FREEPORT-MCMORAN INC 10-K

fcx-20211231 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-11307-01 Freeport-McMoRan Inc. (Exact name of registrant as specified in its charter) Delaware 74-2480931 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 333 North Central Avenue Phoenix Arizona 85004-2189 (Address of principal executive offices) (Zip Code) (602) 366-8100 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.10 per share FCX The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☑ Yes ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No The aggregate market value of common stock held by non-affiliates of the registrant was $ 48.6 billion on June 30, 2021. Common stock issued and outstanding was 1,454,781,055 shares on January 31, 2022. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s proxy statement for its 2022 annual meeting of stockholders are incorporated by reference into Part III of this report. Freeport-McMoRan Inc. TABLE OF CONTENTS Page Part I 1 Items 1. and 2. Business and Properties 1 Item 1A. Risk Factors 44 Item 1B. Unresolved Staff Comments 65 Item 3. Legal Proceedings 65 Item 4. Mine Safety Disclosures 68 Information About our Executive Officers 68 Part II 69 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 69 Item 6. Reserved 70 Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk 70 Item 8. Financial Statements and Supplementary Data 109 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 174 Item 9A. Controls and Procedures 174 Item 9B. Other Information 174 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 174 Part III 174 Item 10. Directors, Executive Officers and Corporate Governance 174 Item 11. Executive Compensation 174 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 174 Item 13. Certain Relationships and Related Transactions, and Director Independence 175 Item 14. Principal Accounting Fees and Services 175 Part IV 175 Item 15. Exhibits, Financial Statement Schedules 175 Item 16. Form 10-K Summary 182 Glossary of Terms 183 Signatures S-1 i Table of Contents PART I Items 1. and 2. Business and Properties. All of our periodic reports filed with the United States (U.S.) Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, through our website, “fcx.com,” including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. These reports and amendments are available through our website as soon as reasonably practicable after we electronically file or furnish such material to the SEC. Our website is for information only and the contents of our website are not incorporated in, or otherwise to be regarded as part of, this Form 10-K. References to “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. References to “Notes” refer to the Notes to Consolidated Financial Statements included herein (refer to Item 8.), and references to “MD&A” refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk included herein (refer to Items 7. and 7A.). GENERAL 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 mineral 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 2021 reflect strong operating and financial performance, and cash flow generation. We remained focused on cost and capital management and advanced our sustainability objectives. Despite continued challenges associated with the COVID-19 pandemic, we achieved a 19 percent increase in copper sales volumes and a 59 percent increase in gold sales volumes in 2021, compared with 2020. To date, our vigilant operating protocols have been effective in mitigating and preventing a major outbreak of COVID-19 at each of our operating sites. Protecting the health of our workforce and communities where we operate is a top priority, and we continue to focus on safeguarding our business in an uncertain public health and economic environment. We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. The ramp-up of underground mining at the Grasberg minerals district in Indonesia continues to advance on schedule, and in fourth-quarter 2021, we achieved quarterly copper and gold volumes approximating 100 percent of the projected annualized levels. Also, the Lone Star copper leach project at our Safford mine is exceeding the initial design capacity of 200 million pounds annually and produced approximately 235 million pounds of copper in 2021. During 2022, we plan to continue to advance organic growth initiatives at our operating sites, based on a favorable operational and market outlook. During 2021, we adopted and implemented a performance-based payout framework. Refer to Item 1A. “Risk Factors,” Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” MD&A and Note 10 for further discussion. 1 Following are our ownership interests at December 31, 2021, in operating mines through our consolidated subsidiaries, Freeport Minerals Corporation (FMC) and PT Freeport Indonesia (PT-FI): a. Our economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.76 percent thereafter. Refer to Note 3 for discussion of the PT-FI divestment transaction. b. FMC has a 72 percent undivided interest in Morenci via an unincorporated joint venture. Refer to Note 3 for further discussion. At December 31, 2021, our estimated consolidated recoverable proven and probable mineral reserves totaled 107.2 billion pounds of copper, 27.1 million ounces of gold and 3.39 billion pounds of molybdenum. Following is the allocation of our estimated consolidated recoverable proven and probable mineral reserves at December 31, 2021, by geographic location (refer to “Mining Operations” and “Mineral Reserves” for further discussion): Copper Gold Molybdenum North America 40 % 2 % 79 % a South America 30 — 21 Indonesia 30 98 — 100 % 100 % 100 % a. Our Henderson and Climax molybdenum mines contain 19 percent of our estimated consolidated recoverable proven and probable molybdenum reserves, and our North America copper mines contain 60 percent. In North America, we operate seven copper mines - Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico, and two molybdenum mines - Henderson and Climax in Colorado. In addition to copper, certain of our North America copper mines also produce molybdenum concentrate, gold and silver. In South America, we operate two copper mines - Cerro Verde in Peru and El Abra in Chile. In addition to copper, the Cerro Verde mine also produces molybdenum concentrate and silver. In Indonesia, PT-FI operates in the Grasberg minerals district. In addition to copper, the Grasberg minerals district also produces gold and silver. 2 Following is the allocation of our consolidated copper, gold and molybdenum production for the year 2021 by geographic location (refer to “Mining Operations” and MD&A for further information): Copper Gold Molybdenum North America 38 % 1 % 76 % a South America 27 — 24 Indonesia 35 99 — 100 % 100 % 100 % a. Our Henderson and Climax molybdenum mines produced 36 percent of our consolidated molybdenum production, and our North America copper mines produced 40 percent. Copper production from three of our mines, the Morenci mine in North America, the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia, together totaled 74 percent of our consolidated copper production in 2021. The geographic locations of our operating mines are shown on the world map below. COPPER, GOLD AND MOLYBDENUM Following is a brief discussion of our primary natural resources - copper, gold and molybdenum. For further discussion of historical and current market prices of these commodities, refer to MD&A. Copper Copper is an internationally traded commodity, and its prices are determined by the major metals exchanges - the London Metal Exchange (LME), Commodity Exchange Inc. (COMEX) and Shanghai Futures Exchange. Prices on these exchanges generally reflect the worldwide balance of copper supply and demand, and can be volatile and cyclical. During 2021, the LME copper settlement price averaged $4.23 per pound, ranging from a low of $3.52 per pound to a record high of $4.86 per pound, and was $4.40 per pound on December 31, 2021. In general, demand for copper reflects the rate of underlying world economic growth, particularly in industrial production and construction. According to Wood Mackenzie, a widely followed independent metals market consultant, copper’s end-use markets (and their estimated shares of total consumption) are construction (29 percent), electrical applications (27 percent), consumer products (22 percent), transportation (11 percent) and industrial machinery (11 percent). We believe copper will continue to be essential in these basic uses as well as contribute significantly to new technologies for clean energy, to advance communications and to enhance public health. Examples of areas we believe will require additional copper in the future include: (i) high efficiency motors, which consume up to 75 percent more copper than a standard motor; (ii) electric vehicles, which consume up to four 3 Table of Contents times the amount of copper in terms of weight compared to vehicles of similar size with an internal combustion engine, and require copper-intensive charging station infrastructure to refuel; and (iii) renewable energy such as wind and solar, which consume four to five times the amount of copper compared to traditional fossil fuel generated power. Gold Gold is used for jewelry, coinage and bullion as well as various industrial and electronic applications. Gold can be readily sold on numerous markets throughout the world. Benchmark prices are generally based on London Bullion Market Association (London) quotations. During 2021, the London PM gold price averaged $1,799 per ounce, ranging from a low of $1,684 per ounce to a high of $1,943 per ounce, and was $1,806 per ounce on December 30, 2021 (there was no London PM gold price quote on December 31, 2021). Molybdenum Molybdenum is a key alloying element in steel and the raw material for several chemical-grade products used in catalysts, lubrication, smoke suppression, corrosion inhibition and pigmentation. Molybdenum, as a high-purity metal, is also used in electronics such as flat-panel displays and in super alloys used in aerospace. Reference prices for molybdenum are available in several publications, including Metals Week, CRU Report and Metal Bulletin . During 2021, the weekly average price of molybdenum quoted by Metals Week averaged $15.92 per pound, ranging from a low of $10.09 per pound to a high of $20.01 per pound, and was $18.70 per pound on December 31, 2021. PRODUCTS AND SALES Our consolidated revenues for 2021 primarily included sales of copper (80 percent), gold (11 percent) and molybdenum (6 percent). Copper concentrate sales to PT Smelting (PT-FI’s 39.5-percent-owned copper smelter and refinery in Gresik, Indonesia) totaled 14 percent of our consolidated revenues for the year ended December 31, 2021, 12 percent for the year ended December 31, 2020, and 13 percent for the year ended December 31, 2019, which is the only customer that accounted for 10 percent or more of our consolidated revenues during the three years ended December 31, 2021. Refer to Note 16 for a summary of our consolidated revenues and operating income (loss) by business segment and geographic area. Copper Products We are one of the world’s leading producers of copper concentrate, cathode and continuous cast copper rod. During 2021, 59 percent of our mined copper was sold in concentrate, 21 percent as cathode and 20 percent as rod from our North America operations. The copper ore from our mines is generally processed either by smelting and refining or by solution extraction and electrowinning (SX/EW) as described below. Copper Concentrate . We produce copper concentrate at six of our mines in which mined ore is crushed and treated to produce a copper concentrate with copper content of approximately 20 to 30 percent. In North America, copper concentrate is produced at the Morenci, Bagdad, Sierrita and Chino mines, and a significant portion is shipped to our Miami smelter in Arizona for further processing. Copper concentrate is also produced at the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia. Copper Cathode . We produce copper cathode at our electrolytic refinery located in El Paso, Texas, and at nine of our mines. SX/EW cathode is produced from the Morenci, Bagdad, Safford, Sierrita, Miami, Chino and Tyrone mines in North America, and from the Cerro Verde and El Abra mines in South America . For ore subject to the SX/EW process, the ore is placed on stockpiles and copper is extracted from the ore by dissolving it with a weak sulfuric acid solution. The copper content of the solution is increased in two additional SX stages, and then the copper-bearing solution undergoes an EW process to produce cathode that is, on average, 99.99 percent copper. Our copper cathode is used as the raw material input for copper rod, brass mill products and for other uses. Copper cathode is also produced at Atlantic Copper (our wholly owned copper smelting and refining unit in Spain) and PT Smelting. Copper concentrate is smelted ( i.e. , subjected to extreme heat) to produce copper anode, which weighs between 800 and 900 pounds and has an average copper content of 99.5 percent. The anode is further treated by electrolytic refining to produce copper cathode, which weighs between 100 and 350 pounds and has an average copper content of 99.99 percent. Refer to “Mining Operations - Smelting Facilities and Other Mining Properties” for further discussion of Atlantic Copper and PT Smelting. 4 Table of Contents Continuous Cast Copper Rod . We manufacture continuous cast copper rod at our facilities in El Paso, Texas and Miami, Arizona, primarily using copper cathode produced at our North America copper mines. Copper Sales North America . The majority of the copper produced at our North America copper mines and refined in our El Paso, Texas refinery is consumed at our rod plants to produce copper rod which is sold to wire and cable manufacturers. The remainder of our North America copper production is sold in the form of copper cathode or copper concentrate under U.S. dollar-denominated annual contracts. Cathode and rod contract prices are generally based on the prevailing COMEX monthly average settlement price for the month of shipment and include a premium. Generally, copper cathode is sold to rod, brass or tube fabricators. During 2021, 23 percent of our North America mines’ copper concentrate sales volumes were shipped to Atlantic Copper for smelting and refining and sold as copper anode and copper cathode by Atlantic Copper. South America . Production from our South America mines is sold as copper concentrate or copper cathode under U.S. dollar-denominated, annual and multi-year contracts. During 2021, our South America mines sold approximately 75 percent of their copper production in concentrate and 25 percent as cathode. During 2021, 5 percent of our South America mines’ copper concentrate sales volumes were shipped to Atlantic Copper for smelting and refining and sold as copper anode and copper cathode by Atlantic Copper. Substantially all of our South America copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average settlement copper prices. Revenues from our South America concentrate sales are recorded net of royalties and treatment charges ( i.e., fees paid to smelters that are generally negotiated annually). In addition, because a portion of the metals contained in copper concentrate is unrecoverable from the smelting process, revenues from our South America concentrate sales are also recorded net of allowances for unrecoverable metals, which are a negotiated term of the contracts and vary by customer. Indonesia . PT-FI sells its production in the form of copper concentrate, which contains significant quantities of gold and silver, primarily under U.S. dollar-denominated, long-term contracts. PT-FI also sells a small amount of copper concentrate in the spot market. Following is a summary of PT-FI’s aggregate percentage of concentrate sales to unaffiliated third parties, PT Smelting and Atlantic Copper for the years ended December 31: 2021 2020 2019 Third parties 55 % 48 % 34 % PT Smelting 41 50 64 Atlantic Copper 4 2 2 100 % 100 % 100 % Substantially all of PT-FI’s concentrate sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average settlement copper prices. Revenues from PT-FI’s concentrate sales are recorded net of royalties, export duties, treatment charges and allowances for unrecoverable metals. Refer to Item 1A. “Risk Factors” for discussion of Indonesia regulations regarding PT-FI’s concentrate exports. Gold Products and Sales We produce gold almost exclusively from the Grasberg minerals district. The gold we produce is primarily sold as a component of our copper concentrate or in slimes, which are a product of the smelting and refining process. Gold generally is priced at the average London price for a specified month near the month of shipment. Revenues from gold sold as a component of our copper concentrate are recorded net of treatment charges, royalties, export duties and allowances for unrecoverable metals. Revenues from gold sold in slimes are recorded net of refining charges. Molybdenum Products and Sales We are the world’s largest producer of molybdenum and molybdenum-based chemicals. In addition to production from the Henderson and Climax molybdenum mines, we produce molybdenum concentrate at certain of the North America copper mines and the Cerro Verde copper mine in Peru. The majority of our molybdenum concentrate is processed in our own conversion facilities. Our molybdenum sales are primarily priced based on the average published Metals Week price for the month prior to the month of shipment. 5 Table of Contents GOVERNMENTAL REGULATIONS Our operations are subject to a broad range of laws and regulations imposed by governments and regulatory bodies, both in the U.S. and internationally. These regulations touch all aspects of our operations, including how we extract, process and explore for minerals and how we conduct our business, including regulations governing matters such as environmental and reclamation matters, mining rights, climate change, occupational health and safety and human rights. Environmental and Reclamation Matters Our operations are subject to extensive and complex laws and regulations, including environmental laws and regulations governing the generation, storage, treatment, transportation and disposal of hazardous substances; solid waste disposal; air emissions; wastewater discharges; remediation, restoration and reclamation of environmental contamination, including mine closures and reclamation; protection of endangered and threatened species and designation of critical habitats; and other related matters. In addition, we must obtain regulatory permits and approvals to start, continue and expand operations. As a mining company, compliance with environmental, health and safety laws and regulations is an integral and costly part of our business. We conduct our operations in a manner that aims to protect public health and the environment, and we believe our operations are in compliance with applicable laws and regulations in all material respects. Laws such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA) and similar state laws may expose us to joint and several liability for environmental damages caused by our operations, or by previous owners or operators of properties we acquired or are currently operating or at sites where we previously sent materials for processing, recycling or disposal. We have substantial obligations for environmental remediation on mining properties previously owned or operated by FMC and certain of its affiliates. At December 31, 2021, we had $1.7 billion recorded in our consolidated balance sheet for environmental obligations attributable to CERCLA or analogous state programs and for estimated future costs associated with environmental matters at closed facilities or closed portions of operating facilities. We are required by U.S. federal and state laws and regulations to provide financial assurance sufficient to allow a third party to implement approved closure and reclamation plans for our mining properties if we are unable to do so. Most of our financial assurance obligations are imposed by state laws that vary significantly by jurisdiction, depending on how each state regulates land use and groundwater quality. The U.S. Environmental Protection Agency (EPA) and state agencies may also require financial assurance for investigation and remediation actions that are required under settlements of enforcement actions under CERCLA or similar state laws. Regulations have been considered at various governmental levels to increase financial responsibility requirements both for mine closure and reclamation. In 2019, legislation was enacted in Colorado that eliminates our ability to use parent company guarantees, and requires proof of an end date for water treatment as a condition of permit issuance authorizing mining operations, with some exceptions for existing operations. In 2018, EPA concluded a rulemaking that considered the need for financial responsibility for hardrock mining operations under CERCLA by publishing its determination that it did not intend to require financial responsibility for the hardrock mining industry sector. In 2019, the D.C. Circuit upheld the EPA’s decision. In connection with the Presidential Executive Order issued on January 20, 2021, EPA will review this final action, though the timing of its review is unknown. Our mining operations are also subject to regulations under the Endangered Species Act (ESA) that are intended to protect species listed by the Department of Interior’s Fish & Wildlife Service (FWS) as endangered or threatened, along with critical habitat designated by FWS for these listed species. The regulations limit the ability of landowners, including us, to obtain federal permits or authorizations needed for expansion of our operations, and may also affect our ability to obtain, retain or deliver water to some operations. On October 26, 2021, FWS published two proposed rules that rescind changes made in 2019 and 2020 to mitigate potential regulatory constraints on mining operations under the ESA. New or revised environmental regulatory requirements are frequently proposed, many of which result in substantially increased costs for our business, including those regarding financial assurance above and in Item 1A. “Risk Factors.” For example, our Miami, Arizona, smelter processes a significant portion of the copper concentrate produced by our North America copper mines. EPA is currently in the process of revising the standards for hazardous air pollutants from primary copper smelters, which could impose additional requirements on our operations. We may be required to modify our systems or install additional equipment to address findings, new 6 Table of Contents requirements or for other reasons, which could result in significant costs, including increased capital expenditures and operating costs, and could adversely impact our business. EPA and state agencies continue to consider regulations for man-made organic compounds that could be present in soil, groundwater and surface water at our existing and former operations. These regulations may include drinking water standards, hazardous waste requirements, and hazardous substance designations for Perfluorooctanesulfonic and Perfluorooctanoic acids. EPA is also considering how to reduce lead exposure in the environment under multiple environmental programs. Certain federal and state health agencies also support more stringent lead cleanup levels. The timing for these EPA activities is unclear, but reduction in lead cleanup levels could result in material increases to our environmental reserves for ongoing residential property cleanup projects near former smelter sites. EPA and the Department of the Army (together, the Agencies) continue to consider whether and how to regulate remote “tributaries” under the regulatory definition of “waters of the United States” that are protected by the Clean Water Act. These requirements can impose significant additional restrictions on land uses in remote areas with only tenuous connections to active waterways. Regulations adopted by the Agencies in 2015, 2019 and 2020 governing “waters of the United States” have been challenged by multiple states and industry parties and litigation on all three final rules is ongoing. Most recently, a federal district court in Arizona vacated and remanded the regulations that became effective in 2020, and the Agencies subsequently published a proposed rule on December 7, 2021, that announced they will revert back to regulations in place prior to 2015. These rules define whether we need federal authorization under the Clean Water Act to expand our operations. We incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) to comply with applicable environmental laws and regulations that affect our operations totaling $0.3 billion in both 2021 and 2020 and $0.4 billion in 2019. For 2022, we expect to incur approximately $0.5 billion of aggregate environmental capital expenditures and other environmental costs. The timing and amounts of estimated payments could change as a result of changes in regulatory requirements, changes in scope and costs of reclamation activities, the settlement of environmental matters and the rate at which actual spending occurs on continuing matters. For information about environmental regulation, litigation and related costs, refer to Item 1A. “Risk Factors” and Notes 1 and 12. Mining Rights We conduct our mining and exploration activities pursuant to concessions granted by, or under contracts with, the host government in the countries where we operate. These countries include, among others, the U.S., Peru, Chile and Indonesia. Mining rights include our license to operate and involve our payment of applicable taxes and royalties to the host governments. The concessions and contracts are subject to the political risks associated with the host countries. For information about mining rights, including laws and regulations applicable to PT-FI, governmental agreements and licenses to operate, refer to “Mining Operations” below, Item 1A. “Risk Factors” and Notes 3, 11, 12 and 13. Climate Change In many of the jurisdictions in which we operate, governmental bodies are increasingly enacting legislation and regulations in response to the potential impacts of climate change. For example, as a result of the 2015 Paris Agreement, a number of governments have pledged “Nationally Determined Contributions” to control and reduce greenhouse gas emissions, including the U.S. Additionally, the recent pledges made as part of the 2021 Glasgow Climate Pact could result in further policy changes in many of the jurisdictions in which we operate. Further, several states in the U.S., including Colorado and New Mexico, have advanced goals reducing or eliminating fossil fuel-based energy production. Carbon tax legislation also has been adopted in jurisdictions where we operate, including Indonesia, and we expect that such carbon taxes and other carbon pricing mechanisms will increase over time. We anticipate that we will dedicate more resources and money to comply and remediate in response to legislative or regulatory changes, and our ability to modify our operations to avoid these costs may be limited in the near term. However, it is not yet possible to reasonably estimate the nature, extent, timing and cost or other impacts of any future carbon pricing mechanisms, other climate change regulatory programs or future legislative action that may be enacted. 7 Table of Contents For information about the potential impacts of climate change and related regulations, refer to Item 1A. “Risk Factors.” Health and Safety The safety and health of our workforce is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. We are subject to extensive regulation of worker health and safety, including the requirements of the U.S. Occupational Safety and Health Act and similar laws of other jurisdictions. In the U.S., the operation of our mines is subject to regulation by the U.S. Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (Mine Act). MSHA inspects our mines on a regular basis and issues citations and orders when it believes a violation has occurred under the Mine Act. Additionally, in the U.S. various state agencies have concurrent jurisdiction arising under state law that regulate worker health and safety in both our industrial facilities and mines. If regulatory inspections result in an alleged violation, we may be subject to fines and penalties and, in instances of alleged significant violations, our mining operations or industrial facilities could be subject to temporary or extended closures. Refer to Exhibit 95.1 to this Form 10-K for additional information regarding certain orders and citations issued by MSHA for our operations during the year ended December 31, 2021. For information about health and safety, refer to “Human Capital” below and Item 4. “Mine Safety Disclosures.” Human Rights We have adopted policies that govern our working relationships with the communities and governments where we operate and that are designed to guide our practices and programs in a manner that respects human rights and the culture of the local people impacted by our operations. For information about human rights, refer to “Community and Human Rights” below. COMPETITION The top 10 producers of copper comprise approximately 43 percent of total worldwide mined copper production. For the year 2021, we ranked second among those producers, with approximately seven percent of estimated total worldwide mined copper production. Our competitive position is based on the size, quality and grade of our ore bodies and our ability to manage costs compared with other producers. We have a diverse portfolio of mining operations with varying ore grades and cost structures. Our costs are driven by the location, grade and nature of our ore bodies, and the level of input costs, including energy, labor and equipment. The metals markets are cyclical, and our ability to maintain our competitive position over the long term is based on our ability to acquire and develop quality deposits, hire and retain a skilled workforce, and to manage our costs. MINING OPERATIONS The Copper Mark We are committed to validating all of our copper producing sites, including our mines and smelting and refining facilities, with the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry’s responsible production practices. To achieve the Copper Mark, each site is required to complete an external assurance process to assess conformance with 32 environmental, social and governance requirements. As of December 31, 2021, we had a total of seven sites that had been validated (Bagdad, Morenci, Miami, El Paso, Cerro Verde, El Abra and Atlantic Copper), and we have commenced the Copper Mark assessment process at four additional sites in North America (Chino, Tyrone, Safford and Sierrita). Tailings Management Our tailings management and stewardship program, which involves qualified external Engineers of Record and periodic oversight by independent tailings Technical Review Boards and our Tailings Stewardship Team, complies with the tailings governance framework on preventing catastrophic failure of tailings storage facilities adopted in December 2016 by the International Council on Mining and Metals (ICMM), an industry group of which we are a founding member, and required to be implemented by ICMM members. In August 2020, the co-conveners of the Global Tailings Review, which included ICMM, published the Global Industry Standard on Tailings Management (the Tailings Standard). The Tailings Standard includes 77 requirements across 6 key areas including the design, construction, operation and monitoring of tailings facilities, management and governance, emergency response and long-term recovery, and public disclosure. As a member of ICMM, we are committed to implementation of the 8 Table of Contents Tailings Standard by August 2023 for priority tailings storage facilities and by August 2025 for our remaining facilities, in line with the Tailings Standard requirements/commitments. Overview of Mines Following are maps and descriptions of our mining operations in North America (including both copper and molybdenum operations), South America and Indonesia. We consider our material mines, as defined under the disclosure requirements of Subpart 1300 of Regulation S-K (S-K 1300), to be the Morenci mine in North America, the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia. Refer to Exhibits 96.1, 96.2 and 96.3 for the Technical Report Summaries that have been prepared for our material mines in support of the disclosure and filing requirements of the SEC under S-K 1300. North America In the U.S., most of the land occupied by our copper and molybdenum mines, concentrators, SX/EW facilities, smelter, refinery, rod mills, molybdenum roasters and processing facilities is owned by us or is located on unpatented mining claims owned by us. Certain portions of our Bagdad, Sierrita, Miami, Chino, Tyrone, Henderson and Climax operations are located on government-owned land and are operated under a Mine Plan of Operations or other use permit. We hold various federal and state permits or leases on government land for purposes incidental to mine operations. Morenci We own a 72 percent undivided interest in Morenci, with the remaining 28 percent owned by Sumitomo Metal Mining Arizona, Inc. (15 percent) and SMM Morenci, Inc. (13 percent). Each partner takes in kind its share of Morenci’s production. Morenci is an open-pit copper mining complex that has been in continuous operation since 1939 and previously was mined through underground workings. In the 1880s, Phelps Dodge & Company (Phelps Dodge) first invested in the area, and through acquisition, consolidated all mining operations in the area by the 1920s. Phelps Dodge was acquired by FCX in 2007. Morenci is located in Greenlee County, Arizona, approximately 50 miles northeast of Safford on U.S. Highway 191. The property is located at latitude 33.07 degrees north and longitude 109.35 degrees west using the World Geodetic System (WGS) 84 coordinate system. The site is accessible by a paved highway and a railway spur. The Morenci mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper mineral is chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, with chalcopyrite as the dominant primary copper sulfide. The Morenci operation consists of two concentrators with a milling design capacity of 132,000 metric tons of ore per day, which produce copper and molybdenum concentrate; a 72,500 metric ton-per-day, crushed-ore leach pad and stacking system; a low-grade run-of-mine (ROM) leaching system; four SX plants; and three EW tank houses that produce copper cathode. Total EW tank house capacity is approximately 900 million pounds of copper per year. Morenci’s available mining fleet consists of one hundred and fifty-four 236-metric-ton haul trucks loaded by 13 electric shovels with bucket sizes ranging from 47 to 57 cubic meters. Morenci’s mining fleet is capable of moving an average of 815,000 metric tons of material per day. One of Morenci’s concentrators, which has a milling capacity of approximately 50,000 metric tons of ore per day was restarted in July 2021 after being on care and maintenance 9 Table of Contents status and is expected to resume operating at full capacity in early 2022. Our share of Morenci's net property, plant, equipment and mine development costs at December 31, 2021, totaled $1.9 billion. Morenci’s production, including our joint venture partners’ share, totaled 0.9 billion pounds of copper and 5 million pounds of molybdenum in 2021, 1.0 billion pounds of copper and 6 million pounds of molybdenum in 2020, and 1.0 billion pounds of copper and 5 million pounds of molybdenum in 2019. Morenci is located in a desert environment with rainfall averaging 13 inches per year. The highest bench elevation is 1,900 meters above sea level and the ultimate pit bottom is expected to have an elevation of 780 meters above sea level. The Morenci operation encompasses approximately 61,700 acres, comprising 51,300 acres of fee lands and 10,400 acres of unpatented mining claims held on public mineral estate and numerous state or federal permits, easements and rights-of-way. The Morenci operation’s electrical power is supplied by our wholly owned subsidiary, Morenci Water and Electric Company (MW&E). MW&E sources its generation services through our wholly owned subsidiary, Freeport-McMoRan Energy Services, through capacity rights at the Luna Energy Facility in Deming, New Mexico, and other power purchase agreements. Although we believe the Morenci operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Morenci operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion. Bagdad Our wholly owned Bagdad mine is an open-pit copper and molybdenum mining complex located in Yavapai County in west-central Arizona. It is approximately 60 miles west of Prescott and 100 miles northwest of Phoenix. The property can be reached by U.S. Highway 93 to State Route 97 or Arizona Highway 96, which ends at the town of Bagdad. The closest railroad is at Hillside, Arizona, 24 miles southeast on Arizona Highway 96. The open-pit mining operation has been ongoing since 1945, and prior mining was conducted through underground workings. The Bagdad mine is a porphyry copper deposit containing both sulfide and oxide mineralization. Chalcopyrite and molybdenite are the dominant primary sulfides and are the primary economic minerals in the mine. Chalcocite is the most common secondary copper sulfide mineral, and the predominant oxide copper minerals are chrysocolla, malachite and azurite. The Bagdad operation consists of a concentrator with a milling design capacity of 77,100 metric tons of ore per day that produces copper and molybdenum concentrate, a SX/EW plant that can produce approximately 6 million pounds per year of copper cathode from solution generated by low-grade stockpile leaching, and a pressure-leach plant to process molybdenum concentrate. The available mining fleet consists of thirty-two 235-metric-ton haul trucks loaded by eight electric shovels with bucket sizes ranging from 30 to 48 cubic meters, which are capable of moving an average of 236,000 metric tons of material per day. Bagdad’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $618 million. We are evaluating an expansion to potentially double concentrate capacity at our Bagdad operation. 10 Table of Contents Bagdad’s production totaled 184 million pounds of copper and 9 million pounds of molybdenum in 2021, 216 million pounds of copper and 11 million pounds of molybdenum in 2020, and 218 million pounds of copper and 13 million pounds of molybdenum in 2019. Bagdad is located in a desert environment with rainfall averaging 15 inches per year. The highest bench elevation is 1,200 meters above sea level and the ultimate pit bottom is expected to be 150 meters above sea level. The Bagdad operation encompasses approximately 51,200 acres, comprising 40,000 acres of fee lands and 11,200 acres of unpatented mining claims held on public mineral estate and numerous state or federal permits, easements and rights-of-ways. Bagdad receives electrical power from Arizona Public Service Company. We believe the Bagdad operation has sufficient water sources to support current operations. Safford, including Lone Star Our wholly owned Safford mine has been in operation since 2007 and is an open-pit copper mining complex located in Graham County, Arizona, 8 miles north of the town of Safford and 170 miles east of Phoenix. The site is accessible by paved county road off U.S. Highway 70. The Safford mine includes three copper deposits that have oxide mineralization overlaying primary copper sulfide mineralization. The predominant oxide copper minerals are chrysocolla and copper-bearing iron oxides with the predominant copper sulfide material being chalcopyrite. The only Safford deposit currently being mined is the Lone Star copper leach project, which began operations in the second half of 2020 and produced approximately 235 million pounds of copper in 2021. We continue to advance opportunities to increase Lone Star operating rates and are advancing plans to increase volumes to achieve 300 million pounds of copper per year from oxide ores. The oxide project advances the opportunity for development of the large-scale sulfide resources at Lone Star. We are increasing exploration in the area to support metallurgical testing and mine development planning for a potential long-term investment in a concentrator. Safford is a mine-for-leach operation that produces copper cathode. The operation consists of three open pits, of which one (Lone Star) is currently being mined, feeding a crushing facility with a design capacity of 103,500 metric tons of ore per day. The crushed ore is delivered to a leach pad by a series of overland and portable conveyors. Leach solutions feed a SX/EW facility with a capacity of 305 million pounds of copper per year. A sulfur burner plant is also in operation at Safford, providing a cost-effective source of sulfuric acid used in SX/EW operations. The available mining fleet consists of forty-two 235-metric-ton haul trucks loaded by six electric shovels with bucket sizes ranging from 34 to 47 cubic meters, which are capable of moving an average of 358,000 metric tons of material per day. Safford’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $1.2 billion. Safford’s copper production totaled 265 million pounds in 2021, 161 million pounds in 2020 and 110 million pounds in 2019. Safford is located in a desert environment with rainfall averaging 10 inches per year. The highest bench elevation is 1,783 meters above sea level and the ultimate pit bottom is expected to have an elevation of 823 meters above sea level. The Safford operation encompasses approximately 78,300 acres, comprising 37,700 acres of fee lands and 40,600 acres of unpatented claims held on public mineral estate. 11 Table of Contents The Safford operation’s electrical power is primarily sourced from Tucson Electric Power Company, Arizona Public Service Company and the Luna Energy facility. Although we believe the Safford operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Safford operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion. Sierrita Our wholly owned Sierrita mine has been in operation since 1959 and is an open-pit copper and molybdenum mining complex located in Pima County, Arizona, approximately 20 miles southwest of Tucson and 7 miles west of the town of Green Valley and Interstate Highway 19. The site is accessible by a paved highway and by rail. The Sierrita mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper minerals are malachite, azurite and chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite are the dominant primary sulfides. The Sierrita operation includes a concentrator with a milling design capacity of 100,000 metric tons of ore per day that produces copper and molybdenum concentrate. Sierrita also produces copper from a ROM oxide-leaching system. Cathode copper is plated at the Twin Buttes EW facility, which has a design capacity of approximately 50 million pounds of copper per year. The Sierrita operation also has molybdenum facilities consisting of a leaching circuit, two molybdenum roasters and a packaging facility. The molybdenum facilities process molybdenum concentrate produced by Sierrita, from our other mines and from third-party sources. The available mining fleet consists of twenty-four 235-metric-ton haul trucks loaded by three electric shovels with bucket sizes ranging from 34 to 56 cubic meters, which are capable of moving an average of 175,000 metric tons of material per day. Sierrita’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $722 million. Sierrita’s production totaled 189 million pounds of copper and 21 million pounds of molybdenum in 2021, 178 million pounds of copper and 17 million pounds of molybdenum in 2020, and 160 million pounds of copper and 16 million pounds of molybdenum in 2019. Sierrita is located in a desert environment with rainfall averaging 14.5 inches per year. The highest bench elevation is 1,300 meters above sea level and the ultimate pit bottom is expected to be 410 meters above sea level. The Sierrita operation, including the adjacent Twin Buttes site, encompasses approximately 47,600 acres, comprising 38,700 acres of fee lands including split estate lands and 8,900 acres of unpatented mining claims held on public mineral estate. Sierrita receives electrical power through long-term contracts with the Tucson Electric Power Company. Although we believe the Sierrita operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water rights claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Sierrita operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion. 12 Table of Contents Miami Our wholly owned Miami mine is an open-pit copper mining complex located in Gila County, Arizona, 90 miles east of Phoenix and 6 miles west of the city of Globe on U.S. Highway 60. The site is accessible by a paved highway and by rail. The Miami mine is a porphyry copper deposit that has leachable oxide and secondary sulfide mineralization. The predominant oxide copper minerals are chrysocolla, copper-bearing clays, malachite and azurite. Chalcocite and covellite are the most important secondary copper sulfide minerals. Since about 1915, the Miami mining operation had processed copper ore using both flotation and leaching technologies. The design capacity of the SX/EW plant is 200 million pounds of copper per year. Miami is no longer mining ore, but currently produces copper through leaching material already placed on stockpiles, which is currently expected to continue through at least 2025. Miami’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $4 million. Miami’s copper production totaled 12 million pounds in 2021, 17 million pounds in 2020 and 15 million pounds in 2019. Miami is located in a desert environment with rainfall averaging 18 inches per year. The highest bench elevation is 1,390 meters above sea level and mining advanced the pit bottom to an elevation of 810 meters above sea level. Subsequent sloughing of material into the pit has filled it back to an elevation estimated to be 900 meters above sea level. The Miami operation encompasses approximately 14,700 acres, comprising 10,400 acres of fee lands and 4,300 acres of unpatented mining claims held on public mineral estate. Miami receives electrical power through long-term contracts with the Salt River Project and natural gas through long-term contracts with El Paso Natural Gas as the transporter. We believe the Miami operation has sufficient water sources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. 13 Table of Contents Chino and Tyrone Chino Our wholly owned Chino mine, which has been in operation since 1910, is an open-pit copper mining complex located in Grant County, New Mexico, approximately 15 miles east of the town of Silver City off of State Highway 180. The mine is accessible by paved roads and by rail. The Chino mine is a porphyry copper deposit with adjacent copper skarn deposits. There is leachable oxide, secondary sulfide and millable primary sulfide mineralization. The predominant oxide copper mineral is chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite the dominant primary sulfides. The Chino operation consists of a concentrator with a milling design capacity of 36,000 metric tons of ore per day that produces copper concentrate, and a 150 million pound-per-year SX/EW plant that produces copper cathode from solution generated by ROM leaching. The available mining fleet consists of twenty-five 240-metric-ton haul trucks loaded by three electric shovels with bucket sizes ranging from 31 to 48 cubic meters, which are capable of moving an average of 180,000 metric tons of material per day. Chino’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $491 million. In April 2020, operations at Chino were suspended in connection with our revised operating plans in response to the COVID-19 pandemic. During first-quarter 2021, we restarted mining activities at the Chino mine at a reduced rate of approximately 100 million pounds of copper per year (approximately 50 percent capacity). Chino’s copper production totaled 124 million pounds in 2021, 92 million pounds in 2020 and 175 million pounds in 2019. Chino is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,250 meters above sea level and the ultimate pit bottom is expected to be 1,508 meters above sea level. The Chino operation encompasses approximately 122,800 acres, comprising 109,000 acres of fee lands and 13,800 acres of unpatented mining claims held on public mineral estate. Chino receives electrical power from the Luna Energy facility and from the open market. We believe the Chino operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. Tyrone Our wholly owned Tyrone mine is an open-pit copper mining complex and has been in operation since 1967. It is located in Grant County, New Mexico, 10 miles south of Silver City, New Mexico, along State Highway 90. The site is accessible by paved road and by rail. The Tyrone mine is a porphyry copper deposit. Mineralization is predominantly secondary sulfide consisting of chalcocite, with leachable oxide mineralization consisting of chrysocolla. Copper processing facilities consist of a SX/EW operation with a maximum capacity of approximately 100 million pounds of copper cathode per year. The available mining fleet consists of nine 240-metric-ton haul trucks loaded by one electric shovel with a bucket size of 47 cubic meters, which is capable of moving an average of 108,000 metric tons of material per day. Tyrone’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $90 million. 14 Table of Contents Tyrone’s copper production totaled 55 million pounds in 2021, 45 million pounds in 2020 and 48 million pounds in 2019. Tyrone is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,070 meters above sea level and the ultimate pit bottom is expected to have an elevation of 1,475 meters above sea level. The Tyrone operation encompasses approximately 80,700 acres, comprising 67,700 acres of fee lands and 13,000 acres of unpatented mining claims held on public mineral estate. Tyrone receives electrical power from the Luna Energy facility and from the open market. We believe the Tyrone operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. Henderson and Climax Henderson Our wholly owned Henderson molybdenum mine has been in operation since 1976 and is located 42 miles west of Denver, Colorado, off U.S. Highway 40. Nearby communities include the towns of Empire, Georgetown and Idaho Springs. The Henderson mill site is located 15 miles west of the mine and is accessible from Colorado State Highway 9. The Henderson mine and mill are connected by a 10-mile conveyor tunnel under the Continental Divide and an additional five-mile surface conveyor. The tunnel portal is located five miles east of the mill. The Henderson mine is a porphyry molybdenum deposit, with molybdenite as the primary sulfide mineral. The Henderson operation consists of a block-cave underground mining complex feeding a concentrator with a design capacity of approximately 32,000 metric tons per day. Henderson has the capacity to produce approximately 15 million pounds of molybdenum per year. The majority of the molybdenum concentrate produced is shipped to our Fort Madison, Iowa, processing facility. The available underground mining equipment fleet consists of fifteen 9-metric-ton load-haul-dump (LHD) units and seven 73-metric-ton haul trucks, which deliver ore to a gyratory crusher feeding a series of three overland conveyors to the mill stockpiles. Henderson’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $265 million. Henderson’s molybdenum production totaled 12 million pounds in 2021, 10 million pounds in 2020 and 12 million pounds in 2019. The Henderson mine is located in a mountainous region with the main access shaft at 3,180 meters above sea level. The main production levels are currently at elevations of 2,200 and 2,350 meters above sea level. This region experiences significant snowfall during the winter months. The Henderson mine and mill operations encompass approximately 17,200 acres, comprising 13,000 acres of fee lands, 4,200 acres of unpatented mining claims held on public mineral estate and a 50-acre easement with the U.S. Forest Service for the surface portion of the conveyor corridor. Henderson operations receive electrical power through long-term contracts with Xcel Energy and natural gas through long-term contracts with Encore Energy (with Xcel Energy as the transporter). We believe the Henderson operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. 15 Table of Contents Climax Our wholly owned Climax mine is located 13 miles northeast of Leadville, Colorado, off Colorado State Highway 91 at the top of Fremont Pass. The mine is accessible by paved roads. The mine was placed on care and maintenance status by its previous owner in 1995 and, after being acquired by us, began commercial production in 2012. The Climax ore body is a porphyry molybdenum deposit, with molybdenite as the primary sulfide mineral. The Climax open-pit mine includes a 25,000 metric tons of ore per day mill facility. Climax has the capacity to produce approximately 30 million pounds of molybdenum per year. The available mining fleet consists of eleven 177-metric-ton haul trucks loaded by two hydraulic shovels with bucket sizes of 34 cubic meters, which are capable of moving an average of 90,000 metric tons of material per day. Climax’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $1.2 billion. In April 2020, because of the decline in market prices of molybdenum, we revised our near-term operating plans, which included a reduction in production of molybdenum by approximately 50 percent at Climax. During the third quarter of 2021, Climax returned to pre-April 2020 production levels. We may increase operating rates at the Climax mine if necessary to satisfy increasing market demand for molybdenum. Molybdenum production from Climax totaled 18 million pounds in 2021, 14 million pounds in 2020 and 17 million pounds in 2019. The Climax mine is located in a mountainous region. The highest bench elevation is approximately 4,050 meters above sea level and the ultimate pit bottom is expected to have an elevation of approximately 3,100 meters above sea level. This region experiences significant snowfall during the winter months. The Climax operation encompasses approximately 15,100 acres, comprising 14,300 of privately owned land and 800 acres of federal claims. Climax operations receive electrical power through long-term contracts with Xcel Energy and natural gas through long-term contracts with Encore Energy. We believe the Climax operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. South America At our operations in South America, mine properties and facilities are controlled through mining claims or concessions under the general mining laws of the relevant country. The claims or concessions are owned or controlled by the operating companies in which we or our subsidiaries have a controlling ownership interest. Roads, power lines and aqueducts are controlled by easements. Cerro Verde We have a 53.56 percent ownership interest in Cerro Verde, with the remaining 46.44 percent held by SMM Cerro Verde Netherlands B.V. (21.0 percent), Compañia de Minas Buenaventura S.A.A. (19.58 percent) and other stockholders whose shares are publicly traded on the Lima Stock Exchange (5.86 percent). Cerro Verde is an open-pit copper and molybdenum mining complex that has been in operation since 1976 and is located 20 miles southwest of Arequipa, Peru. Prior to being acquired in 1994 by a predecessor of Phelps Dodge, the mine was previously operated by the Peru government. The property is located at latitude 16.53 degrees south 16 Table of Contents and longitude 71.58 degrees west using the WGS 84 coordinate system. The site is accessible by paved highway. Cerro Verde’s copper cathode and concentrate production that is not sold locally is transported approximately 70 miles by truck and by rail to the Port of Matarani for shipment to international markets. Molybdenum concentrate is transported by truck to either the Ports of Callao or Matarani for shipment. The Cerro Verde mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper minerals are brochantite, chrysocolla, malachite and copper “pitch.” Chalcocite and covellite are the most important secondary copper sulfide minerals. Chalcopyrite and molybdenite are the dominant primary sulfides. Cerro Verde’s operation consists of two concentrating facilities with a total milling design capacity of 360,000 metric tons of ore per day and SX/EW leaching facilities. Leach copper production is derived from a 39,000-metric-ton-per-day crushed leach facility and a 100,000-metric-ton-per-day ROM leach system. This SX/EW leaching operation has a capacity of approximately 200 million pounds of copper per year. The available fleet consists of fifty-four 300-metric-ton haul trucks and ninety-three 245-metric-ton haul trucks (21 of which are currently on standby) and three 363-metric-ton leased haul trucks loaded by thirteen electric shovels with bucket sizes ranging in size from 33 to 57 cubic meters and two hydraulic shovels with a bucket size of 21 cubic meters (both of which are currently on standby). This fleet is capable of moving an average of approximately 970,000 metric tons of material per day. Cerro Verde’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $6.1 billion. During 2021, milling rates at Cerro Verde’s concentrator facilities averaged 380,300 metric tons of ore per day. Subject to ongoing monitoring of COVID-19 protocols, Cerro Verde is targeting milling rates to increase to approximately 400,000 metric tons of ore per day in 2022. Cerro Verde’s production totaled 0.9 billion pounds of copper and 21 million pounds of molybdenum in 2021, 0.8 billion pounds of copper and 19 million pounds of molybdenum in 2020, and 1.0 billion pounds of copper and 29 million pounds of molybdenum in 2019. Cerro Verde is located in a desert environment with rainfall averaging 1.5 inches per year and is in an active seismic zone. The highest bench elevation is 2,810 meters above sea level and the ultimate pit bottom is expected to be 1,523 meters above sea level. The Peru general mining law and Cerro Verde’s mining stability agreement grant the surface rights of mining concessions located on government land. Government land obtained after 1997 must be leased or purchased. Cerro Verde has a mining concession covering approximately 178,000 acres, including 62,000 acres of surface rights and access to 14,600 acres granted through an easement from the Peru National Assets Office, plus 150 acres of owned property, and 1,151 acres of rights-of-way outside the mining concession area leased from both government agencies and private parties. Cerro Verde currently receives electrical power, including hydro-generated power, under long-term contracts with ElectroPeru and Engie Energia Peru S.A. Water for our Cerro Verde processing operations comes from renewable sources through a series of storage reservoirs on the Rio Chili watershed that collect water primarily from seasonal precipitation and from wastewater collected from the city of Arequipa and treated at a wastewater treatment plant. We believe the Cerro Verde operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. 17 Table of Contents El Abra We have a 51 percent ownership interest in El Abra, and the remaining 49 percent interest is held by the state-owned copper enterprise Corporación Nacional del Cobre de Chile. El Abra is an open-pit copper mining complex that has been in operation since 1996 and is located 47 miles north of Calama in Chile’s El Loa province, Region II. The site is accessible by paved highway and by rail. The El Abra mine is a porphyry copper deposit that has sulfide and oxide mineralization. The predominant primary sulfide copper minerals are bornite and chalcopyrite. There is a minor amount of secondary sulfide mineralization as chalcocite. The oxide copper minerals are chrysocolla and pseudomalachite. There are lesser amounts of copper bearing clays and tenorite. The El Abra operation consists of a SX/EW facility with a capacity of 500 million pounds of copper cathode per year from a 125,000-metric-ton-per-day crushed leach circuit and a ROM leaching operation. The available fleet consists of twenty-three 242-metric-ton haul trucks loaded by four electric shovels with buckets ranging in size from 29 to 41 cubic meters, which are capable of moving 217,000 metric tons of material per day. El Abra’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $707 million. In April 2020, we revised our operating plans at El Abra. During 2021, El Abra returned to pre-April 2020 production levels. Further, increased mining and stacking activities are expected to result in a 30 percent increase in El Abra copper production for the year 2022, compared with the year 2021. El Abra’s copper production totaled 160 million pounds in 2021, 159 million pounds in 2020 and 180 million pounds in 2019. 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 the 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, and we are engaging stakeholders and preparing data required for submission of a robust permit application. We are monitoring potential changes in regulatory and fiscal matters in Chile and will defer major investment decisions pending clarity on these matters. El Abra is located in a desert environment with rainfall averaging less than one inch per year and is in an active seismic zone. The highest bench elevation is 4,225 meters above sea level and the ultimate pit bottom is expected to be 3,385 meters above sea level. El Abra controls a total of approximately 183,600 acres of mining claims covering the ore deposit, stockpiles, process plant, and water wellfield and pipeline. In addition, El Abra has land surface rights for the road between the processing plant and the mine, the water wellfield, power transmission lines and for the water pipeline from the Salar de Ascotán aquifer. El Abra currently receives electrical power under a long-term contract with Engie Energia Chile S.A. Water for our El Abra processing operations comes from the continued pumping of groundwater from the Salar de Ascotán aquifer pursuant to regulatory approval. We believe El Abra has sufficient water rights and regulatory approvals to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion. 18 Table of Contents Indonesia Ownership . PT-FI is a limited liability company organized under the laws of the Republic of Indonesia. On December 21, 2018, we completed the transaction with the Indonesia government regarding PT-FI’s long-term mining rights and share ownership (the 2018 transaction). Following the 2018 transaction, we have a 48.76 percent share ownership in PT-FI and the remaining 51.24 percent share ownership is collectively held by PT Indonesia Asahan Aluminum (Persero) (PT Inalum, also known as MIND ID), an Indonesia state-owned enterprise, and PT Indonesia Papua Metal Dan Mineral (formerly known as PT Indocopper Investama), which is expected to be owned by PT Inalum and the provincial/regional government in Papua, Indonesia. The arrangements related to the 2018 transaction also provide for us and the other pre-transaction PT-FI shareholders to initially retain the economics of the revenue and cost sharing arrangements under the former unincorporated joint venture with Rio Tinto plc (Rio Tinto). As a result, our economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.76 percent thereafter. IUPK . Concurrent with closing the 2018 transaction, the Indonesia government granted PT-FI a new special mining license (IUPK) to replace its former Contract of Work (COW), enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041, subject to PT-FI completing the construction of additional domestic smelting capacity in Indonesia (the schedule for which is under discussion) and fulfilling its defined fiscal obligations to the Indonesia government. The IUPK, and related documentation, contains legal and fiscal terms and is legally enforceable through 2041. In addition, we, as a foreign investor, have rights to resolve investment disputes with the Indonesia government through international arbitration. Refer to Note 13 and Item 1A. “Risk Factors” for discussion of PT-FI’s IUPK and risks associated with our Indonesia mining operations. In March 2021, PT-FI received a one-year extension of its export license through March 15, 2022. Export licenses are valid for a one year period, subject to review and approval by the Indonesia government every six months, depending on greenfield smelter development progress. Indonesia Smelter Capacity . Under the terms of the IUPK, PT-FI has been granted mining rights through 2031, with rights to extend its mining rights through 2041, subject to, among other things, PT-FI’s completion of construction of additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (an extension of which has been requested due to COVID-19 mitigation measures subject to the approval of the Indonesia government), and fulfilling its defined fiscal obligations to the Indonesia government. During 2020, PT-FI notified the Indonesia government of schedule delays resulting from the COVID-19 pandemic and continues to discuss with the Indonesia government a deferred schedule for development of the greenfield smelter. Refer to Item 1A. “Risk Factors,” MD&A and Notes 12 and 13 for additional discussion of the Indonesia smelter projects. 19 Table of Contents Grasberg Minerals District . PT-FI operates in the remote highlands of the Sudirman Mountain Range in the province of Papua, Indonesia, which is on the western half of the island of New Guinea. Since 1967, we and our predecessors have been the only operator of exploration and mining activities in the approximately 24,600-acre operating area. The operating area is accessible by portsite facilities (Arafura Sea) and by the Timika airport. The project site is located at latitude 4.08 degrees south and longitude 137.12 degrees east using the WGS 84 coordinate system. The project area includes a 70-mile main service road from portsite to the mill complex. The Grasberg minerals district includes the following underground mines that are being operated; the Grasberg Block Cave, the Deep Mill Level Zone (DMLZ) and Big Gossan. During 2021, we began development of the Kucing Liar underground ore body and the Deep Ore Zone (DOZ) underground mine ceased production. The ramp-up of underground production at the Grasberg minerals district in Indonesia continues to advance on schedule. During 2021, a total of 139 new drawbells were added at the Grasberg Block Cave and DMLZ underground mines, bringing cumulative open drawbells to 510. Refer to Item 1A. “Risk Factors” for discussion of risks associated with development projects and underground mines. Production from the Grasberg minerals district totaled 1.3 billion pounds of copper and 1.4 million ounces of gold in 2021, 0.8 billion pounds of copper and 0.8 million ounces of gold in 2020, and 0.6 billion pounds of copper and 0.9 million ounces of gold in 2019. PT-FI’s net property, plant, equipment and mine development costs at December 31, 2021, totaled $15.1 billion. Our principal source of power for our Indonesia operations is a coal-fired power plant that we built in 1998. Diesel generators supply peaking and backup electrical power generating capacity; however, beginning in 2022, our new dual-fuel power plant is expected eventually to provide up to approximately 40 percent of PT-FI’s power needs. A combination of naturally occurring mountain streams and water derived from our underground operations provides water for our operations. Our Indonesia operations are in an active seismic zone and experience average annual rainfall of approximately 200 inches. Grasberg Block Cave Underground Mine The Grasberg Block Cave ore body is the same ore body historically mined from the surface in the Grasberg open pit. Undercutting, drawbell construction and ore extraction activities in the Grasberg Block Cave underground mine continue to track expectations. Monitoring data on cave propagation in the Grasberg Block Cave underground mine is providing confidence in growing production rates over time. As existing drawpoints mature and additional drawpoints are added, cave expansion is expected to accelerate production rates to an average of over 105,000 metric tons of ore per day in 2022 and 122,000 metric tons of ore per day in 2023 from five production blocks spanning 335,000 square meters. As of December 31, 2021, the Grasberg Block Cave underground mine had 336 open drawbells. Ore milled from the Grasberg Block Cave underground mine averaged 70,600 metric tons per day in 2021, 30,800 metric tons per day in 2020 and 8,600 metric tons per day in 2019. Production at the Grasberg Block Cave underground mine is expected to continue through 2041. The Grasberg Block Cave fleet consists of approximately 580 pieces of mobile equipment. The primary mining equipment directly associated with production and development includes an available fleet of 88 LHD units and 33 haul trucks. Each production LHD unit typically carries approximately 11 metric tons of ore and transfers ore into the rail haulage system. The Grasberg Block Cave has a rail haulage system currently operating with 10 locomotives and 120 ore wagons that haul the ore to the first 2 of the 3 planned gyratory crushers located underground via an automated rail system. Each ore wagon typically carries 30 metric tons. DMLZ Underground Mine The DMLZ ore body lies below the DOZ underground mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. The DMLZ has continued its ramp-up of production. Hydraulic fracturing operations have been effective in managing rock stresses and pre-conditioning the cave following mining-induced seismic activity experienced from time to time. Ongoing hydraulic fracturing operations combined with continued undercutting and drawbell openings in the two currently active production blocks are expected to expand the cave, supporting higher production rates that are expected to average approximately 68,000 metric tons of ore per day in 2022 and 69,000 metric tons of ore per day in 2023 from three production blocks. As of December 31, 2021, the DMLZ underground mine had 174 open drawbells. 20 Table of Contents Ore milled from the DMLZ underground mine averaged 58,000 metric tons per day in 2021, 28,600 metric tons per day in 2020 and 9,800 metric tons per day in 2019. Production at the DMLZ underground mine is expected to continue through 2041. The DMLZ fleet consists of over 390 pieces of mobile equipment, which includes 63 LHD units and 34 haul trucks used in production and development activities. Each production LHD unit typically carries approximately 11 metric tons of ore and transfers ore into the truck haulage system. The haul trucks have a capacity of 55 to 60 metric tons and load ore from chutes fed by the LHDs and transfer it to one of two gyratory crushers. The crushed ore is conveyed to surface stockpiles for processing. Big Gossan Underground Mine The Big Gossan ore body lies underground and adjacent to the current mill site. It is a tabular, near vertical ore body with approximate dimensions of 1,200 meters along strike and 800 meters down dip with varying thicknesses from 20 meters to 120 meters. The mine utilizes a blasthole stoping method with delayed paste backfill. Stopes of varying sizes are mined and the ore dropped down passes to a truck haulage level. Trucks are chute loaded and transport the ore to a jaw crusher. The crushed ore is then hoisted vertically via a two-skip production shaft to a level where it is loaded onto a conveyor belt. The belt carries the ore to one of the main underground conveyors where the ore is transferred and conveyed to the surface stockpiles for processing. Ore milled from the Big Gossan underground mine averaged approximately 7,500 metric tons per day in 2021, 7,000 metric tons per day in 2020 and 6,100 metric tons per day in 2019. Production at the Big Gossan underground mine is expected to continue through 2041. The Big Gossan fleet consists of over 90 pieces of mobile equipment, which includes 14 LHD units and 10 haul trucks used in development and production activities. Kucing Liar Underground Mine PT-FI commenced long-term mine development activities for its Kucing Liar deposit in October 2021, which is expected to produce over 6 billion pounds of copper and 5 million ounces of gold between 2028 and the end of 2041. The Kucing Liar underground deposit lies on the southern flank of and underneath the southern portion of the Grasberg open pit at the 2,605-meter elevation level. Similar to PT-FI's experience with large-scale, block-cave mines, pre-production development activities will occur over an approximate 10-year timeframe. At full operating rates of 90,000 metric tons of ore per day, annual production from Kucing Liar is expected to approximate 600 million pounds of copper and 500,000 ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Capital investments for Kucing Liar over the next 10 years are expected to average approximately $400 million per year. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining. DOZ Underground Mine The DOZ ore body lies vertically below the depleted Intermediate Ore Zone. PT-FI began production from the DOZ ore body in 1989 and the ore body was depleted at the end of 2021. Ore milled from the DOZ underground mine averaged 8,700 metric tons per day in 2021, 20,900 metric tons per day in 2020 and 25,500 metric tons per day in 2019. Grasberg Open Pit PT-FI began open-pit mining of the Grasberg ore body in 1990 and the final phase was mined during 2019. In aggregate, the Grasberg open pit produced over 27 billion pounds of copper and 46 million ounces of gold in the 30-year period from 1990 through 2019. Description of Indonesia Ore Bodies . Our Indonesia ore bodies are located within and around two main igneous intrusions, the Grasberg monzodiorite and the Ertsberg diorite. The host rocks of these ore bodies include both carbonate and clastic rocks that form the ridge crests and upper flanks of the Sudirman Range, and the igneous rocks of monzonitic to dioritic composition that intrude them. The igneous-hosted ore bodies (the Grasberg Block Cave and portions of the DMLZ) occur as vein stockworks and disseminations of copper sulfides, dominated by chalcopyrite and, to a lesser extent, bornite. The sedimentary-rock hosted ore bodies (portions of the DMLZ and Kucing Liar and all of the Big Gossan) occur as “magnetite-rich, calcium/magnesian skarn” replacements, whose location and orientation are strongly influenced by major faults and by the chemistry of the carbonate rocks along the margins of the intrusions. 21 Table of Contents The copper mineralization in these skarn deposits is dominated by chalcopyrite, but higher bornite concentrations are common. Moreover, gold occurs in significant concentrations in all of the district’s ore bodies, though rarely visible to the naked eye. These gold concentrations usually occur as inclusions within the copper sulfide minerals, though, in some deposits, these concentrations can also be strongly associated with pyrite. The following diagram indicates the relative elevations (in meters) of our reported Indonesia ore bodies. The following map, which encompasses an area of 42 square kilometers, indicates the relative positions and sizes of our reported Indonesia ore bodies and their locations. 22 Table of Contents Smelting Facilities and Other Mining Properties Atlantic Copper . Our wholly owned Atlantic Copper smelter and refinery is located on land concessions from the Huelva, Spain, port authorities, which are scheduled to expire in 2039. The design capacity of the smelter is approximately 300,000 metric tons of copper per year, and the refinery has a capacity of 286,000 metric tons of copper per year. Atlantic Copper’s anode production from its smelter totaled 278,600 metric tons of copper in 2021, 275,900 metric tons in 2020 and 272,000 metric tons in 2019. Copper cathode production from its refinery totaled 277,000 metric tons of copper in 2021, 275,000 metric tons in 2020 and 268,300 metric tons in 2019. Following is the allocation of Atlantic Copper’s concentrate purchases from unaffiliated third parties and our copper mining operations for the years ended December 31: 2021 2020 2019 Third parties 66 % 79 % 73 % North America copper mines 18 10 22 Indonesia mining 9 4 3 South America mining 7 7 2 100 % 100 % 100 % Atlantic Copper’s major maintenance turnarounds typically occur approximately every eight years, with shorter-term maintenance turnarounds in the interim. Atlantic Copper last completed a major maintenance turnaround in 2013 and most recently completed a 16-day maintenance turnaround in 2019. The next major maintenance turnaround is scheduled for the first half of 2022. PT Smelting . PT Smelting, an Indonesia company, owns and operates a copper smelter and refinery in Gresik, Indonesia. On April 30, 2021, PT-FI acquired an additional 14.5 percent of the outstanding common stock of PT Smelting for $33 million, increasing its ownership interest to 39.5 percent. Mitsubishi Materials Corporation owns the remaining 60.5 percent. In November 2021, PT-FI completed agreements with Mitsubishi Materials Corporation to implement the expansion of PT Smelting’s capacity by 30 percent to 1.3 million metric tons of concentrate per year, which is expected to be completed by the end of 2023 in connection with PT-FI’s commitment to develop additional smelting capacity in Indonesia. Refer to Note 2 for discussion of PT-FI’s loan to PT Smelting. 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. PT-FI supplied 100 percent of PT Smelting’s concentrate requirements in 2021, 74 percent in 2020 and 90 percent in 2019. In early 2017, the Indonesia government issued new regulations to address exports of unrefined metals, including copper concentrate and anode slimes, and other matters related to the mining sector. These regulations permit the export of anode slimes, which is necessary for PT Smelting to continue operating. In December 2021, PT Smelting received a twelve-month extension of its anode slimes export license, which currently expires December 9, 2022, subject to review and approval by the Indonesia government every six months. Refer to Item 1A. “Risk Factors” for further discussion. PT Smelting’s anode production from its smelter totaled 280,400 metric tons of copper in 2021, 276,900 metric tons in 2020 and 246,100 metric tons in 2019. Copper cathode production from its refinery totaled 256,900 metric tons of copper in 2021, 273,000 metric tons in 2020 and 241,200 metric tons in 2019. PT Smelting’s maintenance turnarounds (which range from two weeks to a month to complete) typically are expected to occur approximately every two years, with short-term maintenance turnarounds in the interim. PT Smelting completed a 30-day maintenance turnaround during December 2020, and the next major turnaround is scheduled for the second half of 2022. In addition, PT Smelting has a planned 75-day shutdown scheduled for the first half of 2023 associated with its expansion project. 23 Table of Contents Miami Smelter . We own and operate a smelter at our Miami mining operation in Arizona. The smelter has been operating for over 100 years and has been upgraded numerous times during that period to implement new technologies, improve production and comply with air quality requirements. The Miami smelter processes copper concentrate primarily from our North America copper mines. Concentrate processed through the smelter totaled 674,000 metric tons in 2021, 764,000 metric tons in 2020 and 641,000 metric tons in 2019. In addition, because sulfuric acid is a by-product of smelting concentrate, the Miami smelter is also the most significant source of sulfuric acid for our North America leaching operations. Major maintenance turnarounds are anticipated to occur approximately every two or three years for the Miami smelter. We performed a major maintenance turnaround during 2021. The next major maintenance turnaround is scheduled for the first half of 2024. Rod & Refining Operations . Our Rod & Refining operations consist of conversion facilities located in North America, including a refinery in El Paso, Texas and rod mills in El Paso, Texas, and Miami, Arizona. We refine our copper anode production from our Miami smelter at our El Paso refinery. The El Paso refinery has the potential to operate at an annual production capacity of about 900 million pounds of copper cathode, which is sufficient to refine all of the copper anode we produce at our Miami smelter. Our El Paso refinery also produces nickel carbonate, copper telluride and autoclaved slimes material containing gold, silver, platinum and palladium. Molybdenum Conversion Facilities . We process molybdenum concentrate at our conversion plants in the U.S. and Europe into such products as technical-grade molybdic oxide, ferromolybdenum, pure molybdic oxide, ammonium molybdates and molybdenum disulfide. We operate molybdenum roasters in Sierrita, Arizona; Fort Madison, Iowa; and Rotterdam, the Netherlands, and we operate a molybdenum pressure-leach plant in Bagdad, Arizona. We also produce ferromolybdenum for customers worldwide at our conversion plant located in Stowmarket, United Kingdom. Other North America Copper Mines . We have five non-operating copper mines - Ajo, Bisbee, Tohono, Twin Buttes and Christmas, which are located in Arizona - that have been on care and maintenance status for several years and would require new or updated environmental studies, new permits, and additional capital investment, which could be significant, to return them to operating status. MINING DEVELOPMENT PROJECTS AND EXPLORATION ACTIVITIES Capital expenditures totaled $2.1 billion (including $1.25 billion for major projects and $0.2 billion for Indonesia smelter projects) in 2021, $2.0 billion (including $1.2 billion for major projects and $0.1 billion for Indonesia smelter projects) in 2020 and $2.65 billion (including $1.5 billion for major projects) in 2019. Capital expenditures for major projects during 2021, 2020 and 2019 were primarily associated with underground development activities in the Grasberg minerals district and the Lone Star copper leach project at our Safford mine, which was completed in the second half of 2020. Refer to MD&A for projected capital expenditures for the year 2022. We have several projects and potential opportunities to expand production volumes, extend mine lives and develop large-scale underground ore bodies. As further discussed in MD&A, our near-term major development projects will focus on the underground development activities in the Grasberg minerals district. Considering the long-term nature and large size of our development projects, actual costs and timing could vary from estimates. Additionally, in response to market conditions, the timing of our expenditures will continue to be reviewed. We continue to review our mine development and processing plans to maximize the value of our mineral reserves. Additionally, full development of PT-FI’s underground mineral reserves at the Grasberg minerals district is expected to require approximately $3 billion (most of which will be incurred over an approximate 12-year period) of capital expenditures at our processing facilities to optimize the handling of underground ore from the Grasberg Block Cave, DMLZ and Kucing Liar deposits. Increases in power loads at these processing facilities and the underground mines are expected to require additional power generation with capital expenditures approximating $0.6 billion for new dual-fuel power generation, upgrades to existing transmission lines, and refurbishment of the existing three coal units. 24 Table of Contents Our mining exploration activities are primarily associated with our existing mines, focusing on opportunities to expand mineral reserves and mineral resources to support development of additional future production capacity. Exploration results continue to indicate opportunities for significant future potential reserve additions at our existing properties in North America and South America. Exploration spending associated with mining operations totaled $50 million in 2021, $34 million in 2020 and $77 million in 2019. Refer to Item 1A. “Risk Factors” for further discussion of risks associated with mine development projects and exploration activities, and PT-FI’s IUPK. SOURCES AND AVAILABILITY OF ENERGY, NATURAL RESOURCES AND RAW MATERIALS Our copper mining operations require significant amounts of energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy represented approximately 21 percent of our copper mine site operating costs in 2021, including purchases of approximately 220 million gallons of diesel fuel; approximately 8,000 gigawatt hours of electricity at our North America and South America copper mining operations (we generate all of our power at our Indonesia mining operation); approximately 750 thousand metric tons of coal for our coal power plant in Indonesia; and approximately 1 million MMBtu (million British thermal units) of natural gas at certain of our North America mines. Based on current cost estimates, energy is expected to approximate 25 percent of our copper mine site operating costs in 2022. Our mining operations also require significant quantities of water for mining, ore processing and related support facilities. The loss of water rights for any of our mines, in whole or in part, or shortages of water to which we have rights, could require us to curtail or shut down mining operations. For a further discussion of risks and legal proceedings associated with the availability of water, refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings.” Sulfuric acid is used in the SX/EW process and is produced as a by-product of the smelting process at our smelters and from our sulfur burners at the Safford mine. Sulfuric acid needs in excess of the sulfuric acid produced by our operations are purchased from third parties. HUMAN CAPITAL We are committed to promoting the health, safety and well-being of our workforce and striving to further strengthen our commitment to promoting an inclusive, diverse and agile workplace. We believe our global workforce is the foundation of our success. Our Board of Directors (Board) oversees our policies and implementation programs that govern our approach to management of our human capital, with the Board’s Corporate Responsibility Committee having oversight of health and safety matters and the Board’s Compensation Committee having oversight of other human capital matters, including those relating to workforce recruitment, retention and development, pay equity and inclusion and diversity. Workforce At December 31, 2021, we had approximately 24,700 employees (11,600 in North America, 6,100 in Indonesia, 6,000 in South America and 1,000 in Europe and other locations). We also had contractors that employ personnel at many of our operations, including approximately 22,200 at the Grasberg minerals district in Indonesia, 13,600 in North America, 6,100 at our South America mining operations and 600 in Europe and other locations. Approximately 31 percent of our global employee population is covered by collective labor agreements (CLA), with 14 percent covered by a CLA that will or was scheduled to expire in 2022. In North America, our workforce is not covered by a CLA. Our North America hourly employees choose to work directly with management utilizing our Guiding Principles, which sets out how we work together within the values of the company to achieve our collective goals. 25 Employees covered by CLAs on December 31, 2021, are listed below, with the number of employees covered and the expiration date of the applicable CLA: Location Number of Unions Number of Union- Represented Employees Expiration Date PT-FI - Indonesia 3 2,990 March 2022 a Cerro Verde - Peru 2 3,183 August 2024 and August 2025 El Abra - Chile 2 781 April 2023 Atlantic Copper - Spain 3 517 December 2022 Rotterdam - The Netherlands 1 55 September 2022 Stowmarket - United Kingdom 1 40 May 2023 a. In February 2022, PT-FI completed negotiations with its unions on a new two-year CLA that is effective through March 2024. We engage openly with our employee and union leadership to negotiate and uphold labor agreements, recognizing that labor disruptions such as prolonged strikes or other work stoppages can adversely affect our business operations, our workforce and regional stakeholders. There were no strikes or lockouts at any of our operations in 2021. Health and Safety Our highest priority is the health, safety and well-being of our employees and contractors. We also instill health and safety processes for our suppliers and the communities where we operate. We believe that health and safety considerations are integral to, and fundamental for, all other functions in our organization, and we understand that the health and safety of our workforce is critical to our operational efficiency and long-term success. Our global health and safety approach, “Safe Production Matters,” is focused on fatality prevention and continuous improvement through the use of robust management systems, empowering safe work behaviors and strengthening our safety culture. We focus on fatality prevention through the use of data and technology as well as behavioral science principles. Our framework for managing risks and compliance obligations is certified company wide in accordance with the new ISO 45001 Health and Safety Management System (ISO 45001), most recently certified in September 2021. ISO 45001 requires third-party site-level verification of requirements, with a goal to prevent fatalities and reduce safety incidents. As part of our commitment to providing a safe and healthy workplace, we strive to provide the training, tools and resources needed so our workforce can identify risks and consistently apply effective controls. We share information and key learnings about potentially fatal events, near misses and best practices throughout the company and engage with industry peers outside the organization to continuously improve our health and safety performance. We also review and discuss all fatalities with the Corporate Responsibility Committee and the Board. Our objective is to achieve zero workplace fatalities and to decrease injuries and occupational illnesses. We measure our safety performance through regularly established benchmarks, including our company-wide Total Recordable Incident Rate (TRIR), which includes both employees and contractors. In 2021, regrettably, we had 3 workplace fatal events, 2 work related and 1 not yet classified as either an independent medical episode or work related, and 17 potential fatal events (PFEs), compared to 5 fatalities and 12 PFEs in 2020. Overall, the percentage of high risk incidents has trended down from 11 percent in 2019 to 7 percent in 2020 and 2021. Our TRIR per 200,000 man-hours worked was 0.69 in both 2021 and 2020, meeting our 2021 and 2020 targets. The metal mining sector industry average per 200,000 man-hours worked reported by MSHA was 1.70 for 2021 (preliminary for the period of January 1, 2021, through September 30, 2021) and 1.66 in 2020. In 2021, we continued to take steps to protect our workforce from COVID-19, including by continuing operating protocols at each of our operating sites to contain and mitigate the risk of spread of COVID-19. We will continue to monitor, assess and update our COVID-19 response and to provide assistance to employees in obtaining vaccinations. We are committed to the communities where we operate and continue to work closely with them, including providing monetary support and in-kind contributions of medical supplies and food. To support our 26 employees around the world, we adjusted our policies for sick leave and other pay practices to encourage ill employees to stay home. We also implemented a policy to allow those who can work remotely to do so. During the pandemic and looking beyond, we have committed to maintaining health benefits and offer guidance resources to support mental and physical well-being. Employee Engagement, Training and Development We operate in regions of varying ethnic, religious and cultural backgrounds, and we often are the largest employer in our local communities. A key to our success is the ability to recruit, retain, develop and advance talented employees with diverse perspectives. In addition to the health, safety and well-being of our global workforce, we have prioritized a flexible, highly engaged and agile workforce. The COVID-19 pandemic has amplified our focus on the need for, and receptivity to, innovation across all facets of the business, particularly in how we communicate, engage and collaborate across our global workforce in a more virtual environment. We are committed to ongoing training and development of our workforce. We focus on attracting and retaining talented people by offering quality employment with competitive compensation and benefits as well as opportunities for professional development and growth. Strategic talent reviews and succession planning occur regularly and across all business areas. To support the advancement of our employees, we offer training and development programs encouraging advancement from within and continue to promote strong and experienced management talent. We leverage both formal and informal programs to identify, foster and retain top talent at both the corporate and operations levels. Additionally, hiring locally is a commitment we make to the communities surrounding our operations and to our host countries. Most people employed at our operations are host country nationals. We retain expatriate expertise for managerial and technical roles only when it is not available in local communities. To further these efforts, expatriates receive cultural training upon their arrival to a new location. Inclusion and Diversity We are committed to fostering a culture that is safety focused, respectful, inclusive and representative of the communities where we operate. We respect and value the different ideas, beliefs, experiences, talents, skills, perspectives, backgrounds and cultures of our workforce. We strive for, promote and foster a workplace where everyone feels a sense of belonging, is treated with respect and their opinions are valued. We believe an inclusive environment gives our people the confidence to speak up, share ideas that drive innovation, and achieve operational excellence. Our inclusive environment is the foundation of our high-performance culture and is paramount to the long-term sustainable success of our business. Our inclusion and diversity principles align with our core values of safety, respect, integrity, excellence and commitment, and are reflected in our Inclusion and Diversity Policy, our Principles of Business Conduct and other related policies. Refer to Item 1A. “Risk Factors” for further information on human capital matters. COMMUNITY AND HUMAN RIGHTS We have adopted policies that govern our working relationships with the communities where we operate and that are designed to guide our practices and programs in a manner that respects human rights and the culture of the local people impacted by our operations. 27 We continue to make significant expenditures on community development, health, education, training and cultural programs, which include: • comprehensive job training programs • clean water and sanitation projects • public health programs, including malaria control and human immunodeficiency virus • agricultural assistance programs • small and medium enterprise development programs • basic education programs • cultural promotion and preservation programs • community infrastructure development • charitable donations In 2000, we endorsed the joint U.S. State Department-British Foreign Office Voluntary Principles on Human Rights and Security (Voluntary Principles). We participated in developing these Voluntary Principles with other major natural resource companies and international human rights organizations and they are incorporated into our human rights policy. The Voluntary Principles provide guidelines for our security programs, including interaction with host-government security personnel, private security contractors and our internal security employees. Our human rights policy, most recently updated in December 2020, reflects our commitment to implementing the United Nations Guiding Principles on Business and Human Rights. We have embarked on a program to plan and conduct site-level human rights impact assessments (HRIA) at our global operations. HRIAs help us to embed human rights considerations into our business practices, including site-level sustainable development risk registers. We completed a HRIA at our Cerro Verde operation in Peru in 2017 and at our New Mexico mining operations in 2018. During 2021, we substantially completed a HRIA at our El Abra operations in Chile and began a comprehensive HRIA for all of our Arizona sites including Morenci, Bagdad, Safford, Sierrita and Miami, which we expect to complete in the first half of 2022. We also participate in a multi-industry human rights working group to gain insight from peer companies and experts in the field to learn how best practices are evolving. We believe that our social and economic development programs are responsive to the issues raised by the local communities near our areas of operation and help us maintain good relations with the surrounding communities and avoid disruptions of mining operations. As part of our ongoing commitment to our community stakeholders, we have made and expect to continue making investments in certain social programs, including in-kind support and administration, across our global operations from time to time. Over the last three years, these investments have averaged $124 million per year. Nevertheless, social and political instability in the areas of our operations may adversely impact our mining operations. Refer to Item 1A. “Risk Factors” for further discussion. South America . Cerro Verde has provided a variety of community support projects over the years. Following engagements with regional and local governments, civic leaders and development agencies, in 2006, Cerro Verde committed to support the costs for a new potable water treatment plant to serve Arequipa. In addition, an agreement was reached with the Peru government for development of a water storage network that was financed by Cerro Verde and a distribution network that was financed by the Cerro Verde Civil Association. Cerro Verde reached an agreement with the Regional Government of Arequipa, the National Government, the local water utility company and other local institutions to allow it to finance, engineer and construct a wastewater treatment plant for the city of Arequipa, which was completed in 2015. The wastewater treatment plant supplements existing water supplies to support Cerro Verde’s concentrator expansion and also improves the local water quality, enhances agriculture products grown in the area and reduces the risk of waterborne illnesses. In addition to these projects, Cerro Verde annually makes significant community development investments in the Arequipa region. Security Matters . Consistent with our operating permits in Peru and our commitment to protect our employees and property, we have taken steps to provide a safe and secure working environment. As part of its security program, Cerro Verde maintains its own internal security department. Both employees and contractors perform functions such as protecting company facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The security department receives human rights and Voluntary Principles training annually. Some contractors assigned to protection of expatriate personnel are armed. These contractors also receive training in defensive driving and firearms handling. Cerro Verde’s costs for its internal civilian security department totaled $7 million in both 2021 and 2020 and $9 million in 2019. 28 Cerro Verde, like all businesses and residents of Peru, relies on the Peru government for the maintenance of public order, upholding the rule of law and the protection of personnel and property. The Peru government is responsible for employing police personnel and directing their operations. Cerro Verde has limited public security forces in support of its operation, with the arrangement defined through a memorandum of understanding with the Peru National Police. Cerro Verde’s share of support costs for government-provided security approximated $1 million in each of the years 2021, 2020 and 2019. Indonesia . In 1996, PT-FI established the Freeport Partnership Fund for Community Development (the Partnership Fund) through which PT-FI has made available funding and technical assistance to support community development initiatives in the areas of health, education, economic development and local infrastructure. PT-FI has committed to provide funding based on a percentage of its revenues through 2041 for the development of the local communities in its area of operations through the Partnership Fund. PT-FI incurred costs of $75 million in 2021, $36 million in 2020 and $28 million in 2019 for this commitment. Throughout 2019, PT-FI consulted with key stakeholders to restructure the management of the Partnership Fund in compliance with PT-FI’s IUPK. Throughout this process, PT-FI continued its contributions to ensure no disruptions in implementation of approved projects. Beginning in February 2020, the Partnership Fund is now managed by a legally recognized Indonesia foundation ( Yayasan Pemberdayaan Masyarakat Amungme dan Kamoro or YPMAK). YPMAK is governed by a Board of Governors consisting of seven representatives, including four from PT-FI. In addition to the Partnership Fund, PT-FI has made and expects to continue making annual investments in public health, education, community infrastructure and local economic development. Security Matters . Consistent with our ongoing commitment to protect our employees and property, we have taken steps to provide a safe and secure working environment. As part of its security program, PT-FI maintains its own internal civilian security department. Both employees and contractors are unarmed and perform functions such as protecting company facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The security department receives human rights training annually. PT-FI’s costs for its internal civilian security department totaled $50 million in 2021, $47 million in 2020 and $52 million in 2019. PT-FI, like all businesses and residents of Indonesia, relies on the Indonesia government for the maintenance of public order, upholding the rule of law and protection of personnel and property. The Grasberg minerals district has been designated by the Indonesia government as one of Indonesia’s vital national assets. This designation results in the police, and to a lesser extent, the military, playing a significant role in protecting the area of our operations. The Indonesia government is responsible for employing police and military personnel and directing their operations. From the outset of PT-FI’s operations, the Indonesia government has looked to PT-FI to provide logistical and infrastructure support and assistance for these necessary services because of the limited resources of the Indonesia government and the remote location of and lack of development in Papua. PT-FI’s financial support of the Indonesia government security institutions assigned to PT-FI’s operations area represents a prudent response to PT-FI’s requirements and commitments to protect its workforce and property better ensuring that personnel are properly fed and lodged and have the logistical resources to patrol PT-FI’s roads and secure its area of operations. In addition, the provision of such support is consistent with our philosophy of responsible corporate citizenship, and reflects our commitment to pursue practices that protect and respect human rights. PT-FI’s support costs for the government-provided security totaled $25 million in 2021 and $22 million in both 2020 and 2019. This supplemental support consists of various infrastructure and other costs, including food, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military and police. Refer to Item 1A. “Risk Factors” for further discussion of security risks in Indonesia. 29 MINING PRODUCTION AND SALES DATA Years Ended December 31, Production Sales COPPER (millions of recoverable pounds) 2021 2020 2019 2021 2020 2019 (FCX’s net interest in %) North America Morenci (72%) a 631 707 730 632 711 717 Bagdad (100%) 184 216 218 185 213 218 Safford (100%) 265 161 110 252 150 111 Sierrita (100%) 189 178 160 187 177 157 Miami (100%) 12 17 15 13 16 15 Chino (100%) 124 92 175 114 108 174 Tyrone (100%) 55 45 48 53 45 49 Other (100%) — 2 1 — 2 1 Total North America 1,460 1,418 1,457 1,436 1,422 1,442 South America Cerro Verde (53.56%) 887 820 1,003 888 825 1,002 El Abra (51%) 160 159 180 167 151 181 Total South America 1,047 979 1,183 1,055 976 1,183 Indonesia Grasberg minerals district (48.76%) b 1,336 809 607 1,316 804 667 Consolidated 3,843 3,206 3,247 3,807 c 3,202 c 3,292 c Less noncontrolling interests 741 610 668 741 608 679 Net 3,102 2,596 2,579 3,066 2,594 2,613 Average realized price per pound $ 4.33 $ 2.95 $ 2.73 GOLD (thousands of recoverable ounces) North America (100%) 11 9 19 11 13 18 Indonesia (48.76%) b 1,370 848 863 1,349 842 973 Consolidated 1,381 857 882 1,360 855 991 Less noncontrolling interests 257 159 162 252 158 182 Net 1,124 698 720 1,108 697 809 Average realized price per ounce $ 1,796 $ 1,832 $ 1,415 MOLYBDENUM (millions of recoverable pounds) Henderson (100%) 12 10 12 N/A N/A N/A Climax (100%) 18 14 17 N/A N/A N/A North America copper mines (100%) a 34 33 32 N/A N/A N/A Cerro Verde (53.56%) 21 19 29 N/A N/A N/A Consolidated 85 76 90 82 80 90 Less noncontrolling interest 10 9 13 9 10 13 Net 75 67 77 73 70 77 Average realized price per pound $ 15.56 $ 10.20 $ 12.61 a. Amounts are net of Morenci’s joint venture partners’ undivided interest. b. Our economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.76 percent thereafter (refer to Note 3 for further discussion). c. Consolidated sales volumes exclude purchased copper of 173 million pounds in 2021, 290 million pounds in 2020 and 379 million pounds in 2019. 30 SELECTED OPERATING DATA Years Ended December 31, 2021 2020 2019 2018 2017 CONSOLIDATED MINING Copper (millions of recoverable pounds) Production 3,843 3,206 3,247 3,813 3,737 Sales, excluding purchases 3,807 3,202 3,292 3,811 3,700 Average realized price per pound $ 4.33 $ 2.95 $ 2.73 $ 2.91 $ 2.93 Gold (thousands of recoverable ounces) Production 1,381 857 882 2,439 1,577 Sales, excluding purchases 1,360 855 991 2,389 1,562 Average realized price per ounce $ 1,796 $ 1,832 $ 1,415 $ 1,254 $ 1,268 Molybdenum (millions of recoverable pounds) Production 85 76 90 95 92 Sales, excluding purchases 82 80 90 94 95 Average realized price per pound $ 15.56 $ 10.20 $ 12.61 $ 12.50 $ 9.33 NORTH AMERICA COPPER MINES Operating Data, Net of Joint Venture Interests a Copper (millions of recoverable pounds) Production 1,460 1,418 1,457 1,404 1,518 Sales, excluding purchases 1,436 1,422 1,442 1,428 1,484 Average realized price per pound $ 4.30 $ 2.82 $ 2.74 $ 2.96 $ 2.85 Molybdenum (millions of recoverable pounds) Production 34 33 32 32 33 100% Operating Data Leach operations Leach ore placed in stockpiles (metric tons per day) 665,900 714,300 750,900 681,400 679,000 Average copper ore grade (percent) 0.29 0.27 0.23 0.24 0.28 Copper production (millions of recoverable pounds) 1,056 1,047 993 951 1,016 Mill operations Ore milled (metric tons per day) 269,500 279,700 326,100 301,000 299,500 Average ore grade (percent): Copper 0.38 0.35 0.34 0.35 0.39 Molybdenum 0.03 0.02 0.02 0.02 0.03 Copper recovery rate (percent) 81.2 84.1 87.0 87.8 86.4 Copper production (millions of recoverable pounds) 649 647 748 719 788 SOUTH AMERICA MINING Copper (millions of recoverable pounds) Production 1,047 979 1,183 1,249 1,235 Sales 1,055 976 1,183 1,253 1,235 Average realized price per pound $ 4.34 $ 3.05 $ 2.71 $ 2.87 $ 2.97 Molybdenum (millions of recoverable pounds) Production 21 19 29 28 27 Leach operations Leach ore placed in stockpiles (metric tons per day) 163,900 160,300 205,900 195,200 142,800 Average copper ore grade (percent) 0.32 0.35 0.37 0.33 0.37 Copper production (millions of recoverable pounds) 256 241 268 287 255 Mill operations Ore milled (metric tons per day) 380,300 331,600 b 393,100 387,600 360,100 Average ore grade (percent): Copper 0.31 0.34 0.36 0.38 0.44 Molybdenum 0.01 0.01 0.02 0.01 0.02 Copper recovery rate (percent) 87.3 84.3 83.5 84.3 81.2 Copper production (millions of recoverable pounds) 791 738 916 962 980 a. Amounts are net of Morenci’s joint venture partners’ undivided interest. b. Cerro Verde mill operations were impacted by COVID-19 restrictions. 31 SELECTED OPERATING DATA (Continued) Years Ended December 31, 2021 2020 2019 2018 2017 INDONESIA MINING Operating Data, Net of Rio Tinto Joint Venture Interest a Copper (millions of recoverable pounds) Production 1,336 809 607 1,160 984 Sales 1,316 804 667 1,130 981 Average realized price per pound $ 4.34 $ 3.08 $ 2.72 $ 2.89 $ 3.00 Gold (thousands of recoverable ounces) Production 1,370 848 863 2,416 1,554 Sales 1,349 842 973 2,366 1,540 Average realized price per ounce $ 1,796 $ 1,832 $ 1,416 $ 1,254 $ 1,268 100% Operating Data Ore milled (metric tons per day) 151,600 87,700 110,100 178,100 140,400 Average ore grade: Copper (percent) 1.30 1.32 0.84 0.98 1.01 Gold (grams per metric ton) 1.04 1.10 0.93 1.58 1.15 Recovery rates (percent): Copper 89.8 91.9 88.4 91.8 91.6 Gold 77.0 78.1 75.0 84.7 85.0 Production: Copper (millions of recoverable pounds) 1,336 809 607 1,227 996 Gold (thousands of recoverable ounces) 1,370 848 863 2,697 1,554 MOLYBDENUM MINES Molybdenum production (millions of recoverable pounds) 30 24 29 35 32 Ore milled (metric tons per day) 21,800 20,700 30,100 27,900 22,500 Average molybdenum ore grade (percent) 0.19 0.17 0.14 0.18 0.20 a. Prior to December 21, 2018, PT-FI had an unincorporated joint venture with Rio Tinto. 32 MINERAL RESERVES Our estimates of mineral reserves have been prepared in accordance with the disclosure requirements of S-K 1300. Proven and probable mineral reserves were determined from the application of relevant modifying factors to geological data, in order to establish an operational, economically viable mine plan. The estimates are based on mapping, drilling, sampling, assaying and evaluation methods generally applied in the mining industry. Mineral reserves, as used in the mineral reserve data presented here, means the economically mineable part of a measured or indicated resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. Proven mineral reserves mean the economically mineable part of a measured mineral resource, from geological evidence revealed in outcrops, trenches, workings or drill holes with grades and/or quality estimates from detailed, closely-spaced sampling, and geologic characterization that defines the size, shape, depth and mineral content to a high degree of confidence. Probable mineral reserves means the economically mineable part of an indicated mineral resource, for which quantity and grade are estimated from information similar to that used for measured mineral resources where the samples are farther apart, and the geological characterization is adequate. Probable mineral reserves can also include remaining portions of a measured mineral resource. The degree of assurance, although lower than that for proven mineral reserves, is high enough to assume continuity between points of observation. Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees. These estimates are reviewed and verified regularly by independent experts in mining, geology and reserve determination. Our mineral reserve estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our ore bodies to optimize economic values and to manage risk. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Refer to Item 1A. “Risk Factors” for discussion of risks associated with our estimates of proven and probable mineral reserves. Estimated recoverable proven and probable mineral reserves at December 31, 2021, were determined using metals price assumptions of $2.50 per pound for copper, $1,200 per ounce for gold and $10 per pound for molybdenum. For the three-year period ended December 31, 2021, LME copper settlement prices averaged $3.25 per pound, London PM gold prices averaged $1,654 per ounce and the weekly average price for molybdenum quoted by Metals Week averaged $11.97 per pound. The estimated recoverable proven and probable mineral reserves presented in the table below represent the estimated metal quantities from which we expect to be paid after application of estimated metallurgical recoveries and smelter recoveries, where applicable. Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2021 Copper a (billion pounds) Gold (million ounces) Molybdenum (billion pounds) North America 43.0 0.5 2.69 South America 31.9 — 0.69 Indonesia b 32.2 26.6 — Consolidated basis c,d 107.2 27.1 3.39 Net equity interest e 76.2 14.2 3.06 a. Estimated consolidated recoverable copper reserves include 1.8 billion pounds in leach stockpiles and 0.3 billion pounds in mill stockpiles (refer to “Mill and Leach Stockpiles” for further discussion). b. Estimated recoverable proven and probable mineral reserves from Indonesia reflect estimates of minerals that can be recovered through 2041. Refer to Note 13 for discussion of PT-FI’s IUPK. c. May not foot because of rounding. d. Consolidated mineral reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America (refer to Note 3 for further discussion of our Morenci joint venture). Excluded from the table above are our estimated recoverable proven and probable silver reserves of 346 million ounces, which were determined using $15 per ounce. e. Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries). Excluded from the table above are our estimated recoverable proven and probable silver reserves of 230 million ounces. Our net equity interest for estimated metal quantities in Indonesia reflects approximately 81 percent for 2022 and 48.76 percent from 2023 through 2041. 33 Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2021 Proven Mineral Reserves Probable Mineral Reserves Average Ore Grade Average Ore Grade Processing Million Copper Gold Moly Silver Million Copper Gold Moly Silver Method metric tons a % g/t % g/t metric tons a % g/t % g/t North America Morenci Mill 784 0.37 — 0.02 — 110 0.35 — 0.02 — Crushed leach 501 0.37 — — — 87 0.35 — — — ROM leach 2,011 0.14 — — — 424 0.15 — — — Bagdad Mill 1,928 0.34 — b 0.02 1.42 585 0.28 — b 0.02 1.17 ROM leach 19 0.22 — — — 2 0.20 — — — Safford, including Lone Star Crushed leach 542 0.46 — — — 143 0.42 — — — Sierrita Mill 2,241 0.24 — b 0.03 1.25 189 0.19 — b 0.02 0.99 Chino, including Cobre Mill 169 0.50 0.04 — 0.89 60 0.48 0.04 — 0.87 ROM leach 70 0.27 — — — 10 0.25 — — — Tyrone ROM leach 18 0.29 — — — 1 0.13 — — — Henderson Mill 37 — — 0.18 — 17 — — 0.13 — Climax Mill 138 — — 0.15 — 13 — — 0.10 — 8,459 1,641 South America Cerro Verde Mill 670 0.38 — 0.02 2.00 3,219 0.36 — 0.01 1.92 Crushed leach 19 0.43 — — — 2 0.42 — — — ROM leach 33 0.38 — — — 56 0.26 — — — El Abra Crushed leach 538 0.44 — — — 171 0.39 — — — ROM leach 16 0.20 — — — 7 0.18 — — — 1,276 3,454 Indonesia Grasberg Block Cave Mill 316 1.15 0.76 — 3.61 541 1.01 0.69 — 3.87 DMLZ Mill 91 0.89 0.79 — 4.21 321 0.84 0.71 — 4.03 Big Gossan Mill 17 2.50 1.02 — 15.56 34 2.14 0.94 — 12.72 Kucing Liar c Mill 88 1.06 0.96 — 5.64 263 1.02 0.89 — 4.98 512 1,159 Total FCX - 100% Basis 10,247 6,254 a. Totals may not foot because of rounding. b. Amounts not shown because of rounding. c. PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments. The reserve table above and the tables on the following pages utilize the abbreviations described below: • g/t - grams per metric ton • Moly - Molybdenum 34 Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2021 (continued) Proven and Probable a Average Ore Grade Recoveries b Processing Million Copper Gold Moly Silver Copper Gold Moly Silver Method metric tons % g/t % g/t % % % % North America Morenci Mill 894 0.37 — 0.02 — 81.6 — 43.3 — Crushed leach 589 0.37 — — — 81.9 — — — ROM leach 2,435 0.14 — — — 37.4 — — — Bagdad Mill 2,513 0.32 — c 0.02 1.36 85.8 59.1 81.8 49.3 ROM leach 21 0.22 — — — 18.3 — — — Safford, including Lone Star Crushed leach 685 0.45 — — — 72.7 — — — Sierrita Mill 2,430 0.23 — c 0.02 1.23 80.4 59.1 77.2 49.3 Chino, including Cobre Mill 228 0.49 0.04 — 0.89 79.1 77.9 — 78.5 ROM leach 80 0.27 — — — 42.3 — — — Tyrone ROM leach 19 0.28 — — — 57.6 — — — Henderson Mill 54 — — 0.16 — — — 87.5 — Climax Mill 151 — — 0.15 — — — 88.7 — 10,100 South America Cerro Verde Mill 3,888 0.37 — 0.01 1.93 85.6 — 54.4 44.9 Crushed leach 22 0.43 — — — 76.8 — — — ROM leach 89 0.31 — — — 51.4 — — — El Abra Crushed leach 709 0.43 — — — 54.8 — — — ROM leach 22 0.19 — — — 29.5 — — — 4,731 Indonesia Grasberg Block Cave Mill 857 1.06 0.71 — 3.78 83.7 63.9 — 55.7 DMLZ Mill 412 0.85 0.73 — 4.07 84.9 78.7 — 64.1 Big Gossan Mill 51 2.26 0.97 — 13.65 91.3 67.7 — 64.0 Kucing Liar d Mill 351 1.03 0.91 — 5.15 83.1 52.2 — 39.2 1,671 Total FCX - 100% Basis 16,501 a. Amounts may not equal the sum of proven and probable mineral reserves as presented on the previous page because of rounding. In additions, totals may not foot because of rounding. b. Recoveries are net of estimated mill and smelter losses. c. Amounts not shown because of rounding. d. PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments. 35 Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2021 (continued) Recoverable Mineral Reserves a Copper Gold Moly Silver FCX’s Processing billion million billion million Interest Method lbs. ozs. lbs. ozs. North America Morenci 72% Mill 5.9 — 0.15 — Crushed leach 3.9 — — — ROM leach 2.8 — — — Bagdad 100% Mill 15.4 0.2 0.92 54.2 ROM leach — b — — — Safford, including Lone Star 100% Crushed leach 5.0 — — — Sierrita 100% Mill 10.1 0.1 1.02 47.2 Chino, including Cobre 100% Mill 2.0 0.3 — 5.1 ROM leach 0.2 — — — Tyrone 100% ROM leach 0.1 — — — Henderson 100% Mill — — 0.17 — Climax 100% Mill — — 0.44 — 45.4 0.5 2.71 106.5 Recoverable metal in stockpiles c 1.3 — b 0.02 0.1 100% operations 46.7 0.5 2.73 106.6 Consolidated 43.0 0.5 2.69 106.6 Net equity interest 43.0 0.5 2.69 106.6 South America Cerro Verde 53.56% Mill 26.8 — 0.69 108.4 Crushed leach 0.2 — — — ROM leach 0.3 — — — El Abra 51% Crushed leach 3.7 — — — ROM leach — b — — — 31.0 — 0.69 108.4 Recoverable metal in stockpiles c 0.9 — 0.01 1.2 100% operations 31.9 — 0.69 109.6 Consolidated 31.9 — 0.69 109.6 Net equity interest 17.0 — 0.37 58.7 Indonesia Grasberg Block Cave 48.76% d Mill 16.7 12.6 — 57.9 DMLZ 48.76% d Mill 6.6 7.6 — 34.5 Big Gossan 48.76% d Mill 2.3 1.1 — 14.2 Kucing Liar e 48.76% d Mill 6.6 5.3 — 22.8 100% operations 32.2 26.6 — 129.5 Consolidated 32.2 26.6 — 129.5 Net equity interest 16.2 13.6 — 65.1 Total FCX - 100% basis 110.8 27.1 3.43 345.7 Total FCX - Consolidated basis f 107.2 27.1 3.39 345.7 Total FCX - Net equity interest g 76.2 14.2 3.06 230.5 a. Totals may not foot because of rounding. b. Amounts not shown because of rounding. c. Refer to “Mill and Leach Stockpiles” for additional information. d. Our economic interest in PT-FI is expected to approximate 81 percent for 2022 and 48.76 percent thereafter (refer to Note 3 for further discussion). e. PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments. f. Consolidated mineral reserves represent estimated metal quantities after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion). g. Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries). Our net equity interest for estimated metal quantities in Indonesia reflects approximately 81 percent for 2022 and 48.76 percent from 2023 through 2041. 36 The table below summarizes changes in estimated recoverable copper, gold and molybdenum in mineral reserves between December 31, 2020 and 2021, for our properties identified as material under S-K 1300: Estimated Recoverable Mineral Reserves on 100% Basis Copper (billion lbs.) Gold (million ozs.) Molybdenum (billion lbs.) Morenci Cerro Verde Grasberg minerals district Grasberg minerals district Morenci Cerro Verde Mineral reserves as of December 31, 2020 14.3 28.6 33.4 28.3 0.20 0.70 Production (0.9) (0.9) (1.3) (1.4) (0.01) (0.02) Adjustments a (0.3) 0.2 0.1 (0.3) (0.04) 0.01 Mineral reserves as of December 31, 2021 13.1 27.9 32.2 26.6 0.15 0.69 a. The downward adjustments at Morenci are primarily the result of revised mine designs, partly offset by increased crushed leach recovery and re-routing of ore types. The upward adjustments at Cerro Verde are primarily the result of updated resource modeling and revised mine designs, partly offset by mine scheduling strategy and near-term recovery assumptions. The adjustments at Grasberg minerals district are primarily the result of revised mine designs and mine schedule changes. In defining our open-pit mineral reserves, we apply a “variable cutoff grade” strategy. The objective of this strategy is to maximize the net present value of our operations. We use a “break-even cutoff grade” to define the in-situ mineral reserves for our underground ore bodies. The break-even cutoff grade is defined for a metric ton of ore as that equivalent copper grade, once produced and sold, that generates sufficient revenue to cover all operating and administrative costs associated with our production. Our copper mines may contain other commercially recoverable metals, such as gold, molybdenum and silver. We value all commercially recoverable metals in terms of a copper equivalent percentage to determine a single cutoff grade. Copper equivalent percentage is used to express the relative value of multi-metal ores in terms of one metal. The calculation expresses the relative value of the ore using estimates of contained metal quantities, metals prices as used for reserve determination, recovery rates, treatment charges and royalties. Our molybdenum properties use a molybdenum cutoff grade. The table below shows the minimum cutoff grade for mineral reserves by process for each of our existing ore bodies as of December 31, 2021: Copper Equivalent Cutoff Grade (Percent) Molybdenum Cutoff Grade (Percent) Mill Crushed Leach ROM Leach Mill North America Morenci 0.21 0.14 0.03 — Bagdad 0.09 — 0.15 — Safford, including Lone Star — 0.17 — — Sierrita 0.17 — — — Chino, including Cobre 0.22 — 0.06 — Tyrone — — 0.05 — Henderson — — — 0.13 Climax — — — 0.05 South America Cerro Verde 0.15 0.24 0.08 — El Abra — 0.15 0.11 — Indonesia Grasberg Block Cave 0.63 — — — DMLZ 0.71 — — — Big Gossan 1.70 — — — Kucing Liar 0.70 — — — 37 Production Sequencing The following chart illustrates our current plans for sequencing and producing our proven and probable mineral reserves at each of our ore bodies and the years in which we currently expect production from each ore body and related stockpiles. Our proven and probable mineral reserves in Indonesia reflect estimates of minerals that can be recovered through the end of 2041, and our current mine plan and planned operations are based on the assumption that PT-FI will comply with its obligations under the IUPK and receive the second 10-year extension from 2031 through 2041 (refer to Item 1A. “Risk Factors” and Note 13 for further discussion). We develop our mine plans based on maximizing the net present value from the ore bodies. Significant additional capital expenditures will be required at many of these mines in order to achieve the life-of-mine plans reflected below. a. Development commenced in October 2021. The ultimate timing of the start of production is dependent upon a number of factors and may vary from the date shown here. 38 Mill and Leach Stockpiles Mill and leach stockpiles generally contain lower grade ores that have been extracted from an ore body and are available for metal recovery. Mill stockpiles contain sulfide ores and recovery of metal is through milling, concentrating, smelting and refining or, alternatively, by concentrate leaching. Leach stockpiles contain oxide ores and certain secondary sulfide ores and recovery of metal is through exposure to acidic solutions that dissolve contained copper and deliver it in solution to extraction processing facilities. Because it is impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper grades of material delivered to mill and leach stockpiles. Expected copper recoveries for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately. Expected copper recoveries 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 total copper recovery may be extracted during the first year, and the remaining copper may be recovered over many years. Processes and recoveries are monitored regularly, and recovery estimates are adjusted periodically as additional information becomes available and as related technology changes. Following are our stockpiles and the estimated recoverable copper contained within those stockpiles as of December 31, 2021: Recoverable Million Average Recoveries Copper a Metric Tons a Ore Grade (%) (%) (billion pounds) Mill stockpiles Cerro Verde 79 0.27 64.5 0.3 North America copper mines 5 0.45 90.9 — b 84 0.3 Leach stockpiles Morenci 7,216 0.24 1.1 0.4 Bagdad 505 0.25 0.8 — b Safford, including Lone Star 382 0.42 6.4 0.2 Sierrita 650 0.15 8.6 0.2 Miami 498 0.39 1.0 — b Chino, including Cobre 1,769 0.25 2.7 0.3 Tyrone 1,192 0.28 1.8 0.1 Cerro Verde 566 0.45 4.7 0.3 El Abra 855 0.43 4.6 0.4 13,633 1.9 Total FCX - 100% basis 2.3 Total FCX - Consolidated basis c 2.1 Total FCX - Net equity interest d 1.7 a. Totals may not foot because of rounding. b. Rounds to less than 0.1 billion pounds of recoverable copper. c. Consolidated stockpiles represent estimated metal quantities after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion). d. Net equity interest represents estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries). 39 Mineral Resources Our estimates of mineral resources have been prepared in accordance with the disclosure requirements of S-K 1300. As a result of the SEC’s revised disclosure requirements for mining registrants, we replaced our estimate of mineralized material with an estimate of mineral resources, including measured, indicated and inferred resources in accordance with the disclosure requirements of S-K 1300 . We hold various properties containing mineral resources in addition to mineral reserves that we believe could be brought into production should market conditions warrant. However, permitting and significant capital expenditures may be required before mining of these resources could commence at these properties. A mineral resource is a concentration or occurrence of material of economic interest in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. Such a deposit cannot qualify as recoverable proven and probable mineral reserves until engineering, legal and economic feasibility are confirmed based upon a comprehensive evaluation of development and operating costs, grades, recoveries and other material factors. Mineral resources include measured, indicated and inferred mineral classifications. A measured mineral resource is a resource for which the quantity and grade are estimated from detailed, closely-spaced sampling, and geologic characterization that defines the size, shape, depth and mineral content to a high degree of confidence. An indicated mineral resource is a resource for which quantity and grade are estimated from information similar to that used for measured mineral resources where the samples are farther apart, and the geological characterization is adequate. An inferred mineral resource is a resource for which quantity and grade are estimated from information similar to that used for measured and indicated mineral resources, but with limited geological evidence and sampling. Inferred mineral resource grade and mineralization continuity have a lower degree of confidence. Accordingly, no assurance can be given that the estimated mineral resources not included in mineral reserves will become proven and probable mineral reserves. Estimated mineral resources as presented on the following pages were assessed using prices of $3.00 per pound for copper, $1,200 per ounce for gold, $12 per pound for molybdenum and $20 per ounce for silver. Cutoff grade strategy and expected recoveries used to evaluate mineral resources are consistent with those for mineral reserves but would require additional work to substantiate. Refer to Item 1A. “Risk Factors” for discussion of risks associated with our estimates of mineral resources. 40 Estimated Mineral Resources at December 31, 2021 a Measured Indicated Inferred Million Average Ore Grade Million Average Ore Grade Million Average Ore Grade FCX’s Processing metric Copper Gold Moly Silver metric Copper Gold Moly Silver metric Copper Gold Moly Silver Interest Method tons % g/t % g/t tons % g/t % g/t tons % g/t % g/t North America Morenci 72% Milling 1,280 0.25 — 0.02 — 1,077 0.27 — 0.02 — 570 0.27 — 0.02 — Leaching 1,135 0.16 — — — 898 0.16 — — — 522 0.12 — — — Bagdad 100% Milling 492 0.32 — b 0.02 1.36 717 0.27 — b 0.02 1.13 961 0.17 — b 0.01 0.70 Leaching — b 0.22 — — — 1 0.08 — — — 11 0.08 — — — Safford, including Lone Star 100% Milling 807 0.34 0.02 — 0.45 1,588 0.37 0.02 — 0.44 823 0.29 — b — 0.03 Leaching 556 0.31 — — — 568 0.28 — — — 241 0.26 — — — Sierrita 100% Milling 1,467 0.18 — b 0.02 0.74 597 0.17 — b 0.02 0.79 131 0.16 — b 0.01 0.75 Chino, including Cobre 100% Milling 283 0.38 0.04 0.01 0.73 157 0.43 0.04 0.01 0.78 27 0.55 0.05 0.01 0.99 Leaching 27 0.22 — — — 4 0.28 — — — 7 0.26 — — — Tyrone 100% Leaching 115 0.22 — — — 29 0.21 — — — 15 0.21 — — — Henderson 100% Milling 75 — — 0.15 — 36 — — 0.12 — — b — — 0.04 — Climax 100% Milling 310 — — 0.17 — 73 — — 0.09 — 18 — — 0.06 — Ajo 100% Milling 470 0.37 0.06 0.01 0.81 159 0.32 0.04 0.01 0.76 31 0.24 0.05 — b 0.80 Cochise/Bisbee 100% Leaching 153 0.48 — — — 124 0.41 — — — 21 0.37 — — — Sanchez 100% Leaching 86 0.35 — — — 104 0.23 — — — 14 0.18 — — — Tohono 100% Milling 63 0.74 — — — 237 0.64 — — — 27 0.46 — — — Leaching 45 0.94 — — — 250 0.61 — — — 48 0.49 — — — Twin Buttes 100% Milling 188 0.58 0.01 0.03 6.23 17 0.56 0.01 0.03 5.94 8 0.67 0.01 0.02 7.27 Leaching 78 0.22 — — — 27 0.20 — — — 11 0.25 — — — Christmas 100% Milling 73 0.52 0.06 — b 1.53 291 0.35 0.05 — b 0.92 69 0.36 0.06 — b 0.94 South America Cerro Verde 53.56% Milling 22 0.31 — 0.01 1.64 1,460 0.36 — 0.01 1.90 673 0.35 — 0.01 1.87 Leaching 10 0.35 — — — 27 0.29 — — — 13 0.32 — — — El Abra 51% Milling 883 0.45 0.02 0.01 1.52 1,513 0.37 0.02 0.01 1.16 1,012 0.31 0.01 0.01 0.87 Leaching 64 0.24 — — — 72 0.25 — — — 66 0.23 — — — Indonesia Grasberg minerals district 48.76% Milling 319 0.78 0.60 — 4.39 2,136 0.76 0.64 — 4.15 154 0.49 0.40 — 2.77 Total FCX - 100% basis c 9,001 12,160 5,472 Total FCX - Consolidated basis d 8,323 11,606 5,166 Total FCX - Net equity interest e 7,681 9,044 4,240 a. Mineral resources are exclusive of mineral reserves. b. Amounts not shown because of rounding. c. Totals may not foot because of rounding. d. Consolidated basis represents estimated mineral resources after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion). e. Net equity interest represents estimated consolidated mineral resources further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion). 41 Estimated Mineral Resources at December 31, 2021 a (continued) Measured + Indicated Total Mineral Resources Million Million Average Ore Grade Contained Metal c Cutoff Grade d FCX’s Processing metric metric Copper Gold Moly Silver Copper Gold Moly Silver Interest Method tons b tons b % g/t % g/t billion lbs. million ozs. billion lbs. million ozs. Grade % North America Morenci 72% Milling 2,358 2,928 0.26 — 0.02 — 16.8 — 1.11 — 0.14 Leaching 2,033 2,555 0.15 — — — 8.6 — — — 0.02 Bagdad 100% Milling 1,209 2,169 0.24 — e 0.02 0.99 11.3 0.2 0.85 69.3 0.08 Leaching 1 12 0.08 — — — — e — — — 0.03 Safford, including Lone Star 100% Milling 2,394 3,218 0.34 0.02 — 0.34 24.3 1.6 — 34.7 0.15 Leaching 1,123 1,364 0.29 — — — 8.7 — — — 0.11 Sierrita 100% Milling 2,064 2,195 0.18 — e 0.02 0.75 8.5 — e 0.96 53.0 0.12 Chino, including Cobre 100% Milling 440 467 0.41 0.04 0.01 0.76 4.2 0.6 0.10 11.4 0.17 Leaching 31 38 0.23 — — — 0.2 — — — 0.06 Tyrone 100% Leaching 143 158 0.22 — — — 0.8 — — — 0.02 Henderson 100% Milling 112 112 — — 0.14 — — — 0.35 — 0.10 Climax 100% Milling 383 401 — — 0.15 — — — 1.34 — 0.04 Ajo 100% Milling 628 659 0.36 0.06 0.01 0.80 5.2 1.2 0.11 16.9 0.14 Cochise/Bisbee 100% Leaching 278 299 0.44 — — — 2.9 — — — 0.10 Sanchez 100% Leaching 190 204 0.28 — — — 1.2 — — — 0.07 Tohono 100% Milling 301 328 0.64 — — — 4.6 — — — 0.15 Leaching 295 343 0.64 — — — 4.8 — — — 0.12 Twin Buttes 100% Milling 205 213 0.59 0.01 0.03 6.24 2.7 — e 0.15 42.7 0.20 Leaching 105 116 0.22 — — — 0.6 — — — 0.01 Christmas 100% Milling 364 433 0.38 0.06 — e 1.02 3.6 0.8 0.03 14.2 0.18 South America Cerro Verde 53.56% Milling 1,482 2,155 0.35 — 0.01 1.88 16.8 — 0.60 130.5 0.14 Leaching 37 50 0.31 — — — 0.3 — — — 0.08 El Abra 51% Milling 2,396 3,408 0.37 0.02 0.01 1.17 27.8 1.9 0.62 127.7 0.14 Leaching 137 203 0.24 — — — 1.1 — — — 0.08 Indonesia Grasberg minerals district 48.76% Milling 2,454 2,608 0.75 0.62 — 4.10 42.8 51.8 — 343.9 0.51 Total FCX - 100% basis f 21,161 26,634 197.9 58.1 6.21 844.4 Total FCX - Consolidated basis g 19,929 25,095 190.8 58.1 5.90 844.4 Total FCX - Net equity interest h 16,725 20,965 146.8 30.7 5.32 545.0 a. Mineral resources are exclusive of mineral reserves. b. Amounts may not equal the sum of measured, indicated and inferred (as presented on the prior page) because of rounding. c. Estimated recoveries are consistent with those for mineral reserves but would require additional work to substantiate. d. All sites report a percent equivalent copper grade except for Climax and Henderson, which report a percent molybdenum grade. Cutoff grade is the minimum grade considered for processed material. e. Amounts not shown because of rounding. f. Totals may not foot because of rounding. g. Consolidated basis represent estimated mineral resources after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion). h. Net equity interest represent estimated consolidated mineral resources further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion). 42 The table below summarizes changes in estimated contained copper, gold and molybdenum in mineral resources between December 31, 2020 and 2021, for our properties identified as material under S-K 1300: Estimated Contained Mineral Resources at 100% Basis Copper (billion lbs.) Gold (million ozs.) Molybdenum (billion lbs.) Morenci Cerro Verde Grasberg minerals district Grasberg minerals district Morenci Cerro Verde Mineral resources as of December 31, 2020 23.7 17.5 43.6 54.0 1.06 0.61 Adjustments a 1.7 (0.4) (0.8) (2.2) 0.05 (0.01) Mineral resources as of December 31, 2021 25.4 17.1 42.8 51.8 1.11 0.60 a. The upward adjustments at Morenci are primarily the result of lower estimated unit costs coupled with revised mine designs. The downward adjustments at Cerro Verde are primarily the result of converting material from mineral resources to mineral reserves in the revised mineral reserves mine designs. The downward adjustments at the Grasberg minerals district are primarily the result of revised mine designs and a higher cutoff grade. Internal Controls over the Mineral Reserves and Mineral Resources Estimation Process We have internal controls over the mineral reserves and mineral resources estimation processes that result in reasonable and reliable estimates aligned with industry practice and reporting regulations. Annually, qualified persons and other employees review the estimates of mineral reserves and mineral resources, the supporting documentation, and compliance to the internal controls, and, based on their review of such information, recommend approval to use the mineral reserve and mineral resource estimates to our senior management. Our controls utilize management systems including but not limited to, formal quality assurance and quality control protocols, standardized procedures, workflow processes, supervision and management approval, internal and external reviews and audits, reconciliations, and data security covering record keeping, chain of custody and data storage. Our systems also cover exploration activities, sample preparation and analysis, data verification, mineral processing, metallurgical testing, recovery estimation, mine design and sequencing, and mineral reserve and resource evaluations, with environmental, social and regulatory considerations. Our quality assurance and control protocols over sampling and assaying of drill hole samples include insertion of blind samples consisting of standards, blanks, and duplicates in the primary sample streams, as well as selective sample validation at secondary laboratories. These controls and other methods help to validate the reasonableness of the estimates. The effectiveness of the controls are reviewed periodically to address changes in conditions and the degree of compliance with policies and procedures. Refer to Item 1A. “Risk Factors” for discussion of risks associated with our estimates of mineral reserves and mineral resources. 43 Item 1A. Risk Factors. This report 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 business outlook, strategy, goals or targets; ore grades and milling rates; production and sales volumes; unit net cash costs; capital expenditures; operating costs; operating plans; cash flows; liquidity; PT Freeport Indonesia’s (PT-FI) financing, construction and completion of additional domestic smelting capacity in Indonesia in accordance with the terms of its special mining license (IUPK); our commitments to deliver responsibly produced copper, including plans to implement and validate all of our operating sites under the Copper Mark, and to comply with other disclosure frameworks; execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business related thereto; achievement of climate commitments and net zero aspirations; improvements in operating procedures and technology innovations; exploration efforts and results; development and production activities, rates and costs; future organic growth opportunities; tax rates; export quotas and duties; impact of copper, gold and molybdenum price changes; impact of deferred intercompany profits on earnings; mineral reserve and mineral resource estimates; final resolution of settlements associated with ongoing legal proceedings; and the ongoing implementation of our financial policy and future returns to shareholders, including dividend payments (base or variable) and share repurchases. We undertake no obligation to update any forward-looking statements, which speak only as of the date made. We caution readers that forward-looking statements are not guarantees of future performance and our 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 are included below. Risk Factor Summary Investing in our securities involves a high degree of risk and uncertainties. Below is a summary of the risk factors that may have a material adverse impact on our business, financial performance, stock price, results of operations, operating flexibility, reputation, costs or liabilities. In addition to this summary and the more detailed description of each risk factor that immediately follows this summary, you should carefully consider the information included in other sections of this annual report on Form 10-K, including but not limited to Items 1. and 2. “Business and Properties,” Items 7. and 7A. “Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk” (MD&A) and Item 3. “Legal Proceedings” prior to investing in our securities. However, the risk factors described herein are not all of the risks we may face. Other risks not presently known to us or that we currently believe are immaterial may materially affect our business if they occur and the trading price of our securities could decline, and you may lose part or all of your investment. Moreover, new risks emerge from time to time. Further, our business may also be affected by general risks that apply to all companies operating in the United States (U.S.) and globally, which have not been included. Financial risks • Fluctuations or extended material declines in the market prices of the commodities we produce; • Less flexibility due to our debt and other financial commitments; • The ongoing COVID-19 pandemic and any future public health crisis; • Changes in or failure to comply with financial assurance requirements relating to our mine closure reclamation obligations; and • Unanticipated litigation or negative developments in pending litigation, changes in income tax laws or other contingencies. International risks • Geopolitical, economic and social uncertainties and risks for our international operations, including in Indonesia, Peru and Chile; and • Failure of PT-FI to meet its commitments to achieve the extension of PT-FI’s IUPK through 2041. 44 Operational risks • Operational risks inherent in mining, including underground mining; • Environmental, safety and engineering challenges and risks associated with management of waste rock and tailings; • Environmental challenges associated with our Indonesia mining operations; • Violence, civil and religious strife, and activism; • Availability of significant quantities of secure water supplies for our mining operations, including future expansions or development projects; • Fluctuations in price and availability of commodities we purchase as well as constraints on supply and logistics, and transportation services; and • Disruptions, damage, failure and implementation and integration risks associated with information technology systems. Human capital risks • Failure to maintain good relations with our workforce and labor disputes or labor unrest; and • Ability to attract, retain and develop qualified personnel. Risks related to development projects and mineral reserves • Inherent risks associated with development projects and unique risks associated with development of underground mining; • Ability to replace mineral reserves depleted by production; and • Inherent uncertainty associated with estimates of mineral reserves and mineral resources. Regulatory, environmental and social risks • Compliance with applicable environmental, health and safety laws and regulations; • Remediation of properties no longer in operation; • Ability to meet our energy requirements while complying with greenhouse gas emissions (GHG) regulations and other energy transition policy changes; • The physical impacts of climate change on our operations, workforce and supply chain; • Increasing scrutiny and evolving expectations from stakeholders with respect to our environmental, social and governance (ESG) practices, performance and disclosures; and • Failure or perceived failure to manage relationships with the communities and/or Indigenous Peoples where we operate or that are near our operations. Risks related to our common stock • Holding company structure impact on our ability to service debt, declare cash dividends or repurchase shares; and • Impact of anti-takeover provisions in our charter documents and under Delaware law. Financial risks Fluctuations in the market prices of the commodities we produce have caused and may continue to cause significant volatility in our financial performance and in the trading prices of our common stock. Extended material declines in the market prices of such commodities could adversely affect our financial condition. Our financial results vary with fluctuations in the market prices of the commodities we produce, primarily copper and gold, and to a lesser extent molybdenum. Extended material declines in market prices of such commodities could have a material adverse effect on our financial results and the value of our assets, may depress the price of our common stock, and may have a material adverse effect on our ability to comply with financial and other covenants in our debt agreements, repay our debt and meet our other obligations. During 2020, the COVID-19 pandemic and resulting negative impact on the global economy created significant volatility in the financial markets, including the copper market. Copper prices were initially impacted by economic uncertainty; however, in mid-2020 copper prices began to rise and reached a record high during 2021, despite the ongoing COVID-19 pandemic. 45 Fluctuations in commodities prices are caused by varied and complex factors beyond our control, including global supply and demand and inventory levels; global economic and political conditions; international regulatory, trade and/or tax policies, including national tariffs; commodities investment activity and speculation; interest rates; expectations regarding future inflation rates; the strength of the U.S. dollar compared to foreign currencies; the price and availability of substitute products; and changes in technology. Volatility in global economic growth, particularly in developing economies, has the potential to adversely affect future demand and prices for commodities. Geopolitical uncertainty and protectionism, have the potential to inhibit international trade and negatively impact business confidence, which creates the risk of constraints on our ability to trade in certain markets and has the potential to increase price volatility. In addition to the factors discussed above, copper prices may be affected by demand from China, which is currently the largest consumer of refined copper in the world for infrastructure, the growing markets for automobiles and appliances and by the global focus on a transition to new technologies for clean energy, to advance communications and to enhance public health, as well as demand from North America, Europe, and Asian countries other than China. Additional factors affecting gold prices may include purchases and sales of gold by governments and central banks, demand from China and India, two of the world’s largest consumers of gold, and global demand for jewelry containing gold. For additional information regarding the historical fluctuations of the prices of copper, gold and molybdenum, refer to “Markets” in MD&A. If market prices for the primary commodities we produce were to materially decline and remain low for a sustained period of time, we may have to revise our operating plans, including curtailing or modifying our mining and processing operations, as we had to do in early 2020 in response to the global COVID-19 pandemic. We may be unable to decrease our costs in an amount sufficient to offset reductions in revenues, in which case we may incur losses, and those losses may be material. Declines in prices of commodities we sell could also result in metals inventory adjustments and impairment charges for our long-lived assets. Refer to Note 4 for additional information regarding metals inventory adjustments recorded for the three years ended December 31, 2021. Other events that could result in impairment of our long-lived assets include, but are not limited to, decreases in estimated proven and probable mineral reserves and any event that might have a material adverse effect on current and future expected mine production costs. Our debt and other financial commitments may limit our financial and operating flexibility. At December 31, 2021, our total consolidated debt was $9.5 billion (see MD&A and Note 8) and our total consolidated cash and cash equivalents was $8.1 billion. We also have various other financial commitments, including reclamation and environmental obligations, take-or-pay contracts and leases. For further information, see the risk factor below relating to mine closure and reclamation regulations. Although we have been successful in repaying debt in the past, refinancing our bank facilities, and issuing new debt securities in capital markets transactions, there can be no assurance that we can continue to do so. See the risk factor below regarding increasing scrutiny and evolving expectations from stakeholders, including creditors, with respect to our ESG practices, performance and disclosures. In addition, we or our subsidiaries may incur additional debt in future periods or reduce our holdings of cash and cash equivalents in connection with funding existing operations, capital expenditures, dividends, share repurchases or in pursuing other business opportunities. Our level of indebtedness and other financial commitments could have important consequences to our business, including the following: • Limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; • Increasing our vulnerability to general adverse economic, industry and regulatory conditions; • Limiting our ability to fund future working capital, capital expenditures, general corporate requirements and/or material contingencies, to engage in future development activities, or to otherwise realize the value of our assets and opportunities fully because of the need to dedicate a substantial portion of our cash flows from operations to payments on our debt; • Requiring us to sell assets to reduce debt; or • Placing us at a competitive disadvantage compared to our competitors that have less debt and/or fewer financial commitments. 46 Any failure to comply with the financial and/or other covenants in our debt agreements may result in an event of default that would allow the creditors to accelerate maturities of the related debt, which in turn may trigger cross-acceleration or cross-default provisions in other debt agreements. Our available cash and liquidity may not be sufficient to fully repay borrowings under our debt instruments that may be accelerated upon an event of default. As of January 31, 2022, our senior unsecured debt was rated “Baa3” with a stable outlook by Moody’s Investors Service, “BBB-” with a stable outlook by Fitch Ratings, and “BB+” with a stable outlook by Standard & Poor’s. If we are unable to maintain our indebtedness and financial ratios at levels acceptable to these credit rating agencies, or should our business prospects deteriorate, our current credit ratings could be downgraded, which could adversely affect the value of our outstanding securities and existing debt, our ability to obtain new financing on favorable terms and could increase our borrowing costs. The ongoing COVID-19 pandemic and any future major public health crisis may have an adverse impact on our business. Since early 2020, the COVID-19 pandemic has significantly impacted economic activity and markets throughout the world. The extent and duration of adverse impacts that the COVID-19 pandemic (including new and emerging strains and variants) or any future major public health crisis may have on our operations and business, including demand for the commodities we produce, and on global financial markets remains uncertain. Our business and results of operations could be adversely affected if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions or other restrictions. Despite our efforts to manage the impacts of the pandemic, there can be no assurance that our actions will be effective in containing and mitigating the risk of spread or a major outbreak of COVID-19 (or any future major public health crisis) at our operating sites. Additionally, although several vaccines for COVID-19 have been approved, there are risks that these vaccines will not be effective against new and emerging strains and variants of the virus and that these vaccines may not be widely available or accepted in the areas in which we operate. A major outbreak of COVID-19 (or any future major public health crisis) at any of our operating sites, and particularly at PT-FI’s remote operating site, could disrupt or change our operating plans, which may have a material adverse effect on our business and results of operations. Actions taken by governmental authorities and third parties to contain and mitigate the risk of spread of COVID-19 (and those that may be taken for any future major public health crisis) have impacted and may in the future negatively impact our business. For example, in mid-March 2020, the Peru government issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19. To comply with the government’s requirements, in 2020, we temporarily transitioned our Cerro Verde mine to care and maintenance status and adjusted operations to prioritize critical activities. These and other impacts of COVID-19, or any future major public health crisis, had, or could have a material adverse impact on our business, results of operations and financial condition. Changes in or the failure to comply with the requirements of mine closure and reclamation regulations could have a material adverse effect on our business. We are required by U.S. federal and state laws and regulations to provide financial assurance sufficient to allow a third party to implement approved closure and reclamation plans for our mining properties if we are unable to do so. As of December 31, 2021, our financial assurance obligations totaled $1.5 billion for closure and reclamation/restoration costs of U.S. mining sites. Refer to Note 12 for additional information regarding our financial assurance obligations and Items 1. and 2. “Business and Properties” for a discussion of certain of such U.S. federal and state laws and regulations applicable to Freeport-McMoRan Inc. (FCX). A substantial portion of our financial assurance obligations are satisfied by FCX and subsidiary guarantees. Our ability to continue to provide guarantees depends on state and other regulatory requirements, our financial performance and our financial condition. Other forms of assurance, such as letters of credit and surety bonds, are costly to provide and, depending on our financial condition and market conditions, may be difficult or impossible to obtain. Failure to provide the required financial assurance could result in the closure of the affected properties. Plans and provisions for mine closure and remediation may change over time due to changes in stakeholder expectations, legislation, standards, and technical understanding and techniques, which may cause our provisions for environmental and asset retirement obligations to be underestimated and could materially affect our financial position or results of operations. For example, our implementation of the Global Industry Standard for Tailings Management (the Tailings Standard) (discussed in Items 1. and 2. “Business and Properties” herein) could require 47 changes to our closure and reclamation plans, although it is uncertain if these changes would result in material capital or operating cost increases. In addition, climate change could lead to changes in the physical risks posed to our operations, which could result in changes in our closure and reclamation plans to address such risks. Any modifications to our closure and reclamation plans that may be required to address physical climate risks may materially increase the costs associated with implementing closure and reclamation at any or all of our active or inactive mine sites and the financial assurance obligations related to the same. Refer to Notes 1 and 12, for further discussion of our environmental and asset retirement obligations and see the risk factor below relating to the physical impacts of climate change. Unanticipated litigation or negative developments in pending litigation, changes in income tax laws or other contingencies could have a material adverse effect on our financial condition. We are, and may in the future become, involved in various legal proceedings and subject to other contingencies that have arisen or may arise in the ordinary course of our business or are associated with environmental matters, including those described in Note 12 and in Item 3. “Legal Proceedings”. We are also involved periodically in other reviews, inquiries, investigations and other proceedings initiated by or involving government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. From time to time we are involved in disputes over the allocation of environmental remediation obligations at “Superfund” and other sites. In addition, we may be held responsible for the costs of addressing contamination at the site of current or former activities or at third party sites, or be held liable to third parties for exposure to hazardous substances should those be identified in the future. The outcome of litigation is inherently uncertain and adverse developments or outcomes can result in significant monetary damages, penalties, other sanctions or injunctive relief against us, limitations on our property rights, or regulatory interpretations that increase our operating costs. Management does not believe, based on currently available information, that the outcome of any individual legal proceeding will have a material adverse effect on our financial condition, although individual or cumulative outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period. Regardless of the merit of particular claims, defending against litigation or responding to investigations can be expensive, time-consuming, disruptive to our operations and distracting to management. In recognition of these considerations, we may enter into agreements or other arrangements to settle litigation and resolve such challenges. There can be no assurance such agreements can be obtained on acceptable terms or that litigation will not occur. Further, we are a global business with operations in various jurisdictions. In the event of a dispute arising at our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or arbitral panels, or may not be successful in subjecting foreign persons to the jurisdiction of courts or arbitral panels in the U.S. or in enforcing the judgment of a foreign court or arbitral panel against a sovereign nation. Our inability to enforce our right and the enforcement of rights on a prejudicial basis by foreign courts or arbitral panels, including against a sovereign nation, could have an adverse effect on our results of operations and financial position. We have significant net operating losses (NOLs) in the U.S. generated in prior years. These NOLs are available to offset future taxable income, resulting in minimal estimated tax liability in the U.S. over the next several years at current metals market prices. Changes to U.S. income tax laws and/or recommendations from the Organization for Economic Co-operation and Development regarding a global minimum income tax and other changes being considered and/or implemented in countries where we operate could materially impact our income tax provision, cash tax liability, and effective tax rate. In addition, these changes may result in new limitations on our ability to benefit from our significant U.S. NOLs. 48 International risks Our international operations are subject to geopolitical, economic and social risks. We are a U.S.-based mining company with substantial assets located outside of the U.S. Risks of conducting business in countries outside the U.S. can include: • Delays in obtaining or renewing, or the inability to obtain, maintain or renew, or the renegotiation, cancellation, revocation or forced modification (including the inherent risk of these actions being taken unilaterally by government owned entities) of contracts, leases, licenses, permits, stability agreements or other agreements and/or approvals; • Expropriation or nationalization of property, protectionism, or restrictions on repatriation of earnings or capital; • Changes in and differing interpretations of the host country’s laws, regulations and policies (which may be applied retroactively), including, but not limited to, those relating to labor, taxation, royalties, duties, tariffs, divestment, imports, exports (including restrictions on the export of copper concentrate and anode slimes, copper and/or gold), trade regulations, immigration, currency and environmental matters (including land use and water use), additional requirements on foreign operations and investment, and/or result in fines, fees and sanctions imposed for failure to comply with the laws and regulations of the jurisdictions in which we operate, the risk of any of which may increase with rising “resource nationalism” in countries around the world; • Geopolitical, social and economic instability, bribery, extortion, corruption, civil unrest, blockades, acts of war, guerrilla activities, insurrection and terrorism, certain of which may result in, among other things, an inability to access our property or transport our commodities, and in particular, our investments and operations in Peru and Chile currently may be susceptible to such risks; • Risk of loss associated with trespass, illegal artisanal mining, theft, sabotage and vandalism; • Risk of loss due to major public health issues, including any pandemic (such as the ongoing COVID-19 pandemic), epidemic or endemic health issues, as a result of the potential related impact to employees, disruptions to operations, supply chain delays, trade restrictions and impact on economic activity in affected countries or regions and due to the limitations of certain local health systems and infrastructure to contain such major public health issues (see above for further discussion of our risks specific to the COVID-19 pandemic); • Changes in U.S. trade, tariff, tax, immigration or other policies that may harm relations with foreign countries or result in retaliatory policies; • Increases in training and other costs and challenges relating to requirements by governmental entities to employ the nationals of the country in which a particular operation is located; • Foreign exchange controls, fluctuations in foreign currency exchange rates and inflation; and • Reduced protection for intellectual property rights. Our insurance does not cover most losses caused by the above described risks. For example, we do not have political risk insurance. Accordingly, our exploration, development and production activities outside of the U.S. may be substantially affected by many unpredictable factors beyond our control, some of which could have a material adverse effect on our cash flows, results of operations and financial condition. We are required to comply with a wide range of laws and regulations in the countries where we operate or do business. For example, our international operations must comply with the U.S. Foreign Corrupt Practices Act and similar anti-corruption and anti-bribery laws of the other jurisdictions in which we operate. We operate in jurisdictions that have experienced public and private sector corruption and where significant anti-corruption enforcement activities, prosecutions and settlements have occurred. We have a large number of contracts with local and foreign suppliers and contractors, who may take action contrary to or fail to adopt standards, controls and procedures, including health, safety, environment, human rights and community standards, that are equivalent to our standards, controls and procedures. There can be no assurance that our internal control policies and procedures will always protect us from misinterpretation of or noncompliance with applicable laws and internal policies, recklessness, fraudulent behavior, dishonesty or other inappropriate acts committed by our affiliates, employees, agents, suppliers or contractors. As such, our corporate policies and processes may not prevent or detect all potential breaches of law 49 or governance practices. Any such breaches could result in safety events that may result in injuries or fatalities, significant criminal or civil fines and penalties, litigation or regulatory action or inquiries, shareholder activism (such as to stop using a certain supplier or contractor), civil unrest or other adverse impacts on human rights, and loss of operating licenses or permits, and may damage our reputation, which could have a material adverse effect on our cash flows, results of operations and financial condition. We conduct international mining operations in Indonesia, Peru and Chile and exploration activities in other foreign jurisdictions. Accordingly, in addition to the usual risks associated with conducting business in countries outside the U.S., our business may be adversely affected by political, economic, social and regional uncertainties in each of these countries. For example, we are involved in several significant tax proceedings and other tax disputes with Indonesia and Peru tax authorities (refer to Note 12 for further discussion of these matters). Other risks specific to certain countries in which we operate are discussed in more detail below. Because our mining operations in Indonesia are a significant operating asset, our business may be adversely affected by political, economic and social uncertainties in Indonesia. Maintaining a good working relationship with the Indonesia government and PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID), an Indonesia state-owned enterprise and shareholder in PT-FI, is important because of the significance of our Indonesia operations to our business, and because our mining operations there are among Indonesia’s most significant business enterprises. Partially because of the Grasberg minerals district’s significance to Indonesia’s economy, the environmentally sensitive area where it is located, and the number of people employed, our Indonesia operations have been the subject of political debates and criticism in the Indonesia press, and have been the target of protests and occasional violence. Improper management of our working relationship with the Indonesia government could lead to a disruption of operations and/or impact our reputation in Indonesia and in the region where we operate, which could adversely affect our business. The mining industry is subject to extensive regulation within Indonesia, and there have been major developments in laws and regulations applicable to mining concession holders, some of which have conflicted with PT-FI’s contractual rights in the past. In particular, the enactment of Law No. 4 of 2009 on Coal and Mineral Mining on January 12, 2009 (the Mining Law) replaced the previous regulatory framework which allowed concession holders, including PT-FI, to conduct mining activities in Indonesia under a contract of work system. Notwithstanding provisions in PT-FI’s former Contract of Work (COW) prohibiting it from doing so, the Indonesia government sought to modify PT-FI’s former COW to address provisions contained in the Mining Law and implementing regulations adopted thereunder, some of which were not required under or conflicted with PT-FI’s former COW. In early 2017, the Indonesia government issued new regulations to address exports of unrefined metals, including copper concentrate and anode slimes, and other matters related to the mining sector. PT-FI’s export license for copper concentrate is valid for one year periods, subject to review and approval by the Indonesia government every six months, depending on greenfield smelter development progress. PT-FI’s export license expires on March 15, 2022. Refer to MD&A and Note 12 for further discussion of the administrative fine levied by the Indonesia government on PT-FI for failing to achieve physical development progress on the greenfield smelter, and ongoing discussions with the Indonesia government regarding a deferred schedule for the completion of the greenfield smelter in light of the ongoing COVID-19 pandemic. The 2017 regulations also permit the export of anode slimes, which is necessary for PT Smelting (PT-FI’s 39.5-percent-owned copper smelter and refinery located in Gresik, Indonesia) to continue operating. PT Smelting’s export license for anode slimes expires on December 9, 2022, subject to review and approval by the Indonesia government every six months. In addition to a delay in the renewal of its export license for anode slimes in 2017, PT Smelting’s operations were shut down from mid-January 2017 until early March 2017 as a result of labor disturbances. Copper concentrate sales to PT Smelting totaled over 10 percent of our consolidated revenues for each of the years ended December 31, 2021, 2020 and 2019. We cannot predict when and if PT-FI’s copper concentrate export license and PT Smelting’s anode slimes export license may be renewed. PT-FI’s sale of concentrates could be interrupted if either of these export license is not timely renewed or if PT Smelting is unable to operate either due to other operational or financial constraints, which would adversely impact our revenues and operations. We cannot assure you that future regulatory changes affecting the mining industry in Indonesia will not be introduced or unexpectedly repealed, or that new interpretations of existing laws and regulations will not be issued, which could adversely affect our business, financial condition and results of operations. 50 PT-FI will not mine all of the ore reserves in the Grasberg minerals district before the initial term of its IUPK expires in 2031. PT-FI’s IUPK may not be extended through 2041 if PT-FI fails to abide by its terms and conditions and applicable laws and regulations. On December 21, 2018, PT-FI was granted an IUPK to replace its former COW, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted mining rights through 2031, with rights to extend its mining rights through 2041, subject to, among other things, PT-FI’s completion of construction of additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (an extension of which has been requested due to COVID-19 mitigation measures subject to the approval of the Indonesia government), and fulfilling its defined fiscal obligations to the Indonesia government. Refer to Note 13 for a summary of the IUPK’s key fiscal terms. The expansion of PT Smelting is expected to be complete in late 2023 and the construction of the greenfield smelter is expected to be completed as soon as feasible in 2024, which is subject to, among other things, no additional COVID-19 related disruptions. The IUPK also requires PT-FI to pay duties on concentrate exports of 5 percent, declining to 2.5 percent when development progress for additional smelting capacity in Indonesia exceeds 30 percent, and eliminated when development progress for additional smelting capacity in Indonesia exceeds 50 percent. Refer to MD&A and Note 12 for further discussion of the administrative fine levied by the Indonesia government on PT-FI for failing to achieve physical development progress on the greenfield smelter, and ongoing discussions with the Indonesia government regarding a deferred schedule for the completion of the greenfield smelter in light of the ongoing COVID-19 pandemic. The preliminary capital cost estimate for the greenfield smelter and related precious metal refinery approximates $3 billion. In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility to advance its Indonesia smelter projects and is currently arranging additional debt financing for these projects. PT-FI’s ability to raise and service significant new sources of capital will be a function of macroeconomic conditions, and future market prices as well as PT-FI’s operational performance, cash flows and debt position, among other factors. Financing may not be available when needed or, if available, the terms of such financing may not be favorable to PT-FI. See the risk factor below regarding increasing scrutiny and evolving expectations from stakeholders, including creditors, with respect to our ESG practices, performance and disclosures. Our proven and probable mineral reserves in Indonesia reflect estimates of minerals that can be recovered through the end of 2041, and PT-FI’s current long-term mine plan and planned operations are based on the assumption that PT-FI will abide by the terms and conditions of the IUPK and will be granted the 10-year extension from 2031 through 2041. As a result, PT-FI will not mine all of these mineral reserves during the initial term of the IUPK. Prior to the end of 2031, we expect to mine 48 percent of aggregate proven and probable recoverable mineral reserves at December 31, 2021, representing 53 percent of our net equity share of recoverable copper reserves and 55 percent of our net equity share of recoverable gold reserves. If PT-FI does not complete the construction of additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (an extension of which has been requested due to COVID-19 mitigation measures subject to the approval of the Indonesia government), or fulfill its defined fiscal obligations to the Indonesia government as set forth in the IUPK, the IUPK may not be extended from 2031 through 2041, and PT-FI would be unable to mine all of the proven and probable mineral reserves in the Grasberg minerals district, which would adversely affect our business, results of operations and financial position. Operational risks Our mining operations are subject to operational risks that could adversely affect our business and our underground mining operations have higher risks than a surface mine. We have assets in a variety of geographic locations, all of which exist in and around broader communities and environments. Maintaining the operational integrity and performance of our assets is crucial to protect our people, the environment and communities in which we operate. Our mines are very large in scale and, by their nature are subject to significant operational risks, some of which are outside of our control, and many of which are not covered fully, or in some cases even partially, by insurance. These operational risks, which could materially and adversely affect our business, operating results and cash flows, include earthquakes, rainstorms, floods, wildfires and other natural disasters; environmental hazards, including discharge of metals, concentrates, pollutants or hazardous chemicals; surface or underground fires; equipment failures; accidents, including in connection with mining 51 equipment, milling equipment or conveyor systems, transportation of chemicals, explosives or other materials and in the transportation of employees and business partners to and from sites (including where these services are provided by third parties such as vehicle and aircraft transport); wall failures and rock slides in our open-pit mines, and structural collapses of our underground mines or tailings impoundments; underground water and ore management; lower than expected ore grades or recovery rates; and seismic activity resulting from unexpected or difficult geological formations or conditions (whether in mineral or gaseous form). As a result of the COVID-19 pandemic, workplace entry and travel restrictions may result in the delay of key personnel or external consultants accessing our sites to undertake inspections or other activities, potentially resulting in unidentified asset integrity. For a discussion of risks specific to our tailings management, see the risk factor below relating to our management of waste rock and tailings. We are facing continued geotechnical challenges due to the older age of some of our open-pit mines and a trend toward mining deeper pits and more complex deposits. No assurances can be given that unanticipated geotechnical and hydrological conditions may or may not occur, nor whether these conditions may lead to events such as landslides and pit wall failures, in the future or that such events will be detected in advance. Geotechnical instabilities can be difficult to predict and are often affected by risks and hazards outside of our control, such as seismic activity or severe weather, which may lead to floods, mudslides, pit-wall instability, and possibly even slippage of material. In early 2019, our El Abra operation in Chile experienced heavy rainfall and electrical storms. As a result, our operating results for 2019 were impacted by a suspension of El Abra’s crushed leach stacking operations for approximately 35 days. We cannot predict whether similar events will occur in the future or the extent to which any such event would affect this, or any of our other operations. Our business is dependent upon our workforce being able to safely perform their jobs, including the potential for physical injuries or illness. Underground mining operations can be particularly dangerous, and in May 2013, a tragic accident, which resulted in 28 fatalities and 10 injuries, occurred at the Grasberg minerals district when the rock structure above the ceiling of an underground training facility collapsed. No assurance can be given that similar events will not occur in the future. We experience mining induced seismic activity from time to time in the Grasberg minerals district. We cannot predict whether additional occurrences of seismic activity or other unexpected geological activity will occur that could cause schedule delays or additional revisions to PT-FI’s mine plans, which could adversely affect our cash flows, results of operations and financial condition. In addition to the usual risks encountered in the mining industry, our Indonesia mining operations involve additional risks given their location in steep mountainous terrain in a remote area of Indonesia. These conditions have required us to overcome special engineering difficulties and develop extensive infrastructure facilities. The area also receives extreme rainfall, which has led to periodic floods and mudslides. Further, the mine site is also in an active seismic area and has experienced earth tremors from time to time. We maintain insurance at amounts we believe to be reasonable to cover some of these risks and hazards; however, our insurance may not sufficiently cover losses from certain natural or operating disasters. No assurance can be given that such insurance will continue to be available, or that it will be available at economically feasible premiums, or that we will be able to obtain or maintain such insurance. We may elect to not purchase insurance for certain risks due to the high premium costs associated with insuring such risk or for various other reasons. We do not have coverage for certain environmental losses and other risks. The lack of, or insufficiency of, insurance coverage could adversely affect our cash flows and overall profitability. The occurrence of one or more of these events in connection with our exploration activities and development of and production from mining operations may result in the death of, or personal injury to, our employees, other personnel or third parties, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, significant repair costs, monetary losses, deferral or unanticipated fluctuations in production, extensive community disruption (including short- and long-term health and safety risks), loss of licenses, permits or necessary approvals to operate, loss of workforce confidence, loss of infrastructure and services, disruption to essential supplies or delivery of our products, environmental damage and potential legal liabilities, all of which may adversely affect our reputation, business, prospects, results of operations and financial position. Further, the impacts of any serious incidents that occur may also be amplified if we fail to respond timely or in an appropriate manner. 52 Our management of waste rock and tailings are subject to significant environmental, safety and engineering challenges and risks that could adversely affect our business. The waste rock (including overburden) and tailings produced in our mining operations represent our largest volume of waste material. Managing the volume of waste rock and tailings presents significant environmental, safety and engineering challenges and risks primarily relating to structural stability, geochemistry, water quality and dust generation. Management of this waste is regulated in the jurisdictions where we operate and our programs are designed to comply with applicable national, state and local laws, permits and approved environmental impact studies. We maintain large leach pads and tailings impoundments containing viscous material. Tailings impoundments include large embankments that must be engineered, constructed and monitored to ensure structural stability and avoid leakages or structural collapse. Our tailings impoundments in arid areas must have effective programs to suppress fugitive dust emissions, and we must effectively monitor, prevent and treat acid rock drainage at all of our operations. In Indonesia, we use a river transport system for tailings management, which presents other risks discussed in more detail in the risk factor below relating to the environmental challenges at our Indonesia mining operations. Subsidiaries of our company currently operate 16 active tailings storage facilities (14 in the U.S. and 2 in Peru), of which 11 have an upstream design and 5 have a centerline design. We also manage 52 tailings storage facilities in the U.S. that are inactive or closed (45 with an upstream design, 5 with a centerline design and 2 with a downstream design) and another 5 with an upstream design that are deemed “safely closed” according to the definition in the Tailings Standard. In 2021, we produced approximately 295 million metric tons of tailings. The failure of tailings and other embankments at any of our mining operations could cause severe, and in some cases catastrophic, property and environmental damage and loss of life, as well as adverse effects on our business and reputation. Many of our tailings storage facilities are located in areas where a failure has the potential to impact individual dwellings and a limited number of impoundments are in areas where a failure has the potential to impact nearby communities or mining infrastructure. As a result, our programs take into account the significant consequences resulting from potential failure modes, and we dedicate substantial financial resources and internal and external technical resources to pursue the safe management of all those facilities reducing and in some cases eliminating the number of and potential consequences of credible failure modes. Our tailings management and stewardship program involves qualified external Engineers of Record and periodic oversight by independent tailings Technical Review Boards and our Tailings Stewardship Team. We continue to enhance our existing practices to strengthen the design, operation and closure of tailings storage facilities in an effort to reduce the risk of severe or catastrophic failure of those facilities. However, no assurance can be given that these events will not occur in the future. For additional information regarding the company’s tailings management and stewardship program, including the Tailings Standard, refer to Items 1. and 2. “Business and Properties” herein. In addition, changes to the physical risks to our facilities resulting from climate change could lead to changes in our plans for managing tailings and waste rock in order to address such risks, which may materially increase the costs associated with managing waste rock and tailings at any or all of our active or inactive mine sites. For further discussion, see the below risk factor relating to the physical effects of climate change. Based on observations from tailings failures at unaffiliated mines, in addition to fatalities and severe personal, property and environmental damages, these events could result in limited or restricted access to mine sites, suspension of operations, decrease in mineral reserves, legal liability, government investigations, additional regulations and restrictions on mining operations in response to any such failure, increased monitoring costs and production costs, increased insurance costs or inability to obtain insurance, increased costs and/or limited access to capital, remediation costs, inability to comply with any additional safety requirements or obtain necessary certifications, evacuation or relocation of communities or other emergency action, and other impacts, which could have a material adverse effect on our operations and financial position. Our Indonesia mining operations have the potential to create difficult and costly environmental challenges, and future changes in Indonesia environmental laws could increase our costs. Mining operations on the scale of our Indonesia operations involve significant environmental risks and challenges. Our primary challenge is to dispose of the large amount of tailings. In 2021, PT-FI produced approximately 52 million metric tons of tailings. Our tailings management plan, which has been approved by the Indonesia government, uses the unnavigable river system in the highlands near our mine to transport the tailings to an 53 engineered deposition area in the lowlands. Lateral levees have been constructed to help contain the footprint of the tailings and to limit their impact in the lowlands. Another major environmental challenge at PT-FI is managing overburden, which is rock that was required to be moved aside in the open pit mining process to reach the ore in the Grasberg open pit. In the presence of air, water and naturally occurring bacteria, some overburden can generate acid rock drainage, or acidic water containing dissolved metals that, if not properly managed, can adversely affect the environment. In addition, specific overburden stockpiles are subject to erosion caused by the large amounts of rainfall, with the eroded stockpile material eventually being deposited in the lowlands tailings management area. The Grasberg overburden stockpiles have experienced erosion over time. This overburden affects the volume as well as the physical and chemical characteristics of the sediment material deposited in the lowlands tailings management area, which can result in environmental impacts. PT-FI’s current designated tailings deposition management plan as well as robust environmental monitoring programs take into account the presence of this overburden in the lowlands tailings management area. As part of its ongoing management and monitoring program, PT-FI expanded the scope of its analyses to assess possible impacts to the environment and human health from overburden erosion and tailings, including conducting and updating a human health risk assessment. During 2021, PT-FI continued to advance work on the human health risk assessment to evaluate these potential impacts. A study conducted by third-party expert consultants with PT-FI support, assessed potential exposure pathways including surface waters, groundwaters, sediments and soils, dust and terrestrial and aquatic tissues. PT-FI continues further study and evaluation and, in furtherance of this effort, has been assisting local health authorities with a community health survey, which is providing further data to evaluate any potential impacts from operations and information on community health conditions. The ongoing study and evaluation, which is expected to be completed in the first half of 2022, will assist in determining what additional monitoring and mitigation efforts may be required in the future. In the past, the Indonesia government has raised questions with respect to our tailings and overburden management plans, including a suggestion that we implement a pipeline system rather than the river transport system for tailings management. Our Indonesia mining operations are remotely located in steep mountainous terrain and in an active seismic area; such that, a pipeline system would be difficult to construct and maintain, and more prone to catastrophic failure, and could therefore involve significant potentially adverse environmental issues. Based on our own studies and others conducted by third parties, we do not believe that a pipeline system for all mine tailings is feasible. Overtopping or levee failure induced by extreme weather events is a potential risk. Additionally, unanticipated structural failure of the levee system in the future could result in flooding of the nearby communities and related loss of lives and/or severe personal, property and environmental damages. This may necessitate evacuation or relocation of communities or other emergency action, financial assistance to the communities impacted, and remediation costs to repair and compensate for the social, cultural and economic impacts. Managing these environmental challenges at our Indonesia operations could result in reputational harm and increased costs that could be significant. In December 2018, Indonesia’s Ministry of Environment and Forestry (MOEF) issued a revised environmental permit to PT-FI to address many of the operational activities that it alleged were inconsistent with earlier studies. PT-FI and the MOEF also established a new framework for continuous improvement in environmental practices at PT-FI’s operations, including initiatives that will examine options to potentially increase tailings retention and to evaluate large scale beneficial uses of tailings within Indonesia. LAPI-ITB, the third-party expert nominated by MOEF to perform the framework evaluation, submitted their report to the MOEF in June 2021. PT-FI is currently evaluating additional actions and activities based on the study conclusions. In addition, MOEF finalized environmental permitting related to the underground rail facilities and Deep Mill Level Zone (DMLZ) production of 80 thousand metric tons per day in November 2021. Permitting of certain facilities for underground mining production operations, as well as permitting for the extension of levees to contain the lateral flow of tailings in the lowlands, continues to progress. We cannot assure you that future environmental changes affecting the mining industry in Indonesia will not be introduced or unexpectedly altered or repealed, or that new interpretations of existing Indonesia environmental laws and regulations will not be issued, which could have a significant impact on PT-FI. 54 Violence, civil and religious strife, and activism could result in loss of life and disrupt our operations. Indonesia has long faced separatist movements and civil and religious strife in a number of provinces. Several separatist groups have sought increased political independence for the province of Papua, where our Grasberg minerals district is located. In Papua, there have been sporadic attacks on civilians by separatists and sporadic but highly publicized conflicts between separatists and the Indonesia military and police. In addition, illegal miners have periodically clashed with police who have attempted for years to move them away from our facilities. Social, economic and political instability in Papua could materially and adversely affect us if it results in damage to our property or interruption of our Indonesia operations. Starting in 2009, a series of shooting incidents occurred within the PT-FI project area, including along the road leading to our mining and milling operations. Since 2009, there have been 22 fatalities and more than 75 injuries to our employees, contractor employees, government security personnel and civilians. Shooting incidents in PT-FI’s project area have continued on a sporadic basis through January 2021, when a helicopter contracted to PT-FI was fired upon and struck by a single gunshot in an area adjacent to the project area. There were several shooting incidents in the first half of 2020, including an incident near a PT-FI office building where one employee was killed and two others injured. In addition, in December 2018, a mass shooting incident targeting a highway construction crew occurred in a remote mountain area approximately 100 miles east of the PT-FI project area, resulting in at least 19 fatalities and several were reported as missing. Separatist security incidents, including shootings, continue to occur regionally. PT-FI actively monitors security conditions and the occurrence of incidents in the region. The safety of our workforce is a critical concern, and PT-FI continues to work with the Indonesia government to enhance security and address security issues within the PT-FI project area and in nearby areas. Although we have implemented measures and safeguards consistent with both international standards and our own internal standards relating to the use of force and respect for human rights, the implementation of these measures and safeguards does not guarantee that personnel, national police or other security forces will uphold these standards in every instance. We continue to limit the use of the road leading to PT-FI’s mining and milling operations to secured convoys, including transport of personnel by armored vehicles in designated areas. We cannot predict whether additional incidents will occur that could result in loss of life, disruption or suspension of PT-FI’s operations. If other disruptive incidents occur, they could adversely affect our results of operations and financial condition in ways that we cannot predict at this time. South America countries have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and general economic and political instability. Since 2019, both Peru and Chile have experienced significant civil unrest unrelated to our operations. For example, in fourth-quarter 2021, an unaffiliated copper producer in southern Peru announced the suspension of its operations after repeated and sustained community protests on the government-designated concentrate transport route along public roads, which constrained the operation from shipping its product. Although such civil unrest has not significantly impacted our results, similar events in the future could cause our South America operations to be materially impacted, in which case, we may not be able to meet our production and sales targets. We cannot predict whether similar or more significant incidents of civil unrest will occur in the future in Peru or Chile. Our mining operations, including future expansions or developments, depend on the availability of significant quantities of secure water supplies. We recognize that access to clean, safe and reliable water supplies is vital to the health and livelihood of our host communities. Our mining operations require physical availability and secure legal rights to significant quantities of water, and the increasing pressure on water resources requires us to consider both current and future conditions in our approach. We aim to balance our operational water requirements with those of the local communities, environment and ecosystems. Most of our North America and South America mining operations are in areas where competition for water supplies is significant, and where climate change may lead to increasing scarcity of water resources in the future. Continuous production at our mines and any future expansions or developments are dependent on many factors, including our ability to maintain our water rights and claims, and the continuing physical availability of the water supplies. Current and long-term water risks include those that arise from our operations (such as failure to properly manage tailings and overburden) and events that we do not control (such as extreme weather and other physical risks associated with climate change). For further discussion of the physical impacts of climate change, see the related risk factor below. 55 As discussed in Item 3. “Legal Proceedings,” in Arizona, where our operations use both surface water and groundwater, we are a participant in an active adjudication in which Arizona courts have been attempting, for over 45 years, to quantify and prioritize surface water claims for the Gila River watershed, one of the state’s largest river systems. If we are not able to satisfactorily resolve the issues being addressed in the adjudications, water uses could be diminished or curtailed, and our operations at Morenci, Safford and Sierrita could be adversely affected unless we are able to acquire alternative resources. Water for our Cerro Verde operation in Peru comes from renewable sources through a series of storage reservoirs on the Rio Chili watershed that collects water primarily from seasonal precipitation and from wastewater collected from the city of Arequipa and treated at a wastewater treatment plant constructed by us. As a result of occasional drought conditions, temporary supply shortages that could affect our Cerro Verde operations are possible. Water for our El Abra mining operation in Chile comes from the continued pumping of groundwater from the Salar de Ascotán aquifer. In 2010, El Abra obtained regulatory approval for the continued pumping of groundwater from the Salar de Ascotán aquifer for its sulfide processing plant, which began operations in 2011. Our current permit will expire in 2029 unless we are able to renew it again. The agreement to pump from this aquifer is subject to continued monitoring of the aquifer water levels and select flora species to ensure that environmentally sensitive areas are not impacted by our pumping. If impact occurs, reductions in pumping are required to restore water levels, which could have an adverse effect on production from El Abra. For further discussion, see the risk factor above relating to the geopolitical, economic and social risks associated with our international operations. Although we typically have sufficient water for our Indonesia operations, the area receives considerable rainfall that makes us susceptible to periodic floods and mudslides, the nature and magnitude of which cannot be predicted. Although each of our mining operations currently has access to sufficient water supplies to support current operational demands, as discussed above, the availability of additional supplies for potential future expansions or development will require additional investments and will take time to develop, if available. While we are taking actions to acquire additional back-up water supplies, such supplies may not be available at acceptable cost, or at all, so that the loss of a water right or currently available water supply could force us to curtail operations or force premature closures, and the ability to obtain future water supplies could prevent future expansions or developments, thereby increasing and/or accelerating costs or foregoing profitable operations. Fluctuations in the price and availability of commodities we purchase and constraints on supply and logistics could affect our profitability. Further, significant delays or increases in costs affecting transportation services may affect our business. Prices and availability of commodities consumed or used in our operations such as natural gas, diesel, ammonium nitrate, chemical reagents, and steel-related products can affect the costs of production at our operations. These prices fluctuate and can be volatile and any cost increases could have a material adverse effect on our results of operations. In 2021, we experienced price increases on certain commodities, including fuel, steel, ammonia and acid. While these increases did not significantly impact our results in 2021, additional increases may occur in 2022 and such increases may be material. Ensuring continuity of supply of materials to our operations is critical to our business. We also rely on the availability of components from suppliers for key machines and equipment, which may be impacted by competition demands as well as the availability of input materials in the creation of such equipment. A supplier’s failure to supply materials or components in a timely manner or to meet our quality, quantity, cost requirements or our technical specifications, or our inability to obtain alternative sources of materials or components on a timely basis or on terms acceptable to us, could adversely affect our operations. In 2021, we experienced longer lead times on delivery of certain materials and shortages on certain materials, including lubricants, semi-conductors, personal protective equipment, rubber and acid. While these delays and shortages did not significantly impact our results in 2021, these issues may continue in 2022 and such shortages and delays may be material. Our business depends on the inbound transportation of commodities we use and the outbound transportation of the commodities we produce by truck, rail and ocean freight. The COVID-19 pandemic has created global shipping and logistics challenges. Any significant increase in the cost of the transportation of these commodities or products, as a result of increases in fuel or labor costs, higher demand for logistics services, or otherwise, would adversely affect our results of operations. Additionally, if the transportation service providers fail to deliver commodities used in our operations to us or the commodities we produce to our customers in a timely manner or at all, such failure could 56 adversely impact our ability to meet our production schedules, delay our projects and capital initiatives, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations. Our information technology systems may be adversely affected by disruptions, damage, failure and risks associated with implementation and integration. Our industry has become increasingly supported by and dependent on digital technologies. Our strategy of operating large, long-lived, geographically diverse assets has been increasingly dependent on our ability to become fully integrated and highly automated. Many of our business and operational processes are heavily dependent on traditional and emerging technology systems to conduct day-to-day operations, improve safety and efficiency, and lower costs. As our dependence on information systems, including those of our third-party service providers and vendors, grows, we become more vulnerable to an increasing threat of continually evolving cybersecurity risks. In recent years, cybersecurity events have increased in frequency and magnitude. These incidents may include, but are not limited to, installation of malicious software, phishing, ransomware, credential attacks, unauthorized access to data and other advanced and sophisticated cybersecurity breaches and threats, including threats that increasingly target critical operational technologies and process control networks. If any of these threats materialize, we could be subject to manipulation or improper use of our systems and networks, production downtimes, communication interruption or other disruptions and delays to our operations or to the transportation of products or infrastructure utilized by our operations, unauthorized release of proprietary, commercially sensitive, confidential or otherwise protected information, a misappropriation or loss of funds, the corruption of data, significant health and safety consequences, environmental damage, loss of intellectual property, fines and litigation, damage to our reputation or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, results of operations and financial condition. We have experienced targeted and non-targeted cybersecurity events in the past and may experience them in the future. While these cybersecurity events did not result in any material loss to us or interrupt our day-to-day operations, as of January 31, 2022, there can be no assurance that we will not experience any such losses or interruption in the future. Given the unpredictability of the timing and the evolving nature and scope of information technology disruptions, the various procedures and controls we use to monitor and protect against these threats and to mitigate our potential risks to such threats may not be sufficient in preventing cybersecurity events from materializing. Further, as cybersecurity threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate vulnerabilities to cybersecurity threats. We could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly or not properly integrated into our operations. System modification failures could have a material adverse effect on our business, financial position and results of operations and could, if not successfully implemented, adversely impact the effectiveness of our internal controls over financial reporting. Human capital risks Labor disputes or labor unrest could disrupt our operations. Our business is dependent on maintaining good relations with our workforce. A significant portion of our employees are represented by labor unions in a number of countries under various collective bargaining agreements with varying durations and expiration dates. Refer to Items 1. and 2. “Business and Properties” of this annual report on Form 10-K for additional information regarding labor matters, and expiration dates of such agreements. As of December 31, 2021, approximately 31 percent of our global labor force was covered by collective bargaining agreements and approximately 14 percent of our global labor force was covered by agreements that will or were scheduled to expire during 2022. Labor agreements are negotiated on a periodic basis, and may not be renewed on reasonably satisfactory terms to us or at all. If we do not successfully negotiate new collective bargaining agreements with our union workers, we may incur prolonged strikes and other work stoppages at our mining operations, which could adversely affect our financial condition and results of operations. Additionally, if we enter into a new labor agreement with any union that significantly increases our labor costs relative to our competitors, our ability to compete may be materially and adversely affected. 57 We could experience labor disruptions such as work stoppages, work slowdowns, union organizing campaigns, strikes, or lockouts that could adversely affect our operations. For example, during third-quarter 2016, PT-FI experienced labor productivity issues and a 10-day work stoppage, which continued during fourth-quarter 2016 and into the first half of 2017. Beginning in mid-April 2017, PT-FI experienced a high level of worker absenteeism, which unfavorably impacted mining and milling rates, and in May 2017, a significant number of employees and contractors elected to participate in an illegal strike action. These employees were subsequently deemed to have voluntarily resigned under existing Indonesia laws and regulations resulting in increased costs associated with employee severance. In third-quarter 2020, we experienced a five-day labor-related work stoppage related to COVID-19 travel restrictions when a small group of workers at PT-FI staged protests and a blockade restricting access to the main road to the mining operations area. We reached an amicable resolution with the group of workers while upholding our COVID-19 safety protocols. There were no strikes or lockouts at any of our operations in 2021. We cannot predict whether additional labor disruptions will occur. Significant reductions in productivity or protracted work stoppages at one or more of our operations could significantly reduce our production and sales volumes or disrupt operations, which could adversely affect our cash flows, results of operations and financial condition. Our future success depends on our ability to attract, retain and develop qualified personnel. Our success is dependent on the contributions of our highly skilled and experienced workforce. Our business depends upon our ability to attract, retain and develop a qualified, inclusive and diverse workforce. Our ability to attract qualified personnel is affected by the available pool of workers with the training and skills necessary to fill the available positions, the impact on the labor supply due to general economic conditions and our ability to offer competitive compensation and benefit packages. If we fail to attract, retain and develop qualified, inclusive and diverse personnel necessary for the efficient operation of our business, this could result in decreased profitability, productivity and efficiency, which may have a material adverse effect on our performance. Risks related to development projects and mineral reserves Development projects are inherently risky and may require more capital and have lower economic returns than anticipated, and the development of our underground mines are also subject to other unique risks. Mine development projects typically require a number of years and significant expenditures during the development phase before production is possible. Our development projects include underground development activities at the Grasberg Block Cave, DMLZ and Kucing Liar ore bodies in the Grasberg minerals district, which currently constitute approximately 28 percent of our estimated consolidated recoverable proven and probable copper reserves and 94 percent of our estimated consolidated recoverable proven and probable gold reserves. There are many risks and uncertainties inherent in all development projects including, but not limited to, unexpected or difficult geological formations or conditions, potential delays, cost overruns, lower levels of production during ramp-up periods, shortages of material or labor, construction defects, breakdowns and injuries to persons and property. The development of our underground mines are also subject to other unique risks including, but not limited to, underground fires or floods, ventilating harmful gases, fall-of-ground accidents, and seismic activity resulting from unexpected or difficult geological formations or conditions. For example, we experience mining induced seismic activity from time to time in the Grasberg minerals district. While we anticipate taking all measures that we deem reasonable and prudent in connection with the development of our underground mines to safely manage production, there is no assurance that these risks will not cause schedule delays, revised mine plans, injuries to persons and property, or increased capital costs, any of which may have a material adverse impact on our cash flows, results of operations and financial condition. Additionally, although we devote significant time and resources to our project planning, approval and review processes, many of our development projects are highly complex and rely on factors that are outside of our control, which may cause the actual time and capital required to complete a development project to exceed our estimates. 58 Exploration is highly speculative, and our exploration activities may not result in additional discoveries to replace mineral reserves. Our existing mineral reserves will be depleted over time by production from our operations. Because our profits are primarily derived from our mining operations, our ability to replenish our mineral reserves is essential to our long-term success. Depleted mineral reserves can be replaced in several ways, including expanding known ore bodies, reducing operating costs that could extend the life of a mine by allowing us to cost-effectively process ore types that were previously considered uneconomic, by locating new deposits or acquiring interests in mineral reserves from third parties. Exploration is highly speculative in nature, involves many risks and uncertainties, requires substantial capital expenditures and, in some instances, advances in processing technology, and is frequently unsuccessful in discovering significant mineral resources since new, large, long-life deposits are increasingly scarce. Accordingly, our current or future exploration programs may not result in the discovery of additional deposits that can be produced profitably. Even if significant mineral resources are discovered, it will likely take many years from the initial phases of exploration until commencement of production, during which time the economic feasibility of production may change. We may not be able to discover, enhance, develop or acquire mineral reserves in sufficient quantities to maintain or grow our current reserve levels, which could negatively affect our cash flows, results of operations and financial condition. Estimates of mineral reserves and mineral resources are uncertain and the volume and grade of ore actually recovered may vary from our estimates. Our estimates of mineral reserves and mineral resources have been prepared in accordance with the disclosure requirements of Subpart 1300 of U.S. Securities and Exchange Commission (SEC) Regulation S-K. There are numerous uncertainties inherent in mineral estimates. Such estimates are, to a large extent, based on assumed long-term prices for the commodities we produce, primarily copper, gold and molybdenum, and interpretations of geologic data obtained from drill holes and other exploration techniques, which may not necessarily be indicative of future results. Our mineral estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our ore bodies to optimize economic values and to manage risk. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Geological assumptions about our mineral resources that are valid at the time of estimation may change significantly when new information becomes available. Estimates of mineral reserves, or the cost at which we anticipate the mineral reserves will be recovered, are based on assumptions, such as metal prices and other economic inputs. Changes to such assumptions may require revisions to reserve estimates which could affect our asset carrying values and may also negatively impact our future financial condition and results. Until mineral reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, if the market prices for the commodities we produce decline from assumed levels, if production costs increase or recovery rates decrease, or if applicable laws and regulations are adversely changed, we can offer no assurance that the indicated level of recovery will be realized or that mineral reserves can be mined or processed profitably. If we determine that certain of our estimated recoverable proven and probable mineral reserves have become uneconomic, this may ultimately lead to a reduction in our aggregate reported mineral reserves, which could have a material adverse effect on our business, financial condition and results of operations. Additionally, the term “mineral resources” does not indicate recoverable proven and probable mineral reserves as defined by the SEC. Estimates of mineral resources are subject to further exploration and evaluation of development and operating costs, grades, recoveries and other material factors, and, therefore, are subject to considerable uncertainty. Mineral resources do not meet the threshold for mineral reserve modifying factors, such as engineering, legal and/or economic feasibility, that would allow for the conversion to mineral reserves. Accordingly, no assurance can be given that the estimated mineral resources not included in mineral reserves will become recoverable proven and probable mineral reserves. 59 Regulatory, environmental and social risks The costs of compliance with environmental, health and safety laws and regulations applicable to our operations may constrain existing operations or expansion opportunities. Related permit and other approval requirements may delay or result in a suspension of our operations. Our operations are subject to extensive and complex laws and regulations, including environmental laws and regulations governing the generation, storage, treatment, transportation and disposal of hazardous substances; solid waste disposal; air emissions; wastewater discharges; remediation, restoration and reclamation of environmental contamination, including mine closures and reclamation; protection of endangered and threatened species and designation of critical habitats; and other related matters. These laws and regulations are subject to change and to changing interpretation by governmental agencies and other bodies vested with broad supervisory authority. As a mining company, compliance with environmental, health and safety laws and regulations is an integral and costly part of our business. In addition, we must obtain regulatory permits and approvals to start, continue and expand operations. Certain federal and similar state laws and regulations may expose us to joint and several liability for environmental damages caused by our operations, or by previous owners or operators of properties we acquired or are currently operating or at sites where we previously sent materials for processing, recycling or disposal. As discussed in more detail in the risk factor below relating to costs incurred for remediating environmental conditions on our properties that are no longer in operation, we have substantial obligations for environmental remediation on properties previously owned or operated by Freeport Minerals Corporation (FMC) and certain of its affiliates. Noncompliance with these laws and regulations could result in material penalties or other liabilities. In addition, compliance with these laws may from time to time result in delays in or changes to our development or expansion plans. Compliance with these laws and regulations imposes substantial costs, which we expect will continue to increase over time because of increased regulatory oversight, adoption of increasingly stringent environmental standards, and other factors. New or revised environmental regulatory requirements are frequently proposed, many of which result in substantially increased costs for our business, including those regarding financial obligations. Regulations have been considered at various governmental levels to increase financial responsibility requirements for mine closure and reclamation. Adoption of such environmental regulations or more stringent application of existing regulations may materially increase our costs, threaten certain operating activities and constrain our expansion opportunities. In addition, no assurances can be made that restrictions relating to conservation will not have an adverse impact on expansion of our operations or not result in delays in project development, constraints on exploration and constraints on operations in impacted areas. We have incurred and expect to incur environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) to comply with applicable environmental laws and regulations that affect our operations. The timing and amounts of estimated payments could change as a result of changes in regulatory requirements, changes in scope and costs of reclamation activities, the settlement of environmental matters and the rate at which actual spending occurs on continuing matters. We are also subject to extensive regulation of worker health and safety. Our mines are inspected on a regular basis by government regulators who may issue citations and orders when they believe a violation has occurred under applicable mining regulations. If inspections result in an alleged violation, we may be subject to fines and penalties and, in instances of alleged significant violations, our mining operations or industrial facilities could be subject to temporary or extended closures. Many other governmental bodies regulate other aspects of our operations, and our failure to comply with these legal requirements can result in substantial penalties. In addition, new laws and regulations, including executive orders, or changes to or new interpretations of existing laws and regulations by courts or regulatory authorities occur regularly, but are difficult to predict. Any such variations could negatively impact the mining sector, including our business, substantially increase costs to achieve compliance or otherwise could have a material adverse effect on our cash flows, results of operations and financial condition. For additional information regarding the various regulations affecting us, see Items 1. and 2. “Business and Properties” of this annual report on Form 10-K. 60 We incur significant costs for remediating environmental conditions on properties that have not been operated in many years. FMC and its subsidiaries, and many of their affiliates and predecessor companies, have been involved in exploration, mining, milling, smelting and manufacturing in the U.S. for more than a century. Activities that occurred in the late 19th century and the 20th century prior to the advent of modern environmental laws were not subject to environmental regulation and were conducted before American industrial companies fully understood the long-term effects of their operations on the surrounding environment. Companies like FMC are now legally responsible for remediating hazardous substances released into the environment from properties owned or operated by them as well as properties where they arranged for disposal of such substances, irrespective of when the release to the environment occurred or who caused it. That liability is often asserted on a joint and several basis with other prior and subsequent owners, operators and arrangers, meaning that each owner or operator of the property is, and each arranger may be, held fully responsible for the remediation, although in many cases some or all of the other responsible parties no longer exist, do not have the financial ability to respond or cannot be found. As a result, because of our acquisition of FMC in 2007, many of the subsidiary companies we now own are potentially responsible for a wide variety of environmental remediation projects throughout the U.S., and we expect to spend substantial sums annually for many years to address those remediation issues. We are also subject to claims where the release of hazardous substances is alleged to have damaged natural resources. At December 31, 2021, we had more than 100 active remediation projects in 24 U.S. states. In addition, FMC and certain affiliates and predecessor companies were parties to agreements relating to the transfer of businesses or properties that contained indemnification provisions relating to environmental matters, and from time to time these provisions become the source of claims against us. Our environmental obligation estimates are primarily based upon: • Our knowledge and beliefs about complex scientific and historical facts and circumstances that in many cases occurred many decades ago; • Our beliefs and assumptions regarding the nature, extent and duration of remediation activities that we will be required to undertake and the estimated costs of those remediation activities, which are subject to varying interpretations; and • Our beliefs regarding the requirements that are imposed on us by existing laws and regulations and, in some cases, the clarification of uncertain regulatory requirements that could materially affect our environmental obligation estimates. Significant adjustments to these estimates are likely to occur in the future as additional information becomes available. The actual environmental costs may exceed our current and future accruals for these costs, and any such changes could be material. In addition, remediation standards imposed by the U.S. Environmental Protection Agency and state environmental agencies have generally become more stringent over time and may become even more stringent in the future. Imposition of more stringent remediation standards, particularly for arsenic and lead in soils, poses a risk that additional remediation work could be required at our active remediation sites and at sites that we have already remediated to the satisfaction of the responsible governmental agencies, and may increase the risk of toxic tort litigation. Refer to Items 1. and 2. “Business and Properties” and Note 12 for further discussion of our environmental obligations. 61 We face increasing regulatory and stakeholder expectations relating to our GHG emissions and energy transition plans, which may adversely affect our business. Further, we may not be able to timely or successfully transition from fossil fuel sources for our significant energy needs, which may result in reputational damage. Our operations require significant energy, much of which is currently from fossil fuel sources and is obtained from third parties under long-term contracts. Energy represented approximately 21 percent of our copper mine site operating costs in 2021, and is expected to approximate 25 percent in 2022. The principal sources of energy consumption at our mining operations are: diesel fuel, which powers mine trucks and other transportation equipment; purchased electricity, which powers core facilities and certain on-site metal processing operations; and coal and natural gas, which provides electricity at certain operations. Existing and proposed new governmental conventions, laws, regulations and standards (both in the U.S. and internationally), including those related to climate and GHG emissions, may in the future add significantly to our operating costs, limit or modify our operations, and require more resources to comply and remediate in response. For additional information on climate change conventions, laws, regulations and standards applicable to FCX, refer to Items 1. and 2. “Business and Properties”. If we do not adapt to the expectations of stakeholders regarding a low-carbon future in a timely manner, it may result in reputational damage with key stakeholders impacting investor confidence, market value and access to and cost of capital. In response to climate change and societal demands for action, we have announced GHG emissions reduction targets and aspirations, which will result in additional costs to us, and we cannot guarantee that we will be able to achieve any current or future GHG emissions targets or aspirations. While we strive to transition to more renewable power sources for our mining operations, as a commercial consumer of power, our ability to reduce our GHG emissions associated with our power consumption demand is dependent upon the mix of our suppliers and locally-available renewable energy resources at our various sites. The transition to renewable and other energy sources could, among other things, increase our capital expenditures, operating and energy costs, depending on the scope, magnitude and timing of increased regulation of fossil-fuel based energy production, including GHG emissions, as well as the availability of alternative energy sources. In certain aspects of our operations, our ability to reduce our GHG emissions is directly dependent on the actions of third parties and technological solutions and innovation, and our ability to make significant, rapid changes in our GHG emissions in response to potential future regulations may be limited. For example, our diesel-fueled mine trucks are a significant contributor to GHG emissions at our North America and South America operations, but reduction of emissions from mine trucks will depend upon the development of alternative-fueled mining equipment by our third-party suppliers. At our remote operations in Indonesia, we own and operate a coal-fired power plant, and our ability to transition to commercially viable alternative sources of energy will depend on, among other things, a feasibility study and technological considerations. The physical impacts of climate change may adversely affect our mining operations, workforce and supply chain. We recognize that as the climate changes, our operations, workforce and supply chain may be exposed to changes in the frequency, intensity and/or duration of intense storms, drought, flooding (including from sea level rise at our coastal operations), wildfire, and other extreme weather events and patterns. Such potential physical impacts of climate change on our operations are highly uncertain, and would vary by operation based on particular geographic circumstances. At many of our mine sites, climate change is projected to impact local precipitation regimes, resulting in shorter-duration, higher-intensity storm events, and the potential for less precipitation overall. We could face increased operational costs associated with managing additional volumes of storm water during more intense future events, including supply disruption, delays and increased pricing. In addition, the potential for overall decreases in precipitation could affect the availability of water needed for our operations, leading to increased operating costs, or in extreme cases, disruptions to mining operations. In addition, with respect to our tailings facilities, as part of our commitment to implementing the Tailings Standard (discussed in Items 1. and 2. “Business and Properties” herein), we will be required to consider uncertainties due to climate change, incorporate that assessment into the relevant knowledge base for our tailings facilities, use this knowledge base to enhance the resilience of our approach to the impacts of climate change using an adaptive management approach, incorporate that knowledge into facility operations, and take measures to mitigate both 62 environmental impact and potential failure risks at our tailings facilities, including those arising from climate change. These obligations likely will require future changes at our tailings facilities, which could increase our operational expenses or require further capital investments. Increasing scrutiny and evolving expectations from stakeholders with respect to our ESG practices, performance, commitments and disclosures may impact our reputation, increase our costs and impact our access to capital. Stakeholder scrutiny related to our ESG practices, commitments, performance and disclosures continues to increase. We have adopted certain policies and programs, including with respect to responsible production frameworks, climate change, water stewardship, biodiversity, tailings management and stewardship, waste management, safety and health, human capital management, human rights, social performance and community and Indigenous Peoples relations, and supply chain/responsible sourcing. It is possible, however, that our stakeholders might not be satisfied with our ESG practices, commitments, performance and/or disclosures, or the speed of their adoption, implementation and measurable success. If we do not meet our stakeholders’ evolving expectations, our reputation, access to and cost of capital, and stock price could be negatively impacted. Investor advocacy groups, certain institutional investors, investment funds, creditors and other influential investors are increasingly focused on our ESG practices and in recent years have placed increasing importance on the ESG implications of their investments and lending decisions. Organizations that provide information to investors and financial institutions on ESG performance and related matters have developed quantitative and qualitative data collection processes and ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. In addition, many investors have created their own proprietary ratings that inform their investment and voting decisions. Unfavorable ratings or assessment of our ESG practices, including our compliance with certain disclosure standards and frameworks, may lead to negative investor sentiment toward us, which could have a negative impact on our stock price and our access to and cost of capital. Similarly, some financial institutions have incorporated ESG ratings into their credit risk assessments, and screen companies based on their ESG practices and performance when making lending decisions. If we are unable to meet the ESG lending criteria set by our creditors or are required to take certain remediation steps to satisfy such criteria, our access to capital on terms we find favorable may be limited and our costs may increase. As we continue to focus on our ESG practices, commitments, performance and disclosures, and as ESG-related regulations and disclosure standards and frameworks continue to evolve, we have expanded our public disclosures in these areas. Such disclosures may reflect goals, aspirations, commitments, cost estimates and other expectations and assumptions, including over long timeframes, which are necessarily uncertain and may not be realized. Further, the voluntary disclosure standards or frameworks we choose to align with are evolving and may change over time and our interpretation of such disclosure standards and frameworks may differ from those of others, either of which may result in a lack of consistent or meaningful comparative data from period to period and/or significant revisions to our goals and aspirations or reported progress in achieving such goals and aspirations. Ensuring that there are adequate systems and processes in place to comply with the various ESG tracking and disclosure obligations will require management’s time and expense. If we do not adapt to or comply with investor or stakeholder expectations, including with respect to evolving disclosure standards and frameworks, or if we are perceived to have not responded appropriately, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and our business, financial condition, cost of capital and/or stock price could be materially and adversely affected. In addition, our customers and end users may require that we implement certain additional ESG procedures or standards before they will start or continue to do business with us, which could lead to preferential buying based on our ESG practices compared to our competitors’ ESG practices. Further, being associated with activities by suppliers, contractors or other affiliates that have or are perceived to have individual or cumulative adverse impacts on the environment, climate, biodiversity and land management, water access and management, human rights or cultural heritage could negatively affect our reputation and impose additional costs. 63 Failure or the perceived failure to manage our relationships with the communities and/or Indigenous Peoples where we operate or that are near our operations could harm our reputation and social license to operate. Our relationships with the communities and/or Indigenous Peoples where we operate or that are adjacent to or near our operations are critical to the long-term success of our existing operations and the development of any future projects. There is ongoing and increasing stakeholder concern relating to a company’s social license to operate and the perceived effects of mining activities on the environment and on communities impacted by such activities. We may engage in activities, such as exploration, production, construction or expansion of our operations that have or are perceived to have adverse impacts on the local communities and their relevant stakeholders, society as a whole, Indigenous Peoples, cultural heritage, human rights and the environment, among other things. For example, our operations may take place on or adjacent to Indigenous Peoples’ ancestral lands, and such Indigenous Peoples may assert rights to the lands where we operate. Further, we may be required or expected by our stakeholders to consult with and/or obtain consent from Indigenous Peoples with respect to these operations. In addition, our assets are generally long-lived and stakeholders’ perceptions and expectations can change over the life of the mine. Changes in the aspirations and expectations of local communities and/or Indigenous Peoples where we operate, with respect to our employee health and safety performance and our contributions to infrastructure, community development, environmental management and other factors could affect our social license to operate and reputation, and could lead to delays and/or increased costs if expansions or new projects are blocked either temporarily or for extended periods. Failure to effectively engage with communities on an ongoing basis, including the withdrawal of consent or support of Indigenous Peoples, or other stakeholders, could adversely impact our business, damage our reputation and/or result in loss of rights to explore, operate or develop our projects. Risks related to our common stock Our holding company structure may impact our ability to service our debt, declare dividends and repurchase shares. We are a holding company with no material assets other than the capital stock and intercompany receivables of our subsidiaries. As a result, our ability to repay our indebtedness and pay dividends is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us, by dividend, loan, debt repayment or otherwise. Our subsidiaries do not have any obligation to make funds available to us to repay our indebtedness or pay dividends. Dividends from subsidiaries that are not wholly owned are shared with other equity owners. Cash at our international operations is also typically subject to foreign withholding taxes upon repatriation into the U.S. In addition, our subsidiaries may not be able to, or be permitted to, make distributions to us or repay loans to us, to enable us to repay our indebtedness or pay dividends. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal restrictions, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries. Certain of our subsidiaries are parties to credit agreements that restrict their ability to make distributions or loan repayments to us if such subsidiary is in default under such agreements, or to transfer substantially all of the assets of such subsidiary without the consent of the lenders. Our rights to participate in any distribution of our subsidiaries’ assets upon their liquidation, reorganization or insolvency would generally be subject to the prior claims of the subsidiaries’ creditors, including any trade creditors. As more fully described in Note 10, during 2021, our Board of Directors (Board) adopted a performance-based payout framework, which currently includes base and variable dividends and a share repurchase program. Our ability to continue to pay dividends (base or variable) and the timing and amount of any share repurchases is at the discretion of our Board and management, respectively, and is subject to a number of factors, including maintaining our net debt target, capital availability, our financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by our Board or management, as applicable. Our share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion. Our dividend payments and share repurchases may change, and we cannot provide assurance that we will continue to declare dividends or repurchase shares at all or in any particular amounts. A reduction or suspension in our dividend payments or share repurchases could have a negative effect on the price of our common stock. 64 Anti-takeover provisions in our charter documents and Delaware law may make an acquisition of us more difficult. Anti-takeover provisions in our charter documents and Delaware law may make an acquisition of us more difficult. These provisions may discourage potential takeover attempts, discourage bids for our common stock at a premium over market price or adversely affect the market price of, and the voting and other rights of the holders of, our common stock. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors other than the candidates nominated by the Board. Refer to Exhibit 4.1 for further discussion of our anti-takeover provisions. Further, our By-Laws provide to the fullest extent permitted by law that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, the United States District Court for the District of Delaware) will be the sole and exclusive forum for any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim that is based upon a violation of a duty by any of our current or former directors, officers, employees or stockholders in such capacity, (iii) action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery of the State of Delaware, (iv) action asserting a claim governed by the internal affairs doctrine, or (v) action asserting an “internal corporate claim” as that term is defined in Section 115 of the Delaware General Corporation Law. The choice of forum provision may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us or our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our By-Laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in our By-laws will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit large stockholders from consummating a merger with, or acquisition of, us. These provisions may deter an acquisition of us that might otherwise be attractive to our stockholders. Item 1B. Unresolved Staff Comments. Not applicable. Item 3. Legal Proceedings. Below is a discussion of our material pending legal proceedings not otherwise required to be disclosed in our Notes to Consolidated Financial Statements. Refer to Note 12 for a discussion of other material pending legal proceedings. In addition to the material pending legal proceedings discussed below and in Note 12, we are involved periodically in ordinary routine litigation incidental to our business and not required to be disclosed, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. United States (U.S.) Securities and Exchange Commission (SEC) regulations require us to disclose environmental proceedings involving a governmental authority if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such environmental proceedings is required. Management does not believe, based on currently available information, that the outcome of any currently pending legal proceeding will have a material adverse effect on our financial condition; although individual or cumulative outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period. 65 Water Rights Adjudications Our operations in the western U.S. require significant secure quantities of water for mining and ore processing activities, and related support facilities. Continuous operation of our mines is dependent on, among other things, our ability to maintain our water rights and claims and the continuing physical availability of the water supplies. In the arid western U.S., where certain of our mines are located, water rights are often contested, and disputes over water rights are generally time-consuming, expensive and not necessarily dispositive unless they resolve both actual and potential claims. The loss of a water right or a currently available water supply could force us to curtail operations, or force premature closures, thereby increasing and/or accelerating costs or foregoing profitable operations. At our North America operations, certain of our water supplies are supported by surface water rights, which give us the right to use public waters for a statutorily defined beneficial use at a designated location. In Arizona, where our operations use both surface and groundwater, we are a participant in an active adjudication in which Arizona courts have been attempting, for over 45 years, to quantify and prioritize surface water claims for the Gila River system, one of the state’s largest river systems. This Gila River adjudication primarily affects our Morenci, Safford (including Lone Star) and Sierrita mines. The Gila River adjudication is addressing the state law claims of thousands of competing users, including us, as well as significant federal water claims that are potentially adverse to the state law claims of both surface water and groundwater users. Groundwater is treated differently from surface water under Arizona law, which historically allowed land owners to pump unlimited quantities of subsurface water, subject only to the requirement of putting it to “reasonable use.” However, court decisions in the adjudication have concluded that some subsurface water constitutes “subflow” that is to be treated legally as surface water and is therefore subject to the Arizona doctrine of prior appropriation and to the adjudication, and potentially unavailable to groundwater pumpers, including us, in the absence of valid surface water claims. Any re-characterization of groundwater as surface water could affect the ability of consumers, farmers, ranchers, municipalities, and industrial users like us to continue to access water supplies that have been relied on for decades. Because we are a user of both groundwater and surface water in Arizona, we are an active participant in the Gila River adjudication. In Re The General Adjudication of All Rights to Use Water in the Gila River System and Sources , Maricopa County, Superior Court, Cause Nos. W-1 (Salt), W-2 (Verde), W-3 (Upper Gila), and W-4 (San Pedro). This case was originally initiated in 1974 with the filing of a petition with the Arizona State Land Department and was consolidated and transferred to the Maricopa County Superior Court in 1981. The principal parties, in addition to us, include: Arizona Public Service Company, ASARCO, LLC; BHP Copper, Inc; the state of Arizona; various cities and towns and water companies; the Gila Valley Irrigation District; the Franklin Irrigation District; the San Carlos Irrigation and Drainage District; the Salt River Project; the San Carlos Apache Tribe; the Gila River Indian Community; and the U.S. on behalf of those tribes, on its own behalf, and on behalf of the White Mountain Apache Tribe, the Fort McDowell Mohave-Apache Indian Community, the Salt River Pima-Maricopa Indian Community, and the Payson Community of Yavapai Apache Indians. Prior to January 1, 1983, various Indian tribes filed separate suits in the U.S. District Court in Arizona claiming superior rights to water being used by many other parties, including us, and claiming damages for prior use in derogation of their allegedly superior rights. These federal proceedings have been stayed in favor of the adjudications pending in Arizona state courts, and some of the federal suits have since been settled. In 2005, the Maricopa County Superior Court directed the Arizona Department of Water Resources (ADWR) to prepare detailed recommendations regarding the delineation of the “subflow” zone of the San Pedro River, a tributary of the Gila River. Subsurface water within the subflow zone is presumed to constitute appropriable subflow rather than groundwater. Although we have minimal interests in the San Pedro River Basin, a decision that re-characterizes groundwater in that basin as appropriable subflow may set a precedent for other river systems in Arizona that could have material implications for many commercial, industrial, municipal and agricultural users of groundwater, including our Arizona operations. In 2017, the court approved ADWR’s proposed subflow zone maps; water pumped from wells located inside the mapped subflow zone is now presumed to be appropriable subflow. No party has appealed that decision. ADWR is now in the process of preparing subflow delineations for the applicable watercourses in Verde River watershed. In December 2021, ADWR issued a report proposing a delineation for the Verde River mainstem and Sycamore Creek and objections to that report are due in May 2022. We do not have any active mining operations in the Verde watershed that would be impacted by this phase of the adjudication. 66 In 2014, ADWR submitted a proposal for the development of procedures for “cone of depression” analyses to determine whether a well located outside of the subflow zone creates a cone of depression that intersects the subflow zone. Based on these cone of depression analyses, wells outside of the subflow zone could be subject to the adjudications pending in Arizona state courts. In the absence of a valid surface water claim to support the pumping, owners of wells deemed to be depleting the subflow zone through their cones of depression may be subject to claims that they must refrain from pumping subflow or must pay damages. In January 2017, ADWR issued a report containing its recommended cone of depression test, and a trial was held in March 2018 concerning ADWR’s recommended action. On November 14, 2018, the Special Master for the Gila River adjudication issued a final decision rejecting ADWR’s recommended cone of depression test, instead adopting our position that a numeric model capable of accounting for complexities of the aquifer system should be used. The Special Master also confirmed that the cone of depression test instead would be an initial test for determining which wells are subject to the adjudications, rather than proving that a well is pumping subflow or establishing how much of a well’s water production is subflow. Such matters will be determined by a subsequent “subflow depletion test,” which has not yet been formulated. Some of our adversaries objected to the Special Master’s final decision, and the Arizona Superior Court heard oral argument on the objections in February 2020. This issue remains under advisement with the Arizona Superior Court. In response to the Special Master’s decision, in December 2018, ADWR submitted its initial report on the “subflow depletion test,” which will specify the methodology a well owner must use to quantify the portion of the water drawn from a well that is subflow as opposed to groundwater; however, ADWR remains in the process of developing its proposed subflow depletion test. We, along with the other parties, will have the opportunity to provide input throughout the process. The first issue litigated concerned whether for the subflow depletion test the subflow zone should be represented in the numeric model as extending only as deep as the bottom of the floodplain alluvium or extend all the way down to bedrock. In August 2021, the Special Master issued an order recognizing our position that if the vertical extent of the subflow zone is extended below the floodplain alluvium, it would result in overstated depletion calculations. Accordingly, the Special Master ordered that the vertical boundary of the subflow zone be restricted to the floodplain alluvium. To date, our adversaries have not taken steps to appeal this ruling. In proceedings separate from the development of the depletion test, in June 2020, the Special Master designated legal questions to be resolved concerning a well owner’s ability to obtain a surface water right for subsurface water that, while initially believed to be non-appropriable groundwater, is ultimately determined to be appropriable subflow. In April 2021, the Special Master ruled that, for uses initiated after enactment of the 1919 permitting statute, a well owner may not pursue a surface water right unless the well owner filed an application for a permit to appropriate. As part of the adjudications, the U.S. has asserted numerous claims for express and implied “reserved” surface water and groundwater rights on Indian and non-Indian federal lands throughout Arizona. These claims are related to reservations of federal land for specific purposes (e.g., Indian reservations, national parks, military bases and wilderness areas). Unlike state law-based water rights, federal reserved water rights are given priority in the “prior appropriation” system based on the date the land was reserved, not the date that water was first used on the land. In addition, federal reserved water rights may enjoy greater protection from groundwater pumping than is accorded to state law-based water rights. In multiple instances, the U.S. asserts a right to all water in a particular watershed that was not effectively appropriated under state law prior to the establishment of the federal reservation. This creates risks for both surface water users and groundwater users because such expansive claims may severely impede competing uses of water within the same watershed. Because there are numerous federal reservations in watersheds across Arizona, the reserved water right claims of the U.S. pose a significant risk to multiple operations, including Morenci and Safford (including Lone Star) in the Upper Gila River watershed, and Sierrita in the Santa Cruz watershed. Because federal reserved water rights may adversely affect water uses at each of these operations, we have been actively involved in litigation over these claims. Because federal reserved water rights have not yet been quantified, the task of determining how much water each federal reservation may use has been left to the Arizona Superior Court handling the Gila River adjudication. Several “contested cases” to quantify reserved water rights for particular federal reservations in Arizona are currently pending with only one resolved at this time. That case, In re Aravaipa Canyon Wilderness Area, was to resolve the U.S.’s claims to water for the Aravaipa Canyon Wilderness Area. The case was tried in 2015 and the court issued a decision in December 2018 supportive of our position on almost all issues, including rejection of U.S.’s core argument that wilderness areas are entitled to all water that was not appropriated 67 at the time the reservation was created. We believe the rulings in this case will support our positions in other pending federal reserved water right cases, including these: In re Fort Huachuca , which involves the U.S.’s claims to water for an Arizona army base and is awaiting a decision following a trial which concluded in February 2017; In re Redfield Canyon Wilderness Area , which involves the U.S.’s claims to water for another wilderness area and is awaiting a decision following a trial which concluded in May 2017; and In re San Pedro Riparian National Conservation Area , which involves the U.S.’s claims to water for a national conservation area and is awaiting a decision following a trial which concluded in May 2018. Given the legal and technical complexity of these adjudications, their long history, and their long-term legal, economic and political implications, it is difficult to predict the timing or the outcome of these proceedings. If we are not able to satisfactorily resolve the issues being addressed in the adjudications, our ability to pump groundwater could be diminished or curtailed, and our operations at Morenci, Safford (including Lone Star) and Sierrita could be adversely affected unless we are able to acquire alternative water resources. Item 4. Mine Safety Disclosures. Our highest priority is the health, safety and well-being of our workforce. We believe that health and safety considerations are integral to, and fundamental for, all other functions in our organization, and we understand that the health and safety of our workforce is critical to our operational efficiency and long-term success. Our global health and safety approach, “Safe Production Matters,” is focused on fatality prevention and continuous improvement through the use of robust management systems, empowering safe work behaviors and strengthening our safety culture. Our objective is to achieve zero workplace fatalities and to decrease injuries and occupational illnesses. We measure progress toward achieving our objective against regularly established benchmarks, including measuring company-wide Total Recordable Incident Rates (TRIR). Our TRIR (including contractors) per 200,000 man-hours worked was 0.69 in both 2021 and 2020. The metal mining sector industry average per 200,000 man-hours worked reported by the U.S. Mine Safety and Health Administration was 1.70 for 2021 (preliminary for the period of January 1, 2021, through September 30, 2021) and 1.66 in 2020. Refer to Exhibit 95.1 for mine safety disclosures required in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K. Information About our Executive Officers. Certain information as of February 15, 2022, about our executive officers is set forth in the following table and accompanying text: Name Age Position or Office Richard C. Adkerson 75 Chairman of the Board and Chief Executive Officer Kathleen L. Quirk 58 President and Chief Financial Officer Stephen T. Higgins 64 Senior Vice President and Chief Administrative Officer Douglas N. Currault II 57 Senior Vice President and General Counsel Richard C. Adkerson has served as Chairman of the Board since February 2021, Chief Executive Officer since December 2003 and has been a director since October 2006. Mr. Adkerson previously served as Vice Chairman of the Board from May 2013 to February 2021, President from January 2008 to February 2021 and also from April 1997 to March 2007, and Chief Financial Officer from October 2000 to December 2003. Kathleen L. Quirk has served as President since February 2021 and as Chief Financial Officer since December 2003. Ms. Quirk previously served as Executive Vice President from March 2007 to February 2021, Treasurer from February 2000 to August 2018 and as Senior Vice President from December 2003 to March 2007. Ms. Quirk also serves on the Board of Directors of Vulcan Materials Company. Stephen T. Higgins has served as Senior Vice President since August 2018 and as Chief Administrative Officer since January 2019. Mr. Higgins previously served as Vice President - Sales and Marketing from March 2007 to August 2018 and as President of Freeport-McMoRan Sales Company, Inc. from April 2006 to August 2019. 68 Douglas N. Currault II has served as Senior Vice President and General Counsel since October 2019. Mr. Currault previously served as Deputy General Counsel from January 2015 to October 2019, Assistant General Counsel from January 2008 to January 2015, Secretary from May 2007 to December 2019 and as Assistant Secretary from February 2000 to May 2007. PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Unregistered Sales of Equity Securities None. Common Stock Our common stock is traded on the New York Stock Exchange under the symbol “FCX.” At January 31, 2022, there were 10,719 holders of record of our common stock. Common Stock Dividends In February 2021, our Board of Directors (the Board) reinstated a cash dividend on our common stock (base dividend) at an annual rate of $0.30 per share, and on November 1, 2021, the Board approved a variable cash dividend on our common stock for 2022 at an expected annual rate of $0.30 per share. The combined annual rate of the base dividend and the variable dividend is expected to total $0.60 per share for 2022. On December 22, 2021, the Board declared cash dividends totaling $0.15 per share (which included the $0.075 per share quarterly base cash dividend and the $0.075 per share variable cash dividend) on our common stock, which was paid on February 1, 2022, to shareholders of record as of January 14, 2022. The declaration and payment of dividends (base or variable) is at the discretion of our Board and will depend upon our financial results, cash requirements, business prospects, global economic conditions and other factors deemed relevant by our Board. See “Cautionary Statement” in Items 7. and 7A. “Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk” and Note 10 for further discussion. Issuer Purchases of Equity Securities In November 2021, our Board approved a new share repurchase program, which authorizes repurchases of up to $3.0 billion of our common stock. The timing and amount of the share repurchases is at the discretion of management and will depend on a variety of factors. The program may be modified, increased, suspended or terminated at any time at the Board’s discretion. See Note 10 for further discussion. 69 Table of C ontents The following table summarizes share repurchases made by us during the three months ended December 31, 2021, and the approximate dollar value of shares that may yet be purchased pursuant to our share repurchase program: Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs a (d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs a October 1-31, 2021 — $ — — — November 1-30, 2021 2,680,026 $ 39.19 2,680,026 — December 1-31, 2021 10,518,245 b $ 38.04 10,062,511 — Total 13,198,271 $ 38.27 12,742,537 12742537000000 — a. On November 1, 2021, our Board approved a new share repurchase program authorizing repurchases of up to $3.0 billion of our common stock. This new share repurchase program superseded and replaced the share repurchase program previously authorized by our Board in July 2008. The new share repurchase program does not obligate us to acquire any specific amount of shares and does not have an expiration date. b. Includes 455,734 shares acquired in connection with stock option exercises during the period shown. All other share repurchases were made under our publicly announced program. Item 6. Reserved. Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk. In Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk (MD&A), “we,” “us” and “our” refer to Freeport-McMoRan Inc. and its consolidated subsidiaries. The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” below for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial Statements. Throughout MD&A, all references to earnings or losses per share are on a diluted basis. This section of our Form 10-K discusses the results of operations for the years 2021 and 2020 and comparisons between these years. Discussion of the results of operations for the year 2019 and comparisons between the years 2020 and 2019 are not included in this Form 10-K and can be found in Items 7. and 7A. “Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk” contained in Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. 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 mineral 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 2021 reflect strong operating and financial performance, and cash flow generation. We remained focused on cost and capital management and advanced our sustainability objectives. Despite continued challenges associated with the COVID-19 pandemic, we achieved a 19 percent increase in copper sales volumes and a 59 percent increase in gold sales volumes in 2021, compared with 2020. During 2022, we expect to grow production and sales volumes while continuing to execute our operating plans, which we expect will provide strong cash flows to support advancement of organic growth initiatives and continue cash returns to shareholders under our established financial policy, based on a favorable operational and market outlook. In February 2021, our Board of Directors (Board) adopted a financial policy for the allocation of cash flows aligned with our strategic objectives of maintaining a strong balance sheet and increasing cash returns to shareholders while advancing opportunities for future growth. Following achievement of our net debt target in the range of $3.0 billion to $4.0 billion (excluding debt for additional smelting capacity in Indonesia), we announced in November 2021 the implementation of a performance-based payout framework, including the commencement of a new $3.0 billion share repurchase program (through February 15, 2022, we acquired 18.2 million shares of our common stock for a 70 Table of C ontents total cost of $710 million, $39.10 per share) and expected base and variable dividends on common stock totaling $0.60 per share for 2022. Our Board will review the structure and the amount of the performance-based payout framework at least annually. Refer to Note 10 and “Capital Resources and Liquidity” for further discussion of our financial policy. As further discussed in “Operations,” highlights during 2021 include: • The successful ramp-up of underground mining at the Grasberg minerals district, achieving quarterly copper and gold volumes in the fourth quarter approximating 100 percent of the projected annualized levels. • Operations at the Lone Star copper leach project at our Safford mine exceeded initial design capacity of 200 million pounds of copper annually and produced approximately 235 million pounds of copper . • Cerro Verde's concentrator facilities milling rates averaged 380,300 metric tons of ore per day, compared with 331,600 metric tons of ore per day in 2020. Subject to ongoing monitoring of COVID-19 protocols, Cerro Verde is targeting milling rates to increase to approximately 400,000 metric tons of ore per day during 2022. • Advancement of several initiatives to recover additional copper from our large existing leach stockpiles across our North America and South America operations, which incorporate new applications, technologies and data analytics currently being developed. Net income attributable to common stock totaled $4.3 billion in 2021 and $599 million in 2020. Our results in 2021, compared to 2020, primarily reflect increased copper and gold volumes and higher copper and molybdenum prices, partly offset by higher production and delivery costs and provision for income taxes. Refer to “Consolidated Results” for discussion of items impacting our consolidated results for the two years ended December 31, 2021. At December 31, 2021, we had consolidated debt of $9.5 billion and consolidated cash and cash equivalents of $8.1 billion, resulting in net debt of $1.4 billion. This represents a reduction in net debt of $4.7 billion from December 31, 2020. Refer to “Net Debt” for reconciliations of consolidated debt and consolidated cash and cash equivalents to net debt. At December 31, 2021, we had no borrowings and $3.5 billion available under our revolving credit facility. In 2021, we redeemed all $524 million of our 3.55% Senior Notes due 2022 at a redemption price equal to 100 percent of the principal amount, plus accrued and unpaid interest. Our next senior note maturity is in March 2023, with redemption rights, at par, beginning in December 2022. During 2021, we also prepaid $200 million of the Cerro Verde Term Loan (the $325 million balance at December 31, 2021, matures in June 2022). Refer to Note 8 and “Capital Resources and Liquidity” for further discussion. We have significant mineral reserves, mineral resources and future development opportunities within our portfolio of mining assets. At December 31, 2021, our estimated consolidated recoverable proven and probable mineral reserves totaled 107.2 billion pounds of copper, 27.1 million ounces of gold and 3.39 billion pounds of molybdenum. Refer to “Critical Accounting Estimates - Mineral Reserves” and Note 17 for further discussion. During 2021, production from our mines totaled 3.8 billion pounds of copper, 1.4 million ounces of gold and 85 million pounds of molybdenum. Following is an allocation of our consolidated copper, gold and molybdenum production in 2021 by geographic location: Copper Gold Molybdenum North America 38 % 1 % 76 % a South America 27 — 24 Indonesia 35 99 — 100 % 100 % 100 % a. Our North America copper mines produced 40 percent of consolidated molybdenum production, and our Henderson and Climax molybdenum mines produced 36 percent. Copper production from the Morenci mine in North America, Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia together totaled 74 percent of our consolidated copper production in 2021. 71 Table of C ontents OUTLOOK We continue to view the long-term outlook for our business positively, supported by expected rising demand associated with limitations on supplies of copper, the global economic recovery and infrastructure development and new demand associated with clean energy. 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” for further discussion. Because we cannot control the price 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. Sales Volumes Following are our projected consolidated sales volumes for 2022 and actual consolidated sales volumes for 2021: 2022 2021 (Projected) (Actual) Copper (millions of recoverable pounds): North America copper mines 1,550 1,436 South America mining 1,180 1,055 Indonesia mining 1,570 1,316 Total 4,300 3,807 Gold (thousands of recoverable ounces) 1,580 1,360 Molybdenum (millions of recoverable pounds) 80 a 82 a. Includes 50 million pounds from our North America and South America copper mines and 30 million pounds from our Molybdenum mines. Consolidated sales for first-quarter 2022 are expected to approximate 970 million pounds of copper, 380 thousand ounces of gold and 20 million pounds of molybdenum. Projected sales volumes are dependent on operational performance, 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” below and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021. Consolidated Unit Net Cash Costs Assuming average prices of $1,800 per ounce of gold and $19.00 per pound of molybdenum 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 in 2022. The impact of price changes on 2022 consolidated unit net cash costs would approximate $0.03 per pound for each $100 per ounce change in the average price of gold and $0.02 per pound 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 $4.50 per pound of copper, $1,800 per ounce of gold and $19.00 per pound of molybdenum, our consolidated operating cash flows are estimated to approximate $8.0 billion (net of $1.3 billion of working capital and other uses, mostly for income tax payments) for the year 2022. Estimated consolidated operating cash flows in 2022 also reflect a projected income tax provision of $3.2 billion (refer to “Consolidated Results - Income Taxes” for further discussion of our projected income tax rate for the year 2022). The impact of price changes during 2022 on operating cash flows would approximate $365 million for each $0.10 per pound change in the average price of copper, $100 million for each $100 per ounce change in the average price of gold and $110 million for each $2 per pound change in the average price of molybdenum. 72 Table of C ontents Consolidated Capital Expenditures Capital expenditures for the year 2022 are expected to approximate $4.7 billion, $3.3 billion excluding the greenfield smelter and precious metals refinery (PMR) (collectively, the Indonesia smelter projects discussed below), including $2.0 billion for major mining projects ($1.4 billion for planned major projects primarily related to development activities associated with the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines and $0.6 billion for discretionary growth projects). Capital expenditures for the Indonesia smelter projects are expected to approximate $1.4 billion for the year 2022. Development of additional smelting capacity in Indonesia will result in the elimination of export duties, providing an offset to the economic cost associated with the Indonesia smelter projects. MARKETS World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2012 through December 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 $20.01 per pound in 2021. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021. 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 2012 through December 2021. For the year 2021, LME copper settlement prices ranged from a low of $3.52 per pound to a record high of $4.86 per pound, averaged $4.23 per pound and closed at $4.40 per pound on December 31, 2021. Copper prices have been supported by strong demand during the pandemic recovery, rising investor sentiment associated with copper’s prominent role in the global transition to cleaner energy, ongoing supply disruptions and falling inventories. The LME copper settlement price was $4.36 per pound on January 31, 2022. 73 Table of C ontents Long-term fundamentals for copper remain positive. We believe future demand will be supported by copper’s role in the global transition to renewable power, electric vehicles and other carbon-reduction initiatives, and continued urbanization in developing countries. The small number of approved, large-scale projects beyond those expected to commence operations in 2022 and 2023, the long lead times required to permit and build new mines and declining ore grades at existing operations continue to highlight the fundamental supply challenges for copper. This graph presents London PM gold prices from January 2012 through December 2021. For the year 2021, London PM gold prices ranged from a low of $1,684 per ounce to a high of $1,943 per ounce, averaged $1,799 per ounce and closed at $1,806 per ounce on December 30, 2021 (there was no London PM gold price quote on December 31, 2021). While the global economic recovery has put downward pressure on gold prices, many analysts expect gold prices to remain supported by the effects of elevated debt levels associated with large pandemic-related stimulus efforts and historically low United States (U.S.) interest rates. The London PM gold price was $1,795 per ounce on January 31, 2022. 74 Table of C ontents This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2012 through December 2021. For the year 2021, the weekly average price for molybdenum ranged from a low of $10.09 per pound to a high of $20.01 per pound, averaged $15.92 per pound and was $18.70 per pound on December 31, 2021. Molybdenum prices have risen in reaction to supply constraints and increased demand, 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 $19.12 per pound on January 31, 2022. CRITICAL ACCOUNTING ESTIMATES MD&A is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles (GAAP) in the U.S. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The areas requiring the use of management’s estimates are also discussed in Note 1 under the subheading “Use of Estimates.” Management has reviewed the following discussion of its development and selection of critical accounting estimates with the Audit Committee of our Board. Taxes In preparing our consolidated financial statements, we estimate the actual amount of income taxes currently payable or receivable as well as deferred income tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized in income in the period in which such changes are enacted. 75 Table of C ontents Our operations are in multiple jurisdictions where uncertainties arise in the application of complex tax regulations. Some of these tax regimes are defined by contractual agreements with the local government, while others are defined by general tax laws and regulations. We and our subsidiaries are subject to reviews of our income tax filings and other tax payments, and disputes can arise with the taxing authorities over the interpretation of our contracts or laws. During 2021, PT-FI recorded charges to provision for income taxes totaling $186 million associated with historical contested tax matters in Indonesia. Refer to Note 11 for further discussion. As discussed in Note 11, we operate in the U.S. and multiple international tax jurisdictions, and our income tax returns are subject to examination by tax authorities in those jurisdictions who may challenge any tax position on these returns. Uncertainty in a tax position may arise because tax laws are subject to interpretation. We use significant judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. We have uncertain tax positions related to income tax assessments in Indonesia and Peru, including penalties and interest, which have not been recorded at December 31, 2021. Final taxes paid may be dependent upon many factors, including negotiations with taxing authorities. In certain jurisdictions, we pay a portion of the disputed amount before formally appealing an assessment. Such payment is recorded as a receivable if we believe the amount is collectible. Refer to Note 12 for further discussion. A valuation allowance is provided for those deferred income tax assets for which the weight of available evidence suggests that the related benefits will not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income or loss as well as feasible tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred income tax assets, we will increase our valuation allowance. Conversely, if we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. Our valuation allowances totaled $4.1 billion at December 31, 2021, which covered all of our U.S. foreign tax credits and U.S. federal net operating losses (NOLs), substantially all of our U.S. state NOLs, and a portion of our foreign NOLs. During 2021, valuation allowances decreased by $645 million. Refer to Note 11 for further discussion. Environmental Obligations Our current and historical operating activities are subject to various national, state and local environmental laws and regulations that govern the protection of the environment, and compliance with those laws requires significant expenditures. Environmental expenditures are charged to expense or capitalized, depending upon their future economic benefits. The guidance provided by U.S. GAAP requires that liabilities for contingencies be recorded when it is probable that obligations have been incurred, and the cost can be reasonably estimated. At December 31, 2021, environmental obligations recorded in our consolidated balance sheet totaled $1.7 billion, which reflect obligations for environmental liabilities attributed to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) or analogous state programs and for estimated future costs associated with environmental matters. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, and Notes 1 and 12 for further discussion of environmental obligations, including a summary of changes in our estimated environmental obligations for the three years ended December 31, 2021. Accounting for environmental obligations represents a critical accounting estimate because (i) changes to environmental laws and regulations and/or circumstances affecting our operations could result in significant changes to our estimates, which could have a significant impact on our results of operations, (ii) we will not incur most of these costs for a number of years, requiring us to make estimates over a long period, (iii) calculating the discounted cash flows for certain of our environmental obligations requires management to estimate the amounts and timing of projected cash flows and make long-term assumptions about inflation rates and (iv) changes in estimates used in determining our environmental obligations could have a significant impact on our results of operations. 76 Table of C ontents We perform a comprehensive annual review of our environmental obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. Judgments and estimates are based upon currently available facts, existing technology, presently enacted laws and regulations, remediation experience, whether or not we are a potentially responsible party (PRP), the ability of other PRPs to pay their allocated portions and take into consideration reasonably possible outcomes. Our cost estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, updated cost assumptions (including increases and decreases to cost estimates), changes in the anticipated scope and timing of remediation activities, the settlement of environmental matters, required remediation methods and actions by or against governmental agencies or private parties. Asset Retirement Obligations We record the fair value of our estimated asset retirement obligations (AROs) associated with tangible long-lived assets in the period incurred. Fair value is measured as the present value of cash flow estimates after considering inflation and a market risk premium. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible long-lived assets in the period incurred. These cost estimates may differ from financial assurance cost estimates for reclamation activities because of a variety of factors, including obtaining updated cost estimates for reclamation activities, the timing of reclamation activities, changes in scope and the exclusion of certain costs not considered reclamation and closure costs. At December 31, 2021, AROs recorded in our consolidated balance sheet totaled $2.7 billion, including $0.3 billion associated with our remaining oil and gas operations. In 2021, primarily because of safety constraints and other concerns regarding our reclamation activities associated with an overburden stockpile at our Indonesia operations, we recorded a $397 million adjustment to our Indonesia AROs. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, and to Notes 1 and 12 for further discussion of reclamation and closure costs, including a summary of changes in our AROs for the three years ended December 31, 2021. Generally, ARO activities are specified by regulations or in permits issued by the relevant governing authority, and management’s judgment is required to estimate the extent and timing of expenditures. Accounting for AROs represents a critical accounting estimate because (i) we will not incur most of these costs for a number of years, requiring us to make estimates over a long period, (ii) reclamation and closure laws and regulations could change in the future and/or circumstances affecting our operations could change, either of which could result in significant changes to our current plans, (iii) the methods used or required to plug and abandon non-producing oil and gas wellbores, remove platforms, tanks, production equipment and flow lines, and restore the wellsite could change, (iv) calculating the fair value of our AROs requires management to estimate projected cash flows, make long-term assumptions about inflation rates, determine our credit-adjusted, risk-free interest rates and determine market risk premiums that are appropriate for our operations and (v) given the magnitude of our estimated reclamation, mine closure and wellsite abandonment and restoration costs, changes in any or all of these estimates could have a significant impact on our results of operations. Mineral Reserves Recoverable proven and probable mineral reserves were determined from the application of relevant modifying factors to geological data, in order to establish an operational, economically viable mine plan and have been prepared in accordance with the disclosure requirements of subpart 1300 of Securities and Exchange Commission Regulation S-K. The determination of mineral reserves involves numerous uncertainties with respect to the ultimate geology of the ore bodies, including quantities, grades and recoveries. Estimating the quantity and grade of mineral reserves requires us to determine the size, shape and depth of our ore bodies by analyzing geological data, such as samplings of drill holes, tunnels and other underground workings. In addition to the geology of our mines, assumptions are required to determine the economic feasibility of mining these reserves, including estimates of future commodity prices and demand, the mining methods we use and the related costs incurred to develop and mine our mineral reserves. Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees. These estimates are reviewed and verified regularly by independent experts in mining, geology and reserve determination. 77 Table of C ontents Our consolidated estimated recoverable proven and probable mineral reserves shown below were assessed using long-term price assumptions of $2.50 per pound for copper, $1,200 per ounce of gold and $10 per pound of molybdenum. The following table summarizes changes in our estimated consolidated recoverable proven and probable copper, gold and molybdenum mineral reserves during 2020 and 2021: Copper a (billion pounds) Gold (million ounces) Molybdenum (billion pounds) Consolidated reserves at December 31, 2019 116.0 29.6 3.58 Net additions 0.4 0.2 0.21 Production (3.2) (0.9) (0.08) Consolidated reserves at December 31, 2020 113.2 28.9 3.71 Net revisions (2.2) (0.4) (0.24) Production (3.8) (1.4) (0.08) Consolidated reserves at December 31, 2021 107.2 27.1 3.39 a. Includes estimated recoverable metals contained in stockpiles. See below for additional discussion of recoverable copper in stockpiles. Refer to Note 17, and Items 1. and 2. “Business and Properties” and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further information regarding, and risks associated with, our estimated recoverable proven and probable mineral reserves. As discussed in Note 1, we depreciate our life-of-mine mining and milling assets and values assigned to proven and probable mineral reserves using the unit-of-production (UOP) method based on our estimated recoverable proven and probable mineral reserves. Because the economic assumptions used to estimate mineral reserves may change from period to period and additional geological data is generated during the course of operations, estimates of mineral reserves may change, which could have a significant impact on our results of operations, including changes to prospective depreciation rates and impairments of long-lived asset carrying values. Based on projected copper sales volumes, if estimated copper reserves at our mines were 10 percent higher at December 31, 2021, we estimate that our annual depreciation, depletion and amortization (DD&A) expense for 2022 would decrease by approximately $50 million (approximately $30 million to net income attributable to common stock), and a 10 percent decrease in copper reserves would increase DD&A expense by approximately $165 million (approximately $85 million to net income attributable to common stock). We perform annual assessments of our existing assets in connection with the review of mine operating and development plans. If it is determined that assigned asset lives do not reflect the expected remaining period of benefit, any change could affect prospective DD&A rates. As discussed below and in Note 1, we review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, and changes to our estimates of recoverable proven and probable mineral reserves could have an impact on our assessment of asset recoverability. Recoverable Copper in Stockpiles We record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Mill and leach stockpiles are evaluated periodically to ensure that they are stated at the lower of weighted-average cost or net realizable value (refer to Note 4 and “Consolidated Results” for further discussion of inventory adjustments recorded for the three years ended December 31, 2021). Accounting for recoverable copper from mill and leach stockpiles represents a critical accounting estimate because (i) it is impracticable to determine copper contained in mill and leach stockpiles by physical count, thus requiring management to employ reasonable estimation methods and (ii) recoveries from leach stockpiles can vary significantly. Refer to Note 1 for further discussion of our accounting policy for recoverable copper in stockpiles. At December 31, 2021, estimated consolidated recoverable copper was 1.8 billion pounds in leach stockpiles (with a carrying value of $2.1 billion) and 0.3 billion pounds in mill stockpiles (with a carrying value of $0.4 billion). 78 Table of C ontents Impairment of Long-Lived Assets As discussed in Note 1, we assess the carrying values of our long-lived mining assets when events or changes in circumstances indicate that the related carrying amounts of such assets may not be recoverable. In evaluating our long-lived mining assets for recoverability, we use estimates of pre-tax undiscounted future cash flows of our mines. Estimates of future cash flows are derived from current business plans, which are developed using near-term metal price forecasts reflective of the current price environment and management’s projections for long-term average metal prices. In addition to near- and long-term metal price assumptions, other key assumptions include estimates of commodity-based and other input costs; proven and probable mineral reserves estimates, including the timing and cost to develop and produce the mineral reserves; value beyond proven and probable mineral reserve estimates (refer to Note 1); and the use of appropriate discount rates in the measurement of fair value. We believe our estimates and models used to determine fair value are similar to what a market participant would use. As quoted market prices are unavailable for our individual mining operations, fair value is determined through the use of after-tax discounted estimated future cash flows. During the two-year period ended December 31, 2021, no material impairments of our long-lived mining assets were recorded. In addition to decreases in future metal price assumptions, other events that could result in future impairment of our long-lived mining assets include, but are not limited to, decreases in estimated recoverable proven and probable mineral reserves and any event that might otherwise have a material adverse effect on mine site production levels or costs. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021. CONSOLIDATED RESULTS Years Ended December 31, 2021 2020 SUMMARY FINANCIAL DATA (in millions, except per share amounts) Revenues a,b $ 22,845 $ 14,198 Operating income a $ 8,366 $ 2,437 Net income attributable to common stock c $ 4,306 d $ 599 e Diluted net income per share attributable to common stock $ 2.90 d $ 0.41 e Diluted weighted-average common shares outstanding 1,482 1,461 Operating cash flows f $ 7,715 $ 3,017 Capital expenditures $ 2,115 $ 1,961 At December 31: Cash and cash equivalents $ 8,068 $ 3,657 Total debt, including current portion $ 9,450 $ 9,711 a. Refer to Note 16 for a summary of revenues and operating income by operating division. b. Includes adjustments to embedded derivatives for provisionally priced concentrate and cathode sales (refer to Note 14). c. We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to “Operations - Smelting & Refining” for a summary of net impacts from changes in these deferrals. d. Includes net charges in 2021 totaling $331 million ($0.22 per share), primarily associated with net adjustments to AROs mostly at PT Freeport Indonesia (PT-FI), historical contested tax matters at PT-FI (including historical tax audits and an administrative fine levied by the Indonesia government) and nonrecurring labor-related charges for labor agreements at Cerro Verde, partly offset by the release of a valuation allowance on NOLs at PT-FI’s subsidiary, a gain on the sale of Freeport Cobalt, refunds of Arizona transaction privilege taxes related to purchased electricity and favorable adjustments to prior-years’ profit sharing at Cerro Verde. e. Includes net charges in 2020 totaling $191 million ($0.13 per share), primarily associated with the COVID-19 pandemic and revised operating plans (including employee separation costs), a framework for the resolution of all current and future potential talc-related litigation, net losses on early extinguishment of debt, metals inventory adjustments and historical contested tax audits at PT-FI. These charges were partly offset primarily by a gain on the sale of our interests in the Kisanfu exploration project. f. Working capital and other sources totaled $755 million in 2021 and $665 million in 2020. 79 Table of C ontents Years Ended December 31, 2021 2020 SUMMARY OPERATING DATA Copper (millions of recoverable pounds) Production 3,843 3,206 Sales, excluding purchases 3,807 3,202 Average realized price per pound $ 4.33 $ 2.95 Site production and delivery costs per pound a $ 1.93 $ 1.88 Unit net cash costs per pound a $ 1.34 $ 1.48 Gold (thousands of recoverable ounces) Production 1,381 857 Sales, excluding purchases 1,360 855 Average realized price per ounce $ 1,796 $ 1,832 Molybdenum (millions of recoverable pounds) Production 85 76 Sales, excluding purchases 82 80 Average realized price per pound $ 15.56 $ 10.20 a. 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 the 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.” Revenues Consolidated revenues totaled $22.8 billion in 2021 and $14.2 billion in 2020. Our revenues primarily include the sale of copper concentrate, copper cathode, copper rod, gold in concentrate and molybdenum. Following is a summary of changes in our consolidated revenues from 2020 to 2021 (in millions): Consolidated revenues - 2020 $ 14,198 Mining operations: Higher sales volumes: Copper 1,784 Gold 925 Molybdenum 13 Higher (lower) averaged realized prices: Copper 5,253 Gold (48) Molybdenum 439 Adjustments for prior year provisionally priced copper sales 271 Lower revenues from sales of purchased copper (64) Higher Atlantic Copper revenues 924 Higher treatment charges (83) Higher royalties and export duties (291) Other, including intercompany eliminations (476) Consolidated revenues - 2021 $ 22,845 Sales Volumes. Copper and gold sales volumes were higher in 2021, compared to 2020, primarily reflecting the ramp-up of underground mining at the Grasberg minerals district. 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. In 2021, our average realized prices were 47 percent higher for copper, 2 percent lower for gold and 53 percent higher for molybdenum, compared with 2020. 80 Table of C ontents Average realized copper prices include net favorable adjustments to current year provisionally priced copper sales (i.e., provisionally priced sales during the years 2021 and 2020) totaling $256 million for 2021 and $361 million for 2020. Refer to Note 14 for a summary of total adjustments to prior period and current period provisionally priced sales. As discussed below and in “Disclosures About Market Risks - Commodity Price Risk,” 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). 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 Year Provisionally Priced Copper Sales. Net favorable (unfavorable) adjustments to prior years’ provisionally priced copper sales (i.e., provisionally priced copper sales at December 31, 2020 and 2019) recorded in consolidated revenues totaled $169 million in 2021 and $(102) million in 2020. Refer to “Disclosures About Market Risks - Commodity Price Risk” for further discussion of our provisionally priced copper sales, and to Note 14 for a summary of total adjustments to prior period and current period provisionally priced copper sales. Purchased Copper. Lower revenues associated with purchased copper in 2021, compared to 2020, primarily reflects lower volumes, partly offset by higher copper prices. We purchased copper cathode primarily for processing by our Rod & Refining operations, totaling 173 million pounds in 2021 and 290 million pounds in 2020. Atlantic Copper Revenues. Higher Atlantic Copper revenues in 2021, compared with 2020, primarily reflect 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 for sales from PT-FI 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 additional smelting capacity in Indonesia exceeds 50 percent. Refer to “Operations - Indonesia Mining” for further discussion of the current progress on additional smelting capacity in Indonesia and to Note 13 for a summary of PT-FI’s royalties and export duties. Production and Delivery Costs Consolidated production and delivery costs totaled $12.0 billion in 2021, compared with $10.0 billion in 2020. Higher consolidated production and delivery costs in 2021 primarily reflect higher sales volumes, the ramp-up of underground mining at the Grasberg minerals district, higher milling rates at Cerro Verde associated with the return to pre-COVID-19 operating rates and higher maintenance and input costs. The year 2021 includes net charges totaling $415 million primarily associated with an unfavorable ARO adjustment (refer to Note 12) and other net charges at PT-FI and nonrecurring labor-related charges at Cerro Verde for collective labor agreements, partly offset by refunds of Arizona transaction privilege taxes related to purchased electricity and favorable adjustments to prior-years’ profit sharing at Cerro Verde. The year 2020 includes net charges totaling $252 million, primarily associated with the COVID-19 pandemic and revised operating plans (including employee separation costs). Refer to Note 16 for details of production and delivery costs by operating segment. Mining Unit Site Production and Delivery Costs. Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulfuric acid, reagents, liners, tires and explosives. Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.93 per pound of copper in 2021 and $1.88 per pound in 2020. Higher consolidated unit site production and delivery costs in 2021, compared with 2020, primarily reflect higher mining and milling costs associated with ramped-up operations and higher maintenance and input costs, partly offset by higher sales volumes. Consolidated site production and delivery costs per pound for the year 2021 included nonrecurring labor-related charges at Cerro Verde for collective labor agreements. 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. 81 Table of C ontents Our copper mining operations require significant amounts of energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Our take-or-pay contractual obligations for electricity totaled approximately $0.3 billion at December 31, 2021. We do not have take-or-pay contractual obligations for other energy commodities. Energy represented approximately 21 percent of our copper mine site operating costs in 2021, including purchases of approximately 220 million gallons of diesel fuel; approximately 8,000 gigawatt hours of electricity at our North America and South America copper mining operations (we generate all of our power at our Indonesia mining operation); approximately 750 thousand metric tons of coal for our coal power plant in Indonesia; and approximately 1 million MMBtu (million British thermal units) of natural gas at certain of our North America mines. Based on current cost estimates, energy will approximate 25 percent of our copper mine site operating costs for 2022. Depreciation, Depletion and Amortization Depreciation will vary under the UOP method as a result of changes in sales volumes and the related UOP rates at our mining operations. Consolidated DD&A totaled $2.0 billion in 2021 and $1.5 billion in 2020. Higher DD&A in 2021, compared with 2020, primarily relates to significant assets placed in service associated with the ramp-up of underground mining at the Grasberg minerals district. Metals Inventory Adjustments Unfavorable net realizable value metals inventory adjustments totaled $16 million in 2021 and $96 million in 2020. Metals inventory adjustments in 2021 were primarily related to a leach stockpile adjustment. Metals inventory adjustments in 2020 were related to volatility in copper and molybdenum prices associated with the COVID-19 pandemic. Refer to Note 4 for further details on our inventory adjustments. Environmental Obligations and Shutdown Costs Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates (refer to “Critical Accounting Estimates - Environmental Obligations” for further discussion). Shutdown costs include care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges for environmental obligations and shutdown costs totaled $91 million in 2021, including unfavorable adjustments to environmental obligations totaling $41 million. Net charges for the year 2020 totaled $159 million, including talc-related litigation charges of $132 million, primarily associated with a framework for the resolution of all current and future potential talc-related litigation, partly offset by $19 million of net favorable adjustments to environmental obligations. Refer to Note 12 for environmental obligations and litigation matters. Net Gain on Sales of Assets Net gain on sales of assets totaled $80 million in 2021 and $473 million in 2020. Gains on sales of assets in 2021 were primarily associated with the sale of our remaining Freeport Cobalt assets and the sale of carbon dioxide emissions credits at Atlantic Copper. Gains on sales of assets in 2020 were primarily associated with the sale of our interests in the Kisanfu undeveloped exploration project. Refer to Note 2 for further discussion of dispositions. Interest Expense, Net Consolidated interest costs (before capitalization and excluding interest expense associated with international tax matters) totaled $634 million in 2021 and $649 million in 2020. Interest expense associated with international tax matters totaled $40 million in 2021 and $96 million in 2020 (refer to Note 11). Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $72 million in 2021 and $147 million in 2020. The decrease in capitalized interest in 2021, compared with 2020, is primarily related to significant assets at PT-FI’s underground mines being placed in service. Refer to “Operations” and “Capital Resources and Liquidity - Investing Activities” for further discussion of current development projects. Other (Expense) Income, Net Other (expense) income, net, totaled $(105) million in 2021 and $59 million in 2020. The year 2021 includes charges totaling $208 million associated with historical contested tax matters at PT-FI (refer to Note 11), partly offset by gains on currency exchange rate movements and other net credits. The year 2020 includes a gain of $30 million for the sale of royalty interests. 82 Table of C ontents Income Taxes Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision for the years ended December 31 (in millions, except percentages): 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 $ 1,883 1% $ (10) c $ (532) 11% $ 60 d South America 2,072 40% (820) e 466 51% (239) f Indonesia 3,986 35% (1,377) g 1,342 45% (608) h PT-FI historical contested tax disputes i (219) N/A (147) (44) N/A 2 Gain on sale of Kisanfu — N/A — 486 N/A (135) Eliminations and other (63) N/A 55 79 N/A (24) Consolidated $ 7,659 30% $ (2,299) $ 1,797 53% j $ (944) 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 NOLs. d. Includes tax benefits 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 and $6 million associated with the removal of a valuation allowance on deferred tax assets. e. Includes a tax benefit at Cerro Verde of $18 million primarily associated with completion of tax audits for the years 2014 and 2015. f. Includes tax charges at Cerro Verde of $15 million primarily associated with adjustments to profit sharing for prior years. g. Includes net tax benefits associated with the release of valuation allowances recorded against PT Rio Tinto Indonesia NOLs totaling $189 million. The year 2021 also includes a tax benefit of $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. h. Includes tax charges of $21 million associated with establishing a tax reserve related to the treatment of prior-year contractor support costs and $8 million associated with an unfavorable 2012 Indonesia Supreme Court ruling. i. Refer to Note 11 for further discussion of these historical contested tax disputes. j. Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate, excluding the U.S. jurisdiction. Assuming achievement of current sales volume and cost estimates and average prices of $4.50 per pound for copper, $1,800 per ounce for gold and $19.00 per pound for molybdenum for 2022, we estimate our consolidated effective tax rate for the year 2022 would approximate 30 percent. Changes in projected sales volumes and average prices during 2022 would incur tax impacts at estimated effective rates of 39 percent for Peru, 38 percent for Indonesia and 0 percent for the U.S. Variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Because of our U.S. tax position, we do not record a financial statement impact for income or losses generated in the U.S. Refer to Note 11 for further discussion of income taxes. 83 Table of C ontents OPERATIONS Responsible Production The Copper Mark. We are committed to validating all of our copper producing sites with the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry's responsible production practices. To achieve the Copper Mark, each site is required to complete an external assurance process to assess conformance with 32 environmental, social and governance (ESG) requirements. We have a total of seven sites that have been validated (Bagdad, Morenci, Miami, El Paso, Cerro Verde, El Abra and Atlantic Copper) and we have commenced the Copper Mark assessment process at four additional sites in North America, including Chino, Tyrone, Safford and Sierrita. International Council of Mining and Metals (ICMM) . We are a founding and active member of the ICMM, an international organization dedicated to safe, fair and sustainable mining. We are committed to implementing ICMM's Mining Principles which serve as a best practice framework on sustainable development for the global mining and metals industry. Our Chairman of the Board and Chief Executive Officer serves as the current Chair of ICMM. 2020 Annual Report on Sustainability. We published our 2020 Annual Report on Sustainability in April 2021, which is available on our website. We have a long history of ESG programs and are continuously striving to improve and embrace 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 industry framework. We are committed to building upon our achievements in sustainability and seek to contribute positively to society by supplying the world with responsibly produced copper. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of ESG-related risks. 2020 Climate Report. We published our updated climate report in September 2021, which is available on our website. The climate report details the work underway across our global business to reduce greenhouse gas (GHG) emissions, improve energy efficiency, advance the use of renewable energy and enhance our resilience to future climate-related risks. The updated climate report includes our GHG emissions reduction targets and aspirations and reflects our continued progress towards alignment with the current recommendations of the Task Force on Climate-related Financial Disclosures. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of climate-related risks. Innovation Initiatives During 2021, we continued to advance innovation initiatives designed to enhance productivity, expand margins and reduce the capital intensity of our business through the utilization of new technology applications in combination with a more interactive operating structure. These initiatives are expected to allow us to recover additional copper from our large existing leach stockpiles. There are several projects ongoing across our North America and South America operations, which incorporate new applications, technologies and data analytics. Initial results are encouraging and support additional work on these emerging opportunities. 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. 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. We have substantial mineral reserves and future opportunities in the U.S., primarily associated with existing mining operations. Current operations at the Lone Star copper leach project at our Safford mine, which was completed in the second half of 2020, are exceeding the initial design capacity of 200 million pounds annually and produced approximately 235 million pounds of copper in 2021. We continue to advance opportunities to increase Lone Star operating rates and are advancing plans to increase volumes to achieve 300 million pounds of copper per year from oxide ores. The oxide project advances the opportunity for development of 84 Table of C ontents the large-scale sulfide resources at Lone Star. We are increasing exploration in the area to support metallurgical testing and mine development planning for a potential long-term investment in a concentrator. We are also evaluating an expansion to potentially double concentrator capacity at our Bagdad operation in northwest Arizona, and are engaging stakeholders. Feasibility studies to double Bagdad's operating rates are expected to commence in 2022. Operating Data. Following is summary operating data for the North America copper mines for the years ended December 31: 2021 2020 Operating Data, Net of Joint Venture Interests Copper (millions of recoverable pounds) Production 1,460 1,418 Sales, excluding purchases 1,436 1,422 Average realized price per pound $ 4.30 $ 2.82 Molybdenum (millions of recoverable pounds) Production a 34 33 100% Operating Data Leach operations Leach ore placed in stockpiles (metric tons per day) 665,900 714,300 Average copper ore grade (percent) 0.29 0.27 Copper production (millions of recoverable pounds) 1,056 1,047 Mill operations Ore milled (metric tons per day) 269,500 279,700 Average ore grade (percent): Copper 0.38 0.35 Molybdenum 0.03 0.02 Copper recovery rate (percent) 81.2 84.1 Copper production (millions of recoverable pounds) 649 647 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines. Copper sales volumes from our North America copper mines totaled 1.4 billion pounds in 2021 and 2020. North America copper sales are estimated to approximate 1.55 billion pounds in 2022. Refer to “Outlook” for projected molybdenum sales volumes. 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. 85 Table of C ontents Gross Profit per Pound of Copper and Molybdenum The following table summarizes unit net cash costs and gross profit per pound of copper at our North America copper mines for the two years ended December 31, 2021. 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. 2021 2020 By- Co-Product Method By- Co-Product Method Product Method Copper Molyb- denum a Product Method Copper Molyb- denum a Revenues, excluding adjustments $ 4.30 $ 4.30 $ 14.14 $ 2.82 $ 2.82 $ 8.62 Site production and delivery, before net noncash and other costs shown below 2.13 1.96 8.17 1.90 1.78 6.84 By-product credits (0.33) — — (0.19) — — Treatment charges 0.09 0.09 — 0.10 0.10 — Unit net cash costs 1.89 2.05 8.17 1.81 1.88 6.84 DD&A 0.25 0.24 0.62 0.25 0.23 0.56 Metals inventory adjustments 0.01 0.01 — 0.03 0.03 — Noncash and other costs, net 0.07 b 0.07 0.03 0.10 c 0.10 0.09 Total unit costs 2.22 2.37 8.82 2.19 2.24 7.49 Revenue adjustments, primarily for pricing on prior period open sales — — — (0.02) (0.02) — Gross profit per pound $ 2.08 $ 1.93 $ 5.32 $ 0.61 $ 0.56 $ 1.13 Copper sales (millions of recoverable pounds) 1,436 1,436 1,420 1,420 Molybdenum sales (millions of recoverable pounds) a 34 33 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 credits totaling $0.02 per pound of copper associated with refunds of Arizona transaction privilege taxes related to purchased electricity. c. Includes charges totaling $0.02 per pound of copper, primarily associated with our April 2020 revised operating plans (including employee separation costs) and the COVID-19 pandemic (including health and safety costs). 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. During 2021, average unit net cash costs (net of by-product credits) for the North America copper mines ranged from $1.47 per pound to $2.86 per pound at the individual mines and averaged $1.89 per pound. Higher average unit net cash costs (net of by-product credits) of $1.89 in 2021, compared with $1.81 per pound in 2020, primarily reflect higher mining and milling costs associated with higher operating rates at Lone Star and higher maintenance and input costs, partly offset by higher by-product credits because of higher molybdenum prices. Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $2.00 per pound of copper in 2022, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $19.00 per pound. The impact of price changes during 2022 on North America’s average unit net cash costs for the year 2022 would approximate $0.04 per pound for each $2 per pound change in the average price of molybdenum. 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 51.0 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. 86 Table of C ontents Operating and Development Activities. Milling rates at Cerro Verde's concentrator facilities averaged 380,300 metric tons of ore per day for the year 2021, compared with 331,600 metric tons of ore per day for the year 2020 when COVID-19 restrictions resulted in reduced rates. Subject to ongoing monitoring of COVID-19 protocols, Cerro Verde is targeting milling rates to increase to approximately 400,000 metric tons of ore per day during 2022. El Abra increased operating rates to pre-COVID-19 pandemic levels during 2021. Increased mining and stacking activities are expected to result in a 30 percent increase in El Abra copper production for the year 2022, compared with the year 2021. 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 the 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, and we are engaging stakeholders and preparing data required for submission of a robust permit application. We are continuing to monitor potential changes in regulatory and fiscal matters in Chile and will defer major investment decisions pending clarity on these matters. Operating Data. Following is summary operating data for our South America mining operations for the years ended December 31. 2021 2020 Copper (millions of recoverable pounds) Production 1,047 979 Sales 1,055 976 Average realized price per pound $ 4.34 $ 3.05 Molybdenum (millions of recoverable pounds) Production a 21 19 Leach operations Leach ore placed in stockpiles (metric tons per day) 163,900 160,300 Average copper ore grade (percent) 0.32 0.35 Copper production (millions of recoverable pounds) 256 241 Mill operations Ore milled (metric tons per day) 380,300 331,600 b Average ore grade (percent): Copper 0.31 0.34 Molybdenum 0.01 0.01 Copper recovery rate (percent) 87.3 84.3 Copper production (millions of recoverable pounds) 791 738 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 impacted by COVID-19 restrictions. Higher consolidated copper sales volumes from South America of 1.1 billion pounds in 2021, compared with 1.0 billion pounds in 2020, primarily reflect higher mining and milling rates at Cerro Verde. Copper sales from South America mines are expected to approximate 1.2 billion pounds in 2022. Refer to “Outlook” for projected molybdenum sales volumes. 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. 87 Table of C ontents Gross Profit per Pound of Copper The following table summarizes unit net cash costs and gross profit per pound of copper at our South America mining operations for the two years ended December 31, 2021. 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. 2021 2020 By-Product Method Co-Product Method By-Product Method Co-Product Method Revenues, excluding adjustments $ 4.34 $ 4.34 $ 3.05 $ 3.05 Site production and delivery, before net noncash and other costs shown below 2.23 a 2.06 1.86 1.74 By-product credits (0.32) — (0.17) — Treatment charges 0.13 0.13 0.15 0.15 Royalty on metals 0.01 0.01 0.01 0.01 Unit net cash costs 2.05 2.20 1.85 1.90 DD&A 0.39 0.37 0.43 0.41 Noncash and other costs, net 0.03 b 0.03 0.13 c 0.12 Total unit costs 2.47 2.60 2.41 2.43 Revenue adjustments, primarily for pricing on prior period open sales 0.09 0.09 (0.07) (0.07) Gross profit per pound $ 1.96 $ 1.83 $ 0.57 $ 0.55 Copper sales (millions of recoverable pounds) 1,055 1,055 976 976 a. Includes charges totaling $0.09 per pound of copper associated with nonrecurring labor-related charges at Cerro Verde for collective labor agreements reached with its hourly employees. b. Includes credits totaling $0.03 per pound of copper associated with favorable adjustments to prior-years’ profit sharing at Cerro Verde. c. Includes charges totaling $0.09 per pound of copper, primarily associated with idle facility (Cerro Verde) and contract cancellation costs related to the COVID-19 pandemic, and employee separation costs associated with our April 2020 revised operating plans. Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Higher average unit net cash costs (net of by-product credits) of $2.05 per pound of copper in 2021, compared with $1.85 per pound in 2020, primarily reflect increased profit-sharing costs and nonrecurring labor-related charges at Cerro Verde for collective labor agreements and higher maintenance and input costs, partly offset by higher sales volumes and by-product credits. 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. 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 our South America mines are expected to approximate $2.06 per pound of copper in 2022, based on current sales volume and cost estimates and assuming an average price of $19.00 per pound of molybdenum. 88 Table of C ontents Indonesia Mining PT-FI’s assets include one of the world’s largest copper and gold deposits 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 3, under the terms of the shareholders agreement, our economic interest in PT-FI approximates 81 percent through 2022 and 48.76 percent thereafter. PT-FI’s results are consolidated in our financial statements. Substantially all of PT-FI’s copper concentrate is sold under long-term contracts. During 2021, 41 percent of PT-FI’s copper concentrate was sold to PT Smelting (PT-FI owned 25.0 percent of PT Smelting prior to April 30, 2021, and 39.5 percent thereafter - See Note 2). Operating and Development Activities . PT-FI currently has three underground operating mines in the Grasberg minerals district: Grasberg Block Cave, DMLZ and Big Gossan. The ramp-up of underground production at the Grasberg minerals district continues to advance on schedule. For the year 2021, highlights include: • Achieved quarterly copper and gold volumes in fourth-quarter 2021 approximating 100 percent of the projected annualized levels discussed below. • 139 new drawbells were constructed at the Grasberg Block Cave and DMLZ underground mines, bringing cumulative open drawbells to 510. • Combined average production from the Grasberg Block Cave and DMLZ underground mines approximated 128,600 metric tons of ore per day (more than double the year 2020 rates) and PT-FI's total milling rates averaged 151,600 metric tons of ore per day. PT-FI expects milling rates to average approximately 180,000 metric tons of ore per day in 2022. The installation of additional milling facilities are in progress and are currently expected to be completed in 2023, which will increase milling capacity to approximately 240,000 metric tons of ore per day. PT-FI expects to generate average annual production of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold for the next five years at an attractive unit net cash cost, providing significant margins and cash flows. PT-FI's estimated capital spending on the Grasberg Block Cave and DMLZ underground projects for the year 2022 is expected to approximate $1.0 billion, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID). PT-FI is also advancing construction of a dual-fuel power plant and upgrades to the mill circuit to improve recoveries. In accordance with applicable accounting guidance, the aggregate costs (before scheduled contributions from PT Inalum), expected to approximate $1.2 billion for the year 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. Kucing Liar . In October 2021, PT-FI commenced long-term mine development activities for its Kucing Liar deposit, which is expected to produce over 6 billion pounds of copper and 5 million ounces of gold between 2028 and the end of 2041. Similar to PT-FI's experience with large-scale, block-cave mines, pre-production development activities will occur over an approximate 10-year timeframe. At full operating rates, annual production from Kucing Liar is expected to approximate 600 million pounds of copper and 500 thousand ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Capital investments for Kucing Liar over the next 10 years are expected to average approximately $400 million per year. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining. Indonesia Smelter Capacity. In connection with PT-FI’s 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI committed to construct additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023. During 2020, PT-FI notified the Indonesia government of schedule delays resulting from the COVID-19 pandemic and continues to review with the government a revised schedule for satisfying its commitment. 89 Table of C ontents On January 7, 2021, the Indonesia government levied an administrative fine of $149 million on PT-FI for failing to achieve physical development progress on the greenfield smelter as of July 31, 2020. During 2021, PT-FI recorded charges totaling $16 million for a potential settlement of the administrative fine. On January 25, 2022, the Indonesia government submitted a new estimate of the administrative fine totaling $57 million. On February 15, 2022, PT-FI responded to the Indonesia government with a revised calculation of $37 million. PT-FI expects to record a charge in first-quarter 2022 for an amount in excess of the previously recorded $16 million. Refer to Note 12 and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion. PT-FI is actively engaging in the following projects for additional domestic smelting capacity: • Construction of a greenfield smelter with a capacity to process approximately 1.7 million metric tons of concentrate per year. In July 2021, PT-FI awarded a construction contract with an estimated cost of $2.8 billion. During 2021, PT-FI progressed site preparation activities and expects engineering procurement and construction activities to advance during 2022 and 2023. The smelter construction is expected to be completed as soon as feasible in 2024, which is subject to potential pandemic-related disruptions and other factors. • Expansion of PT Smelting's capacity by 30 percent to 1.3 million metric tons of concentrate per year, which is expected to be completed by the end of 2023. PT-FI completed agreements in November 2021 with the majority owner of PT Smelting to implement the expansion plans. PT-FI is funding the cost of the expansion, estimated to approximate $250 million, with a loan that will convert to equity and increase ownership in PT Smelting to a majority ownership interest once the expansion is complete. • Construction of a PMR to process gold and silver from the greenfield smelter and PT Smelting at an estimated cost of $250 million. In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility to advance these projects. As of December 31, 2021, $443 million ($432 million net of debt issuance costs) was drawn under this facility. PT-FI is currently arranging incremental financing for these projects, with the cost of debt shared 48.76 percent by us and 51.24 percent by PT Inalum. Refer to Note 8 for further discussion. Capital expenditures for the Indonesia smelter projects totaled $0.2 billion for 2021, and are expected to approximate $1.4 billion for 2022, $1.1 billion for 2023 and $0.4 billion for 2024, excluding capitalized interest, owner’s costs and commissioning. Development of additional smelting capacity in Indonesia will result in the elimination of export duties, providing an offset to the economic cost associated with the Indonesia smelter projects. 90 Table of C ontents Operating Data. Following is summary operating data for our Indonesia mining operations for the years ended December 31. 2021 2020 Operating Data Copper (millions of recoverable pounds) Production 1,336 809 Sales 1,316 804 Average realized price per pound $ 4.34 $ 3.08 Gold (thousands of recoverable ounces) Production 1,370 848 Sales 1,349 842 Average realized price per ounce $ 1,796 $ 1,832 100% Operating Data Ore milled (metric tons per day): Grasberg Block Cave 70,600 30,800 DMLZ 58,000 28,600 Deep Ore Zone a 8,700 20,900 Big Gossan 7,500 7,000 Other 6,800 400 Total 151,600 87,700 Average ore grade: Copper (percent) 1.30 1.32 Gold (grams per metric ton) 1.04 1.10 Recovery rates (percent): Copper 89.8 91.9 Gold 77.0 78.1 Production (recoverable): Copper (millions of pounds) 1,336 809 Gold (thousands of ounces) 1,370 848 a. Ore body depleted in 2021. Higher consolidated sales of 1.3 billion pounds of copper and 1.3 million ounces of gold in 2021, compared with 0.8 billion pounds of copper and 0.8 million ounces of gold in 2020, primarily reflect the ramp-up of underground mining at the Grasberg minerals district. Consolidated sales volumes from PT-FI are expected to approximate 1.6 billion pounds of copper and 1.6 million ounces of gold in 2022. 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 metal mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. 91 Table of C ontents 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 for the two years ended December 31, 2021. 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. 2021 2020 By- Product Co-Product Method By- Product Co-Product Method Method Copper Gold Method Copper Gold Revenues, excluding adjustments $ 4.34 $ 4.34 $ 1,796 $ 3.08 $ 3.08 $ 1,832 Site production and delivery, before net noncash and other costs shown below 1.49 1.03 424 1.88 1.13 674 Gold and silver credits (1.95) — — (2.03) — — Treatment charges 0.24 0.17 69 0.27 0.17 98 Export duties 0.17 0.11 47 0.12 0.07 41 Royalty on metals 0.24 0.17 67 0.19 0.11 72 Unit net cash costs 0.19 1.48 607 0.43 1.48 885 DD&A 0.80 0.55 228 0.72 0.43 259 Noncash and other costs, net 0.27 a 0.18 77 0.11 b 0.07 41 Total unit costs 1.26 2.21 912 1.26 1.98 1,185 Revenue adjustments, primarily for pricing on prior period open sales 0.05 0.05 (3) (0.03) (0.03) 5 PT Smelting intercompany loss (0.07) (0.05) (19) (0.01) (0.01) (5) Gross profit per pound/ounce $ 3.06 $ 2.13 $ 862 $ 1.78 $ 1.06 $ 647 Copper sales (millions of recoverable pounds) 1,316 1,316 804 804 Gold sales (thousands of recoverable ounces) 1,349 842 a. Includes charges totaling $0.26 per pound of copper associated with an ARO adjustment. b. Includes COVID-19 related costs (including one-time incremental employee benefits and health and safety costs) totaling $0.02 per pound of copper. A significant portion of PT-FI’s costs are fixed and unit costs vary depending on volumes and other factors. PT-FI’s unit net cash costs (including gold and silver credits) of $0.19 per pound of copper in 2021, were lower than unit net cash costs of $0.43 per pound in 2020, primarily reflecting higher copper and gold 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 $218 million in 2021 and $93 million in 2020, and PT-FI’s royalties totaled $319 million in 2021 and $153 million in 2020. PT-FI will continue to pay export duties until development progress for additional smelting capacity in Indonesia exceeds 50 percent. Refer to Note 13 for further discussion of PT-FI’s export duties and royalties. 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 they by-product method was $0.80 in 2021, compared with $0.72 in 2020, primarily reflecting significant underground development assets placed in service. 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. PT Smelting intercompany loss represents the change in the deferral of PT-FI’s profit on sales to PT Smelting (25.0 percent prior to April 30, 2021, and 39.5 percent thereafter). Refer to “Operations - Smelting & Refining” below for further discussion. 92 Table of C ontents Assuming an average gold price of $1,800 per ounce for 2022 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 $0.18 per pound of copper in 2022. The impact of price changes during 2022 on PT-FI’s average unit net cash costs would approximate $0.09 per pound of copper for each $100 per ounce change in the average price of gold. PT-FI’s projected sales volumes and unit net cash costs for the year 2022 are dependent on a number of factors, including operational performance, timing of shipments and the Indonesia government’s extension of PT-FI’s export permit. In March 2021, PT-FI received a one-year extension of its export license through March 15, 2022. Refer to Note 12 and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for a discussion of the administrative fine levied by the Indonesia government on PT-FI for failing to achieve physical development progress on the greenfield smelter and ongoing discussions with the Indonesia government regarding a deferred schedule for the completion of the greenfield smelter. Molybdenum Mines We have 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 totaled 30 million pounds of molybdenum in 2021 and 24 million pounds in 2020. The increase in 2021, compared with 2020, primarily reflects higher ore grades. We plan to increase mining rates at the Climax mine in 2022 to provide options to increase volumes in response to market demand for molybdenum. 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. Unit net cash costs for our Molybdenum mines of $8.87 per pound of molybdenum in 2021 were lower than $9.50 per pound in 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 $12.50 per pound of molybdenum in 2022. The increase in expected unit net cash costs for 2022, compared with 2021, primarily reflects higher mining and input costs. 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 & Refining We wholly own and operate the Miami smelter in Arizona, the El Paso refinery in Texas and a smelter and refinery in Spain (Atlantic Copper). Additionally, PT-FI has a 39.5 percent ownership interest in PT Smelting and expects its ownership to increase to a majority interest upon completion of the project to expand PT Smelting’s smelting capacity. See “Indonesia Smelter Capacity” above for additional information regarding the PT Smelting expansion and Note 13 for information regarding the tolling agreement effective in 2023. 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. Our Miami smelter processes concentrate produced by our U.S. mines and also provides acid for copper leaching operations. During 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. 93 Table of C ontents Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. Following is an allocation of Atlantic Copper’s concentrate purchases from unaffiliated third parties and our copper mining operations for the two years ended December 31, 2021: 2021 2020 Third parties 66 % 79 % North America copper mines 18 10 Indonesia mining 9 4 South America mining 7 7 100 % 100 % Atlantic Copper’s major maintenance turnarounds typically occur approximately every eight years, with shorter-term maintenance turnarounds in the interim. Atlantic Copper last completed a major maintenance turnaround in 2013 and most recently completed a 16-day maintenance turnaround in 2019. The next major maintenance turnaround is scheduled for the first half of 2022. Atlantic Copper has take-or-pay contractual obligations for the procurement of copper concentrate totaling $3.1 billion at December 31, 2021, that provide for deliveries of specified volumes at market-based prices. 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. PT-FI supplied 100 percent of PT Smelting’s concentrate requirements in 2021 and 74 percent in 2020. PT Smelting processed 41 percent of PT-FI’s concentrate production in 2021 and 50 percent of such production in 2020. In December 2021, PT Smelting received a 12-month extension of its anodes slimes export license, which currently expires December 9, 2022, subject to review and approval by the Indonesia government every 6 months. PT Smelting’s maintenance turnarounds (which range from two weeks to a month to complete) typically are expected to occur approximately every two years, with shorter-term maintenance turnarounds in the interim. PT Smelting completed a 30-day maintenance turnaround during December 2020, and the next major turnaround is scheduled for the second half of 2022. In addition, PT Smelting has a planned 75-day shutdown scheduled for the first half of 2023 associated with its expansion project. We defer recognizing profits on sales from our mining operations to Atlantic Copper and on PT-FI’s sales to PT Smelting (on 25.0 percent prior to April 30, 2021, and 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 totaling $(188) million ($(106) million to net income attributable to common stock) in 2021 and $(7) million ($1 million to net income attributable to common stock) in 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 $175 million at December 31, 2021. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings. No significant changes in deferred profits are expected in the first quarter of 2022. 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. A large component of our production costs are related to energy. See “Consolidated Results” and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of our energy requirements and related costs. Our operating cash flows during 2021 primarily reflected strong operating and financial performance and favorable copper prices. During 2022, we expect to grow production and sales volumes while continuing to execute our operating plans, which we expect will provide strong cash flows to support advancement of organic growth initiatives and continue cash returns to shareholders under our established financial policy, based on a favorable operational and market outlook. 94 Table of C ontents We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. During fourth-quarter 2021, PT-FI successfully ramped-up production from its underground mining operations and achieved quarterly copper and volumes approximating 100 percent of the projected annualized level, as well as commenced long-term mine development activities for its Kucing Liar deposit at the Grasberg minerals district. Production from the Lone Star copper leach project at our Safford operation is exceeding initial design capacity with production totaling approximately 235 million pounds in 2021. We are also evaluating organic growth opportunities for expansion of certain of our operations in North America and South America, including at Bagdad, Lone Star and El Abra, the timing of which will be dependent on, among other things, market conditions. Based on current sales volume, cost and metal price estimates discussed in “Outlook”, our available cash and cash equivalents plus our projected consolidated operating cash flows of $8.0 billion for the year 2022 exceed our expected consolidated capital expenditures of $4.7 billion (which includes $2.0 billion for major projects and $1.4 billion for the Indonesia smelter projects) and other expected cash requirements for the year, including share repurchases, noncontrolling interest distributions, income tax payments, common stock dividends (base and variable) and debt repayments. We believe that our cash generating capability and financial condition, which includes $8.1 billion of consolidated cash and cash equivalents at December 31, 2021, together with $3.5 billion available under our FCX revolving credit facility, will be adequate to meet our operating, investing and financing needs over the next several years. Expenditures for the Indonesia smelter projects are currently being funded by PT-FI’s new $1.0 billion unsecured bank credit facility and additional debt financing is being evaluated. Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2022 and to “Debt” below and Note 8 for further discussion of PT-FI’s credit facility. Financial Policy. In February 2021, our Board adopted a financial policy for the allocation of cash flows aligned with our strategic objectives of maintaining a strong balance sheet and increasing cash returns to shareholders while advancing opportunities for future growth. In February 2021, the Board reinstated a cash dividend on our common stock (base dividend) at an annual rate of $0.30 per share, and following achievement of our net debt target in the range of $3.0 billion to $4.0 billion (excluding debt for additional smelting capacity in Indonesia), in November 2021 the Board approved the implementation of a performance-based payout framework, including (i) a new $3.0 billion share repurchase program and (ii) a variable cash dividend on common stock for 2022 at an expected annual rate of $0.30 per share. The combined annual rate of the base dividend and the variable dividend is expected to total $0.60 per share for 2022. Based on current shares outstanding totaling 1.5 billion, the total common stock dividends (base and variable) for 2022 are expected to approximate $0.9 billion. Refer to “Financing Activities” below for further discussion. In December 2021, our Board declared dividends totaling $0.15 per share on our common stock (including a $0.075 per share quarterly base cash dividend and a $0.075 per share quarterly variable cash dividend), which was paid on February 1, 2022, to shareholders of record as of January 14, 2022. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, and “Cautionary Statement” below 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 December 31, 2021 (in billions): Cash at domestic companies $ 5.2 Cash at international operations 2.9 Total consolidated cash and cash equivalents 8.1 Noncontrolling interests’ share (0.9) Cash, net of noncontrolling interests’ share $ 7.2 Withholding taxes (0.2) Net cash available $ 7.0 95 Table of C ontents Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayments, working capital 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. See Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of our holding company structure. Debt At December 31, 2021, consolidated debt totaled $9.5 billion, with a related weighted-average interest rate of 4.6 percent. We had no borrowings, $8 million in letters of credit issued and approximately $3.5 billion available under our FCX revolving credit facility at December 31, 2021. On December 1, 2021, we redeemed all of our outstanding $524 million aggregate principal amount of 3.55% Senior Notes due 2022 at a redemption price equal to 100 percent of the principal amount of the notes outstanding, plus accrued and unpaid interest. Our next senior note maturity is March 2023, with redemption rights at par beginning in December 2022. In September 2021, Cerro Verde elected to prepay $200 million on its term loan, reducing the outstanding balance to $325 million, which matures in June 2022. In July 2021, PT-FI entered into a $1.0 billion, five-year, unsecured bank credit facility (consisting of a $667 million term loan and a $333 million revolving credit facility) to fund projects associated with its commitment to construct additional smelting capacity in Indonesia. As of December 31, 2021, $443 million ($432 million net of debt issuance costs) was drawn under the PT-FI term loan and no amounts were drawn under the revolving credit facility. Refer to Note 8 for further discussion of the above items and for information regarding our debt arrangements. Operating Activities We generated consolidated operating cash flows of $7.7 billion in 2021 (including $0.8 billion from working capital and other sources) and $3.0 billion in 2020 (including $0.7 billion from working capital and other sources). Higher operating cash flows for 2021, compared with 2020, primarily reflect increased copper and gold volumes, higher copper and molybdenum prices and the timing of tax payments. We have estimated 2021 final income tax payments primarily in Indonesia and Peru due in the first half of 2022 totaling approximately $1.3 billion. Investing Activities Capital Expenditures. Capital expenditures, including capitalized interest, totaled $2.1 billion for the year 2021, including $1.25 billion for major projects, and $2.0 billion for the year 2020, including $1.2 billion for major projects. Major projects were primarily associated with underground development activities in the Grasberg minerals district. A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods, enabling us to continue to generate operating cash flows exceeding capital expenditures in future years. Refer to “Outlook” for further discussion of projected capital expenditures for 2022. Proceeds from Sales of Assets. In September 2021, we completed the sale of our remaining Freeport Cobalt assets to Jervois Global Limited (Jervois) for $208 million, including net cash proceeds of $150 million and shares of Jervois, and in December 2021, we collected $50 million in consideration associated with the 2019 sale of the Timok exploration project. Proceeds from sales of other assets totaled $47 million in 2021. In 2020, we sold the Kisanfu undeveloped exploration project for $550 million and collected proceeds of $45 million related to the 2019 sale of the Timok exploration project. Proceeds from sales of other assets totaled $109 million in 2020 primarily related to contingent consideration associated with the 2016 sale of the Tenke Fungurume Mining assets and the sale of royalty assets. Refer to Note 2 for further discussion. 96 Table of C ontents Loans to PT Smelting for Expansion. PT-FI made loans to PT Smelting totaling $36 million in 2021 to fund PT Smelting’s expansion project. Refer to “Operations - Indonesia Mining” for further discussion. 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 25.0 percent to 39.5 percent. Financing Activities Debt Transactions. Net repayments of debt in 2021 totaled $260 million, primarily associated with the $524 billion redemption of our 3.55% Senior Notes due 2022 and the repayment of $200 million under Cerro Verde’s term loan, partly offset by borrowings of $432 million under the PT-FI term loan. Net repayments of debt in 2020 totaled $193 million, primarily reflecting the repayment of $305 million under Cerro Verde’s term loan. During 2020, we also completed the sale of $2.8 billion of senior notes and used most of the net proceeds to purchase and redeem senior notes maturing in 2021, 2022, 2023 and 2024. The remaining net proceeds were used for general corporate purposes. Refer to Note 8 for further discussion of debt transactions. Cash Dividends and Distributions Paid. We paid cash dividends on our common stock totaling $331 million in 2021 and $73 million in 2020. The declaration and payment of dividends (base or variable) is at the discretion of the Board and will depend on our financial results, cash requirements, business prospects, global economic conditions and other factors deemed relevant by the Board. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, “Cautionary Statement” below and discussion of our financial policy above. Cash dividends and distributions paid to noncontrolling interests at PT-FI and Cerro Verde totaled $583 million in 2021. Based on the estimates discussed in “Outlook,” we currently expect cash dividends and distributions paid to noncontrolling interests to exceed $1.4 billion in 2022. There were no cash dividends or distributions to noncontrolling interests paid in 2020. Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries. Treasury Stock Purchases. In fourth-quarter 2021, we acquired 12.7 million shares under our share repurchase program for a total cost of $488 million, $38.32 per share. Through February 15, 2022, we have acquired 18.2 million shares under our share repurchase program for a total cost of $710 million, $39.10 per share, and $2.3 billion remains available. The timing and amount of share repurchases is 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. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, “Cautionary Statement” below and discussion of our financial policy above. Contributions from Noncontrolling Interests. PT-FI received equity contributions from PT Inalum for their share of capital spending on the underground mine development projects in the Grasberg minerals district totaling $182 million in 2021 and $156 million in 2020. Stock-based awards. Following an increase in our stock price during 2021, proceeds from exercised stock options totaled $210 million and payments for related employee taxes totaled $29 million. See Note 10 for a discussion of stock-based awards. CONTINGENCIES Environmental The cost of complying with environmental laws is a fundamental and substantial cost of our business. At December 31, 2021, we had $1.7 billion recorded in our consolidated balance sheet for environmental obligations attributed to CERCLA or analogous state programs and for estimated future costs associated with environmental obligations that are considered probable based on specific facts and circumstances. 97 Table of C ontents We incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) to comply with applicable environmental laws and regulations that affect our operations totaling $0.3 billion in both 2021 and 2020. For 2022, we expect to incur approximately $0.5 billion of aggregate environmental capital expenditures and other environmental costs. The timing and amount of estimated payments could change as a result of changes in regulatory requirements, changes in scope and timing of reclamation and plug and abandonment activities, the settlement of environmental matters and the rate at which actual spending occurs on continuing matters. Refer to Items 1. and 2. “Business and Properties,” and Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, Note 12 and “Critical Accounting Estimates - Environmental Obligations” above for further information about environmental regulation, including significant environmental matters. Asset Retirement Obligations We recognize AROs as liabilities when incurred, with the initial measurement at fair value. These obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to cost of sales. Mine reclamation costs for disturbances are recorded as an ARO and as a related asset retirement cost (included in property, plant, equipment and mine development costs) in the period of disturbance. For non-operating properties without mineral reserves, changes to the ARO are recorded in earnings. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible, long-lived assets. At December 31, 2021, we had $2.7 billion recorded in our consolidated balance sheet for AROs, including $0.3 billion related to our oil and gas properties. Spending on AROs totaled $201 million in 2021 and $156 million in 2020 (including $77 million in 2021 and $38 million in 2020 for our oil and gas operations). At our former Grasberg open-pit operations in Indonesia, we recorded an ARO adjustment of $397 million in 2021, with $340 million charged to production and delivery costs, as it relates to the depleted Grasberg open pit. For 2022, we expect to incur approximately $0.2 billion in aggregate ARO payments (including $0.1 billion for our oil and gas operations). Refer to Note 12 and “Critical Accounting Estimates - Asset Retirement Obligations” above for further discussion. Litigation and Other Contingencies Refer to Notes 2 and 12, and Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of contingencies associated with legal proceedings and other matters. DISCLOSURES ABOUT MARKET RISKS Commodity Price Risk Our consolidated revenues from our mining operations include the sale of copper concentrate, copper cathode, copper rod, gold, molybdenum and other metals by our North America and South America mines, the sale of copper concentrate (which also contains significant quantities of gold and silver) by our Indonesia mining operations, the sale of molybdenum in various forms by our molybdenum operations, and the sale of copper cathode, copper anode and gold in anode and slimes by Atlantic Copper. Our financial results will vary with fluctuations in the market prices of the commodities we produce, primarily copper and gold, and to a lesser extent molybdenum. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook.” World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to Item 1A. “Risk Factors” contained in Part I of our annual report on Form 10-K for the year ended December 31, 2021, for further discussion of financial risks associated with fluctuations in the market prices of the commodities we sell. During 2021, our mined copper was sold 59 percent in concentrate, 21 percent as cathode and 20 percent as rod from North America operations. 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 settlement prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our 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 98 Table of C ontents 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. Following are the favorable (unfavorable) impacts of net adjustments to the prior years’ provisionally priced copper sales for the years ended December 31 (in millions, except per share amounts): 2021 2020 Revenues $ 169 $ (102) Net income attributable to common stock $ 65 $ (42) Net income per share attributable to common stock $ 0.04 $ (0.03) At December 31, 2021, we had provisionally priced copper sales at our copper mining operations totaling 397 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $4.42 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2021, provisional price recorded would have an approximate $12 million effect on 2022 net income attributable to common stock. The LME copper settlement price closed at $4.36 per pound on January 31, 2022. Foreign Currency Exchange Risk The functional currency for most of our operations is the U.S. dollar. Substantially all of our revenues and a significant portion of our costs are denominated in U.S. dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesia rupiah, Australian dollar, Peruvian sol, Chilean peso and euro. We recognized foreign currency translation gains on balances denominated in foreign currencies totaling $66 million in 2021 and $34 million in 2020. Generally, our operating results are positively affected when the U.S. dollar strengthens in relation to those foreign currencies and are adversely affected when the U.S. dollar weakens in relation to those foreign currencies. Following is a summary of estimated annual payments and the impact of changes in foreign currency rates on our annual operating costs: Exchange Rate per $1 at December 31, Estimated Annual Payments 10% Change in Exchange Rate (in millions of U.S. dollars) a 2021 2020 (in local currency) (in millions of U.S. dollars) b Increase Decrease Indonesia Rupiah 14,198 14,034 14.2 trillion $ 1,000 $ (91) $ 111 Australian dollar 1.37 1.30 244 million $ 178 $ (16) $ 20 South America Peruvian sol 4.00 3.62 2.9 billion $ 735 $ (67) $ 82 Chilean peso 845 711 193 billion $ 228 $ (21) $ 25 Atlantic Copper Euro 0.88 0.82 172 million $ 195 $ (18) $ 22 a. Reflects the estimated impact on annual operating costs assuming a 10 percent increase or decrease in the exchange rate reported at December 31, 2021. b. Based on exchange rates at December 31, 2021. Interest Rate Risk At December 31, 2021, we had total debt maturities based on principal amounts of $9.5 billion, of which approximately 9 percent was variable-rate debt with interest rates primarily based on the London Interbank Offered Rate. The table below presents average interest rates for our scheduled maturities of principal for our outstanding debt and the related fair values at December 31, 2021 (in millions, except percentages): 2022 2023 2024 2025 2026 Thereafter Fair Value Fixed-rate debt $ 4 $ 997 $ 735 $ 4 $ 4 $ 6,971 $ 9,819 Average interest rate — % 3.9 % 4.5 % — % — % 5.0 % 4.9 % Variable-rate debt $ 368 $ — $ — $ 133 $ 310 $ — $ 811 Average interest rate 1.8 % — % — % 2.2 % 2.2 % — % 2.0 % 99 Table of C ontents NEW ACCOUNTING STANDARDS We did not adopt any new accounting standards in 2021. 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): December 31, 2021 December 31, 2020 Current portion of debt $ 372 $ 34 Long-term debt, less current portion 9,078 9,677 Consolidated debt 9,450 a 9,711 Less: consolidated cash and cash equivalents 8,068 3,657 Net debt $ 1,382 $ 6,054 a. Includes $432 million, net of debt issuance costs, for the PT-FI term loan (refer to Note 8). PRODUCT REVENUES AND PRODUCTION COSTS Mining Product Revenues and Unit Net Cash Costs Unit net cash costs per pound of copper a