FREEPORT-MCMORAN INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our annual report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K), filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to income or losses per share are on a diluted basis. Our website is for information only and the contents of our website or information connected thereto are not incorporated in, or otherwise to be regarded as part of, this Form 10-Q. 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 the second quarter and first six months of 2023 reflect solid operating performance and execution of our business strategy. We continue to focus on managing costs efficiently and are advancing several important value-enhancing initiatives. We remain confident in our long-lived and high-quality asset base and have a favorable long-term outlook for copper, which will enable solid performance in the future. We believe we have a strong balance sheet and a positive outlook for cash flow generation to support continued organic growth and cash returns to shareholders. Our near-term organic development pipeline is highlighted by our leach innovation initiatives, which we believe have the potential to provide substantial value from our existing leach material and reduce capital intensity for future projects. We are currently targeting an annual run rate of approximately 200 million pounds of copper per year through these initiatives by the end of 2023, with potentially larger opportunities in the future. We also continue to progress our underground development activities at Grasberg, supporting large-scale, long-lived, low-cost operations. Refer to “Operations” for further discussion. Net income attributable to common stockholders totaled $343 million in second-quarter 2023 and $1.0 billion for the first six months of 2023, compared with $840 million in second-quarter 2022 and $2.4 billion for the first six months of 2022, primarily reflecting lower copper sales volumes resulting from shipping delays associated with the renewal of PT Freeport Indonesia’s (PT-FI) export license, lower copper prices, the change in our economic interest in PT-FI (refer to Note 1) and increased costs for maintenance and supplies. The results of the first six months of 2023 also reflect lower copper and gold sales volumes as a result of the deferral of sales recognition related to the PT Smelting tolling arrangement (refer to Note 9 for further discussion). Refer to “Consolidated Results” for further discussion of these impacts. On July 24, 2023, PT-FI was granted an export license through May 2024 for 1.7 million metric tons of copper concentrate. Refer to Note 8 and “Operations – Indonesia Mining” for further discussion of Indonesia regulatory matters. At June 30, 2023, we had consolidated debt of $9.5 billion and consolidated cash and cash equivalents of $6.7 billion, resulting in net debt of $2.8 billion ($0.9 billion excluding net debt for the Manyar smelter and precious metals refinery (PMR) in Indonesia - collectively, the Indonesia smelter projects). Refer to “Net Debt” for reconciliations of consolidated debt and consolidated cash and cash equivalents to net debt. Beginning in 2022 and through August 3, 2023, we purchased $1.3 billion aggregate principal amount of our senior notes in open-market transactions for a total cost of $1.2 billion, including $131 million aggregate principal amount in the second quarter and first six months of 2023. 26 Table of Contents At June 30, 2023, we had $3.0 billion of availability under our revolving credit facility, and PT-FI and Cerro Verde had $1.3 billion and $350 million, respectively, of availability under their respective revolving credit facilities. Refer to Note 5 and “Capital Resources and Liquidity” for further discussion of our debt balances and transactions. OUTLOOK As further discussed in “Risk Factors” in Part I, Item 1A. of our 2022 Form 10-K, our financial results vary as a result of fluctuations in market prices primarily for copper, gold and, to a lesser extent, molybdenum, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to “Markets” below for further discussion. Because we cannot control the prices of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs, operating cash flows and capital expenditures. As discussed in Note 8, the Indonesia government issued a revised regulation on duties for various exported products, including copper concentrates. Export duties that may be assessed under this revised regulation are not reflected in our projected financial results for the second half of 2023. Based on current sales volume and metal price estimates, a 7.5% export duty on PT-FI sales during the second half of 2023 is estimated to impact consolidated revenues by approximately $250 million ($80 million to net income attributable to common stock) for the year 2023, including approximately $120 million ($40 million to net income attributable to common stock) in third-quarter 2023. PT-FI is continuing to discuss the applicability of the revised regulation with the Indonesia government and will contest, and seek recovery of, any assessments. Consolidated Sales Volumes Following are our projected consolidated sales volumes for the year 2023: Copper (millions of recoverable pounds): North America copper mines 1,376 South America mining 1,202 Indonesia mining 1,439 Total 4,017 Gold (millions of recoverable ounces) 1.75 Molybdenum (millions of recoverable pounds) 79 a a. Projected molybdenum sales include 50 million pounds produced by our North America and South America copper mines and 29 million pounds produced by our Molybdenum mines. Consolidated sales volumes in third-quarter 2023 are expected to approximate 1.0 billion pounds of copper, 420 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 detailed in the “Cautionary Statement” below. For other important factors that could cause results to differ materially from projections, refer to “Risk Factors” contained in Part I, Item 1A. of our 2022 Form 10-K. Consolidated Unit Net Cash Costs Assuming average prices of $1,950 per ounce of gold and $20.00 per pound of molybdenum for the remainder of 2023 and achievement of current volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $1.55 per pound of copper for the year 2023 (including $1.61 per pound of copper in third-quarter 2023). Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum. The impact of price changes during the remainder of 2023 on consolidated unit net cash costs for the year 2023 would approximate $0.03 per pound of copper for each $100 per ounce change in the average price of gold and $0.01 per pound of copper for each $2.00 per pound change in the average price of molybdenum. Estimated consolidated unit net cash costs for the second half of 2023 do not include a 7.5% export duty at PT-FI that may be assessed under the revised regulation (refer to Note 8 for further discussion). Based on current sales volume and metal price estimates, the assessment of a 7.5% export duty on PT-FI sales during the second half of 27 Table of Contents 2023 is estimated to increase consolidated unit net cash costs by $0.07 per pound of copper for the year 2023 (including $0.12 per pound of copper in third-quarter 2023). 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 $3.90 per pound for copper, $1,950 per ounce for gold, and $20.00 per pound for molybdenum for the remainder of 2023, our consolidated operating cash flows are estimated to approximate $6.4 billion (net of less than $0.1 billion of working capital and other uses) for the year 2023. Estimated consolidated operating cash flows for the year 2023 also reflect an estimated income tax provision of $2.4 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year 2023). The impact of price changes for the remainder of 2023 on operating cash flows would approximate $240 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 $60 million for each $2.00 per pound change in the average price of molybdenum. Estimated consolidated operating cash flows for the second half of 2023 do not include a 7.5% export duty at PT-FI that may be assessed under the revised regulation (refer to Note 8 for further discussion of the revised regulation). Consolidated Capital Expenditures Capital expenditures are expected to approximate $4.8 billion for the year 2023 (including $2.0 billion for major mining projects and $1.6 billion for the Indonesia smelter projects). Projected capital expenditures for major mining projects include $1.3 billion for planned projects, primarily associated with underground mine development in the Grasberg minerals district and supporting mill and power capital costs, and $0.7 billion for discretionary growth projects, primarily for development of Kucing Liar, a mill recovery project with the installation of a new copper cleaner circuit at PT-FI, and expansion projects at Bagdad and Lone Star. We closely monitor market conditions and will continue to adjust our operating plans, including capital expenditures, to protect our liquidity and preserve our asset values, as necessary. Capital expenditures for the Indonesia smelter projects are being funded with proceeds from PT-FI's senior notes and availability under its revolving credit facility. MARKETS World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2013 through June 2023, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.87 per pound in 2022; 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 Platts Metals Daily Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of $37.42 per pound in 2023. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in “Risk Factors” contained in Part I, Item 1A. of our 2022 Form 10-K. 28 Table of Contents 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 2013 through June 2023. During second-quarter 2023, LME copper settlement prices ranged from a low of $3.59 per pound to a high of $4.12 per pound, averaged $3.84 per pound and settled at $3.72 per pound on June 30, 2023. Volatility continued to be high across the copper market in second-quarter 2023, influenced by China’s weak economic data and wide-ranging views about the global economy. Physical market tightness continues to provide significant support to the price of copper, and inventory levels remain low with slightly less than two and a half days of global consumption available. The LME copper settlement price was $3.92 per pound on July 31, 2023. We believe long-term fundamentals for copper are favorable and that 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 that have been announced, 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. 29 Table of Contents This graph presents London PM gold prices from January 2013 through June 2023. During second-quarter 2023, London PM gold prices ranged from a low of $1,900 per ounce to a high of $2,048 per ounce, averaged $1,976 per ounce, and closed at $1,912 per ounce on June 30, 2023. Forecasts are divided as analysts evaluate climbing treasury yields, the strength of the U.S. dollar, the potential lagged impact of a significant cumulative rate-hiking cycle, and elevated geopolitical risk. The London PM gold price was $1,971 per ounce on July 31, 2023. 30 Table of Contents This graph presents the Platts Metals Daily Molybdenum Dealer Oxide weekly average price from January 2013 through June 2023. During second-quarter 2023, the weekly average price of molybdenum ranged from a low of $17.09 per pound to a high of $22.75 per pound, averaged $21.25 per pound and was $21.96 per pound on June 30, 2023. Following sharp price increases in early 2023, China increased exports of molybdenum and Chinese buyers moderated purchases, causing significant price declines near the end of first-quarter 2023. During second-quarter 2023, buyers reentered the market and supply remained tight amidst level molybdenum demand supported by segments such as energy, aerospace and defense. We believe long-term fundamentals for molybdenum are positive with favorable demand drivers and limited supply. The Platts Metals Daily Molybdenum Dealer Oxide weekly average price was $22.89 per pound on July 31, 2023. 31 Table of Contents CONSOLIDATED RESULTS Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 SUMMARY FINANCIAL DATA (in millions, except per share amounts) Revenues a,b $ 5,737 $ 5,416 $ 11,126 $ 12,019 Operating income a $ 1,410 $ 1,736 $ 3,011 $ 4,545 Net income attributable to common stock c,d $ 343 e $ 840 f $ 1,006 e $ 2,367 f Diluted net income per share of common stock $ 0.23 $ 0.57 $ 0.69 $ 1.61 Diluted weighted-average shares of common stock outstanding 1,442 1,457 1,443 1,463 Operating cash flows g $ 1,673 $ 1,621 $ 2,723 $ 3,312 Capital expenditures $ 1,163 $ 863 $ 2,284 $ 1,586 At June 30: Cash and cash equivalents $ 6,683 $ 9,492 $ 6,683 $ 9,492 Total debt, including current portion $ 9,495 $ 11,092 $ 9,495 $ 11,092 a. Refer to Note 9 for a summary of revenues and operating income by operating division. b. Includes (unfavorable) favorable adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $(118) million ($(45) million to net income attributable to common stock or $(0.03) per share) in second-quarter 2023, $(355) million ($(154) million to net income attributable to common stock or $(0.10) per share) in second-quarter 2022, $182 million ($61 million to net income attributable to common stock or $0.04 per share) for the first six months of 2023 and $65 million ($27 million to net income attributable to common stock or $0.02 per share) for the first six months of 2022. Refer to Note 6 for further discussion. c. Beginning January 1, 2023, our economic and equity ownership interest in PT-FI is 48.76%. Prior to January 1, 2023, our economic interest in PT-FI approximated 81%. d. We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to “Operations – Smelting and Refining” for a summary of net impacts from changes in these deferrals. e. Includes net charges totaling $157 million ($0.11 per share) in second-quarter 2023 and $251 million ($0.17 per share) for the first six months of 2023, primarily associated with charges for contested tax rulings by the Peruvian Supreme Court, environmental obligations, an accrual for a potential administrative fine in Indonesia and impairments and contract-cancellation costs. f. Includes net charges totaling $14 million ($0.01 per share) in second-quarter 2022 and $52 million ($0.04 per share) for the first six months of 2022, primarily associated with environmental obligations and metals inventory adjustments, partly offset by a net gain on early extinguishment of debt. Net charges for the first six months of 2022 also included the settlement of an administrative fine and an adjustment to prior-period export duties at PT-FI, and asset retirement obligation adjustments. g. Working capital and other sources (uses) totaled $237 million in second-quarter 2023, $100 million in second-quarter 2022, $(230) million for the first six months of 2023 and $(711) million for the first six months of 2022. 32 Table of Contents Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 SUMMARY OPERATING DATA Copper (millions of recoverable pounds) Production 1,067 1,075 2,032 2,084 Sales, excluding purchases 1,029 a 1,087 1,861 a 2,111 Average realized price per pound $ 3.84 $ 4.03 $ 3.91 $ 4.18 Site production and delivery costs per pound b $ 2.39 $ 2.09 $ 2.47 $ 2.06 Unit net cash costs per pound b $ 1.47 $ 1.41 $ 1.60 $ 1.37 Gold (thousands of recoverable ounces) Production 483 476 888 891 Sales, excluding purchases 495 a 476 765 a 885 Average realized price per ounce $ 1,942 $ 1,827 $ 1,946 $ 1,861 Molybdenum (millions of recoverable pounds) Production 21 23 42 44 Sales, excluding purchases 20 20 39 39 Average realized price per pound $ 24.27 $ 19.44 $ 27.24 $ 19.37 a. Beginning on January 1, 2023, PT-FI’s commercial arrangement with PT Smelting converted from a copper concentrate sales agreement to a tolling arrangement, which resulted in a change in timing of sales. At June 30, 2023, approximately 85 million pounds of copper and 40 thousand ounces of gold from PT-FI's production was deferred in inventory and will be sold as refined metal in future periods. b. Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. For reconciliations of per pound unit net cash costs (credits) 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 $5.7 billion in second-quarter 2023, $5.4 billion in second-quarter 2022, $11.1 billion for the first six months of 2023 and $12.0 billion for the first six months of 2022. Revenues from our mining operations and processing facilities primarily include the sale of copper in concentrate, copper cathode, copper rod, gold in concentrate and molybdenum. Refer to Note 9 for a summary of product revenues. Following is a summary of changes in our consolidated revenues between periods (in millions): Three Months Ended June 30 Six Months Ended June 30 Consolidated revenues - 2022 period $ 5,416 $ 12,019 (Lower) higher sales volumes: Copper (229) (1,040) Gold 35 (223) Molybdenum 17 17 (Lower) higher average realized prices: Copper (196) (503) Gold 57 65 Molybdenum 97 311 Adjustments for prior period provisionally priced copper sales 237 117 Higher Atlantic Copper revenues 315 353 (Lower) higher revenues from purchased copper (32) 102 (Higher) lower treatment charges (3) 29 Lower royalties and export duties 105 220 Other, including intercompany eliminations (82) (341) Consolidated revenues - 2023 period $ 5,737 $ 11,126 Sales Volumes. Consolidated copper sales volumes decreased in the second quarter and first six months of 2023, compared to second quarter and first six months of 2022, primarily as a result of shipping delays in Indonesia associated with the renewal of PT-FI's export license and lower ore grades in North America. Lower copper and gold 33 Table of Contents sales volumes for the first six months of 2023, compared to the 2022 period, also reflects the deferral of sales recognition related to the PT Smelting tolling arrangement. Realized Prices. Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. Average realized prices in second-quarter 2023, compared with second-quarter 2022, were 5% lower for copper, 6% higher for gold and 25% higher for molybdenum, and average realized prices for the first six months of 2023, compared with the first six months of 2022, were 6% lower for copper, 5% higher for gold and 41% higher for molybdenum. Average realized copper prices include net unfavorable adjustments to current period provisionally priced copper sales totaling $52 million in second-quarter 2023, $365 million in second-quarter 2022, $121 million for the first six months of 2023 and $567 million for the first six months of 2022. As discussed in Note 6, all of our copper concentrate and some cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average copper prices. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on provisionally priced copper concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs. Prior Period Provisionally Priced Copper Sales. Net (unfavorable) favorable adjustments to prior periods’ provisionally priced copper sales ( i.e. , provisionally priced sales at March 31, 2023 and 2022, and December 31, 2022 and 2021) recorded in consolidated revenues totaled $(118) million in second-quarter 2023, $(355) million in second-quarter 2022, $182 million for the first six months of 2023 and $65 million the first six months of 2022. Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales. At June 30, 2023, we had provisionally priced copper sales totaling 271 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.77 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the June 30, 2023, provisional price recorded would have an approximate $8 million effect on our 2023 net income attributable to common stock. The LME copper price settled at $3.92 per pound on July 31, 2023. Atlantic Copper Revenues. Atlantic Copper revenues totaled $748 million in second-quarter 2023 and $1.5 billion for the first six months of 2023, compared with $433 million in second-quarter 2022 and $1.2 billion for the first six months of 2022. Higher revenues in the 2023 periods, compared with 2022 periods, primarily reflects higher sales volumes in the 2023 periods, mostly reflecting the impact of reduced operations in second-quarter 2022 because of a scheduled major maintenance turnaround. Purchased Copper. We purchase copper cathode primarily for processing by our Rod & Refining operations. The volumes of copper purchases vary depending on cathode production from our operations and totaled 19 million pounds in second-quarter 2023, 23 million pounds in second-quarter 2022, 67 million pounds for the first six months of 2023 and 38 million pounds for the first six months of 2022. Treatment Charges. Revenues from our copper 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. The increase in the treatment charges in second-quarter 2023, compared to second-quarter 2022, primarily reflects higher treatment charges for South America copper concentrate, partly offset by lower copper concentrate sales volumes. The decrease in the treatment charges for the first six months of 2023, compared with the first six months of 2022, primarily reflects lower copper concentrate sales volumes and PT-FI’s commercial arrangement with PT Smelting converting from a copper concentrate sales agreement to a tolling arrangement. Costs incurred under the tolling arrangement are recorded as production costs in the consolidated statements of income (refer to Note 9). 34 Table of Contents Royalties and Export Duties. Royalties are primarily associated with PT-FI sales and vary with the volume of metal sold and the prices of copper and gold. In late 2022, the export duty rate on PT-FI’s sales declined from 5% to 2.5% as a result of smelter development progress. In March 2023, the Indonesia government verified that construction progress on the Manyar smelter exceeded 50%, which resulted in the elimination of export duties effective March 29, 2023. Lower royalties and export duties during the 2023 periods, compared with the 2022 periods, reflect lower PT-FI copper sales volumes and the reduction in and subsequent elimination of export duties. In July 2023, the Indonesia government issued a revised regulation on duties for various exported products, including copper concentrates. PT-FI is continuing to discuss the applicability of the revised regulation with the Indonesia government and will contest, and seek recovery of, any assessments. Refer to Note 8 and “Outlook” for further discussion. Production and Delivery Costs Consolidated production and delivery costs totaled $3.5 billion in second-quarter 2023, $3.0 billion in second-quarter 2022, $6.7 billion for the first six months of 2023 and $6.2 billion for the first six months of 2022. Higher costs in second-quarter 2023, compared to second-quarter 2022, primarily reflected increased costs at PT-FI associated with higher operating rates and increased underground maintenance costs. Higher costs for the first six months of 2023, compared to the first six months of 2022, also reflected higher commodity-related costs across our operations. Site Production and Delivery Costs Per Pound. Site production and delivery costs for our copper mining operations primarily include labor, energy and other commodity-based inputs, such as sulfuric acid, explosives, steel, reagents, liners and tires. Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $2.39 per pound of copper in second-quarter 2023, $2.09 per pound of copper in second-quarter 2022, $2.47 per pound of copper for the first six months of 2023 and $2.06 per pound of copper for the first six months of 2022. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs (credits) 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. Depreciation, Depletion and Amortization Depreciation will vary under the unit-of-production (UOP) method as a result of changes in sales volumes and the related UOP rates at our mining operations. Consolidated depreciation, depletion and amortization (DD&A) totaled $547 million in second-quarter 2023, $507 million in second-quarter 2022, $946 million for the first six months of 2023 and $996 million for the first six months of 2022. Environmental Obligations and Shutdown Costs Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates. Shutdown costs include care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Higher net charges for environmental obligations and shutdown costs in the 2023 periods, compared to the 2022 periods, primarily reflect net revisions to long-term historical environmental obligations totaling $60 million in second-quarter 2023 and $116 million for the first six months of 2023, compared to $13 million for both the second quarter and first six months of 2022. Interest Expense, Net Consolidated interest costs (before capitalization) totaled $234 million in second-quarter 2023, $189 million in second-quarter 2022, $441 million for the first six months of 2023 and $342 million for the first six months of 2022. The increase in consolidated interest costs (before capitalization) for the 2023 periods, compared to the 2022 periods, primarily reflects interest charges recognized for Cerro Verde’s contested tax rulings by the Peruvian Supreme Court, which totaled $50 million in second-quarter 2023 and $74 million for the first six months of 2023. Higher consolidated interest costs (before capitalization) for the first six months of 2023 also reflected higher interest associated with PT-FI’s $3.0 billion of senior notes that were issued in April 2022. Capitalized interest varies with the level of qualifying assets associated with our development projects and average interest rates on our borrowings. Capitalized interest totaled $62 million in second-quarter 2023, $33 million in 35 Table of Contents second-quarter 2022, $119 million for the first six months of 2023 and $59 million for the first six months of 2022. The increase in capitalized interest costs in the 2023 periods, compared to the 2022 periods, resulted from increased construction and development projects in process, primarily for the Indonesia smelter projects. Refer to “Capital Resources and Liquidity – Investing Activities” for discussion of capital expenditures associated with our major development projects. Other Income, Net Other income, net totaled $24 million in second-quarter 2023, $11 million in second-quarter 2022, $112 million for the first six months of 2023 and $42 million for the first six months of 2022. The increase in other income, net primarily reflects higher interest income of $66 million for the quarterly periods and $150 million for the six month periods, partly offset by a $69 million charge in the second quarter and first six months of 2023 associated with Cerro Verde’s contested tax rulings by the Peruvian Supreme Court. Income Taxes Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision (in millions, except percentages): Six Months Ended June 30, 2023 2022 Income (Loss) a Effective Tax Rate Income Tax (Provision) Benefit Income (Loss) a Effective Tax Rate Income Tax (Provision) Benefit U.S. b $ 250 — % c $ 3 $ 909 1 % c $ (5) South America 642 d 48 % (307) 776 39 % (302) Indonesia 1,981 37 % (740) 2,625 39 % (1,020) Eliminations and other (67) N/A 21 2 N/A (7) Rate adjustment e — N/A (15) — N/A (61) Consolidated FCX $ 2,806 37 % $ (1,038) $ 4,312 32 % $ (1,395) a. Represents income before income taxes and equity in affiliated companies’ net earnings. b. In addition to our North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs. c. Includes valuation allowance release on prior year unbenefited net operating losses. See below for discussion of the provisions of the U.S. Inflation Reduction Act of 2022. d. Includes net charges associated with Cerro Verde’s contested tax rulings by the Peruvian Supreme Court totaling $142 million for the first six months of 2023. e. In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our consolidated tax rate. The provisions of the U.S. Inflation Reduction Act of 2022 (the Act) became applicable to us on January 1, 2023. The Act includes, among other provisions, a new Corporate Alternative Minimum Tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period. As limited guidance related to how the CAMT provisions of the Act should be applied or otherwise administered has been released by the U.S. Department of the Treasury (the Treasury), uncertainty remains regarding the application of the CAMT. We have made interpretations of certain provisions of the Act, and based on these interpretations, determined that the provisions of the Act did not impact our 2023 financial results for the first six months of 2023. However, future guidance released by the Treasury may differ from our interpretations, which could be material and may further limit our ability to realize future benefits from our U.S. net operating losses. Assuming achievement of current sales volume and cost estimates and average prices of $3.90 per pound for copper, $1,950 per ounce for gold and $20.00 per pound for molybdenum for the remainder of 2023, we estimate our consolidated effective tax rate for the year 2023 would approximate 36%. Changes in projected sales volumes and average prices during 2023 would incur tax impacts at estimated effective rates of 40% for Peru, 36% for Indonesia and 0% for the U.S., which excludes any impact from the Act. Our projected estimated effective tax rate of 0% for the U.S. for the year 2023 may be adjusted as additional guidance is released by the Treasury on key provisions of the Act, including guidance on the CAMT. 36 Table of Contents Noncontrolling Interests Net income attributable to noncontrolling interests is primarily associated with our noncontrolling shareholders at PT-FI, Cerro Verde and El Abra and totaled $388 million in second-quarter 2023, $198 million in second-quarter 2022, $774 million for the first six months of 2023 and $575 million for the first six months of 2022. Our economic interest in PT-FI approximated 81% through 2022, and beginning January 1, 2023, our economic interest in PT-FI is 48.76%. As discussed in Note 3 of our 2022 Form 10-K, in accordance with provisions pertaining to PT-FI’s shareholders agreement, first-quarter 2023 net income included a $35 million net benefit associated with PT-FI sales volumes that were attributed to us at our previous approximate 81% economic ownership interest. Refer to Note 9 for net income attributable to noncontrolling interests for each of our business segments. Based on current sales volume and cost estimates and assuming average prices of $3.90 per pound of copper, $1,950 per ounce of gold and $20.00 per pound of molybdenum and taking into account the change in our economic interest in PT-FI, net income attributable to noncontrolling interests is estimated to approximate $2.0 billion for the year 2023. The actual amount will depend on many factors, including relative performance of each business segment, commodity prices, costs and other factors. OPERATIONS Leaching Innovation Initiatives We are advancing a series of initiatives across our North America and South America operations to incorporate new applications, technologies and data analytics to our leaching processes. We believe these leach innovation initiatives provide opportunities to produce incremental copper from our large existing leach stockpiles. Initial results support the potential for incremental low-cost additions to our production and reserve profile and we are targeting an annual run rate of approximately 200 million pounds of copper per year through these initiatives by the end of 2023. We are pursuing new technology applications that have the potential for significant increases in recoverable metal beyond the initial target. Feasibility and Optimization Studies We are engaged in various studies associated with potential future expansion projects primarily at our mining operations. The costs for these studies are charged to production and delivery costs as incurred and totaled $51 million in second-quarter 2023, $31 million in second-quarter 2022, $101 million for the first six months of 2023 and $50 million for the first six months of 2022. We estimate the costs of these studies will approximate $200 million for the year 2023 (including approximately $60 million in third-quarter 2023), subject to market conditions and other factors. 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% 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 reserves and future opportunities in the U.S., primarily associated with existing mining operations. We are planning an expansion to double the concentrator capacity of the Bagdad operation in northwest Arizona and expect to complete a feasibility study in late 2023. In parallel, we are advancing plans for expanded tailings infrastructure projects to support Bagdad's long-range plans. 37 Table of Contents At Safford/Lone Star, production from oxide ores is approaching 300 million pounds of copper per year, which reflects expansion of the initial design capacity of 200 million pounds of copper per year. We have conducted significant exploration drilling in the area in recent years. The positive drilling results indicate potential opportunities to expand production to include sulfide ores in the future. We are advancing metallurgical testing and mine planning for a potential significant long-term investment for development of identified large sulfide resources. A tight labor market and increased competition from other employers in North America continue to represent strategic challenges that are impacting production and our ability to further expand current mining rates. The timing of all future developments will be dependent on market conditions, labor and supply chain considerations and other economic factors. Operating Data. Following is summary consolidated operating data for the North America copper mines: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Operating Data, Net of Joint Venture Interests Copper (millions of recoverable pounds) Production 354 382 686 736 Sales, excluding purchases 339 389 671 770 Average realized price per pound $ 3.92 $ 4.36 $ 4.03 $ 4.46 Molybdenum (millions of recoverable pounds) Production a 9 8 16 15 100% Operating Data Leach operations Leach ore placed in stockpiles (metric tons per day) 724,100 722,900 668,900 715,800 Average copper ore grade (%) 0.24 0.29 0.25 0.29 Copper production (millions of recoverable pounds) 239 254 473 499 Mill operations Ore milled (metric tons per day) 315,500 306,900 306,500 299,200 Average ore grade (%): Copper 0.33 0.39 0.34 0.38 Molybdenum 0.02 0.02 0.02 0.02 Copper recovery rate (%) 83.8 83.2 82.2 82.1 Copper production (millions of recoverable pounds) 172 195 326 364 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines. Our consolidated copper sales volumes from North America totaled 339 million pounds in second-quarter 2023, 389 million pounds in second-quarter 2022, 671 million pounds for the first six months of 2023 and 770 million pounds for the first six months of 2022. Lower copper sales volumes in the 2023 periods, compared with the 2022 periods, primarily reflect lower ore grades and the timing of shipments, partly offset by incremental copper associated with leach initiatives. North America copper sales are estimated to approximate 1.4 billion pounds for the year 2023. Unit Net Cash Costs. We believe unit net cash costs per pound of copper is a measure that provides investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. 38 Table of Contents Gross Profit per Pound of Copper and Molybdenum The following table summarizes unit net cash costs and gross profit per pound at our North America copper mines. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Three Months Ended June 30, 2023 2022 By- Product Method Co-Product Method By- Product Method Co-Product Method Copper Molyb- denum a Copper Molyb- denum a Revenues, excluding adjustments $ 3.92 $ 3.92 $ 23.08 $ 4.36 $ 4.36 $ 18.75 Site production and delivery, before net noncash and other costs shown below 2.93 2.55 16.04 2.50 2.30 12.42 By-product credits (0.55) — — (0.35) — — Treatment charges 0.13 0.13 — 0.11 0.11 — Unit net cash costs 2.51 2.68 16.04 2.26 2.41 12.42 DD&A 0.29 0.26 1.15 0.27 0.24 0.81 Metals inventory adjustments — — — 0.02 0.02 0.16 Noncash and other costs, net 0.15 b 0.13 0.60 0.09 b 0.08 0.32 Total unit costs 2.95 3.07 17.79 2.64 2.75 13.71 Revenue adjustments, primarily for pricing on prior period open sales (0.03) (0.03) — (0.10) (0.10) — Gross profit per pound $ 0.94 $ 0.82 $ 5.29 $ 1.62 $ 1.51 $ 5.04 Copper sales (millions of recoverable pounds) 341 341 389 389 Molybdenum sales (millions of recoverable pounds) a 9 8 Six Months Ended June 30, 2023 2022 By- Product Method Co-Product Method By- Product Method Co-Product Method Copper Molyb- denum a Copper Molyb- denum a Revenues, excluding adjustments $ 4.03 $ 4.03 $ 25.52 $ 4.46 $ 4.46 $ 18.36 Site production and delivery, before net noncash and other costs shown below 2.92 2.55 17.81 2.44 2.25 11.68 By-product credits (0.57) — — (0.35) — — Treatment charges 0.13 0.12 — 0.10 0.10 — Unit net cash costs 2.48 2.67 17.81 2.19 2.35 11.68 DD&A 0.30 0.26 1.24 0.27 0.25 0.85 Metals inventory adjustments — — — 0.01 0.01 0.08 Noncash and other costs, net 0.19 b 0.16 1.06 0.09 b 0.07 0.23 Total unit costs 2.97 3.09 20.11 2.56 2.68 12.84 Revenue adjustments, primarily for pricing on prior period open sales 0.02 0.02 — (0.01) (0.01) — Gross profit per pound $ 1.08 $ 0.96 $ 5.41 $ 1.89 $ 1.77 $ 5.52 Copper sales (millions of recoverable pounds) 676 676 770 770 Molybdenum sales (millions of recoverable pounds) a 16 15 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 charges totaling $0.08 per pound of copper in second-quarter 2023, $0.05 per pound of copper in second-quarter 2022, $0.08 per pound of copper for the first six months of 2023 and $0.04 per pound of copper for the first six months of 2022 for feasibility and optimization studies. Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) for the North America copper mines of $2.51 per pound of copper in second-quarter 2023 and $2.48 per pound for the first six months of 2023 were higher than second-quarter 2022 unit net cash costs of $2.26 per pound and $2.19 per pound for the first six months for 2022, reflecting the impact of lower volumes and increased 39 Table of Contents costs of maintenance, supplies and labor, partly offset by higher molybdenum by-product credits and lower costs of energy. Because certain assets are depreciated on a straight-line basis, North America’s average unit depreciation rate may vary with asset additions and the level of copper production and sales. 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 North America copper mines are expected to approximate $2.56 per pound of copper for the year 2023, based on achievement of current volume and cost estimates and assuming an average molybdenum price of $20.00 per pound for the second half of 2023. North America’s average unit net cash costs for the year 2023 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum for the second half of 2023. South America Mining We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56% interest) and El Abra in Chile (in which we own a 51% 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. Operating and Development Activities. El Abra's large sulfide resource supports a potential major mill project similar to the large-scale concentrator at Cerro Verde. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project. We are advancing plans to invest in water infrastructure to provide options to extend existing operations, while continuing to monitor potential changes in Chile's regulatory and fiscal matters. Operating Data. Following is summary consolidated operating data for South America mining: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Copper (millions of recoverable pounds) Production 307 286 611 560 Sales 304 288 606 552 Average realized price per pound $ 3.78 $ 3.83 $ 3.85 $ 4.00 Molybdenum (millions of recoverable pounds) Production a 5 7 11 14 Leach operations Leach ore placed in stockpiles (metric tons per day) 203,600 157,700 203,800 148,800 Average copper ore grade (%) 0.33 0.37 0.33 0.36 Copper production (millions of recoverable pounds) 74 71 160 132 Mill operations Ore milled (metric tons per day) 425,500 427,100 415,300 410,800 Average ore grade (%): Copper 0.35 0.31 0.34 0.32 Molybdenum 0.01 0.01 0.01 0.02 Copper recovery rate (%) 82.6 84.4 83.2 85.5 Copper production (millions of recoverable pounds) 233 215 451 428 a. Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde. 40 Table of Contents Our consolidated copper sales volumes from South America totaled 304 million pounds in second-quarter 2023, 288 million pounds in second-quarter 2022, 606 million pounds for the first six months of 2023 and 552 million pounds for the first six months of 2022. Higher copper sales volumes in the 2023 periods, compared with the 2022 periods, primarily reflect higher mill ore grades and increased production from leach ore placed on stockpiles. Copper sales from South America mining are expected to approximate 1.2 billion pounds for the year 2023. Refer to “Outlook” for projected molybdenum sales volumes. Unit Net Cash Costs. We believe unit net cash costs per pound of copper is a measure that provides investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Gross Profit per Pound of Copper The following table summarizes unit net cash costs and gross profit per pound of copper at our South America mining operations. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Three Months Ended June 30, 2023 2022 By-Product Method Co-Product Method By-Product Method Co-Product Method Revenues, excluding adjustments $ 3.78 $ 3.78 $ 3.83 $ 3.83 Site production and delivery, before net noncash and other costs shown below 2.43 2.22 2.48 2.29 By-product credits (0.37) — (0.35) — Treatment charges 0.21 0.21 0.15 0.15 Royalty on metals 0.01 0.01 0.01 0.01 Unit net cash costs 2.28 2.44 2.29 2.45 DD&A 0.44 0.39 0.35 0.32 Metals inventory adjustments — — 0.04 0.03 Noncash and other costs, net 0.08 a 0.07 0.06 0.06 Total unit costs 2.80 2.90 2.74 2.86 Revenue adjustments, primarily for pricing on prior period open sales (0.22) (0.22) (0.53) (0.53) Gross profit per pound $ 0.76 $ 0.66 $ 0.56 $ 0.44 Copper sales (millions of recoverable pounds) 304 304 288 288 41 Table of Contents Six Months Ended June 30, 2023 2022 By-Product Method Co-Product Method By-Product Method Co-Product Method Revenues, excluding adjustments $ 3.85 $ 3.85 $ 4.00 $ 4.00 Site production and delivery, before net noncash and other costs shown below 2.49 2.25 2.45 2.26 By-product credits (0.45) — (0.38) — Treatment charges 0.19 0.19 0.15 0.15 Royalty on metals 0.01 0.01 0.01 0.01 Unit net cash costs 2.24 2.45 2.23 2.42 DD&A 0.40 0.35 0.36 0.32 Metals inventory adjustments — — 0.02 0.02 Noncash and other costs, net 0.08 a 0.07 0.06 0.06 Total unit costs 2.72 2.87 2.67 2.82 Revenue adjustments, primarily for pricing on prior period open sales 0.11 0.11 0.06 0.06 Gross profit per pound $ 1.24 $ 1.09 $ 1.39 $ 1.24 Copper sales (millions of recoverable pounds) 606 606 552 552 a. Includes $0.04 per pound of copper in second-quarter 2023 and $0.03 per pound of copper for the first six months of 2023 for feasibility and optimization studies. Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) for South America mining were $2.28 per pound of copper in second-quarter 2023, $2.29 per pound of copper in second-quarter 2022, $2.24 per pound of copper for the first six months of 2023 and $2.23 per pound of copper for the first six months of 2022. The impact of higher volumes in the 2023 periods was offset by higher costs of maintenance, supplies and consumables, and increased treatment charges. The first six months of 2023 also reflected the impact of higher molybdenum credits. Revenues from Cerro Verde’s copper concentrate sales are recorded net of treatment charges, which will vary with Cerro Verde’s sales volumes and the price of copper. Higher treatment charges in the 2023 periods, compared to the 2022 periods, reflected higher smelting and refining rates. 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. Increased DD&A rates per pound of copper in the 2023 periods, compared to the 2022 periods, primarily reflect a correction in the useful lives of certain fixed assets at Cerro Verde, which resulted in additional depreciation being recognized in second-quarter 2023. Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results – Revenues” for further discussion of adjustments to prior period provisionally priced copper sales. Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $2.33 per pound of copper for the year 2023, based on current volume and cost estimates and assuming an average price of $20.00 per pound of molybdenum for the second half of 2023. Indonesia Mining PT-FI operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Central Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. We have a 48.76% ownership interest in PT-FI and manage its mining operations. PT-FI's results are consolidated in our financial statements. Other than copper concentrate delivered to PT Smelting for further processing into refined products, most of PT-FI’s copper concentrate is sold under long-term contracts. 42 Table of Contents Regulatory Matters. Over the past several years, the Indonesia government has enacted various laws and regulations to promote downstream processing of various minerals, including copper concentrates. In 2018, PT-FI agreed to expand its domestic smelting and refining capacity to process all of its copper concentrates in Indonesia and is advancing the construction of the Indonesia smelter projects and expanding capacity at PT Smelting (refer to “Indonesia Smelter” below for further discussion of construction progress). Export License . On June 10, 2023, a ban on the export of copper concentrate went into effect in accordance with Indonesia regulations and export licenses for several exporters, including PT-FI, expired. During the second quarter and in July 2023, the Indonesia government issued various regulations to address exports of unrefined metals, including regulations by the Ministry of Energy and Mineral Resources (MEMR) to allow continued exports of copper concentrates through May 2024 for companies engaged in ongoing smelter development projects with construction progress greater than 50%, and regulations by the Ministry of Trade on the permitted export of various products, including copper concentrates. On July 24, 2023, PT-FI was granted an export license through May 2024 for 1.7 million metric tons of copper concentrate. PT-FI will continue to work with the Indonesia government to obtain approvals to continue exports until the Manyar smelter is fully commissioned and has reached designed operating conditions. Export Duties . Under PT-FI’s special mining license (IUPK), export duties are determined based on regulations that were in effect in 2018, which provided that no duties are required after smelter construction progress reached 50%. In March 2023, the Indonesia government verified that construction progress on the Manyar smelter exceeded 50% and PT-FI's export duties were eliminated effective March 29, 2023. In July 2023, the Ministry of Finance issued a revised regulation on duties for various exported products, including copper concentrates. PT-FI is continuing to discuss the applicability of the revised regulation with the Indonesia government and will contest, and seek recovery of, any assessments. Refer to Note 8 for further discussion of the revised export regulation and other Indonesia regulatory matters. Mining Rights . PT-FI and the Indonesia government continue to engage in discussions regarding the extension of PT-FI's mining rights under its IUPK beyond 2041. An extension beyond 2041 would enable continuity of large-scale operations for the benefit of all stakeholders and provide growth options through additional resource development opportunities in the highly attractive Grasberg minerals district. Operating and Development Activities. Over a multi-year investment period, PT-FI has successfully commissioned three large-scale block cave mines in the Grasberg minerals district (Grasberg Block Cave, Deep Mill Level Zone and Big Gossan), providing annual production volumes of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold. PT-FI’s ongoing project to install additional milling facilities is currently expected to be completed in 2024. The project will increase milling capacity to approximately 240,000 metric tons of ore per day to provide sustained large scale production volumes. PT-FI is also advancing a mill recovery project with the installation of a new copper cleaner circuit that is expected to be completed in the second half of 2024 and to provide incremental metal production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year. Kucing Liar . Long-term mine development activities are ongoing for PT-FI's Kucing Liar deposit in the Grasberg minerals district, which is expected to produce over 6 billion pounds of copper and 6 million ounces of gold between 2028 and the end of 2041. Pre-production development activities commenced in 2022 and are expected to continue over an approximate 10-year timeframe. Capital investments are estimated to average approximately $400 million per year over this period. At full operating rates of approximately 90,000 metric tons of ore per day, annual production from Kucing Liar is expected to approximate 550 million pounds of copper and 560 thousand ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining. 43 Table of Contents Indonesia Smelter . In connection with PT-FI’s 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI agreed to expand its domestic smelting and refining capacity to process all of its copper concentrates in Indonesia. PT-FI is actively engaged in the following projects for additional domestic smelting capacity: • Construction of the Manyar smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of copper concentrate per year. Construction progress currently approximates 75%. Construction of the smelter has an estimated cost of $3.0 billion, including $2.8 billion for a construction contract (excluding capitalized interest, owner’s costs and commissioning) and $0.2 billion for investment in a desalinization plant. Construction is expected to be complete in mid-2024 followed by commissioning of the facilities and a ramp-up schedule through year-end 2024. • Expansion of PT Smelting's capacity by 30% to 1.3 million metric tons of copper concentrate per year, which is expected to be completed by the end of 2023. PT-FI is funding the cost of the expansion, estimated to approximate $250 million, with a loan that will convert to equity and increase PT-FI’s ownership in PT Smelting to a majority ownership interest, which is expected to occur in 2024. • The PMR is being constructed to process gold and silver from the Manyar smelter and PT Smelting. Construction is in progress with commissioning expected during 2024 at an estimated cost of $525 million. For the first six months of 2023, capital expenditures for the Indonesia smelter projects totaled $0.8 billion, and are expected to approximate $1.6 billion for the year 2023. Capital expenditures for the Indonesia smelter projects are being funded with proceeds received from PT-FI's senior notes and availability under its revolving credit facility. Operating Data. Following is summary consolidated operating data for Indonesia mining: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Copper (millions of recoverable pounds) Production 406 407 735 788 Sales 386 410 584 789 Average realized price per pound $ 3.82 $ 3.86 $ 3.83 $ 4.04 Gold (thousands of recoverable ounces) Production 479 473 881 885 Sales 492 474 758 880 Average realized price per ounce $ 1,942 $ 1,827 $ 1,946 $ 1,861 Ore extracted and milled (metric tons per day): Grasberg Block Cave underground mine 114,800 101,800 102,300 101,100 Deep Mill Level Zone underground mine 80,200 77,300 75,100 77,800 Big Gossan underground mine 8,200 7,400 7,600 7,500 Other adjustments 3,900 10,500 1,100 5,400 Total 207,100 197,000 186,100 191,800 Average ore grades: Copper (%) 1.15 1.22 1.16 1.22 Gold (grams per metric ton) 1.05 1.08 1.06 1.05 Recovery rates (%): Copper 88.9 89.8 89.5 89.6 Gold 76.7 79.0 77.4 78.2 PT-FI’s consolidated copper sales of 386 million pounds in second-quarter 2023 and 584 million pounds for the first six months of 2023 were lower than consolidated copper sales of 410 million pounds in second-quarter 2022 and 789 million pounds for the first six months of 2022, reflecting shipping delays associated with the renewal of PT-FI's export license. PT-FI's consolidated copper sales for the first six months of 2023 also reflects the deferral of sales recognition related to the PT Smelting tolling arrangement. PT-FI’s consolidated gold sales of 492 thousand ounces in second-quarter 2023 were higher than second-quarter 2022 consolidated gold sales of 474 thousand ounces, primarily reflecting the timing of sales. PT-FI’s consolidated gold sales of 758 thousand ounces for the first six months of 2023 were lower than consolidated gold sales of 880 44 Table of Contents thousand ounces for the first six months of 2022, primarily reflects the deferral of sales recognition related to the PT Smelting tolling arrangement. Consolidated sales volumes from PT-FI are expected to approximate 1.4 billion pounds of copper and 1.7 million ounces of gold for the year 2023, net of a deferral of approximately 90 million pounds of copper and 130 thousand ounces of gold from mine production under tolling arrangements to be processed and sold as refined metal in future periods. Projected sales volumes are dependent on operational performance, weather-related conditions and other factors detailed in the “Cautionary Statement.” Unit Net Cash (Credits) Costs. We believe unit net cash (credits) costs per pound of copper is a measure that provides investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Gross Profit per Pound of Copper and per Ounce of Gold The following table summarizes the unit net cash (credits) costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations. Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash (credits) costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Three Months Ended June 30, 2023 2022 By-Product Method Co-Product Method By-Product Method Co-Product Method Copper Gold Copper Gold Revenues, excluding adjustments $ 3.82 $ 3.82 $ 1,942 $ 3.86 $ 3.86 $ 1,827 Site production and delivery, before net noncash and other costs shown below 1.88 1.12 569 1.43 0.91 433 Gold and silver credits (2.60) — — (2.17) — — Treatment charges 0.39 0.23 118 0.24 0.15 72 Export duties a — — — 0.21 0.13 63 Royalty on metals 0.24 0.14 72 0.27 0.18 74 Unit net cash (credits) costs (0.09) 1.49 759 (0.02) 1.37 642 DD&A 0.71 0.42 216 0.63 0.41 193 Noncash and other costs, net 0.20 b,c 0.12 60 0.01 0.01 2 Total unit costs 0.82 2.03 1,035 0.62 1.79 837 Revenue adjustments, primarily for pricing on prior period open sales (0.14) (0.14) 1 (0.49) (0.49) (17) PT Smelting intercompany profit — — — 0.06 0.04 19 Gross profit per pound/ounce $ 2.86 $ 1.65 $ 908 $ 2.81 $ 1.62 $ 992 Copper sales (millions of recoverable pounds) 386 386 410 410 Gold sales (thousands of recoverable ounces) 492 474 45 Table of Contents Six Months Ended June 30, 2023 2022 By-Product Method Co-Product Method By-Product Method Co-Product Method Copper Gold Copper Gold Revenues, excluding adjustments $ 3.83 $ 3.83 $ 1,946 $ 4.04 $ 4.04 $ 1,861 Site production and delivery, before net noncash and other costs shown below 1.93 1.14 578 1.42 0.92 426 Gold and silver credits (2.68) — — (2.17) — — Treatment charges 0.38 0.23 115 0.24 0.16 73 Export duties a 0.03 0.02 9 0.21 0.14 63 Royalty on metals 0.26 0.15 73 0.26 0.17 72 Unit net cash (credits) costs (0.08) 1.54 775 (0.04) 1.39 634 DD&A 0.72 0.43 217 0.64 0.42 194 Noncash and other costs, net 0.18 b,c 0.11 55 0.04 b 0.03 11 Total unit costs 0.82 2.08 1,047 0.64 1.84 839 Revenue adjustments, primarily for pricing on prior period open sales 0.19 0.19 22 0.04 0.04 3 PT Smelting intercompany profit (loss) 0.19 0.11 58 (0.03) (0.02) (10) Gross profit per pound/ounce $ 3.39 $ 2.05 $ 979 $ 3.41 $ 2.22 $ 1,015 Copper sales (millions of recoverable pounds) 584 584 789 789 Gold sales (thousands of recoverable ounces) 758 880 a. In March 2023, the Indonesia government verified that construction progress of the Manyar smelter exceeded 50% and export duties were eliminated effective March 29, 2023. Refer to Note 8 for further discussion of the revised export duty regulation that was issued by the Indonesia government. b. Includes a charge totaling $0.14 per pound of copper in second-quarter 2023 and $0.09 per pound of copper for the first six months of 2023 associated with a potential administrative fine. The first six months of 2022 also includes a charge of $0.05 per pound of copper associated with an administrative fine. Refer to Note 8 for further discussion. c. Includes charges totaling $0.03 per pound of copper in second-quarter 2023 and $0.04 per pound of copper for the first six months 2023 for feasibility and optimization studies. PT-FI's unit net cash credits (including gold and silver credits) of $0.09 per pound of copper in second-quarter 2023 and $0.08 per pound of copper for the first six months of 2023 were higher than unit net cash credits of $0.02 per pound of copper in second-quarter 2022 and $0.04 per pound of copper for the first six months of 2022, reflecting higher gold and silver credits and lower export duties, partly offset by higher operating rates, increased underground maintenance costs and treatment charges and the impact of lower copper 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. The increase in treatment charges per pound of copper and ounce of gold in the 2023 periods, compared with the 2022 periods, reflects higher costs associated with the new tolling arrangement with PT Smelting compared to the previous copper concentrate sales agreement. Tolling costs paid to PT Smelting are recorded as production costs in the consolidated statements of income but are reflected as treatment costs above in our unit net cash (credits) costs presentation. PT-FI’s royalties vary with the volume of metal sold and the prices of copper and gold. PT-FI’s royalties totaled $92 million in second-quarter 2023, $108 million in second-quarter 2022, $150 million for the first six months of 2023 and $201 million for the first six months of 2022. The decrease in PT-FI’s royalties for the 2023 periods, compared to the 2022 periods, primarily reflects lower sales volumes and copper prices. Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate may vary with asset additions and the level of copper production and sales. The increase in the DD&A rate per pound of copper in 2023 periods, compared with the 2022 periods, primarily reflects underground development assets being placed into 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. 46 Table of Contents PT Smelting intercompany profit (loss) for the second quarter and first six months of 2022 represents the change in the deferral of 39.5% of PT-FI’s profit on sales to PT Smelting. Beginning on January 1, 2023, PT-FI’s commercial arrangement with PT Smelting converted from a copper concentrate sales agreement to a tolling arrangement. Under this arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its copper concentrate and PT-FI retains title to all products for sales to third parties. Accordingly, beginning in 2023, there are no further sales to PT Smelting. Assuming an average gold price $1,950 per ounce for the second half of 2023 and achievement of current volume and cost estimates, unit net cash credits (including gold and silver credits) for PT-FI are expected to approximate $0.06 per pound of copper for the year 2023. PT-FI's average unit net cash credits for the year 2023 would change by approximately $0.07 per pound of copper for each $100 per ounce change in the average price of gold for the second half of 2023. As discussed in Note 8, in July 2023, the Indonesia government issued a revised regulation on duties for various exported products, including copper concentrates. Export duties that may be assessed under this revised regulation are not reflected in PT-FI's estimated unit net cash credits for the second half of 2023. Based on current sales volume and metal price estimates, the assessment of a 7.5% export duty on PT-FI’s sales during the second half of 2023 is estimated to reduce PT-FI's unit net cash credits by $0.19 per pound of copper for the year 2023 (including $0.31 per pound of copper in third-quarter 2023). PT-FI is continuing to discuss the applicability of the revised regulation with the Indonesia government and will contest, and seek recovery of, any assessments. Molybdenum Mines We operate two wholly owned molybdenum mines in Colorado – the Climax open-pit mine and the Henderson underground mine. The Climax and Henderson 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 Climax and Henderson mines, as well as from our North America and South America copper mines, is processed at our conversion facilities. Operating and Development Activities. Production from the Molybdenum mines totaled 7 million pounds of molybdenum in second-quarter 2023, 15 million pounds for the first six months of 2023, 8 million pounds of molybdenum in second-quarter 2022 and 15 million pounds for the first six months of 2022. Refer to “Consolidated Results” for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our Molybdenum mines and from our North America and South America copper mines. Refer to “Outlook” for projected consolidated molybdenum sales volumes and to “Markets” for a discussion of molybdenum prices. Unit Net Cash Costs Per Pound of Molybdenum. We believe unit net cash costs per pound of molybdenum is a measure that provides investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies. Average unit net cash costs for the Molybdenum mines of $15.99 per pound of molybdenum in second-quarter 2023 and $13.95 per pound for the first six months of 2023 were higher than average unit net cash costs of $10.62 per pound in second-quarter 2022 and $10.75 per pound for the first six months of 2022, primarily reflecting higher contract labor and input costs. Based on current volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $14.13 per pound of molybdenum for the year 2023. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements. Smelting and Refining We wholly own and operate the Miami smelter in Arizona, the El Paso refinery in Texas and Atlantic Copper, a smelter and refinery in Spain. Additionally, PT-FI has a 39.5% ownership interest in PT Smelting and expects its ownership to increase to a majority interest upon completion of the expansion of PT Smelting’s smelting capacity. Through this form of downstream integration, we are assured placement of a significant portion of our copper concentrate production. 47 Table of Contents 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. 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. Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During the first six months of 2023, Atlantic Copper’s copper concentrate purchases included 45% from our copper mining operations and 55% from third parties. Beginning on January 1, 2023, PT-FI's commercial arrangement with PT Smelting converted from a copper concentrate sales agreement to a tolling arrangement. Under this arrangement, PT-FI pays PT Smelting a tolling fee (which PT-FI records as production costs in the consolidated statements of income) to smelt and refine its copper concentrate and PT-FI retains title to all products for sale to third parties ( i.e. , there are no further sales to PT Smelting). We defer recognizing profits on sales from our mining operations to Atlantic Copper (and on 39.5% of PT-FI’s sales to PT Smelting for the 2022 periods) 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 $(39) million ($(21) million to net income attributable to common stock) in second-quarter 2023, $(7) million (less than $1 million to net income attributable to common stock) in second-quarter 2022, $72 million ($27 million to net income attributable to common stock) for the first six months of 2023 and $40 million ($23 million to net income attributable to common stock) for the first six months of 2022. Our net deferred profits on our inventories at Atlantic Copper to be recognized in future periods’ net income attributable to common stock totaled $63 million at June 30, 2023. 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. CAPITAL RESOURCES AND LIQUIDITY Our consolidated operating cash flows vary with sales volumes; prices realized from copper, gold and molybdenum sales; production costs; income taxes; other working capital changes; and other factors. We believe the actions we have taken in recent years to build a strong balance sheet, successfully expand low-cost operations and maintain flexible organic growth options while maintaining sufficient liquidity, will allow us to continue to execute our business plans in a prudent manner during periods of economic uncertainty while preserving substantial future asset values. We closely monitor market conditions and will adjust our operating plans to protect liquidity and preserve our asset values, if necessary. We expect to maintain a strong balance sheet and liquidity position as we focus on building long-term value in our business, executing our operating plans safely, responsibly and efficiently, and prudently managing costs and capital expenditures. 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 $6.4 billion for the year 2023 exceed our expected consolidated capital expenditures of $4.8 billion (which includes $1.6 billion for the Indonesia smelter projects that are being funded with the remaining proceeds from PT-FI’s senior notes and its available credit facility). As discussed in “Outlook,” our projected financial results for the second half of 2023 do not include a 7.5% export duty at PT-FI that may be assessed under a revised regulation issued by the Indonesia government in July 2023. Additionally, as further discussed in Note 8, PT-FI may be required to make an additional refundable smelter deposit of approximately $250 million and deposit 30% of its gross export proceeds into Indonesian banks for a period of 90 days before withdrawal. We have cash on hand and the financial flexibility to fund capital expenditures and our other cash requirements for the year, including noncontrolling interest distributions, income tax payments, current common stock dividends (base and variable) and any share or debt repurchases. At June 30, 2023, we had $6.7 billion of consolidated cash and cash equivalents (which includes $1.1 billion of PT-FI cash designated for Indonesia smelter projects). FCX, PT-FI and Cerro Verde have $3.0 billion, $1.3 billion and $350 million, respectively, of availability under their revolving credit facilities. Refer to “Outlook” for further discussion of projected operating cash flows and capital expenditures for 2023, and to “Debt” below and Note 5 for further discussion. 48 Table of Contents Financial Policy. Our financial policy is aligned with our strategic objectives of maintaining a strong balance sheet, providing cash returns to shareholders and advancing opportunities for future growth. The policy includes a base dividend and a performance-based payout framework, whereby up to 50% of available cash flows generated after planned capital spending and distributions to noncontrolling interests would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to us maintaining our net debt at a level not to exceed the net debt target of $3.0 billion to $4.0 billion (excluding net project debt for additional smelting capacity in Indonesia). Our Board of Directors (Board) will review the structure of the performance-based payout framework at least annually. At June 30, 2023, our net debt, excluding net debt for the Indonesia smelter projects, totaled $0.9 billion. Refer to "Net Debt" for further discussion. On June 21, 2023, our Board declared cash 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, performance-based cash dividend), which was paid on August 1, 2023, to common stockholders of record as of July 14, 2023. Based on current market conditions, the base and variable dividends on our common stock are anticipated to total $0.60 per share for 2023 (including the dividends paid on August 1, 2023), comprised of a $0.30 per share base dividend and $0.30 per share variable dividend. The declaration and payment of dividends (base or variable) is at the discretion of our Board and will depend on our financial results, cash requirements, global economic conditions and other factors deemed relevant by our Board. Cash Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, excluding cash committed for the Indonesia smelter projects and net of noncontrolling interests’ share, taxes and other costs at June 30, 2023 (in billions): Cash at domestic companies $ 3.3 Cash at international operations 3.4 Total consolidated cash and cash equivalents 6.7 Cash for Indonesia smelter projects (1.1) a Noncontrolling interests’ share (1.0) Cash, net of noncontrolling interests’ share 4.6 Withholding taxes (0.1) Net cash available $ 4.5 a. Estimated remaining net proceeds from PT-FI's senior notes offering. 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. Debt At June 30, 2023, consolidated debt totaled $9.5 billion, with a weighted-average interest rate of 5.2%. Substantially all of our outstanding debt is fixed rate. We had no borrowings outstanding and $8 million in letters of credit issued under our $3.0 billion revolving credit facility. Additionally, at June 30, 2023, no amounts were drawn under PT-FI’s $1.3 billion revolving credit facility or Cerro Verde’s $350 million revolving credit facility. Refer to Note 5 for further discussion. Operating Activities We generated operating cash flows of $2.7 billion (net of $0.2 billion of working capital and other uses) for the first six months of 2023 and $3.3 billion (net of $0.7 billion of working capital and other uses) for the first six months of 2022. Lower operating cash flows for the first six months of 2023, compared with first six months of 2022, primarily reflected lower copper prices, lower copper and gold sales volumes and higher production and delivery costs (refer to “Consolidated Results” for further discussion), partly offset by working capital changes. 49 Table of Contents Investing Activities Capital Expenditures. Capital expenditures, including capitalized interest, totaled $2.3 billion for the first six months of 2023, including approximately $0.8 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and $0.8 billion for the Indonesia smelter projects. Capital expenditures, including capitalized interest, totaled $1.6 billion for the first six months of 2022, including approximately $0.8 billion for major mining projects primarily associated with underground development activities in the Grasberg minerals district and $0.3 billion for the Indonesia smelter projects. Proceeds from Sales of Assets. Proceeds from sales of assets totaled $11 million for the first six months of 2023 and $96 million for the first six months of 2022. In May 2022, we sold all of the shares we owned in Jervois Global Limited, which we received in connection with the 2021 sale of our remaining cobalt business, for proceeds of $60 million. Loans to PT Smelting for Expansion. PT-FI made loans to PT Smelting totaling $61 million for the first six months of 2023 and $34 million for the first six months of 2022 to fund PT Smelting’s expansion project. Financing Activities Debt Transactions. Net repayments of debt totaled $1.1 billion for the first six months of 2023, including the repayment of our 3.875% Senior Notes that matured in March 2023 totaling $996 million and open-market purchases of our senior notes for a total cost of $125 million. Refer to Note 5 for additional information. Net proceeds from debt totaled $1.7 billion for the first six months of 2022, reflecting net proceeds from PT-FI’s $3.0 billion senior note offering, partly offset by the repayment of borrowings under PT-FI’s term loan ($0.6 billion) and Cerro Verde’s term loan ($0.3 billion), and open-market purchases of our senior notes ($0.6 billion). Cash Dividends on Common Stock. We paid cash dividends on our common stock totaling $432 million for the first six months of 2023 and $438 million for the first six months of 2022. The declaration and payment of dividends (base or variable) is at the discretion of our Board and will depend on our financial results, cash requirements, global economic conditions and other factors deemed relevant by our Board. Refer to Note 5, Item 1A. “Risk Factors” contained in Part I of our 2022 Form 10-K, “Cautionary Statement” below and discussion of our financial policy above. Cash Dividends and Distributions Paid to Noncontrolling Interests. Cash dividends and distributions paid to noncontrolling interests at our international operations totaled $291 million for the first six months of 2023 and $513 million for the first six months of 2022. Based on the estimates discussed in “Outlook,” we currently expect cash dividends and distributions paid to noncontrolling interests totaling $1.1 billion for the year 2023. Cash dividends and distributions to noncontrolling interests vary based on the operating results and cash requirements of our consolidated subsidiaries. Treasury Stock Purchases. Since mid-2021, we have acquired 47.8 million shares of our common stock under the share repurchase program for a total cost of $1.8 billion ($38.35 average cost per share), including 29.4 million shares in the first six months of 2022 for a total cost of $1.2 billion. No shares have been purchased since July 11, 2022, and we have $3.2 billion available for repurchases under the program. 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 our Board’s discretion. Refer to Item 1A. “Risk Factors” contained in Part I of our 2022 Form 10-K, “Cautionary Statement” below and discussion of our financial policy above. Contributions from Noncontrolling Interests. We received equity contributions totaling $50 million for the first six months of 2023 and $94 million for the first six months of 2022 from PT Mineral Industri Indonesia (formerly PT Indonesia Asahan Aluminium (Persero), (MIND ID)). Contributions for the first six months of 2023 were primarily associated with receipt of the final capital contribution in accordance with the PT-FI shareholders agreement. Contributions for the first six months of 2022 were associated with MIND ID’s share of capital spending on underground mine development projects in the Grasberg minerals district. Beginning on January 1, 2023, capital spending at PT-FI is being shared in accordance with the shareholders’ ownership interests. 50 Table of Contents CONTRACTUAL OBLIGATIONS There have been no other material changes in our contractual obligations since December 31, 2022. Refer to Note 13 and Part II, Items 7. and 7A. in our 2022 Form 10-K for information regarding our contractual obligations. CONTINGENCIES Environmental Liabilities and Asset Retirement Obligations (AROs) Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental liabilities and AROs and also review changes in facts and circumstances associated with these obligations at least quarterly. As discussed in “Consolidated Results – Environmental Obligations and Shutdown Costs,” we recorded $116 million in revisions to our environmental obligations during the first six months of 2023 primarily associated with revised cost estimates. There have been no significant changes to our AROs since December 31, 2022. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental liabilities and AROs. Refer to Note 12 in our 2022 Form 10-K for further information regarding our environmental liabilities and AROs. Litigation and Other Contingencies There have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since December 31, 2022 other than the Indonesia regulatory matters discussed above in “Indonesia Mining-Regulatory Matters and as disclosed in Note 8. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our 2022 Form 10-K, as updated by Note 8, for further information regarding litigation and other contingencies. NEW ACCOUNTING STANDARDS There were no significant updates to previously reported accounting standards included in Note 1 of our 2022 Form 10-K. NET DEBT We believe that net debt, which we define as consolidated debt less consolidated cash and cash equivalents, provides investors with information related to the performance-based payout framework in our financial policy, which requires us to maintain our net debt at a level not to exceed the net debt target of $3 billion to $4 billion (excluding net 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, which may not be comparable to similarly titled measures reported by other companies, follows (in billions): As of June 30, 2023 As of December 31, 2022 Current portion of debt $ — a $ 1.0 Long-term debt, less current portion 9.5 9.6 Consolidated debt 9.5 10.6 Less: consolidated cash and cash equivalents 6.7 8.1 FCX net debt 2.8 2.5 Less: net debt for Indonesia smelter projects b 1.9 1.2 FCX net debt, excluding Indonesia smelter projects $ 0.9 $ 1.3 a. Rounds to less than $0.1 billion b. Includes consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $1.1 billion as of June 30, 2023, and consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $1.8 billion as of December 31, 2022. 51 Table of Contents PRODUCT REVENUES AND PRODUCTION COSTS We believe unit net cash costs (credits) per pound of copper and molybdenum are measures that provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use these measures for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies. We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce and (iv) it is the method used by our management and Board to monitor our mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change. We show revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, net, which are removed from site production and delivery costs in the calculation of unit net cash costs (credits), consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, feasibility and optimization study costs, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements. 52 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 1,337 $ 1,337 $ 200 $ 51 $ 1,588 Site production and delivery, before net noncash and other costs shown below 999 870 139 51 1,060 By-product credits (190) — — — — Treatment charges 46 43 — 3 46 Net cash costs 855 913 139 54 1,106 DD&A 99 87 10 2 99 Metals inventory adjustments 1 1 — — 1 Noncash and other costs, net 51 c 45 5 1 51 Total costs 1,006 1,046 154 57 1,257 Other revenue adjustments, primarily for pricing on prior period open sales (11) (11) — — (11) Gross profit (loss) $ 320 $ 280 $ 46 $ (6) $ 320 Copper sales (millions of recoverable pounds) 341 341 Molybdenum sales (millions of recoverable pounds) a 9 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 3.92 $ 3.92 $ 23.08 Site production and delivery, before net noncash and other costs shown below 2.93 2.55 16.04 By-product credits (0.55) — — Treatment charges 0.13 0.13 — Unit net cash costs 2.51 2.68 16.04 DD&A 0.29 0.26 1.15 Metals inventory adjustments — — — Noncash and other costs, net 0.15 c 0.13 0.60 Total unit costs 2.95 3.07 17.79 Other revenue adjustments, primarily for pricing on prior period open sales (0.03) (0.03) — Gross profit per pound $ 0.94 $ 0.82 $ 5.29 Reconciliation to Amounts Reported Revenues Production and Delivery DD&A Metals Inventory Adjustments Totals presented above $ 1,588 $ 1,060 $ 99 $ 1 Treatment charges (3) 43 — — Noncash and other costs, net — 51 — — Other revenue adjustments, primarily for pricing on prior period open sales (11) — — — Eliminations and other 16 12 — — North America copper mines 1,590 1,166 99 1 Other mining d 5,756 3,936 429 — Corporate, other & eliminations (1,609) (1,554) 19 — As reported in our consolidated financial statements $ 5,737 $ 3,548 $ 547 $ 1 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $26 million ($0.08 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other segments as presented in Note 9. 53 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 1,697 $ 1,697 $ 144 $ 30 $ 1,871 Site production and delivery, before net noncash and other costs shown below 975 897 95 21 1,013 By-product credits (136) — — — — Treatment charges 41 40 — 1 41 Net cash costs 880 937 95 22 1,054 DD&A 103 95 7 1 103 Metals inventory adjustments 7 6 1 — 7 Noncash and other costs, net 36 c 33 2 1 36 Total costs 1,026 1,071 105 24 1,200 Other revenue adjustments, primarily for pricing on prior period open sales (37) (37) — — (37) Gross profit $ 634 $ 589 $ 39 $ 6 $ 634 Copper sales (millions of recoverable pounds) 389 389 Molybdenum sales (millions of recoverable pounds) a 8 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 4.36 $ 4.36 $ 18.75 Site production and delivery, before net noncash and other costs shown below 2.50 2.30 12.42 By-product credits (0.35) — — Treatment charges 0.11 0.11 — Unit net cash costs 2.26 2.41 12.42 DD&A 0.27 0.24 0.81 Metals inventory adjustments 0.02 0.02 0.16 Noncash and other costs, net 0.09 c 0.08 0.32 Total unit costs 2.64 2.75 13.71 Other revenue adjustments, primarily for pricing on prior period open sales (0.10) (0.10) — Gross profit per pound $ 1.62 $ 1.51 $ 5.04 Reconciliation to Amounts Reported Revenues Production and Delivery DD&A Metals Inventory Adjustments Totals presented above $ 1,871 $ 1,013 $ 103 $ 7 Treatment charges (5) 36 — — Noncash and other costs, net — 36 — — Other revenue adjustments, primarily for pricing on prior period open sales (37) — — — Eliminations and other 26 32 (1) — North America copper mines 1,855 1,117 102 7 Other mining d 5,332 3,614 389 11 Corporate, other & eliminations (1,771) (1,728) 16 — As reported in our consolidated financial statements $ 5,416 $ 3,003 $ 507 $ 18 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $21 million ($0.05 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other segments as presented in Note 9. 54 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Six Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 2,723 $ 2,723 $ 412 $ 86 $ 3,221 Site production and delivery, before net noncash and other costs shown below 1,975 1,720 288 78 2,086 By-product credits (387) — — — — Treatment charges 88 83 — 5 88 Net cash costs 1,676 1,803 288 83 2,174 DD&A 202 178 20 4 202 Metals inventory adjustments 1 1 — — 1 Noncash and other costs, net 126 c 107 17 2 126 Total costs 2,005 2,089 325 89 2,503 Other revenue adjustments, primarily for pricing on prior period open sales 13 13 — — 13 Gross profit (loss) $ 731 $ 647 $ 87 $ (3) $ 731 Copper sales (millions of recoverable pounds) 676 676 Molybdenum sales (millions of recoverable pounds) a 16 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 4.03 $ 4.03 $ 25.52 Site production and delivery, before net noncash and other costs shown below 2.92 2.55 17.81 By-product credits (0.57) — — Treatment charges 0.13 0.12 — Unit net cash costs 2.48 2.67 17.81 DD&A 0.30 0.26 1.24 Metals inventory adjustments — — — Noncash and other costs, net 0.19 c 0.16 1.06 Total unit costs 2.97 3.09 20.11 Other revenue adjustments, primarily for pricing on prior period open sales 0.02 0.02 — Gross profit per pound $ 1.08 $ 0.96 $ 5.41 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 3,221 $ 2,086 $ 202 $ 1 Treatment charges (9) 79 — — Noncash and other costs, net — 126 — — Other revenue adjustments, primarily for pricing on prior period open sales 13 — — — Eliminations and other 35 37 — — North America copper mines 3,260 2,328 202 1 Other mining d 11,068 7,435 712 — Corporate, other & eliminations (3,202) (3,051) 32 1 As reported in our consolidated financial statements $ 11,126 $ 6,712 $ 946 $ 2 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $53 million ($0.08 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other mining operations as presented in Note 9. 55 Table of Contents North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs Six Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Molybdenum a Other b Total Revenues, excluding adjustments $ 3,440 $ 3,440 $ 282 $ 57 $ 3,779 Site production and delivery, before net noncash and other costs shown below 1,883 1,735 179 39 1,953 By-product credits (269) — — — — Treatment charges 77 75 — 2 77 Net cash costs 1,691 1,810 179 41 2,030 DD&A 207 192 13 2 207 Metals inventory adjustments 7 6 1 — 7 Noncash and other costs, net 65 c 60 4 1 65 Total costs 1,970 2,068 197 44 2,309 Other revenue adjustments, primarily for pricing on prior period open sales (7) (7) — — (7) Gross profit $ 1,463 $ 1,365 $ 85 $ 13 $ 1,463 Copper sales (millions of recoverable pounds) 770 770 Molybdenum sales (millions of recoverable pounds) a 15 Gross profit per pound of copper/molybdenum: Revenues, excluding adjustments $ 4.46 $ 4.46 $ 18.36 Site production and delivery, before net noncash and other costs shown below 2.44 2.25 11.68 By-product credits (0.35) — — Treatment charges 0.10 0.10 — Unit net cash costs 2.19 2.35 11.68 DD&A 0.27 0.25 0.85 Metals inventory adjustments 0.01 0.01 0.08 Noncash and other costs, net 0.09 c 0.07 0.23 Total unit costs 2.56 2.68 12.84 Other revenue adjustments, primarily for pricing on prior period open sales (0.01) (0.01) — Gross profit per pound $ 1.89 $ 1.77 $ 5.52 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 3,779 $ 1,953 $ 207 $ 7 Treatment charges (9) 68 — — Noncash and other costs, net — 65 — — Other revenue adjustments, primarily for pricing on prior period open sales (7) — — — Eliminations and other 43 49 — — North America copper mines 3,806 2,135 207 7 Other mining d 11,708 7,461 757 11 Corporate, other & eliminations (3,495) (3,443) 32 — As reported in our consolidated financial statements $ 12,019 $ 6,153 $ 996 $ 18 a. Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing. b. Includes gold and silver product revenues and production costs. c. Includes charges totaling $29 million ($0.04 per pound of copper) for feasibility and optimization studies. d. Represents the combined total for our other mining operations as presented in Note 9. 56 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 1,153 $ 1,153 $ 128 $ 1,281 Site production and delivery, before net noncash and other costs shown below 741 678 82 760 By-product credits (109) — — — Treatment charges 62 62 — 62 Royalty on metals 2 2 — 2 Net cash costs 696 742 82 824 DD&A 132 118 14 132 Noncash and other costs, net 24 b 23 1 24 Total costs 852 883 97 980 Other revenue adjustments, primarily for pricing on prior period open sales (69) (69) — (69) Gross profit $ 232 $ 201 $ 31 $ 232 Copper sales (millions of recoverable pounds) 304 304 Gross profit per pound of copper: Revenues, excluding adjustments $ 3.78 $ 3.78 Site production and delivery, before net noncash and other costs shown below 2.43 2.22 By-product credits (0.37) — Treatment charges 0.21 0.21 Royalty on metals 0.01 0.01 Unit net cash costs 2.28 2.44 DD&A 0.44 0.39 Noncash and other costs, net 0.08 b 0.07 Total unit costs 2.80 2.90 Other revenue adjustments, primarily for pricing on prior period open sales (0.22) (0.22) Gross profit per pound $ 0.76 $ 0.66 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 1,281 $ 760 $ 132 Treatment charges (62) — — Royalty on metals (2) — — Noncash and other costs, net — 24 — Other revenue adjustments, primarily for pricing on prior period open sales (69) — — Eliminations and other — (1) — South America mining 1,148 783 132 Other mining c 6,198 4,319 396 Corporate, other & eliminations (1,609) (1,554) 19 As reported in our consolidated financial statements $ 5,737 $ 3,548 $ 547 a. Includes silver sales of 1.1 million ounces ($23.02 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Includes charges totaling $11 million ($0.04 per pound of copper) for feasibility studies. c. Represents the combined total for our other segments as presented in Note 9. 57 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 1,102 $ 1,102 $ 116 $ 1,218 Site production and delivery, before net noncash and other costs shown below 712 658 69 727 By-product credits (101) — — — Treatment charges 44 44 — 44 Royalty on metals 3 3 — 3 Net cash costs 658 705 69 774 DD&A 101 91 10 101 Metals inventory adjustments 11 10 1 11 Noncash and other costs, net 18 17 1 18 Total costs 788 823 81 904 Other revenue adjustments, primarily for pricing on prior period open sales (154) (154) — (154) Gross profit $ 160 $ 125 $ 35 $ 160 Copper sales (millions of recoverable pounds) 288 288 Gross profit per pound of copper: Revenues, excluding adjustments $ 3.83 $ 3.83 Site production and delivery, before net noncash and other costs shown below 2.48 2.29 By-product credits (0.35) — Treatment charges 0.15 0.15 Royalty on metals 0.01 0.01 Unit net cash costs 2.29 2.45 DD&A 0.35 0.32 Metals inventory adjustments 0.04 0.03 Noncash and other costs, net 0.06 0.06 Total unit costs 2.74 2.86 Other revenue adjustments, primarily for pricing on prior period open sales (0.53) (0.53) Gross profit per pound $ 0.56 $ 0.44 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 1,218 $ 727 $ 101 $ 11 Treatment charges (44) — — — Royalty on metals (3) — — — Noncash and other costs, net — 18 — — Other revenue adjustments, primarily for pricing on prior period open sales (154) — — — Eliminations and other (1) (3) 1 — South America mining 1,016 742 102 11 Other mining b 6,171 3,989 389 7 Corporate, other & eliminations (1,771) (1,728) 16 — As reported in our consolidated financial statements $ 5,416 $ 3,003 $ 507 $ 18 a. Includes silver sales of 1.1 million ounces ($23.26 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Represents the combined total for our other segments as presented in Note 9. 58 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Six Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 2,331 $ 2,331 $ 301 $ 2,632 Site production and delivery, before net noncash and other costs shown below 1,508 1,363 179 1,542 By-product credits (270) — — — Treatment charges 118 118 — 118 Royalty on metals 4 3 1 4 Net cash costs 1,360 1,484 180 1,664 DD&A 239 212 27 239 Noncash and other costs, net 50 b 46 4 50 Total costs 1,649 1,742 211 1,953 Other revenue adjustments, primarily for pricing on prior period open sales 71 71 3 74 Gross profit $ 753 $ 660 $ 93 $ 753 Copper sales (millions of recoverable pounds) 606 606 Gross profit per pound of copper: Revenues, excluding adjustments $ 3.85 $ 3.85 Site production and delivery, before net noncash and other costs shown below 2.49 2.25 By-product credits (0.45) — Treatment charges 0.19 0.19 Royalty on metals 0.01 0.01 Unit net cash costs 2.24 2.45 DD&A 0.40 0.35 Noncash and other costs, net 0.08 b 0.07 Total unit costs 2.72 2.87 Other revenue adjustments, primarily for pricing on prior period open sales 0.11 0.11 Gross profit per pound $ 1.24 $ 1.09 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 2,632 $ 1,542 $ 239 Treatment charges (118) — — Royalty on metals (4) — — Noncash and other costs, net — 50 — Other revenue adjustments, primarily for pricing on prior period open sales 74 — — Eliminations and other — (2) — South America mining 2,584 1,590 239 Other mining c 11,744 8,173 675 Corporate, other & eliminations (3,202) (3,051) 32 As reported in our consolidated financial statements $ 11,126 $ 6,712 $ 946 a. Includes silver sales of 2.1 million ounces ($23.20 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Includes charges totaling $19 million ($0.03 per pound of copper) for feasibility studies. c. Represents the combined total for our other mining operations as presented in Note 9. 59 Table of Contents South America Mining Product Revenues, Production Costs and Unit Net Cash Costs Six Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Other a Total Revenues, excluding adjustments $ 2,204 $ 2,204 $ 240 $ 2,444 Site production and delivery, before net noncash and other costs shown below 1,352 1,244 135 1,379 By-product credits (213) — — — Treatment charges 84 84 — 84 Royalty on metals 6 5 1 6 Net cash costs 1,229 1,333 136 1,469 DD&A 198 179 19 198 Metals inventory adjustments 11 10 1 11 Noncash and other costs, net 35 33 2 35 Total costs 1,473 1,555 158 1,713 Other revenue adjustments, primarily for pricing on prior period open sales 35 35 — 35 Gross profit $ 766 $ 684 $ 82 $ 766 Copper sales (millions of recoverable pounds) 552 552 Gross profit per pound of copper: Revenues, excluding adjustments $ 4.00 $ 4.00 Site production and delivery, before net noncash and other costs shown below 2.45 2.26 By-product credits (0.38) — Treatment charges 0.15 0.15 Royalty on metals 0.01 0.01 Unit net cash costs 2.23 2.42 DD&A 0.36 0.32 Metals inventory adjustments 0.02 0.02 Noncash and other costs, net 0.06 0.06 Total unit costs 2.67 2.82 Other revenue adjustments, primarily for pricing on prior period open sales 0.06 0.06 Gross profit per pound $ 1.39 $ 1.24 Reconciliation to Amounts Reported Metals Production Inventory Revenues and Delivery DD&A Adjustments Totals presented above $ 2,444 $ 1,379 $ 198 $ 11 Treatment charges (84) — — — Royalty on metals (6) — — — Noncash and other costs, net — 35 — — Other revenue adjustments, primarily for pricing on prior period open sales 35 — — — Eliminations and other 1 (2) 1 — South America mining 2,390 1,412 199 11 Other mining b 13,124 8,184 765 7 Corporate, other & eliminations (3,495) (3,443) 32 — As reported in our consolidated financial statements $ 12,019 $ 6,153 $ 996 $ 18 a. Includes silver sales of 2.1 million ounces ($23.31 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing. b. Represents the combined total for our other mining operations as presented in Note 9. 60 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs Three Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 1,473 $ 1,473 $ 956 $ 45 $ 2,474 Site production and delivery, before net noncash and other costs shown below 725 432 280 13 725 Gold and silver credits (1,002) — — — — Treatment charges 151 90 58 3 151 Royalty on metals 92 55 36 1 92 Net cash (credits) costs (34) 577 374 17 968 DD&A 275 164 106 5 275 Noncash and other costs, net 77 b 46 30 1 77 Total costs 318 787 510 23 1,320 Other revenue adjustments, primarily for pricing on prior period open sales (54) (54) 1 — (53) Gross profit $ 1,101 $ 632 $ 447 $ 22 $ 1,101 Copper sales (millions of recoverable pounds) 386 386 Gold sales (thousands of recoverable ounces) 492 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 3.82 $ 3.82 $ 1,942 Site production and delivery, before net noncash and other costs shown below 1.88 1.12 569 Gold and silver credits (2.60) — — Treatment charges 0.39 0.23 118 Royalty on metals 0.24 0.14 72 Unit net cash (credits) costs (0.09) 1.49 759 DD&A 0.71 0.42 216 Noncash and other costs, net 0.20 b 0.12 60 Total unit costs 0.82 2.03 1,035 Other revenue adjustments, primarily for pricing on prior period open sales (0.14) (0.14) 1 Gross profit per pound/ounce $ 2.86 $ 1.65 $ 908 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 2,474 $ 725 $ 275 Treatment charges (92) 59 — Royalty on metals (92) — — Noncash and other costs, net — 77 — Other revenue adjustments, primarily for pricing on prior period open sales (53) — — Eliminations and other — (3) — Indonesia mining 2,237 858 275 Other mining c 5,109 4,244 253 Corporate, other & eliminations (1,609) (1,554) 19 As reported in our consolidated financial statements $ 5,737 $ 3,548 $ 547 a. Includes silver sales of 1.8 million ounces ($23.07 per ounce average realized price). b. Includes a charge totaling $55 million ($0.14 per pound of copper) associated with a potential administrative fine and charges totaling $12 million ($0.03 per pound of copper) for feasibility and optimization studies. c. Represents the combined total for our other segments as presented in Note 9. 61 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs Three Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 1,582 $ 1,582 $ 865 $ 32 $ 2,479 Site production and delivery, before net noncash and other costs shown below 587 374 205 8 587 Gold and silver credits (888) — — — — Treatment charges 98 63 34 1 98 Export duties 85 54 30 1 85 Royalty on metals 108 72 35 1 108 Net cash (credits) costs (10) 563 304 11 878 DD&A 262 167 91 4 262 Noncash and other costs, net 3 b 2 1 — 3 Total costs 255 732 396 15 1,143 Other revenue adjustments, primarily for pricing on prior period open sales (201) (201) (8) (1) (210) PT Smelting intercompany profit 26 17 9 — 26 Gross profit $ 1,152 $ 666 $ 470 $ 16 $ 1,152 Copper sales (millions of recoverable pounds) 410 410 Gold sales (thousands of recoverable ounces) 474 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 3.86 $ 3.86 $ 1,827 Site production and delivery, before net noncash and other costs shown below 1.43 0.91 433 Gold and silver credits (2.17) — — Treatment charges 0.24 0.15 72 Export duties 0.21 0.13 63 Royalty on metals 0.27 0.18 74 Unit net cash (credits) costs (0.02) 1.37 642 DD&A 0.63 0.41 193 Noncash and other costs, net 0.01 0.01 2 Total unit costs 0.62 1.79 837 Other revenue adjustments, primarily for pricing on prior period open sales (0.49) (0.49) (17) PT Smelting intercompany profit 0.06 0.04 19 Gross profit per pound/ounce $ 2.81 $ 1.62 $ 992 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 2,479 $ 587 $ 262 Treatment charges (98) — — Export duties (85) — — Royalty on metals (108) — — Noncash and other costs, net — 3 — Other revenue adjustments, primarily for pricing on prior period open sales (210) — — PT Smelting intercompany profit — (26) — Indonesia mining 1,978 564 262 Other mining b 5,209 4,167 229 Corporate, other & eliminations (1,771) (1,728) 16 As reported in our consolidated financial statements $ 5,416 $ 3,003 $ 507 a. Includes silver sales of 1.6 million ounces ($20.71 per ounce average realized price). b. Represents the combined total for our other segments as presented in Note 9. 62 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs Six Months Ended June 30, 2023 (In Millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 2,238 $ 2,238 $ 1,474 $ 73 $ 3,785 Site production and delivery, before net noncash and other costs shown below 1,124 665 438 21 1,124 Gold and silver credits (1,564) — — — — Treatment charges 224 133 87 4 224 Export duties 18 10 7 1 18 Royalty on metals 150 92 55 3 150 Net cash (credits) costs (48) 900 587 29 1,516 DD&A 423 250 165 8 423 Noncash and other costs, net 107 b 63 42 2 107 Total costs 482 1,213 794 39 2,046 Other revenue adjustments, primarily for pricing on prior period open sales 114 114 18 (1) 131 PT Smelting intercompany profit 112 66 44 2 112 Gross profit $ 1,982 $ 1,205 $ 742 $ 35 $ 1,982 Copper sales (millions of recoverable pounds) 584 584 Gold sales (thousands of recoverable ounces) 758 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 3.83 $ 3.83 $ 1,946 Site production and delivery, before net noncash and other costs shown below 1.93 1.14 578 Gold and silver credits (2.68) — — Treatment charges 0.38 0.23 115 Export duties 0.03 0.02 9 Royalty on metals 0.26 0.15 73 Unit net cash (credits) costs (0.08) 1.54 775 DD&A 0.72 0.43 217 Noncash and other costs, net 0.18 b 0.11 55 Total unit costs 0.82 2.08 1,047 Other revenue adjustments, primarily for pricing on prior period open sales 0.19 0.19 22 PT Smelting intercompany profit 0.19 0.11 58 Gross profit per pound/ounce $ 3.39 $ 2.05 $ 979 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 3,785 $ 1,124 $ 423 Treatment charges (143) 81 — Export duties (18) — — Royalty on metals (150) — — Noncash and other costs, net — 107 — Other revenue adjustments, primarily for pricing on prior period open sales 131 — — PT Smelting intercompany profit — (112) — Eliminations and other — (7) — Indonesia mining 3,605 1,193 423 Other mining c 10,723 8,570 491 Corporate, other & eliminations (3,202) (3,051) 32 As reported in our consolidated financial statements $ 11,126 $ 6,712 $ 946 a. Includes silver sales of 2.7 million ounces ($23.28 per ounce average realized price). b. Includes a charge of $55 million ($0.09 per pound of copper) associated with a potential administrative fine and charges totaling $25 million ($0.04 per pound of copper) for feasibility and optimization studies. c. Represents the combined total for our other mining operations as presented in Note 9. 63 Table of Contents Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs Six Months Ended June 30, 2022 (In Millions) By-Product Co-Product Method Method Copper Gold Silver a Total Revenues, excluding adjustments $ 3,184 $ 3,184 $ 1,638 $ 69 $ 4,891 Site production and delivery, before net noncash and other costs shown below 1,121 730 375 16 1,121 Gold and silver credits (1,710) — — — — Treatment charges 191 124 64 3 191 Export duties 164 107 55 2 164 Royalty on metals 201 135 64 2 201 Net cash (credits) costs (33) 1,096 558 23 1,677 DD&A 510 332 171 7 510 Noncash and other costs, net 30 b 20 10 — 30 Total costs 507 1,448 739 30 2,217 Other revenue adjustments, primarily for pricing on prior period open sales 32 32 3 — 35 PT Smelting intercompany loss (27) (17) (9) (1) (27) Gross profit $ 2,682 $ 1,751 $ 893 $ 38 $ 2,682 Copper sales (millions of recoverable pounds) 789 789 Gold sales (thousands of recoverable ounces) 880 Gross profit per pound of copper/per ounce of gold: Revenues, excluding adjustments $ 4.04 $ 4.04 $ 1,861 Site production and delivery, before net noncash and other credits shown below 1.42 0.92 426 Gold and silver credits (2.17) — — Treatment charges 0.24 0.16 73 Export duties 0.21 0.14 63 Royalty on metals 0.26 0.17 72 Unit net cash (credits) costs (0.04) 1.39 634 DD&A 0.64 0.42 194 Noncash and other costs, net 0.04 b 0.03 11 Total unit costs 0.64 1.84 839 Other revenue adjustments, primarily for pricing on prior period open sales 0.04 0.04 3 PT Smelting intercompany loss (0.03) (0.02) (10) Gross profit per pound/ounce $ 3.41 $ 2.22 $ 1,015 Reconciliation to Amounts Reported Production Revenues and Delivery DD&A Totals presented above $ 4,891 $ 1,121 $ 510 Treatment charges (191) — — Export duties (164) — — Royalty on metals (201) — — Noncash and other costs, net 12 42 — Other revenue adjustments, primarily for pricing on prior period open sales 35 — — PT Smelting intercompany loss — 27 — Indonesia mining 4,382 1,190 510 Other mining c 11,132 8,406 454 Corporate, other & eliminations (3,495) (3,443) 32 As reported in our consolidated financial statements $ 12,019 $ 6,153 $ 996 a. Includes silver sales of 3.1 million ounces ($22.18 per ounce average realized price). b. Includes charges of $41 million ($0.05 per pound of copper) associated with a settlement of an administrative fine levied by the Indonesia government (refer to Note 8) and $18 million ($0.02 per pound of copper) to reserve for exposure associated with export duties in prior periods, partly offset by a credit of $30 million ($0.04 per pound of copper) associated with adjustments to prior year treatment and refining charges. c. Represents the combined total for our other mining operations as presented in Note 9. 64 Table of Contents Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs Three Months Ended June 30, (In Millions) 2023 2022 Revenues, excluding adjustments a $ 156 $ 151 Site production and delivery, before net noncash and other costs shown below 101 78 Treatment charges and other 6 7 Net cash costs 107 85 DD&A 14 18 Noncash and other costs, net 4 2 Total costs 125 105 Gross profit $ 31 $ 46 Molybdenum sales (millions of recoverable pounds) a 7 8 Gross profit per pound of molybdenum: Revenues, excluding adjustments a $ 23.28 $ 18.87 Site production and delivery, before net noncash and other costs shown below 15.13 9.77 Treatment charges and other 0.86 0.85 Unit net cash costs 15.99 10.62 DD&A 2.01 2.27 Noncash and other costs, net 0.59 0.30 Total unit costs 18.59 13.19 Gross profit per pound $ 4.69 $ 5.68 Reconciliation to Amounts Reported Production Three Months Ended June 30, 2023 Revenues and Delivery DD&A Totals presented above $ 156 $ 101 $ 14 Treatment charges and other (6) — — Noncash and other costs, net — 4 — Molybdenum mines 150 105 14 Other mining b 7,196 4,997 514 Corporate, other & eliminations (1,609) (1,554) 19 As reported in our consolidated financial statements $ 5,737 $ 3,548 $ 547 Three Months Ended June 30, 2022 Totals presented above $ 151 $ 78 $ 18 Treatment charges and other (7) — — Noncash and other costs, net — 2 — Molybdenum mines 144 80 18 Other mining b 7,043 4,651 473 Corporate, other & eliminations (1,771) (1,728) 16 As reported in our consolidated financial statements $ 5,416 $ 3,003 $ 507 a. Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table. b. Represents the combined total for our other segments as presented in Note 9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines. 65 Table of Contents Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs Six Months Ended June 30, (In Millions) 2023 2022 Revenues, excluding adjustments a $ 386 $ 285 Site production and delivery, before net noncash and other costs shown below 192 150 Treatment charges and other 13 13 Net cash costs 205 163 DD&A 34 34 Noncash and other costs, net 9 5 Total costs 248 202 Gross profit $ 138 $ 83 Molybdenum sales (millions of recoverable pounds) a 15 15 Gross profit per pound of molybdenum: Revenues, excluding adjustments a $ 26.36 $ 18.81 Site production and delivery, before net noncash and other costs shown below 13.10 9.90 Treatment charges and other 0.85 0.85 Unit net cash costs 13.95 10.75 DD&A 2.32 2.27 Noncash and other costs, net 0.64 0.34 Total unit costs 16.91 13.36 Gross profit per pound $ 9.45 $ 5.45 Reconciliation to Amounts Reported Production Six months ended June 30, 2023 Revenues and Delivery DD&A Totals presented above $ 386 $ 192 $ 34 Treatment charges and other (13) — — Noncash and other costs, net — 9 — Molybdenum mines 373 201 34 Other mining b 13,955 9,562 880 Corporate, other & eliminations (3,202) (3,051) 32 As reported in our consolidated financial statements $ 11,126 $ 6,712 $ 946 Six months ended June 30, 2022 Totals presented above $ 285 $ 150 $ 34 Treatment charges and other (13) — — Noncash and other costs, net — 5 — Molybdenum mines 272 155 34 Other mining b 15,242 9,441 930 Corporate, other & eliminations (3,495) (3,443) 32 As reported in our consolidated financial statements $ 12,019 $ 6,153 $ 996 a. Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table. b. Represents the combined total for our other segments as presented in Note 9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines. 66 Table of Contents CAUTIONARY STATEMENT Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as plans, projections, or expectations relating to business outlook, strategy, goals or targets; global market conditions; ore grades and milling rates; production and sales volumes; unit net cash costs and operating costs; capital expenditures; operating plans; cash flows; liquidity; PT-FI’s financing, construction and completion of additional domestic smelting capacity in Indonesia in accordance with the terms of its IUPK; extension of PT-FI’s IUPK beyond 2041 and export licenses; payment of export duties; export volumes; our commitment to deliver responsibly produced copper and molybdenum, including plans to implement, validate and maintain validation of our operating sites under specific frameworks; execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business related thereto; achievement of 2030 climate targets and 2050 net zero aspiration; improvements in operating procedures and technology innovations and applications; exploration efforts and results; development and production activities, rates and costs; future organic growth opportunities; tax rates; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; mineral reserve and mineral resource estimates; final resolution of settlements associated with ongoing legal and environmental proceedings; debt repurchases; and the ongoing implementation of our financial policy and future returns to shareholders, including dividend payments (base or variable) and share repurchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “could,” “to be,” “potential,” “assumptions,” “guidance,” “aspirations,” “future,” “commitments,” “pursues,” “initiatives,” “objectives,” “opportunities,” “strategy” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration and payment of dividends (base or variable), and timing and amount of any share repurchases are at the discretion of the Board and management, respectively, and are subject to a number of factors, including not exceeding our net debt target, capital availability, our financial results, cash requirements, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by the Board or management, as applicable. The share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion. We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of the commodities we produce, primarily copper; PT-FI’s ability to continue to export and sell copper concentrates and anode slimes; changes in export duties; the Indonesia government’s approval of a deferred schedule for completion of additional domestic smelting capacity in Indonesia; production rates; timing of shipments; price and availability of consumables and components we purchase as well as constraints on supply and logistics, and transportation services; changes in our cash requirements, financial position, financing or investment plans; changes in general market, economic, regulatory or industry conditions; reductions in liquidity and access to capital; changes in tax laws and regulations, including the impact of the Act; any major public health crisis; political and social risks, including the potential effects of violence in Indonesia, civil unrest in Peru, and relations with local communities and Indigenous Peoples; operational risks inherent in mining, with higher inherent risks in underground mining; mine sequencing; changes in mine plans or operational modifications, delays, deferrals or cancellations; results of technical, economic or feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; satisfaction of requirements in accordance with PT-FI's IUPK to extend mining rights from 2031 through 2041; discussions relating to the extension of PT-FI’s IUPK beyond 2041; cybersecurity incidents; labor relations, including labor-related work stoppages and costs; compliance with applicable environmental, health and safety laws and regulations; weather- and climate-related risks; environmental risks, including availability of secure water supplies, and litigation results; our ability to comply with our responsible production commitments under specific frameworks and any changes to such frameworks and other factors described in more detail under the heading “Risk Factors” contained in Part I, Item 1A. of our 2022 Form 10-K. Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs or technological solutions and innovations, some aspects of which we may not be able to control. Further, we may make changes to our business plans that could affect our results. We caution investors that we undertake no obligation to update any forward-looking statements, which speak only as of the date made, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes. 67 Table of Contents This report on Form 10-Q also contains measures such as net debt and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S. GAAP. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements. Refer to “Net Debt” for reconciliations of debt and consolidated cash and cash equivalents to net debt.