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f you are successful in getting to that 200 million pound rate by the end of next year, should we be then thinking about that adding on to the existing 4.2 billion pound guidance for 2024?
leaching 200 m added to 4.2 bn guidance for 2024?
Transcript
2022 Q3
21 Oct 22
One was the 2018 agreement that we reached with the government to stabilize the situation we had in years about the structure of our taxes, royalties and operating rights. And now we’ve had 4 years of operating under that and it’s going very well as you can see by presence visit, etcetera. And then as Kathleen mentioned, de-risking Grasberg by ramping up the underground and being so effective in sustaining the rates there.
more stable now
Transcript
2022 Q3
21 Oct 22
So we’re going to do what we need to do, the levers that we have to pull are the same levers that we’ve had in the past, big reductions in CapEx probably the first thing. And then we will start looking mine by mine on how to change the operating plans. But the difference, again, I just want to emphasize, you look at the forecast for this decarbonization and the world appears to need more copper rather than less and that copper demand is not [indiscernible] to these economic movements.
sticking to bullish case
Transcript
2022 Q3
21 Oct 22
But right now, we’ve got the copper prices that have declined significantly, but input costs have not at this point.
I think that if we do get into a really tough situation, our cost situation may get some risk. But in any case, what we do is we go through each mine, look at the operating plans, determine how we can optimize those operating plans. What it tends to mean is that we tend to look at where can we cut back on the mining rate to get to a better cash flow situation. We did that in 2020. We’ve certainly done it ‘08, ‘09. We did it in ‘15, ‘16. We’ve done it multiple times.
input costs still rising, while copper falling
Transcript
2022 Q3
21 Oct 22
So obviously, the first lever, which looks like you’re pulling already, is kind of suspending the buyback until things improve. But you still have a couple of billion dollars of kind of leeway on the balance sheet before you get into your net debt target range.
Let’s assume that commodity markets get worse, and we’re kind of stress testing the business and you’re burning cash for the next kind of 12 months based on your current operational and spending plans. When you get into that targeted net debt range, what are the levers that you can pull next? Are there kind of CapEx reductions that you can make? Are there mines that you’ll take offline? I mean, the cost inflation is kind of prominent in the industry, and copper price isn’t really doing much.
what will you do if conditions worsen? buybacks, capex reductions etc?
Transcript
2022 Q3
21 Oct 22
We did not purchase shares since mid-July and that reflects our priorities on our balance sheet and our policy of using excess cash flows for shareholder returns and the timing of our future purchases will be dependent on our cash flows and overall market conditions.
didnt buy back shares since mid July
Transcript
2022 Q3
21 Oct 22
So you’re talking about, by the end of next year, getting to 50 million pounds per quarter on a run rate basis.
We’re already probably third of the way there in terms of what we’re seeing now. But what we’ve got to do is not only see the improvements in recovery, but get the material placed
leach details "third of the way"
Transcript
2022 Q3
21 Oct 22
our annual EBITDA would range from roughly $6 billion per year at $3 copper to over $14 billion per year at $5 copper. And our operating cash flows net of all of our taxes would range from $4 billion per year, $3 copper, to $11 billion at $5 copper.
ebitda/ocf sensitivity to CU price movements
Transcript
2022 Q3
21 Oct 22
The balance of this change is associated with updated mine plans in the Americas, and that includes the impact of anticipated lower grades than we were previously forecasting for 2023 at Cerro Verde
more colour on coppeer sakes guidance cut
Transcript
2022 Q3
21 Oct 22
You’ll note that our 2023 copper sales guidance have been adjusted. They are lower by about 150 million pounds from our prior estimate. That’s roughly 3%. About half of this is a timing matter and does not represent a production shortfall. And this goes to a change in the commercial agreement of our arrangement with PT Smelting, the existing smelter in Indonesia, which we own a 40% interest in currently. That commercial arrangement is converting in 2023 from a purchase and sale agreement to a tolling agreement.
cut in 2023 copper sales guidance explained -- timing issue
Transcript
2022 Q3
21 Oct 22
And so essentially, we’re doing here is extracting more copper from what historically would be considered waste.
We are using new data analytics capabilities, and those are providing valuable information to guide us and prioritize our work on the highest value.
We’re continuing efforts to retain heat in the stockpile.
We are moving forward to apply covers to our leach stockpiles because the retention of heat within the stockpiles is proving to enhance recoveries.
We’re also applying solutions to new areas that were not pursued historically. And we continue to test various additives that can further enhance recoveries. The progress to-date and early results are leading us to a target run rate of 200 million pounds by the end of next year, and that is at the top end of what we were prior thinking was 100 million to 200 million pounds. Success at this level would give us a road map to scale larger, and that’s what we’re focused on.
leaching technology colour
Transcript
2022 Q3
21 Oct 22
And with the success of this project, we’re engaged in discussions regarding an extension of our operating rights beyond our current 2041 time frame
extension of rights for graasberg beyond 2041?
Transcript
2022 Q3
21 Oct 22
s we go through this period of increased demand from decarbonization, large gas supply-demand gaps emerging in the copper market
demand/supply gaps to come
Transcript
2022 Q3
21 Oct 22
Physical market was tight as evidenced by low levels of inventories. The situation is much the same today. Copper demand remains healthy.
copper demand remains healthy (low inventories)
Transcript
2022 Q3
21 Oct 22
n the current market, many of our input costs are above historical correlations to the copper price. We can’t predict how long this dislocation will occur, but based on history, we typically see a high correlation of many of our input costs with the price of copper.
relatively high costs
Transcript
2022 Q3
21 Oct 22
The industry continues to struggle to meet production targets and inventories remain low by historical levels. And as we look forward, we see copper demand that will benefit from the substantial requirements for metals required for electrification and the energy transition.
copper production struggling
Transcript
2022 Q3
20 Oct 22
From a cash cost standpoint, our consolidated average unit net cash cost were $1.75 in the quarter, they averaged $1.75 and that was about 5% above our estimates going into the quarter.
caah cost higher than expected
Transcript
2022 Q3
20 Oct 22
You see production reports from producers across the globe reporting challenges in meeting their production targets and the industry is facing increasingly challenges in developing new supplies. In the current environment, stretch supply chains, production shortfalls are becoming commonplace and cost curves are rising
supply issues
Transcript
2022 Q3
20 Oct 22
On the other hand, the fundamental physical copper market is strikingly tight globally right now.
tight market
Transcript
2022 Q3
20 Oct 22
ell, Chris, in preparing for this call, I have made a concerted effort with my contacts in the industry, who are very knowledgeable of the business on the ground in China. To answer your direct question there because that was perplexing out. I inquired broadly about where their inventories in China that were not visible, what was going on with Chinese commodity trading companies, and the word came back that inventories were not building, it wasn't unusual trading.
china demand currently good
Transcript
2022 Q2
3 Oct 22