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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
e believe we have the opportunity to add 200 million pounds of copper a year with very limited capital investment.
We’re very focused on the details of the reliability and asset efficiency that we’re pursuing and see that potential as we look forward.
We also outlined the potential of our leach opportunity beyond the initial target of 200 million pounds per annum. We talk extensively about this on our last call. We’ve got very large areas under leach. We’ve got new approaches and operating practices that we are deploying on this effort, and the more we work on it, the more optimistic we are about this opportunity is much larger than the initial 200 million pounds.
We continue to see the clear opportunity of expanding the initial 200 million pounds of copper per annum to 800 million pounds of – per annum over the next three years to five years.
leaching opportunity
Transcript
2023 Q2
28 Jul 23
we show the modeled results for our EBITDA and cash flow at various copper prices ranging from $4 to $5 copper. These results on the slide are modeled using the average of our 2024 and 2025 volume and cost estimates, and we hold gold flat in these scenarios at $1,950 per ounce and molybdenum flat at $20 per pound, both of those commodities are slightly above that today.
Annual EBITDA under these assumptions would range from about $11 billion per annum to $15 billion per annum at $5. The $11 billion was at $4, and our operating cash flows before working capital would range from nearly $8 billion per year at $4 copper and $11 billion per year at $5 copper.
sensitivies to copper
Transcript
2023 Q2
28 Jul 23
e ability of the copper industry to meet this rising demand is a major challenge, and we are working very hard to increase our supplies as we look forward. We believe prices will need to rise to incentivize new supplies of copper. At Freeport, we benefit from a large reserve position and even greater resource position to be able to grow our business in the future.
As I mentioned, we're really focused on continuing to support the growing demand, producing responsibly and we're pursuing several initiatives to enhance our production going forward.
supply situation
Transcript
2023 Q2
28 Jul 23
The short-term market situation is characterized by, on the one hand, favorable demand drivers from growing intensity in autos, renewables and data centers, and that's partly offset by slowing manufacturing growth.
China remains the world's largest consumer of copper and even with the country's current economic challenges and the weakness in the property sector, copper consumption continues to grow and that's been bolstered by large investments in copper-intensive electrical grid and strong growth in electric vehicle production. Richard referenced the inventories, which are very low levels by historical standards, they're now lower than they were at the start of this year, and we see this as evidence of a tightly balanced market.
As we look forward over the next several years, demand is expected to accelerate with third-party projections for demand to double by 2035. Investments in low carbon renewable power, electrification will lead to massive growth in demand. And in addition to that, the initiatives by many countries for major infrastructure programs and the uses of copper for connectivity, data, AI, those are also growing demand drivers.
demand outlook, seculare griowth drivers counter cyckical weakness
Transcript
2023 Q2
28 Jul 23
Beginning in June and July of this year various ministries completed regulatory process to enable ongoing exports of copper concentrates through May of 2024 for exporters with more than 50% smelter progress, and we are over 70%. Last week, the trade ministry enacted legislation to allow the exports and now the administrative process we expect to receive formal approval to resume exports over the next several days.
70% smelter progress enoiugh to achive approval to resume exports
Transcript
2023 Q2
28 Jul 23
During the second quarter, this effort yielded incremental copper of 29 million pounds, and that was over two times the level in last year's second quarter. We're about 60% of our targeted annual run rate at this level, and we are well on our way to getting to our target of roughly 200 million pounds of copper per year incremental from this initiative. We're going to talk later – about it later in the presentation, but our confidence is increasing in meeting the initial target and on the significant upside for this highly valuable initiative.
leaching update
Transcript
2023 Q2
28 Jul 23
We are making steady progress on the smelter in Indonesia. This is an important initiative and we're now at 75% compared with 60% progress three months ago.
Our project execution is going well, and our team is very focused on completing the project efficiently.
smelter in indonesia
Transcript
2023 Q2
28 Jul 23
Our unit net cash costs during the quarter averaged $1.47 per pound, and that was a little better than our guidance of $1.51 per pound. With average copper prices realized of $3.84 per pound in the quarter, we generated strong margins and EBITDA of $2.14 billion.
cash costs better than guidabce
Transcript
2023 Q2
28 Jul 23
electrification is expanding with ongoing advances in alternative energy, electric vehicles, connectivity and supporting infrastructure.
Global copper inventories remain remarkably low, and this is notable in the context of the concerns about the global economy in China. The current demand for copper is much stronger than headline economic data.
electrification not china. maybe...
Transcript
2023 Q2
28 Jul 23
Our annual EBITDA under these scenarios would range from over $10.5 billion per annum at $4 copper to $15 billion per annum at $5 copper. And operating cash flows would range from $7.5 billion per year at $4 copper to $11 billion per year at $5 copper.
ebitda vs copper price
Transcript
2023 Q1
19 May 23
But we've kind of internally said, let's go after trying to get 100 million pounds to 200 million pounds from this -- in the near-term.
And so where we're looking to gradually improve where we are in 2022, and you'll be hearing more about it. But from a cost standpoint, if you think about where the incremental costs of this is. We've got much of this materials already in our leach stockpiles.
So we've already expanded the funds to mine it, and it's in stock piles.
And so it's a very low incremental cost to be able to recover it.
So that's the opportunity for us, as we look at it having low incremental capital to go after it low incremental operating costs.
We have latent tank house capacity, Josh mentioned. We're filling the tank house at Safford. But at all of our mines, we've got some tank house capacity that that we can fill, if we're able to get more recoveries.
So economically, this is a real opportunity for us. But when you're talking about 100 million pounds to 200 million pounds, and we've got 38 billion pounds of material and stockpiles, that's a small amount, but it does have value to us. And we hope to go capture it. But in terms of this being a sea change for supply for the industry. We just don't -- we don't see it, it'll take time. And it'll come out over time. But it is, it's a meaningful value opportunity for us as a company given our set of circumstances with the large stockpiles in the latent tank house capacity. And Cory I don't know if you want to add anything to that. But that's where we are with it.
100 to 200 from 38 billion pounds stockpiles
Transcript
2021 Q4
17 Feb 23
And my question around that is, first of all, how much production potential could we see from these new leaching technologies? What's the timeframe? Is it in any good guidance yet?
leaching opportunity?
Transcript
2021 Q4
17 Feb 23
We have, we believe we have almost 40 billion pounds of copper in those stacks. And even small recoveries out of that could result in copper, that would be equivalent to developing a whole new mine.
40bn copper in stacks for leaching
Transcript
2021 Q4
17 Feb 23
So, it’s broader than mining. I mean, when I talk with people to business council, business around the table, it’s a common theme you hear across many industries. And when all the COVID relief funds went out, that was a factor. I mean, face it, our work is hard work. And it’s harder to drive a big haul truck than it is to drive an Amazon or UPS or FedEx truck.
So, we compete with those. We pay our people strong living wages.
We’re giving people substantial increases this year. We invest in recreational facilities, try to deal with housing. It’s an issue in Colorado with our molybdenum mines.
You can imagine what it’s like there.
So, it’s a big issue for us. And as a result, our mine rates start meeting what we would like for them to meet, and that affects not only current but future production, and it’s a strategic challenge for us. But, it’s not just us and it’s not just the mining industry, but the mining industry because the nature of the work presents special problems.
labour issues
Transcript
2022 Q4
27 Jan 23
But these are the ones that are strategic and that we’re focused on. The leach technology is a near-term project. And Bagdad long term -- I mean, medium term and the Lone Star major expansion longer term. El Abra, we believe, will get done. It’s a project that it’s attractive and it will get done. It’s a question of when.
project timing
Transcript
2022 Q4
27 Jan 23
So, it has been striking as to the strength of demand that we’ve had, we had no problem selling our production. We’ve actually -- there was a shortage of wire rod in the United States that was -- where we couldn’t meet everything that was being produced. And then, with our copper concentrate customers, including China, people were buying all that we produced and actually wanting more.
So, market sentiment is better now. And but our customers continue to be very positive.
physical market remains good
Transcript
2022 Q4
27 Jan 23