315 $ 13 $ 786 Site production and delivery, before net noncash and other costs shown below 345 201 138 6 345 Gold and silver credits (336) — — — — Treatment charges 47 27 19 1 47 Export duties 16 10 6 — 16 Royalty on metals 25 13 12 — 25 Net cash costs 97 251 175 7 433 DD&A 124 72 50 2 124 Noncash and other costs, net 8 b 5 3 — 8 Total costs 229 328 228 9 565 Other revenue adjustments, primarily for pricing on prior period open sales 12 12 7 1 20 PT Smelting intercompany loss (25) (15) (10) — (25) Gross profit $ 216 $ 127 $ 84 $ 5 $ 216 Copper sales (millions of recoverable pounds) 172 172 Gold sales (thousands of recoverable ounces) 180 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 2.67 $ 2.67 $ 1,748 Site production and delivery, before net noncash and other costs shown below 2.00 1.17 766 Gold and silver credits (1.95) — — Treatment charges 0.27 0.16 105 Export duties 0.09 0.05 35 Royalty on metals 0.15 0.08 65 Unit net cash costs 0.56 1.46 971 DD&A 0.72 0.42 276 Noncash and other costs, net 0.05 b 0.03 17 Total unit costs 1.33 1.91 1,264 Other revenue adjustments, primarily for pricing on prior period open sales 0.07 0.07 41 PT Smelting intercompany loss (0.15) (0.09) (57) Gross profit per pound/ounce $ 1.26 $ 0.74 $ 468 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 786 $ 345 $ 124 Treatment charges (47) — — Export duties (16) — — Royalty on metals (25) — — Noncash and other costs, net — 8 — Other revenue adjustments, primarily for pricing on prior period open sales 20 — — PT Smelting intercompany loss — 25 — Indonesia mining 718 378 124 Other mining c 3,255 2,870 219 Corporate, other & eliminations (919) (854) 15 As reported in our consolidated financial statements $ 3,054 $ 2,394 $ 358 a. Includes silver sales of 0.8 million ounces ($17.09 per ounce average realized price). b. Includes COVID-19 related costs totaling $4 million ($0.03 per pound of copper). c. Represents the combined total for our other segments, as presented in Note 9. 60 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2021 (In millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 2,435 $ 2,435 $ 995 $ 68 $ 3,498 Site production and delivery, before net noncash and other costs shown below 859 598 244 17 859 Gold and silver credits (1,059) — — — — Treatment charges 140 97 40 3 140 Export duties 73 51 21 1 73 Royalty on metals 140 100 38 2 140 Net cash costs 153 846 343 23 1,212 DD&A 446 310 127 9 446 Noncash and other costs, net 3 b 2 1 — 3 Total costs 602 1,158 471 32 1,661 Other revenue adjustments, primarily for pricing on prior period open sales 72 72 (4) — 68 PT Smelting intercompany loss (90) (63) (25) (2) (90) Gross profit $ 1,815 $ 1,286 $ 495 $ 34 $ 1,815 Copper sales (millions of recoverable pounds) 568 568 Gold sales (thousands of recoverable ounces) 558 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 4.29 $ 4.29 $ 1,785 Site production and delivery, before net noncash and other costs shown below 1.51 1.05 439 Gold and silver credits (1.86) — — Treatment charges 0.24 0.17 71 Export duties 0.13 0.09 37 Royalty on metals 0.25 0.18 68 Unit net cash costs 0.27 1.49 615 DD&A 0.78 0.55 228 Noncash and other costs, net 0.01 b — 1 Total unit costs 1.06 2.04 844 Other revenue adjustments, primarily for pricing on prior period open sales 0.12 0.12 (8) PT Smelting intercompany loss (0.16) (0.11) (46) Gross profit per pound/ounce $ 3.19 $ 2.26 $ 887 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 3,498 $ 859 $ 446 Treatment charges (140) — — Export duties (73) — — Royalty on metals (140) — — Noncash and other costs, net 31 34 — Other revenue adjustments, primarily for pricing on prior period open sales 68 — — PT Smelting intercompany loss — 90 — Indonesia mining 3,244 983 446 Other mining c 10,113 7,381 425 Corporate, other & eliminations (2,759) (2,511) 31 As reported in our consolidated financial statements $ 10,598 $ 5,853 $ 902 a. Includes silver sales of 2.6 million ounces ($26.05 per ounce average realized price). b. Includes credits of $31 million ($0.05 per pound of copper) associated with adjustments to prior year treatment and refining charges and charges of $16 million ($0.03 per pound of copper) associated with a potential settlement of an administrative fine levied by the Indonesia government. c. Represents the combined total for our other segments, as presented in Note 9. 61 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs Six months ended June 30, 2020 (In millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 760 $ 760 $ 545 $ 22 $ 1,327 Site production and delivery, before net noncash and other costs shown below 686 393 282 11 686 Gold and silver credits (572) — — — — Treatment charges 85 49 35 1 85 Export duties 20 11 8 1 20 Royalty on metals 44 25 19 — 44 Net cash costs 263 478 344 13 835 DD&A 225 129 92 4 225 Noncash and other costs, net 35 b 20 14 1 35 Total costs 523 627 450 18 1,095 Other revenue adjustments, primarily for pricing on prior period open sales (20) (20) 5 — (15) Gross profit $ 217 $ 113 $ 100 $ 4 $ 217 Copper sales (millions of recoverable pounds) 299 299 Gold sales (thousands of recoverable ounces) 319 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 2.54 $ 2.54 $ 1,709 Site production and delivery, before net noncash and other costs shown below 2.29 1.31 884 Gold and silver credits (1.91) — — Treatment charges 0.28 0.17 110 Export duties 0.07 0.04 25 Royalty on metals 0.15 0.08 58 Unit net cash costs 0.88 1.60 1,077 DD&A 0.75 0.43 289 Noncash and other costs, net 0.12 b 0.06 45 Total unit costs 1.75 2.09 1,411 Other revenue adjustments, primarily for pricing on prior period open sales (0.07) (0.07) 14 Gross profit per pound/ounce $ 0.72 $ 0.38 $ 312 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 1,327 $ 686 $ 225 Treatment charges (85) — — Export duties (20) — — Royalty on metals (44) — — Noncash and other costs, net — 35 — Other revenue adjustments, primarily for pricing on prior period open sales (15) — — Indonesia mining 1,163 721 225 Other mining c 6,386 5,860 444 Corporate, other & eliminations (1,697) (1,642) 30 As reported in our consolidated financial statements $ 5,852 $ 4,939 $ 699 a. Includes silver sales of 1.3 million ounces ($16.30 per ounce average realized price). b. Includes COVID-19 related costs totaling $4 million ($0.01 per pound of copper). c. Represents the combined total for our segments, as presented in Note 9. 62 Table of Contents Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, (In millions) 2021 2020 Revenues, excluding adjustments a $ 95 $ 63 Site production and delivery, before net noncash and other costs shown below 54 53 Treatment charges and other 6 5 Net cash costs 60 58 DD&A 17 15 Metals inventory adjustments — 1 Noncash and other costs, net 2 8 b Total costs 79 82 Gross profit (loss) $ 16 $ (19) Molybdenum sales (millions of recoverable pounds) a 7 6 Gross profit (loss) per pound of molybdenum: Revenues, excluding adjustments a $ 12.77 $ 9.69 Site production and delivery, before net noncash and other costs shown below 7.29 8.12 Treatment charges and other 0.85 0.85 Unit net cash costs 8.14 8.97 DD&A 2.29 2.29 Metals inventory adjustments — 0.16 Noncash and other costs, net 0.30 1.34 b Total unit costs 10.73 12.76 Gross profit (loss) per pound $ 2.04 $ (3.07) Reconciliation to Amounts Reported Metals Production Inventory Three Months Ended June 30, 2021 Revenues and Delivery DD&A Adjustments Totals presented above $ 95 $ 54 $ 17 $ — Treatment charges and other (6) — — — Noncash and other costs, net — 2 — — Molybdenum mines 89 56 17 — Other mining c 7,285 4,519 451 — Corporate, other & eliminations (1,626) (1,508) 15 — As reported in our consolidated financial statements $ 5,748 $ 3,067 $ 483 $ — Three Months Ended June 30, 2020 Totals presented above $ 63 $ 53 $ 15 $ 1 Treatment charges and other (5) — — — Noncash and other costs, net — 8 — — Molybdenum mines 58 61 15 1 Other mining c 3,915 3,187 328 (145) Corporate, other & eliminations (919) (854) 15 5 As reported in our consolidated financial statements $ 3,054 $ 2,394 $ 358 $ (139) a. 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. b. Includes charges totaling $6 million ($1.00 per pound of molybdenum) primarily associated with the April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic. c. 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 63 Table of Contents Six months ended June 30, (In millions) 2021 2020 Revenues, excluding adjustments a $ 171 $ 140 Site production and delivery, before net noncash and other costs shown below 108 117 Treatment charges and other 12 11 Net cash costs 120 128 DD&A 32 31 Metals inventory adjustments 1 5 Noncash and other costs, net 5 10 b Total costs 158 174 Gross profit (loss) $ 13 $ (34) Molybdenum sales (millions of recoverable pounds) a 14 13 Gross profit (loss) per pound of molybdenum: Revenues, excluding adjustments a $ 12.12 $ 10.36 Site production and delivery, before net noncash and other costs shown below 7.68 8.67 Treatment charges and other 0.85 0.85 Unit net cash costs 8.53 9.52 DD&A 2.27 2.29 Metals inventory adjustments 0.06 0.35 Noncash and other costs, net 0.36 0.79 b Total unit costs 11.22 12.95 Gross profit (loss) per pound $ 0.90 $ (2.59) Reconciliation to Amounts Reported Metals Production Inventory Six months ended June 30, 2021 Revenues and Delivery DD&A Adjustments Totals presented above $ 171 $ 108 $ 32 $ 1 Treatment charges and other (12) — — — Noncash and other costs, net — 5 — — Molybdenum mines 159 113 32 1 Other mining c 13,198 8,251 839 — Corporate, other & eliminations (2,759) (2,511) 31 — As reported in our consolidated financial statements $ 10,598 $ 5,853 $ 902 $ 1 Six months ended June 30, 2020 Totals presented above $ 140 $ 117 $ 31 $ 5 Treatment charges and other (11) — — — Noncash and other costs, net — 10 — — Molybdenum mines 129 127 31 5 Other mining c 7,420 6,454 638 60 Corporate, other & eliminations (1,697) (1,642) 30 18 As reported in our consolidated financial statements $ 5,852 $ 4,939 $ 699 $ 83 a. 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. b. Includes charges totaling $6 million ($0.48 per pound of molybdenum) primarily associated with the April 2020 revised operating plans (including employee separation costs) and contract cancellation costs related to the COVID-19 pandemic. c. 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. 64 Table of Contents GUARANTOR SUMMARIZED FINANCIAL INFORMATION All of the senior notes issued by FCX are fully and unconditionally guaranteed on a senior basis jointly and severally by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC), as guarantor, which is a 100-percent-owned subsidiary of FCX Oil & Gas LLC (FM O&G) and FCX. The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of FM O&G LLC, including indebtedness under our revolving credit facility. The guarantee ranks senior in right of payment with all of FM O&G LLC’s future subordinated obligations and is effectively subordinated in right of payment to any debt of FM O&G LLC’s subsidiaries. The indentures provide that FM O&G LLC’s guarantee obligations may be released or terminated upon: (i) the sale of all or substantially all of the equity interests or assets of FM O&G LLC to a third party that is not our subsidiary or our affiliate; (ii) FM O&G LLC no longer having any obligations under any FM O&G senior notes or any refinancing thereof and no longer being a co-borrower or guarantor of any of our obligations under the revolving credit facility or any other senior debt or, in each case, any refinancing thereof; or (iii) the discharge of our obligations under the indentures in accordance with their terms. The following summarized financial data includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all our other non-guarantor subsidiaries at June 30, 2021, and December 31, 2020, and for the six months ended June 30, 2021. FCX FM O&G LLC Non-guarantor Consolidated Issuer Guarantor Subsidiaries Eliminations FCX As of June 30, 2021 Current assets $ 163 $ 704 $ 12,625 $ (893) $ 12,599 Noncurrent assets 416 6 32,784 (369) 32,837 Current liabilities 809 30 5,595 (907) 5,527 Noncurrent liabilities 9,019 11,340 14,079 (15,464) 18,974 As of December 31, 2020 Current assets $ 65 $ 697 $ 9,287 $ (746) $ 9,303 Noncurrent assets 785 6 32,806 (756) 32,841 Current liabilities 187 31 3,964 (765) 3,417 Noncurrent liabilities 9,433 11,208 15,075 (15,657) 20,059 Six Months Ended June 30, 2021 Revenues $ — $ 28 $ 10,570 $ — $ 10,598 Operating (loss) income (21) 7 3,596 17 3,599 Net income (loss) 1,801 a (85) a 2,400 (1,832) 2,284 a. Net income (loss) equals net income (loss) attributable to common stockholders because net income attributable to noncontrolling interests is zero for issuer and guarantor. 65 Table of Contents CAUTIONARY STATEMENT Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to ore grades and milling rates; business outlook; production and sales volumes; unit net cash costs; cash flows; capital expenditures; liquidity; operating costs; operating plans; our financial policy; 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; expectations regarding negotiations with hourly employees at Cerro Verde including completion of new CLAs; 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; exploration efforts and results; development and production activities, rates and costs; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; 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 returns to shareholders, including dividend payments, share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,” “could,” “to be,” ”potential," “assumptions,” “guidance,” “future” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of future dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, global economic conditions, and other factors deemed relevant by the Board. We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, changes in our credit rating; changes in our cash requirements, financial position, financing plans or investment plans; changes in general market, economic, tax, regulatory or industry conditions; the duration and scope of and uncertainties associated with the COVID-19 pandemic (including new and emerging strains and variants of COVID-19), 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; supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; production rates; timing of shipments; results of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; the potential effects of violence in Indonesia generally and in the province of Papua; 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 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; industry risks; regulatory changes; political and social risks; labor relations, including labor-related work stoppages and costs; weather- and climate-related risks; environmental risks; 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 volatile commodity prices; reductions in liquidity and access to capital; our ability to comply with our 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 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. GAAP. 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. Refer to “Net Debt” for reconciliations of debt and consolidated cash and cash equivalents to net debt. 66 Table of Contents