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Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 219 added, 157 removed, 642 unchanged (37% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30,

2021 December 31,

16 unchanged sentences

Accounts payable and accrued liabilities $ 2,949 $ 2,708

Current portion of debt 1,057 34

Accrued income taxes 1,237 324

Current portion of debt 897 34

Current portion of environmental and asset retirement obligations 329 351

19 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

11 unchanged sentences

Total costs and expenses 3,621 2,971 10,620 8,975

Operating income (loss) 2,067 321 3,599 ( 152 )

Operating income 2,462 880 6,061 728

Interest expense, net ( 138 ) ( 120 ) ( 431 ) ( 362 )

2 unchanged sentences

Other income, net 36 22 56 62

Income (loss) before income taxes and equity in affiliated companies’ net earnings 1,928 217 3,326 ( 395 )

Income before income taxes and equity in affiliated companies’ net (losses) earnings 2,360 723 5,686 328

Provision for income taxes ( 628 ) ( 297 ) ( 1,674 ) ( 333 )

Equity in affiliated companies’ net earnings 6 3 4 6

Net income (loss) 1,331 124 2,284 ( 425 )

Equity in affiliated companies’ net (losses) earnings ( 9 ) 6 ( 5 ) 12

Net income 1,723 432 4,007 7

Net income attributable to noncontrolling interests ( 324 ) ( 103 ) ( 807 ) ( 116 )

10 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(In millions)

Net income (loss) $ 1,331 $ 124 $ 2,284 $ ( 425 )

Other comprehensive income, net of taxes:

Net income $ 1,723 $ 432 $ 4,007 $ 7

Other comprehensive income (loss), net of taxes:

Defined benefit plans:

1 unchanged sentence

Amortization of unrecognized amounts included in net periodic benefit costs 4 14 12 38

Foreign exchange gains (losses) — 4 ( 1 ) ( 1 )

Other comprehensive income 4 16 6 23

Foreign exchange losses — ( 1 ) ( 1 ) ( 2 )

Other comprehensive income (loss) 4 ( 76 ) 10 ( 53 )

Total comprehensive income (loss) 1,727 356 4,017 ( 46 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended

Nine Months Ended

September 30,

(In millions)

Cash flow from operating activities:

Net income (loss) $ 2,284 $ ( 425 )

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

Net income $ 4,007 $ 7

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 1,430 1,093

22 unchanged sentences

South America ( 94 ) ( 156 )

Indonesia ( 624 ) ( 634 )

Indonesia mining ( 904 ) ( 865 )

Indonesia smelter development ( 79 ) ( 94 )

Molybdenum mines ( 4 ) ( 14 )

Other ( 52 ) ( 46 )

Proceeds from sales of assets 16 116

Proceeds from sale of Freeport Cobalt 150 —

Proceeds from sales of other assets 21 146

Acquisition of minority interest in PT Smelting ( 33 ) —

11 unchanged sentences

Debt financing costs and other, net ( 47 ) ( 51 )

Net cash provided by financing activities 29 24

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 2,666 ( 549 )

Net cash (used in) provided by financing activities ( 188 ) 120

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 4,016 377

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year 3,903 2,278

3 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED JUNE 30

THREE MONTHS ENDED SEPTEMBER 30

Stockholders’ Equity

9 unchanged sentences

(In millions)

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

Balance at June 30, 2021 1,601 $ 160 $ 26,084 $ ( 9,880 ) $ ( 576 ) 133 $ ( 3,777 ) $ 12,011 $ 8,924 $ 20,935

Exercised and issued stock-based awards — — 6 — — — — 6 — 6

6 unchanged sentences

Other comprehensive income — — — — 4 — — 4 — 4

Balance at June 30, 2021 1,601 $ 160 $ 26,084 $ ( 9,880 ) $ ( 576 ) 133 $ ( 3,777 ) $ 12,011 $ 8,924 $ 20,935

Balance at September 30, 2021 1,601 $ 160 $ 26,023 $ ( 8,481 ) $ ( 572 ) 133 $ ( 3,777 ) $ 13,353 $ 9,178 $ 22,531

Stockholders’ Equity

9 unchanged sentences

(In millions)

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

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

Exercised and issued stock-based awards 1 — 1 — — — — 1 — 1

Stock-based compensation, including the tender of shares — — 8 — — — — 8 — 8

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

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

1 unchanged sentence

Net income attributable to noncontrolling interests — — — — — — — — 103 103

Other comprehensive income — — — — 16 — — 16 — 16

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

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

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

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

SIX MONTHS ENDED JUNE 30

NINE MONTHS ENDED SEPTEMBER 30

Stockholders’ Equity

19 unchanged sentences

Other comprehensive income (loss) — — — — 11 — — 11 ( 1 ) 10

Balance at June 30, 2021 1,601 $ 160 $ 26,084 $ ( 9,880 ) $ ( 576 ) 133 $ ( 3,777 ) $ 12,011 $ 8,924 $ 20,935

Balance at September 30, 2021 1,601 $ 160 $ 26,023 $ ( 8,481 ) $ ( 572 ) 133 $ ( 3,777 ) $ 13,353 $ 9,178 $ 22,531

Stockholders’ Equity

12 unchanged sentences

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

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

Contributions from noncontrolling interests — — 56 — — — — 56 59 115

2 unchanged sentences

— — — — — — — — 116 116

Other comprehensive income (loss) — — — — 24 — — 24 ( 1 ) 23

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

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

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

Freeport-McMoRan Inc.

1 unchanged sentence

GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.).

Therefore, this information should be read in conjunction with Freeport-McMoRan Inc.’s (FCX) consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K).

1 unchanged sentence

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

Operating results for the six-month period ended June 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the nine-month period ended September 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Trade Accounts Receivable Agreements.

1 unchanged sentence

The agreements were entered into in the normal course of business to fund the working capital for the additional quantity of copper to be supplied by PT-FI to PT Smelting (PT-FI’s 39.5 percent owned copper smelter and refinery in Gresik, Indonesia - see “Acquisition of Minority Interest in PT Smelting” below for further discussion).

The balances sold under the agreements were excluded from trade accounts receivable on the consolidated balance sheet at June 30, 2021.

The balances sold under the agreements were excluded from trade accounts receivable on the consolidated balance sheet at September 30, 2021.

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

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

Gross amounts sold under these arrangements totaled $ 135 million in second-quarter 2021 and $ 188 million for the six-month period ended June 30, 2021.

Discounts on the sold receivables totaled less than $1 million during 2021.

Gross amounts sold under these arrangements totaled $ 131 million in third-quarter 2021 and $ 319 million for the nine-month period ended September 30, 2021.

Discounts on the sold receivables totaled less than $ 1 million in third-quarter 2021 and $ 1 million for the nine-month period ended September 30, 2021.

Acquisition of Minority Interest in PT Smelting.

2 unchanged sentences

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

Sale of Freeport Cobalt.

On September 1, 2021, FCX’s 56 -percent-owned subsidiary, Koboltti Chemicals Holdings Limited (KCHL), completed the sale of its remaining cobalt business based in Kokkola, Finland (Freeport Cobalt) to Jervois Global Limited (Jervois) for $ 208 million (subject to post-closing adjustments), consisting of cash consideration of $ 173 million and 7 percent of Jervois shares (valued at $ 35 million).

At closing, Freeport Cobalt’s assets included cash of approximately $ 20 million and other net assets of $ 125 million.

FCX recorded a gain of $ 60 million ($ 34 million to net income attributable to common stock) in third-quarter 2021.

In addition, KCHL will have the right to receive contingent consideration of up to $ 40 million based on the future performance of Freeport Cobalt.

Any gain related to the contingent consideration will be recognized when received.

The operating results of Freeport Cobalt are not significant to FCX’s financial statements for the year ended December 31, 2020, or the three- and nine-month periods ended September 30, 2021.

Subsequent Events.

FCX evaluated events after June 30, 2021, and through the date the consolidated financial statements were issued, and took into account events and transactions occurring during this period requiring recognition or disclosure in these consolidated financial statements.

On July 26, 2021, FCX’s 56-percent-owned subsidiary, Koboltti Chemicals Holdings Limited, entered into an agreement to sell its specialty cobalt business based in Kokkola, Finland (Freeport Cobalt) to Jervois Mining Limited (Jervois) for $ 85 million (in cash and Jervois shares) plus net working capital, estimated to approximate $ 125 million at June 30, 2021.

In addition, FCX and its noncontrolling interest partners will have the right to receive up to $ 40 million in contingent cash consideration based on the future performance of the business.

FCX currently estimates its share of the proceeds, excluding contingent consideration, would approximate $ 100 million cash plus its pro rata 56 percent share of 9.9 percent of Jervois shares.

The transaction is subject to the completion of Jervois financing and other customary closing conditions and is expected to close in the third quarter of 2021.

FCX expects to record a gain on the transaction.

The operating results of Freeport Cobalt are not significant to FCX’s financial statements for the year ended December 31, 2020, or the three- and six-month periods ended June 30, 2021.

At June 30, 2021, Freeport Cobalt had total assets of $ 180 million and total liabilities of $ 28 million included on FCX's balance sheet.

The Freeport Cobalt operations do not represent an operating segment of FCX and did not meet the criteria to be classified as held for sale at June 30, 2021.

FCX evaluated events after September 30, 2021, and through the date the consolidated financial statements were issued, and took into account events and transactions occurring during this period requiring recognition or disclosure in these consolidated financial statements.

EARNINGS PER SHARE

FCX calculates its basic net income (loss) per share of common stock under the two-class method and calculates its diluted net income (loss) per share of common stock using the more dilutive of the two-class method or the treasury-stock method.

FCX calculates its basic net income per share of common stock under the two-class method and calculates its diluted net income (loss) per share of common stock using the more dilutive of the two-class method or the treasury-stock method.

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

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

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

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net income (loss) $ 1,331 $ 124 $ 2,284 $ ( 425 )

Net income $ 1,723 $ 432 $ 4,007 $ 7

Net income attributable to noncontrolling interests ( 324 ) ( 103 ) ( 807 ) ( 116 )

7 unchanged sentences

Basic net income (loss) per share attributable to common stockholders $ 0.95 $ 0.22 $ 2.18 $ ( 0.08 )

$ 0.74 $ 0.03 $ 1.23 $ ( 0.30 )

Diluted net income (loss) per share attributable to common stockholders $ 0.94 $ 0.22 $ 2.16 $ ( 0.08 )

$ 0.73 $ 0.03 $ 1.21 $ ( 0.30 )

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

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

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

Stock options for 4 million shares of common stock in second-quarter 2021, 38 million shares of common stock in second-quarter 2020, 7 million shares of common stock for the first six months of 2021 and 39 million shares of common stock the first six months of 2020 were excluded.

Stock options for 4 million shares of common stock in third-quarter 2021, 28 million shares of common stock in third-quarter 2020, 6 million shares of common stock for the first nine months of 2021 and 35 million shares of common stock the first nine months of 2020 were excluded.

INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current inventories:

13 unchanged sentences

$ 1,450 $ 1,463

Materials and supplies inventory was net of obsolescence reserves totaling $ 33 million at June 30, 2021, and $ 32 million at December 31, 2020.

Materials and supplies inventory was net of obsolescence reserves totaling $ 37 million at September 30, 2021, and $ 32 million at December 31, 2020.

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

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

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

FCX recorded charges for metals inventory adjustments totaling $ 15 million for the first nine months of 2021 primarily related to a leach stockpile adjustment.

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

Refer to Note 9 for metals inventory adjustments by business segment.

Morenci Stockpile Recoveries.

In accordance with FCX's policy, processes and recovery rates for mill and leach stockpiles are monitored regularly, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes.

Adjustments to recovery rates will typically result in a future impact to the value of the material removed from the stockpiles at a revised weighted-average cost per pound of recoverable copper.

Expected copper recovery rates for leach stockpiles are determined using small-scale laboratory tests, small- to large-scale column testing (which simulates the production process), historical trends and other factors, including mineralogy of the ore and rock type.

Total copper recovery in leach stockpiles can vary significantly from a low percentage to more than 90 percent depending on several variables, including processing methodology, processing variables, mineralogy and particle size of the rock.

For newly placed material on active stockpiles, as much as 80 percent of the total copper recovery may occur during the first year, and the remaining copper may be recovered over many years.

Over the last three years, FCX's Morenci mine has experienced improved recoveries and following an analysis of column testing results to date, Morenci concluded it had sufficient evidence to increase its estimated recovery rate for certain of its leach stockpiles effective July 1, 2021.

As a result of the revised recovery rate, Morenci increased its estimated recoverable copper in leach stockpiles, net to its joint venture interest, by 191 million pounds.

The effect of this change in estimate reduced site production and delivery costs and increased net income by $ 52 million ($ 0.04 per share) in the third quarter and first nine months of 2021.

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

Six Months Ended

Nine Months Ended

September 30,

operations $ ( 7 )

International operations ( 1,042 )

International operations ( 1,667 ) b

Total $ ( 1,674 ) $ ( 333 )

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

FCX’s consolidated effective income tax rate was 31 percent for the first six months of 2021 and ( 9 ) percent for the first six months of 2020.

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

Includes net tax benefits totaling $ 83 million ($ 66 million net of noncontrolling interest), consisting of $ 69 million associated with the release of a portion of the valuation allowances recorded against PT Rio Tinto Indonesia (PT RTI), PT-FI’s wholly owned subsidiary, net operating losses (NOLs) and $ 24 million primarily associated with the reversal of a tax reserve related to the treatment of prior year contractor support costs;

partly offset by a tax charge of $ 10 million associated with the audit of PT-FI's 2019 tax returns.

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

FCX’s consolidated effective income tax rate was 29 percent for the first nine months of 2021 and 102 percent for the first nine months of 2020.

Because FCX's U.S.

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

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

pre-tax losses.

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

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

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

None of these measures resulted in material impacts to FCX’s provision for income taxes for the six months ended June 30, 2021 and 2020.

As discussed in Note 8, Cerro Verde paid the balance of its royalty dispute liabilities during third-quarter 2021, which resulted in a $ 252 million reduction of unrecognized tax benefits (including a $ 137 million reduction of accrued interest and penalties), but did not have an impact on FCX’s provision for income taxes for the third quarter or nine months ended September 30, 2021.

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

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

None of these measures resulted in material impacts to FCX’s provision for income taxes for the nine months ended September 30, 2021 and 2020.

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

1 unchanged sentence

FCX collected U.S.

alternative minimum tax credit refunds of $ 221 million in July 2020, $ 24 million in October 2020 and $ 23 million in March 2021.

alternative minimum tax credit refunds of $ 23 million in March 2021, $ 24 million in October 2020 and $ 221 million in July 2020.

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

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

DEBT AND EQUITY

As previously disclosed in our 2020 Form 10-K, PT-FI received unfavorable Indonesia Tax Court decisions in 2018 with respect to its appeal of capitalized mine development costs on its 2012 and 2014 corporate income tax returns.

PT-FI appealed those decisions to the Indonesia Supreme Court.

On October 31, 2019, the Indonesia Supreme Court communicated an unfavorable ruling regarding the treatment of mine development costs on PT-FI’s 2014 tax return.

During the fourth quarter of 2019, PT-FI met with the Indonesia Tax Office and developed a framework for resolution of the disputed matters and progress of the framework for resolution continued in 2020 and through the nine months ended September 30, 2021.

During October 2021, PT-FI participated in discussions with the Indonesian tax office regarding progress on the framework for resolution of disputes arising from the audits of tax years 2012 through 2016.

As a result of these discussions and the revised positions taken by both the Indonesian tax office and PT-FI, FCX believes it can no longer conclude a resolution of all of the disputed tax items at a more-likely-than-not threshold.

Because of these recent events, FCX continues to evaluate its uncertain tax positions and may record a material tax charge during fourth-quarter 2021.

This tax charge may be offset by a tax benefit related to the additional release of valuation allowance associated with PT Rio Tinto net operating loss carryforwards that PT-FI may deem realizable.

continue to engage with the Indonesian tax office in pursuit of certain aspects of the original framework for resolution.

DEBT AND FINANCIAL POLICY

The components of debt follow (in millions):

September 30,

2021 December 31, 2020

1 unchanged sentence

Issued by FCX $ 8,790 $ 8,783

Issued by Freeport Minerals Corporation (FMC) 356 356

Issued by Freeport Minerals Corporation 355 356

Cerro Verde Term Loan 325 523

PT-FI Term Loan 146 —

Total debt 9,665 9,711

1 unchanged sentence

Long-term debt $ 8,768 $ 9,677

Includes $ 0.5 billion for the 3.55% Senior Notes due March 2022 and $ 0.5 billion for the Cerro Verde Term Loan due June 2022.

Includes $ 524 million for the 3.55% Senior Notes, which will be redeemed on December 1, 2021, and $ 325 million for the Cerro Verde Term Loan due June 2022.

Revolving Credit Facility.

At June 30, 2021, FCX had no borrowings outstanding and $ 8 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

At September 30, 2021, FCX had no borrowings outstanding and $ 8 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

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

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

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

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

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

At June 30, 2021, FCX was in compliance with its revolving credit facility covenants.

At September 30, 2021, FCX was in compliance with its revolving credit facility covenants.

PT-FI Credit Facility.

In July 2021, PT-FI entered into a $ 1.0 billion, five-year, unsecured credit facility (consisting of a $ 667 million term loan and a $ 333 million revolving credit facility) to fund project costs in connection with the PT Smelting expansion and construction of a precious metals refinery, and for PT-FI’s general corporate purposes.

The term loan allows for borrowings up to $ 667 million within the first three years, and amortizes in four installments, with 15 percent of the outstanding balance due in January 2025, 15 percent due in July 2025, 35 percent due in January 2026 and the remaining 35 percent due in July 2026.

The term loan allows for borrowings up to $ 667 million within the first three years, and then the loan amortizes in four installments, with 15 percent of the outstanding balance due in January 2025, 15 percent due in July 2025, 35 percent due in January 2026 and the remaining 35 percent due in July 2026.

The $ 333 million revolving credit facility is available for drawings until June 2026.

5 unchanged sentences

The credit facility also contains financial ratios governing maximum total leverage and minimum interest expense coverage and certain environmental and social compliance requirements.

As of September 30, 2021, $ 158 million ($ 146 million net of debt issuance costs) was drawn under the PT-FI Term Loan and no amounts were drawn under the revolving credit facility.

Senior Notes.

In March 2020, FCX completed the sale of $ 1.3 billion of senior notes.

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

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

On October 21, 2021, FCX called for redemption all of its outstanding $ 524 million principal amount of 3.55 % Senior Notes due 2022.

The notes will be redeemed on December 1, 2021, at a redemption price equal to 100 percent of the principal amount of the notes outstanding, plus accrued and unpaid interest to, but not including, the redemption date.

Annual interest costs associated with the 3.55 % Senior Notes approximate $ 19 million.

FCX has no other senior note maturities until March 2023.

As further discussed in the 2020 Form 10-K, in the first nine months of 2020, FCX redeemed in full or purchased a portion of its 4.00 % Senior Notes due 2021, 3.55 % Senior Notes due 2022, 3.875 % Senior Notes due 2023 and 4.55 % Senior Notes due 2024.

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

Cerro Verde Term Loan.

In September 2021, Cerro Verde prepaid $ 200 million on its term loan.

The $ 325 million balance of the loan is due June 2022.

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 added to property, plant, equipment and mine development costs, net, 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 for the 2021 periods results from significant assets placed in service as PT-FI’s underground mining operations continue to ramp up.

Common Stock.

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

On June 23, 2021, FCX declared a quarterly cash dividend of $ 0.075 per share on its common stock, which was paid on August 2, 2021, to common stockholders of record as of July 15, 2021.

Consolidated interest costs (before capitalization) totaled $ 157 million in third-quarter 2021, $ 160 million in third-quarter 2020, $ 482 million for the first nine months of 2021 and $ 490 million for the first nine months of 2020.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 19 million in third-quarter 2021, $ 40 million in third-quarter 2020, $ 51 million for the first nine months of 2021 and $ 128 million for the first nine months of 2020.

The decrease in capitalized interest for the 2021 periods results from assets placed in service as PT-FI’s underground mining operations continue to ramp up.

Financial Policy.

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

The policy includes a base dividend and a performance-based payout framework, whereby 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 FCX maintaining its net debt at a level not to exceed the net debt target of $ 3 billion to $ 4 billion (excluding project debt for additional smelting capacity in Indonesia).

In February 2021, the Board reinstated a cash dividend on FCX’s common stock (base dividend), and on November 1, 2021, the Board approved (i) a new share repurchase program authorizing repurchases of up to $ 3.0 billion of FCX common stock, and (ii) a variable cash dividend on FCX’s common stock for 2022.

The timing and amount of any share repurchases will be at the discretion of management and will depend on a variety of factors.

The share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion.

The declaration and payment of dividends (base or variable) is also at the discretion of the Board and will depend on FCX's financial results, cash requirements, business prospects, global economic conditions and other factors deemed relevant by the Board.

On September 22, 2021, FCX declared a quarterly cash dividend (base dividend) of $ 0.075 per share

on its common stock, which was paid on November 1, 2021, to common stockholders of record as of October 15, 2021.

FINANCIAL INSTRUMENTS

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

The forward sales provided for fixed pricing of $ 2.34 per pound of copper on approximately 60

percent of North America's sales volumes for May and June 2020.

These contracts resulted in hedging losses

totaling $ 24 million in second-quarter 2020 and for the six months ended June 30, 2020.

There were no remaining

forward sales contracts as of June 30, 2020.

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

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

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

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

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

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the six-month periods ended June 30, 2021 and 2020.

At June 30, 2021, FCX held copper futures and swap contracts that qualified for hedge accounting for 80 million pounds at an average contract price of $ 4.20 per pound, with maturities through May 2023.

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the nine-month periods ended September 30, 2021 and 2020.

At September 30, 2021, FCX held copper futures and swap contracts that qualified for hedge accounting for 84 million pounds at an average contract price of $ 4.23 per pound, with maturities through May 2023.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

A summary of FCX’s embedded derivatives at June 30, 2021, follows:

A summary of FCX’s embedded derivatives at September 30, 2021, follows:

Open Positions Average Price

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Embedded derivatives in provisional sales contracts:

Copper (millions of pounds) 597 $ 4.31 $ 4.25 December 2021

Gold (thousands of ounces) 157 1,848 1,762 September 2021

Copper (millions of pounds) 548 $ 4.28 $ 4.05 February 2022

Gold (thousands of ounces) 196 1,790 1,738 January 2022

Embedded derivatives in provisional purchase contracts:

Copper (millions of pounds) 115 4.30 4.25 November 2021

Copper (millions of pounds) 116 4.31 4.05 February 2022

Copper Forward Contracts.

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

At June 30, 2021, Atlantic Copper held net copper forward purchase contracts for 17 million pounds at an average contract price of $ 4.36 per pound, with maturities through August 2021.

Summary of Gains (Losses).

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

Three Months Ended Six Months Ended

June 30, June 30,

At September 30, 2021, Atlantic Copper held net copper forward purchase contracts for 9 million pounds at an average contract price of $ 4.23 per pound, with maturities through November 2021.

Summary of (Losses) Gains.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

September 30,

2021 December 31, 2020

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Assets Liabilities

2021 December 31, 2020 June 30,

September 30,

2021 December 31, 2020 September 30,

2021 December 31, 2020

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Other current assets 4 15 — —

Other assets 1 — — —

Accounts payable and accrued liabilities 26 — 45 20

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

As of June 30, 2021, the maximum amount of credit exposure associated with derivative transactions was $ 72 million.

As of September 30, 2021, the maximum amount of credit exposure associated with derivative transactions was $ 37 million.

Other Financial Instruments.

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

The carrying value for cash and cash equivalents (which included time deposits of $ 0.2 billion at June 30, 2021, and $ 0.3 billion at December 31, 2020), restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and debt).

In addition, as of June 30, 2021, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

The carrying value for cash and cash equivalents (which included time deposits of $ 0.2 billion at September 30, 2021, and $ 0.3 billion at December 31, 2020), restricted cash, restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 7 for the fair values of investment securities, legally restricted funds and debt).

In addition, as of September 30, 2021, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

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

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

September 30,

2021 December 31, 2020

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

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

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

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

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

At June 30, 2021

At September 30, 2021

Carrying Fair Value

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Investment securities:

core fixed income fund $ 29 $ 29 $ 29 $ — $ — $ —

Equity securities $ 52 $ 52 $ — $ 52 $ — $ —

core fixed income fund 29 29 29 — — —

Total 81 81 29 52 — —

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30 30 — — 30 —

Copper futures and swap contracts c

Copper forward contracts c

Copper futures and swap contracts c

Total 37 37 — 2 35 —

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Copper futures and swap contracts c

14 14 — 14 — —

Copper forward contracts 4 4 — 1 3 —

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

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 116 million at June 30, 2021, and $ 97 million at December 31, 2020, and (ii) other assets of $ 139 million at June 30, 2021, and $ 148 million at December 31, 2020, primarily associated with an assurance bond to support PT-FI’s commitment for new domestic smelter development in Indonesia and PT-FI’s closure and reclamation guarantees.

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 114 million at September 30, 2021, and $ 97 million at December 31, 2020, and (ii) other assets of $ 132 million at September 30, 2021, and $ 148 million at December 31, 2020, primarily associated with an assurance bond to support PT-FI’s commitment for additional domestic smelter development in Indonesia and PT-FI’s closure and reclamation guarantees.

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

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

The contingent consideration included in (i) other current assets totaled $ 18 million at June 30, 2021, and $ 12 million at December 31, 2020, and (ii) other assets totaled $ 80 million at June 30, 2021, and $ 96 million at December 31, 2020.

The contingent consideration included in (i) other current assets totaled $ 20 million at September 30, 2021, and $ 12 million at December 31, 2020, and (ii) other assets totaled $ 74 million at September 30, 2021, and $ 96 million at December 31, 2020.

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

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

There have been no changes in the techniques used at June 30, 2021, as compared with those techniques used at December 31, 2020.

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

There have been no changes in the techniques used at September 30, 2021, as compared with those techniques used at December 31, 2020.

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

Fair value at January 1, 2021 $ 88

Net unrealized gain related to assets still held at the end of the period 12

Fair value at June 30, 2021 $ 85

Fair value at September 30, 2021 $ 85

CONTINGENCIES AND COMMITMENTS

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The parties’ RI/FS work under the AOC and their efforts to identify other PRPs are ongoing.

The NCG submitted the initial draft RI to EPA in 2016 and currently expects the report to be finalized in 2021.

The NCG currently anticipates a draft FS to be submitted to EPA for review and approval in 2024.

EPA is not expected to propose a final creek-wide remedy until after the RI/FS is completed, with the actual

remediation construction starting several years later.

The final draft RI, which addressed all remaining EPA comments, was submitted in October 2021 and NCG expects EPA’s formal acceptance after their review.

NCG expects to submit the draft FS in late 2025

and currently expects EPA to select a creek-wide remedy in 2026, with the actual remediation construction starting several years later.

In July 2019, the NCG entered into an AOC to conduct a Focused Feasibility Study (FFS) of the first two miles of the creek to support an evaluation of an interim remedy for that section of the creek.

In July 2021, EPA terminated the FFS, which effectively incorporates remediation of the lower creek with the site-wide remedy.

FCX’s environmental liability balance for the creek was $ 308 million at June 30, 2021.

FCX’s environmental liability balance for the creek was $ 313 million at September 30, 2021.

The final costs of fulfilling this remedial obligation and the allocation of costs among PRPs are uncertain and subject to change based on the results of the RI/FS, the remedy ultimately selected by EPA and related allocation determinations.

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

A hearing to consider confirmation of the Imerys bankruptcy plan has been scheduled to be held in November 2021.

The hearing to consider confirmation of the Imerys bankruptcy plan previously scheduled to be held in November 2021 has been cancelled following a recent decision by the bankruptcy judge to invalidate a substantial number of votes in favor of the plan.

Consistent with the global settlement agreement, Cyprus Mines commenced its own bankruptcy process on February 11, 2021, and talc-related litigation against both Cyprus Mines and Cyprus Amax Minerals Company is stayed through 2021.

The global settlement is subject to, among other things, votes by claimants in both the Imerys and Cyprus Mines bankruptcy cases as well as bankruptcy court approvals in both cases, and there can be no assurance that the global settlement will be successfully implemented.

FCX has a $ 130 million liability balance at June 30, 2021, associated with the proposed settlement.

FCX has a $ 130 million liability balance at September 30, 2021, associated with the proposed settlement.

Louisiana Parishes Coastal Erosion Cases.

As discussed in Note 12 of FCX's 2020 Form 10-K, certain FCX affiliates were named as defendants, along with numerous co-defendants, in 13 cases out of a total of 42 cases filed in Louisiana state courts by six south Louisiana parishes (Cameron, Jefferson, Plaquemines, St.

John the Baptist and Vermilion), alleging that certain oil and gas exploration and production operations and sulphur mining and production operations in coastal Louisiana contaminated and damaged coastal wetlands and caused significant land loss along the Louisiana coast.

In 2019, affiliates of FCX reached an agreement in principle to settle all 13 cases.

The maximum out-of-pocket settlement payment will be $ 23.5 million with the initial payment of $ 15 million to be paid upon execution of the settlement agreement.

The settlement agreement must be executed by all parties, including authorized representatives of the six south Louisiana parishes originally plaintiffs in the suit and certain other non-plaintiff Louisiana parishes and the state of Louisiana.

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

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

The settlement agreement has been executed by the FCX affiliates, the state of Louisiana and 8 of the 12 Louisiana parishes.

FCX is continuing its efforts to finalize the settlement.

Other Matters

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In July 2021, PT Smelting received a six-month extension of its anodes slimes export license, which currently expires December 30, 2021.

Cerro Verde Royalty Dispute.

SUNAT (National Superintendency of Customs and Administration), the Peru national tax authority, assessed mining royalties on ore processed by the Cerro Verde concentrator for the period December 2006 to December 2013.

Cerro Verde contested each of these assessments because it believes that its 1998 stability agreement exempts from royalties all minerals extracted from its mining concession, irrespective of the method used for processing such minerals.

Since 2014, Cerro Verde has been paying the disputed assessments for the period from December 2006 through December 2013 under installment payment programs provided under Peru law.

In third-quarter 2021, Cerro Verde paid the balance of its royalty dispute liabilities (payments totaled $ 356 million in third-quarter 2021 and $ 421 million for the first nine months of 2021) and is proceeding with international arbitration as previously disclosed in FCX’s 2020 Form 10-K.

Development Progress of Greenfield Smelter at East Java .

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

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

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

In June 2021, the Indonesia government issued a ministerial decree for the calculation of an administrative fine for lack of smelter development in light of the COVID-19 pandemic.

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

During the first six months of 2021, PT-FI recorded charges totaling $ 16 million ($ 3 million in second-quarter 2021 and $ 13 million in first-quarter 2021) for a potential settlement of the administrative fine which is expected to include a revised construction schedule for the greenfield smelter.

During the first nine months of 2021, PT-FI recorded charges totaling $ 16 million for a potential settlement of the administrative fine which is expected to include a revised construction schedule for the greenfield smelter.

No additional fine is expected for the construction period after July 2020 based on the revised schedule.

The final settlement could differ from the amounts recorded in 2021.

The final settlement could differ from the amounts recorded.

Chiyoda Contract.

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Product Revenues.

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

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Unaffiliated customers $ 16 $ 64 $ 80 $ 979 $ 149 $ 1,128 $ 1,961 a

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Intersegment 711 1,020 1,731 95 — 95 81 151 7 — ( 2,065 ) —

Production and delivery 351 574 925 494 c

106 600 528 56 1,691 775 ( 1,508 ) d

Production and delivery 312 592 904 533 97 630 569 70 1,701 765 ( 1,630 ) 3,009

Depreciation, depletion and amortization

40 54 94 101 10 111 280 19 1 7 16 528

Metals inventory adjustments

13 — 13 — — — — — — — 1 14

Selling, general and administrative expenses

3 unchanged sentences

( 1 ) ( 1 ) ( 2 ) — — — — — — — 15 13

Net gain on sales of assets — — — — — — — — — — ( 3 ) ( 3 )

Net gain on sales of assets — — — — — — — — — — ( 60 ) c

Operating income (loss) 363 437 800 438 42 480 1,165 62 2 6 ( 53 ) 2,462

Interest expense, net — 1 1 6 — 6 1 — — 1 129 138

Provision for income taxes — — — 145 17 162 404 — — — 37 603

Total assets at June 30, 2021 2,635 5,288 7,923 8,795 1,795 10,590 18,461 1,740 271 1,117 5,334 45,436

Capital expenditures 22 47 69 23 3 26 314 2 — 7 15 433

Three Months Ended June 30, 2020

Provision for (benefit from) income taxes — — — 197 24 221 382 d

— — ( 1 ) 26 628

Total assets at September 30, 2021 2,586 5,244 7,830 8,554 1,843 10,397 18,592 1,726 278 1,067 7,027 46,917

Capital expenditures 42 74 116 41 6 47 328 1 1 5 43 e

Three Months Ended September 30, 2020

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

$ — $ 1,270 $ 536 $ 266 b

Intersegment 447 505 952 e

Intersegment 584 637 1,221

66 — 66 3 42 8 3 ( 1,343 ) —

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— ( 3 ) ( 3 ) — — — — — — — 24 21

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

Operating income (loss) 237 147 384 210 12 222 442 ( 25 ) ( 2 ) 4 ( 145 ) 880

1 unchanged sentence

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

Total assets at June 30, 2020 2,697 5,198 7,895 8,515 1,631 10,146 16,848 1,777 259 726 2,579 40,230

Capital expenditures 27 121 148 31 20 51 308 4 2 5 9 527

Includes PT-FI's sales to PT Smelting totaling $ 756 million in second-quarter 2021 and $ 433 million in second-quarter 2020.

Total assets at September 30, 2020 2,654 5,137 7,791 8,569 1,640 10,209 16,858 1,770 251 877 3,343 41,099

Capital expenditures 21 45 66 26 5 31 297 3 1 6 32 e

Includes PT-FI's sales to PT Smelting totaling $ 795 million in third-quarter 2021 and $ 506 million in third-quarter 2020.

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

Includes nonrecurring charges totaling $ 69 million associated with labor-related charges at Cerro Verde for agreements reached with 57 percent of its hourly employees.

Includes charges associated with the major maintenance turnaround at the Miami smelter totaling $ 19 million.

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

Represents the gain on the sale of FCX’s remaining cobalt business located in Kokkola, Finland (Freeport Cobalt).

Includes net tax benefits of $ 69 million associated with the release of a portion of the valuation allowances recorded against PT RTI NOLs.

Includes capital expenditures for the new greenfield smelter and precious metals refinery (collectively, the Indonesia smelter project) of $ 31 million in third-quarter 2021 and $ 27 million in third-quarter 2020.

(In millions)

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

Six months ended June 30, 2021

Nine months ended September 30, 2021

Unaffiliated customers $ 77 $ 147 $ 224 $ 2,721 $ 512 $ 3,233 $ 5,097 a

8 unchanged sentences

Environmental obligations and shutdown costs — ( 1 ) ( 1 ) — — — — — — — 52 51

Net gain on sales of assets — — — — — — — — — — ( 3 ) ( 3 )

Net gain on sales of assets — — — — — — — — — — ( 63 ) e

Operating income (loss) 1,013 1,121 2,134 1,240 172 1,412 2,927 75 4 12 ( 503 ) 6,061

Interest expense, net — 1 1 31 — 31 8 — — 4 387 431

Provision for (benefit from) income taxes — — — 318 38 356 719 — — — ( 29 ) 1,046

Capital expenditures 32 63 95 43 4 47 624 3 1 13 20 803

Six months ended June 30, 2020

Provision for (benefit from) income taxes — — — 515 62 577 1,101 f

— — ( 1 ) ( 3 ) 1,674

Capital expenditures 74 137 211 84 10 94 904 4 2 18 111 g

Nine months ended September 30, 2020

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

$ — $ 3,491 $ 1,429 $ 780 b

Intersegment 889 1,039 1,928 e

Intersegment 1,473 1,676 3,149

156 — 156 38 171 24 16 ( 3,554 ) —

8 unchanged sentences

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

(Benefit from) provision for income taxes — — — ( 23 ) ( 10 ) ( 33 ) 90 — — 1 ( 22 ) 36

Capital expenditures 71 261 332 90 35 125 634 11 4 11 20 1,137

Includes PT-FI's sales to PT Smelting totaling $ 1.5 billion for the first six months of 2021 and $ 813 million for the first six months of 2020.

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

Capital expenditures 92 306 398 116 40 156 865 14 5 17 118 g

Includes PT-FI's sales to PT Smelting totaling $ 2.3 billion for the first nine months of 2021 and $ 1.3 billion for the first nine months of 2020.

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

Includes nonrecurring charges totaling $ 69 million associated with labor-related charges at Cerro Verde for agreements reached with 57 percent of its hourly employees.

Includes nonrecurring charges totaling $ 74 million associated with labor-related charges at Cerro Verde for agreements reached with approximately 65 percent of its hourly employees.

Includes charges associated with the major maintenance turnaround at the Miami smelter totaling $ 87 million.

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

Includes a $ 60 million gain on the sale of Freeport Cobalt.

Includes net tax benefits of $ 69 million associated with the release of a portion of the valuation allowances recorded against PT RTI NOLs.

Includes capital expenditures for the Indonesia smelter project of $ 79 million for the first nine months of 2021 and $ 94 million for the first nine months of 2020.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

(the Company) as of June 30, 2021, the related consolidated statements of operations, comprehensive income (loss), and equity for the three- and six-month periods ended June 30, 2021 and 2020, the related consolidated statements of cash flows for the six-month periods ended June 30, 2021 and 2020, and the related notes (collectively referred to as the “consolidated interim financial statements”).

(the Company) as of September 30, 2021, the related consolidated statements of operations, comprehensive income (loss), and equity for the three- and nine-month periods ended September 30, 2021 and 2020, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively referred to as the “consolidated interim financial statements”).

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

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Phoenix, Arizona

August 5, 2021

November 5, 2021

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

What changed 10-Q

Item 1. Financial Statements