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Item 2. Management’s Discussion and Analysis

2023-11-03 compared with 2023-08-03 · 363 added, 326 removed, 1268 unchanged (35% of the section changed)

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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 results for the third quarter and first nine months of 2023 reflect strong operating performance and continued execution of our business strategy.

We remain focused on managing costs efficiently and continue to advance several important value-enhancing initiatives.

Despite near-term global economic and market uncertainties, we are confident in our long-lived and high-quality asset base and have a favorable outlook on the long-term fundamentals for copper, driven by the global transition to clean energy.

As a leading responsible supplier of copper with a strong balance sheet and a proven track record for successful project development, we believe we are well positioned to build long-term value for the benefit of our stakeholders.

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.

During third-quarter 2023, incremental copper production from these initiatives totaled 46 million pounds, and we are targeting achievement of an annual run rate of approximately 200 million pounds of copper by the end of 2023, with potentially larger opportunities in the future.

Cerro Verde's concentrator facilities continue to perform well, with milling rates averaging 431,300 metric tons of ore per day in third-quarter 2023, a new quarterly record.

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).

Net income attributable to common stockholders totaled $454 million in third-quarter 2023 and $1.5 billion for the first nine months of 2023, compared with $404 million in third-quarter 2022 and $2.8 billion for the first nine months of 2022.

The increase in third-quarter 2023, compared to third-quarter 2022, primarily reflects higher copper sales volumes and copper prices, partly offset by a higher income tax provision.

The decrease for the first nine months of 2023, compared with the first nine months of 2022, primarily reflects increased costs for maintenance and supplies, partly offset by a lower income tax provision.

The 2023 periods were also impacted by the change in our economic interest in PT Freeport Indonesia (PT-FI) (refer to Note 1 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.

Through June 10, 2023, PT-FI exported anode slimes under PT Smelting’s export license.

A change in regulations during second-quarter 2023 requires PT-FI to follow a new administrative process for the export of anode slimes.

The administrative process is advancing, and PT-FI expects to receive approval to resume exports of anode slimes during fourth-quarter 2023.

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.

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.

At September 30, 2023, we had consolidated debt of $9.4 billion and consolidated cash and cash equivalents of $5.7 billion ($6.25 billion, including $0.5 billion of current restricted cash and cash equivalents associated with a

portion of PT-FI's export proceeds required to be temporarily deposited in Indonesia banks).

Net debt totaled $3.2 billion ($0.8 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, consolidated cash and cash equivalents and current restricted cash associated with PT-FI's export proceeds to net debt.

Beginning in 2022 and through November 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 $102 million aggregate principal amount in third-quarter 2023 and $233 million in the first nine months of 2023.

At September 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.

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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

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Projected molybdenum sales include 50 million pounds produced by our North America and South America copper mines and 30 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.

Consolidated sales volumes in fourth-quarter 2023 are expected to approximate 1.1 billion pounds of copper, 580 thousand ounces of gold and 20 million pounds of molybdenum.

Projected sales volumes are dependent on operational performance, the resumption of anode slime exports at PT-FI, 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.

of our 2022 Form 10-K and Part II, Item 1A.

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).

Assuming average prices of $1,900 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 $1.63 per pound of copper for the year 2023 (including $1.58 per pound of copper in fourth-quarter 2023).

Estimated consolidated unit net cash costs for the year 2023 include assessment of a 7.5% export duty at PT-FI during the second half of 2023, which continues to be discussed with the Indonesia government.

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

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).

The impact of price changes during fourth-quarter 2023 on consolidated unit net cash costs for the year 2023 would approximate $0.02 per pound of copper for each $100 per ounce change in the average price of gold and $0.01 per pound of copper for each $2 per pound change in the average price of molybdenum.

Consolidated Operating Cash Flows

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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.

Assuming average prices of $3.60 per pound for copper, $1,900 per ounce for gold, and $20.00 per pound for molybdenum in fourth-quarter 2023 and the resumption of anode slime exports at PT-FI, our consolidated operating cash flows are estimated to approximate $5.4 billion (net of $0.5 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 $2.1 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).

The impact of price changes during fourth-quarter 2023 on operating cash flows for the year 2023 would approximate $115 million for each $0.10 per pound change in the average price of copper, $55 million for each $100 per ounce change in the average price of gold and $15 million for each $2 per pound change in the average price of molybdenum.

Consolidated Capital Expenditures

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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.

Capital expenditures for the Indonesia smelter projects are being funded with PT-FI's senior notes and availability under its revolving credit facility.

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;

During the period from January 2013 through September 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;

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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.

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.

of our 2022 Form 10-K and Part II, Item 1A.

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 September 2023.

During third-quarter 2023, LME copper settlement prices ranged from a low of $3.64 per pound to a high of $3.96 per pound, averaged $3.79 per pound and settled at $3.73 per pound on September 29, 2023.

Volatility continued across the copper market in third-quarter 2023, influenced by China’s mixed economic data and wide-ranging views about the global and U.S.

While still relatively low relative to consumption, inventory levels rose during third-quarter 2023, with slightly more than three days of global consumption available at the end of October 2023.

Rising inventory levels have translated to copper price declines, and the LME copper settlement price was $3.65 per pound on October 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.

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.

This graph presents London PM gold prices from January 2013 through September 2023.

During third-quarter 2023, London PM gold prices ranged from a low of $1,871 per ounce to a high of $1,976 per ounce, averaged $1,928 per ounce, and closed at $1,871 per ounce on September 29, 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.

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.

dollar, the potential lagged impact of a significant cumulative rate-hiking cycle, and sustained elevated geopolitical risk.

The London PM gold price was $1,997 per ounce on October 31, 2023.

This graph presents the Platts Metals Daily Molybdenum Dealer Oxide weekly average price from January 2013 through September 2023.

During third-quarter 2023, the weekly average price of molybdenum ranged from a low of $22.11 per pound to a high of $25.57 per pound, averaged $23.78 per pound and was $22.61 per pound on

September 29, 2023.

During third-quarter 2023, there was improved demand from Chinese steel mills, while downstream demand in Europe and North America remained low because of seasonality and economic weakness.

Overall global demand for molybdenum was mixed with energy and aerospace sectors performing better than others, such as the construction sector.

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.

The Platts Metals Daily Molybdenum Dealer Oxide weekly average price was $18.83 per pound on October 27, 2023.

CONSOLIDATED RESULTS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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$ 1,178 $ 836 $ 3,462 $ 2,422

At September 30:

Cash and cash equivalents

$ 5,745 $ 8,578 $ 5,745 $ 8,578

Restricted cash and cash equivalents, current $ 697 h

$ 112 $ 697 h

Total debt, including current portion

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Refer to Note 9 for a summary of revenues and operating income by operating division.

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.

Includes favorable (unfavorable) adjustments to prior period provisionally priced concentrate and cathode copper sales totaling $4 million ($2 million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2023, $(228) million ($(95) million to net income attributable to common stock or $(0.07) per share) in third-quarter 2022, $183 million ($62 million to net income attributable to common stock or $0.04 per share) for the first nine months of 2023 and $58 million ($24 million to net income attributable to common stock or $0.02 per share) for the first nine months of 2022.

Refer to Note 6 for further discussion.

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%.

Our economic interest in PT-FI is 48.76% and prior to January 1, 2023, it approximated 81%.

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.

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.

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.

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.

Three Months Ended June 30, Six Months Ended June 30,

Includes net charges totaling $117 million ($0.08 per share) in third-quarter 2023 and $368 million ($0.25 per share) for the first nine months of 2023, primarily associated with revisions to environmental obligation estimates and asset impairment charges.

Net charges for the first nine months of 2023 also included charges for contested tax rulings issued by the Peruvian Supreme Court and an accrual for a potential administrative fine in Indonesia.

Includes net credits (charges) totaling $29 million ($0.02 per share) in third-quarter 2022 and $(23) million ($(0.02) per share) for the first nine months of 2022.

Net credits in third-quarter 2022 were primarily associated with gains on early extinguishment of debt and favorable adjustments associated with international tax audits, partly offset by metals inventory adjustments.

The first nine months of 2022 also included net charges at PT-FI primarily associated with an administrative fine levied by the Indonesia government and a reserve for exposure associated with export duties.

Working capital and other uses totaled $483 million in third-quarter 2023, $269 million in third-quarter 2022, $713 million for the first nine months of 2023 and $980 million for the first nine months of 2022.

Includes $0.5 billion associated with a portion of PT-FI's export proceeds required to be temporarily deposited in Indonesia banks for 90 days in accordance with an August 2023 regulation issued by the Indonesia government.

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Production 1,085 1,056 3,117 3,140

Sales, excluding purchases 1,029 a

1,087 1,861 a

Sales, excluding purchases 1,109 1,060 2,970 3,171

Average realized price per pound $ 3.80 $ 3.50

$ 3.87 $ 3.88

Site production and delivery costs per pound b

Site production and delivery costs per pound a

$ 2.27 $ 2.35 $ 2.40 $ 2.16

Unit net cash costs per pound b

Unit net cash costs per pound a

$ 1.73 $ 1.75 $ 1.65 $ 1.50

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Sales, excluding purchases

399 480 1,164 1,365

Average realized price per ounce $ 1,898 $ 1,683 $ 1,932 $ 1,786

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Average realized price per pound $ 23.71 $ 17.05 $ 26.05 $ 18.64

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.

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.”

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.

For reconciliations of per pound unit net cash costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.”

Consolidated revenues totaled $5.8 billion in third-quarter 2023, $5.0 billion in third-quarter 2022, and $17.0 billion for the first nine months of 2023 and 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.

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Following is a summary of changes in our consolidated revenues between periods (in millions):

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

Consolidated revenues - 2022 period $ 5,003 $ 17,022

(Lower) higher sales volumes:

Higher (lower) sales volumes:

Copper 168 (779)

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Molybdenum 42 62

(Lower) higher average realized prices:

Higher (lower) average realized prices:

Copper 333 (30)

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(Higher) lower treatment charges (19) 10

Lower royalties and export duties 105 220

(Higher) lower royalties and export duties (49) 171

Other, including intercompany eliminations 38 (333)

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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

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.

Consolidated copper sales volumes increased in third-quarter 2023, compared to third-quarter 2022, primarily as a result of higher mining rates.

Consolidated gold sales volumes decreased in third-quarter 2023, compared to third-quarter 2022, primarily reflecting the timing of shipments of anode slimes associated with a change in Indonesia administrative requirements for products that were previously being exported by PT Smelting.

Lower consolidated copper and gold sales volumes for the first nine months of 2023, compared to the 2022 period, primarily reflect the deferral of sales recognition related to the PT Smelting tolling arrangement.

Lower copper sales

volumes also reflected lower ore grades in North America, and lower gold sales volumes also reflected the timing of shipments of anode slimes in Indonesia.

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.

Average realized prices in third-quarter 2023, compared with third-quarter 2022, were 9% higher for copper, 13% higher for gold and 39% higher for molybdenum, and average realized prices for the first nine months of 2023, compared with the first nine months of 2022, were slightly lower for copper, 8% higher for gold and 40% higher for molybdenum.

Average realized copper prices include net unfavorable adjustments to current period provisionally priced copper sales totaling $34 million in third-quarter 2023, $44 million in third-quarter 2022, $152 million for the first nine months of 2023 and $832 million for the first nine 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.

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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.

Net favorable (unfavorable) adjustments to prior periods’ provisionally priced copper sales ( i.e.

, provisionally priced sales at June 30, 2023 and 2022, and December 31, 2022 and 2021) recorded in consolidated revenues totaled $4 million in third-quarter 2023, $(228) million in third-quarter 2022, $183 million for the first nine months of 2023 and $58 million for the first nine 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.

At September 30, 2023, we had provisionally priced copper sales totaling 257 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $3.75 per pound, subject to final pricing over the next several months.

We estimate that each $0.05 change in the price realized from the September 30, 2023, recorded provisional price would have an approximate $8 million effect on our 2023 net income attributable to common stock.

The LME copper price settled at $3.65 per pound on October 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.

Atlantic Copper revenues totaled $700 million in third-quarter 2023 and $2.2 billion for the first nine months of 2023, compared with $609 million in third-quarter 2022 and $1.8 billion for the first nine months of 2022.

Higher revenues in the 2023 periods, compared with the 2022 periods, primarily reflects higher sales volumes, mostly because of reduced operations during 2022 associated with 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.

The volumes of copper purchases vary depending on cathode production from our operations and totaled 18 million pounds in third-quarter 2023, 48 million pounds in third-quarter 2022, 85 million pounds for the first nine months of 2023 and 86 million pounds for the first nine 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).

The 2023 periods, compared to the 2022 periods, reflect (i) lower treatment charges at PT-FI associated with the change in its commercial arrangement with PT Smelting from a copper concentrate sales agreement to a tolling arrangement (that is, beginning in 2023, costs incurred under the tolling arrangement are recorded as production costs in the consolidated statements of income) and (ii) higher rates for Cerro Verde and PT-FI’s copper concentrates.

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.

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, and effective March 29, 2023, export duties were eliminated upon verification by the Indonesia government that construction progress on the Manyar smelter exceeded 50%.

Subsequently, in July 2023, the Indonesia government issued a revised regulation on duties for various exported

products, including copper concentrates, and under the revised regulation, PT-FI is currently being assessed export duties for copper concentrates at 7.5% (refer to Note 8 for further discussion).

PT-FI incurred export duties totaling $147 million in third-quarter 2023 (associated with the revised regulation by the Indonesia government), $80 million in third-quarter 2022, $165 million for the first nine months of 2023 and $245 million for the first nine months of 2022.

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.

Consolidated production and delivery costs totaled $3.5 billion in third-quarter 2023, $3.4 billion in third-quarter 2022, $10.3 billion for the first nine months of 2023 and $9.5 billion for the first nine months of 2022.

Higher costs in the 2023 periods, compared to the 2022 periods, primarily reflected increased consolidated operating rates, higher commodity-related costs across our operations and increased costs of labor (including increased contract labor), particularly in North America.

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.

Consolidated site production and delivery costs (before net noncash and other costs) for our copper mines averaged $2.27 per pound of copper in third-quarter 2023, $2.35 per pound of copper in third-quarter 2022, $2.40 per pound of copper for the first nine months of 2023 and $2.16 per pound of copper for the first nine months of 2022.

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.

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.

Consolidated depreciation, depletion and amortization (DD&A) totaled $533 million in third-quarter 2023, $508 million in third-quarter 2022, and $1.5 billion for the first nine months of 2023 and 2022.

Environmental Obligations and Shutdown Costs

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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.

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 $83 million in third-quarter 2023 and $199 million for the first nine months of 2023, compared to net credits of $5 million in third-quarter 2022 and net charges of $8 million for the first nine months of 2022.

Refer to Note 8 for further discussion of the 2023 revisions.

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.

Consolidated interest costs (before capitalization) totaled $165 million in third-quarter 2023, $182 million in third-quarter 2022, $606 million for the first nine months of 2023 and $524 million for the first nine months of 2022.

Consolidated interest costs (before capitalization) for the third quarter and first nine months of 2023, compared to the 2022 periods, reflects the impact of lower average outstanding debt as a result of the repayment of our 3.875% Senior Notes and open-market purchases of our senior notes (refer to Note 5).

Higher consolidated interest costs (before capitalization) for the first nine months of 2023, also reflects interest charges totaling $74 million for Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court, and higher consolidated interest costs 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

second-quarter 2022, $119 million for the first six months of 2023 and $59 million for the first six months of 2022.

Capitalized interest totaled $69 million in third-quarter 2023, $42 million in third-quarter 2022, $188 million for the first nine months of 2023 and $101 million for the first nine 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.

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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.

Other income, net totaled $71 million in third-quarter 2023, $25 million in third-quarter 2022, $183 million for the first nine months of 2023 and $67 million for the first nine months of 2022.

The increase in other income, net primarily reflects higher interest income.

The first nine months of 2023 also include a $69 million charge associated with Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court.

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,

Nine Months Ended September 30,

Income (Loss) a

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South America 961 d

48 % (307) 776 39 % (302)

46 % (438) 802 36 % (287) e

Indonesia 3,130 37 % (1,159) 3,480 39 % (1,363)

Eliminations and other 7 N/A — 43 N/A (25)

Rate adjustment e

Rate adjustment f

— N/A 48 — N/A (30)

Consolidated FCX $ 4,278 36 % $ (1,546) $ 5,179 33 % $ (1,710)

Represents income before income taxes and equity in affiliated companies’ net earnings.

Represents income before income taxes, equity in affiliated companies' net earnings (losses), and noncontrolling interests.

In addition to our North America mining operations, the U.S.

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Inflation Reduction Act of 2022.

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.

Includes net charges associated with Cerro Verde’s contested tax rulings issued by the Peruvian Supreme Court totaling $142 million ($73 million net of noncontrolling interests).

Includes a tax credit of $31 million ($16 million net of noncontrolling interest) primarily associated with completion of Cerro Verde's 2016 tax audit.

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%.

Refer to Note 4 for discussion of the U.S.

Inflation Reduction Act of 2022 (the Act), which became applicable to us on January 1, 2023.

Assuming average prices of $3.60 per pound for copper, $1,900 per ounce for gold and $20.00 per pound for molybdenum in fourth-quarter 2023 and achievement of current sales volume and cost estimates, we estimate our consolidated effective tax rate for the year 2023 would approximate 38% (which would result in a 44% effective tax rate in fourth-quarter 2023).

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.

for the year 2023 may be adjusted as additional guidance is released on key provisions of the Act.

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.

Net income attributable to noncontrolling interests, which is primarily associated with our noncontrolling shareholders at PT-FI, Cerro Verde and El Abra, totaled $510 million in third-quarter 2023, $156 million in third-quarter 2022, $1.3 billion for the first nine months of 2023 and $731 million for the first nine months of 2022.

Our economic interest in PT-FI is 48.76% and prior to January 1, 2023, it approximated 81%.

As discussed in Note 1, 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.

Assuming average prices of $3.60 per pound of copper, $1,900 per ounce of gold and $20.00 per pound of molybdenum, achievement of current sales volume and cost estimates, and taking into account the change in our economic interest in PT-FI, net income attributable to noncontrolling interests is estimated to approximate

$1.75 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.

Responsible Production

Updated Climate Report.

In September 2023, we published our annual climate report, available on our website at fcx.com/sustainability .

The climate report details our ongoing progress to advance our climate strategy focused on reducing our greenhouse gas (GHG) emissions, enhancing our resilience to climate risks and contributing responsibly produced copper to the global economy.

We have four 2030 GHG emissions reduction targets that collectively cover nearly 100% of our Scope 1 and 2 GHG emissions.

Leaching Innovation Initiatives

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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.

In third-quarter 2023, incremental copper production from these initiatives totaled 46 million pounds (approximately 90% of the targeted annual rate).

We are pursuing new technology applications that have the potential for significant increases in recoverable metal beyond the initial target.

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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.

The costs for these studies are charged to production and delivery costs as incurred and totaled $42 million in third-quarter 2023, $34 million in third-quarter 2022, $137 million for the first nine months of 2023 and $84 million for the first nine months of 2022.

We estimate the costs of these studies will approximate $200 million for the year 2023, subject to market conditions and other factors.

North America Copper Mines

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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.

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 fourth-quarter 2023.

In parallel, we are advancing activities for expanded tailings infrastructure projects and are procuring an autonomous haul truck fleet to support Bagdad's long-range plans.

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.

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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.

A tight labor market and increased competition from other employers in North America continue to represent strategic challenges that have impacted and are continuing to impact 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.

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Following is summary consolidated operating data for the North America copper mines:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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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.

Our consolidated copper sales volumes from North America totaled 372 million pounds in third-quarter 2023, 361 million pounds in third-quarter 2022, 1.0 billion pounds for the first nine months of 2023 and 1.1 billion pounds for the nine months of 2022.

Copper sales volumes in the 2023 periods, compared with the 2022 periods, primarily reflect lower ore grades.

The impact of lower ore grades in third-quarter 2023, compared with third-quarter 2022, was offset by the timing of shipments.

North America copper sales are estimated to approximate 1.4 billion pounds for the year 2023.

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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,

Three Months Ended September 30,

By- Product Method Co-Product Method By- Product Method Co-Product Method

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Molybdenum sales (millions of recoverable pounds) a

Six Months Ended June 30,

Nine Months Ended September 30,

By- Product Method Co-Product Method By- Product Method Co-Product Method

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Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

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.

Includes charges totaling $0.08 per pound of copper in third-quarter 2023, $0.06 per pound of copper in third-quarter 2022, $0.08 per pound of copper for the first nine months of 2023 and $0.04 per pound of copper for the first nine 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

costs of maintenance, supplies and labor, partly offset by higher molybdenum by-product credits and lower costs of energy.

Average unit net cash costs (net of by-product credits) for the North America copper mines of $2.70 per pound of copper in third-quarter 2023 and $2.56 per pound for the first nine months of 2023 were higher than average unit net cash costs of $2.56 per pound in third-quarter 2022 and $2.31 per pound for the first nine months for 2022, primarily reflecting increased costs of labor

(including contract labor), maintenance and supplies, partly offset by higher molybdenum by-product credits and lower energy costs.

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.

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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.

Assuming an average price of $20.00 per pound of molybdenum in fourth-quarter 2023 and achievement of current sales volume and cost estimates, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $2.62 per pound of copper for the year 2023.

North America's average unit net cash costs for the year 2023 would change by approximately $0.01 per pound for each $2 per pound change in the average price of molybdenum in fourth-quarter 2023.

South America Mining

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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.

During third-quarter 2023, Cerro Verde processed an average of 431,300 metric tons of ore per day through its concentrators, a new quarterly record, and entered into a new power purchase agreement that is expected to transition its electric power to fully renewable energy sources in 2026.

At the El Abra operations in Chile, we have identified a large sulfide resource that would support 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.

Capital cost requirements are being updated to reflect current market conditions.

We are advancing plans to invest in water infrastructure to provide options to extend existing operations, while continuing to monitor Chile's regulatory and fiscal matters, as well as trends in capital costs for similar projects.

Operating Data.

Following is summary consolidated operating data for South America mining:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde.

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.

Our consolidated copper sales volumes from South America totaled 307 million pounds in third-quarter 2023, 293 million pounds in third-quarter 2022, 913 million pounds for the first nine months of 2023 and 845 million pounds for the first nine months of 2022.

Higher copper sales volumes in the 2023 periods, compared with the 2022 periods, primarily reflect increased milling rates and ore grades at Cerro Verde.

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.

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Three Months Ended June 30,

Three Months Ended September 30,

Method Co-Product

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Copper sales (millions of recoverable pounds) 307 307 293 293

Six Months Ended June 30,

Nine Months Ended September 30,

Method Co-Product

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Copper sales (millions of recoverable pounds) 913 913 845 845

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.

Includes $0.03 per pound of copper 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.

Average unit net cash costs (net of by-product credits) for South America mining of $2.35 per pound of copper in third-quarter 2023 and $2.28 per pound for the first nine months of 2023 were lower than average unit net cash costs of $2.58 per pound in third-quarter 2022 and $2.35 per pound for the first nine months of 2022, reflecting higher molybdenum by-product credits and volumes, partly offset by higher treatment charges.

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.

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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.

Assuming an average price of $20.00 per pound of molybdenum in fourth-quarter 2023 and achievement of current sales volume and cost estimates, average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $2.34 per pound of copper for the year 2023.

Indonesia Mining

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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.

Over the past several years, the Indonesia government has enacted various laws and regulations to promote downstream processing of various products, including copper concentrates.

On June 10, 2023, export licenses for several exporters, including PT-FI and PT Smelting, expired.

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.

Through June 10, 2023, PT-FI exported anode slimes under PT Smelting’s export license.

A change in regulations during second-quarter 2023 requires PT-FI to follow a new administrative process for the export of anode slimes.

The administrative process is advancing, and PT-FI expects to receive approval to resume exports of anode slimes during fourth-quarter 2023.

PT-FI is working with the Indonesia government to obtain approvals to continue exports of copper concentrates and anode slimes beyond May 2024 and until the Indonesia smelter projects are fully commissioned and reach designed operating conditions.

Under PT-FI’s IUPK, export duties are determined based on regulations that were in effect in 2018 and no duties are required after smelter construction progress reached 50%.

Effective March 29, 2023, PT-FI’s export duties were eliminated upon verification of smelter construction progress by the Indonesia government.

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.

Under the revised regulation PT-FI is currently being assessed export duties for copper concentrates at 7.5%, resulting in export duties totaling $147 million in third-quarter 2023.

PT-FI does not believe any export duties should be assessed under the revised regulation and continues to discuss the applicability of the revised regulation with the Indonesia government because of inconsistencies with its IUPK.

Refer to Note 8 for further discussion of the revised export regulation and other Indonesia regulatory matters.

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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.

Milling rates from these underground mines averaged 206,600 metric tons of ore per day in third-

quarter 2023, an approximate 10% increase from 188,700 metric tons of ore per day in third-quarter 2022.

During third-quarter 2023, PT-FI successfully commissioned a new crusher to support increased mining rates in the Grasberg Block Cave ore body.

PT-FI’s ongoing project to install additional milling facilities is expected to be complete in early 2024.

The project is expected to 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.

PT-FI is advancing plans to transition its existing energy source from coal to liquefied natural gas, which is expected to meaningfully reduce PT-FI's Scope 1 GHG emissions at the Grasberg minerals district.

PT-FI is planning investments in a new gas-fired combined cycle facility at Grasberg with a targeted start date in 2027.

Capital expenditures for the new facilities, to be incurred over the next three to four years, approximate $1 billion, which represents an incremental cost of $0.4 billion compared to previously planned investments to refurbish the existing coal units.

Kucing Liar .

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• 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 progress currently approximates 84% complete.

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.

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• 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.

Construction is in progress with commissioning expected during 2024 at an estimated cost of $575 million, which incorporates recent revisions to scope.

For the first nine months of 2023, capital expenditures for the Indonesia smelter projects totaled $1.2 billion, and are expected to approximate $1.6 billion for the year 2023.

Capital expenditures for the Indonesia smelter projects are being funded with 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,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Gold 77.8 77.2 77.5 77.9

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

thousand ounces for the first six months of 2022, primarily reflects the deferral of sales recognition related to the PT Smelting tolling arrangement.

PT-FI’s consolidated copper sales of 430 million pounds in third-quarter 2023 were higher than third-quarter 2022 copper sales volumes of 406 million pounds, primarily reflecting higher mining rates and ore grades.

PT-FI’s consolidated copper sales of 1.0 billion pounds for the first nine months of 2023 were lower than 1.2 billion pounds for the first nine months of 2022, primarily reflecting the deferral of sales recognition related to the PT Smelting tolling arrangement.

PT-FI’s consolidated gold sales totaled 395 thousand ounces in third-quarter 2023, 476 thousand ounces in third-quarter 2022, 1.2 million ounces for the first nine months of 2023, and 1.4 million ounces for the first nine months of 2022.

Lower gold sales volumes in the 2023 periods, compared with the 2022 periods, primarily reflect the timing of shipments of anode slimes associated with a change in administrative requirements for products that were previously being exported by PT Smelting.

At September 30, 2023, approximately 75 thousand ounces of gold in anode slimes were included in inventory and available for sale pending approval of PT-FI’s export license for anode slimes.

The first nine months of 2023 was also impacted by the deferral of sales recognition related to the PT Smelting tolling arrangement.

Consolidated sales volumes from PT-FI are expected to approximate 1.5 billion pounds of copper and 1.7 million ounces of gold for the year 2023, net of a deferral of approximately 100 million pounds of copper and 180 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.

Projected sales volumes are dependent on operational performance, the resumption of anode slime exports, weather-related conditions and other factors detailed in the “Cautionary Statement.”

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.

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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,

The following table summarizes the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations.

Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Three Months Ended September 30,

By-Product Method Co-Product Method By-Product Method Co-Product Method

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Site production and delivery, before net noncash and other costs shown below 1.42 0.96 484 1.81 1.13 553

Gold and silver credits (2.60) — — (2.17) — —

Gold, silver and other by-product credits (1.83) — — (2.00) — —

Treatment charges 0.32 0.22 109 0.23 0.15 72

Export duties a

— — — 0.21 0.13 63

Export duties 0.34 0.23 116 0.20 0.12 61

Royalty on metals 0.19 0.12 64 0.20 0.12 67

Unit net cash (credits) costs (0.09) 1.49 759 (0.02) 1.37 642

Unit net cash costs 0.44 1.53 773 0.44 1.52 753

DD&A 0.63 0.43 214 0.65 0.41 200

Noncash and other costs, net 0.20 b,c

Noncash and other costs (credits), net 0.02 a

0.01 6 (0.02) (0.01) (7)

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Gold sales (thousands of recoverable ounces) 395 476

Six Months Ended June 30,

Nine Months Ended September 30,

By-Product Method Co-Product Method By-Product Method Co-Product Method

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Site production and delivery, before net noncash and other costs shown below 1.71 1.07 542 1.55 0.99 476

Gold and silver credits (2.68) — — (2.17) — —

Gold, silver and other by-product credits (2.32) — — (2.11) — —

Treatment charges 0.36 0.22 113 0.24 0.15 74

Export duties a

0.03 0.02 9 0.21 0.14 63

Export duties 0.16 0.10 51 0.20 0.13 63

Royalty on metals 0.23 0.14 70 0.24 0.16 70

Unit net cash (credits) costs (0.08) 1.54 775 (0.04) 1.39 634

Unit net cash costs 0.14 1.53 776 0.12 1.43 683

DD&A 0.69 0.43 216 0.65 0.41 199

Noncash and other costs, net 0.18 b,c

Noncash and other costs, net 0.11 a,b

0.07 36 0.02 b

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Revenue adjustments, primarily for pricing on prior period open sales 0.11 0.11 15 0.02 0.02 2

PT Smelting intercompany profit (loss) 0.19 0.11 58 (0.03) (0.02) (10)

PT Smelting intercompany profit 0.11 0.07 35 0.03 0.02 9

Gross profit per pound/ounce $ 3.09 $ 1.96 $ 954 $ 2.97 $ 1.90 $ 910

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Gold sales (thousands of recoverable ounces) 1,153 1,356

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.

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.

Includes charges totaling $0.01 per pound of copper in third-quarter 2023 and $0.02 per pound of copper for the first nine months 2023 for feasibility and optimization studies.

Includes a charge totaling $0.05 per pound of copper for the first nine months of 2023 associated with a potential administrative fine.

The first nine months of 2022 also includes a charge of $0.03 per pound of copper associated with an administrative fine.

Refer to Note 8 for further discussion.

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.

PT-FI's unit net cash costs (net of gold, silver and other by-product credits) of $0.44 per pound of copper in third-quarter 2023 approximated unit net cash costs in third-quarter 2022, primarily reflecting higher copper volumes, offset by lower gold, silver and other by-product credits and higher treatment charges and export duties.

PT-FI’s unit net cash costs (net of gold, silver and other by-product credits) of $0.14 per pound of copper for the first nine months of 2023 were higher than unit net cash costs of $0.12 per pound for the first nine months of 2022, primarily reflecting increased underground maintenance costs and higher treatment charges and the impact of lower copper sales volumes, partly offset by higher gold, silver and other by-product credits.

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.

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 costs presentation.

PT-FI’s export duties totaled $147 million in third-quarter 2023, $80 million in third-quarter 2022, $165 million for the first nine months of 2023 and $245 million for the first nine months of 2022.

In July 2023, the Indonesia government issued a revised regulation on duties for various exported products, including copper concentrates, and under the revised regulation, PT-FI is currently being assessed export duties for copper concentrates at 7.5%.

Refer to Note 8 for further discussion of the revised regulation.

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.

PT-FI’s royalties totaled $78 million in third-quarter 2023, $81 million in third-quarter 2022, $228 million for the first nine months of 2023 and $281 million for the first nine months of 2022.

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.

The change in the DD&A rate per pound of copper in the 2023 periods, compared with the 2022 periods, primarily reflects changes in sales volumes.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods.

Refer to “Consolidated Results – Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

PT Smelting intercompany 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.

PT Smelting intercompany profit for the third quarter and first nine 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 changed 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.

Assuming an average gold price of $1,900 per ounce in fourth-quarter 2023 and achievement of current sales volumes and cost estimates, unit net cash costs (including gold, silver and other by-product credits) for PT-FI are expected to approximate $0.15 per pound of copper for the year 2023.

PT-FI's estimated unit net cash costs for the year 2023 include assessment of a 7.5% export duty during the second half of 2023, which continues to be discussed with the Indonesia government.

PT-FI's average unit net cash costs for the year 2023 would change by approximately $0.05 per pound of copper for each $100 per ounce change in the average price of gold in fourth-quarter 2023.

Molybdenum Mines

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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.

Production from the Molybdenum mines totaled 7 million pounds of molybdenum in third-quarter 2023, 8 million pounds in third-quarter 2022, 22 million pounds for the first nine months of 2023 and 23 million pounds for the first nine 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.

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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.

Average unit net cash costs for the Molybdenum mines of $18.07 per pound of molybdenum in third-quarter 2023 and $15.25 per pound for the first nine months of 2023 were higher than average unit net cash costs of $12.10 per pound in third-quarter 2022 and $11.22 per pound for the first nine months of 2022, primarily reflecting lower production volumes associated with ore types mined and higher contract labor costs.

Based on current volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate $14.47 per pound of molybdenum for the year 2023.

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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.

During the first nine months of 2023, Atlantic Copper’s copper concentrate purchases included 38% from our copper mining operations and 62% from third parties.

Beginning on January 1, 2023, PT-FI's commercial arrangement with PT Smelting changed 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.

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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.

Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions to operating income totaling $81 million ($37 million to net income attributable to common stock) in third-quarter 2023, $33 million ($14 million to net income attributable to common stock) in third-quarter 2022, $153 million ($64 million to net income attributable to common stock) for the first nine months of 2023 and $73 million ($37 million to net income attributable to common stock) for the first nine 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 $30 million at September 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.

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and other factors.

Our results for the first nine months of 2023 reflect strong operating performance and continued execution of our business strategy.

We remain focused on managing costs efficiently and continue to advance several important value-enhancing initiatives.

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.

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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.

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 $5.4 billion for the year 2023 exceed our expected consolidated capital expenditures of $4.8 billion (which includes $1.9 billion for major mining projects and $1.6 billion for the Indonesia smelter projects that are being funded with PT-FI’s senior notes and its available credit facility).

Planned capital expenditures for major mining projects over the next few years are primarily associated with projects in Indonesia, including underground development activities, supporting mill and power capital costs and initial spending on a new gas-fired combined cycle facility.

In addition, we are advancing discretionary capital projects associated with the development of the Kucing Liar deposit in Grasberg and an expansion of concentrator capacity at our Bagdad operation.

We have cash on hand and the financial flexibility to fund capital expenditures and our other cash requirements for the next twelve months, including noncontrolling interest distributions, income tax payments, current common stock dividends (base and variable) and any share or debt repurchases.

At September 30, 2023, we had $5.7 billion in consolidated cash and cash equivalents (which includes $0.6 billion of PT-FI cash designated for Indonesia smelter projects) and FCX, PT-FI and Cerro Verde have $3.0 billion, $1.3 billion and $350 million, respectively, of availability under their revolving credit facilities.

At September 30, 2023, we had $0.7 billion in current restricted cash and cash equivalents, which includes (i) $0.5 billion associated with PT-FI's export proceeds temporarily deposited in Indonesia banks in accordance with a regulation issued by the Indonesia government that became effective August 1, 2023, requiring 30% of export proceeds to be temporarily deposited into Indonesia banks for a period of 90 days before withdrawal, and (ii) $145 million in assurance to support PT-FI’s commitment for smelter development in Indonesia.

Refer to Note 8 for further discussion of an additional refundable deposit that PT-FI may be required to make related to smelter development.

Financial Policy.

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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.

At September 30, 2023, net debt, excluding net debt for the Indonesia smelter projects, totaled $0.8 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.

On September 20, 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 November 1, 2023, to common stockholders of record as of October 13, 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 November 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.

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 $ 3.1

Cash at international operations 3.4

Cash at international operations 2.6 a

Total consolidated cash and cash equivalents 5.7

Cash for Indonesia smelter projects (1.1) a

Cash for Indonesia smelter projects (0.6) b

Noncontrolling interests’ share (0.9)

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Net cash available $ 4.1

Estimated remaining net proceeds from PT-FI's senior notes offering.

Excludes $0.5 billion of cash associated with a portion of PT-FI's export proceeds required to be temporarily deposited in Indonesia banks for 90 days in accordance with an August 2023 regulation issued by the Indonesia government, which have been presented as current restricted cash and cash equivalents in FCX's consolidated balance sheet.

Estimated remaining net proceeds from PT-FI's senior notes.

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.

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through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share.

At June 30, 2023, consolidated debt totaled $9.5 billion, with a weighted-average interest rate of 5.2%.

At September 30, 2023, consolidated debt totaled $9.4 billion, with a weighted-average interest rate of 5.2%.

Substantially all of our outstanding debt is fixed rate.

FCX has $0.7 billion in scheduled senior note maturities through 2026 and an average remaining duration of its total debt of approximately 10 years.

We had no borrowings outstanding and $7 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.

Additionally, at September 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.

We generated operating cash flows of $4.0 billion (net of $0.7 billion of working capital and other uses) for the first nine months of 2023 and $4.1 billion (net of $1.0 billion of working capital and other uses) for the first nine months of 2022.

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.

Capital expenditures, including capitalized interest, totaled $3.5 billion for the first nine months of 2023, including approximately $1.2 billion for major mining projects, primarily associated with underground development activities in the Grasberg minerals district and $1.2 billion for the Indonesia smelter projects.

Capital expenditures, including capitalized interest, totaled $2.4 billion for the first nine months of 2022, including approximately $1.2 billion for major mining projects, primarily associated with underground development activities in the Grasberg minerals district and $0.5 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.

Proceeds from sales of assets totaled $16 million for the first nine months of 2023 and $102 million for the first nine 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.

PT-FI made loans to PT Smelting totaling $109 million for the first nine months of 2023 and $51 million for the first nine 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.

Net repayments of debt totaled $1.2 billion for the first nine 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 $221 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).

Net proceeds from debt totaled $1.3 billion for the first nine 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), Cerro Verde’s term loan ($0.3 billion) and open-market purchases of our senior notes ($0.9 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.

We paid cash dividends on our common stock totaling $647 million for the first nine months of 2023 and $652 million for the first nine months of 2022.

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.

“Risk Factors” contained in Part I of our 2022 Form 10-K (as updated in Part II, Item 1A.

herein), “Cautionary Statement” below and the 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.

Cash dividends and distributions paid to noncontrolling interests at our international operations totaled $407 million for the first nine months of 2023 and $625 million for the first nine months of 2022.

Based on the estimates discussed in “Outlook,” we currently expect cash dividends and distributions paid to noncontrolling interests totaling $0.5 billion for the year 2023.

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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.

Since mid-2021, we have acquired 47.8 million shares of our common stock under our share repurchase program for a total cost of $1.8 billion ($38.35 average cost per share), including 35.1 million shares in the first nine months of 2022 for a total cost of $1.3 billion.

No shares have been purchased since July 11, 2022, and we have $3.2 billion available for repurchases under the program.

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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.

“Risk Factors” contained in Part I of our 2022 Form 10-K (as updated in Part II, Item 1A.

herein), “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.

We received equity contributions totaling $50 million for the first nine months of 2023 and $142 million for the first nine months of 2022 from PT Mineral Industri Indonesia (formerly PT Indonesia Asahan Aluminium (Persero), (MIND ID)).

Contributions for the first nine 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 nine 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.

CONTRACTUAL OBLIGATIONS

There have been no other material changes in our contractual obligations since December 31, 2022.

There have been no material changes in our contractual obligations since December 31, 2022.

Refer to Note 13 and Part II, Items 7.

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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.

As discussed in Note 8, we recorded charges totaling $199 million for revisions to our environmental obligations during the first nine 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.

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.

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There were no significant updates to previously reported accounting standards included in Note 1 of our 2022 Form 10-K.

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).

We believe that net debt 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).

We define net debt as consolidated debt less (i) consolidated cash and cash equivalents and (ii) current restricted cash associated with PT-FI's export proceeds.

This information differs from consolidated debt determined in accordance with U.S.

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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

As of September 30, 2023 As of December 31, 2022

Current portion of debt $ — a

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consolidated cash and cash equivalents 5.7 8.1

current restricted cash associated with PT-FI's export proceeds b

FCX net debt 3.2 2.5

net debt for Indonesia smelter projects b

net debt for Indonesia smelter projects c

FCX net debt, excluding Indonesia smelter projects $ 0.8 $ 1.3

Rounds to less than $0.1 billion

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.

Effective August 1, 2023, and in accordance with a regulation issued by the Indonesia government, 30% of PT-FI’s export proceeds are being temporarily deposited into Indonesia banks for a period of 90 days before withdrawal and have been presented as current restricted cash and cash equivalents in FCX's consolidated balance sheet.

As the 90-day holding period is the only restriction on the cash, FCX has included such amount in the calculation of net debt.

Includes consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $0.6 billion as of September 30, 2023, and consolidated debt of $3.0 billion and consolidated cash and cash equivalents of $1.8 billion as of December 31, 2022.

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 believe unit net cash costs 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.

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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.

Noncash and other costs, net, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, long-lived asset impairments, idle facility costs, 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.

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In Millions) By-Product Co-Product Method

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on prior period open sales 1 1 — — 1

Gross profit (loss) $ 320 $ 280 $ 46 $ (6) $ 320

Gross profit $ 269 $ 244 $ 21 $ 4 $ 269

Copper sales (millions of recoverable pounds) 372 372

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(In Millions) By-Product Co-Product Method

12 unchanged sentences

on prior period open sales (20) (20) — — (20)

Gross profit $ 634 $ 589 $ 39 $ 6 $ 634

Gross profit (loss) $ 204 $ 205 $ (3) $ 2 $ 204

Copper sales (millions of recoverable pounds) 361 361

Molybdenum sales (millions of recoverable pounds) a

Gross profit per pound of copper/molybdenum:

Gross profit (loss) per pound of copper/molybdenum:

Revenues, excluding adjustments $ 3.57 $ 3.57 $ 16.75

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on prior period open sales (0.06) (0.06) —

Gross profit per pound $ 1.62 $ 1.51 $ 5.04

Gross profit (loss) per pound $ 0.56 $ 0.56 $ (0.40)

Reconciliation to Amounts Reported

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In Millions) By-Product Co-Product Method

12 unchanged sentences

on prior period open sales 13 13 — — 13

Gross profit (loss) $ 731 $ 647 $ 87 $ (3) $ 731

Gross profit $ 1,000 $ 890 $ 109 $ 1 $ 1,000

Copper sales (millions of recoverable pounds) 1,048 1,048

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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In Millions) By-Product Co-Product Method

50 unchanged sentences

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In Millions) By-Product Co-Product Method

8 unchanged sentences

DD&A 110 98 12 110

Metals inventory adjustments 1 1 — 1

Noncash and other costs, net 21 b

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DD&A 0.36 0.32

Metals inventory adjustments — —

Noncash and other costs, net 0.07 b

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Gross profit per pound $ 1.00 $ 0.87

Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Reconciliation to Amounts Reported Metals

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 1,304 $ 805 $ 110 $ 1

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South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(In Millions) By-Product Co-Product Method

49 unchanged sentences

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In Millions) By-Product Co-Product Method

8 unchanged sentences

DD&A 350 310 40 350

Metals inventory adjustments 1 1 — 1

Noncash and other costs, net 71 b

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DD&A 0.38 0.34

Metals inventory adjustments — —

Noncash and other costs, net 0.08 b

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Reconciliation to Amounts Reported

Revenues and Delivery DD&A

Production Inventory

Revenues and Delivery DD&A Adjustments

Totals presented above $ 3,939 $ 2,346 $ 350 $ 1

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South America Mining Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In Millions) By-Product Co-Product Method

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Represents the combined total for our other mining operations as presented in Note 9.

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

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended September 30, 2023

(In Millions) Co-Product Method

By-Product Method Copper Gold Silver & Other a

Revenues, excluding adjustments $ 1,621 $ 1,621 $ 749 $ 32 $ 2,402

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and other costs shown below 612 413 191 8 612

Gold and silver credits (1,002) — — — —

Gold, silver and other by-product credits (785) — — — —

Treatment charges 138 93 43 2 138

Export duties 147 99 46 2 147

Royalty on metals 78 52 25 1 78

Net cash (credits) costs (34) 577 374 17 968

Net cash costs 190 657 305 13 975

DD&A 271 183 84 4 271

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and other costs shown below 1.42 0.96 484

Gold and silver credits (2.60) — —

Gold, silver and other by-product credits (1.83) — —

Treatment charges 0.32 0.22 109

Export duties 0.34 0.23 116

Royalty on metals 0.19 0.12 64

Unit net cash (credits) costs (0.09) 1.49 759

Unit net cash costs 0.44 1.53 773

DD&A 0.63 0.43 214

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Treatment charges (87) 51

Export duties (147) — —

Royalty on metals (78) — —

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Includes silver sales of 1.3 million ounces ($22.96 per ounce average realized price).

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.

Includes charges totaling $3 million ($0.01 per pound of copper) for feasibility and optimization studies.

Represents the combined total for our other segments as presented in Note 9.

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

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended September 30, 2022

(In Millions) Co-Product Method

By-Product Method Copper Gold Silver & Other a

Revenues, excluding adjustments $ 1,400 $ 1,400 $ 802 $ 30 $ 2,232

Site production and delivery, before net noncash

and other costs shown below 587 374 205 8 587

Gold and silver credits (888) — — — —

and other credits shown below 735 461 264 10 735

Gold, silver and other by-product credits (814) — — — —

Treatment charges 95 60 34 1 95

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Royalty on metals 81 48 32 1 81

Net cash (credits) costs (10) 563 304 11 878

Net cash costs 177 619 359 13 991

DD&A 265 167 95 3 265

Noncash and other costs, net 3 b

Noncash and other credits, net (10) b

(7) (3) — (10)

Total costs 432 779 451 16 1,246

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Site production and delivery, before net noncash

and other costs shown below 1.43 0.91 433

Gold and silver credits (2.17) — —

and other credits shown below 1.81

Gold, silver and other by-product credits (2.00) — —

Treatment charges 0.23 0.15 72

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Royalty on metals 0.20 0.12 67

Unit net cash (credits) costs (0.02) 1.37 642

Unit net cash costs 0.44 1.52 753

DD&A 0.65 0.41 200

Noncash and other costs, net 0.01 0.01 2

Noncash and other credits, net (0.02) b

Total unit costs 1.07 1.92 946

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Royalty on metals (81) — —

Noncash and other costs, net — 3 —

Noncash and other credits, net (2) (12) —

Other revenue adjustments, primarily for pricing

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Indonesia mining 1,798 663 265

Other mining b

Other mining c

4,591 4,092 225

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Includes silver sales of 1.6 million ounces ($18.58 per ounce average realized price).

Includes net credits totaling $21 million ($0.05 per pound of copper) associated with historical tax audits.

Represents the combined total for our other segments as presented in Note 9.

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

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Nine Months Ended September 30, 2023

(In Millions) Co-Product Method

By-Product Method Copper Gold Silver & Other a

Revenues, excluding adjustments $ 3,860 $ 3,860 $ 2,227 $ 106 $ 6,193

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and other costs shown below 1,736 1,082 624 30 1,736

Gold and silver credits (1,564) — — — —

Gold, silver and other by-product credits (2,350) — — — —

Treatment charges 362 226 130 6 362

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Royalty on metals 228 144 81 3 228

Net cash (credits) costs (48) 900 587 29 1,516

Net cash costs 141 1,555 894 42 2,491

DD&A 694 433 249 12 694

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and other costs shown below 1.71 1.07 542

Gold and silver credits (2.68) — —

Gold, silver and other by-product credits (2.32) — —

Treatment charges 0.36 0.22 113

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Royalty on metals 0.23 0.14 70

Unit net cash (credits) costs (0.08) 1.54 775

Unit net cash costs 0.14 1.53 776

DD&A 0.69 0.43 216

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Represents the combined total for our other mining operations as presented in Note 9.

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

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs

Nine Months Ended September 30, 2022

(In Millions) Co-Product Method

By-Product Method Copper Gold Silver & Other a

Revenues, excluding adjustments $ 4,433 $ 4,433 $ 2,422 $ 98 $ 6,953

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and other costs shown below 1,855

Gold and silver credits (1,710) — — — —

1,183 646 26 1,855

Gold, silver and other by-product credits (2,523) — — — —

Treatment charges 287 183 100 4 287

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Royalty on metals 281 183 95 3 281

Net cash (credits) costs (33) 1,096 558 23 1,677

Net cash costs 145 1,705 926 37 2,668

DD&A 775 494 270 11 775

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on prior period open sales 25 25 3 — 28

PT Smelting intercompany loss (27) (17) (9) (1) (27)

PT Smelting intercompany profit 34 21 12 1 34

Gross profit $ 3,552 $ 2,267 $ 1,234 $ 51 $ 3,552

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and other credits shown below 1.55 0.99 476

Gold and silver credits (2.17) — —

Gold, silver and other by-product credits (2.11) — —

Treatment charges 0.24 0.15 74

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Royalty on metals 0.24 0.16 70

Unit net cash (credits) costs (0.04) 1.39 634

Unit net cash costs 0.12 1.43 683

DD&A 0.65 0.41 199

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on prior period open sales 0.02 0.02 2

PT Smelting intercompany loss (0.03) (0.02) (10)

PT Smelting intercompany profit 0.03 0.02 9

Gross profit per pound/ounce $ 2.97 $ 1.90 $ 910

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on prior period open sales 28 — —

PT Smelting intercompany loss — 27 —

PT Smelting intercompany profit — (34) —

Indonesia mining 6,180 1,853 775

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Includes silver sales of 4.7 million ounces ($20.80 per ounce average realized price).

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.

Includes a net charge of $30 million ($0.02 per pound of copper) consisting of charges associated with a settlement of an administrative fine levied by the Indonesia government and a reserve for exposure associated with export duties in prior periods, partially offset by credits for adjustments to prior year treatment and refining charges and historical tax audits.

Represents the combined total for our other mining operations as presented in Note 9.

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended June 30,

Three Months Ended September 30,

(In Millions) 2023 2022

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Reconciliation to Amounts Reported

Three Months Ended June 30, 2023 Revenues and Delivery DD&A

Three Months Ended September 30, 2023 Revenues and Delivery DD&A

Totals presented above $ 153 $ 116 $ 14

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As reported in our consolidated financial statements $ 5,824 $ 3,548 $ 533

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Totals presented above $ 134 $ 91 $ 18

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Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs

Six Months Ended June 30,

Nine Months Ended September 30,

(In Millions) 2023 2022

20 unchanged sentences

Reconciliation to Amounts Reported

Six months ended June 30, 2023 Revenues and Delivery DD&A

Nine Months Ended September 30, 2023 Revenues and Delivery DD&A

Totals presented above $ 539 $ 308 $ 48

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As reported in our consolidated financial statements $ 16,950 $ 10,260 $ 1,479

Six months ended June 30, 2022

Nine Months Ended September 30, 2022

Totals presented above $ 419 $ 241 $ 52

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CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance.

Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance, operations and projects.

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;

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extension of PT-FI’s IUPK beyond 2041 and export licenses;

PT-FI’s resumption of exports of anode slimes;

payment of export duties;

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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;

execution of our energy and climate strategies and the underlying assumptions and estimated impacts on our business and stakeholders related thereto;

achievement of 2030 climate targets and 2050 net zero aspiration;

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PT-FI’s ability to continue to export and sell copper concentrates and anode slimes;

changes in export duties;

changes in export duties, including results of proceedings to dispute export duties;

the Indonesia government’s approval of a deferred schedule for completion of additional domestic smelting capacity in Indonesia;

3 unchanged sentences

changes in our cash requirements, financial position, financing or investment plans;

changes in general market, economic, regulatory or industry conditions;

changes in general market, economic, geopolitical, regulatory or industry conditions;

reductions in liquidity and access to capital;

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weather- and climate-related risks;

environmental risks, including availability of secure water supplies, and litigation results;

environmental risks, including availability of secure water supplies;

litigation results;

tailings management;

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.

of our 2022 Form 10-K and Part II, Item 1A.

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.

We caution investors that we undertake no obligation to update any forward-looking statements,

which speak only as of the date made, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes.

This report on Form 10-Q also contains measures such as net debt and unit net cash costs per pound of copper and molybdenum, which are not recognized under U.S.

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.

Refer to “Net Debt” for reconciliations of consolidated debt, consolidated cash and cash equivalents and current restricted cash associated with PT-FI’s export proceeds to net debt.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis