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And we've outlined identified projects totaling about 1.7 billion pounds of copper in the Americas. And we've also highlighted on the slide the ongoing development of the [indiscernible] project in Indonesia which is expected to support long-term production profiles in the Grasberg District.
The opportunities that are shown on the slide in the 2- to 3-year category, they center around scaling our rich initiatives and achieving incremental production from our operational improvement projects. Together, the potential from these opportunities total 400 million pounds of incremental copper per annum and do not require significant investment or long lead times. We discussed earlier that the leach projects, but we're also dedicating significant resources to enhancing productivity and asset efficiencies, rebuilding the experience of our workforce given the large number of new hires in recent years and utilizing new technologies and automation to restore and improve on productivity metrics that weakened somewhat during the pandemic.
As we indicated, we completed the feasibility study late in the year 2023, to evaluate a project to more than double the size of our bad debt operation in Northwest Arizona. The reserves at Bagdad are span for decades, and they support expansion of infrastructure at the site to bring value forward. The incremental capital cost to build a new concentrator and support infrastructure for significantly higher mining and milling rates is on the order of $3.5 billion and an expanded operation would not only substantially increase copper production but would produce economies of scale and reduce unit costs.
The project does not require major permitting and it's relatively straightforward. But given the tight labor market conditions and general market factors, we're not making a decision right now on the timing of the project. We'll continue to evaluate the timing of when we would go forward. But we are taking steps now to enhance optionality for the future by making some investments in the autonomous haulage for our mining operations, making some investments in housing, and also advancing investments in the tailings infrastructure that will put us in a position when we make the decision, we could get the project online within a few years.
expansion projects
Transcript
2023 Q4
17 Apr 24
And you can see here on the charts that annual EBITDA in these periods would range from $10 billion per annum at $4 copper to over $14 billion per year at $5 copper and operating cash flows under these price scenarios to range from $7 billion to over $10 billion. A
sensitivities
Transcript
2023 Q4
17 Apr 24
At the same time, supply disruption increased meaningfully in recent months. In total, near-term supplies of copper have been reduced by over 700,000 tons in a very short period of time. The market was previously expecting that 2024 would be a small surplus market and turning to deficit beginning in 2025 time frame and continuing for some time.
With the recent supply disruptions and continued demand growth, the deficit market has been advanced into 2024, setting up for tight market conditions in the near term.
supply disiripteribs
Transcript
2023 Q4
17 Apr 24
nventories of copper around the world are at historically low levels and the inventory levels are really inconsistent with the current copper price. The copper price clearly been driven by macroeconomic factors.
low inventory levels
Transcript
2023 Q4
17 Apr 24
Then there were the supply shortfalls throughout the industry for some significant mines and these for range of factors that are kind of coming to our business.
supply shortfalls
Transcript
2023 Q4
17 Apr 24
Excluding the net debt associated with the smelter projects in Indonesia, we ended the quarter with $800 million in net debt.
net debt excluding smekter is ony 800m
Transcript
2023 Q3
26 Oct 23
Our Kucing Liar development in Grasberg is proceeding on schedule.
We expect to commence production by 2030. A huge, huge ore body ramping up to 550 million pounds of copper and 560,000 ounces of gold in next decade. We're also conducting some additional exploration in the Grasberg district, where we have identified some potential below our Deep MLZ ore body. We're continuing to advance discussions in Indonesia for extension beyond 2041.
Kucing Liar
Transcript
2023 Q3
23 Oct 23
We also have a major opportunity for expansion at our El Abra mine in Chile. This is a very large resource that could support a concentrator on the size of the concentrator we added at Cerro Verde several years ago. We're retesting the economics to update project capital costs in light of the recent capital cost experience and other large projects. And in parallel, we are planning investments in water infrastructure to support the current operation and provide optionality for the future. Again, this is about options for expansion at the right time, and we've got the portfolio with a lot of option value within the Freeport portfolio
El Abra
Transcript
2023 Q3
23 Oct 23
We're also continuing our work on potential expansion of the Bagdad mine in Northwest Arizona. We're completing a feasibility study, and we're taking some steps now to enhance optionality for the future, including making some investments in autonomous haulage in our mining operations at Bagdad and we're advancing investments in our tailings infrastructure for the future.
We are setting up Bagdad expansion project as an option for the future. The timing of it will depend on market conditions.
Bagdad
Transcript
2023 Q3
23 Oct 23
our strategy is really focused on development of extensions of our existing operations and our portfolio of brownfield opportunity.
growth opportunity on brownfield
Transcript
2023 Q3
23 Oct 23
The recent weakness in price, combined with higher capital costs to develop new mines, are making it more difficult to justify new project development, which is essential to the future. With this backdrop, we believe the current price is not sustainable and prices will need to rise to incentivize new supplies.
At Freeport, we benefit from a large reserve position and an even larger resource position to grow our business in the future. We're going to take a long-term view and also be mindful of the short-term pressures on the market.
near term price weakness
Transcript
2023 Q3
23 Oct 23
China's consumption continues to grow despite the country's weak property sector, supported by massive investments in wind and solar and growth in electric vehicle production. And the recent signs we're seeing that economic activity is picking up in China.
We're also seeing growth in copper consumption in India, which has historically used less copper per catheter than other countries. We can't predict short-term macro forces that have heavily influenced the market, but our conviction for the long-term fundamental outlook remains strong. Copper is the metal when it comes to electrification and Freeport is well positioned as a leader in the global copper industry.
china and india
Transcript
2023 Q3
23 Oct 23
n the U.S., several of our customers are reporting growth in power cable and building wire for utilities and data centers and rising demand from the automotive sector.
power cable demand good
Transcript
2023 Q3
23 Oct 23
Macroeconomic factors with higher interest rates are negative for the price of copper and Freeport's equity. It goes without saying, our business by design, by strategy is correlated to the price of copper. In response to the recent lower copper prices, we are supported by having a strong balance sheet, which we're committed to maintaining and by having the ability to manage our capital cost and operations to be responsive to the price environment.
lower prices
Transcript
2023 Q3
23 Oct 23
And Brian just let me say because of the IUPK term, we only report reserves through 2041. But with our work to develop our mine plans to 2041, we've already identified production that would extend production of significance that would extend beyond that. And Mark Johnson our PT-FI team are already started the process of looking at delineating these ore bodies to see what opportunities are there.
reserves on ly reported to 2041
Transcript
2023 Q2
28 Jul 23
Under the policy, we're distributing 50%. And if you go back cumulatively to where – when we started it in the second half of 2021, we've distributed over 50% between the dividends and the share buybacks.
50% distribution
Transcript
2023 Q2
28 Jul 23
The 10% would only come into play after 2041. And a key factor is under the 2018 agreement, Freeport-McMoRan manages, controls the management of the operations and everybody's happy with that. There's widespread recognition in the government of just how complicated this business is, and they're very complementary and pleased with our – the way we're running the business.
So it's really a good partnership.
"10%" only after 2041 etc
Transcript
2023 Q2
28 Jul 23
And the 10% – the share thing that you read about, what we were engaged in is looking at preserving what we have through 2041, but compensating the government in some way for that extension beyond 2041.
So again, like we did in 2018, this would be only done if we could find the right win-win for both Freeport and the government, which we think we can.
2041-- discussion on preservug activity
Transcript
2023 Q2
28 Jul 23
Our current IUPK runs to 2041 and we have no rights beyond that. And that was negotiated after a lengthy period and settled in 2018. And the settlement in 2018 has proved to be extraordinary positive for all stakeholders. The government of Indonesia, which acquired Rio Tinto’s interest during that process achieved its goals of getting a 51% equity ownership interest, and together with taxes, royalties, and other fees has essentially a 70% interest in the economics of the project. Through that FCX retained its interest, because it was already burdened by the Rio Tinto joint venture interest. And then since that date, we’ve successfully completed the conversion from the open pit to this underground mine and you can just see the track record that our team’s achieving with that. And over that period of time, copper prices have been good, all stakeholders of benefit.
indonesia iupk
Transcript
2023 Q2
28 Jul 23
We’re continuing to evaluate the expansion of our Bagdad mine in Arizona.
We’re completing the feasibility studies on that expansion. We’ve got the major El Abra opportunity in Chile, where we have an existing operation and very large reserves – resources that support future expansion. And of course, we’re developing making progress with the 90,000 ton per day Kucing Liar block-cave in Indonesia, and that’s expected to commence production by the end of the decade.
At Bagdad, we’re making some investments to advance tailings and other infrastructure to enhance our optionality for the project. And we’re doing the same at El Abra looking at some investments and water infrastructure, not only that would support the current operation, but provide optionality for the large mill project in the future.
After those two projects, we’ve got an – big opportunity in our Safford/Lone Star district in eastern Arizona. We’ve got current production there and have identified a significant resource that would allow us to make that district another cornerstone asset for Freeport as we look into the 2030 timeframe. We’ve got a series of U.S. Brownfield projects that were also looking at a big opportunity for us as in Indonesia, where an extension of our operating rights beyond 2041, which were continuing to advance would open the door for long-term large scale mining beyond 2041 and potential reserve expansion and additional development options in one of the world’s largest and highest grade copper and gold mining districts.
expansion projects
Transcript
2023 Q2
28 Jul 23