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The Phoenix-based mining company supplies about 9% of the world’s mined copper and is led by CEO and board chair Richard Adkerson. FCX has <a href="https://www.fcx.com/about/board-of-directors">12 members</a> on its board, including David Abney, former CEO of UPS; Lydia Kennard, CEO of KDG Construction Consulting; and John Stephens, former AT&amp;T CFO. In February, the company appointed its president, Kathleen Quirk, to the board. FCX has grappled with an ongoing <a href="https://www.reuters.com/markets/commodities/copper-miner-freeport-mcmoran-beats-profit-estimates-2023-04-21/">labor shortage</a> in the copper mining industry in recent months. Its metals are critical to support decarbonization efforts and the green energy transition. In its 2022<a href="https://www.fcx.com/sustainability"> sustainability report</a>—its 22nd to date—the company outlined its ESG performance, covering human rights, responsible supply-chain practices, and ethics, among other matters. There are five women members on its 12-person board.

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The mining company is based out of the Freeport-McMoRan Center in Phoenix and mines for minerals including gold and copper.

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The Phoenix-based mining company extracts copper, gold, and molybdenum from sites in North and South America and Indonesia. It closed one of its New Mexico mines in April when workers contracted the coronavirus; the company has since announced furloughs and cuts to executive compensation.

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Phoenix-based Freeport-McMoRan was founded more than 100 years ago in Freeport, Texas, as a sulfur-mining company. The company merged in 1981 with McMoRan Oil and Gas as a fossil fuel and mining conglomerate under the Freeport-McMoRan name. In more recent years, the company has focused its business on metals mining, specifically with a goal of becoming the world leader in copper, which is growing in demand because of its use in renewable energy, electric vehicles, data centers, and more. With a global mining footprint throughout the Americas—from Arizona to Chile—and in Indonesia, Freeport also mines heavily in gold and molybdenum, which is used in steel and other alloys.

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Q4 2024

Freeport-McMoRan (FCX): Company Profile, Stock Price, News, Rankings

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Ladies and gentlemen, thank you for standing by. Welcome to the Freeport McMoran 4th Quarter Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I would now like to turn the conference over to Mr.

David Joynt, Vice President, Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to the Freeport conference call. Earlier this morning, FCX reported its Q4 and full year 2024 operating and financial results. A copy of today's release with supplemental schedules and slides are available on our website, fcx.com. Today's conference call is being broadcast live on the Internet. Anyone may listen to the conference call by accessing our website homepage and clicking on the webcast link for the conference call.

In addition to analysts and investors, the financial press has been invited to listen to today's call. A replay of the webcast will be available on our website later today. Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include non GAAP measures and forward looking statements and actual results may differ materially. Please refer to the cautionary language included in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website. Also on the call with me today are Richard Ackerson, Chairman of the Board Kathleen Quirk, President and Chief Executive Officer Marie Robertson, Executive Vice President and CFO and other senior members of our management team.

Richard will make some opening remarks, Kathleen and Marie will review our slide materials and then we'll open up the call for questions. Richard?

Good morning, everyone. Thank you all for joining us. Kathleen will review our continuing strong operating performance, a strong financial position and our significant organic growth opportunities. Marie will review our financial outlook. It goes without saying we're living in a very interesting world today.

We have new presidents in the United States and in Indonesia. At Freeport, we will support their administrations as we do in all the countries where we operate. Our first work with Provost Subianto in Indonesia in the late 1990s when he was a general in Kapasis. At that time, he helped us resolve social unrest in our operating area of Papua. Kathleen and I met with him recently in Jakarta, again in Washington and in Lima at APAC.

I was very impressed by his knowledge of global affairs and his candid engagement on issues important to investors. We are now working with his government on several issues important to our company, including obtaining permission to continue exporting copper concentrates in 2025 as we complete repairs from the unfortunate fire at our massive new smelter and as we work on extension of our license to operate beyond 2,041. I'm confident we will find common ground on these and other issues as we have done over the almost 60 years of our operating in Indonesia. I'll turn the call over to Kathleen and look forward to her comments.

Thank you, Richard. Thanks everyone for being on the call. I'm pleased to report on our 4th quarter results, review our 2024 performance and update you on our projects and outlook for the future. We look back on our performance in 2024 and I'm on Slide 3 here. Our team executed our plans in solid fashion.

We enhanced our strong foundation to support a positive long term future centered on value creation. We show on slide 3 the annual information on our copper sales, unit costs and financial metrics for the year 2024 compared to 2023. Our team delivered on our plan. We essentially met our sales targets developed at the start of 2024 and we slightly improved on net unit cash costs compared with 2023 and our plan going into the year. We're proud of Freeport's long track record for successful execution and we don't take this as a given.

It requires that we stay disciplined each day on managing the many underlying metrics, which drive our results, requires that we manage risk and stay on top of what matters, both for the short term and the long term. It also requires that we find solutions to overcome unforeseen challenges, which as we all know are inevitable given the nature of our business. Strong operational execution combined with improved pricing allowed us to achieve CAD10 1,000,000,000 in EBITDA for the year 2024. That was 14% above 2023 EBITDA. And our operating cash flows in 2024 of over $7,000,000,000 were 35% improved from the prior year.

This was on an average copper realization during 2024 of $4.21 per pound and our realization for gold was slightly above $2,400 per ounce. As we go forward, our team is focused on opportunities to continuously improve and drive value in our existing operations and through our organic growth portfolio. We look at our priorities for 2025. Our team is very focused on a number of initiatives and I'm going to outline the key ones here. The first one and this is a theme at Freeport every day, it's execution.

Our team is committed to strong execution of our plans again this year, doing what we say, delivering on our plan, volumes, cost targets and capital projects safely and efficiently, while seeking opportunities to capture upside. A second focus area is scaling our leach opportunity. We've set a target to reach a run rate of £300,000,000 by the end of 2025 and to build on that with additional scale in 2026 on our path to £800,000,000 of incremental copper per annum by 2,030. A third focus area is the PTFI smelter. Our team has executed this complex project well and has stepped up to respond to the recent fire incident.

We have a plan, a solid recovery plan that we're executing on and that will enable us to deliver this project during 2025. It's important for us not only to be fully integrated and get the smelter up and running, but also important as we seek to extend our operating rights beyond 2,041 in Indonesia. You'll see us talking more about innovation. Innovation is a major priority as we go forward. Our work to date indicates a significant untapped potential value in this area and we've got a team working on it to drive that value.

Equally important, we're continuing to build slide 5. I'm going to review markets on Slide 5, and you can see where copper prices have been. They traded in a broad range during the year 2024 between $3.67 per pound and $4.92 per pound averaging $4.15 per pound on the LME. On the U. S.

COMEX exchange prices were slightly higher than the LME and year to date the differential has grown and is now is average about $0.17 per pound through the 1st part of 2025. During 2024, copper prices mostly followed macro sentiment, which weighed favorable U. S. Economic data, rate cuts in the U. S.

And the potential for economic stimulus in China against ongoing economic pressures in China, a strong U. S. Dollar and uncertainties on U. S. Tariff and trade policies that the markets have been focused on from late last year.

At a micro level, demand continues to grow and that's supported by secular demand trends associated with electrification, which has offset some of the impact of weakness that we've seen in certain more cyclical sectors. In the U. S, our customers are reporting solid demand for power cable and building wire associated with substantial investment in electrical infrastructure and AI data centers. Growth in the power sector is offsetting weakness in traditional demand sectors currently coming from residential construction weakness in the auto sector. Turning to China, demand from China continues to be supported by significant investments in the electrical grid and continued growth in China's production of electric vehicles.

We've seen a highly publicized reports of weakness in China's property sector and that's influenced sentiment, but the reality is China's demand for copper continues to grow, albeit it had modest growth in demand in 2024. We're seeing recent data points out of China that indicate a number of sectors are poised for better growth in 2025 and together with potential stimulus actions to support economic growth targets, their support for potentially higher growth in demand from China as we move through 2025. We want to highlight copper's superior conductivity and that makes it demetal when it comes to electrification. New massive investment in the power grid, renewable generation, technology infrastructure and transportation are driving increased demand for copper and forecast call for above 10% trend growth and demand for the foreseeable future. As we match this up with supply, we continue to see a balanced market near term and significant deficit conditions longer run.

This is going to require significant investment by the industry as well as innovative technologies to build supplies longer term. And at Freeport, we're driven to supply copper reliably and responsibly to this growing market. We'll move into the Q4 results on slide 6, where we provide a summary of the results. Our operating performance in the Q4 was solid. Our sales and net unit costs were slightly better than our guidance going into the quarter.

We've made a lot of progress since our last update call in October at our Indonesian smelter and refinery project. The smelter recovery activities are in progress. Long lead items are expected to arrive in the March, April timeframe and we expect to recommence production by middle of this year. The precious metals refinery, which was designed to refine precious metals from our existing smelter in Indonesia as well as the new smelter was not impacted by the fire and we produced our first gold bar in late 2024. Start up operations at the refinery have gone very well and following completion of the smelter ramp up, our Indonesian mining and smelting operations will be fully integrated.

In parallel with working on the smelter recovery, we've made great progress with the Indonesian government to allow us exports during the period of the smelter repairs. We did receive approval in late 2024 to update our quota for the year 2024 and that allowed us to make some additional shipments in December. We're currently working with the government on 2025 exports and we expect to receive approval in the Q1. We're also working very hard to progress initiatives to build value from organic growth. We benefited Freeport from a large reserve and resource position with near term, medium term and long term embedded growth options.

We're challenging ourselves to take advantage of innovation and improve efficiencies, reduce costs and capital intensity and shorten lead times for our projects. The high potential innovative leach initiative is a great example of this. We achieved an approximate 50% in copper production from this initiative in 2024 at a very low cost and have projects in motion to target an annual run rate of £300,000,000 by the end of this year and that's 40% higher than what we achieved in 2024 with opportunity for further gains in the future. We're also advancing our brownfield expansion opportunities to position the business for longer term growth to supply a market with increased requirements for copper. We ended the quarter in a strong position financially.

As we look forward, we see great value in our business, supported by our leadership role in copper, a market with highly attractive fundamental outlook, matched up with our portfolio of high quality assets and future prospects for strong cash flow generation to support investments in value enhancing projects and returns to shareholders. I'll go through on slide 7 our operations update across our geographic regions. And I'll start with the U. S, where we're making good progress with our initiatives to improve efficiencies and cost performance despite a decline in ore grades in recent history. Data we monitor regularly regarding our asset efficiencies and other key indicators have trended more favorably over the last several months.

As we look forward, we expect production in the U. S. To increase by 8% in 2025 with opportunities for further increases in 20262027. Absent changes in commodity based input costs, we're targeting unit costs to trend lower each year over this 3 year period. With 2024 behind us, our goal is to make 2024 the low watermark year for our U.

S. Business. Structurally, we deal with lower grades in the U. S. And hauls are getting longer.

The autonomous haul truck conversion being deployed in 2025 at Baghdad will allow us to test the potential for this application on a broader scale at other operations. The incremental leach pounds at scale will also benefit our cost position as we go forward. We also initiated a new project during 2024 centered on integrating new technology and automation to optimize performance in our basic mining functions. We believe there is significant opportunity here for value creation through meaningful cost reduction, which would enhance margins and also expand reserves from known mineralization, which is currently economically limited under our current reserve pricing. Many of you have been following this.

We're following it very closely. U. S. Legislation considering copper as a critical mineral for integrated producers. If this is enacted, this will give us a further benefit of potentially being eligible for tax credit of 10% of our operating costs in the U.

S. In South America, the team at Cerro Verde operation posted another solid quarter with strong operating rates and no recoveries. The team is doing a really good job with cost management as evidenced by a 13% improvement in South America cost unit cost over the year ago Q4. As you'll see in our guidance, Cerro Verde grades are expected to be slightly lower in 2025 compared with 2024. We expect long term averages to recover to the £900,000,000 per annum range at Cerro Verde.

At Alabra, we're positive about the opportunity to test an initiative to add heat to our leach process and that has a lot of promise to provide incremental near term production there. Turning to Indonesia, we had another solid quarter and the team achieved multiple new operating records again in 2024. Our team is consistently delivering strong volumes of both copper and gold from our large scale underground ore bodies and has demonstrated this consistently over the last several years. During late 2024, we successfully completed construction of a project, a $500,000,000 range project to install a copper cleaner circuit to enhance mill performance at Grasberg. And as you'll see in the reference slide on slide 26, the outlook for Grasberg is positive with a strong multi year outlook for significant copper and gold production.

For 2025, our guidance at Grasberg reflects downtime associated with 2 major mill repair projects scheduled during the year. This is expected to result in lower volumes in the Q1 compared with the balance of 2025. We also wanted to comment, we've received some questions about recent press reports coming out of Indonesia regarding a potential change in requirements for retention of export proceeds. There were new regulations issued in 2023 and that required PTFI to deposit 30% of its U. S.

Dollar export proceeds in a domestic cash bearing account for 90 days. The government is currently considering potential changes to this regulation, which would increase the requirement, but also allow withdrawals from the balances to fund business requirements. The details of the potential modifications have not been finalized and Freeport and other companies in Indonesia are discussing the proposals with the government in an effort to avoid requirements that could have a negative impact on our business. We'll move to our growth and innovative leach opportunity, where we continue to be encouraged by the significant value potential from this initiative. The chart on the left side of slide 8 shows our progress over the last few years.

We've been successful in deploying a new series of operating practices to recover incremental copper previously thought to be waste. Our recent gains have been in the areas of adding scale to our targeted solution injection wells, innovative approaches to reengine areas in the leach stockpile previously inaccessible and expanding thermal covers on top of the stockpiles and optimizing our solution chemistry. We have several additional projects underway in 2025 and we're targeting reaching the annual run rate of £300,000,000 by the end of this year with the potential to produce £300,000,000 to £400,000,000 during 2026 from these initiatives. Really excited about projects being planned to add heat to the stockpiles and field testing of additives. Ultimately, our goal is to achieve £800,000,000 per annum from this value enhancing growth initiative, the size of a major new mine that's got very low capital investment required, very low incremental operating costs, which will significantly enhance the value and competitive position of our Americas production.

Just to comment on the cost of this innovative leach, to date it's been well below $1 incrementally per pound. And what's so exciting about it is we're bringing on production of product that was considered waste in the past. We've already incurred the mining costs. So we're spending incremental dollars to get more copper and it's set really a lot of value potential and that's why we're pursuing it so aggressively. We've got an extensive inventory of substantial residual copper from material already mined.

We've got industry leading technical expertise and a strong multi discipline innovation team dedicated to the initiative. On Slide 9 is a brief update on our organic growth projects, all of which are brownfield opportunities where we can leverage existing assets and establish operations. We talked about the leach opportunity. In addition, we also have opportunities for expansion at Baghdad and our Safford Lone Star operations in the U. S.

At Baghdad, we're continuing to make investments in site infrastructure and tailings expansion to position us to execute the project more efficiently when the time is right. We expect to have the majority or most of the autonomous trucks deployed in the field this year. That will provide the ability to be more efficient with labor at this remote location. In parallel, we're also continuing to pursue opportunities to reduce the capital intensity of the project. We're monitoring markets and site specific factors and hope to be in a position to make a decision on the path forward by the year end.

In the Safran Lone Star Sacred Lone Star District, where we already have existing operations, it's our newest mine in the U. S. We're engaged in studies to define a major brownfield expansion. We're targeting opportunities there that could double the current production levels of £300,000,000 per annum. We've got a very large resource at this location and expect this district will become a significant asset for Freeport in Arizona in the next decade.

At Alabra in Chile, we've talked about this in the past. We're preparing an environmental impact statement. We expect to be complete and submitted by the end of this year. The project involves investment in a new concentrator of scale, similar to the size of the Cerro Verde concentrator we installed 10 years ago. We've got plans for investments in a desalination plant and also a pipeline system to support our water requirements.

The opportunity from the project is to provide £750,000,000 of annual copper production. It's very large scale and £9,000,000 of molybdenum per annum. It's got a long lead time to it. It requires 7 to 8 years of lead time, but we're currently advancing it to provide options for the future and value driven options to boost our production in the future as the world needs more copper. In Indonesia, we're continuing to develop the Kuching Liar ore body within the Grasberg District.

That development continues towards a targeted commencement of production by 2,030. We're also very excited about additional exploration opportunities below the Deep MLZ ore body and extension of our operating rights will get set us up for additional long term development options in this highly attractive and valuable district. Our overall objective is this to move quickly to define the opportunities across the portfolio, rank them on value potential and allocate capital on a risk reward basis to provide profitable growth options for the future. We're going to be disciplined in our approach, targeting opportunities that enhance long term value and where we believe we can create that value at a manageable risk. We're moving to our outlook on slide 10, where we show a 3 year outlook for sales volumes of copper, gold and molybdenum.

Our copper guidance for 2025, as you'll note, has been adjusted by approximately 5%. That incorporates updated estimates for the mill maintenance projects planned in 2025 in Indonesia. Our gold estimates for 2025 are about 7% higher than the prior estimates, and that's benefiting from inventory draw downs during 2025 and also slightly higher ore grades for gold. We provide quarterly estimates on slide 25 of the reference materials. The first quarter volumes are expected to be the lowest of the year because of mill maintenance and timing associated with the expected export approvals, but you'll see we get back to large scale production as we move through the year.

Our 2026 guidance is for copper is unchanged and our gold for 2026 is up about 100,000 ounces compared with our prior guidance. We've added 2027 to our outlook, which is similar to the outlook for 2026. For slide 11, we show our cost estimates for 2025 and we show the geographic mix, which has an impact on the overall average. When you look at our cash cost estimate currently for 2025 of $1.60 per pound that compares to $1.56 per pound in 20.24. The two results are similar, but the weighting of volumes between the regions results in a slight increase.

The important point we want to get across on this slide is that we expect U. S. Costs to be lower in 2025 and we're focused on driving these costs lower as we go forward. You can see the cost by region presented on Slide 24 in the reference material, which will show you the makeup of the cost. I'll now turn the call over to Marie, who is going to review our cash flow outlook and then we'll come back and take your questions.

Kathleen. Just turning to slide 12. Putting together our projected volumes and cost projections, we show a modeled results on Slide 12 for our EBITDA and cash flow at various copper prices ranging from $4 per pound to $5 per pound. These are modeled results using the average of 2026 2027 with current volume and cost estimates and holding gold flat at $2,700 per ounce and molybdenum flat at $20 per pound. Annual EBITDA would range from over $11,000,000,000 per annum at $4 copper to over $15,000,000,000 per annum at $5 copper.

Operating cash flows at these ranges would be nearly $8,000,000,000 per year at $4 and over $11,000,000,000 per year at $5 We show sensitivities to various commodities on the right. You will note we are highly leveraged to copper prices with each $0.10 per pound change equating to approximately $425,000,000 in annual EBITDA. We will also benefit from improving gold prices with each $100 per ounce change in price approximating $150,000,000 in annual EBITDA. With our long lived reserves and large scale production, we are well positioned to generate substantial cash flow to fund future organic growth and cash returns under our performance based payout framework. Moving on to Slide 13.

This shows our current forecast for capital expenditures in 20252026. Capital expenditures for 2024 were $3,600,000,000 and are expected to approximate $4,400,000,000 per year in 20252026. 2025 capital expenditures are about 5% above our October estimate, which largely reflects minor revisions to project estimates and an increased allocation of capitalized interest. The discretionary projects approximated $1,000,000,000 in 2024 and are expected to approximate $1,600,000,000 to $1,700,000,000 in 20252026 with roughly 50% related to the Kitchenlyard development and the LNG project at Grasberg. The balance includes acceleration of tailings and other infrastructure to support the Baghdad expansion.

The Atlantic Copper Circular Project, which is expected to be completed in the first half of twenty twenty six and allocated capitalized interest. The discretionary category reflects the capital investments we are making in new projects that under our financial policy are funded with the 50% of available cash that is not distributed. These projects are value enhancing initiatives and are detailed on Slide 28 in our reference materials. We have a track record of managing capital in a disciplined manner and we will continue to deploy capital in a manner that builds long term value. And finally, on Slide 14, we reiterate the financial policy priorities centered on a strong balance sheet, cash returns to shareholders and investments in value enhancing growth projects.

Our balance sheet is strong with investment grade ratings, strong credit metrics and flexibility within our debt targets to execute on our projects. In the Q4, we redeemed $730,000,000 in maturing senior notes for cash. We have no significant debt maturities until 2027. We have distributed $4,700,000,000 to shareholders through dividends and share purchases since implementing the financial policy and have an attractive future long term portfolio that will enable us to continue to build long term value for shareholders. We actively monitor current market conditions and carefully manage the timing of our projects to ensure our financial flexibility remains strong.

Our global team is focused on driving value in our business, committed to strong execution of our plans and providing cash to invest in profitable growth and returns to shareholders. Thank you everyone for your attention. I'll now hand back to Kathleen and we can take your questions.

Thank you, Marie. Operator, we're ready to take questions.

Ladies and gentlemen, we will now begin the question and answer session. Our first question comes from the line of Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Good morning, Kathleen and Richard. I'll just stick to one question, given the guidance there. Just around the the approval to export concentrate from Indonesia, you said you hope to receive it in Q1, but do you have any more visibility on when in Q1? And does there come a point in this quarter when you'll start to run out of storage capacity? And therefore, could that start to impact your production rates and your guidance?

Thank you, Liam. As we mentioned, we're making really good progress with the government. We've reviewed with them the incident, the repairs, the lead times required. They visited the site and they are they've indicated support for allowing us to continue exports during 2025. They've also encouraged us to move as quickly as we can to finish the repairs.

But they've indicated support for this. Now it's a matter of getting documentation, for the amendment to the regulation. We understand that they're working on the drafts of the new regulation or the amendment to the regulation to allow this. And we expect this to be approved in the near term. We've got some maintenance going on at Grasberg, Berg, as I mentioned.

And so our inventories are building still. We're still shipping to our existing smelter there, but our inventories are building a little bit. But if we get this export permit as we expect in the coming weeks, we'll be good to start shipping exports and also we're bringing down those inventories.

Our next question will come from the line of Katya Jancik with BMO Capital Markets. Please go ahead.

Hi. Thank you for taking my question. Kathleen, you mentioned the 10% tax credit potential. What are some of the next steps that need to happen for copper to actually qualify for that? And is there any timeline?

In other words, is this still possible in 2025?

It's a matter of legislation. There was a bill that passed through the House late last year, which allowed for the copper to be added to the list. And so we've got to get additional legislation passed through the other processes in the U. S. And so it still is possible.

We're flagging it. We're monitoring it. And so I can't predict U. S. Legislation timing, but it is important.

There are a number it's a bipartisan support for this. And so we're following very closely.

And what's your question Which would be very significant for us if you look something on the order of $500,000,000 of benefit.

Our next question will come from the line of Alex Hacking with Citi. Please go ahead.

Yes. Thank you. Good morning. Just digging into the discretionary CapEx spend for 2025. The $400,000,000 of bagged out on the tailings infrastructure, is that explicitly tied to the expansion or that's something you would need to do anyway?

And is that part of the $3,500,000,000 CapEx for the project? And then the $600,000,000 at Cushing Liar, when that arrives, can you remind me does it increase Grasberg production or it's just going to fill the mill as other sources of ore are depleting? Thank you very much.

Thank you, Alex. With respect to Baghdad, we do need to expand tailings infrastructure long term. We don't need to do it now and that's why it's discretionary. If we don't move forward with an expansion that those dollars could be deferred into the future. But what we're doing now is advancing this tailings infrastructure that we would have to do in any case in the future so that it gives us better optionality once we decide on whether to move forward to move more quickly.

So we could if we decide not to move forward with Baghdad, we could push that sailings investment out. The $3,500,000,000 of capital for the Baghdad expansion is really the incremental capital. The tailings would have to be done at some point in the future in any case. So we don't include that as capital for the expansion. But we do have flexibility on the timing of this tailings infrastructure if we don't go forward with the expansion.

And then on KL, what we're talking about there is under our long term plans adding 90,000 tons a day from KL. We're also looking at the opportunity to bring more KL production as we look at the mine plans longer term. And that will allow us to sustain a very long life at high rates at Grasberg as we go through 2,041. When we think about the extension beyond 2,041, there's a lot of KL material that's still left over at the end of 2,041. So an extension would essentially allow us to increase reserves without additional exploration success.

So it's part of our long range plans. We'd always expected to have some declines in various ore bodies over time and this will allow us to sustain long term large scale production at Grasberg.

Your next question comes from the line of Chris Lefebena with Jefferies. Please go ahead.

Thanks, operator. Hi, Kathleen. Hi, Richard. Thanks for taking my question. I'm just thinking about kind of the geopolitical risk profile for Freeport.

So your organic growth is mostly in the Americas. But Indonesia, at the end of the day, because it's such an amazing ore body, it's always going to be a significant contributor to earnings and a really important part of the Freeport investment case. And if we think back to the acquisition of Phelps Dodge, in hindsight, that was brilliant because it gave you geographic diversification. And when you did have challenges in Indonesia, you had other assets in the portfolio that were able to basically sustain the business as you dealt with those other challenges. So one option now, which is an option that it sounds like you're pursuing is early stage investments in these longer lead time organic growth projects, which at the end of the day would help diversify your earnings mix a little bit more to the Americas.

But I wonder is M and A similar to what Phelps Dodge was for you nearly 20 years ago? Is M and A a potential path to derisking the business from a geopolitical perspective? I mean, again, Grasberg, amazing ore body, always going to be near the bottom of the cost curve. But a lot of the kind of value leakage that we consistently see there, it seems like these problems don't really ever come to an end. There's always some new negotiation that has to happen or some new kind of source of kind of a pound of flesh out of Freeport continue to operate there?

So just thinking about the geopolitical risk in general. Thanks.

Thank you, Chris. In terms of the investment case, of course, we've got a great opportunity in Indonesia. And as Richard was saying earlier, we've got close to a 60 year history there. And our team has always found a way to execute very positively and generate value. So we have a lot of confidence and feel positive about the long term outlook there.

But in terms of the opportunities, we're really excited about the investment case we have in the Americas and particularly in the U. S. And the Leach initiative, when you think about getting to £800,000,000 and I know we're not there yet. We've got more work to do to get there. But the opportunity to have £800,000,000 of incremental copper at a cash cost, which is in the way less than the current $3 and we've been less than $1 right now.

And really very limited CapEx, you're talking about an opportunity there where some people are investing $10,000,000,000 to achieve that and we're not having to do that. So we have a lot of opportunity to create value in the U. S. Not only from the leach opportunity, but also from these cost reduction opportunities. And those drop right to the bottom line.

We've got this new innovation initiative that we stood up last year and we've got ambitious targets to reduce our costs meaningfully in the U. S. That will drop right to the bottom line and create a lot of value, not only from being able to have higher margins, but expanding the reserves because we've got a lot of reserves in the U. S. That are economically limited.

So we're very excited about the opportunity for low capital intensity opportunities in the U. S. That'll generate a lot of value. And you remember that drops to the bottom line. We don't have significant taxes we're paying in the U.

S. We don't have a royalty structure, etcetera. So we're very, very excited about that. With regard to M and A and we'll let Richard comment as well on his thoughts, but we do monitor opportunities across the industry on a regular basis. The Phelps Dodge opportunity that you mentioned in 2007, we were not planning to do an acquisition, but the opportunity was presented and we were able to take advantage of it because we were prepared.

So we will always look, we will always be prepared for opportunities as they may come, but we don't see as part of our strategy getting involved in a competitive auction process or something on that order. We'll look to M and A for opportunities where we can generate synergies, where we can use our our technical capabilities to add value to existing operations. This leach initiative is one that may give us an opportunity in the future to consolidate more and generate more value from it. But it's not necessarily we don't have to do M and A. We look, we will be opportunistic.

But we feel within our own plan, we've got a real opportunity to create value and don't have to do M and A. But Richard, do you want to add to anything I said there?

Thanks, Kathleen. Thanks, Chris. And I'm going to try to be real short with this, Chris, we can talk later. But you point out how acquiring Southside diversify Freeport in Indonesia. But on the other hand, having Indonesia to support the operations in the Americas gave us the ability to be much more aggressive in the way we manage those operations and took advantage of opportunities in Phelps Dodge or any other company could have with those low grade mines.

Actually, I've been talking to Phelps Dodge for almost 10 years before we acquired them to get them to acquire us and they never would do it. The world changed with China and we had that opportunity. You look back on our industries when management teams and this goes across many companies, When management teams or boards force an M and A transaction for strategic reasons, it's almost always a bad answer. So we position ourselves to run our company without having to make acquisitions, but we are in the market so that if an opportunity comes to us, we are in a position to take advantage of it. I believe in our industry, M and A driven by opportunities is the way to have successful M and A.

Our next question comes from the line of Daniel Major with UBS. Please go ahead.

Great. Thanks. Yes, a few questions. Just the first one, I noticed increase in the CapEx allocated to the smelter at Grasberg. Is there any insurance coverage for the additional work to fix the fire at the smelter?

The repair cost is estimated at approximately $100,000,000 and so that is covered by insurance. We have not increased our estimates overall for the cost of the smelter. What you're seeing come through in 2025 for the most part is cost that we incurred in 2024 with the payables in 2025. But the incremental cost of the repairs will be covered. That's roughly $100,000,000 will be covered by insurance.

Okay. That's clear. Thank you. And then second question, prior to the election, well, the change of government in Indonesia, you are heading towards, I guess, the conclusion of the review of the license extension, etcetera. Do you have a visibility on the timeline for when you'd be entering the similar process with the new government?

As Richard mentioned, we've met with the new government. We had the opportunity while we were in Indonesia last year as well as when the President and others have visited the U. S. And Peru. And so we are discussing the benefits of this operation.

Freeport-McMoRan (FCX) Q4 2024 Earnings Call Transcript

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