What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-05-05 · 260 added, 98 removed, 513 unchanged (41% of the section changed)

20 unchanged sentences

Accounts payable and accrued liabilities $ 3,853 $ 3,495

Accrued income taxes 1,392 1,541

Current portion of debt 1,038 372

Accrued income taxes 507 1,541

Current portion of environmental and asset retirement obligations 317 264

19 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions, except per share amounts)

3 unchanged sentences

Depreciation, depletion and amortization 507 483 996 902

Metals inventory adjustments 18 — 18 1

Total cost of sales 3,528 3,550 7,167 6,756

2 unchanged sentences

Environmental obligations and shutdown costs

Net gain on sales of assets ( 2 ) ( 3 ) ( 2 ) ( 3 )

Total costs and expenses 3,680 3,681 7,474 6,999

1 unchanged sentence

Interest expense, net ( 156 ) ( 148 ) ( 283 ) ( 293 )

Net gain on early extinguishment of debt 8 — 8 —

Other income, net 11 9 42 20

Income before income taxes and equity in affiliated companies’ net earnings (losses) 2,713 1,398

Income before income taxes and equity in affiliated companies’ net earnings 1,599 1,928 4,312 3,326

Provision for income taxes ( 571 ) ( 603 ) ( 1,395 ) ( 1,046 )

Equity in affiliated companies’ net earnings (losses) 15 ( 2 )

Equity in affiliated companies’ net earnings 10 6 25 4

Net income 1,038 1,331 2,942 2,284

4 unchanged sentences

$ 0.57 $ 0.73 $ 1.61 $ 1.21

Weighted-average common shares outstanding:

Weighted-average shares of common stock outstanding:

1,447 1,467 1,451 1,465

1,457 1,483 1,463 1,480

Dividends declared per share of common stock $ 0.15 $ 0.075 $ 0.30 $ 0.15

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

13 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended

Six Months Ended

(In millions)

3 unchanged sentences

Depreciation, depletion and amortization 996 902

Metals inventory adjustments 18 1

Net gain on sales of assets ( 2 ) ( 3 )

Stock-based compensation 62 56

3 unchanged sentences

Pension plan contributions ( 50 ) ( 42 )

Net gain on early extinguishment of debt ( 8 ) —

Deferred income taxes 63 79

19 unchanged sentences

Loans to PT Smelting for expansion ( 34 ) —

Acquisition of minority interest in PT Smelting — ( 33 )

Other, net ( 6 ) ( 13 )

18 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED MARCH 31

THREE MONTHS ENDED JUNE 30

Stockholders’ Equity

9 unchanged sentences

(In millions)

Balance at December 31, 2021 1,603 $ 160 $ 25,875 $ ( 7,375 ) $ ( 388 ) 146 $ ( 4,292 ) $ 13,980 $ 9,039 $ 23,019

Balance at March 31, 2022 1,612 $ 161 $ 25,835 $ ( 5,848 ) $ ( 387 ) 160 $ ( 4,895 ) $ 14,866 $ 9,176 $ 24,042

Exercised and issued stock-based awards — — 5 — — — — 5 — 5

7 unchanged sentences

Other comprehensive income — — — — 1 — — 1 — 1

Balance at June 30, 2022 1,612 $ 161 $ 25,661 $ ( 5,008 ) $ ( 386 ) 177 $ ( 5,539 ) $ 14,889 $ 9,158 $ 24,047

Stockholders’ Equity

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

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

Exercised and issued stock-based awards 4 — 78 — — — — 78 — 78

Stock-based compensation, including the tender of shares — — 14 — — — — 14 ( 1 ) 13

Dividends — — ( 111 ) — — — — ( 111 ) — ( 111 )

Contributions from noncontrolling interests — — 23 — — — — 23 24 47

Net income attributable to common stockholders — — — 1,083 — — — 1,083 — 1,083

Net income attributable to noncontrolling interests — — — — — — — — 248 248

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

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

Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (continued)

SIX MONTHS ENDED JUNE 30

Stockholders’ Equity

12 unchanged sentences

Stock-based compensation, including the tender of shares — — 63 — — 2 ( 62 ) 1 ( 11 ) ( 10 )

Treasury stock purchases — — — — — 29 ( 1,185 ) ( 1,185 ) — ( 1,185 )

Dividends — — ( 435 ) — — — — ( 435 ) ( 493 ) ( 928 )

Contributions from noncontrolling interests

— — 46 — — — — 46 48 94

Net income attributable to common stockholders — — — 2,367 — — — 2,367 — 2,367

Net income attributable to noncontrolling interests

— — — — — — — — 575 575

Other comprehensive income — — — — 2 — — 2 — 2

Balance at June 30, 2022 1,612 $ 161 $ 25,661 $ ( 5,008 ) $ ( 386 ) 177 $ ( 5,539 ) $ 14,889 $ 9,158 $ 24,047

Stockholders’ Equity

Common Stock Accum-ulated Deficit Accumu-

Other Compre-

Loss Common Stock

Held in Treasury Total

Stock-holders’ Equity

Shares At Par

Value Capital in

Par Value Number

Interests Total

(In millions)

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

Exercised and issued stock-based awards 11 1 183 — — — — 184 — 184

Stock-based compensation, including the tender of shares — — 43 — — 1 ( 19 ) 24 ( 4 ) 20

Dividends — — ( 222 ) — — — — ( 222 ) ( 93 ) ( 315 )

Contributions from noncontrolling interests — — 43 — — — — 43 45 88

Net income attributable to common stockholders — — — 1,801 — — — 1,801 — 1,801

Net income attributable to noncontrolling interests

— — — — — — — — 483 483

Other comprehensive income (loss) — — — — 7 — — 7 ( 1 ) 6

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

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

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

6 unchanged sentences

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

Operating results for the three-month period ended March 31, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the six-month period ended June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Sale of Investments.

In second-quarter 2022, Koboltti Chemicals Holdings Limited (KCHL), a 56 -percent-owned subsidiary of FCX, sold all of the shares it owned in Jervois Global Limited for proceeds of $ 60 million.

The shares were received in connection with the 2021 sale of KCHL's remaining cobalt business.

Subsequent Events.

FCX evaluated events after March 31, 2022, and through the date the consolidated financial statements were issued, and determined any events and transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

FCX evaluated events after June 30, 2022, and through the date the consolidated financial statements were issued, and determined any events and transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

EARNINGS PER SHARE

3 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income $ 1,038 $ 1,331 $ 2,942 $ 2,284

Net income attributable to noncontrolling interests ( 198 ) ( 248 ) ( 575 ) ( 483 )

Undistributed earnings allocated to participating securities ( 5 ) ( 4 )

Undistributed dividends and earnings allocated to participating securities ( 4 ) ( 4 ) ( 5 ) ( 4 )

Net income attributable to common stockholders $ 836 $ 1,079 $ 2,362 $ 1,797

Basic weighted-average shares of common stock outstanding

1,447 1,467 1,451 1,465

Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units (RSUs) 10 16 12 15

Diluted weighted-average shares of common stock outstanding

1,457 1,483 1,463 1,480

Basic net income per share attributable to common stockholders $ 0.58 $ 0.74 $ 1.63 $ 1.23

1 unchanged sentence

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

Stock options for 2 million shares of common stock in first-quarter 2022 and 10 million shares of common stock in first-quarter 2021, were excluded.

There were no shares of common stock excluded in second-quarter 2022.

Excluded shares of common stock totaled 4 million shares in second-quarter 2021, 1 million shares for the first six months of 2022 and 7 million shares for the first six months of 2021.

INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

March 31, 2022 December 31, 2021

2022 December 31, 2021

Current inventories:

13 unchanged sentences

$ 1,230 $ 1,387

Materials and supplies inventory was net of obsolescence reserves totaling $ 39 million at March 31, 2022, and $ 36 million at December 31, 2021.

Materials and supplies inventory was net of obsolescence reserves totaling $ 39 million at June 30, 2022, and $ 36 million at December 31, 2021.

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

FCX recorded metals inventory adjustments totaling $ 18 million in the second quarter and first six months of 2022, associated with a stockpile write-off at Cerro Verde ($ 9 million) and net realizable value adjustments related to lower market prices for copper ($ 9 million).

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

El Abra Stockpile Recoveries.

As discussed in FCX’s 2021 Form 10-K, processes and recovery rates for mill and leach stockpiles are monitored regularly, and recovery rate estimates are adjusted periodically as additional information becomes available and as related technology changes.

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

Following an analysis of recent recovery data and column testing results, El Abra revised its estimated recovery rate assumptions for specific ore types expected to be processed from its existing leach stockpile.

The revised estimates resulted in a 135 million pound reduction in future estimated recoverable copper from this leach stockpile which is being phased out.

This revision had an unfavorable impact on El Abra’s costs but did not have a significant impact on consolidated site production and delivery costs in second-quarter 2022 or the first six months of 2022.

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

Three Months Ended

Six Months Ended

operations $ ( 5 )

1 unchanged sentence

Total $ ( 1,395 ) $ ( 1,046 )

FCX’s consolidated effective income tax rate was 30 percent for first-quarter 2022 and 32 percent for first-quarter 2021.

FCX’s consolidated effective income tax rate was 32 percent for the first six months of 2022 and 31 percent for the first six months of 2021.

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

Because of its U.S.

tax position, FCX does not record a financial statement impact for income or losses generated in the U.S.

DEBT AND EQUITY

3 unchanged sentences

Issued by FCX $ 7,697 $ 8,268

Issued by PT-FI 2,976 —

Issued by Freeport Minerals Corporation 355 355

2 unchanged sentences

Total debt 11,092 9,450

Less current portion of debt ( 1,365 ) a ( 372 )

Less current portion of debt ( 1,038 ) ( 372 )

Long-term debt $ 10,054 $ 9,078

Includes $ 325 million for the Cerro Verde Term Loan due June 2022 and $ 995 million for the FCX 3.875% Senior Notes due March 2023.

Revolving Credit Facility.

At March 31, 2022, FCX had no borrowings outstanding and $ 8 million in letters of credit issued under its revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

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

At March 31, 2022, FCX was in compliance with its revolving credit facility covenants.

PT-FI Credit Facility.

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

At March 31, 2022, $ 614 million ($ 603 million net of debt issuance costs) was drawn under the term loan, no amounts were drawn under the revolving credit facility and PT-FI was in compliance with its credit facility covenants.

FCX Revolving Credit Facility.

At June 30, 2022, FCX had no borrowings outstanding and $ 8 million in letters of credit issued under its unsecured revolving credit facility, resulting in availability of approximately $ 3.5 billion, of which approximately $ 1.5 billion could be used for additional letters of credit.

Availability under FCX’s revolving credit facility consists of $ 3.3 billion maturing April 2024 and $ 0.2 billion maturing April 2023.

At June 30, 2022, FCX was in compliance with its revolving credit facility covenants.

Cerro Verde Credit Facility.

In second-quarter 2022, Cerro Verde entered into a new $ 350 million, five-year , unsecured revolving credit facility and repaid the $ 325 million outstanding balance of its term loan.

At June 30, 2022, Cerro Verde had no borrowings outstanding under its revolving credit facility and was in compliance with its revolving credit facility covenants.

Senior Notes issued by PT-FI.

In April 2022, PT-FI completed the sale of $ 3.0 billion of unsecured senior notes, consisting of $ 750 million of 4.763% Senior Notes due 2027, $ 1.5 billion of 5.315% Senior Notes due 2032 and $ 750 million of 6.200% Senior Notes due 2052.

PT-FI intends to use the proceeds, net of underwriting fees, of $ 2.99 billion to finance its smelter projects, to refinance the PT-FI Term Loan and for general corporate purposes.

In April 2022, PT-FI completed the sale of $ 3.0 billion aggregate principal amount of unsecured senior notes, consisting of $ 750 million of 4.763% Senior Notes due 2027, $ 1.5 billion of 5.315% Senior Notes due 2032 and $ 750 million of 6.200% Senior Notes due 2052.

PT-FI used $ 0.6 billion of the net proceeds to repay the borrowings under its term loan and expects to use the remaining net proceeds to finance its smelter projects.

PT-FI Credit Facility.

In second-quarter 2022 , PT-FI amended its five-year , unsecured revolving credit facility to, among other things, increase the availability to $ 1.3 billion.

At June 30, 2022, PT-FI had no borrowings under its revolving credit facility and was in compliance with its revolving credit facility covenants.

As noted above, in second-quarter 2022, PT-FI repaid the principal balance of the term loan portion of its credit facility, which cannot be redrawn, and recorded a loss on early extinguishment of debt of $ 10 million.

Purchases of Senior Notes.

In second-quarter 2022, FCX purchased certain of its senior notes in open-market transactions.

A summary of these debt extinguishments follows:

Principal Amount Discounts/Deferred Issuance Costs Book Value Redemption Value Gain/(Loss)

5.00% Senior Note due 2027 $ 85 $ 1 $ 84 $ 85 $ ( 1 )

4.125% Senior Note due 2028 90 1 89 85 4

4.375% Senior Note due 2028 106 1 105 102 3

5.25% Senior Note due 2029 85 1 84 82 2

4.25% Senior Note due 2030 17 — 17 16 1

4.625% Senior Note due 2030 66 1 65 62 3

5.40% Senior Note due 2034 15 — 15 15 —

5.450% Senior Note due 2043 118 1 117 111 6

$ 582 $ 6 $ 576 $ 558 $ 18

From July 1, 2022, through August 5, 2022, FCX purchased an additional $ 291 million aggregate principal amount of its senior notes in open-market transactions, for a total redemption value of $ 273 million.

Interest Expense, Net.

Consolidated interest costs (before capitalization) totaled $ 153 million in first-quarter 2022 and $ 160 million in first-quarter 2021.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 26 million in first-quarter 2022 and $ 15 million in first-quarter 2021.

The increase in capitalized interest costs for the 2022 period resulted from increased construction and development projects in process.

Share Repurchase Program.

In first-quarter 2022, FCX acquired 12.3 million shares of its common stock under the share repurchase program for a total cost of $ 541 million ($ 44.02 average cost per share).

Through May 5, 2022, FCX acquired 28.7 million shares of its common stock for a total cost of $ 1.2 billion ($ 41.64 average cost per share) and $ 1.8 billion remains available for repurchases under the program.

On March 23, 2022, FCX declared quarterly cash dividends totaling $ 0.15 per share ($ 0.075 per share base dividend and $ 0.075 per share variable dividend) on its common stock, which were paid on May 2, 2022, to common stockholders of record as of April 14, 2022.

The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases is at

the discretion of FCX’s Board of Directors (Board) and management, respectively, and is subject to a number of factors, including maintaining FCX’s net debt target, capital availability, FCX’s financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by FCX’s Board or management, as applicable.

Consolidated interest costs (before capitalization) totaled $ 189 million in second-quarter 2022, $ 165 million in second-quarter 2021, $ 342 million for the first six months of 2022 and $ 325 million for the first six months of 2021.

The increase in consolidated interest costs (before capitalization) for the 2022 periods is primarily related to the senior notes issued by PT-FI in April 2022.

Capitalized interest added to property, plant, equipment and mine development costs, net, totaled $ 33 million in second-quarter 2022, $ 17 million in second-quarter 2021, $ 59 million for the first six months of 2022 and $ 32 million for the first six months of 2021.

The increase in capitalized interest costs for the 2022 periods resulted from increased construction and development projects in process.

Share Repurchase Program and Dividends.

In second-quarter 2022, FCX acquired 17.1 million shares of its common stock under its share repurchase program for a total cost of $ 645 million ($ 37.66 average cost per share).

For the first six months of 2022, FCX acquired 29.4 million shares of its common stock under its share repurchase program for a total cost of $ 1.2 billion ($ 40.32 average cost per share).

In July 2022, FCX’s Board of Directors (Board) authorized an increase in the share repurchase program from up to $ 3.0 billion to up to $ 5.0 billion.

Through August 5, 2022, FCX has acquired 47.9 million shares of its common stock for a total cost of $ 1.8 billion ($ 38.35 average cost per share), and $ 3.2 billion remains available for repurchases under the program.

On June 22, 2022, FCX declared quarterly cash dividends totaling $ 0.15 per share ($ 0.075 per share base dividend and $ 0.075 per share variable dividend) on its common stock, which were paid on August 1, 2022, to common stockholders of record as of July 15, 2022.

The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases is at the discretion of the Board and management, respectively, and is subject to a number of factors, including maintaining FCX’s net debt target, capital availability, FCX’s financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by FCX’s Board or management, as applicable.

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

15 unchanged sentences

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

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the three-month periods ended March 31, 2022 and 2021.

At March 31, 2022, FCX held copper futures and swap contracts that qualified for hedge accounting for 84 million pounds at an average contract price of $ 4.47 per pound, with maturities through February 2024.

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

Three Months Ended

FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the six-month periods ended June 30, 2022 and 2021.

At June 30, 2022, FCX held copper futures and swap contracts that qualified for hedge accounting for 103 million pounds at an average contract price of $ 4.36 per pound, with maturities through March 2024.

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

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Copper futures and swap contracts:

Unrealized gains (losses):

Unrealized (losses) gains:

Derivative financial instruments $ ( 89 ) $ ( 11 ) $ ( 78 ) $ ( 8 )

Hedged item – firm sales commitments 89 11 78 8

Realized gains:

Realized (losses) gains:

Matured derivative financial instruments ( 12 ) 28 2 52

10 unchanged sentences

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

A summary of FCX’s embedded derivatives at March 31, 2022, follows:

A summary of FCX’s embedded derivatives at June 30, 2022, follows:

Open Positions Average Price

2 unchanged sentences

Embedded derivatives in provisional sales contracts:

Copper (millions of pounds) 753 $ 4.49 $ 4.71 August 2022

Gold (thousands of ounces) 206 1,925 1,936 June 2022

Copper (millions of pounds) 703 $ 4.41 $ 3.75 December 2022

Gold (thousands of ounces) 236 1,848 1,821 October 2022

Embedded derivatives in provisional purchase contracts:

Copper (millions of pounds) 65 4.43 4.71 July 2022

Copper (millions of pounds) 59 4.39 3.75 October 2022

Copper Forward Contracts.

1 unchanged sentence

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

At March 31, 2022, Atlantic Copper held net copper forward purchase contracts for 4 million pounds at an average contract price of $ 4.60 per pound, with maturities through May 2022.

Summary of Gains (Losses).

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

Three Months Ended

At June 30, 2022, Atlantic Copper held net copper forward sales contracts for 34 million pounds at an average contract price of $ 4.06 per pound, with maturities through August 2022.

Summary of (Losses) Gains.

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

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Embedded derivatives in provisional sales contracts:

2 unchanged sentences

Copper forward contracts b

22 ( 5 ) 26 ( 13 )

Amounts recorded in revenues.

11 unchanged sentences

Commodity Derivative Liabilities:

Derivatives designated as hedging instruments :

Copper futures and swap contracts $ 66 $ —

Derivatives not designated as hedging instruments :

6 unchanged sentences

Assets Liabilities

2022 December 31, 2021 March 31,

2022 December 31, 2021 June 30,

2022 December 31, 2021

15 unchanged sentences

Other current assets 11 12 — —

Other assets 1 — — —

Accounts payable and accrued liabilities 32 10 308 10

Other liabilities — — 3 —

$ 49 $ 73 $ 542 $ 24

1 unchanged sentence

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

As of March 31, 2022, the maximum amount of credit exposure associated with derivative transactions was $ 195 million.

As of June 30, 2022, the maximum amount of credit exposure associated with derivative transactions was $ 53 million.

Other Financial Instruments.

2 unchanged sentences

Refer to Note 7 for the fair values of investment securities, legally restricted funds and debt.

In addition, as of March 31, 2022, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

In addition, as of June 30, 2022, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 7 for the related fair values).

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

8 unchanged sentences

Total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows $ 9,745 $ 8,314

Includes time deposits of $ 0.2 billion at each of March 31, 2022, and December 31, 2021.

Includes time deposits of $ 0.2 billion at each of June 30, 2022, and December 31, 2021 .

FAIR VALUE MEASUREMENT

1 unchanged sentence

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

FCX did not have any significant transfers in or out of Level 3 during first-quarter 2022.

FCX did not have any significant transfers in or out of Level 3 during second-quarter 2022.

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

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

At March 31, 2022

At June 30, 2022

Carrying Fair Value

1 unchanged sentence

Investment securities:

Equity securities $ 70 $ 70 $ — $ 70 $ — $ —

core fixed income fund $ 26 $ 26 $ 26 $ — $ — $ —

Equity securities 5 5 — 5 — —

Total 31 31 26 5 — —

8 unchanged sentences

Total 186 186 56 8 122 —

Embedded derivatives in provisional sales/purchase contracts in a gross asset position c

169 169 — — 169 —

Copper futures and swap contracts c

24 24 — 18 6 —

Copper forward contracts c

Embedded derivatives in provisional sales/purchase contracts in a gross asset position 38 38 — — 38 —

Copper forward contracts 15 15 — 8 7 —

Total 53 53 — 8 45 —

3 unchanged sentences

Embedded derivatives in provisional sales/purchase contracts in a gross liability position 476 476 — — 476 —

Copper futures and swap contracts 66 66 — 61 5 —

Copper forward contracts 4 4 — 3 1 —

18 unchanged sentences

Total 209 209 64 8 137 —

Embedded derivatives in provisional sales/purchase contracts in a gross asset position c

64 64 — — 64 —

Copper futures and swap contracts c

12 12 — 9 3 —

Copper forward contracts c

Embedded derivatives in provisional sales/purchase contracts in a gross asset position 64 64 — — 64 —

Copper futures and swap contracts 12 12 — 9 3 —

Copper forward contracts 1 1 — 1 — —

Total 77 77 — 10 67 —

8 unchanged sentences

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

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 117 million at March 31, 2022, and $ 114 million at December 31, 2021, and (ii) other assets of $ 133 million at March 31, 2022, and $ 132 million at December 31, 2021, primarily associated with an assurance bond to support PT-FI’s commitment for additional domestic smelter development in Indonesia and PT-FI’s closure and reclamation guarantees.

Excludes time deposits (which approximated fair value) included in (i) other current assets of $ 119 million at June 30, 2022, and $ 114 million at December 31, 2021, and (ii) other assets of $ 134 million at June 30, 2022, and $ 132 million at December 31, 2021, primarily associated with an assurance bond to support PT-FI’s commitment for additional domestic smelter development in Indonesia and PT-FI’s closure and reclamation guarantees.

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

16 unchanged sentences

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

The contingent consideration included in (i) other current assets totaled $ 20 million at March 31, 2022, and December 31, 2021, and (ii) other assets totaled $ 64 million at March 31, 2022, and $ 70 million at December 31, 2021.

The contingent consideration included in (i) other current assets totaled $ 20 million at June 30, 2022, and December 31, 2021, and (ii) other assets totaled $ 59 million at June 30, 2022, and $ 70 million at December 31, 2021.

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

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

There have been no changes in the techniques used at March 31, 2022, as compared with those techniques used at December 31, 2021.

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first three months of 2022 follows (in millions):

There have been no changes in the techniques used at June 30, 2022, as compared with those techniques used at December 31, 2021.

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first six months of 2022 follows (in millions):

Fair value at January 1, 2022 $ 81

Net unrealized loss related to assets still held at the end of the period ( 3 )

Fair value at March 31, 2022 $ 74

Fair value at June 30, 2022 $ 67

CONTINGENCIES AND COMMITMENTS

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A permit applicant must demonstrate its financial ability to meet the closure costs approved by ADEQ.

Closure costs for facilities covered by APPs are required to be updated every six years and financial assurance mechanisms are required to be updated every two years .

During first-quarter 2022, Bagdad increased its ARO liability and asset retirement cost asset by $ 45 million associated with an updated closure strategy that Bagdad submitted to ADEQ for approval.

Morenci is also preparing an update to its closure strategy for submission to ADEQ, which is expected to result in increased costs that could be significant.

FCX will continue updating its closure strategy and closure cost estimates at other Arizona sites, and any such updates may also result in increased costs that could be significant.

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2021 Form 10-K.

Closure costs for facilities covered by APPs are required to be updated approximately every six years and financial assurance mechanisms are required to be updated every two years .

During the first six months of 2022, FCX’s Bagdad mine increased its ARO liability and asset retirement cost asset by $ 62 million, associated with its updated closure plan that was submitted to ADEQ for approval.

Morenci is also preparing an update to its closure plan for submission to ADEQ, which is expected to result in increased costs that could be significant.

FCX will continue updating its closure plans and closure cost estimates at other Arizona sites, and any such updates may also result in increased costs that could be significant.

There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s 2021 Form 10-K, other than the matter discussed below.

Asbestos and Talc Claims .

As previously disclosed, in 2021, Imerys obtained an injunction temporarily staying approximately 950 talc-related lawsuits against Cyprus Amax Minerals Company (CAMC), an indirect wholly owned subsidiary of FCX, and Cyprus Mines Corporation (Cyprus Mines), a wholly owned subsidiary of CAMC, which has been extended through at least January 2023.

The interim stay is a component of the global settlement but there can be no assurance that the bankruptcy court will continue to impose the interim stay.

Mediation to resolve open issues in the Imerys and Cyprus Mines bankruptcy cases is ongoing and expected to continue through 2022.

Other Matters

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Product Revenues.

FCX’s revenues attributable to the products it sold for the first quarters of 2022 and 2021 follow (in millions):

Three Months Ended

FCX’s revenues attributable to the products it sold for the second quarters and first six months of 2022 and 2021 follow (in millions):

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Concentrate $ 2,694 $ 2,076 $ 5,385 $ 3,785

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Purchased copper a

104 310 174 528

Gold 909 597 1,720 1,115

Molybdenum 377 288 755 532

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Export duties c

( 98 ) ( 29 )

( 84 ) ( 44 ) ( 182 ) d

Revenues from contracts with customers 6,169 5,615 12,532 10,286

Embedded derivatives d

Embedded derivatives e

( 753 ) 133 ( 513 ) 312

Total consolidated revenues $ 5,416 $ 5,748 $ 12,019 $ 10,598

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Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold and prices.

Reflects PT-FI export duties, including a first-quarter 2022 charge of $ 18 million associated with an adjustment to prior-period export duties.

Reflects PT-FI export duties.

Includes a charge of $ 18 million associated with an adjustment to prior-period export duties.

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

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Unaffiliated customers $ 17 $ 30 $ 47 $ 702 $ 180 $ 882 $ 1,920 a

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Intersegment 730 1,078 1,808 134 — 134 58 144 8 — ( 2,152 ) —

Production and delivery 363 655 1,018 558 112 670 626 75 1,754 722 ( 1,715 ) 3,150

Production and delivery 397 720 1,117 565 177 742 564 80 1,765 463 c

( 1,728 ) 3,003

Depreciation, depletion and amortization

44 58 102 91 11 102 262 18 1 6 16 507

Metals inventory adjustments

— 7 7 9 2 11 — — — — — 18

Selling, general and administrative expenses

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( 13 ) — ( 13 ) — — — — — — — 42 29

Net gain on sales of assets — — — — — — — — — — ( 2 ) ( 2 )

Operating income (loss) 318 322 640 169 ( 10 ) 159 1,122 46 ( 5 ) ( 41 ) ( 185 ) 1,736

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Provision for (benefit from) income taxes — — — 68 ( 7 ) 61 434 — — — 76 571

Total assets at March 31, 2022 2,773 5,284 8,057 8,678 1,925 10,603 19,338 1,702 299 1,045 7,788 48,832

Capital expenditures 73 57 130 33 23 56 379 1 2 11 144 c

Three Months Ended March 31, 2021

Total assets at June 30, 2022 2,839 5,338 8,177 8,379 1,843 10,222 20,679 1,702 300 1,078 7,955 50,113

Capital expenditures 63 83 146 35 33 68 388 8 2 32 219 d

Three Months Ended June 30, 2021

Unaffiliated customers $ 57 $ 55 $ 112 $ 825 $ 188 $ 1,013 $ 1,753 a

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120 — 120 56 89 6 — ( 2,013 ) —

Production and delivery 269 480 749 436 103 539 455 58 1,316 673 ( 1,003 ) d

Production and delivery 351 574 925 494 e

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

Depreciation, depletion and amortization

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1 — 1 — — — — — — — 32 33

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

Operating income (loss) 385 441 826 367 70 437 1,007 16 3 6 ( 228 ) 2,067

Interest expense, net — — — 12 — 12 6 — — 2 128 148

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

Total assets at June 30, 2021 2,635 5,288 7,923 8,795 1,795 10,590 18,135 1,740 271 1,117 5,660 45,436

Capital expenditures 22 47 69 23 3 26 286 2 — 7 43 d

Includes PT-FI's sales to PT Smelting totaling $ 827 million in second-quarter 2022 and $ 756 million in second-quarter 2021.

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

Includes charges associated with major maintenance turnarounds totaling $ 40 million at Atlantic Copper in second-quarter 2022 and $ 19 million at the Miami smelter in second-quarter 2021.

Includes capital expenditures for the greenfield smelter and precious metals refinery (collectively, the Indonesia smelter projects).

Includes nonrecurring charges totaling $ 69 million associated with labor-related costs at Cerro Verde.

(In millions)

Atlantic Corporate,

North America Copper Mines South America Mining Copper Other

Cerro Indonesia Molybdenum Rod & Smelting & Elimi- FCX

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

Six Months Ended June 30, 2022

Unaffiliated customers $ 107 $ 85 $ 192 $ 1,808 $ 340 $ 2,148 $ 4,246 a

$ — $ 3,496 $ 1,151 $ 786 b

Intersegment 1,441 2,173 3,614 242 — 242 136 272 17 — ( 4,281 ) —

Production and delivery 760 1,375 2,135 1,123 289 1,412 1,190 155 3,519 1,185 c

( 3,443 ) 6,153

Depreciation, depletion and amortization 88 119 207 178 21 199 510 34 2 12 32 996

Metals inventory adjustments — 7 7 9 2 11 — — — — — 18

Selling, general and administrative expenses 1 1 2 4 — 4 57 — — 13 139 215

Mining exploration and research expenses — 1 1 — — — — — — — 48 49

Environmental obligations and shutdown costs ( 13 ) — ( 13 ) — — — — — — — 58 45

Net gain on sales of assets — — — — — — — — — — ( 2 ) ( 2 )

Operating income (loss) 712 755 1,467 736 28 764 2,625 83 ( 8 ) ( 59 ) ( 327 ) 4,545

Interest expense, net — — — 7 — 7 15 — — 4 257 283

Provision for income taxes — — — 295 7 302 1,020 — — — 73 1,395

Capital expenditures 136 140 276 68 56 124 759 9 4 43 371 d

Six Months Ended June 30, 2021

Unaffiliated customers $ 61 $ 83 $ 144 $ 1,742 $ 363 $ 2,105 $ 3,136 a

$ — $ 2,998 $ 1,481 $ 734 b

Intersegment 1,285 1,763 3,048

165 — 165 108 159 13 — ( 3,493 ) —

Production and delivery 620 1,054 1,674 930 e

209 1,139 983 113 3,007 1,448 ( 2,511 ) c

Depreciation, depletion and amortization 74 107 181 171 24 195 446 32 2 15 31 902

Metals inventory adjustments — — — — — — — 1 — — — 1

Selling, general and administrative expenses 1 1 2 4 — 4 53 — — 12 116 187

Mining exploration and research expenses — — — — — — — — — — 21 21

Environmental obligations and shutdown costs 1 — 1 — — — — — — — 37 38

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

Operating income (loss) 650 684 1,334 802 130 932 1,762 13 2 6 ( 450 ) 3,599

Interest expense, net — — — 25 — 25 7 — — 3 258 293

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

Total assets at March 31, 2021 2,629 5,283 7,912 8,723 1,738 10,461 17,273 1,753 235 997 5,012 43,643

Capital expenditures 10 16 26 20 1 21 290 1 1 6 25 c

Includes PT-FI's sales to PT Smelting totaling $ 917 million in first-quarter 2022 and $ 792 million in first-quarter 2021.

Capital expenditures 32 63 95 43 4 47 576 3 1 13 68 d

Includes PT-FI's sales to PT Smelting totaling $ 1.7 billion for the first six months of 2022 and $ 1.5 billion for the first six months of 2021.

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

Includes capital expenditures for the greenfield smelter and PMR.

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

Includes charges associated with major maintenance turnarounds totaling $ 40 million at Atlantic Copper for the first six months of 2022 and $ 87 million at the Miami smelter for the first six months of 2021.

Primarily includes capital expenditures for the Indonesia smelter projects.

Includes nonrecurring charges totaling $ 69 million associated with labor-related costs at Cerro Verde.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

(the Company) as of March 31, 2022, the related consolidated statements of income, comprehensive income, equity and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the “consolidated interim financial statements”).

(the Company) as of June 30, 2022, the related consolidated statements of income, comprehensive income, and equity for the three- and six-month periods ended June 30, 2022 and 2021, the related consolidated statements of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the “consolidated interim financial statements”).

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

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Phoenix, Arizona

August 5, 2022

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

What changed 10-Q

Item 1. Financial Statements