United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)



~~UNITED STATES~~☒
~~SECURITIES AND EXCHANGE COMMISSION~~
~~Washington, D.C. 20549~~

~~FORM 10-Q~~

~~(Mark One)~~
~~[X]~~ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

~~For the quarterly period ended September 30, 2017~~
OR
~~[ ]~~ ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the transition period from~~		to
~~Commission File Number: 001-11307-01~~

For the transition period from to

Commission file number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)



Delaware		74-2480931
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)



333 North Central Avenue	Phoenix
~~Phoenix,~~ AZ		85004-2189
(Address of principal executive offices)			(Zip Code)

(602)366-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

~~(602) 366-8100~~
~~(Registrant’s telephone number, including area code)~~
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	FCX	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☑Yes☐ No

þ ~~Yes~~ o No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

þ☑Yeso☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging ~~growth~~grown company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"emerging growth company"~~“emerging grown company” in Rule 12b-2 of the Exchange Act.



Large accelerated filerþ	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		~~Accelerated filer~~ ¨
~~Non-accelerated filer~~ ¨~~(Do not check if a smaller reporting company)~~			~~Smaller reporting company~~ ¨
Emerging growth company¨			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act).

o☐ Yes þ☑No

On ~~October~~July 31, ~~2017,~~2019, there were issued and outstanding ~~1,447,590,668~~1,450,890,574 shares of the registrant’s common stock, par value $0.10 per share.

~~FREEPORT-McMoRan INC.~~

Freeport-McMoRan Inc.

TABLE OF CONTENTS




	Page

Part I. Financial Information	3

Item 1. Financial Statements:	3

Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Operations (Unaudited)	4

Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ (Unaudited)	5

Consolidated Statements of Cash Flows (Unaudited)	6

Consolidated ~~Statement~~Statements of Equity (Unaudited)	7

Notes to Consolidated Financial Statements (Unaudited)	89

~~Review~~ Report of Independent Registered Public Accounting Firm	3331

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	3432

Item 3. Quantitative and Qualitative Disclosures About Market Risk	7569

Item 4. Controls and Procedures	7569

Part II. Other Information	7569

Item 1. Legal Proceedings	7569

Item 1A. Risk Factors	7569

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	7669

Item 4. Mine Safety Disclosures	7669

Item 6. Exhibits	7770

Signature	S-1

Table of Contents


Part I.	FINANCIAL INFORMATION


Item 1.	Financial Statements.

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2017			December 31, 2016			June 30, 2019			December 31, 2018
	(In millions)						(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4,957		$	4,245		$	2,623		$	4,217
Trade accounts receivable	1,024			1,126			725			829
Income and other tax receivables	522			879			245			493
Inventories:
Materials and supplies, net	1,276			1,306			1,634			1,528
Mill and leach stockpiles	1,393			1,338			1,352			1,453
Product	1,188			998			1,391			1,778
Other current assets	241			199			760			422
Assets held for sale	549			344
Total current assets	11,150			10,435			8,730			10,720
Property, plant, equipment and mine development costs, net	22,914			23,219			28,841			28,010
Oil and gas properties, subject to amortization, less accumulated amortization and impairments	20			74
Long-term mill and leach stockpiles	1,453			1,633			1,347			1,314
Other assets	1,790			1,956			2,168			2,172
Total assets	$	37,327		$	37,317		$	41,086		$	42,216

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,098		$	2,393		$	2,721		$	2,625
Current portion of environmental and asset retirement obligations							425			449
Dividends payable							73			73
Accrued income taxes							63			165
Current portion of debt	2,215			1,232			4			17
Accrued income taxes	464			66
Current portion of environmental and asset retirement obligations	419			369
Liabilities held for sale	321			205
Total current liabilities	5,517			4,265			3,286			3,329
Long-term debt, less current portion	12,567			14,795			9,912			11,124
Deferred income taxes	3,771			3,768			4,055			4,032
Environmental and asset retirement obligations, less current portion	3,498			3,487			3,617			3,609
Other liabilities	1,744			1,745			2,399			2,230
Total liabilities	27,097			28,060			23,269			24,324

Equity:
Stockholders’ equity:
Common stock	158			157			158			158
Capital in excess of par value	26,743			26,690			25,949			26,013
Accumulated deficit	(15,763		)	(16,540		)	(12,082		)	(12,041		)
Accumulated other comprehensive loss	(443		)	(548		)	(582		)	(605		)
Common stock held in treasury	(3,722		)	(3,708		)	(3,734		)	(3,727		)
Total stockholders’ equity	6,973			6,051			9,709			9,798
Noncontrolling interests	3,257			3,206			8,108			8,094
Total equity	10,230			9,257			17,817			17,892
Total liabilities and equity	$	37,327		$	37,317		$	41,086		$	42,216

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2017			2016			2017			2016			2019			2018			2019			2018
	(In millions, except per share amounts)												(In millions, except per share amounts)
Revenues	$	4,310		$	3,877		$	11,362		$	10,453		$	3,546		$	5,168		$	7,338		$	10,036
Cost of sales:
Production and delivery	2,802			2,529			7,497			7,984			3,002			2,915			5,978			5,723
Depreciation, depletion and amortization	418			643			1,257			1,937			352			442			699			893
Impairment of oil and gas properties	—			239			—			4,317
Total cost of sales	3,220			3,411			8,754			14,238			3,354			3,357			6,677			6,616
Selling, general and administrative expenses	106			110			366			408			97			109			209			240
Mining exploration and research expenses	27			13			61			46			31			24			58			45
Environmental obligations and shutdown costs (credits)	73			(3		)	81			18
Net gain on sales of assets	(33		)	(13		)	(66		)	(762		)
Environmental obligations and shutdown costs													23			59			65			68
Net loss (gain) on sales of assets													8			(45		)	(25		)	(56		)
Total costs and expenses	3,393			3,518			9,196			13,948			3,513			3,504			6,984			6,913
Operating income (loss)	917			359			2,166			(3,495		)
Operating income													33			1,664			354			3,123
Interest expense, net	(304		)	(187		)	(633		)	(574		)	(132		)	(142		)	(278		)	(293		)
Net gain on exchanges and early extinguishment of debt	11			15			8			51
Other income (expense), net	2			(10		)	36			54
Income (loss) from continuing operations before income taxes and equity in affiliated companies’ net earnings	626			177			1,577			(3,964		)
(Provision for) benefit from income taxes	(387		)	114			(747		)	(79		)
Net gain (loss) on early extinguishment of debt													—			9			(6		)	8
Other income, net													5			20			19			49
(Loss) income from continuing operations before income taxes and equity in affiliated companies’ net earnings													(94		)	1,551			89			2,887
Benefit from (provision for) income taxes													15			(515		)	(90		)	(1,021		)
Equity in affiliated companies’ net earnings	3			1			6			9			5			3			2			1
Net income (loss) from continuing operations	242			292			836			(4,034		)
Net income (loss) from discontinued operations	3			(6		)	50			(191		)
Net income (loss)	245			286			886			(4,225		)
Net loss (income) attributable to noncontrolling interests:
Net (loss) income from continuing operations													(74		)	1,039			1			1,867
Net (loss) income from discontinued operations													—			(4		)	1			(15		)
Net (loss) income													(74		)	1,035			2			1,852
Net loss (income) attributable to noncontrolling interests													2			(166		)	(43		)	(291		)
Net (loss) income attributable to common stockholders													$	(72	)	$	869		$	(41	)	$	1,561

Basic net (loss) income per share attributable to common stockholders:
Continuing operations	35			(37		)	(106		)	(146		)	$	(0.05	)	$	0.60		$	(0.03	)	$	1.08
Discontinued operations	—			(22		)	(4		)	(44		)	—			—			—			(0.01		)
Preferred dividends attributable to redeemable noncontrolling interest	—			(10		)	—			(31		)
Net income (loss) attributable to common stockholders	$	280		$	217		$	776		$	(4,446	)
													$	(0.05	)	$	0.60		$	(0.03	)	$	1.07
Basic and diluted net income (loss) per share attributable to common stockholders:

Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	0.19		$	0.18		$	0.50		$	(3.27	)	$	(0.05	)	$	0.59		$	(0.03	)	$	1.08
Discontinued operations	—			(0.02		)	0.03			(0.18		)	—			—			—			(0.01		)
	$	0.19		$	0.16		$	0.53		$	(3.45	)	$	(0.05	)	$	0.59		$	(0.03	)	$	1.07

Weighted-average common shares outstanding:
Basic	1,448			1,346			1,447			1,289			1,451			1,449			1,451			1,449

Diluted	1,454			1,351			1,453			1,289			1,451			1,458			1,451			1,458

Dividends declared per share of common stock													$	0.05		$	0.05		$	0.10		$	0.10

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~ (Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In millions)
Net income (loss) $ 245
$ 286
$ 886
$ (4,225 )

Other comprehensive income, net of taxes:
Unrealized gains on securities —
2
2
3
Defined benefit plans:
Actuarial gains arising during the period, net of taxes of $48 million for the nine months ended September 30, 2017 —
—
69
—
Amortization or curtailment of unrecognized amounts included in net periodic benefit costs 12
11
42
34
Foreign exchange gains (losses) 1
(1 ) —
(11 )
Other comprehensive income 13
12
113
26

Total comprehensive income (loss) 258
298
999
(4,199 )
Total comprehensive loss (income) attributable to noncontrolling interests 35
(59 ) (118 ) (189 )
Preferred dividends attributable to redeemable noncontrolling interest —
(10 ) —
(31 )
Total comprehensive income (loss) attributable to common stockholders $ 293
$ 229
$ 881
$ (4,419 )



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In millions)
Net (loss) income	$	(74	)	$	1,035		$	2		$	1,852

Other comprehensive income, net of taxes:
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	13			11			24			23
Foreign exchange losses	—			—			—			(1		)
Other comprehensive income	13			11			24			22

Total comprehensive (loss) income	(61		)	1,046			26			1,874
Total comprehensive loss (income) attributable to noncontrolling interests	1			(166		)	(44		)	(290		)
Total comprehensive (loss) income attributable to common stockholders	$	(60	)	$	880		$	(18	)	$	1,584

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended
September 30,
2017 2016
(In millions)
Cash flow from operating activities:
Net income (loss) $ 886
$ (4,225 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 1,257
2,017

Net charges for Cerro Verde royalty dispute 359
—

Payments for Cerro Verde royalty dispute (32 ) (20 )
Impairment of oil and gas properties —
4,317

Oil and gas non-cash drillship settlements/idle rig costs and other adjustments (33 ) 705

Net gain on sales of assets (66 ) (762 )
Net charges for environmental and asset retirement obligations, including accretion 196
149

Payments for environmental and asset retirement obligations (85 ) (190 )
Net charges for defined pension and postretirement plans 95
78

Pension plan contributions (152 ) (44 )
Net gain on exchanges and early extinguishment of debt (8 ) (51 )
Deferred income taxes 77
(22 )
(Gain) loss on disposal of discontinued operations (41 ) 182

Decrease (increase) in long-term mill and leach stockpiles 181
(84 )
Oil and gas contract settlement payments (70 ) —

Other, net 59
61

Changes in working capital and other tax payments, excluding amounts from dispositions:
Accounts receivable 420
257

Inventories (314 ) 251

Other current assets (17 ) (120 )
Accounts payable and accrued liabilities (93 ) (80 )
Accrued income taxes and changes in other tax payments 399
175

Net cash provided by operating activities 3,018
2,594

Cash flow from investing activities:
Capital expenditures:
North America copper mines (106 ) (87 )
South America (65 ) (332 )
Indonesia (663 ) (706 )
Molybdenum mines (4 ) (2 )
Other, including oil and gas operations (182 ) (1,182 )
Net proceeds from the sale of additional interest in Morenci —
996

Net proceeds from sales of other assets 68
410

Other, net (22 ) 9

Net cash used in investing activities (974 ) (894 )

Cash flow from financing activities:
Proceeds from debt 795
3,463

Repayments of debt (1,991 ) (4,539 )
Net proceeds from sale of common stock —
442

Cash dividends paid:
Common stock (2 ) (5 )
Noncontrolling interests (67 ) (87 )
Stock-based awards net payments (10 ) (5 )
Debt financing costs and other, net (12 ) (17 )
Net cash used in financing activities (1,287 ) (748 )

Net increase in cash and cash equivalents 757
952

Increase in cash and cash equivalents in assets held for sale (45 ) (43 )
Cash and cash equivalents at beginning of year 4,245
177

Cash and cash equivalents at end of period $ 4,957
$ 1,086

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Table of Contents~~

~~FREEPORT-McMoRan INC.~~

~~CONSOLIDATED STATEMENT OF EQUITY (Unaudited)~~

Stockholders’ Equity
Common Stock Accum-ulated Deficit Accumu-
lated
Other Compre-
hensive
Loss
Common Stock
Held in Treasury
Total
Stock-holders’ Equity

Number
of
Shares

At Par
Value

Capital in
Excess of
Par Value

Number
of
Shares

At
Cost

Non-
controlling
Interests

Total
Equity

(In millions)
Balance at December 31, 2016 1,574
$ 157
$ 26,690
$ (16,540 ) $ (548 ) 129
$ (3,708 ) $ 6,051
$ 3,206
$ 9,257
Exercised and issued stock-based awards 4
1
4
—
—
—
—
5
—
5
Stock-based compensation —
—
49
—
—
—
—
49
—
49
Tender of shares for stock-based awards —
—
—
—
—
1
(14 ) (14 ) —
(14 )
Dividends —
—
—
1
—
—
—
1
(67 ) (66 )
Net income attributable to common stockholders —
—
—
776
—
—
—
776
—
776
Net income attributable to noncontrolling interests, including discontinued operations —
—
—
—
—
—
—
—
110
110
Other comprehensive income —
—
—
—
105
—
—
105
8
113
Balance at September 30, 2017 1,578
$ 158
$ 26,743
$ (15,763 ) $ (443 ) 130
$ (3,722 ) $ 6,973
$ 3,257
$ 10,230



	Six Months Ended
	June 30,
	2019			2018
	(In millions)
Cash flow from operating activities:
Net income	$	2		$	1,852
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	699			893
Metals inventory adjustments	59			2
Net gain on sales of assets	(25		)	(56		)
Stock-based compensation	40			60
Net charges for environmental and asset retirement obligations, including accretion	109			152
Payments for environmental and asset retirement obligations	(100		)	(110		)
Net charges for defined pension and postretirement plans	53			38
Pension plan contributions	(33		)	(44		)
Net loss (gain) on early extinguishment of debt	6			(8		)
Deferred income taxes	20			61
(Income) loss on disposal of discontinued operations	(1		)	15
(Increase) decrease in long-term mill and leach stockpiles	(33		)	38
PT Freeport Indonesia surface water tax settlement	28			—
Cerro Verde royalty dispute	28			4
Payments for Cerro Verde royalty dispute	(86		)	(21		)
Other, net	41			15
Changes in working capital and other tax payments:
Accounts receivable	256			309
Inventories	287			(468		)
Other current assets	(26		)	(20		)
Accounts payable and accrued liabilities	9			114
Accrued income taxes and timing of other tax payments	(245		)	(148		)
Net cash provided by operating activities	1,088			2,678

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(417		)	(232		)
South America	(108		)	(138		)
Indonesia	(658		)	(449		)
Molybdenum mines	(6		)	(2		)
Other	(62		)	(63		)
Proceeds from sales of oil and gas properties	91			—
Intangible water rights and other, net	(7		)	(86		)
Net cash used in investing activities	(1,167		)	(970		)

Cash flow from financing activities:
Proceeds from debt	328			352
Repayments of debt	(1,563		)	(2,297		)
Cash dividends and distributions paid:
Common stock	(146		)	(73		)
Noncontrolling interests	(79		)	(241		)
Contributions from noncontrolling interests	100			—
Stock-based awards net (payments) proceeds	(6		)	5
Debt financing costs and other, net	(4		)	(23		)
Net cash used in financing activities	(1,370		)	(2,277		)

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(1,449		)	(569		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	4,455			4,710
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	3,006		$	4,141

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

THREE MONTHS ENDED JUNE 30



	Stockholders’ Equity
	Common Stock						Accum-ulated Deficit			Accumu- lated Other Compre- hensive Loss			Common Stock Held in Treasury				Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	(In millions)
Balance at March 31, 2019	1,582	$	158	$	25,963		$	(12,010	)	$	(594	)	131	$	(3,734	)	$	9,783		$	8,058		$	17,841
Stock-based compensation, including the tender of shares	—	—		10			—			—			—	—			10			—			10
Dividends	—	—		(73		)	—			—			—	—			(73		)	—			(73		)
Contributions from noncontrolling interests	—	—		49			—			—			—	—			49			51			100
Net loss attributable to common stockholders	—	—		—			(72		)	—			—	—			(72		)	—			(72		)
Net loss attributable to noncontrolling interests	—	—		—			—			—			—	—			—			(2		)	(2		)
Other comprehensive income	—	—		—			—			12			—	—			12			1			13
Balance at June 30, 2019	1,582	$	158	$	25,949		$	(12,082	)	$	(582	)	131	$	(3,734	)	$	9,709		$	8,108		$	17,817



	Stockholders’ Equity
	Common Stock						Accum-ulated Deficit			Accumu- lated Other Compre- hensive Loss			Common Stock Held in Treasury				Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	(In millions)
Balance at March 31, 2018	1,579	$	158	$	26,729		$	(14,030	)	$	(475	)	130	$	(3,726	)	$	8,656		$	3,270		$	11,926
Exercised and issued stock-based awards	—	—		2			—			—			—	—			2			—			2
Stock-based compensation, including the tender of shares	—	—		9			—			—			—	—			9			—			9
Dividends	—	—		(73		)	—			—			—	—			(73		)	(68		)	(141		)
Net income attributable to common stockholders	—	—		—			869			—			—	—			869			—			869
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			166			166
Other comprehensive income	—	—		—			—			11			—	—			11			—			11
Balance at June 30, 2018	1,579	$	158	$	26,667		$	(13,161	)	$	(464	)	130	$	(3,726	)	$	9,474		$	3,368		$	12,842

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Freeport-McMoRan Inc.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

SIX MONTHS ENDED JUNE 30



	Stockholders’ Equity
	Common Stock						Accum-ulated Deficit			Accumu- lated Other Compre- hensive Loss			Common Stock Held in Treasury				Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	(In millions)
Balance at December 31, 2018	1,579	$	158	$	26,013		$	(12,041	)	$	(605	)	130	$	(3,727	)	$	9,798		$	8,094		$	17,892
Exercised and issued stock-based awards	3	—		1			—			—			—	—			1			—			1
Stock-based compensation, including the tender of shares	—	—		33			—			—			1	(7		)	26			—			26
Dividends	—	—		(146		)	—			—			—	—			(146		)	(70		)	(216		)
Changes in noncontrolling interests	—	—		(1		)	—			—			—	—			(1		)	(11		)	(12		)
Contributions from noncontrolling interests	—	—		49			—			—			—	—			49			51			100
Net loss attributable to common stockholders	—	—		—			(41		)	—			—	—			(41		)	—			(41		)
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			43			43
Other comprehensive income	—	—		—			—			23			—	—			23			1			24
Balance at June 30, 2019	1,582	$	158	$	25,949		$	(12,082	)	$	(582	)	131	$	(3,734	)	$	9,709		$	8,108		$	17,817



	Stockholders’ Equity
	Common Stock						Accum-ulated Deficit			Accumu- lated Other Compre- hensive Loss			Common Stock Held in Treasury				Total Stock-holders’ Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	Number of Shares	At Par Value		Capital in Excess of Par Value									Number of Shares	At Cost						Non- controlling Interests			Total Equity
	(In millions)
Balance at December 31, 2017	1,578	$	158	$	26,751		$	(14,722	)	$	(487	)	130	$	(3,723	)	$	7,977		$	3,319		$	11,296
Exercised and issued stock-based awards	1	—		8			—			—			—	—			8			—			8
Stock-based compensation, including the tender of shares	—	—		53			—			—			—	(3		)	50			—			50
Dividends	—	—		(145		)	—			—			—	—			(145		)	(241		)	(386		)
Net income attributable to common stockholders	—	—		—			1,561			—			—	—			1,561			—			1,561
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			291			291
Other comprehensive income (loss)	—	—		—			—			23			—	—			23			(1		)	22
Balance at June 30, 2018	1,579	$	158	$	26,667		$	(13,161	)	$	(464	)	130	$	(3,726	)	$	9,474		$	3,368		$	12,842

The accompanying notes are an integral part of these consolidated financial statements.

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Freeport-McMoRan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.). Therefore, this information should be read in conjunction with Freeport-McMoRan Inc.’s (FCX) consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, ~~2016.~~2018 (2018 Form 10-K). The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. With the exception of the accounting for discontinued operations, assets held for sale, the remeasurement of a pension plan and charges related to a continuing royalty dispute with respect to historical periods at FCX’s mine in Peru, allAll such adjustments are, in the opinion of management, of a normal recurring nature. As a result of FCX’s sale of its interest in TF Holdings Limited (TFHL), FCX has reported TFHL as discontinued operations for all periods presented in the unaudited consolidated financial statements (refer to Note 2). Operating results for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2017,~~2019, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2019.

~~Indonesia Mining.~~ AsProperty, Plant, Equipment and Mine Development Costs. The following is an update to FCX’s property, plant, equipment and mine development costs accounting policy included in Note 1 of its 2018 Form 10-K. Development costs are capitalized beginning after proven and probable mineral reserves have been established. Development costs include costs incurred resulting from mine pre-production activities undertaken to gain access to proven and probable reserves, including shafts, adits, drifts, ramps, permanent excavations, infrastructure and removal of overburden. For underground mines certain costs related to panel development, such as undercutting and drawpoint development, are also capitalized as mine development costs until production reaches design capacity for the mine. After reaching design capacity, the mine transitions to the production phase and panel development costs are allocated to inventory and then included as a ~~result~~component of ~~the first-quarter 2017 regulatory restrictions and uncertainties regarding long-term investment stability,~~cost of goods sold.

Attribution of PT Freeport Indonesia (PT-FI) took actions to adjust its cost structure, reduce its workforce and slow investments in its underground development projects and new smelter. These actions included workforce reductions through furlough and voluntary retirement programs. FollowingNet Income or Loss. FCX has concluded that the ~~furlough and voluntary retirement programs, a significant number~~attribution of employees and contractors elected to participate in an illegal strike action beginning in May 2017, and were subsequently deemed to have voluntarily resigned under existing laws and regulations. As a result, PT-FI recorded charges to operatingPT-FI’s net income ~~for employee severance and related costs totaling $9 million for third-quarter 2017 and $113 million for~~or loss from the ~~first nine months of 2017.~~

~~Additionally, because~~date of the ~~significant reduction in workforce,~~divestment transaction (i.e., December 21, 2018) through December 31, 2022 (the Initial Period), should be based on the economics replacement agreement, which provides for FCX and the other pre-transaction PT-FI ~~was required~~shareholders (i.e., PT Indonesia Asahan Aluminium (Persero) (PT Inalum) and PT Indonesia Papua Metal Dan Mineral (PTI)) to ~~remeasure its pension assets~~retain the economics of the revenue and ~~pension benefit obligation as~~cost sharing arrangements under PT-FI’s joint venture formerly with Rio Tinto Plc (refer to Note 2 of ~~June 30, 2017.~~FCX’s 2018 Form 10-K). The ~~discount rate and rate~~economics replacement agreement entitles FCX to approximately 81 percent of ~~compensation increase used for~~PT-FI dividends paid during the ~~June 30, 2017, remeasurement were 7.50~~Initial Period, with the remaining 19 percent ~~and 4.00 percent, respectively, compared~~ paid to the December 31, 2016, discount rate of 8.25 percent and the rate of compensation increase of 8.00 percent. The expected long-term rate of return on the plan assets was unchanged (7.75 percent). The remeasurement and curtailment resulted in the projected benefit obligation declining by $145 million and plan assets declining by $21 million. In addition, PT-FI recognized a curtailmentnoncontrolling interests. PT-FI’s net loss ~~of $4 million~~ in second-quarter ~~2017~~2019 totaled $56 million, of which $46 million was attributed to FCX, and for the first ~~nine~~six months of ~~2017. As~~2019 totaled $4 million, of ~~September~~which $3 million was attributed to FCX. PT-FI’s cumulative net loss since the December 21, 2018, transaction date through June 30, ~~2017, the funded status~~2019, totaled $140 million, of which $114 million was attributed to FCX.

The above-described attribution of PT-FI’s ~~pension plan was a~~ net ~~asset~~income or loss applies only through the Initial Period. Beginning January 1, 2023, the attribution of ~~$36 million (included in other assets in the consolidated balance sheet), compared with a~~PT-FI’s net ~~liability of $90 million (included in other liabilities in the consolidated balance sheet) as of December 31, 2016.~~

~~Oil~~income or loss will be based on equity ownership percentages (48.76 percent for FCX, 26.24 percent for PT Inalum and ~~Gas Properties.~~ ~~During 2016, FCX Oil & Gas LLC (FM O&G, a wholly owned subsidiary of FCX) determined the carrying values of certain~~25.00 percent for PTI). For all of its unevaluated properties were impaired. During the first nine months of 2016, FM O&G transferred $3.2 billion of costs (including $3.1 billion in first-quarter 2016) associated with unevaluated properties to the full cost pool, mostly reflecting impairment of the carrying values of unevaluated properties. The transfer of unevaluated properties to the full cost pool, along with the impact of the reduction in twelve-month historical prices and reserve revisions in 2016 caused net capitalized costs to exceed the related ceiling test limitation under full cost accounting rules. As a result, FM O&G recognized impairment charges of $239 million in third-quarter 2016 and $4.3 billion for the first nine months of 2016. Refer to Note 1 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, for further discussion.

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~~NOTE 2. DISPOSITIONS~~

~~TF Holdings Limited - Discontinued Operations.~~other partially owned consolidated subsidiaries, FCX ~~had~~a~~70 percent interest in TFHL, which owns 80 percent of Tenke Fungurume Mining S.A. (TFM or Tenke) located in the Democratic Republic of Congo (DRC). On~~ ~~November 16, 2016, FCX completed the sale of its interest in TFHL to China Molybdenum Co., Ltd. (CMOC) for~~ ~~$2.65 billion~~ ~~in cash (before closing adjustments) and contingent consideration of up to~~ ~~$120 million~~ ~~in cash, consisting of~~ ~~$60 million~~ ~~if the average copper price exceeds~~ ~~$3.50~~ ~~per pound and~~ ~~$60 million~~ ~~if the average cobalt price exceeds~~ ~~$20~~ ~~per pound, both during calendar years~~ ~~2018~~ ~~and~~ ~~2019~~. The contingent consideration is considered a derivative, and at September 30, 2017, the related fair value of $58 million was recorded in other assets on the consolidated balance sheets. During the first nine months of 2017, the fair value of the contingent consideration derivative increased by $45 million ($3 million in third-quarter 2017), primarily resulting from higher cobalt prices, and was recorded inattributes net income ~~(loss) from discontinued operations.~~

In accordance with accounting guidance, FCX has reported the results of operations of TFHL as discontinued operations in the consolidated statements of operations. The consolidated statements of cash flows are reported on a combined basis without separately presenting discontinued operations.

~~Net income (loss) from discontinued operations in the consolidated statements of operations consists of the following (in millions):~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues $ —
$ 261
^a
$ 13
^a
$ 819
^a
Costs and expenses:
Production and delivery costs —
248
—
730

Depreciation, depletion and amortization —

—
—
80

Interest expense allocated from parent —
12
^b
—
33
^b
Other costs and expenses, net —
4
—
10

Income (loss) before income taxes and net gain (loss) on disposal —
(3 ) 13
(34 )
Net gain (loss) on disposal 3
^c
(5 )
^d
41
^c
(182 )
^d
Net income (loss) before income taxes 3
(8 ) 54
(216 )
Benefit from (provision for) income taxes —
2
(4 ) 25

Net income (loss) from discontinued operations $ 3
$ (6 ) $ 50
$ (191 )


a.	In accordance with accounting guidance, amounts are net of (eliminations) recognition of intercompany sales totaling $(53) million in third-quarter 2016, $13 million for the first nine months of 2017 and $(125) million for the first nine months of 2016.


b.	~~In accordance with accounting guidance, interest associated with FCX’s term loan that was required to be repaid as a result of the sale of TFHL has been allocated to discontinued operations.~~


c.	~~Includes a gain of $3 million in third-quarter 2017 and $45 million for the first nine months of 2017 associated with the change in the fair value of contingent consideration.~~


d.	~~In accordance with accounting guidance, an estimated loss on disposal was recorded and adjusted through closing of the transaction in November 2016.~~

~~Cash flows from discontinued operations included in the consolidated statements of cash flows for the nine months ended September 30, 2016, follow (in millions):~~

Net cash provided by operating activities $ 213
Net cash used in investing activities (71 )
Net cash used in financing activities (103 )
Increase in cash and cash equivalents in assets held for sale $ 39

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~~Oil and Gas Operations.~~On July 31, 2017, FM O&G sold certain property interests in the Gulf of Mexico Shelf for cash consideration of $62 million, before closing adjustments, with an effective date of April 1, 2017. On March 17, 2017, FM O&G sold property interests in the Madden area in central Wyoming for cash consideration of $17.5 million, before closing adjustments. Under the full cost accounting rules, the sales resulted in the recognition of gains of $33 million in third-quarter 2017 and $49 million for the first nine months of 2017 because the reserves associated with these properties were significant to the full cost pool.

On June 17, 2016, FM O&G sold certain oil and gas royalty interests for cash consideration of $102 million, before closing adjustments. In addition, on July 25, 2016, FM O&G sold its Haynesville shale assets for cash consideration of $87 million, before closing adjustments. Under the full cost accounting rules, the proceeds from these transactions were recorded as a reduction to capitalized oil and gas properties, with no gain or loss ~~recognition for the first nine months~~based on equity ownership percentages.

Agreement to Sell a Portion of ~~2016 because the reserves were not significant~~Cobalt Business. In second-quarter 2019, FCX entered into an agreement to ~~the full cost pool.~~

~~Morenci.~~ ~~On May 31, 2016, FCX sold a 13 percent undivided interest in~~sell its Morenci unincorporated joint venture to SMM Morenci, Inc. for $1.0 billion in cash. FCX recorded a $576 million gain for the first nine months of 2016 and used losses to offset cash taxes on the transaction. A portion of the proceeds from the transaction was used to repay borrowings under FCX's unsecured bank term loan and revolving credit facility. As a result of the transaction, the unincorporated joint venture is owned 72 percent by FCX, 15 percent by Sumitomo Metal Mining Arizona, Inc. and 13 percent by SMM Morenci, Inc.

~~Timok.~~ On May 2, 2016, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of FCX, sold an interest in the Timok exploration project in Serbia to Global Reservoir Minerals Inc. (now known as Nevsun Resources, Ltd.) for consideration of $135 million in cash and contingent consideration of up to $107 million payable to FCX in stages upon achievement of defined development milestones. As a result of this transaction, FCX recorded a gain of $133 million for the first nine months of 2016, and no amounts were recorded for contingent consideration under the loss recovery approach.

~~Assets Held for Sale.~~ ~~Freeport Cobalt includes the large-scale~~ cobalt refinery in Kokkola, Finland, and related cobalt cathode precursor business (consisting of approximately $135 million of assets and $20 million of liabilities at June 30, 2019)for total consideration of approximately $150 million, plus working capital at the ~~related sales~~time of closing. FCX and marketing business, in which FCX owns an effective 56 percent interest. Kisanfu is a copper and cobalt exploration project, located near Tenke, in which FCX holds a 100 percent interest. As a result of the ~~sale of TFHL, FCX expects to sell its~~current noncontrolling interest partners in Freeport Cobalt ~~and Kisanfu, and~~will retain the ~~assets and liabilities~~remaining cobalt business. The transaction is expected to close by year-end 2019. Lundin Mining Corporation, which is one of the noncontrolling interest partners, is entitled to receive 30 percent of the proceeds from this transaction. In addition to customary closing conditions, including regulatory approvals, prior to completing the transaction, Freeport Cobalt ~~and Kisanfu are classified as~~is required to be segregated into two separate businesses. FCX evaluated the criteria required for assets held for sale inclassification and concluded that this transaction did not meet all of the consolidated balance sheets. During the first nine months of 2017, a favorable adjustment of $13 million was recorded in net gain on sales of assets in the consolidated statements of operations associated with the estimated fair value less costs to sell for the Kisanfu exploration project. The adjustment was limited to the reduction in the carrying value when the Kisanfu exploration project was initially classified as held for sale in November 2016.

criteria at June 30, 2019.

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NOTE 3.2. EARNINGS PER SHARE

FCX calculates its basic net (loss) income ~~(loss)~~ per share of common stock under the two-class method and calculates its diluted net (loss) income ~~(loss)~~ per share of common stock using the more dilutive of the two-class method or the treasury-stock method. Basic net (loss) income ~~(loss)~~ per share of common stock was computed by dividing net (loss) income ~~(loss)~~ attributable to common stockholders ~~(after deducting accumulated dividends and undistributed earnings to participating securities)~~ by the weighted-average shares of common stock outstanding during the period. Diluted net (loss) income ~~(loss)~~ per share of common stock was calculated by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all potential dilutive shares of common stock, unless their effect would be anti-dilutive.

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Reconciliations of net (loss) income ~~(loss)~~ and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted net (loss) income ~~(loss)~~ per share follow (in millions, except per share amounts):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Net (loss) income from continuing operations	$	(74	)	$	1,039		$	1		$	1,867
Net loss (income) from continuing operations attributable to noncontrolling interests	2			(166		)	(43		)	(291		)
Undistributed earnings allocated to participating securities	(3		)	(3		)	(3		)	(4		)
Net (loss) income from continuing operations attributable to common stockholders	(75		)	870			(45		)	1,572

Net (loss) income from discontinued operations attributable to common stockholders	—			(4		)	1			(15		)


Net (loss) income attributable to common stockholders	$	(75	)	$	866		$	(44	)	$	1,557

Basic weighted-average shares of common stock outstanding	1,451			1,449			1,451			1,449
Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units^a	—			9			—			9
Diluted weighted-average shares of common stock outstanding	1,451			1,458			1,451			1,458

Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.05	)	$	0.60		$	(0.03	)	$	1.08
Discontinued operations	—			—			—			(0.01		)
	$	(0.05	)	$	0.60		$	(0.03	)	$	1.07
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.05	)	$	0.59		$	(0.03	)	$	1.08
Discontinued operations	—			—			—			(0.01		)
	$	(0.05	)	$	0.59		$	(0.03	)	$	1.07

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income (loss) from continuing operations $ 242
$ 292
$ 836
$ (4,034 )
Net loss (income) from continuing operations attributable to noncontrolling interests 35
(37 ) (106 ) (146 )
Preferred dividends on redeemable noncontrolling interest —
(10 ) —
(31 )
Undistributed earnings allocated to participating securities (3 ) (3 ) (3 ) (3 )
Net income (loss) from continuing operations attributable to common stockholders $ 274
$ 242
$ 727
$ (4,214 )

Net income (loss) from discontinued operations $ 3
$ (6 ) $ 50
$ (191 )
Net income from discontinued operations attributable to noncontrolling interests —
(22 ) (4 ) (44 )
Net income (loss) from discontinued operations attributable to common stockholders $ 3
$ (28 ) $ 46
$ (235 )

Net income (loss) attributable to common stockholders $ 277
$ 214
$ 773
$ (4,449 )

Basic weighted-average shares of common stock outstanding 1,448
1,346
1,447
1,289

Add shares issuable upon exercise or vesting of dilutive stock options and restricted stock units 6
5
6
—
^a
Diluted weighted-average shares of common stock outstanding 1,454
1,351
1,453
1,289

Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations $ 0.19
$ 0.18
$ 0.50
$ (3.27 )
Discontinued operations —
(0.02 ) 0.03
(0.18 )
$ 0.19
$ 0.16
$ 0.53
$ (3.45 )


a.	Excludes 12approximately 10 million shares of common stock in second-quarter 2019, 2 million insecond-quarter2018, 12 million for the first ~~nine~~six months of ~~2016~~2019 and 3 million for the first six months of 2018 associated with outstanding stock options with exercise prices less than the average market price of FCX’s common stock ~~and restricted stock units~~ that were anti-dilutive.

Outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net (loss) income ~~(loss)~~ per share of common stock. Stock options for 3843 million shares of common stock ~~were excluded for third-quarter 2017, 46~~in second-quarter 2019, 35 million ~~for third-quarter 2016, 42~~shares in second-quarter 2018, 41 million shares for the first ~~nine~~six months of ~~2017~~2019 and 4634 million shares for the first ~~nine~~six months of ~~2016.~~2018 were excluded.

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NOTE 4.3. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):



	June 30, 2019		December 31, 2018
Current inventories:
Total materials and supplies, net^a	$	1,634	$	1,528

Mill stockpiles	$	227	$	282
Leach stockpiles	1,125		1,171
Total current mill and leach stockpiles	$	1,352	$	1,453

Raw materials (primarily concentrate)	$	295	$	260
Work-in-process	156		192
Finished goods	940		1,326
Total product	$	1,391	$	1,778

Long-term inventories:
Mill stockpiles	$	254	$	265
Leach stockpiles	1,093		1,049
Total long-term mill and leach stockpiles^b	$	1,347	$	1,314

September 30,
2017 December 31, 2016
Current inventories:
Total materials and supplies, net^a
$ 1,276
$ 1,306

Mill stockpiles $ 336
$ 259

Leach stockpiles 1,057
1,079

Total current mill and leach stockpiles $ 1,393
$ 1,338

Raw materials (primarily concentrate) $ 285
$ 255

Work-in-process 154
114

Finished goods 749
629

Total product inventories $ 1,188
$ 998

Long-term inventories:
Mill stockpiles $ 346
$ 487

Leach stockpiles 1,107
1,146

Total long-term mill and leach stockpiles^b
$ 1,453
$ 1,633


a.	Materials and supplies inventory was net of obsolescence reserves totaling ~~$31~~$24 million at ~~September~~June 30, ~~2017,~~2019, and ~~$29 million at~~ December 31, ~~2016.~~2018.


b.	Estimated metals in stockpiles not expected to be recovered within the next 12 months.

FCX recorded charges of $2 million in second-quarter 2019 and $59 million for the first six months of 2019 to adjust metals inventory carrying values to net realizable value, primarily for cobalt inventory because of lower cobalt market prices.

NOTE 5.4. INCOME TAXES

Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate. FCX’s consolidated effective income tax rate was 47101 percent for the first ~~nine~~six months of ~~2017~~2019 and ~~(2)~~35 percent for the first ~~nine~~six months of ~~2016.~~2018. Geographic sources of FCX’s benefit from (provision for) ~~benefit from~~ income taxes follow (in millions):



	Six Months Ended
	June 30,
	2019				2018
U.S. operations	$	20		^a	$	8		^b
International operations	(110		)		(1,029		)
Total	$	(90	)		$	(1,021	)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
U.S. operations^a
$ 2
$ 331
$ 24
$ 293

International operations (389 )
^b
(217 ) (771 )
^b
(372 )
Total $ (387 ) $ 114
$ (747 ) $ (79 )

Includes ~~net~~a tax ~~(charges) credits~~credit of ~~$(10)~~$18 million ~~for third-quarter 2017 and $21 million for the first nine months of 2017~~primarily associated with alternative minimum tax credit carryforwards. The third quarter and first nine months of 2016 include net tax credits of $332 million and $290 million, respectively, associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims.state law changes.

Includes ~~net charges~~a tax credit of $2$5 million associated with the ~~Cerro Verde mining royalties dispute, consisting~~settlement of a state income tax charges of $127 million for disputed royalties and other related mining taxes for the period October 2011 through the year 2013 (when royalties were determined based on operating income), mostly offset by a tax benefit of $125 million associated with disputed royalties and other related mining taxes for the period December 2006 through the year 2013.examination.

As a result of the unfavorable Peruvian Supreme Court ruling on the Cerro Verde royalty dispute, FCX recorded pre-tax charges of $357 million to income from continuing operations and $2 million of net tax expense for the first nine months of 2017. FCX’sFCX's consolidated effective income tax rate ~~was~~ ~~39 percent~~for the first ~~nine~~six months of ~~2017 excluding these charges.~~

As2019 is a ~~result~~function of the ~~impairment to U.S. oil and gas properties, FCX recorded~~combined effective tax ~~charges of $1.6 billion~~rates for the jurisdictions in which FCX operates, excluding the U.S. jurisdiction. Because FCX's U.S. jurisdiction generated net losses in the first ~~nine~~six months of ~~2016 to establish a valuation allowance primarily against U.S. federal and state deferred tax assets~~2019 that will not ~~generate~~result in a ~~future benefit. FCX’s consolidated~~realized tax benefit, applicable accounting rules require FCX to adjust its estimated annual effective ~~income~~ tax rate ~~was 32 percent for~~to exclude the ~~first nine months~~impact of ~~2016 excluding these tax charges.~~U.S. net losses.

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NOTE 6.5. DEBT AND EQUITY

The components of debt follow (in millions):



	June 30, 2019			December 31, 2018
Senior notes and debentures:
Issued by FCX	$	8,595		$	9,594
Issued by Freeport Minerals Corporation (FMC)	357			358
Cerro Verde credit facility	825			1,023
Other	139			166
Total debt	9,916			11,141
Less current portion of debt	(4		)	(17		)
Long-term debt	$	9,912		$	11,124

September 30,
2017 December 31, 2016
Senior notes and debentures:
Issued by FCX $ 12,811
$ 13,745
Issued by FMC 358
359
Issued by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC) 122
267
Cerro Verde credit facility 1,486
1,390
Cerro Verde shareholder loans —
261
Other 5
5
Total debt^a
14,782
16,027
Less current portion of debt (2,215 ) (1,232 )
Long-term debt $ 12,567
$ 14,795


a.	Includes additions for unamortized fair value adjustments totaling $131 million at September 30, 2017 ($179 million at December 31, 2016), and is net of reductions for unamortized net discounts and unamortized debt issuance costs totaling $92 million at September 30, 2017 ($100 million at December 31, 2016).

Revolving Credit Facility. At ~~September~~June 30, ~~2017,~~2019, there were no borrowings outstanding and $3613 million in letters of credit issued under FCX’s revolving credit facility, resulting in availability of approximately $3.5 billion, of which approximately $1.5 billion could be used for additional letters of credit.

~~Senior Notes Issued by FCX.~~ ~~In March 2017,~~On May 2, 2019, FCX’s ~~2.15% Senior Notes matured, and the $500 million outstanding principal balance was repaid.~~

~~Cerro Verde Credit Facility and Shareholder Loans.~~ ~~In June 2017, Cerro Verde’s~~$3.5 billion revolving credit facility was amended to ~~increase~~extend $3.26 billion of the ~~commitment~~facility by ~~$225~~one year to April 20, 2024. The remaining $240 million to ~~$1.5 billion, modify~~ matures on April 20, 2023. In addition, the ~~amortization schedule and to extend the maturity date to June 19, 2022. The amended credit facility amortizes in four installments, with~~ ~~$225 million~~ ~~due on December 31, 2020, $225 million due on June 30, 2021,~~ ~~$525 million~~ ~~due on December 31, 2021, and the remaining balance due on the maturity date of June 19, 2022. All other terms, including the interest rates, remain the same. The interest rate on Cerro Verde's~~revolving credit facility was ~~3.14 percent~~ ~~at September 30, 2017. Cerro Verde~~amended to modify the calculation of the total debt component used ~~proceeds from its amended~~to determine the total leverage ratio by increasing the amount of unrestricted cash that may be applied to reduce the amount of total debt. There were no other substantive modifications to the revolving credit ~~facility plus available cash to repay the balance~~facility.

Senior Notes. On March 27, 2019, FCX redeemed all of its ~~shareholder loans in June 2017. Refer to Note 8~~outstanding $1.0 billion aggregate principal amount of ~~FCX’s annual report on Form 10-K for the year ended December 31, 2016, for further discussion.~~

~~Table of Contents~~

~~Exchanges and Early Extinguishment of Debt.~~ ~~During third-quarter 2017, FCX redeemed in full certain senior notes. A summary~~3.100% Senior Notes due 2020. Holders of these ~~early debt extinguishments follows (in millions):~~

Principal Amount Net Adjustments Book Value Redemption Value Gain
FCX 6.125% Senior Notes due 2019 $ 179
$ 5
$ 184
$ 182
$ 2
FM O&G 6.125% Senior Notes due 2019 58
2
60
59
1
FCX 6.625% Senior Notes due 2021 228
12
240
234
6
FM O&G 6.625% Senior Notes due 2021 33
2
35
34
1
FM O&G 6.75% Senior Notes due 2022 45
2
47
46
1
$ 543
$ 23
$ 566
$ 555
$ 11

~~Partially offsetting~~senior notes received the ~~$11 million gain~~principal amount together with the redemption premium and accrued and unpaid interest up to the redemption date. As a result of this redemption, FCX recorded a loss on early extinguishment of ~~certain senior notes was a net loss~~debt totaling $5 million in first-quarter 2019.

Cerro Verde Credit Facility. In March 2019, Cerro Verde prepaid $200 million of ~~$3 million, primarily associated with the modification of Cerro Verde’s~~its credit facility, ~~in second-quarter 2017.~~

~~During the second and third quarters of 2016, FCX redeemed certain senior notes in exchange for its common stock,~~ which resulted in ~~gains~~a $1 million loss recorded to early extinguishment of ~~$15~~debt in first-quarter 2019.

Interest Expense, Net. Consolidated interest costs totaled $167 million in ~~third-quarter 2016 and $54~~second-quarter 2019, $165 million in second-quarter 2018, $345 million for the first ~~nine~~six months of ~~2016. Partially offsetting the gains were $3 million in losses, primarily associated with the modification of FCX’s revolving credit facility in first-quarter 2016. Refer to Notes 8~~2019 and ~~10 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, for further discussion.~~

~~Interest Expense, Net.~~ Consolidated interest costs from continuing operations (before capitalization and excluding $141 million of interest expense associated with disputed Cerro Verde royalties recorded in third-quarter 2017) totaled $196 million in third-quarter 2017, $211 million in third-quarter 2016, $583$341 million for the first ~~nine~~six months of ~~2017 and $647 million for the first nine months of 2016.~~2018. Capitalized interest added to property, plant, equipment and mine development costs, net, totaled ~~$33~~$35 million in ~~third-quarter 2017, $24~~second-quarter 2019, $23 million in ~~third-quarter 2016, $91~~second-quarter 2018, $67 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$66~~$48 million for the first ~~nine~~six months of ~~2016. Capitalized interest added~~2018.

Common Stock. On June 26, 2019, FCX declared a quarterly cash dividend of $0.05 per share on its common stock, which was paid on August 1, 2019, to ~~oil and gas properties not subject to amortization totaled $7 million for the first nine months~~common stockholders of ~~2016 (none in third-quarter 2016 or 2017).~~record as of July 15, 2019.

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NOTE 7.6. FINANCIAL INSTRUMENTS

FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates.

Commodity Contracts. From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions. As of ~~September~~June 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, FCX had no price protection contracts relating to its mine production. A discussion of FCX’s derivative contracts and programs follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod customers request a fixed market price instead of the Commodity Exchange Inc. (COMEX) average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures or swap contracts. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2019 and ~~2016.~~2018. At ~~September~~June 30, ~~2017,~~2019, FCX held copper futures and swap contracts that qualified for hedge accounting for 4674 million pounds at an average contract price of ~~$2.83~~$2.76 per pound, with maturities through ~~June 2019.~~December 2020.

~~Table of Contents~~

A summary of (losses) gains ~~(losses)~~ recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, ~~along with~~including the unrealized gains (losses) on the related hedged item follows (in millions):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Copper futures and swap contracts:
Unrealized (losses) gains:
Derivative financial instruments	$	(13	)	$	(4	)	$	5		$	(19	)
Hedged item – firm sales commitments	13			4			(5		)	19

Realized (losses) gains:
Matured derivative financial instruments	(3		)	—			(1		)	2

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments $ —
$ 1
$ (1 ) $ 11
Hedged item – firm sales commitments —
(1 ) 1
(11 )

Realized gains (losses):
Matured derivative financial instruments 12
—
21
(8 )

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. ~~As described in Note 1 to FCX’s annual report on Form 10-K for the year ended December 31, 2016, under “Revenue Recognition,” certain~~ Certain FCX ~~copper~~ concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) copper price or the COMEX copper price and the London Bullion Market Association ~~(London)~~(LBMA) gold price at the time of shipment as specified in the contract. ~~Similarly,~~ FCX ~~purchases~~receives market prices based on prices in the specified future month, which results in price fluctuations recorded in revenues until the date of settlement. FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper ~~under~~prices and the LBMA gold prices as specified in the contracts, which results in an embedded derivative (i.e., a pricing mechanism that ~~provide for provisional pricing.~~is finalized after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale of the metals contained in the concentrate or cathode at the then-current LME or COMEX copper price, and the LBMA gold price. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host contract in its concentrate or cathode sales agreements since ~~the~~these contracts do not allow for net settlement and always result in physical delivery. ~~Sales and purchases with a provisional sales price contain an~~The embedded derivative (~~i.e.~~,does not qualify for hedge accounting and is adjusted to fair value through earnings each period, using the price settlement mechanism is settled after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale or purchase of the metals contained in the concentrate or cathode at the then-currentperiod-end LME or COMEX copper ~~price or~~forward prices and the ~~London~~adjusted LBMA gold ~~price as defined in~~prices, until the ~~contract.~~date of final pricing. Similarly, FCX purchases copper and cobalt under contracts that provide for provisional pricing. Mark-to-market price fluctuations from these embedded derivatives ~~related to continuing operations~~ are recorded through the settlement date and are reflected in revenues for sales contracts and in ~~cost of sales as production and delivery costs~~inventory for purchase contracts. Mark-to-market price fluctuations associated with embedded derivatives for discontinued operations, which were minimal, are included in discontinued operations for all periods presented in these financial statements.

Table of Contents

A summary of FCX’s embedded derivatives at ~~September~~June 30, ~~2017,~~2019, follows:



	Open Positions	Average Price Per Unit				Maturities Through
	Open Positions	Contract		Market		Maturities Through
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	505	$	2.79	$	2.72	November 2019
Gold (thousands of ounces)	74	1,328		1,416		August 2019
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	86	2.83		2.72		September 2019
Cobalt (millions of pounds)	6	10.56		8.88		September 2019

Open Positions
Average Price
Per Unit
Maturities Through
Contract Market
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds) 546
$ 2.84
$ 2.93
February 2018
Gold (thousands of ounces) 194
1,318
1,287
December 2017
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds) 155
2.83
2.93
January 2018

Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into copper forward contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in cost of sales. At ~~September~~June 30, ~~2017,~~2019, Atlantic Copper held net copper forward ~~purchase~~sales contracts for 52 million pounds at an average contract price of ~~$2.95~~$2.66 per pound, with maturities through ~~October 2017.~~July 2019.

~~Table of Contents~~

Summary of ~~Gains~~ (Losses). Gains. A summary of the realized and unrealized (losses) gains ~~(losses)~~ recognized in operating income ~~(loss)~~ for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Embedded derivatives in provisional copper and gold
sales contracts^a
$ 137
$ 12
$ 297
$ 88
Copper forward contracts^b
(9 ) (1 ) (14 ) 4



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Embedded derivatives in provisional sales contracts:^a
Copper	$	(122	)	$	(14	)	$	—		$	(149	)
Gold and other metals	13			(30		)	11			(12		)
Copper forward contracts^b	(4		)	6			(3		)	8


a.	Amounts recorded in revenues.


b.	Amounts recorded in cost of sales as production and delivery costs.

Unsettled Derivative Financial Instruments

A summary of the fair values of unsettled commodity derivative financial instruments follows (in millions):



	June 30, 2019		December 31, 2018
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	1	$	—
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper, gold and cobalt
sales/purchase contracts	41		23
Total derivative assets	$	42	$	23

Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Copper futures and swap contracts	$	5	$	9
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper, gold and cobalt
sales/purchase contracts	51		39
Total derivative liabilities	$	56	$	48

September 30,
2017 December 31, 2016
Commodity Derivative Assets:
Derivatives designated as hedging instruments:

Copper futures and swap contracts $ 7
$ 9
Derivatives not designated as hedging instruments:

Embedded derivatives in provisional copper and gold
sales/purchase contracts 74
137
Total derivative assets $ 81
$ 146

Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:

Copper futures and swap contracts $ 2
$ 2
Derivatives not designated as hedging instruments:

Embedded derivatives in provisional copper and gold
sales/purchase contracts 46
56
Total derivative liabilities $ 48
$ 58

~~Table of Contents~~

FCX’s commodity contracts have netting arrangements with counterparties with which the right of offset exists, and it is FCX’s policy to generally offset balances by ~~counterparty~~contract on its balance sheet. FCX’s embedded derivatives on provisional sales/purchase contracts are netted with the corresponding outstanding receivable/payable balances.

Table of Contents

A summary of these unsettled commodity contracts that are offset in the balance sheets follows (in millions):



	Assets				Liabilities
	June 30, 2019		December 31, 2018		June 30, 2019		December 31, 2018

Gross amounts recognized:
Embedded derivatives in provisional
sales/purchase contracts	$	41	$	23	$	51	$	39
Copper derivatives	1		—		5		9
	42		23		56		48

Less gross amounts of offset:
Embedded derivatives in provisional
sales/purchase contracts	4		7		4		7
Copper derivatives	1		—		1		—
	5		7		5		7

Net amounts presented in balance sheet:
Embedded derivatives in provisional
sales/purchase contracts	37		16		47		32
Copper derivatives	—		—		4		9
	$	37	$	16	$	51	$	41

Balance sheet classification:
Trade accounts receivable	$	26	$	3	$	22	$	24
Accounts payable and accrued liabilities	11		13		29		17
	$	37	$	16	$	51	$	41

Assets Liabilities
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016

Gross amounts recognized:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts $ 74
$ 137
$ 46
$ 56
Copper derivatives 7
9
2
2
81
146
48
58

Less gross amounts of offset:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts 1
12
1
12
Copper derivatives 2
2
2
2
3
14
3
14

Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts 73
125
45
44
Copper derivatives 5
7
—
—
$ 78
$ 132
$ 45
$ 44

Balance sheet classification:
Trade accounts receivable $ 69
$ 119
$ 24
$ 13
Other current assets 5
7
—
—
Accounts payable and accrued liabilities 4
6
21
31
$ 78
$ 132
$ 45
$ 44

Credit Risk. FCX is exposed to credit loss when financial institutions with which it has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties. FCX does not anticipate that any of the counterparties it deals with will default on their obligations. As of ~~September~~June 30, ~~2017,~~2019, the maximum amount of credit exposure associated with derivative transactions was ~~$78~~$37 million.

Other Financial Instruments. Other financial instruments include cash and cash equivalents, restricted cash, restricted cash equivalents, accounts receivable, ~~restricted cash,~~ investment securities, legally restricted funds, accounts payable and accrued liabilities, dividends payable and long-term debt. The carrying value for cash and cash equivalents (which included time deposits of ~~$1.9~~$1.4 billion at ~~September~~June 30, ~~2017,~~2019, and ~~$64 million~~$2.3 billion at December 31, ~~2016)~~2018), restricted cash, restricted cash equivalents, accounts receivable, ~~restricted cash, and~~ accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 87 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, as of ~~September~~June 30, ~~2017,~~2019, FCX has contingent consideration assets related to ~~certain~~the 2016 asset sales of TF Holdings Limited (TFHL), onshore California oil and gas properties and the Deepwater Gulf of Mexico (GOM) oil and gas properties (refer to Note 87 for the related fair ~~value~~values and to Note 2 of FCX’s ~~annual report on~~2018 Form 10-K ~~for the year ended December 31, 2016,~~ for further discussion of these instruments).

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents. The following table provides a reconciliation of total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows (in millions):



	June 30, 2019		December 31, 2018
Balance sheet components:
Cash and cash equivalents	$	2,623	$	4,217
Restricted cash and restricted cash equivalents included in:
Other current assets	218		110
Other assets	165		128
Total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows	$	3,006	$	4,455

Table of Contents

NOTE 8.7. FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). FCX ~~recognizes transfers between levels at the end of the reporting period. FCX~~ did not have any significant transfers in or out of Level ~~1, 2 or~~ 3 ~~for third-quarter 2017.~~during second-quarter 2019.

FCX’s financial instruments are recorded on the consolidated balance sheets at fair value except for contingent consideration associated with the sale of the Deepwater ~~Gulf of Mexico (GOM)~~GOM oil and gas properties (which was recorded under the loss recovery approach) and debt. A summary of the carrying amount and fair value of FCX’s financial instruments (including those measured at net asset value (NAV) as a practical expedient), other than cash and cash equivalents, ~~accounts receivable,~~ restricted cash, ~~and~~restricted cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable (refer to Note 7)6) follows (in millions):


	At September 30, 2017												At June 30, 2019
	Carrying		Fair Value										Carrying		Fair Value
	Amount		Total		NAV		Level 1		Level 2		Level 3		Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	25	$	25	$	25	$	—	$	—	$	—	$	26	$	26	$	26	$	—	$	—	$	—
Money market funds	21		21		—		21		—		—
Equity securities	6		6		—		6		—		—		4		4		—		4		—		—
Total	52		52		25		27		—		—		30		30		26		4		—		—

Legally restricted funds:^a
U.S. core fixed income fund	55		55		55		—		—		—		58		58		58		—		—		—
Government mortgage-backed securities													37		37		—		—		37		—
Government bonds and notes	38		38		—		—		38		—		37		37		—		—		37		—
Corporate bonds	30		30		—		—		30		—		32		32		—		—		32		—
Government mortgage-backed securities	25		25		—		—		25		—
Money market funds	18		18		—		18		—		—
Asset-backed securities	14		14		—		—		14		—		12		12		—		—		12		—
Collateralized mortgage-backed securities	8		8		—		—		8		—		7		7		—		—		7		—
Money market funds													7		7		—		7		—		—
Municipal bonds	1		1		—		—		1		—		1		1		—		—		1		—
Total	189		189		55		18		116		—		191		191		58		7		126		—

Derivatives:
Embedded derivatives in provisional sales/
purchase contracts in a gross asset position^c	74		74		—		—		74		—
Embedded derivatives in provisional copper, gold and cobalt sales/purchase contracts in a gross asset position^c													41		41		—		—		41		—
Copper futures and swap contracts^c	7		7		—		5		2		—		1		1		—		1		—		—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a	80		80		—		—		80		—		79		79		—		—		79		—
Total	161		161		—		5		156		—		121		121		—		1		120		—

Contingent consideration for the sale of the
Deepwater GOM oil and gas properties^a	150		138		—		—		—		138		132		111		—		—		—		111

Total assets			$	540	$	80	$	50	$	272	$	138

Liabilities
Derivatives:^c
Embedded derivatives in provisional sales/
purchase contracts in a gross liability position	46		$	46	$	—	$	—	$	46	$	—
Embedded derivatives in provisional copper, gold and cobalt sales/purchase contracts in a gross liability position													$	51	$	51	$	—	$	—	$	51	$	—
Copper futures and swap contracts	2		2		—		1		1		—		5		5		—		4		1		—
Total	48		48		—		1		47		—		56		56		—		4		52		—

Long-term debt, including current portion^d	14,782		14,735		—		—		14,735		—		9,916		9,861		—		—		9,861		—

Total liabilities			$	14,783	$	—	$	1	$	14,782	$	—

Table of Contents



	At December 31, 2018
	Carrying		Fair Value
	Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	25	$	25	$	25	$	—	$	—	$	—
Equity securities	4		4		—		4		—		—
Total	29		29		25		4		—		—

Legally restricted funds:^a
U.S. core fixed income fund	55		55		55		—		—		—
Government mortgage-backed securities	38		38		—		—		38		—
Government bonds and notes	36		36		—		—		36		—
Corporate bonds	28		28		—		—		28		—
Asset-backed securities	11		11		—		—		11		—
Collateralized mortgage-backed securities	7		7		—		—		7		—
Money market funds	5		5		—		5		—		—
Municipal bonds	1		1		—		—		1		—
Total	181		181		55		5		121		—

Derivatives:
Embedded derivatives in provisional copper, gold and cobalt sales/purchase contracts in a gross asset position^c	23		23		—		—		23		—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a	73		73		—		—		73		—
Total	96		96		—		—		96		—

Contingent consideration for the sale of the
Deepwater GOM oil and gas properties^a	143		127		—		—		—		127

Liabilities
Derivatives:^c
Embedded derivatives in provisional copper, gold and cobalt sales/purchase contracts in a gross liability position	$	39	$	39	$	—	$	—	$	39	$	—
Copper futures and swap contracts	9		9		—		7		2		—
Total	48		48		—		7		41		—

Long-term debt, including current portion^d	11,141		10,238		—		—		10,238		—

At December 31, 2016
Carrying Fair Value
Amount Total NAV Level 1 Level 2 Level 3
Assets
Investment securities:^a,b

U.S. core fixed income fund $ 23
$ 23
$ 23
$ —
$ —
$ —
Money market funds 22
22
—
22
—
—
Equity securities 5
5
—
5
—
—
Total 50
50
23
27
—
—

Legally restricted funds:^a

U.S. core fixed income fund 53
53
53
—
—
—
Government bonds and notes 36
36
—
—
36
—
Corporate bonds 32
32
—
—
32
—
Government mortgage-backed securities 25
25
—
—
25
—
Asset-backed securities 16
16
—
—
16
—
Money market funds 12
12
—
12
—
—
Collateralized mortgage-backed securities 8
8
—
—
8
—
Municipal bonds 1
1
—
—
1
—
Total 183
183
53
12
118
—

Derivatives:
Embedded derivatives in provisional sales/
purchase contracts in a gross asset position^c
137
137
—
—
137
—
Copper futures and swap contracts^c
9
9
—
8
1
—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a
46
46
—
—
46
—
Total 192
192
—
8
184
—

Contingent consideration for the sale of the
Deepwater GOM oil and gas properties^a
150
135
—
—
—
135

Total assets $ 560
$ 76
$ 47
$ 302
$ 135

Liabilities
Derivatives:^c

Embedded derivatives in provisional sales/
purchase contracts in a gross liability position 56
$ 56
$ —
$ —
$ 56
$ —
Copper futures and swap contracts 2
2
—
2
—
—
Total 58
58
—
2
56
—

Contingent payments for the settlements of
drilling rig contracts^e
23
23
—
—
23
—

Long-term debt, including current portion^d
16,027
15,196
—
—
15,196
—

Total liabilities $ 15,277
$ —
$ 2
$ 15,275
$ —


a.	Current portion included in other current assets and long-term portion included in other assets.

Excludes time deposits (which approximated fair value) included in (i) other current assets of ~~$41~~$218 million at ~~September~~June 30, ~~2017,~~2019, and ~~$28~~$109 million at December 31, ~~2016,~~2018, and (ii) other assets of ~~$122~~$164 million at ~~both September~~June 30, ~~2017,~~2019, and $126 millionatDecember 31, ~~2016,~~2018, primarily associated with an assurance bond to support PT-FI’s commitment for the development of a new smelter ~~development~~ in ~~Indonesia.~~Indonesia and PT-FI’s closure and reclamation guarantees.


c.	Refer to Note 76 for further discussion and balance sheet classifications.


d.	Recorded at cost except for debt assumed in acquisitions, which ~~were~~are recorded at fair value at the respective acquisition dates.


e.	~~Included in accounts payable and accrued liabilities.~~

~~Table of Contents~~

Valuation Techniques. The U.S. core fixed income fund is valued at ~~net asset value (NAV).~~NAV. The fund strategy seeks total return consisting of income and capital appreciation primarily by investing in a broad range of investment-grade debt securities, including U.S. government obligations, corporate bonds, mortgage-backed securities, asset-backed securities and money market instruments. There are no restrictions on redemptions (which are usually within one business day of notice).

~~Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.~~

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded and, as such, are classified within Level 1 of the fair value hierarchy.

Table of Contents

Fixed income securities (government securities, corporate bonds, asset-backed securities, collateralized mortgage-backed securities and municipal bonds) are valued using a bid-evaluation price or a mid-evaluation price. A bid-evaluation price is an estimated price at which a dealer would pay for a security. A mid-evaluation price is the average of the estimated price at which a dealer would sell a security and the estimated price at which a dealer would pay for a security. These evaluations are based on quoted prices, if available, or models that use observable inputs and, as such, are classified within Level 2 of the fair value hierarchy.

Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales are valued using ~~only~~ quoted monthly LME or COMEX copper forward prices and the ~~London~~adjusted LBMA gold ~~forward price~~prices at each reporting date based on the month of maturity (refer to Note 76 for further discussion); however, FCX’s contracts themselves are not traded on an exchange. FCX’s embedded derivatives on provisional cobalt purchases are valued using quoted monthly LME cobalt forward prices or average published Metals Bulletin cobalt prices subject to certain adjustments as specified by the terms of the contracts, at each reporting date based on the month of maturity. As a result, these derivatives are classified within Level 2 of the fair value hierarchy.

FCX’s derivative financial instruments for copper futures and swap contracts and copper forward contracts that are traded on the respective exchanges are classified within Level 1 of the fair value hierarchy because they are valued using quoted monthly COMEX or LME prices at each reporting date based on the month of maturity (refer to Note 76 for further discussion). Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy based on COMEX and LME forward prices.

As reported in Note 2 of FCX’s 2018 Form 10-K, in November 2016, FCX’s sale of its interest in TFHL included contingent consideration of up to $120 million in cash, consisting of $60 million if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price exceeds $20 per pound, both during the 24-month period beginning January 1, 2018. The fair value of the contingent consideration ~~for~~derivative associated with the ~~sales~~sale of TFHL was $59 million at June 30, 2019 (included in other current assets in the consolidated balance sheet), and $57 million at December 31, 2018 (included in other assets). Future changes in the fair value of this contingent consideration derivative will continue to be recorded in discontinued operations. Also in 2016, FCX’s sale of its onshore California oil and gas properties isincluded contingent consideration of up to $150 million, consisting of $50 million per year for 2018, 2019 and 2020 if the price of Brent crude oil averages over $70 per barrel in each of these calendar years. The fair value of the contingent consideration derivative associated with the sale of the onshore California oil and gas properties was $20 million at June 30, 2019 ($7 million included in other current assets and $13 million in other assets), and $16 million at December 31, 2018 (included in other assets). Future changes in the fair value of this contingent consideration derivative will continue to be recorded in operating income. Also, contingent consideration of $50 million associated with the onshore California oil and gas properties was realized in 2018 and collected in first-quarter 2019 (included in proceeds from sales of oil and gas properties in the consolidated statements of cash flows) because the average Brent crude oil price exceeded $70 per barrel for 2018 and was included in other current assets in the consolidated balance sheet at December 31, 2018. These fair values were calculated based on average commodity price forecasts through applicable maturity dates using a ~~Monte Carlo~~Monte-Carlo simulation model. The models use various observable inputs, including Brent crude oil forward prices, historical copper and cobalt prices, volatilities, discount rates and settlement terms. As a result, these contingent consideration assets are classified within Level 2 of the fair value hierarchy.

~~The fair value~~As reported in Note 2 of ~~contingent consideration for the~~FCX’s 2018 Form 10-K, in December 2016, FCX’s sale of its Deepwater GOM oil and gas properties isincluded up to $150 million in contingent consideration that was recorded at the total amount under the loss recovery approach. The contingent consideration will be received over time as future cash flows are realized in connection with a third-party production handling agreement for an offshore platform. The first collection occurred in third-quarter 2018. The contingent consideration included in (i) other current assets totaled $14 million at June 30, 2019, and $27 million at December 31, 2018, and (ii) other assets totaled $118 million at June 30, 2019, and $116 million at December 31, 2018. The fair value of this contingent consideration was calculated based on a discounted cash flow model using inputs that include third-party ~~reserve~~ estimates for reserves, production rates and production timing, and discount rates. Because significant inputs are not observable in the market, the contingent consideration is classified within Level 3 of the fair value hierarchy.

~~The December 31, 2016, fair value~~

Table of contingent payments for the settlements of drilling rig contracts was calculated based on the average price forecasts of West Texas Intermediate (WTI) crude oil over the 12-month period ending June 30, 2017, using a mean-reverting model. The model used various observable inputs, including WTI crude oil forward prices, volatilities, discount rate and settlement terms. As a result, these contingent payments were classified within Level 2 of the fair value hierarchy. The contingency period for FM O&G’s drilling rig contract settlements ended June 30, 2017, and no additional amounts were paid.Contents

Long-term debt, including current portion, is valued using available market quotes and, as such, is classified within Level 2 of the fair value hierarchy.

The techniques described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the techniques used at ~~September~~June 30, ~~2017,~~2019, as compared towith those techniques used at December 31, ~~2016.~~2018.

~~Table of Contents~~

A summary of the changes in the fair value of FCX’s Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, during the first ~~nine~~six months of ~~2017~~2019 follows (in millions):



Fair value at January 1, 2019	$	127
Net unrealized loss related to assets still held at the end of the period	(5		)
Settlements	(11		)
Fair value at June 30, 2019	$	111

Fair value at January 1, 2017 $ 135

Net unrealized gain related to assets still held at the end of the period 3

Fair value at September 30, 2017 $ 138

NOTE 9.8. CONTINGENCIES AND COMMITMENTS

~~Environmental~~

~~Historical Smelter Sites — Borough of Carteret~~

As reported in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, from 1920 until 1986, United States Metal Refining Company (USMR), an indirect wholly owned subsidiary of Cyprus Amax Minerals Company, owned and operated a copper smelter and refinery in the Borough of Carteret, New Jersey, on the banks of the Arthur Kill (a narrow waterway that separates New Jersey from Staten Island). As a result of recent off-site soil sampling in public and private areas near the former smelter, FCX increased its associated environmental obligation for known and potential off-site environmental remediation by recording a $59 million charge to operating income in third-quarter 2017. Additional sampling is ongoing and could result in additional adjustments to the related environmental remediation obligation.

~~Uranium Mining Sites~~

As reported in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, the Department of Justice, the U.S. Environmental Protection Agency, the Navajo Nation and two FCX-related subsidiaries reached an agreement regarding the scope of environmental investigation and remediation work for 94 former uranium mining sites on tribal lands, and the related financial contributions of the U.S. government and the FCX subsidiaries. The related Consent Decree was approved by the U.S. District Court for the District of Arizona in second-quarter 2017. Based on updated cash flow and timing estimates, FCX reduced its associated obligation for that contingency by recording a $41 million credit to operating income in second-quarter 2017 after receiving court approval of the Consent Decree.

Litigation

~~During third-quarter 2017, there~~There were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s ~~annual~~2018 Form 10-K, other than the matter below, which was updated in Note 8 of FCX’s quarterly report on Form ~~10-K~~10-Q for the ~~year~~quarter ended ~~December~~March 31, ~~2016.~~2019.

As previously disclosed, there has been a significant increase in the number of cases alleging the presence of asbestos contamination in talc-based personal care products and in cases alleging exposure to talc products that are not alleged to be contaminated with asbestos. The primary targets have been the producers of those products, but defendants in many of these cases also include talc miners. Cyprus Amax Minerals Company (CAMC), an indirect wholly owned subsidiary of FCX, and Cyprus Mines Corporation (Cyprus Mines), a wholly owned subsidiary of CAMC, are among those targets. Cyprus Mines was engaged in talc mining from 1964 until 1992 when it exited its talc business by conveying it to a third party in two related transactions. Those transactions involved (i) a transfer by Cyprus Mines of the assets of its talc business to a newly formed subsidiary that assumed all pre-sale and post-sale talc liabilities, subject to limited reservations, and (ii) a sale of the stock of that subsidiary to the third party. In 2011, the third party sold that subsidiary to Imerys Talc America (Imerys), an affiliate of Imerys S.A.

Cyprus Mines has contractual indemnification rights, subject to limited reservations, against Imerys, which has historically acknowledged those indemnification obligations, and had taken responsibility for all cases tendered to it. However, on February 13, 2019, Imerys filed for Chapter 11 bankruptcy protection, which triggered an immediate automatic stay under the federal bankruptcy code prohibiting any party from continuing or initiating litigation or asserting new claims against Imerys. As a result, Imerys is no longer defending the talc lawsuits against Cyprus Mines and CAMC. In addition, Imerys has taken the position that it alone owns, and has the sole right to access, the proceeds of the legacy insurance coverage of Cyprus Mines and CAMC for talc liabilities. In late March 2019, Cyprus Mines and CAMC challenged this position and obtained emergency relief from the bankruptcy court to gain access to the insurance until the question of ownership and contractual access can be decided in an adversary proceeding before the bankruptcy court, which is currently scheduled for October 2019.

During first-quarter 2019, in a case pending at the time Imerys filed bankruptcy, a California jury entered a $29 million verdict against Johnson & Johnson and Cyprus Mines, of which approximately $2 million was attributed to Cyprus Mines. Taking advantage of the temporary access to the insurance authorized by the bankruptcy court, Cyprus Mines used the insurance to fully resolve the case. Cyprus Mines and the insurers also settled several other cases set for trial in recent months, and secured delays or dismissals in other cases. Multiple trials have been scheduled over the remainder of 2019, and others may be scheduled prior to the adversary proceeding regarding the legacy insurance.

Table of Contents

FCX believes that Cyprus Mines and CAMC each has strong defenses to legal liability and that both should have access to the legacy insurance to cover defense costs, settlements and judgments, at least until the bankruptcy court decides otherwise or the insurance is exhausted. At this time, FCX cannot estimate the range of possible loss associated with these proceedings, but it does not currently believe the amount of any such losses are material to its consolidated financial statements. However, there can be no assurance that future developments will not alter this conclusion.

Tax and Other Matters

~~Cerro Verde Royalty Dispute~~

As reported in FCX’s annual report on Form 10-K for the year ended December 31, 2016, and as subsequently updated in Note 9 of FCX’s quarterly report on Form 10-Q for the quarter ended June 30, 2017, SUNAT, Peru’s national tax authority, has assessed mining royalties on ore processed by the Cerro Verde concentrator, which commenced operations in late 2006, for the period December 2006 to September 2011. Cerro Verde contested these assessments because it believes its 1998 stability agreement exempts from royalties all minerals extracted from its mining concession, irrespective of the method used for processing those minerals. No assessments have been issued for the period from October 2011 to December 2013, and no assessments can be issued for years after 2013, as Cerro Verde began paying royalties on all of its production in January 2014 under its new 15-year stability agreement. Since 2014, Cerro Verde has been paying the disputed assessments for the period December 2006 through December 2008 under an installment program ($135 million paid by Cerro Verde through September 30, 2017).

In October 2017, the Peruvian Supreme Court issued a ruling in favor of SUNAT that the assessments of royalties for the year 2008 on ore processed by the Cerro Verde concentrator were proper under Peruvian law.

~~Table of Contents~~

As a result of the unfavorable Peruvian Supreme Court ruling on the 2008 royalty dispute, Cerro Verde recorded pre-tax charges totaling $357 million ($359 million including net tax charges and $188 million net of noncontrolling interests) in third-quarter 2017, consisting of $240 million in royalty assessments, $147 million of penalties and interest related to the December 2006 to December 2008 assessments, and $97 million for related items (primarily associated with the special mining tax and net assets tax) that Cerro Verde would have incurred under the view that its concentrator was not stabilized.

~~A summary of the charges recorded in third-quarter 2017 for the Cerro Verde royalty dispute follows (in millions):~~

Royalty and related assessment charges:
Production and delivery $ 216
^a
Interest expense, net 141

Provision for income taxes 2
^b
Net loss attributable to noncontrolling interests (171 )
$ 188


a.	Includes $176 million related to disputed royalty assessments for the period from December 2006 to September 2011 (when royalties were determined based on revenues), $6 million of penalties related to the December 2006 to December 2008 royalty assessments and $34 million primarily associated with the net assets tax.


b.	Includes tax charges of $127 million for disputed royalties ($64 million) and other related mining taxes ($63 million) for the period October 2011 through the year 2013 when royalties were determined based on operating income, mostly offset by a tax benefit of $125 million associated with disputed royalties and other related mining taxes for the period December 2006 through the year 2013.

Cerro Verde acted in good faith in applying the provisions of its 1998 stability agreement and continues to evaluate alternatives to defend its rights. Cerro Verde intends to seek a waiver available under Peruvian law of penalties and interest associated with this matter and has not recorded charges for potential unpaid penalties and interest totaling $360 million ($193 million net of noncontrolling interests) at September 30, 2017, as FCX believes that Cerro Verde should be successful under Peruvian law in obtaining a waiver. Cerro Verde also intends to file a reimbursement claim with SUNAT for penalties and interest paid under the installment plan for the December 2006 to December 2008 assessments, and may have claims for reimbursement of payments it would not have made in the absence of the stabilization agreement, such as the overpayments made for a special (voluntary) levy (GEM), import duties and civil association contributions. No amounts have been recorded for these potential gain contingencies at September 30, 2017.

~~Other Peru Tax Matters~~

~~There were no significant changes to other Peru tax matters during third-quarter 2017 (refer to Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016).~~

~~Indonesia Tax Matters~~

~~The following information includes a discussion of updates to previously reported Indonesia tax matters included~~discussed in Note 12 of FCX’s ~~annual report on~~2018 Form 10-K, ~~for the year ended December 31, 2016.~~

PT-FI received assessments from the local regional tax ~~authority~~authorities in Papua, Indonesia, for additional taxes and penalties related to surface water ~~taxes for the period from January 2011 through September 2017.~~taxes. In May 2019, PT-FI ~~is filing objections~~agreed to these assessments. During 2017, the Indonesia Tax Court issued rulings against PT-FI with respect to assessments for additional taxes and penalties for the period from January 2011 through December 2015 in the amount of $402pay 1.394 trillion rupiah ($99 million (based on the exchange rate as of September 30, 2017, and including $240 million in penalties). The aggregate amount of assessments received from January 2016 through September 2017 was an additional $114 million, including penalties (based on the exchange rate as of September 30, 2017). No charges have been recorded for these assessments as of September 30, 2017, because PT-FI believes its Contract of Work (COW) exempts it from these payments and that it has the right to contest these assessments (in which FCX estimates the total exposure based on the exchange rate asat June 30, 2019), which will be paid over three years to settle historical disputes. As a result, in second-quarter 2019, PT-FI recorded charges of ~~September 30, 2017, totals $516~~$28 million ~~including penalties)~~to production and delivery costs ($69 million was previously accrued in ~~the Indonesia Tax Court and ultimately the Indonesia Supreme Court. As of November 7, 2017,~~2018 for this matter). In accordance with PT-FI’s special mining license (IUPK), PT-FI ~~has not paid and does not intend~~is also obligated to pay ~~these assessments unless there is a mechanism established to secure a refund for any such payments upon the final court decision. Additionally, PT-FI is seeking to address this matter~~surface water taxes of $15 million annually, beginning in ~~connection with the ongoing negotiations with the Indonesian government to resolve PT-FI’s long-term operating rights.~~2019, which are recognized in production and delivery costs as incurred.

~~Table of Contents~~

~~Indonesia Mining Contract.~~ ~~The following information includes updates to the discussion of PT-FI’s COW included in Note 13 of FCX’s annual report on Form 10-K for the year ended December 31, 2016.~~

In January and February 2017, the Indonesian government issued new regulations to address the export of unrefined metals, including copper concentrate and anode slimes, and other matters related to the mining sector. The new regulations permit the continuation of copper concentrate exports for a five-year period through January 2022, subject to various conditions, including conversion from a contract of work to a special operating license (known as an IUPK, which does not provide the same level of fiscal and legal protections asMarch 2019, PT-FI’s COW, which remains in effect), a commitment to the completion of smelter construction in five years and payment of export duties to be determined by the Ministry of Finance. In addition, the new regulations enable application for an extension of operating rights five years before expiration of the IUPK and require foreign IUPK holders to divest a 51 percent interest in the licensed entity to Indonesian interests no later than the tenth year of production. Export licenses would be valid for one-year periods, subject to review every six months, depending on smelter construction progress.

Following the issuance of the January and February 2017 regulations and discussions with the Indonesian government, PT-FI advised the government that it was prepared to convert its COW to an IUPK, subject to obtaining an investment stability agreement providing contractual rights with the same level of legal and fiscal certainty enumerated under its COW, and provided that the COW would remain in effect until it is replaced by a mutually satisfactory alternative. PT-FI also committed to commence construction of a new smelter during a five-year time frame, following approval of the extension of its long-term operating rights.

~~On January 12, 2017, PT-FI suspended exports in response to Indonesian regulations adopted in January 2014. In addition, as a result of labor disturbances and a delay in the renewal of its~~ export license ~~for anode slimes,~~was extended to March 8, 2020, and PT ~~Smelting’s operations~~Smelting (PT-FI’s 25 percent-owned smelter and refinery in Indonesia) were shut down from January 19, 2017, until early March 2017. On February 10, 2017, PT-FI was forced to suspend production as a result of limited storage capacity at PT-FI and PT Smelting. On April 21, 2017, the Indonesian government issued a permit to PT-FI that allowed exports to resume for a six-month period, and PT-FI commenced export shipments.

~~In mid-February 2017, pursuant to the COW’s dispute resolution process, PT-FI provided formal notice to the Indonesian government of~~received an ~~impending dispute listing the government's breaches and violations of the COW. PT-FI continues to reserve its rights under these provisions.~~

As a result of the 2017 regulatory restrictions and uncertainties regarding long-term investment stability, PT-FI took actions to adjust its cost structure, slow investments in its underground development projects and new smelter, and place certainextension of its ~~workforce on furlough programs.~~anode slimes export license through March 11, 2020.

In late March 2017, the Indonesian government amended the regulations to enable PT-FI to retain its COW until replaced with an IUPK accompanied by an investment stability agreement, and to grant PT-FI a temporary IUPK through October 10, 2017, that would allow concentrate exports to resume during this period. In April 2017, PT-FI entered into a Memorandum of Understanding with the Indonesian government confirming that the COW would continue to be valid and honored until replaced by a mutually agreed IUPK and investment stability agreement. PT-FI agreed to continue to pay a five percent export duty during this period.

In August 2017, FCX and the Indonesian government reached an understanding on a framework that would resolve PT-FI’s long-term operating rights. This framework includes (i) conversion from the COW to an IUPK providing PT-FI with long-term operating rights through 2041, (ii) Indonesian government certainty of fiscal and legal terms during the term of the IUPK, (iii) PT-FI commitment to construct a new smelter in Indonesia within five years of reaching a definitive agreement, and (iv) divestment of 51 percent of the project area interests to Indonesian participants at fair market value structured so that FCX retains control over operations and governance of PT-FI. FCX cannot currently predict whether there will be any material accounting and tax implications associated with the divestment.

The framework requires documentation and execution of a definitive agreement, which must be approved by the FCX Board of Directors and joint venture partner Rio Tinto. The parties continue to negotiate to reach agreement on important aspects of implementation of the framework, including the timing and process of divestment, governance matters, and the determination of fair market value, and to complete documentation on a comprehensive agreement for PT-FI’s operations through 2041. The parties have expressed a mutual objective of completing the negotiations and documentation during 2017.

~~Table of Contents~~

~~Until a definitive agreement is reached, PT-FI has reserved all rights under its COW, including pursuing arbitration under the dispute resolution provisions.~~

NOTE ~~10.~~9. BUSINESS SEGMENTS

FCX has organized its mining operations into four primary divisions – North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX’s reportable segments, which include the Morenci, Cerro Verde and Grasberg (Indonesia Mining) copper mines, the Rod & Refining operations and Atlantic Copper Smelting & Refining.

FCX’s reportable segments previously included U.S. Oil & Gas operations. During 2016, FCX completed the sales of its Deepwater Gulf of Mexico, onshore California and Haynesville oil and gas properties. As a result, beginning in 2017, the U.S. oil and gas operations no longer qualify as a reportable segment, and oil and gas results for all periods presented have been included in Corporate, Other & Eliminations in the following tables. Refer to Note 2 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, for additional information.

Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mines to other ~~divisions,~~segments, including Atlantic Copper ~~(FCX’s wholly owned smelter and refinery in Spain)~~Smelting & Refining and on 25 percent of PT-FI’s sales to PT Smelting, ~~(PT-FI’s 25-percent-owned smelter and refinery in Indonesia),~~ until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX’s net deferred profits and quarterly earnings.

FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs, along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following ~~segment information~~Financial Information by Business Segment reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

Table of Contents

~~Financial Information by Business Segments~~Product Revenues. FCX’s revenues attributable to the products it sold for the second quarters and first six months of 2019 and 2018 follow (in millions):

(In millions)

Atlantic Corporate,
North America Copper Mines South America Copper Other
Cerro Indonesia Molybdenum Rod & Smelting & Elimi- FCX
Morenci Other Total Verde Other Total Mining Mines Refining & Refining
nations^a
Total
Three Months Ended September 30, 2017
Revenues:
Unaffiliated customers $ 57
$ 40
$ 97
$ 850
$ 109
$ 959
$ 1,121
^b
$ —
$ 1,137
$ 554
$ 442
^c
$ 4,310

Intersegment 460
548
1,008
64
—
64
—
65
8
1
(1,146 ) —

Production and delivery 244
414
658
683
^d
76
759
406
58
1,141
533
(753 ) 2,802

Depreciation, depletion and amortization 42
54
96
116
18
134
136
20
2
7
23
418

Selling, general and administrative expenses 1
1
2
2
—
2
32
—
—
4
66
106

Mining exploration and research expenses —
—
—
—
—
—
—
—
—
—
27
27

Environmental obligations and shutdown costs —
—
—
—
—
—
—
—
—
—
73
73

Net gain on sales of assets —
—
—
—
—
—
—
—
—
—
(33 ) (33 )
Operating income (loss) 230
119
349
113
15
128
547
(13 ) 2
11
(107 ) 917

Interest expense, net 1
—
1
156
^d
—
156
1
—
—
5
141
304

Provision for income taxes —
—
—
134
^d
5
139
233
—
—
1
14
387

Total assets at September 30, 2017 2,844
4,223
7,067
8,851
1,595
10,446
11,100
1,885
264
751
5,814
^e
37,327

Capital expenditures 26
13
39
17
3
20
206
2
1
5
41
314

Three Months Ended September 30, 2016
Revenues:
Unaffiliated customers $ 115
$ 112
$ 227
$ 505
$ 112
$ 617
$ 984
^b
$ —
$ 930
$ 445
$ 674
^c
$ 3,877

Intersegment 358
499
857
54
—
54
2
46
7
—
(966 ) —

Production and delivery 275
464
739
333
91
424
478
57
931
416
(516 )
^f
2,529

Depreciation, depletion and amortization 51
78
129
109
25
134
110
15
2
7
246
643

Impairment of oil and gas properties —
—
—
—
—
—
—
—
—
—
239
239

Selling, general and administrative expenses 1
—
1
1
1
2
24
—
—
5
78
110

Mining exploration and research expenses —
1
1
—
—
—
—
—
—
—
12
13

Environmental obligations and shutdown costs —
—
—
—
—
—
—
—
—
—
(3 ) (3 )
Net loss (gain) on sales of assets 1
—
1
—
—
—
—
—
—
—
(14 ) (13 )
Operating income (loss) 145
68
213
116
(5 ) 111
374
(26 ) 4
17
(334 ) 359

Interest expense, net 1
—
1
21
—
21
—
—
—
3
162
187

Provision for (benefit from) income taxes —
—
—
36
(4 ) 32
158
—
—
4
(308 ) (114 )
Total assets at September 30, 2016 2,881
4,540
7,421
9,139
1,551
10,690
9,718
1,953
238
565
10,815
^e
41,400

Capital expenditures 6
5
11
38
1
39
253
1
—
5
185
^g
494



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Copper:
Concentrate	$	1,134		$	1,703		$	2,299		$	3,350
Cathode	959			1,183			1,818			2,368
Rod and other refined copper products	516			668			1,023			1,338
Purchased copper^a	325			282			662			520
Gold	305			933			696			1,741
Molybdenum	327			310			615			596
Other^b	218			400			495			798
Adjustments to revenues:
Treatment charges	(100		)	(139		)	(205		)	(271		)
Royalty expense^c	(19		)	(73		)	(49		)	(142		)
Export duties^d	(10		)	(55		)	(27		)	(101		)
Revenues from contracts with customers	3,655			5,212			7,327			10,197
Embedded derivatives^e	(109		)	(44		)	11			(161		)
Total consolidated revenues	$	3,546		$	5,168		$	7,338		$	10,036


a.	~~Includes U.S. oil and gas operations, which were previously a reportable segment.~~FCX purchases copper cathode primarily for processing by its Rod & Refining operations.


b.	Primarily includes revenues associated with cobalt and silver.


c.	Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold and prices.


d.	Reflects PT-FI export duties.


e.	Refer to Note 6 for discussion of embedded derivatives related to FCX’s provisionally priced concentrate and cathode sales contracts.

Table of Contents

Financial Information by Business Segment




(In millions)

																						Atlantic		Corporate,
	North America Copper Mines						South America															Copper		Other
							Cerro							Indonesia				Molybdenum		Rod &		Smelting		& Elimi-				FCX
	Morenci		Other		Total		Verde		Other			Total		Mining				Mines		Refining		& Refining		nations				Total
Three Months Ended June 30, 2019
Revenues:
Unaffiliated customers	$	16	$	69	$	85	$	562	$	128		$	690	$	583		^a	$	—	$	1,171	$	546	$	471		^b	$	3,546
Intersegment	491		544		1,035		71		—			71		(1		)		109		4		—		(1,218		)		—
Production and delivery	348		477		825		455		126			581		554				78		1,171		515		(722		)		3,002
Depreciation, depletion and amortization	43		44		87		101		18			119		99				18		3		7		19				352
Selling, general and administrative expenses	—		—		—		2		—			2		30				—		—		5		60				97
Mining exploration and research expenses	—		1		1		—		—			—		—				—		—		—		30				31
Environmental obligations and shutdown costs	—		—		—		—		—			—		—				—		—		—		23				23
Net loss on sales of assets	—		—		—		—		—			—		—				—		—		—		8				8
Operating income (loss)	116		91		207		75		(16		)	59		(101		)		13		1		19		(165		)		33

Interest expense, net	1		—		1		25		—			25		1				—		—		6		99				132
Provision for (benefit from) income taxes	—		—		—		20		(9		)	11		(35		)		—		—		2		7				(15		)
Total assets at June 30, 2019	2,917		4,921		7,838		8,571		1,699			10,270		16,261				1,792		250		764		3,911				41,086
Capital expenditures	49		158		207		43		4			47		339				2		1		5		28				629

Three Months Ended June 30, 2018
Revenues:
Unaffiliated customers	$	25	$	13	$	38	$	719	$	171		$	890	$	1,639		^a	$	—	$	1,387	$	602	$	612		^b	$	5,168
Intersegment	568		641		1,209		100		—			100		1				111		8		—		(1,429		)		—
Production and delivery	298		491		789		445		133			578		425				71		1,389		579		(916		)		2,915
Depreciation, depletion and amortization	44		48		92		109		24			133		172				21		3		7		14				442
Selling, general and administrative expenses	1		—		1		2		—			2		28				—		—		5		73				109
Mining exploration and research expenses	—		—		—		—		—			—		—				—		—		—		24				24
Environmental obligations and shutdown costs	—		—		—		—		—			—		—				—		—		—		59				59
Net gain on sales of assets	—		—		—		—		—			—		—				—		—		—		(45		)		(45		)
Operating income (loss)	250		115		365		263		14			277		1,015				19		3		11		(26		)		1,664

Interest expense, net	1		—		1		16		—			16		—				—		—		6		119				142
Provision for (benefit from) income taxes	—		—		—		102		6			108		429				—		—		—		(22		)		515
Total assets at June 30, 2018	2,819		4,374		7,193		8,630		1,715			10,345		10,911				1,820		278		931		5,550				37,028
Capital expenditures	41		99		140		68		3			71		246				1		1		3		20				482


a.	Includes PT-FI's sales to PT Smelting totaling ~~$652~~$470 million in ~~third-quarter 2017~~second-quarter 2019 and ~~$348~~$649 million in ~~third-quarter 2016.~~second-quarter 2018.


c.b.	Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


d.	~~Includes net charges of $216 million in production and delivery costs, $141 million in interest expense and $2 million in provision for income taxes associated with disputed royalties for prior years.~~


e.	Includes assets held for sale totaling $549 million at September 30, 2017, primarily associated with Freeport Cobalt and the Kisanfu exploration project, and $5.1 billion at September 30, 2016, which also included discontinued operations. Also includes assets associated with oil and gas operations of $272 million at September 30, 2017, and $3.5 billion at September 30, 2016.


f.	~~Includes net charges for oil and gas operations totaling $49 million, primarily for idle rig costs, inventory adjustments and the termination of the Morocco well commitment.~~


g.	~~Includes $160 million associated with oil and gas operations and $15 million associated with discontinued operations.~~

Table of Contents



(In millions)

																						Atlantic		Corporate,
	North America Copper Mines						South America Mining															Copper		Other
							Cerro							Indonesia				Molybdenum		Rod &		Smelting		& Elimi-				FCX
	Morenci		Other		Total		Verde		Other			Total		Mining				Mines		Refining		& Refining		nations				Total
Six Months Ended June 30, 2019
Revenues:
Unaffiliated customers	$	28	$	164	$	192	$	1,289	$	226		$	1,515	$	1,288		^a	$	—	$	2,299	$	1,117	$	927		^b	$	7,338
Intersegment	949		1,013		1,962		197		—			197		57				200		10		5		(2,431		)		—
Production and delivery	643		925		1,568		894		226			1,120		1,110				149		2,304		1,067		(1,340		)		5,978
Depreciation, depletion and amortization	83		87		170		201		32			233		204				34		5		14		39				699
Selling, general and administrative expenses	1		1		2		4		—			4		60				—		—		10		133				209
Mining exploration and research expenses	—		1		1		—		—			—		—				—		—		—		57				58
Environmental obligations and shutdown costs	—		—		—		—		—			—		—				—		—		—		65				65
Net gain on sales of assets	—		—		—		—		—			—		—				—		—		—		(25		)		(25		)
Operating income (loss)	250		163		413		387		(32		)	355		(29		)		17		—		31		(433		)		354

Interest expense, net	2		—		2		54		—			54		1				—		—		12		209				278
Provision for (benefit from) income taxes	—		—		—		130		(14		)	116		(9		)		—		—		3		(20		)		90
Capital expenditures	111		306		417		99		9			108		658				6		2		9		51				1,251

Six Months Ended June 30, 2018
Revenues:
Unaffiliated customers	$	28	$	28	$	56	$	1,344	$	321		$	1,665	$	3,160		^a	$	—	$	2,772	$	1,179	$	1,204		^b	$	10,036
Intersegment	1,169		1,330		2,499		202		—			202		53				206		16		2		(2,978		)		—
Production and delivery	588		992		1,580		872		249			1,121		882				138		2,777		1,135		(1,910		)		5,723
Depreciation, depletion and amortization	90		96		186		214		46			260		353				40		5		14		35				893
Selling, general and administrative expenses	2		2		4		4		—			4		67				—		—		11		154				240
Mining exploration and research expenses	—		1		1		—		—			—		—				—		—		—		44				45
Environmental obligations and shutdown costs	—		—		—		—		—			—		—				—		—		—		68				68
Net gain on sales of assets	—		—		—		—		—			—		—				—		—		—		(56		)		(56		)
Operating income (loss)	517		267		784		456		26			482		1,911				28		6		21		(109		)		3,123

Interest expense, net	2		—		2		33		—			33		—				—		—		11		247				293
Provision for income taxes	—		—		—		170		10			180		830				—		—		1		10				1,021
Capital expenditures	88		144		232		131		7			138		449				2		2		7		54				884

(In millions)

Atlantic Corporate,
North America Copper Mines South America Mining Copper Other
Cerro Indonesia Molybdenum Rod & Smelting & Elimi- FCX
Morenci Other Total Verde Other Total Mining Mines Refining & Refining
nations^a
Total
Nine Months Ended September 30, 2017
Revenues:
Unaffiliated customers $ 168
$ 122
$ 290
$ 2,057
$ 332
$ 2,389
$ 2,720
^b
$ —
$ 3,290
$ 1,412
$ 1,261
^c
$ 11,362

Intersegment 1,354
1,704
3,058
237
—
237
—
199
22
1
(3,517 ) —

Production and delivery 772
1,284
2,056
1,450
^d
245
1,695
1,233
^e
169
3,299
1,369
(2,324 ) 7,497

Depreciation, depletion and amortization 138
192
330
332
60
392
372
58
7
21
77
1,257

Selling, general and administrative expenses 2
2
4
7
—
7
92
^e
—
—
13
250
366

Mining exploration and research expenses —
2
2
—
—
—
—
—
—
—
59
61

Environmental obligations and shutdown costs —
—
—
—
—
—
—
—
—
—
81
81

Net gain on sales of assets —
—
—
—
—
—
—
—
—
—
(66 ) (66 )
Operating income (loss) 610
346
956
505
27
532
1,023
(28 ) 6
10
(333 ) 2,166

Interest expense, net 2
1
3
187
^d
—
187
1
—
—
13
429
633

Provision for income taxes —
—
—
288
^d
10
298
435
—
—
4
10
747

Capital expenditures 78
28
106
60
5
65
663
4
3
30
149
1,020

Nine Months Ended September 30, 2016
Revenues:
Unaffiliated customers $ 356
$ 211
$ 567
$ 1,485
$ 379
$ 1,864
$ 2,014
^b
$ —
$ 2,820
$ 1,360

$ 1,828
^c
$ 10,453

Intersegment 1,119
1,594
2,713
155
—
155
59
136
22
3
(3,088 ) —

Production and delivery 913
1,340
2,253
927
313
1,240
1,228
159
2,820
1,275
(991 )
^f
7,984

Depreciation, depletion and amortization 170
237
407
319
83
402
284
51
7
22
764
1,937

Impairment of oil and gas properties

—
—
—
—
—
—
—
—
—
—
4,317

4,317

Selling, general and administrative expenses 2
2
4
5
1
6
60
—
—
13
325
^f
408

Mining exploration and research expenses —
2
2
—
—
—
—
—
—
—
44
46

Environmental obligations and shutdown costs —
—
—
—
—
—
—
—
—
—
18
18

Net gain on sales of assets

(576 ) —
(576 ) —
—
—
—
—
—
—
(186 ) (762 )
Operating income (loss) 966
224
1,190
389
(18 ) 371
501
(74 ) 15
53
(5,551 ) (3,495 )

Interest expense, net 2
1
3
63
—
63
—
—
—
11
497
574

Provision for (benefit from) income taxes —
—
—
126
(12 ) 114
212
—
—
5
(252 ) 79

Capital expenditures 71
16
87
329
3
332
706
2
1
12
1,169
^g
2,309


a.	~~Includes U.S. oil and gas operations, which were previously a reportable segment.~~


b.	Includes PT-FI’s sales to PT Smelting totaling ~~$1.4~~$879 million for the first six months of 2019 and $1.3 billion for the first ~~nine~~six months of ~~2017 and $912 million for the first nine months of 2016.~~2018.


c.b.	Includes revenues from FCX’s molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


d.	~~Includes net charges of $216 million in production and delivery costs, $141 million in interest expense and $2 million in provision for income taxes associated with disputed royalties for prior years.~~


e.	~~Includes net charges of $112 million in production and delivery costs and $5 million in selling, general and administrative expenses for PT-FI workforce reductions.~~


f.	Includes net charges for oil and gas operations of $942 million in production and delivery costs, primarily for drillship settlements/idle rig costs and inventory adjustments and $38 million for net restructuring charges.


g.	~~Includes $1.1 billion associated with oil and gas operations and $70 million associated with discontinued operations.~~

Table of Contents

NOTE ~~11.~~10. GUARANTOR FINANCIAL STATEMENTS

All of the senior notes issued by FCX are fully and unconditionally guaranteed on a senior basis jointly and severally by FMFreeport-McMoRan Oil & Gas LLC (FM O&G ~~LLC,~~LLC), as guarantor, which is a 100-percent-owned subsidiary of FMFCX Oil & Gas LLC (FM O&G&G) and FCX. The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of FM O&G LLC, including indebtedness under FCX’s revolving credit facility. The guarantee ranks senior in right of payment with all of FM O&G LLC’s future subordinated obligations and is effectively subordinated in right of payment to any debt of FM O&G LLC’s subsidiaries. The indentures provide that FM O&G LLC’s guarantee may be released or terminated for certain obligations under the following circumstances: (i) all or substantially all of the equity interests or assets of FM O&G LLC are sold to a third party; or (ii) FM O&G LLC no longer has any obligations under any FM O&G senior notes or any refinancing thereof and no longer guarantees any obligations of FCX under the revolving credit facility or any other senior debt or, in each case, any refinancing thereof.

The following condensed consolidating financial information includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all other non-guarantor subsidiaries of FCX. Included are the condensed consolidating balance sheets at ~~September~~June 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, and the related condensed consolidating statements of comprehensive (loss) income ~~(loss)~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, and the condensed consolidating statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 (in millions), which should be read in conjunction with ~~FCX’s~~the other notes ~~to the~~in these consolidated financial statements.

CONDENSED CONSOLIDATING BALANCE SHEET

~~September~~June 30, ~~2017~~2019


	FCX			FM O&G LLC			Non-guarantor					Consolidated		FCX			FM O&G LLC			Non-guarantor					Consolidated
	Issuer			Guarantor			Subsidiaries		Eliminations			FCX		Issuer			Guarantor			Subsidiaries		Eliminations			FCX
ASSETS
Current assets	$	197		$	716		$	10,948	$	(711	)	$	11,150	$	84		$	570		$	8,634	$	(558	)	$	8,730
Property, plant, equipment and mine development costs, net	15			11			22,899		(11		)	22,914		18			2			28,821		—			28,841
Oil and gas properties, subject to amortization, less accumulated amortization and impairments	—			—			20		—			20
Investments in consolidated subsidiaries	20,178			—			—		(20,178		)	—		17,773			—			—		(17,773		)	—
Other assets	479			36			3,193		(465		)	3,243		1,335			21			3,252		(1,093		)	3,515
Total assets	$	20,869		$	763		$	37,060	$	(21,365	)	$	37,327	$	19,210		$	593		$	40,707	$	(19,424	)	$	41,086

LIABILITIES AND EQUITY
Current liabilities	$	2,402		$	111		$	3,820	$	(816	)	$	5,517	$	255		$	55		$	3,574	$	(598	)	$	3,286
Long-term debt, less current portion	10,600			6,428			5,621		(10,082		)	12,567		8,595			7,097			5,963		(11,743		)	9,912
Deferred income taxes	832		^a	—			2,939		—			3,771		561		^a	—			3,494		—			4,055
Environmental and asset retirement obligations, less current portion	—			208			3,290		—			3,498		—			234			3,383		—			3,617
Investments in consolidated subsidiaries	—			850			10,174		(11,024		)	—		—			594			10,728		(11,322		)	—
Other liabilities	62			3,341			1,828		(3,487		)	1,744		90			3,340			2,456		(3,487		)	2,399
Total liabilities	13,896			10,938			27,672		(25,409		)	27,097		9,501			11,320			29,598		(27,150		)	23,269

Equity:
Stockholders’ equity	6,973			(10,175		)	6,782		3,393			6,973		9,709			(10,727		)	8,455		2,272			9,709
Noncontrolling interests	—			—			2,606		651			3,257		—			—			2,654		5,454			8,108
Total equity	6,973			(10,175		)	9,388		4,044			10,230		9,709			(10,727		)	11,109		7,726			17,817
Total liabilities and equity	$	20,869		$	763		$	37,060	$	(21,365	)	$	37,327	$	19,210		$	593		$	40,707	$	(19,424	)	$	41,086


a.	All U.S.-related deferred income taxes are recorded at the parent company.

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, ~~2016~~2018


	FCX			FM O&G LLC			Non-guarantor					Consolidated		FCX			FM O&G LLC			Non-guarantor					Consolidated
	Issuer			Guarantor			Subsidiaries		Eliminations			FCX		Issuer			Guarantor			Subsidiaries		Eliminations			FCX
ASSETS
Current assets	$	230		$	1,790		$	11,675	$	(3,260	)	$	10,435	$	309		$	620		$	10,376	$	(585	)	$	10,720
Property, plant, equipment and mine development costs, net	19			24			23,176		—			23,219		19			7			27,984		—			28,010
Oil and gas properties, subject to amortization, less accumulated amortization and impairments	—			—			74		—			74
Investments in consolidated subsidiaries	21,110			—			—		(21,110		)	—		19,064			—			—		(19,064		)	—
Other assets	1,985			47			3,522		(1,965		)	3,589		880			23			3,218		(635		)	3,486
Total assets	$	23,344		$	1,861		$	38,447	$	(26,335	)	$	37,317	$	20,272		$	650		$	41,578	$	(20,284	)	$	42,216

LIABILITIES AND EQUITY
Current liabilities	$	3,895		$	308		$	3,306	$	(3,244	)	$	4,265	$	245		$	34		$	3,667	$	(617	)	$	3,329
Long-term debt, less current portion	12,517			6,062			11,297		(15,081		)	14,795		9,594			6,984			5,649		(11,103		)	11,124
Deferred income taxes	826		^a	—			2,942		—			3,768		524		^a	—			3,508		—			4,032
Environmental and asset retirement obligations, less current portion	—			200			3,287		—			3,487		—			227			3,382		—			3,609
Investments in consolidated subsidiary	—			893			8,995		(9,888		)	—
Investments in consolidated subsidiaries														—			578			10,513		(11,091		)	—
Other liabilities	55			3,393			1,784		(3,487		)	1,745		111			3,340			2,265		(3,486		)	2,230
Total liabilities	17,293			10,856			31,611		(31,700		)	28,060		10,474			11,163			28,984		(26,297		)	24,324

Equity:
Stockholders’ equity	6,051			(8,995		)	4,237		4,758			6,051		9,798			(10,513		)	9,912		601			9,798
Noncontrolling interests	—			—			2,599		607			3,206		—			—			2,682		5,412			8,094
Total equity	6,051			(8,995		)	6,836		5,365			9,257		9,798			(10,513		)	12,594		6,013			17,892
Total liabilities and equity	$	23,344		$	1,861		$	38,447	$	(26,335	)	$	37,317	$	20,272		$	650		$	41,578	$	(20,284	)	$	42,216


a.	All U.S.-related deferred income taxes are recorded at the parent company.

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

Three Months Ended September 30, 2017
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Revenues $ —
$ 13
$ 4,297
$ —
$ 4,310
Total costs and expenses 8
25
3,361
(1 ) 3,393
Operating (loss) income (8 ) (12 ) 936
1
917
Interest expense, net (116 ) (59 ) (218 ) 89
(304 )
Other income (expense), net 97
3
2
(89 ) 13
(Loss) income before income taxes and equity in affiliated companies’ net earnings (losses) (27 ) (68 ) 720
1
626
Benefit from (provision for) income taxes 21
24
(432 ) —
(387 )
Equity in affiliated companies’ net earnings (losses) 286
20
(20 ) (283 ) 3
Net income (loss) from continuing operations 280
(24 ) 268
(282 ) 242
Net income from discontinued operations —
—
3
—
3
Net income (loss) 280
(24 ) 271
(282 ) 245
Net loss (income) attributable to noncontrolling interests:
Continuing operations —
—
69
(34 ) 35
Discontinued operations —
—
—
—
—
Net income (loss) attributable to common stockholders $ 280
$ (24 ) $ 340
$ (316 ) $ 280

Other comprehensive income (loss) 13
—
13
(13 ) 13
Total comprehensive income (loss) $ 293
$ (24 ) $ 353
$ (329 ) $ 293




Three Months Ended June 30, 2019
	FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	13		$	3,533		$	—		$	3,546
Total costs and expenses	4			26			3,481			2			3,513
Operating (loss) income	(4		)	(13		)	52			(2		)	33
Interest expense, net	(83		)	(82		)	(102		)	135			(132		)
Other (expense) income, net	(1		)	—			7			(1		)	5
(Loss) income before income taxes and equity in affiliated companies’ net earnings (losses)	(88		)	(95		)	(43		)	132			(94		)
(Provision for) benefit from income taxes	(7		)	22			—			—			15
Equity in affiliated companies’ net earnings (losses)	23			(21		)	(89		)	92			5
Net (loss) income	(72		)	(94		)	(132		)	224			(74		)
Net (income) loss attributable to noncontrolling interests	—			—			(8		)	10			2
Net (loss) income attributable to common stockholders	$	(72	)	$	(94	)	$	(140	)	$	234		$	(72	)

Other comprehensive income (loss)	12			—			12			(12		)	12
Total comprehensive (loss) income	$	(60	)	$	(94	)	$	(128	)	$	222		$	(60	)




Three Months Ended June 30, 2018
	FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	16		$	5,152		$	—		$	5,168
Total costs and expenses	4			(16		)	3,525			(9		)	3,504
Operating (loss) income	(4		)	32			1,627			9			1,664
Interest expense, net	(97		)	(76		)	(92		)	123			(142		)
Other income (expense), net	132			2			18			(123		)	29
Income (loss) before income taxes and equity in affiliated companies’ net earnings (losses)	31			(42		)	1,553			9			1,551
(Provision for) benefit from income taxes	(11		)	10			(512		)	(2		)	(515		)
Equity in affiliated companies’ net earnings (losses)	849			2			(45		)	(803		)	3
Net income (loss) from continuing operations	869			(30		)	996			(796		)	1,039
Net loss from discontinued operations	—			—			(4		)	—			(4		)
Net income (loss)	869			(30		)	992			(796		)	1,035
Net income attributable to noncontrolling interests	—			—			(102		)	(64		)	(166		)
Net income (loss) attributable to common stockholders	$	869		$	(30	)	$	890		$	(860	)	$	869

Other comprehensive income (loss)	11			—			11			(11		)	11
Total comprehensive income (loss)	$	880		$	(30	)	$	901		$	(871	)	$	880

Three Months Ended September 30, 2016
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Revenues $ —
$ 110
$ 3,767
$ —
$ 3,877
Total costs and expenses 12
266
^a
3,239
^a
1
3,518
Operating (loss) income (12 ) (156 ) 528
(1 ) 359
Interest expense, net (126 ) (18 ) (132 ) 89
(187 )
Other income (expense), net 91
—
(10 ) (76 ) 5
(Loss) income before income taxes and equity in affiliated companies’ net (losses) earnings (47 ) (174 ) 386
12
177
Benefit from (provision for) income taxes 343
(197 ) (40 ) 8
114
Equity in affiliated companies’ net (losses) earnings (75 ) (218 ) (589 ) 883
1
Net income (loss) from continuing operations 221
(589 ) (243 ) 903
292
Net (loss) income from discontinued operations (4 ) —
10
(12 ) (6 )
Net income (loss) 217
(589 ) (233 ) 891
286
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations —
—
(24 ) (23 ) (47 )
Discontinued operations —
—
(22 ) —
(22 )
Net income (loss) attributable to common stockholders $ 217
$ (589 ) $ (279 ) $ 868
$ 217

Other comprehensive income (loss) 12
—
12
(12 ) 12
Total comprehensive income (loss) $ 229
$ (589 ) $ (267 ) $ 856
$ 229


a.	Includes charges totaling $95 million at the FM O&G LLC guarantor and $0.2 billion at the non-guarantor subsidiaries related to impairment of FCX’s oil and gas properties pursuant to full cost accounting rules.

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

Nine Months Ended September 30, 2017
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Revenues $ —
$ 38
$ 11,324
$ —
$ 11,362
Total costs and expenses 31
86
9,068
11
9,196
Operating (loss) income (31 ) (48 ) 2,256
(11 ) 2,166
Interest expense, net (355 ) (167 ) (363 ) 252
(633 )
Other income (expense), net 256
3
37
(252 ) 44
(Loss) income before income taxes and equity in affiliated companies’ net earnings (losses) (130 ) (212 ) 1,930
(11 ) 1,577
(Provision for) benefit from income taxes (111 ) 74
(714 ) 4
(747 )
Equity in affiliated companies’ net earnings (losses) 1,017
14
(118 ) (907 ) 6
Net income (loss) from continuing operations 776
(124 ) 1,098
(914 ) 836
Net income from discontinued operations —
—
50
—
50
Net income (loss) 776
(124 ) 1,148
(914 ) 886
Net income attributable to noncontrolling interests:
Continuing operations —
—
(42 ) (64 ) (106 )
Discontinued operations —
—
(4 ) —
(4 )
Net income (loss) attributable to common stockholders $ 776
$ (124 ) $ 1,102
$ (978 ) $ 776

Other comprehensive income (loss) 105
—
105
(105 ) 105
Total comprehensive income (loss) $ 881
$ (124 ) $ 1,207
$ (1,083 ) $ 881


Nine Months Ended September 30, 2016
Six Months Ended June 30, 2019
	FCX			FM O&G LLC				Non-guarantor							Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor				Subsidiaries				Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	294			$	10,159			$	—		$	10,453		$	—		$	16		$	7,322		$	—		$	7,338
Total costs and expenses	56			2,859			^a	11,026			^a	7			13,948			17			26			6,941			—			6,984
Operating loss	(56		)	(2,565		)		(867		)		(7		)	(3,495		)
Operating (loss) income																		(17		)	(10		)	381			—			354
Interest expense, net	(404		)	(37		)		(370		)		237			(574		)	(173		)	(168		)	(211		)	274			(278		)
Other income (expense), net	248			—				59				(202		)	105			64			—			23			(74		)	13
(Loss) income before income taxes and equity in affiliated companies’ net (losses) earnings	(212		)	(2,602		)		(1,178		)		28			(3,964		)
(Loss) income before income taxes and equity in affiliated companies’ net earnings (losses)																		(126		)	(178		)	193			200			89
(Provision for) benefit from income taxes	(1,785		)	725				979				2			(79		)	(8		)	40			(122		)	—			(90		)
Equity in affiliated companies’ net (losses) earnings	(2,450		)	(3,202		)		(5,072		)		10,733			9
Equity in affiliated companies’ net earnings (losses)																		93			(16		)	(152		)	77			2
Net (loss) income from continuing operations	(4,447		)	(5,079		)		(5,271		)		10,763			(4,034		)	(41		)	(154		)	(81		)	277			1
Net income (loss) from discontinued operations	1			—				(159		)		(33		)	(191		)
Net income from discontinued operations																		—			—			1			—			1
Net (loss) income	(4,446		)	(5,079		)		(5,430		)		10,730			(4,225		)	(41		)	(154		)	(80		)	277			2
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations	—			—				(141		)		(36		)	(177		)
Discontinued operations	—			—				(44		)		—			(44		)
Net income attributable to noncontrolling interests																		—			—			(42		)	(1		)	(43		)
Net (loss) income attributable to common stockholders	$	(4,446	)	$	(5,079	)		$	(5,615	)		$	10,694		$	(4,446	)	$	(41	)	$	(154	)	$	(122	)	$	276		$	(41	)

Other comprehensive income (loss)	27			—				27				(27		)	27			23			—			23			(23		)	23
Total comprehensive (loss) income	$	(4,419	)	$	(5,079	)		$	(5,588	)		$	10,667		$	(4,419	)	$	(18	)	$	(154	)	$	(99	)	$	253		$	(18	)


a.	Includes charges totaling $1.5 billion at the FM O&G LLC guarantor and $2.8 billion at the non-guarantor subsidiaries related to impairment of FCX’s oil and gas properties pursuant to full cost accounting rules.



Six Months Ended June 30, 2018	FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	31		$	10,005		$	—		$	10,036
Total costs and expenses	13			(8		)	6,918			(10		)	6,913
Operating (loss) income	(13		)	39			3,087			10			3,123
Interest expense, net	(201		)	(140		)	(177		)	225			(293		)
Other income (expense), net	233			2			47			(225		)	57
Income (loss) before income taxes and equity in affiliated companies’ net earnings (losses)	19			(99		)	2,957			10			2,887
(Provision for) benefit from income taxes	(94		)	22			(947		)	(2		)	(1,021		)
Equity in affiliated companies’ net earnings (losses)	1,636			(4		)	(79		)	(1,552		)	1
Net income (loss) from continuing operations	1,561			(81		)	1,931			(1,544		)	1,867
Net loss from discontinued operations	—			—			(15		)	—			(15		)
Net income (loss)	1,561			(81		)	1,916			(1,544		)	1,852
Net income attributable to noncontrolling interests	—			—			(173		)	(118		)	(291		)
Net income (loss) attributable to common stockholders	$	1,561		$	(81	)	$	1,743		$	(1,662	)	$	1,561

Other comprehensive income (loss)	23			—			23			(23		)	23
Total comprehensive income (loss)	$	1,584		$	(81	)	$	1,766		$	(1,685	)	$	1,584

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


Nine Months Ended September 30, 2017
Six Months Ended June 30, 2019
	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Net cash (used in) provided by operating activities	$	(222	)	$	(383	)	$	3,623		$	—		$	3,018
Net cash provided by (used in) operating activities																$	330		$	(204	)	$	962		$	—		$	1,088

Cash flow from investing activities:
Capital expenditures	—			(24		)	(996		)	—			(1,020		)	—			—			(1,251		)	—			(1,251		)
Intercompany loans	(609		)	—			—			609			—			(640		)	—			—			640			—
Dividends from (investments in) consolidated subsidiaries	1,757			(16		)	93			(1,834		)	—			1,470			—			47			(1,519		)	(2		)
Asset sales and other, net	—			58			(12		)	—			46			(1		)	91			(4		)	—			86
Net cash provided by (used in) investing activities	1,148			18			(915		)	(1,225		)	(974		)	829			91			(1,208		)	(879		)	(1,167		)

Cash flow from financing activities:
Proceeds from debt	—			—			795			—			795			—			—			328			—			328
Repayments of debt	(915		)	(139		)	(937		)	—			(1,991		)	(1,003		)	—			(560		)	—			(1,563		)
Intercompany loans	—			512			97			(609		)	—			—			113			527			(640		)	—
Cash dividends paid and contributions received, net	(2		)	—			(1,839		)	1,772			(69		)	(146		)	—			(1,478		)	1,499			(125		)
Other, net	(9		)	(11		)	(64		)	62			(22		)	(10		)	—			(20		)	20			(10		)
Net cash (used in) provided by financing activities	(926		)	362			(1,948		)	1,225			(1,287		)	(1,159		)	113			(1,203		)	879			(1,370		)

Net increase in cash and cash equivalents	—			(3		)	760			—			757
Increase in cash and cash equivalents in assets held for sale	—			—			(45		)	—			(45		)
Cash and cash equivalents at beginning of period	—			3			4,242			—			4,245
Cash and cash equivalents at end of period	$	—		$	—		$	4,957		$	—		$	4,957
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents																—			—			(1,449		)	—			(1,449		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year																—			—			4,455			—			4,455
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period																$	—		$	—		$	3,006		$	—		$	3,006



Six Months Ended June 30, 2018
	FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Net cash (used in) provided by operating activities	$	(163	)	$	(184	)	$	3,025		$	—		$	2,678

Cash flow from investing activities:
Capital expenditures	(2		)	—			(882		)	—			(884		)
Intercompany loans	(442		)	—			—			442			—
Dividends from (investments in) consolidated subsidiaries	2,519			—			45			(2,564		)	—
Asset sales and other, net	4			1			(91		)	—			(86		)
Net cash provided by (used in) investing activities	2,079			1			(928		)	(2,122		)	(970		)

Cash flow from financing activities:
Proceeds from debt	—			—			352			—			352
Repayments of debt	(1,826		)	(52		)	(419		)	—			(2,297		)
Intercompany loans	—			228			214			(442		)	—
Cash dividends paid and contributions received, net	(73		)	—			(2,789		)	2,548			(314		)
Other, net	(17		)	—			(17		)	16			(18		)
Net cash (used in) provided by financing activities	(1,916		)	176			(2,659		)	2,122			(2,277		)

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	—			(7		)	(562		)	—			(569		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year	—			7			4,703			—			4,710
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	—		$	—		$	4,141		$	—		$	4,141

Nine Months Ended September 30, 2016
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Net cash (used in) provided by operating activities $ (264 ) $ (294 ) $ 3,151
$ 1
$ 2,594

Cash flow from investing activities:
Capital expenditures —
(497 ) (1,814 ) 2
(2,309 )
Intercompany loans (1,021 ) (518 ) —
1,539
—
Dividends from (investments in) consolidated subsidiaries 1,643
(41 ) 124
(1,726 ) —
Asset sales and other, net —
208
1,210
(3 ) 1,415
Net cash provided by (used in) investing activities 622
(848 ) (480 ) (188 ) (894 )

Cash flow from financing activities:
Proceeds from debt 1,721
—
1,742
—
3,463
Repayments of debt (2,498 ) —
(2,041 ) —
(4,539 )
Intercompany loans —
1,223
316
(1,539 ) —
Net proceeds from sale of common stock 442
—
374
(374 ) 442
Cash dividends paid and contributions received, net (5 ) (78 ) (2,096 ) 2,087
(92 )
Other, net (18 ) (2 ) (15 ) 13
(22 )
Net cash (used in) provided by financing activities (358 ) 1,143
(1,720 ) 187
(748 )

Net increase in cash and cash equivalents —
1
951
—
952
Increase in cash and cash equivalents in assets held for sale —
—
(43 ) —
(43 )
Cash and cash equivalents at beginning of period —
—
177
—
177
Cash and cash equivalents at end of period $ —
$ 1
$ 1,085
$ —
$ 1,086

Table of Contents

NOTE ~~12.~~11. NEW ACCOUNTING STANDARDS

~~In May 2014,~~Leases.Effective January 1, 2019, FCX adopted the Financial Accounting Standards ~~Board~~Board’s (FASB) ~~issued an~~ Accounting ~~Standard~~Standards Update (ASU) that ~~provides~~requires lessees to recognize most leases on the balance sheet. FCX elected the practical expedients allowing it to (i) apply the provisions of the updated lease guidance at the effective date, without adjusting the comparative periods presented and (ii) not reassess lease contracts, lease classification and initial direct costs of leases existing at adoption. FCX also elected an accounting policy to not recognize a ~~single comprehensive revenue~~lease asset and liability for leases with a term of 12 months or less and a purchase option that is not expected to be exercised.

FCX leases various types of properties, including offices and equipment under non-cancelable leases. Nearly all of FCX’s leases were considered operating leases under the new ASU. Adoption of this ASU resulted in the recognition of $243 million in lease right-of-use assets and lease liabilities as of January 1, 2019.

The components of FCX’s leases presented in the consolidated balance sheet as of June 30, 2019, follow (in millions):



Lease right-of-use assets (included in property, plant, equipment and mine development costs, net)	$	242

Short-term lease liabilities (included in accounts payable and accrued liabilities)	$	47
Long-term lease liabilities (included in other liabilities)	216
Total lease liabilities	$	263

Operating lease costs, primarily included in production and delivery expense in the consolidated statement of operations, are as follows (in millions):



	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019

Operating leases	$	21	$	33
Variable and short-term leases	19		40
Total lease costs	$	40	$	73

Lease costs totaled $80 million for the year 2018.

FCX paid $20 million during the first six months of 2019 for lease liabilities recorded in the consolidated balance sheet (primarily included in operating cash flows in the consolidated statements of cash flows). As of June 30, 2019, the weighted-average discount rate used to determine the lease liabilities was 5.2 percent and the weighted-average remaining lease term was 8.8 years.

The future minimum payments for leases presented in the consolidated balance sheets at June 30, 2019, follow (in millions):



Remaining six months of 2019	$	27
2020	54
2021	40
2022	33
2023	30
Thereafter	158
Total payments	342
Less amount representing interest	(79		)
Present value of net minimum lease payments	263
Less current portion	(47		)
Long-term portion	$	216

Table of Contents

Financial Instruments.In June 2016, FASB issued an ASU that requires entities to estimate all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which ~~will replace most existing revenue recognition guidance,~~requires consideration of historical experience, current conditions, and reasonable and supportable forecasts. This ASU also requires ~~expanded disclosures. The core principle~~enhanced disclosure requirements to enable users of financial statements to understand the model is that revenue is recognized when control of goods or services has been transferred to customers at an amount that reflects the consideration to which an entity expects to be entitled in exchangeentity’s assumptions, models and methods for ~~those goods or services.~~estimating expected credit losses. For public ~~entities,~~companies, this ASU is effective for interim and annual reporting periods beginning after December 15, ~~2017, and interim reporting periods within that reporting period. Early~~2019, with early adoption ~~is permitted for annual reporting periods beginning after December 15, 2016, and interim reporting periods within that reporting period.~~permitted. FCX will adopt this ASU January 1, 2018, and currently expects to apply the modified retrospective approach under which any cumulative effect adjustment would be recorded to retained earnings as of the adoption date. FCX has substantially completed its review of the impact of this guidance, and based on the terms of its sales contracts, does not expect ~~the~~this guidance ~~to have any impact on its revenue recognition policies or processes. FCX continues to review the impact of the new guidance on its financial reporting and disclosures.~~

In March 2016, FASB issued an ASU that simplifies various aspects of the accounting for share-based payment transactions, including the income tax consequences, statutory tax withholding requirements, an accounting policy election for forfeitures and the classification on the statement of cash flows. FCX adopted this ASU effective January 1, 2017, and adoption did not have a material impact on its financial statements.

In March 2017, FASB issued an ASU that changes how entities with a defined benefit pension or other postretirement benefit plans present net periodic benefit cost in the income statement. This ASU requires the service cost component of net periodic benefit cost to be presented in the same income statement line item or items as other compensation costs for those employees who are receiving the retirement benefit. In addition, only the service cost component is eligible for capitalization when applicable (~~i.e.~~, as a cost of inventory or an internally constructed asset). The other components of net periodic benefit cost are required to be presented separately from the service cost component and outside of operating income. These other components of net periodic benefit cost are not eligible for capitalization, and the income statement line item or items must be disclosed. For public entities, this ASU is effective for annual periods beginning after December 15, 2017, and interim reporting periods within that reporting period. Early adoption is permitted. FCX will adopt this ASU on January 1, 2018, and does not expect it to have a material impact on its ~~presentation of the statements of operations.~~consolidated financial statements.

NOTE ~~13.~~12. SUBSEQUENT EVENTS

On August 1, 2019, FCX agreed to sell $600 million of 5.00% Senior Notes due 2027 and $600 million of 5.25% Senior Notes due 2029 for total net proceeds of $1.187 billion. The sale is expected to settle on August 15, 2019, subject to customary closing conditions. Interest on these senior notes is payable semiannually on September 1 and March 1 of each year. These senior notes rank equally with FCX’s other existing and future unsecured and unsubordinated indebtedness. FCX intends to use the net proceeds from this offering to fund the redemption of all of its outstanding 6.875% Senior Notes due 2023 (book value of $764 million as of June 30, 2019) and its concurrent cash tender offers for up to $430 million aggregate purchase price of its 4.00% Senior Notes due 2021, 3.55% Senior Notes due 2022 and 3.875% Senior Notes due 2023, and the payment of accrued and unpaid interest, premiums, fees and expenses in connection with these transactions. As a result of the redemption and tender offers, FCX expects to record a loss on early extinguishment of debt of approximately $15 million in third-quarter 2019.

FCX evaluated events after ~~September~~June 30, ~~2017,~~2019, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

Table of Contents

~~REVIEW~~ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF~~To the Board of Directors and Stockholders of

~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Freeport-McMoRan Inc. (the Company) as of ~~September~~June 30, ~~2017, and~~2019, the related consolidated statements of operations, comprehensive (loss) income, and ~~comprehensive income (loss)~~equity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, the consolidated statements of cash flows for the ~~nine-month periods~~six-month period ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated ~~statement of equity for the nine-month period ended September 30, 2017. These~~interim financial statements ~~are the responsibility of the Company’s management.~~for them to be in conformity with U.S. generally accepted accounting principles.

We ~~conducted our review~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of December 31, 2018, the related consolidated statements of operations, comprehensive income (loss), cash flows and equity for the year then ended, and the related notes (not presented herein); and in our report dated February 15, 2019, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial ~~information~~statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, 2016, and the related consolidated statements of operations, comprehensive loss, cash flows and equity for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 24, 2017. In our opinion, the accompanying consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ ~~ERNST~~Ernst & ~~YOUNG~~Young LLP

Phoenix, Arizona

~~November 7, 2017~~August 6, 2019

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our consolidated financial statements, the related ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MD&A and the discussion of our Business and Properties in our annual report on Form 10-K for the year ended December 31, ~~2016,~~2018 (2018 Form 10-K), filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial ~~Statements.~~Statements (Unaudited). Throughout ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~MD&A, all references to ~~earnings~~income or losses per share are on a diluted basis. Additionally, in accordance with accounting guidelines, TF Holdings Limited (TFHL), through which we held a controlling interest in the Tenke Fungurume (Tenke) mine until it was sold on November 16, 2016, is reported as a discontinued operation for all periods presented.

OVERVIEW

We are a leading international mining company with headquarters in Phoenix, Arizona. We operate large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. We are one of the world’s largest publicly traded copper ~~producer.~~producers. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant mining operations in ~~the Americas,~~North America and South America, including the large-scale Morenci minerals district in ~~North America~~Arizona and the Cerro Verde operation in ~~South America.~~Peru.

Net income (loss) attributable to common stock totaled $280 million in third-quarter 2017, $217 million in third-quarter 2016, $776 million for the first nine months of 2017 and $(4.4) billion for the first nine months of 2016. The 2017 periods, compared with the 2016 periods, benefited from higher copper prices and higher gold sales volumes, partly offset by lower copper sales volumes and higher tax expense. The 2017 periods also include a net charge of $188 million for accruals related to Peruvian government claims for disputed royalties (refer to “Operations – South America Mining” for further discussion). The first nine months of 2016 included significant charges for the impairment of oil and gas properties and other oil and gas charges for drillship settlements/idle rig costs, inventory adjustments, asset impairment and restructuring, partly offset by net gains on sales of assets. Refer to “Consolidated Results” for further discussion.

~~At September 30, 2017, we had $5.0 billion in consolidated cash and cash equivalents and $14.8 billion in total debt. We had no borrowings and~~ ~~$3.5 billion~~ ~~available under our revolving credit facility. Refer to Note 6 for further discussion of debt.~~

We continue to manage production, exploration and administrative costs and capital spending and, subject to commodity prices and operational results, expect to generate operating cash flows in excess of capital expenditures for the years 2017 and 2018.

We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. We continue to advance a project to develop the Lone Star leachable ores near the Safford operation in eastern Arizona, and PT Freeport Indonesia (PT-FI) has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. We are also pursuing other opportunities to enhance our mines’ net present values, and we continue to advance studies for future development of our copper resources, the timing of which will be dependent on market conditions.

~~In August 2017, we reached an understanding~~During second-quarter 2019, PT-FI achieved important milestones with respect to its underground mining operations in the Indonesian government on a framework that would resolve PT Freeport Indonesia’s (PT-FI) long-term operating rights. This framework includes (i) conversion from the Contract of Work (COW) to a new operating license (IUPK) providing PT-FI with long-term operating rights through 2041, (ii) Indonesian government certainty of fiscal and legal terms during the term of the IUPK, (iii) PT-FI commitment to construct a new smelter in Indonesia within five years of reaching a definitive agreement, and (iv) divestment of 51 percent of the project area interests to Indonesian participants at fair market value structured so that we retain control over operations and governance of PT-FI.

The framework requires documentation and execution of a definitive agreement, which must be approved by our Board of Directors (Board) and joint venture partner Rio Tinto. The parties continue to negotiate to reach agreement on important aspects of implementation of the framework, including the timing and process of divestment, governance matters, and the determination of fair market value, and to complete documentation on a comprehensive agreement for PT-FI’s operations through 2041. The parties have expressed a mutual objective of

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completing the negotiations and documentation during 2017. In October 2017, the Indonesian government extended PT-FI’s export rights to December 31, 2017, while negotiations to reach and document a comprehensive long-term definitive agreement based on the agreed framework continue. Until a definitive agreement is reached, PT-FI has reserved all rights under its COW, including pursuing arbitration under the dispute resolution provisions. ReferGrasberg minerals district (refer to “Operations –- Indonesia Mining” for further discussion).

Net (loss) income attributable to common stock totaled $(72) million in second-quarter 2019, $869 million in second-quarter 2018, $(41) million for the first six months of 2019 and $1.6 billion for the first six months of 2018. The results for the 2019 periods, compared with 2018 periods, primarily reflect lower copper and gold sales volumes resulting from anticipated lower mill rates and ore grades in Indonesia as PT-FI transitions mining from the open pit to underground, and lower copper prices. Refer to “Consolidated Results” for further discussion.

At June 30, 2019, we had $2.6 billion in consolidated cash and cash equivalents and $9.9 billion in total debt. At June 30, 2019, we had no borrowings, and $3.5 billion was available under our $3.5 billion, unsecured revolving credit facility. Refer to Note 5 for discussion of debt and Note 12 for discussion of the August 2019 debt transactions.

OUTLOOK

We continue to view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold and molybdenum, as well as other factors. World market prices for these commodities have fluctuated historically ~~fluctuated~~ and are affected by numerous factors beyond our control. Refer to “Markets” for further discussion. Because we cannot control the ~~price~~prices of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs, operating cash flow and capital expenditures.

~~Refer to “Operations – Indonesia Mining” for further discussion~~

Table of ~~Indonesia regulatory matters, which could have a significant impact on future results.~~Contents

Consolidated Sales Volumes

Following are our projected consolidated sales volumes for the year ~~2017:~~2019 (which is a transition year for Indonesia mining):



Copper (millions of recoverable pounds):
North America copper mines	~~1,470~~1,394
South America mining	~~1,230~~1,237
Indonesia mining	~~1,010~~630
Total	~~3,710~~3,261

Gold (thousands of recoverable ounces)	~~1,600~~841

Molybdenum (millions of recoverable pounds)	94	^a


a.	Projected molybdenum sales include 3436 million pounds produced by our Molybdenum mines and 6058 million pounds produced by our North America and South America copper mines.

Consolidated sales volumes for ~~fourth-quarter 2017~~third-quarter 2019 are expected to approximate ~~1.0 billion~~830 million pounds of copper, ~~625~~230 thousand ounces of gold and 2325 million pounds of molybdenum. As PT-FI transitions mining from the open pit to underground, metal production is expected to improve by 2021.

Projected sales volumes are dependent on operational performance and other factors. For other important factors that could cause results to differ materially from projections, refer to “Cautionary Statement.”

Consolidated Unit Net Cash Costs

Assuming average prices of ~~$1,300~~$1,400 per ounce of gold and ~~$8.00~~$12.00 per pound of molybdenum for ~~fourth-quarter 2017~~the second half of 2019 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average ~~$1.19~~$1.75 per pound of copper for the year ~~2017.~~2019 (including $1.67 per pound for the second half of 2019). The impact of price changes ~~for fourth-quarter 2017~~ on consolidated unit net cash costs for the year 2019 would approximate $0.01 per pound for each $50 per ounce change in the average price of gold for the second half of 2019 and ~~$0.005~~$0.015 per pound for each $2 per pound change in the average price of ~~molybdenum.~~molybdenum for the second half of 2019. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices, primarily for gold and molybdenum. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production costs for our mining operations.

Consolidated Operating Cash Flow

Our consolidated operating cash flows vary with sales ~~volumes,~~volumes; prices realized from copper, gold and molybdenum ~~sales,~~sales; production ~~costs,~~costs; income ~~taxes,~~taxes; other working capital ~~changes~~changes; and other factors. Based on current sales volume and cost estimates, and assuming average prices of ~~$3.00~~$2.75 per pound of copper, ~~$1,300~~$1,400 per ounce of gold and ~~$8.00~~$12.00 per pound of molybdenum for ~~fourth-quarter 2017,~~the second half of 2019, our consolidated operating cash flows are estimated to approximate ~~$4.3~~$1.9 billion ~~for the year 2017~~ (including ~~$0.5~~$0.3 billion inof working capital sources and timing of other tax payments)~~. Projected~~ for the year 2019. Estimated consolidated operating cash flows for the year ~~2017~~2019 also reflect an estimated income tax provision of ~~$1.3~~$0.4 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected income tax rate for the year ~~2017)~~2019). The impact of price changes during ~~fourth-quarter 2017~~the second half of 2019 on operating cash flows would approximate ~~$80~~

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$185 million for each $0.10 per pound change in the average price of copper, $20 million for each $50 per ounce change in the average price of gold and ~~$15~~$55 million for each $2 per pound change in the average price of molybdenum.

Consolidated Capital Expenditures

Consolidated capital expenditures are expected to approximate ~~$1.5~~$2.6 billion for the year ~~2017,~~2019, including ~~$0.9~~$1.6 billion for major mining projects primarily ~~for~~associated with underground development activities ~~at Grasberg. As a result~~in the Grasberg minerals district and development of ~~regulatory uncertainty, PT-FI has slowed investments in its underground development projects. If PT-FI is unable to reach a definitive agreement~~the Lone Star copper leach project, and exclude estimates associated with the ~~Indonesian government~~new smelter in Indonesia. A large portion of the capital expenditures relates to projects that are expected to add significant production and cash flow in future periods, enabling us to generate operating cash flows exceeding capital expenditures in future years. We have cash on ~~its long-term mining rights, we intend~~hand and the financial flexibility to ~~reduce or defer investments significantly~~fund these expenditures and will continue to be disciplined in ~~underground development projects.~~deploying capital.

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MARKETS

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January ~~2007~~2009 through ~~September 2017,~~June 2019, the London Metal Exchange (LME) ~~spot~~ copper settlement price varied from a low of ~~$1.26~~$1.38 per pound in ~~2008~~2009 to a record high of $4.60 per pound in 2011; the London Bullion Market Association ~~(London)~~(LBMA) PM gold price fluctuated from a low of ~~$608~~$810 per ounce in ~~2007~~2009 to a record high of $1,895 per ounce in 2011; and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of ~~$33.88~~$18.60 per pound in ~~2008.~~2010. 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 ~~annual report on~~2018 Form ~~10-K for the year ended December 31, 2016.~~10-K.

This graph presents LME ~~spot~~ copper settlement prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc. ~~(COMEX)~~, a division of the New York Mercantile Exchange, ~~(NYMEX),~~ and the Shanghai Futures Exchange from January ~~2007~~2009 through ~~September 2017. Beginning in mid-2014,~~June 2019. During second-quarter 2019, LME copper prices declined because of concerns about slowing growth rates in China, a stronger U.S. dollar and a broad-based decline in commodity prices, but began to improve in fourth-quarter 2016 and into 2017. During third-quarter 2017, LME spot coppersettlement prices ranged from a low of ~~$2.62~~$2.61 per pound to a high of ~~$3.13~~$2.95 per pound, averaged ~~$2.88~~$2.77 per pound and ~~closed~~settled at ~~$2.94~~$2.71 per pound on ~~September 30, 2017.~~June 28, 2019. During the first six months of 2019, copper prices continued to be negatively impacted by the trade dispute between the U.S. and China. The LME ~~spot~~ copper settlement price was ~~$3.09~~$2.69 per pound on ~~October~~July 31, ~~2017.~~2019.

We believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment attributable to difficulty in replacing ~~the output of~~ existing large ~~mines~~mines’ output with new production sources. Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and the production levels of mines and copper smelters.

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This graph presents ~~London~~LBMA PM gold prices from January ~~2007~~2009 through ~~September 2017. An improving economic outlook, stronger U.S. dollar and positive equity performance contributed to lower demand for gold since 2014.~~June 2019. During ~~third-quarter 2017, London~~second-quarter 2019, LBMA PM gold prices ranged from a low of ~~$1,211~~$1,270 per ounce to a high of ~~$1,346~~$1,431 per ounce, averaged ~~$1,278~~$1,309 per ounce, and closed at ~~$1,283~~$1,409 per ounce on ~~September 30, 2017.~~June 28, 2019. The ~~London~~LBMA PM gold price was ~~$1,270~~$1,428 per ounce on ~~October~~July 31, ~~2017.~~2019.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average ~~prices~~price from January ~~2007~~2009 through ~~September 2017. Molybdenum prices declined beginning in mid-2014 because of weaker demand from global steel and stainless steel producers but have rebounded slightly starting in mid-2016.~~June 2019. During ~~third-quarter 2017,~~second-quarter 2019, the weekly average price of molybdenum ranged from a low of ~~$7.11~~$11.96 per pound to a high of ~~$8.88~~$12.35 per pound, averaged ~~$8.14~~$12.18 per pound, and was ~~$8.49~~$12.10 per pound on ~~September 30, 2017.~~June 28, 2019. The Metals Week Molybdenum Dealer Oxide weekly average price was ~~$8.38~~$11.90 per pound on ~~October~~July 31, ~~2017.~~2019.

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CONSOLIDATED RESULTS


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended June 30,							Six Months Ended June 30,
	2017			2016				2017			2016				2019				2018			2019				2018
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)														(in millions, except per share amounts)
Revenues^a,b	$	4,310		$	3,877			$	11,362		$	10,453			$	3,546			$	5,168		$	7,338			$	10,036
Operating income (loss)^a,c,d,e,f	$	917	^g	$	359		^h	$	2,166	^g	$	(3,495	)	^h
Net income (loss) from continuing operations^i,j,k	$	242		$	292			$	836		$	(4,034	)
Net income (loss) from discontinued operations^l	$	3		$	(6	)		$	50		$	(191	)
Net income (loss) attributable to common stock	$	280		$	217			$	776		$	(4,446	)
Diluted net income (loss) per share of common stock:
Operating income^a,c,d															$	33		^e	$	1,664		$	354		^e,f	$	3,123
Net (loss) income from continuing operations^g,h															$	(74	)		$	1,039		$	1			$	1,867
Net (loss) income from discontinued operationsⁱ															$	—			$	(4	)	$	1			$	(15	)
Net (loss) income attributable to common stock															$	(72	)		$	869		$	(41	)		$	1,561
Diluted net (loss) income per share of common stock:
Continuing operations	$	0.19		$	0.18			$	0.50		$	(3.27	)		$	(0.05	)		$	0.59		$	(0.03	)		$	1.08
Discontinued operations	—			(0.02		)		0.03			(0.18		)		—				—			—				(0.01		)
	$	0.19		$	0.16			$	0.53		$	(3.45	)		$	(0.05	)		$	0.59		$	(0.03	)		$	1.07

Diluted weighted-average common shares outstanding	1,454			1,351				1,453			1,289				1,451				1,458			1,451				1,458

Operating cash flows^m	$	1,189		$	980			$	3,018		$	2,594
Operating cash flows^j															$	554			$	1,309		$	1,088			$	2,678
Capital expenditures	$	314		$	494			$	1,020		$	2,309			$	629			$	482		$	1,251			$	884
At September 30:
At June 30:
Cash and cash equivalents	$	4,957		$	1,086			$	4,957		$	1,086			$	2,623			$	3,894		$	2,623			$	3,894
Total debt, including current portion	$	14,782		$	18,882			$	14,782		$	18,882			$	9,916			$	11,277		$	9,916			$	11,277

~~a.As further detailed in Note 10, following is a summary of revenues and operating income (loss) by operating division (in millions):~~

Three Months Ended September 30, Nine Months Ended September 30,
Revenues 2017 2016 2017 2016
North America copper mines $ 1,105
$ 1,084
$ 3,348
$ 3,280

South America mining 1,023
671
2,626
2,019

Indonesia mining 1,121
986
2,720
2,073

Molybdenum mines 65
46
199
136

Rod & Refining 1,145
937
3,312
2,842

Atlantic Copper Smelting & Refining 555
445
1,413
1,363

Corporate, other & eliminations (704 ) (292 ) (2,256 ) (1,260 )
Total revenues $ 4,310
$ 3,877
$ 11,362
$ 10,453

Operating income (loss)
North America copper mines $ 349
$ 213
$ 956
$ 1,190

South America mining 128
111
532
371

Indonesia mining 547
374
1,023
501

Molybdenum mines (13 ) (26 ) (28 ) (74 )
Rod & Refining 2
4
6
15

Atlantic Copper Smelting & Refining 11
17
10
53

Corporate, other & eliminations (107 ) (334 ) (333 ) (5,551 )
Total operating income (loss) $ 917
$ 359
$ 2,166
$ (3,495 )


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


b.	Includes ~~favorable (unfavorable)~~ adjustments to embedded derivatives for provisionally priced concentrate and cathode ~~copper~~ sales ~~recognized in prior periods~~(refer to Note 6).

Includes net (losses) gains on sales of assets totaling ~~$95~~$(8) million ($39(8) million to net loss attributable to common stock or $(0.01) per share) in second-quarter 2019, $45 million ($45 million to net income attributable to common stock or $0.03 per share) in ~~third-quarter 2017, $(15)~~second-quarter 2018, $25 million ($~~(7)~~25 million to net ~~income attributable to common stock or $(0.01) per share) in third-quarter 2016, $81 million ($35 million to net income~~loss attributable to common stock or $0.02 per share) for the first ~~nine~~six months of ~~2017~~2019 and $5$56 million ($256 million to net income attributable to common stock or $0.04 per share) for the first six months of 2018, associated with sales of oil and gas assets, including adjustments to the estimated fair value of contingent consideration related to the 2016 sale of onshore California oil and gas properties (refer to Note 7).


d.	Includes net charges to environmental obligations and related litigation reserves totaling $9 million ($9 million to net loss attributable to common stock or ~~less than~~ $0.01 per share) ~~for the first nine months of 2016. Refer to “Revenues” for further discussion.~~

~~Includes net (credits) charges to mining operations totaling $(4) million ($(4) million to net income attributable to common stock or less than $(0.01) per share)~~ in third-quarter 2017, $40 million ($40 million to net income attributable to common stock or $0.02 per share) in third-quarter 2016, $24 million ($24 million to net income attributable to common stock or $0.02 per share) for the first nine months of 2017 andsecond-quarter 2019, $44 million ($44 million to net loss attributable to common stock or $0.03 per share) for the first ~~nine~~six months of ~~2016, primarily for inventory adjustments~~2019 and ~~asset impairment/retirement.~~


d.	~~Includes net credits to oil and gas operations totaling $4~~$50 million ($450 million to net income attributable to common stock or ~~less than $0.01~~$0.03 per share) ~~in third-quarter 2017~~for the second quarter and ~~$8 million ($8 million to net income attributable to common stock or~~first six months of 2018.

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$0.01 per share) for the first nine months of 2017, primarily related to drillship settlements, and net charges of $49 million ($49 million to net income attributable to common stock or $0.03 per share) in third-quarter 2016 and $980 million ($980 million to net loss attributable to common stock or $0.76 per share) for the first nine months of 2016, for drillship settlements, inventory adjustments, asset impairment and restructuring charges.

Includes ~~a net gain on sales~~charges of ~~assets totaling $33~~$28 million ($3314 million to net income attributable to common stock or $0.02 per share) in third-quarter 2017 and $66 million ($66 million to net income attributable to common stock or $0.05 per share) for the first nine months of 2017, primarily associated with oil and gas transactions and $13 million ($13 million to net income attributable to common stock or $0.01 per share) in third quarter 2016 and $762 million ($757 million to net loss attributable to common stock or $0.59 per share) for the first nine months of 2016, primarily associated with the sales of a 13 percent undivided interest in the Morenci unincorporated joint venture and our interest in the Timok exploration project in Serbia.

Includes net charges (credits) to environmental obligations and related litigation reserves totaling $64 million ($64 million to net income attributable to common stock or $0.04 per share) in third-quarter 2017, $(12) million ($(12) million to net income attributable to common stock or $(0.01) per share) in third-quarter 2016, $53 million ($53 million to net income attributable to common stock or $0.04 per share) for the first nine months of 2017 and $(11) million ($(11) million to net loss attributable to common stock or $(0.01) per share) for the first nine months of 2016. Refer to Note 9 for further discussion.

Includes a charge of $357 million ($188 million to net income attributable to common stock or $0.13 per share) in the third-quarter and first nine months of 2017 associated with disputed Cerro Verde royalties for prior years as well as net charges of $9 million ($5 million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2017 and $117 million ($62 million to net income attributable to common stock or $0.04 per share) for the first nine months of 2017 associated with workforce reductions at PT-FI.


h.	Includes $239 million ($239 million to net income attributable to common stock or $0.18 per share) in third-quarter 2016 and $4.3 billion ($4.3 billion to net loss attributable to common stock or $3.35 per share) for the first nine months of 2016 to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules.

Includes net gains on exchanges and early extinguishment of debt totaling $11 million ($11 million to net income attributable to common stock or $0.01 per share) in third-quarter 2017, $15 million ($15 million to net income attributable to common stock or $0.01 per share) in third-quarter 2016, $8 million ($8 million to net income attributable to common stock or $0.01 per share) for the second quarter and first ~~nine~~six months of ~~2017 and $51~~2019 for an adjustment to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia. Refer to Note 8 for further discussion.

Includes metals inventory adjustments of $59 million ($5127 million to net loss attributable to common stock or ~~$0.04~~$0.02 per share), primarily for ~~the first nine months of 2016.~~cobalt inventory, and charges totaling $23 million ($9 million to net loss attributable to common stock or $0.01 per share) associated with weather-related issues at El Abra and for non-recurring employee costs at PT-FI.


j.g.	Includes net tax credits of $18 million ($0.01 per share) in second-quarter 2019, $24 million ($0.02 per share) for the first six months of 2019 and $7 million (less than $0.01 per share) for the second quarter and first six months of 2018. Refer to “Income Taxes” for further discussion of these net tax credits.


h.	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.

k.i.

Includes net tax (charges) credits of $(10) million ($(0.01) per share) in third-quarter 2017 and $21 million ($0.01 per share) for the first nine months of 2017 associated with alternative minimum tax credit carryforwards, and $332 million ($0.24 per share) in third-quarter 2016 and $290 million ($0.22 per share) for the first nine months of 2016 associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims.

~~Net income from discontinued operations for the third quarter and first nine months of 2017 primarily~~Primarily reflects adjustments to the estimated fair value of ~~the potential $120 million in~~ contingent consideration related to the November 2016 sale of our interest in ~~TFHL,~~TF Holdings Limited, which ~~totaled $58 million at September 30, 2017, and~~ will continue to be adjusted through December 31, 2019. Net loss from discontinued operations for the third quarter and first nine months of 2016 includes an estimated loss of $5 million (less than $0.01 per share) and $182 million ($0.14 per share), respectively, on the sale of our interest in TFHL. Refer to Note 2 for a summary of the components of net income (loss) from discontinued operations.


m.j.	Includes ~~net~~ working capital sources (uses) and ~~changes in~~timing of other tax payments of ~~$52~~$308 million in ~~third-quarter 2017, $8~~second-quarter 2019, $(192) million in ~~third-quarter 2016, $395~~second-quarter 2018, $281 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$483~~$(213) million for the first ~~nine~~six months of ~~2016.~~2018.

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	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016^a		2017		2016^a		2019		2018		2019		2018
SUMMARY OPERATING DATA
Copper (millions of recoverable pounds)
Production	996		1,093		2,730		3,091		776		1,014		1,556		1,966
Sales, excluding purchases	932		1,113		2,683		3,100		807		989		1,591		1,982
Average realized price per pound	$	2.94	$	2.19	$	2.79	$	2.17	$	2.75	$	3.08	$	2.78	$	3.10
Site production and delivery costs per pound^b	$	1.57	$	1.37	$	1.60	$	1.42
Unit net cash costs per pound^b	$	1.21	$	1.14	$	1.26	$	1.28
Site production and delivery costs per pound^a									$	2.26	$	1.69	$	2.21	$	1.68
Unit net cash costs per pound^a									$	1.92	$	0.96	$	1.85	$	0.97
Gold (thousands of recoverable ounces)
Production	418		308		1,010		658		160		746		326		1,345
Sales, excluding purchases	355		317		969		674		189		676		431		1,286
Average realized price per ounce	$	1,290	$	1,327	$	1,261	$	1,292	$	1,351	$	1,274	$	1,315	$	1,291
Molybdenum (millions of recoverable pounds)
Production	24		19		70		58		25		24		48		46
Sales, excluding purchases	22		16		71		52		24		24		46		48
Average realized price per pound	$	9.22	$	9.14	$	9.18	$	8.36	$	13.15	$	12.89	$	12.93	$	12.42
Oil Equivalents
Sales volumes
Oil (millions of barrels (MMBbls))	0.4		9.1		1.4		26.1
Natural gas (billion cubic feet (Bcf))	3.1		13.8		13.3		52.2
Natural gas liquids (MMBbls)	—		0.6		0.2		1.8
Million barrels of oil equivalent (MMBOE)	1.0		12.0		3.8		36.6
Thousand BOE (MBOE) per day	11		131		14		133


a.	Excludes the results of the Tenke mine, which was sold in November 2016 and is reported as a discontinued operation. Copper sales from the Tenke mine totaled 118 million pounds in third-quarter 2016 and 365 million for the first nine months of 2016.


b.	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 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.”

Revenues

Consolidated revenues totaled ~~$4.3~~$3.5 billion in ~~third-quarter 2017 and $11.4~~second-quarter 2019, $5.2 billion in second-quarter 2018, $7.3 billion for the first ~~nine~~six months of ~~2017, compared with $3.9 billion in third-quarter 2016~~2019 and ~~$10.5~~$10.0 billion for the first ~~nine~~six months of ~~2016.~~2018. Revenues from our mining operations primarily include the sale of copper concentrate, copper cathode, copper rod, gold in concentrate and molybdenum. ~~Revenues from our oil and gas operations, most~~Refer to Note 9 for a summary of ~~which were sold in 2016, include the sale of oil, natural gas and natural gas liquids (NGLs).~~

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


	Three Months Ended September 30			Nine Months Ended September 30			Three Months Ended June 30			Six Months Ended June 30

Revenues - 2016 period	$	3,877		$	10,453
Consolidated revenues - 2018 period							$	5,168		$	10,036
(Lower) higher sales volumes:
Copper	(394		)	(903		)	(563		)	(1,214		)
Gold	50			381			(620		)	(1,102		)
Molybdenum	56			161			4			(19		)
Oil and gas	(394		)	(1,031		)
Higher (lower) average realized prices:
(Lower) higher average realized prices:
Copper	700			1,664			(266		)	(509		)
Gold	(13		)	(29		)	15			10
Molybdenum	2			59			6			23
Net adjustments for prior period provisionally priced copper sales	110			76
Adjustments for prior period provisionally priced copper sales							(106		)	128
Lower treatment charges	38			83			39			66
Higher revenues from purchased copper	87			256			43			142
Higher Atlantic Copper revenues	110			50
Lower Atlantic Copper revenues							(56		)	(59		)
Lower royalties and export duties							99			167
Other, including intercompany eliminations	81			142			(217		)	(331		)
Revenues - 2017 period	$	4,310		$	11,362
Consolidated revenues - 2019 period							$	3,546		$	7,338

Sales Volumes.Consolidated copper and gold sales volumes decreased in the 2019 periods, compared to ~~932 million pounds in third-quarter 2017, compared with 1.1 billion pounds in third-quarter 2016,~~the 2018 periods, primarily reflecting anticipated lower mill rates and ore grades in ~~North America and~~ Indonesia ~~and~~as PT-FI transitions mining from the ~~timing of shipments. Consolidated copper sales decreased~~open pit to 2.7 billion pounds for the first nine months of 2017, compared with 3.1 billion pounds for the first nine months of 2016, primarily reflecting lower ore grades in North America and the impact of the May 2016 sale of an additional 13 percent interest in Morenci.

Consolidated gold sales volumes increased to 355 thousand ounces in third-quarter 2017 and 969 thousand ounces for the first nine months of 2017, compared with 317 thousand ounces in third-quarter 2016 and 674 thousand ounces for the first nine months of 2016, primarily reflecting higher ore grades in Indonesia.

Consolidated molybdenum sales volumes increased to 22 million pounds in third-quarter 2017 and 71 million pounds for the first nine months of 2017, compared with 16 million pounds in third-quarter 2016 and 52 million pounds for the first nine months of 2016, primarily reflecting higher demand.

underground. Refer to “Operations” for further discussion of sales volumes at our mining operations.

Oil and gas sales volumes of 1.0 MMBOE in third-quarter 2017 and 3.8 MMBOE for the first nine months of 2017, were lower than oil and gas sales volumes of 12.0 MMBOE in third-quarter 2016 and 36.6 MMBOE for the first nine months of 2016, primarily reflecting the sales of significant oil and gas properties in 2016.

Realized Prices.Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. ~~Third-quarter 2017 average~~Average realized prices in second-quarter 2019, compared with ~~third-quarter 2016,~~second-quarter 2018, were 3411 percent lower for copper, 6 percent higher for ~~copper, 3 percent lower for~~ gold and 12 percent higher for molybdenum, and average realized prices for the first ~~nine~~six months of ~~2017,~~2019, compared with ~~the~~ first ~~nine~~six months of ~~2016,~~2018, were 2910 percent ~~higher~~lower for copper, 2 percent ~~lower~~higher for gold and 104 percent higher for molybdenum. ~~Refer~~

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Average realized copper prices include net unfavorable adjustments to ~~“Markets”~~current period provisionally priced copper sales totaling $39 million in second-quarter 2019 and $58 million for ~~further discussion.~~

~~Provisionally Priced Copper Sales.Substantially~~the first six months of 2019, compared with $37 million in second-quarter 2018 and $79 million for the first six months of 2018. As discussed in Note 6, substantially all of our copper concentrate and 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 ~~spot~~ copper prices. ~~We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement.~~ We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on ~~our~~ provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs. ~~Favorable~~

Prior Period Provisionally Priced Copper Sales.Net (unfavorable)

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~~impacts of net~~ favorable adjustments to prior periods’ provisionally priced copper sales ~~from continuing operations~~(i.e., provisionally priced sales at March 31, 2019 and 2018 and December 31, 2018 and 2017) recorded in consolidated revenues totaled ~~$95~~$(83) million in ~~third-quarter 2017~~second-quarter 2019 and ~~$81~~$58 million for the first ~~nine~~six months of ~~2017,~~2019, compared with ~~$(15)~~$23 million in ~~third-quarter 2016~~second-quarter 2018 and $5$(70) million for the first ~~nine~~six months of ~~2016, primarily reflecting higher copper prices in the 2017 periods.~~2018. Refer to Notes 6 and 9 for a summary of total adjustments to prior period and current period provisionally priced sales.

At ~~September~~June 30, ~~2017,~~2019, we had provisionally priced copper sales ~~at our copper mining operations~~ totaling ~~338~~285 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of ~~$2.93~~$2.72 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~~June 30, ~~2017,~~2019, provisional price recorded would have an approximate ~~$11~~$10 million effect on our ~~2017~~2019 net income attributable to common stock. The LME ~~spot~~ copper price ~~was $3.09~~settled at $2.69 per pound on ~~October~~July 31, ~~2017.~~2019.

Treatment Charges. Revenues from our concentrate sales are recorded net of treatment ~~charges. Lower treatment~~ charges, ~~in the 2017 periods, compared~~which will vary with the ~~2016 periods, primarily reflect lower concentrate~~ sales volumes ~~at North America copper mines.~~and the price of copper.

Purchased Copper.We purchase copper cathode primarily for processing by our Rod & Refining operations. ~~In addition to higher copper prices, we had higher purchased~~Purchased copper volumes ~~in the 2017 periods (75~~totaled 114 million pounds in ~~third-quarter 2017~~second-quarter 2019 and ~~195 million for the first nine months of 2017, compared with 61 million pounds in third-quarter 2016 and 131~~231 million pounds for the first ~~nine~~six months of ~~2016).~~2019, compared with 90 million pounds in second-quarter 2018 and 164 million pounds for the first six months of 2018.

Atlantic Copper Revenues.Atlantic Copper revenues totaled ~~$555~~$546 million in ~~third-quarter 2017~~second-quarter 2019 and ~~$1.4~~$1.1 billion for the first ~~nine~~six months of ~~2017,~~2019, compared with ~~$445~~$602 million in ~~third-quarter 2016~~second-quarter 2018 and ~~$1.4~~$1.2 billion for the first ~~nine~~six months of ~~2016. Higher~~2018. Lower revenues in ~~third-quarter 2017,~~the 2019 periods, compared with ~~third-quarter 2016,~~the 2018 periods, primarily reflect ~~higher~~lower copper sales volumes and lower copper prices.

Royalties and Export Duties. Royalties are primarily for sales from PT-FI and vary with the volume of metal sold and the prices of copper and gold. PT-FI also pays export duties until development progress for the new smelter in Indonesia exceeds 50 percent. Refer to Note 9 for a summary of royalty expense and export duties.

Production and Delivery Costs

Consolidated production and delivery costs totaled ~~$2.8~~$3.0 billion in ~~third-quarter 2017, $2.5~~second-quarter 2019, $2.9 billion in ~~third-quarter 2016, $7.5~~second-quarter 2018, $6.0 billion for the first ~~nine~~six months of ~~2017~~2019 and ~~$8.0~~$5.7 billion for the first ~~nine~~six months of ~~2016. Production~~2018. Higher consolidated production and delivery costs ~~for~~in the ~~third quarter and first nine months of 2017 included charges totaling $216 million~~2019 periods, compared with the 2018 periods, primarily reflect costs at ~~Cerro Verde associated~~PT-FI that were historically shared under the joint venture formerly with disputed royalties for prior years (refer to “Operations – South America Mining” for further discussion). Production and delivery costs for the first nine months of 2016 included charges totaling $942 million at oil and gas operations primarily for drillship settlements and inventory adjustments.Rio Tinto plc.

~~Mining Unit~~ Site Production and Delivery ~~Costs.~~Costs Per Pound. Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives. Consolidated ~~unit~~ site production and delivery costs (before net noncash and other costs) for our copper mines averaged ~~$1.57~~$2.26 per pound of copper in ~~third-quarter 2017 and $1.60~~second-quarter 2019, $1.69 per pound of copper in second-quarter 2018, $2.21 per pound of copper for the first ~~nine~~six months of ~~2017, compared with $1.37 per pound of copper in third-quarter 2016~~2019 and ~~$1.42~~$1.68 per pound of copper for the first ~~nine~~six months of ~~2016.~~2018. Higher consolidated ~~unit~~ site production and delivery costs ~~for~~per pound in the ~~2017~~2019 periods, compared with the ~~2016~~2018 periods, primarily reflect lower ~~copper sales volumes.~~volumes associated with PT-FI’s transition from mining the open pit to underground. 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

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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 ~~individual mines.~~mining operations. Consolidated depreciation, depletion and amortization (DD&A) totaled ~~$418~~$352 million in ~~third-quarter 2017 and $1.3 billion~~second-quarter 2019, $442 million in second-quarter 2018, $699 million for the first ~~nine~~six months of ~~2017, compared with $643~~2019 and $893 million ~~in third-quarter 2016 and $1.9 billion~~ for the first ~~nine~~six months of ~~2016.~~2018. Lower DD&A in the ~~2017~~2019 periods, compared with the ~~2016~~2018 periods, primarily ~~reflects~~reflect lower ~~DD&A from oil~~sales volumes at PT-FI and ~~gas operations resulting from sales~~lower UOP rates because of ~~significant oil and gas properties in 2016.~~

~~Impairment of Oil and Gas Properties~~

The review of the carrying value of our oil and gas properties for impairment under full cost accounting rules resulted in the recognition of impairment charges totaling $239 million for third-quarter 2016 and $4.3 billion for the first nine months of 2016.

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~~Selling, General and Administrative Expenses~~

Consolidated selling, general and administrative expenses totaled $106 million in third-quarter 2017, $110 million in third-quarter 2016, $366 million for the first nine months of 2017 and $408 million for the first nine months of 2016. Selling, general and administrative expenses include net oil and gas-related charges totaling $17 million for the first nine months of 2017 for contract termination and $38 million for the first nine months of 2016 for restructuring.

~~Consolidated selling, general and administrative expenses were net of capitalized general and administrative expenses~~increased reserves at our ~~oil~~North America and ~~gas operations totaling $16 million in third-quarter 2016 and $66 million for the first nine months of 2016.~~South America mines.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled ~~$27~~$31 million in ~~third-quarter 2017, $13~~second-quarter 2019, $24 million in ~~third-quarter 2016, $61~~second-quarter 2018, $58 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$46~~$45 million for the first ~~nine~~six months of ~~2016.~~2018. Our mining exploration activities are generally associated with our existing mines, ~~and focus~~focusing on opportunities to expand reserves and resources to support development of additional future production capacity. ~~Exploration results continue~~A drilling program to further delineate the Lone Star resource continues to indicate ~~opportunities for~~ significant ~~future potential reserve additions~~additional mineralization in this district, with higher ore grades than our other North America ~~and South America.~~copper mines. Exploration spending is expected to approximate $75 million for the year ~~2017.~~2019.

Environmental Obligations and Shutdown Costs

Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates. Shutdown costs include care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges ~~(credits)~~ for environmental obligations and shutdown costs totaled ~~$73~~$23 million in ~~third-quarter 2017, $(3)~~second-quarter 2019, $59 million in ~~third-quarter 2016, $81~~second-quarter 2018, $65 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$18~~$68 million for the first ~~nine~~six months of ~~2016. Refer to Note 9 for further discussion.~~2018.

Interest Expense, Net ~~Gain on Sales of Assets~~

~~Net gain on sales of assets~~Consolidated interest costs (before capitalization) totaled ~~$33~~$167 million in ~~third-quarter 2017 and $66~~second-quarter 2019, $165 million in second-quarter 2018, $345 million for the first ~~nine~~six months of ~~2017, primarily associated with oil~~2019 and ~~gas transactions. Net gain on sales of assets totaled $13 million in third-quarter 2016 and $762~~$341 million for the first ~~nine~~six months of ~~2016, primarily associated with the sales of a 13 percent undivided interest~~2018. The increase in the ~~Morenci unincorporated joint venture and a portion of our~~2019 periods, compared to the 2018 periods, primarily reflects interest ~~in the Timok exploration project in Serbia.~~

~~Interest Expense, Net~~

~~Interest expense, net, for the third quarter and first nine months of 2017 includes $141 million~~ associated with disputed Cerro Verde royalties ~~(refer to Note 9~~ for additional discussion). Consolidated interest costs (before capitalization and excluding interest expense associated with disputed Cerro Verde royalties) totaled $196 million in third-quarter 2017, $211 million in third-quarter 2016, $583 million for the first nine months of 2017 and $647 million for the first nine months of 2016. Lower interest cost for the 2017 periods, compared to the 2016 periods, reflects a decrease in totalprior years, partly offset by lower debt .

balances. Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings, and totaled ~~$33~~$35 million in ~~third-quarter 2017, $24~~second-quarter 2019, $23 million in ~~third-quarter 2016, $91~~second-quarter 2018, $67 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$73~~$48 million for the first ~~nine~~six months of ~~2016.~~2018.

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Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision ~~from continuing operations for the 2017 and 2016 periods~~ (in millions, except percentages):


	Nine Months Ended September 30,																	Six Months Ended June 30,
	2017									2016								2019									2018
	Income (Loss)^a			Effective Tax Rate		Income Tax Benefit (Provision)				Income (Loss)^a			Effective Tax Rate	Income Tax Benefit (Provision)				Income (Loss)^a			Effective Tax Rate		Income Tax (Provision) Benefit				Income^a		Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	66		(40)%		$	27		^b	$	(616	)	47%	$	292		^c
U.S.^b																		$	(183	)	10%		$	19		^c	$	311	(3)%	$	9		^c
South America	709			42%		(296		)		290			39%	(114		)		294			40%		(117		)		459		39%	(180		)	^d
Indonesia	1,035			42%		(435		)		544			39%	(212		)		(13		)	69%		9			^e	1,945		43%	(830		)
Cerro Verde royalty dispute	(357		)	N/A		(2		)	^d	—			N/A	—
Impairment of oil and gas properties	—			N/A		—				(4,317		)	38%	1,632
Valuation allowance, net	—			N/A		—				—			N/A	(1,632		)	^e
Eliminations and other	124			N/A		(38		)		135			N/A	(46		)		(9		)	N/A		(10		)		172		N/A	(31		)
Rate adjustment^f	—			N/A		(3		)		—			N/A	1				—			N/A		9				—		N/A	11
Consolidated FCX	$	1,577		47%	^g	$	(747	)		$	(3,964	)	(2)%	$	(79	)		$	89		101%	^g	$	(90	)		$	2,887	35%	$	(1,021	)


a.	Represents income ~~(loss)~~ from continuing operations ~~by geographic location~~ before income taxes and equity in affiliated companies’ net earnings.


b.	~~Includes net tax credits of $21 million~~In addition to our North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with ~~alternative minimum tax credit carryforwards.~~senior notes, general and administrative expenses, and environmental obligations and shutdown costs.


c.	~~Includes net~~The first six months of 2019 include tax credits totaling $18 million primarily associated with state law changes. The first six months of ~~$290~~2018 include a tax credit of $5 million associated with ~~alternative minimum~~the settlement of a state income tax ~~credits, changes to valuation allowances and net operating loss carryback claims.~~examination.

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Includes a tax ~~charges~~credit of ~~$127~~$5 million ~~for~~($2 million net of noncontrolling interest) associated with Cerro Verde's disputed royalties and other related mining taxes for the period October 2011 through the year 2013 (when royalties were determined based on operating income), mostly offset by a tax benefit of $125 million associated with disputed royalties and other related mining taxes for the period December 2006 through the year 2013.taxes.

AsIncludes a ~~result~~tax credit of $8 million ($6 million net of noncontrolling interest) associated with the ~~impairment to U.S. oil and gas properties, we recorded~~reduction in PT-FI's statutory tax ~~charges to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit.~~rates in accordance with its special mining license (IUPK).


f.	In accordance with applicable accounting rules, we adjust our interim provision for income taxes to equal our consolidated tax rate.

~~The~~Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we ~~operate. Accordingly, variations~~operate, excluding the U.S. jurisdiction. Because our U.S. jurisdiction generated net losses in the ~~relative proportions~~first six months of ~~jurisdictional income~~2019 that will not result in ~~fluctuations~~a realized tax benefit, applicable accounting rules require us to adjust our consolidated effective income tax rate. Assuming achievement of current sales volume and cost estimates and average prices of $3.00 per pound for copper, $1,300 per ounce for gold and $8.00 per pound for molybdenum for fourth-quarter 2017, we estimate our consolidatedestimated annual effective tax rate ~~related~~ to ~~continuing operations for~~exclude the ~~year 2017 will approximate 45 percent and would decrease with higher prices.~~impact of U.S. net losses.

~~Net Income (Loss) from Discontinued Operations~~

~~In November 2016,~~Assuming achievement of current sales volume and cost estimates and average prices of $2.75 per pound for copper, $1,400 per ounce for gold and $12.00 per pound for molybdenum for the second half of 2019, we ~~completed~~estimate our consolidated effective tax rate for the ~~sale~~year 2019 would approximate 57 percent (comprised of an estimated effective rate of 42 percent on South America income, 39 percent on Indonesia income and 0 percent for the U.S.). Variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Because of our ~~interest in TFHL, through which~~U.S. tax position, we ~~had an effective 56 percent interest~~do not record a financial statement impact for income or losses generated in the ~~Tenke~~U.S.; therefore, the consolidated effective tax rate is generally higher than the international rates at lower copper prices and cobalt concessions in the Democratic Republic of Congo. In accordance with accounting guidelines, the results of TFHL have been reported as discontinued operations for all periods presented. Net income from discontinued operations totaled $3 million in third-quarter 2017 and $50 million for the first nine months of 2017, which primarily reflected adjustments to the fair value of the potential $120 million contingent consideration related to the sale, which totaled $58 millionlower than international rates at September 30, 2017, and will continue to be adjusted through December 31, 2019. Net loss from discontinued operations of $6 million in third-quarter 2016 and $191 million for the first nine months of 2016 include an estimated loss on disposal of $5 million for third-quarter 2016 and $182 million for the first nine months of 2016. Refer to Note 2 for a summary of the components of net income (loss) from discontinued operations.higher copper prices.

OPERATIONS

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. All of the North America mining operations are wholly owned, except for Morenci.

We record our 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method. On May 31, 2016, we completed the sale of an additional 13 percent undivided interest in Morenci. As a result of the transaction, our undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent.

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The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper sales is in the form of copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate, gold and silver are also produced by certain of our North America copper mines.

Operating and Development Activities. We have significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. Future investments will be undertaken based on the results of economic and technical feasibility studies, and are dependent on market conditions. We continue to pursue projects to enhance productivity through innovative technologies and to study opportunities to reduce the capital intensity of our potential long-term development projects.

Through exploration drilling, we have identified a significant resource at our wholly owned Lone Star copper leach project located near the Safford operation in eastern Arizona. ~~The Safford mine is~~An initial project to develop the Lone Star leachable ores commenced in 2018, with first production expected ~~to have copper production through 2024.~~by the end of 2020. Initial production from the Lone Star ~~oxide~~leachable ores could begin in 2021 assuming an approximate three-year development period and using existing infrastructure at the adjacent Safford operation. Total preliminary capital cost estimates for development, including mine equipment and pre-production stripping, approximates $850 million. Projected production from the Lone Star oxide ores wouldis expected to average approximately 200 million pounds of copper per year, with ~~an approximate 20-year mine life. Considering the long-term nature and size of the project, results could vary from these estimates. The project would also advance~~ the potential for ~~development~~future expansion options. Total capital costs for the initial project, including mine equipment and pre-production stripping, are expected to approximate $850 million and will benefit from the utilization of ~~a larger-scale district opportunity. We have obtained regulatory approvals~~existing infrastructure at the adjacent Safford operation. As of June 30, 2019, approximately $480 million has been incurred for this project. The project ~~and are assessing the timing~~also advances exposure to ~~commence pre-stripping activities. We are conducting additional drilling as we continue to evaluate longer term opportunities available from the~~a significant sulfide ~~potential~~resource. We expect to incorporate recent positive drilling and ongoing results in ~~the Lone Star/Safford minerals district.~~ our future development plans.

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Operating Data. Following is a summary of consolidated operating data for the North America copper ~~mines for the third quarters and first nine months of 2017 and 2016:~~mines:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Operating Data, Net of Joint Venture Interests
Copper (millions of recoverable pounds)
Production	375		455		1,151		1,411		370		354		706		702
Sales, excluding purchases	347		458		1,130		1,425		369		361		689		745
Average realized price per pound	$	2.92	$	2.19	$	2.74	$	2.18	$	2.78	$	3.12	$	2.80	$	3.14

Molybdenum (millions of recoverable pounds)
Production^a	8		9		25		25		9		8		16		15

100% Operating Data
SX/EW operations
Leach operations
Leach ore placed in stockpiles (metric tons per day)	655,600		681,400		681,200		764,900		797,600		689,500		751,600		682,100
Average copper ore grade (percent)	0.27		0.31		0.28		0.32		0.23		0.24		0.23		0.26
Copper production (millions of recoverable pounds)	280		316		839		921		245		241		471		480

Mill operations
Ore milled (metric tons per day)	297,200		300,500		300,000		299,900		320,300		307,000		317,900		297,900
Average ore grade (percent):
Copper	0.38		0.47		0.40		0.48		0.36		0.35		0.34		0.35
Molybdenum	0.03		0.03		0.03		0.03		0.02		0.02		0.02		0.02
Copper recovery rate (percent)	86.6		87.8		86.6		86.3		87.4		89.1		87.6		88.5
Copper production (millions of recoverable pounds)	167		216		527		661		195		184		371		358


a.	Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines.

~~Table of Contents~~

North America’s consolidated copper sales volumes ~~of 347~~totaled 369 million pounds in ~~third-quarter 2017 and 1.1 billion~~second-quarter 2019, 361 million pounds in second-quarter 2018, 689 million pounds for the first ~~nine~~six months of ~~2017 were lower than third-quarter 2016 sales of 458~~2019 and 745 million ~~pounds and 1.4 billion~~ pounds for the first ~~nine~~six months of ~~2016,~~2018. Lower sales volumes for the first six months of 2019, compared with the first six months of 2018, primarily ~~reflecting lower ore grades. Additionally, third-quarter 2017 was impacted by the~~reflect timing of shipments.

North America copper sales are estimated to approximate ~~1.5~~1.4 billion pounds for the year ~~2017, compared with 1.8 billion pounds in 2016.~~2019.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide 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. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and Molybdenum

The following table summarizes unit net cash costs and gross profit per pound at our North America copper ~~mines for the third quarters and first nine months of 2017 and 2016.~~mines. 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 September 30,
2017 2016
By- Product Method Co-Product Method By- Product Method Co-Product Method
Copper
Molyb-
denum^a
Copper
Molyb-
denum^a

Revenues, excluding adjustments $ 2.92
$ 2.92
$ 7.59
$ 2.19
$ 2.19
$ 7.39

Site production and delivery, before net noncash
and other costs shown below
1.67
1.56
5.58
1.44
1.34
5.51

By-product credits (0.17 ) —
—
(0.17 ) —
—

Treatment charges 0.11
0.11
—
0.10
0.09
—

Unit net cash costs 1.61
1.67
5.58
1.37
1.43
5.51

DD&A 0.28
0.27
0.49
0.28
0.26
0.70

Noncash and other costs, net 0.04
0.04
0.05
0.06
0.05
0.13

Total unit costs 1.93
1.98
6.12
1.71
1.74
6.34

Revenue adjustments, primarily for pricing
on prior period open sales
0.03
0.03
—
—
—
—

Gross profit per pound $ 1.02
$ 0.97
$ 1.47
$ 0.48
$ 0.45
$ 1.05

Copper sales (millions of recoverable pounds) 345
345
457
457

Molybdenum sales (millions of recoverable pounds)^a
8
9

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	Nine Months Ended September 30,																			Three Months Ended June 30,
	2017								2016											2019											2018
	By- Product Method				Co-Product Method				By- Product Method				Co-Product Method							By- Product Method				Co-Product Method							By- Product Method				Co-Product Method
					Copper		Molyb- denum^a					Copper				Molyb- denum^a							Copper				Molyb- denum^a							Copper				Molyb- denum^a
Revenues, excluding adjustments	$	2.74			$	2.74	$	7.57		$	2.18			$	2.18			$	6.24		$	2.78			$	2.78			$	12.39		$	3.12			$	3.12			$	12.13

Site production and delivery, before net noncash and other costs shown below	1.59				1.50		5.62		1.41				1.34				4.86			2.05				1.88				9.53			1.94				1.78				9.09
By-product credits	(0.16		)		—		—		(0.12		)		—				—			(0.26		)		—				—			(0.25		)		—				—
Treatment charges	0.11				0.10		—		0.11				0.10				—			0.11				0.10				—			0.10				0.10				—
Unit net cash costs	1.54				1.60		5.62		1.40				1.44				4.86			1.90				1.98				9.53			1.79				1.88				9.09
DD&A	0.29				0.27		0.56		0.29				0.27				0.61			0.24				0.22				0.77			0.25				0.23				0.80
Noncash and other costs, net	0.06			^b	0.06		0.06		0.05				0.05				0.06			0.03				0.02				0.23			0.07				0.06				0.15
Total unit costs	1.89				1.93		6.24		1.74				1.76				5.53			2.17				2.22				10.53			2.11				2.17				10.04
Revenue adjustments, primarily for pricing on prior period open sales	—				—		—		—				—				—			(0.04		)		(0.04		)		—			—				—				—
Gross profit per pound	$	0.85			$	0.81	$	1.33	$	0.44			$	0.42			$	0.71		$	0.57			$	0.52			$	1.86		$	1.01			$	0.95			$	2.09

Copper sales (millions of recoverable pounds)	1,127				1,127				1,421				1,421							369				369							361				361
Molybdenum sales (millions of recoverable pounds)^a							25										25											9											8



	Six Months Ended June 30,
	2019							2018
	By- Product Method			Co-Product Method				By- Product Method			Co-Product Method
	By- Product Method			Copper		Molyb- denum^a		By- Product Method			Copper			Molyb- denum^a
Revenues, excluding adjustments	$	2.80		$	2.80	$	12.06	$	3.14		$	3.14		$	11.52

Site production and delivery, before net noncash and other costs shown below	2.05			1.87		9.69		1.89			1.75			8.47
By-product credits	(0.26		)	—		—		(0.22		)	—			—
Treatment charges	0.11			0.11		—		0.10			0.10			—
Unit net cash costs	1.90			1.98		9.69		1.77			1.85			8.47
DD&A	0.25			0.22		0.75		0.25			0.23			0.74
Noncash and other costs, net	0.05			0.04		0.22		0.05			0.05			0.12
Total unit costs	2.20			2.24		10.66		2.07			2.13			9.33
Other revenue adjustments, primarily for pricing on prior period open sales	0.01			0.01		—		(0.01		)	(0.01		)	—
Gross profit per pound	$	0.61		$	0.57	$	1.40	$	1.06		$	1.00		$	2.19

Copper sales (millions of recoverable pounds)	689			689				744			744
Molybdenum sales (millions of recoverable pounds)^a						16								15


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


b.	~~Includes $21 million ($0.02 per pound of copper) for asset impairment charges at Morenci.~~

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 were $~~1.61~~1.90 per pound of copper for the second quarter and first six months of 2019, $1.79 per pound in ~~third-quarter2017~~second-quarter2018 and ~~$1.54~~$1.77 per pound for the first ~~nine~~six months of ~~2017 were~~2018. The increase in the 2019 periods, compared to the 2018 periods, primarily reflects higher ~~than~~mining rates, maintenance activities and higher cost of consumables, primarily sulphuric acid. The increase in average unit net cash costs of ~~$1.37~~ ~~per pound in~~ ~~third-quarter2016~~ ~~and $1.40 per pound~~ for the first ~~nine~~six months of ~~2016, primarily reflecting~~2019 also reflects lower sales volumes.

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.

Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $~~1.58~~1.91 per pound of copper for the year ~~2017,~~2019, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $~~8.00~~12.00 per pound for ~~fourth-quarter 2017.~~the second half of 2019. North

Table of Contents

America’s average unit net cash costs for the year ~~2017~~2019 would change by approximately $~~0.007~~0.02 per pound for each $2 per pound change in the average price of ~~molybdenum.~~molybdenum for the second half of 2019.

South America Mining

We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest)~~. These operations~~, which are consolidated in our financial statements.

South America mining includes open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or cathode under long-term contracts. Our South America mines also sell a portion of their copper concentrate production to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.

~~Cerro Verde Royalty Dispute.~~In October 2017, the Peruvian Supreme Court issued a ruling in favor of SUNAT, Peru’s national tax authority, that the assessments of royalties for the year 2008 on ore processed by the Cerro Verde concentrator were proper under Peruvian law. As previously reported in our annual report on Form 10-K for the year ended December 31, 2016, SUNAT has assessed mining royalties on ore processed by the Cerro Verde concentrator for the period December 2006 to September 2011, which Cerro Verde has contested on the basis that its 1998 stability agreement exempts from royalties all minerals extracted from its mining concessions, irrespective of the method used for processing those minerals.

~~Table of Contents~~

As a result of the unfavorable Peruvian Supreme Court decision on the 2008 royalty dispute, Cerro Verde recorded pre-tax charges totaling $357 million ($359 million including net tax charges and $188 million net of noncontrolling interests) in third-quarter 2017 associated with prior assessments and potential royalty and related assessments for December 2006 through the year 2013. Effective January 1, 2014, Cerro Verde entered into a new 15-year stability agreement and has been paying royalties in accordance with the new stability agreement.

Operating and Development Activities. ~~The Cerro Verde expansion project commenced operations in September 2015 and achieved capacity operating rates during first-quarter 2016.~~ Cerro Verde’s expanded operations benefit from its large-scale, long-lived reserves and cost efficiencies. ~~The project expanded the~~Cerro Verde's concentrator facilities ~~from 120,000~~have continued to perform well, with average mill throughput rates of 407,700 metric tons of ore per day ~~to 360,000~~in second-quarter 2019 and 397,200 metric tons of ore per ~~day.~~day for the first six months of 2019. Debottlenecking projects and additional initiatives to enhance operating rates continue to be advanced.

We continue to evaluate a ~~major~~large-scale expansion at El Abra to process additional sulfide material and to achieve higher recoveries. ~~Exploration results at~~ El ~~Abra indicate a significant~~Abra’s large sulfide resource ~~which~~ could potentially support a major mill project similar to facilities ~~recently~~ constructed at Cerro Verde. ~~Future investments will depend on technical~~Technical and economic studies ~~which are being~~continue to be advanced ~~economic factors~~to determine the optimal scope and ~~market conditions.~~timing for the project.

Operating Data. Following is a summary of consolidated operating data for ~~our~~ South America ~~mining operations for the third quarters and first nine months of 2017 and 2016:~~mining:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Copper (millions of recoverable pounds)
Production	328		317		932		986		281		313		580		606
Sales	327		323		923		973		287		312		577		602
Average realized price per pound	$	2.95	$	2.19	$	2.82	$	2.17	$	2.72	$	3.07	$	2.75	$	3.09

Molybdenum (millions of recoverable pounds)
Production^a	8		5		21		14		7		7		15		13

SX/EW operations
Leach operations
Leach ore placed in stockpiles (metric tons per day)	180,400		163,000		153,100		158,100		187,000		246,700		178,400		207,600
Average copper ore grade (percent)	0.36		0.41		0.37		0.41		0.38		0.30		0.36		0.32
Copper production (millions of recoverable pounds)	65		78		190		250		63		75		122		142

Mill operations
Ore milled (metric tons per day)	379,200		355,300		355,400		348,900		407,700		385,200		397,200		385,300
Average ore grade (percent):
Copper	0.44		0.41		0.44		0.42		0.34		0.38		0.36		0.39
Molybdenum	0.02		0.02		0.02		0.02		0.02		0.01		0.02		0.01
Copper recovery rate (percent)	80.9		84.4		82.7		86.1		81.7		84.4		84.5		81.7
Copper production (millions of recoverable pounds)	263		239		742		736		218		238		458		464


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

South America’s consolidated copper sales volumes ~~of 327~~totaled 287 million pounds in ~~third-quarter~~ ~~2017 approximated~~ ~~third-quarter2016~~ ~~sales of 323~~second-quarter 2019, 312 million ~~pounds. South America’s lower consolidated copper sales volumes of 923~~pounds in second-quarter2018, 577 million pounds for the first ~~nine~~six months of ~~2017, compared with 973~~2019 and 602 million pounds for the first ~~nine~~six months of ~~2016,~~2018. Lower sales volumes for the 2019 periods, compared to the 2018 periods, reflect lower ore grades at Cerro Verde. Sales volumes for the ~~Cerro Verde operation being unfavorably~~first six months of 2019 were also impacted by ~~unusually high~~heavy rainfall and electrical storms that resulted in a ~~21-day labor strike during~~suspension of El Abra’s crushed leach stacking operations for approximately 35 days in first-quarter ~~2017.~~2019.

Copper sales from South America mines are expected to approximate 1.2 billion pounds ~~of copper~~ for the year ~~2017, compared with 1.3 billion pounds of copper in~~ ~~2016~~.2019.

Table of Contents

Protests in connection with an unaffiliated copper development project have resulted in restricted access to certain areas and roads in Peru used by the mining community, including Cerro Verde, to transport fuel, concentrate and other critical supplies. Our team at Cerro Verde is monitoring the situation and executing contingency plans as needed. There have been limited impacts to our mining and milling operations to date.

Gross Profit per Pound of Copper

The following table summarizes unit net cash costs and gross profit per pound of copper at the South America mining ~~operations for the third quarters and first nine months of 2017 and 2016.~~operations. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had sales of molybdenum and silver. 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 September 30,
2017 2016

By-Product
Method

Co-Product
Method

By-Product
Method

Co-Product
Method

Revenues, excluding adjustments $ 2.95
$ 2.95
$ 2.19
$ 2.19

Site production and delivery, before net noncash
and other costs shown below
1.60
1.50
1.27
1.20

By-product credits (0.19 ) —
(0.12 ) —

Treatment charges 0.22
0.22
0.24
0.24

Royalty on metals 0.01
0.01
0.01
—

Unit net cash costs 1.64
1.73
1.40
1.44

DD&A 0.41
0.38
0.41
0.39

Noncash and other costs, net 0.69
^a
0.63
0.01
0.01

Total unit costs 2.74
2.74
1.82
1.84

Revenue adjustments, primarily for pricing
on prior period open sales
0.18
0.18
(0.02 ) (0.02 )
Gross profit per pound $ 0.39
$ 0.39
$ 0.35
$ 0.33

Copper sales (millions of recoverable pounds) 327
327
323
323


	Nine Months Ended September 30,											Three Months Ended June 30,
	2017						2016					2019							2018
	By-Product Method				Co-Product Method		By-Product Method			Co-Product Method		By-Product Method				Co-Product Method			By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	2.82			$	2.82	$	2.17		$	2.17	$	2.72			$	2.72		$	3.07		$	3.07

Site production and delivery, before net noncash and other costs shown below	1.55				1.45		1.23			1.17		1.92				1.74			1.77			1.65
By-product credits	(0.17		)		—		(0.10		)	—		(0.28		)		—			(0.22		)	—
Treatment charges	0.22				0.22		0.24			0.24		0.18				0.18			0.18			0.18
Royalty on metals	0.01				0.01		—			—		0.01				0.01			0.01			0.01
Unit net cash costs	1.61				1.68		1.37			1.41		1.83				1.93			1.74			1.84
DD&A	0.42				0.40		0.41			0.39		0.41				0.37			0.43			0.40
Noncash and other costs, net	0.25			^a	0.23		0.02			0.02		0.07			^a	0.07			0.05			0.05
Total unit costs	2.28				2.31		1.80			1.82		2.31				2.37			2.22			2.29
Revenue adjustments, primarily for pricing on prior period open sales	0.04				0.04		0.01			0.01		(0.20		)		(0.20		)	0.04			0.04
Gross profit per pound	$	0.58			$	0.55	$	0.38		$	0.36	$	0.21			$	0.15		$	0.89		$	0.82

Copper sales (millions of recoverable pounds)	923				923		973			973		287				287			312			312



	Six Months Ended June 30,
	2019						2018
	By-Product Method				Co-Product Method		By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	2.75			$	2.75	$	3.09		$	3.09

Site production and delivery, before net noncash and other costs shown below	1.82				1.64		1.78			1.64
By-product credits	(0.31		)		—		(0.24		)	—
Treatment charges	0.19				0.19		0.19			0.19
Royalty on metals	0.01				0.01		0.01			0.01
Unit net cash costs	1.71				1.84		1.74			1.84
DD&A	0.40				0.35		0.43			0.40
Noncash and other costs, net	0.08			^a	0.08		0.05			0.05
Total unit costs	2.19				2.27		2.22			2.29
Other revenue adjustments, primarily for pricing on prior period open sales	0.06				0.06		(0.06		)	(0.06		)
Gross profit per pound	$	0.62			$	0.54	$	0.81		$	0.74

Copper sales (millions of recoverable pounds)	577				577		602			602

Table of Contents


a.	Includes charges ~~totaling $216 million ($0.66~~of $0.01 per pound of copper in ~~third-quarter 2017~~second-quarter 2019 and ~~$0.23~~$0.03 per pound of copper for the first ~~nine~~six months of ~~2017)~~2019 associated with ~~disputed Cerro Verde royalties for prior years.~~weather-related impacts at El Abra.

~~Table of Contents~~

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) of ~~$1.64~~$1.83 per pound of copper in ~~third-quarter2017~~ ~~and $1.61 per pound for the first nine months of 2017~~second-quarter2019 were higher than unit net cash costs of ~~$1.40~~$1.74 per pound in ~~third-quarter2016~~ ~~and $1.37~~second-quarter2018, primarily reflecting lower copper volumes, partly offset by higher by-product credits. Average unit net cash costs (net of by-product credits) of $1.71 per pound for the first ~~nine~~six months of ~~2016,~~2019 were lower than unit net cash costs of $1.74 per pound for the first six months of 2018, primarily reflecting higher ~~mining, milling and employee costs at Cerro Verde.~~by-product credits, partly offset by lower copper volumes.

Revenues from Cerro Verde’s concentrate sales are recorded net of treatment ~~charges. Accordingly, treatment~~ charges, which will vary with Cerro Verde’s sales volumes and the price of copper.

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.

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 ~~our~~ South America mining ~~operations~~ are expected to approximate $~~1.64~~1.68 per pound of copper for the year ~~2017,~~2019, based on current sales volume and cost estimates and assuming an average price of $~~8.00~~12.00 per pound of molybdenum for ~~fourth-quarter 2017.~~the second half of 2019.

Indonesia Mining

~~Indonesia mining includes~~ PT-FI’s ~~Grasberg minerals district,~~assets include one of the world’s largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. ~~We own 90.64 percent of PT-FI, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama.~~

PT-FI proportionately consolidates an unincorporated joint venture with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and a 40 percent interest through 2022 in production exceeding specified annual amounts of copper, gold and silver. Refer to Note 3 in our annual report on Form 10-K for the year ended December 31, 2016, for discussion of our joint venture with Rio Tinto.

PT-FI produces copper concentrate that contains significant quantities of gold and silver. Effective December 21, 2018, our ownership interest in PT-FI is 48.76 percent. We manage PT-FI’s mining operations and consolidate PT-FI in our financial statements. As further discussed in Note 1, our economic interest in PT-FI is expected to approximate 81 percent through 2022.

Substantially all of PT-FI’s copper concentrate is sold under long-term ~~contracts, and during~~contracts. During the first ~~nine~~six months of ~~2017, approximately half~~2019, 64 percent of PT-FI’s concentrate production was sold to PT Smelting ~~its~~(PT-FI’s 25-percent-owned smelter and refinery in Gresik, ~~Indonesia.~~Indonesia).

~~Regulatory Matters.~~ ~~In January~~Operating and February 2017, the Indonesian government issued new regulations to address the export of unrefined metals, including copper concentrate and anode slimes, and other matters related to the mining sector. The new regulations permit the continuation of copper concentrate exports for a five-year period through January 2022, subject to various conditions, including conversion from a contract of work to a special operating license (known as an IUPK, which does not provide the same level of fiscal and legal protections as PT-FI’s Contract of Work (COW), which remains in effect), a commitment to the completion of smelter construction in five years and payment of export duties to be determined by the Ministry of Finance. In addition, the new regulations enable application for an extension of operating rights five years before expiration of the IUPK and require foreign IUPK holders to divest a 51 percent interest in the licensed entity to Indonesian interests no later than the tenth year of production. Export licenses would be valid for one-year periods, subject to review every six months, depending on smelter construction progress.

Following the issuance of the January and February 2017 regulations and discussions with the Indonesian government, PT-FI advised the government that it was prepared to convert its COW to an IUPK, subject to obtaining an investment stability agreement providing contractual rights with the same level of legal and fiscal certainty enumerated under its COW, and provided that the COW would remain in effect until it is replaced by a mutually satisfactory alternative. PT-FI also committed to commence construction of a new smelter during a five-year timeframe, following approval of the extension of its long-term operating rights.

On January 12, 2017, PT-FI suspended exports in response to Indonesian regulations adopted in January 2014. In addition, as a result of labor disturbances and a delay in the renewal of its export license for anode slimes, PT Smelting’s operations were shut down from January 19, 2017, until early March 2017. On February 10, 2017, PT-FI was forced to suspend production as a result of limited storage capacity at PT-FI and PT Smelting. On April 21,

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~~2017, the Indonesian government issued a permit to PT-FI that allowed exports to resume for a six-month period, and PT-FI commenced export shipments.~~

In mid-February 2017, pursuant to the COW’s dispute resolution process, PT-FI provided formal notice to the Indonesian government of an impending dispute listing the government’s breaches and violations of the COW.Development Activities. PT-FI continues to ~~reserve its rights under these provisions.~~

In August 2017, we reached an understanding with the Indonesian government on a framework that would resolve PT-FI’s long-term operating rights. This framework includes (i) conversion from the COW to an IUPK providing PT-FI with long-term operating rights through 2041, (ii) Indonesian government certainty of fiscal and legal terms during the term of the IUPK, (iii) PT-FI commitment to construct a new smelter in Indonesia within five years of reaching a definitive agreement, and (iv) divestment of 51 percent of the project area interests to Indonesian participants at fair market value structured so that we retain control over operations and governance of PT-FI.

The framework requires documentation and execution of a definitive agreement, which must be approved by our Board and joint venture partner Rio Tinto. The parties continue to negotiate to reach agreement on important aspects of implementation of the framework, including the timing and process of divestment, governance matters, and the determination of fair market value, and to complete documentation on a comprehensive agreement for PT-FI’s extended operations through 2041. The parties have expressed a mutual objective of completing the negotiations and documentation during 2017.

In October 2017, the Indonesian government extended PT-FI’s export rights to December 31, 2017, while negotiations to reach and document a comprehensive long-term definitive agreement based on the agreed framework continue. Until a definitive agreement is reached, PT-FI has reserved all rights under its COW, including pursuing arbitration under the dispute resolution provisions.

We cannot predict whether PT-FI will be successful in reaching a satisfactory definitive agreement on the terms of its long-term mining rights. Refer to “Risk Factors” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2016, for further discussion of risks associated with our operations in Indonesia.

~~Operating and Development Activities.~~ ~~PT-FI is currently mining~~mine the final ~~phase~~stages of the Grasberg open pit. During second-quarter 2019, PT-FI opened an additional area to extend mining in the Grasberg open pit ~~which contains high~~into third-quarter 2019 and potentially longer. The mine sequencing changes in the open pit delayed access to the high-grade material previously expected to be produced during second-quarter 2019, but are expected to meet previous estimates for copper and gold ~~ore grades.~~production for the year 2019. PT-FI ~~expects~~will continue to ~~mine high-grade ore over~~monitor geotechnical conditions to determine the ~~next several quarters prior~~extent of mining in the open pit. Material not mined from the open pit is expected to ~~transitioning~~be available to be mined from the Grasberg Block Cave underground ~~mine in early 2019.~~mine.

During second-quarter 2019, PT-FI ~~has several projects in the Grasberg minerals district~~achieved important milestones related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit. ~~Assuming a definitive agreement is reached to support PT-FI’s long-term investment plans,~~PT-FI's estimated annual capital spending on ~~these~~underground mine development projects ~~would~~is expected to average ~~$1.0~~$0.7 billion per year ~~($0.8~~for the four-year period 2019 through 2022, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum). In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average $0.9 billion per year ~~net to PT-FI) over~~for the ~~next five years.~~four-year period 2019 through 2022, will be reflected as an investing activity in our cash flow statement, and contributions from PT Inalum will be reflected as a financing activity. Considering the long-term nature and size of these projects, actual costs could vary from these estimates. In response to market conditions and Indonesian regulatory uncertainty, timing of these expenditures continues to be reviewed. If PT-FI is unable to reach a definitive agreement with the Indonesian government on its long-term mining rights, we intend to reduce or defer investments significantly in our underground development projects and pursue arbitration under PT-FI’s COW.

The following provides additional information on the ~~continued~~ development of ~~the Common Infrastructure project,~~ the Grasberg Block Cave underground mine, ~~and~~ the Deep Mill Level Zone (DMLZ) ~~ore body that lies below~~underground mine and the new Indonesian smelter. Estimates of timing of future production from the underground mines continue to be reviewed and may be modified as additional information becomes available.

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~~Deep Ore Zone (DOZ) underground mine. Our current plans and mineral reserves in Indonesia assume that PT-FI’s long-term mining rights will be extended through 2041, as stated in the COW.~~

~~Common Infrastructure and~~ Grasberg Block ~~Cave Mine.~~ ~~In 2004,~~ Cave. PT-FI has commenced ~~its Common Infrastructure project to provide access to its large undeveloped underground~~extraction of ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in 2010. The Big Gossan underground mine is currently preparing to restart production. Development of the DMLZ and Grasberg Block Cave underground mines is advancing using the Common Infrastructure project tunnels as access.

~~The Grasberg Block Cave underground mine accounts for approximately half of our recoverable proven and probable reserves in Indonesia. Production~~ from the Grasberg Block Cave underground mine, which is ~~expected to commence~~the same ore body historically mined from the surface in ~~early 2019, following the end of mining of~~ the Grasberg open pit. ~~Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 130,000-160,000 metric tons of~~During second-quarter 2019, undercutting, drawbell construction and ore ~~per day. PT-FI is reviewing its operating plans to determine the optimum mine plan for the Grasberg Block Cave underground mine.~~

~~Aggregate mine development capital for~~extraction activities in the Grasberg Block Cave underground mine exceeded expectations. Ore extraction from the Grasberg Block Cave underground mine averaged 7,400 metric tons per day in second-quarter 2019 and ~~associated Common Infrastructure~~ is expected to ~~approximate $6.3 billion (incurred between 2008~~ramp up to 15,000 metric tons per day by the end of 2019. Monitoring data on cave propagation in the Grasberg Block Cave underground mine is providing increased confidence in growing production rates over time. As existing drawpoints mature and ~~2022), with PT-FI’s share totaling approximately $5.8 billion. Aggregate project costs totaling $3.2 billion~~additional drawpoints are added, cave expansion is expected to accelerate production rates from an average of 30,000 metric tons of ore per day in 2020 to 130,000 metric tons of ore per day in 2023 from five production blocks spanning 335,000 square meters.

DMLZ. The DMLZ underground mine, located east of the Grasberg ore body and below the Deep Ore Zone (DOZ) underground mine, has commenced production. Hydraulic fracturing operations have been ~~incurred through September 30,~~effective in managing rock stresses and pre-conditioning the cave following mining-induced seismic activity experienced in 2017 ~~including $118 million during~~ ~~third-quarter~~ ~~2017. As a result of regulatory uncertainty, PT-FI has slowed investments~~and 2018. In second-quarter 2019, undercutting and drawbell construction were in ~~its underground development projects. If PT-FI is unable to reach a definitive agreement~~line with ~~the Indonesian government on its long-term mining rights, we intend to reduce or defer investments significantly in our underground development projects~~expectations, and ~~pursue arbitration under PT-FI’s COW.~~

~~DMLZ.~~ ~~The DMLZ~~ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. In September 2015, PT-FI initiated pre-commercial production that represents ore extracted during the development phase for the purpose of obtaining access to the ore body. In June 2017, productionextraction exceeded expectations. Ore extraction from the DMLZ underground mine ~~was impacted by mining-induced seismic activity, which~~averaged 7,700 metric tons per day in second-quarter 2019 and is ~~not uncommon in block cave mining. To mitigate the impact of these events, PT-FI implemented a revised mine sequence and start-up plan in~~ ~~third-quarter~~ ~~2017. PT-FI expects DMLZ~~expected to ramp up to ~~full capacity~~11,000 metric tons of ore per day by the end of 2019. Ongoing hydraulic fracturing operations combined with continued undercutting and drawbell openings in the two production blocks are expected to expand the cave, supporting higher production rates that are expected to average 28,000 metric tons of ore per day in 2020 and 80,000 metric tons of ore per day in ~~2021, but at~~2022 from three production blocks.

Indonesian Smelter. In connection with the extension of PT-FI’s mining rights from 2031 to 2041, PT-FI committed to construct a ~~slower pace than previous estimates.~~

~~Drilling efforts continue to determine~~new smelter in Indonesia by December 21, 2023. A site for the ~~extent~~new smelter has been selected in Gresik near PT Smelting and ground preparation is in progress. Engineering and front-end engineering and design for the selected process technology are ongoing, with construction of the ~~ore body. Aggregate mine development~~smelter expected to begin in 2020. The preliminary capital ~~costs~~cost estimate for the ~~DMLZ underground mine are expected to approximate $3.2 billion (incurred between 2009 and 2021), with PT-FI’s share totaling approximately $1.9 billion. Aggregate~~ project ~~costs totaling $2.1 billion have been incurred through September 30, 2017, including $62 million during~~ ~~third-quarter~~ 2017. As a result of regulatory uncertainty, PT-FI has slowed investments in its underground development projects. If PT-FI is unable to reach a definitive agreement with the Indonesian government on its long-term mining rights, we intend to reduce or defer investments significantly in our underground development projects and pursue arbitration under PT-FI’s COW.

~~Other Matters.~~ In late October 2017, Indonesia’s Ministry of Environment and Forestry (the Ministry) notified PT-FI of administrative sanctions related to certain activities the Ministry indicated are not reflected in its environmental permit. The Ministry also notified PT-FI that certain operational activities were inconsistent with factors set forth in its environmental permitting studies and that additional monitoring and improvements need to be undertaken related to air quality, water drainage, treatment and handling of certain wastes, and tailings management. PT-FI has been engaged in a process to update its permits through submissions and dialogue with the Ministry, which began in late 2014. PT-FI believes that it has submitted the required documentation to update its permits, and is in the ~~process of addressing other points raised by the Ministry.~~

As further discussed in “Risk Factors” contained in Part I. Item 1A of our annual report on Form 10-K for the year ended December 31, 2016, in 2009, there were a series of shooting incidents within the PT-FI project area, with sporadic shooting incidents continuing through January 1, 2015. From August 2017 through November 3, 2017, there were six shooting incidents within the PT-FI project area and five shooting incidents in nearby areas, which resulted in one fatality and 12 injuries. The safety of our workforce is a critical concern,$3 billion range, and PT-FI is ~~working~~pursuing financing, commercial and potential partner arrangements for this project. The economics of PT-FI’s share of the new smelter will be shared by PT-FI’s shareholders according to their respective share ownership percentages.

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~~cooperatively with the Indonesian government to address security issues. We also continue to limit the use of the road leading to our mining and milling operations to secured convoys.~~

Operating Data. Following is a summary of consolidated operating data for ~~our~~ Indonesia ~~mining operations for the third quarters and first nine months of 2017 and 2016:~~mining:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Operating Data, Net of Joint Venture Interest
Operating Data
Copper (millions of recoverable pounds)
Production	293		321		647		694		125		347		270		658
Sales	258		332		630		702		151		316		325		635
Average realized price per pound	$	2.95	$	2.20	$	2.81	$	2.17	$	2.71	$	3.05	$	2.77	$	3.07

Gold (thousands of recoverable ounces)
Production	412		301		992		637		154		740		316		1,335
Sales	352		307		956		653		185		671		420		1,274
Average realized price per ounce	$	1,290	$	1,327	$	1,261	$	1,292	$	1,350	$	1,274	$	1,314	$	1,291

100% Operating Data
Ore milled (metric tons per day):^a
Grasberg open pit	130,500		135,600		91,200		117,200
Ore extracted and milled (metric tons per day):
Grasberg open pit^a									54,000		148,400		78,300		136,800
DOZ underground mine^b	34,500		35,100		29,400		38,700		21,100		29,200		25,700		34,300
DMLZ underground mine	2,400		6,000		3,100		5,000
Grasberg Block Cave	4,200		2,800		3,600		2,600
Big Gossan underground mine	—		1,000		500		700
DMLZ underground mine^b									7,700		2,700		7,200		2,700
Grasberg Block Cave underground mine^b									7,400		3,800		6,200		3,900
Big Gossan underground mine^b									5,400		3,800		5,500		3,100
Total	171,600		180,500		127,800		164,200		95,600		187,900		122,900		180,800
Average ore grades:
Copper (percent)	0.91		1.02		1.00		0.86		0.80		1.06		0.69		1.09
Gold (grams per metric ton)	0.98		0.69		1.08		0.58		0.79		1.77		0.66		1.71
Recovery rates (percent):
Copper	91.1		91.4		91.6		90.5		88.3		92.7		86.3		92.4
Gold	84.7		82.7		84.9		81.4		74.9		86.1		71.6		85.5
Production:
Copper (millions of recoverable pounds)	277		327		670		736		125		353		270		693
Gold (thousands of recoverable ounces)	405		300		993		664		154		816		316		1,489


a.	~~Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities~~Includes ore from ~~each producing mine and~~related stockpiles.


b.	Reflects ore extracted, including ore from development activities that result in metal production.


b.	~~Ore milled from the DOZ underground mine is expected to ramp up to 60,000 metric tons of ore per day in 2018.~~

~~Indonesia mining’s~~PT-FI’s consolidated ~~copper sales volumes of 258 million pounds in~~ ~~third-quarter~~ ~~2017 were lower than~~ sales of ~~332~~151 million ~~pounds in~~ ~~third-quarter~~ 2016, primarily reflecting lower copper ore grades and timing of shipments. Indonesia mining’s consolidated copper sales volumes of 630 million pounds for the first nine months of 2017 were lower than sales of 702 million pounds for the first nine months of 2016, primarily reflecting the impact of regulatory restrictions on PT-FI’s concentrate exports at the beginning of 2017 (see discussion above in “Regulatory Matters”).

~~Indonesia’s consolidated gold sales of 352 thousand ounces in~~ ~~third-quarter~~ ~~2017 and 956 thousand ounces for the first nine months of 2017 were higher than sales of 307 thousand ounces in~~ ~~third-quarter~~ ~~2016 and 653 thousand ounces for the first nine months of 2016, primarily reflecting higher gold ore grades, partly offset by timing of shipments.~~

During third-quarter 2017, PT-FI's labor productivity improved significantly following a recovery from disruptions that occurred in the first half of the year. Mining and milling rates improved throughout the quarter, and PT-FI continues to assess opportunities to advance mining of a section of high-grade material during 2018 and 2019 through open-pit mining rather than over time through the Grasberg Block Cave underground mine.

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~~In October 2017, PT-FI and union officials commenced discussions for a new two-year labor agreement. The existing agreement will continue in effect until a new agreement is consummated.~~

~~Assuming achieving planned operating rates for fourth-quarter 2017, consolidated sales volumes from Indonesia mining are expected to approximate 1.0 billion~~ pounds of copper and ~~1.6~~185 thousand ounces of gold in second-quarter 2019 and 325 million pounds of copper and 420 thousand ounces of gold for the first six months of 2019 were lower than second-quarter 2018 sales of 316 million pounds of copper and 671 thousand ounces of gold and 635 million pounds of copper and 1.3 million ounces of gold for the ~~year 2017, compared with 1.1 billion~~first six months of 2018, primarily reflecting anticipated lower mill rates and ore grades as PT-FI transitions mining from the open pit to underground.

Consolidated sales volumes from PT-FI are expected to approximate 630 million pounds of copper and ~~1.1 million~~830 thousand ounces of gold in 2019. PT-FI will continue to monitor geotechnical conditions to determine the extent of mining in the Grasberg open pit. As PT-FI transitions mining from the open pit to underground, metal production is expected to improve by 2021.

During the first half of 2019, PT-FI utilized its approved export quota of approximately 180,000 dry metric tons of concentrate for the ~~year 2016. At~~current export period, which expires March 8, 2020. PT-FI has requested approval from the ~~Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold.~~

~~Indonesia mining’s projected sales volumes~~Indonesian government to increase its export quota for the ~~year 2017 are dependent on a number of factors, including operational performance, workforce productivity and the timing of shipments.~~current export period for expected higher production volumes associated with changes to PT-FI's production plan. PT-FI expects to receive approval during third-quarter 2019.

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performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross (Loss) Profit per Pound of Copper and per Ounce of Gold

The following table summarizes the unit net cash costs (credits) and gross (loss) profit per pound of copper and per ounce of gold at our Indonesia mining ~~operations for the third quarters and first nine months of 2017 and 2016.~~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 (credits) per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.



	Three Months Ended September 30,																					Three Months Ended June 30,
	2017										2016											2019											2018
	By-Product Method				Co-Product Method						By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
					Copper			Gold						Copper				Gold							Copper				Gold							Copper				Gold
Revenues, excluding adjustments	$	2.95			$	2.95		$	1,290			$	2.20			$	2.20			$	1,327		$	2.71			$	2.71			$	1,350		$	3.05			$	3.05			$	1,274

Site production and delivery, before net noncash and other costs shown below	1.41				0.87			383			1.37				0.86				520
Site production and delivery, before net noncash and other costs (credits) shown below																						3.40				2.09				1,041			1.33				0.70				291
Gold and silver credits	(1.80		)		—			—			(1.29		)		—				—			(1.69		)		—				—			(2.76		)		—				—
Treatment charges	0.27				0.17			74			0.27				0.17				104			0.26				0.16				80			0.26				0.14				57
Export duties	0.08				0.05			22			0.10				0.07				39			0.07				0.04				20			0.18				0.09				38
Royalty on metals	0.17				0.10			48			0.12				0.07				50			0.11				0.08				28			0.22				0.11				51
Unit net cash costs	0.13				1.19			527			0.57				1.17				713
Unit net cash costs (credits)																						2.15				2.37				1,169			(0.77		)		1.04				437
DD&A	0.53				0.33			143			0.33				0.21				125			0.65				0.40				199			0.54				0.28				119
Noncash and other costs, net	0.09			^a	0.06			25			0.05			^b	0.03				19
Total unit costs	0.75				1.58			695			0.95				1.41				857
Noncash and other costs (credits), net																						0.30			^a	0.18				91			(0.01		)		—				(2		)
Total unit costs (credits)																						3.10				2.95				1,459			(0.24		)		1.32				554
Revenue adjustments, primarily for pricing on prior period open sales	0.11				0.11			4			(0.02		)		(0.02		)		1			(0.13		)		(0.13		)		(7		)	0.04				0.04				(2		)
PT Smelting intercompany loss	(0.07		)		(0.04		)	(19		)	(0.03		)		(0.02		)		(10		)
Gross profit per pound/ounce	$	2.24			$	1.44		$	580		$	1.20			$	0.75			$	461
PT Smelting intercompany profit (loss)																						0.06				0.03				16			(0.03		)		(0.01		)		(6		)
Gross (loss) profit per pound/ounce																						$	(0.46	)		$	(0.34	)		$	(100	)	$	3.30			$	1.76			$	712

Copper sales (millions of recoverable pounds)	258				258						332				332							151				151							316				316
Gold sales (thousands of recoverable ounces)								352											307											185											671

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	Six Months Ended June 30,
	2019								2018
	By-Product Method				Co-Product Method				By-Product Method			Co-Product Method
	By-Product Method				Copper		Gold		By-Product Method			Copper			Gold
Revenues, excluding adjustments	$	2.77			$	2.77	$	1,314	$	3.07		$	3.07		$	1,291

Site production and delivery, before net noncash and other costs shown below	3.24				1.99		944		1.34			0.72			304
Gold and silver credits	(1.75		)		—		—		(2.67		)	—			—
Treatment charges	0.28				0.17		81		0.25			0.14			57
Export duties	0.08				0.05		24		0.16			0.09			36
Royalty on metals	0.14				0.09		38		0.22			0.11			50
Unit net cash costs (credits)	1.99				2.30		1,087		(0.70		)	1.06			447
DD&A	0.63				0.38		183		0.55			0.30			125
Noncash and other costs, net	0.14			^a	0.09		43		0.02			0.01			4
Total unit costs (credits)	2.76				2.77		1,313		(0.13		)	1.37			576
Other revenue adjustments, primarily for pricing on prior period open sales	0.05				0.05		5		(0.05		)	(0.05		)	13
PT Smelting intercompany profit (loss)	0.04				0.02		10		(0.04		)	(0.01		)	(7		)
Gross profit per pound/ounce	$	0.10			$	0.07	$	16	$	3.11		$	1.64		$	721

Copper sales (millions of recoverable pounds)	325				325				635			635
Gold sales (thousands of recoverable ounces)							420								1,274

Nine Months Ended September 30,
2017 2016
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Gold Copper Gold
Revenues, excluding adjustments $ 2.81
$ 2.81
$ 1,261
$ 2.17
$ 2.17
$ 1,292

Site production and delivery, before net noncash and other costs shown below 1.71
1.01
451
1.70
1.08
639
Gold and silver credits (1.98 ) —
—
(1.28 ) —
—
Treatment charges 0.27
0.16
71
0.29
0.18
109
Export duties 0.10
0.06
26
0.09
0.06
34
Royalty on metals 0.16
0.09
47
0.12
0.07
48
Unit net cash costs 0.26
1.32
595
0.92
1.39
830
DD&A 0.59
0.35
156
0.40
0.25
152
Noncash and other costs, net 0.22
^a
0.13
58
0.04
^b
0.03
16
Total unit costs 1.07
1.80
809
1.36
1.67
998
Revenue adjustments, primarily for pricing on prior period open sales 0.06
0.06
9
—
—
25
PT Smelting intercompany loss (0.03 ) (0.01 ) (7 ) (0.01 ) (0.01 ) (4 )
Gross profit per pound/ounce $ 1.77
$ 1.06
$ 454
$ 0.80
$ 0.49
$ 315

Copper sales (millions of recoverable pounds) 630
630
702
702

Gold sales (thousands of recoverable ounces) 956
653


a.	Includes costs charged directly to production and delivery costs totaling $9 million ($0.03 per pound of copper) for third-quarter 2017 and $112 million ($0.18 per pound of copper) for the first nine months of 2017 as a result of workforce reductions.


b.	~~Includes asset retirement~~ charges of ~~$17 million ($0.05~~$0.18 per pound of copper in ~~third-quarter 2016~~second-quarter 2019 and ~~$0.02~~$0.09 per pound of copper for the first ~~nine~~six months of ~~2016).~~2019 associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia.

~~A significant~~

Because of the fixed nature of a large portion of PT-FI’s costs, ~~are fixed and unit costs vary depending on production volumes and other factors. Indonesia’s~~ unit net cash costs (credits) can vary significantly from quarter to quarter depending on copper and gold volumes. PT-FI’s unit net cash costs (credits) (including gold

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and silver credits) of ~~$0.13~~$2.15 per pound of copper in ~~third-quarter~~ ~~2017~~second-quarter 2019 and ~~$0.26~~$1.99 per pound ~~of copper~~ for the first ~~nine~~six months of ~~2017 were lower than~~2019, compared with unit net cash ~~costs~~credits of ~~$0.57~~$0.77 per pound ~~of copper~~ in ~~third-quarter2016~~second-quarter2018 and ~~$0.92~~$0.70 per pound ~~of copper~~ for the first ~~nine~~six months of ~~2016,~~2018, primarily ~~reflecting higher gold and silver credits, partly offset by~~reflect lower copper ~~sales~~and gold volumes.

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.

PT-FI’s royalties totaled $43 million in third-quarter 2017, $40 million in third-quarter 2016, $106 million for the first nine months of 2017 and $84 million for the first nine months of 2016. Export duties totaled $21 million in third-quarter 2017, $34 million in third-quarter 2016, $62 million for the first nine months of 2017 and $63 million for the first nine months of 2016. As further discussed above in “Regulatory Matters,” PT-FI agreed to continue to pay a five percent export duty.

Higher depreciation rates for the 2017 periods, compared with the 2016 periods, primarily relate to higher amortization of asset retirement costs associated with revised estimates at the end of 2016 for an overburden stockpile. Additionally, because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate varies with the level of copper production and sales.

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.

PT Smelting intercompany ~~loss~~profit (loss) represents the change in the deferral of 25 percent of PT-FI’s profit on sales to PT Smelting. Refer to ~~“Operations – Smelting &~~“Smelting and Refining” below for further discussion.

Assuming an average gold price of ~~$1,300~~$1,400 per ounce for ~~fourth-quarter 2017~~the second half of 2019 and achievement of current sales volume and cost estimates, unit net cash costs ~~(net of~~(including gold and silver credits) for ~~Indonesia mining~~PT-FI are expected to approximate ~~$0.07~~$1.55 per pound of copper for the year ~~2017. Indonesia mining’s~~2019 (including $1.14 per pound of copper for the second half of 2019). PT-FI’s unit net cash costs for the second half of 2019 are expected to benefit from access to higher grade ore from the Grasberg open pit. PT-FI’s unit net cash costs for the year ~~2017~~2019 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of ~~gold.~~gold for the second half of 2019.

~~Table~~PT-FI’s projected sales volumes and unit net cash costs for the year 2019 are dependent on a number of ~~Contents~~

factors, including operational performance, mine sequencing changes, timing of shipments and export quotas.

~~Because of the fixed nature of a large portion of Indonesia’s costs, unit costs vary from quarter to quarter depending on copper and gold volumes.~~

Molybdenum Mines

We have two wholly owned molybdenum mines in ~~North America~~Colorado – the Henderson underground mine and the Climax open-pit ~~mine, both in Colorado.~~mine. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North America and South America copper mines, is processed at our own conversion facilities.

Operating and Development Activities. ~~In response to market conditions, the Henderson molybdenum mine continues to operate at reduced rates.~~ Production from the Molybdenum mines totaled 89 million pounds of molybdenum in ~~third-quarter2017, 5 million pounds in~~ ~~third-quarter~~ ~~2016, 24~~both second-quarter2019 and 2018, 17 million pounds for the first ~~nine~~six months of ~~2017~~2019 and 1918 million pounds for the first ~~nine~~six months of ~~2016.~~2018. 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, and refer to “Outlook” for projected consolidated molybdenum sales volumes.

Unit Net Cash Costs Per Pound of Molybdenum. Unit net cash costs per pound of molybdenum is a measure intended to provide 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. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. 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~~Unit net cash costs for our Molybdenum mines ~~of $7.90~~averaged $9.15 per pound of molybdenum in ~~third-quarter2017~~ ~~and $7.60~~second-quarter2019, $8.36 per pound ~~of molybdenum~~in second-quarter 2018, $9.45 per pound for the first ~~nine~~six months of ~~2017 were lower than average unit net cash costs of $10.28~~2019 and $8.46 per pound ~~of molybdenum in~~ ~~third-quarter~~ ~~2016 and $8.39 per pound of molybdenum~~ for the first ~~nine~~six months of ~~2016, primarily reflecting higher volumes. Assuming achievement of~~2018. Based on current sales volume and cost estimates, ~~we estimate~~average unit net cash costs for the Molybdenum mines are expected to ~~average $7.85~~approximate $9.60 per pound of molybdenum for the year ~~2017.~~2019. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

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Smelting and Refining

We wholly own and operate a smelter in Arizona (Miami smelter), a refinery in Texas (El Paso refinery) and a smelter and refinery in Spain (Atlantic Copper). Additionally, PT-FI owns 25 percent of a smelter and refinery in Gresik, Indonesia (PT Smelting). Treatment charges for smelting and refining copper concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami ~~smelter.~~smelter and El Paso refinery. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During the first ~~nine~~six months of ~~2017,~~2019, Atlantic Copper’s concentrate purchases include 28 percent from our copper mining operations ~~included 16~~and 72 percent ~~from our North America copper mines and 10 percent from South America mining, with the remainder purchased~~ from third parties.

~~In March 2017, PT Smelting’s anode slimes export license was renewed through March 1, 2018.~~ PT-FI’s contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum treatment charge rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first ~~nine~~six months of ~~2017,~~2019, PT-FI supplied substantially all of PT Smelting’s concentrate requirements. ~~Minimum and maximum treatment charge rates have been approved~~In March 2019, PT Smelting received a one-year extension of its anode slimes export license through ~~April~~March 11, 2020.

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We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of PT-FI’s sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to net income attributable to common stock of ~~$24~~$(1) million in ~~third-quarter2017~~second-quarter2019, ~~$17~~$27 million ~~for~~ ~~third-quarter~~ ~~2016, less than $1~~in second-quarter 2018, $(15) million for the first ~~nine~~six months of ~~2017~~2019 and $6$20 million for the first ~~nine~~six months of ~~2016.~~2018. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled ~~$62~~$23 million at ~~September~~June 30, ~~2017.~~2019. 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. In third-quarter 2019, we expect increased intercompany sales volumes to Atlantic Copper and PT Smelting, resulting in the deferral of approximately $30 million of net income until final sales occur.

CAPITAL RESOURCES AND LIQUIDITY

Our consolidated operating cash flows vary with sales ~~volumes,~~volumes; prices realized from copper, gold and molybdenum ~~sales,~~sales; production ~~costs,~~costs; income ~~taxes,~~taxes; other working capital ~~changes~~changes; and other factors. We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. We continue to advance a project to develop the Lone Star leachable ores near our Safford operation in eastern Arizona, and PT-FI has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. We are also pursuing other opportunities to enhance ~~our mines’~~ net present values, and we continue to advance studies for future development of our copper resources, the timing of which will be dependent on market conditions.

As presented in “Outlook,” our projected capital expenditures for 2019 are approximately $0.7 billion higher than projected operating cash flows. A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods, enabling us to generate operating cash flows exceeding capital expenditures in future years. We have cash on hand and the financial flexibility to fund these expenditures and will continue to be disciplined in deploying capital. Subject to future commodity prices for copper, gold and molybdenum, we expect estimated consolidated operating cash flows in 2019, plus available cash and availability under our credit facility, to be sufficient to fund our budgeted capital expenditures, cash dividends, noncontrolling interest distributions and other cash requirements for the year.

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Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at ~~September~~June 30, ~~2017~~2019 (in billions):


Cash at domestic companies	$	3.7		$	1.6
Cash at international operations	1.3			1.0
Total consolidated cash and cash equivalents	5.0			2.6
Noncontrolling interests’ share	(0.4		)	(0.4		)
Cash, net of noncontrolling interests’ share	4.6			2.2
Withholding taxes and other	(0.1		)	—			^a
Net cash available	$	4.5		$	2.2

a. Rounds to less than $0.1 billion.

Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayment, working capital and other tax payments, or other cash needs. Management believes that

sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility. We have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share.

Debt

~~Following is a summary of our total~~At June 30, 2019, FCX's consolidated debt ~~and the related weighted-average interest rates at September~~totaled $9.9 billion, with no material scheduled maturities until 2021. At June 30, ~~2017 (in billions, except percentages):~~

Weighted-
Average
Interest Rate
Senior Notes $ 13.3
4.4%
Cerro Verde credit facility 1.5
3.1%
Total debt $ 14.8
4.2%

In September 2017, we redeemed $543 million aggregate principal amount of senior notes, resulting in annual cash interest savings of approximately $35 million. We recognized an $11 million gain on early extinguishment of debt in connection with the redemptions. During the first nine months of 2017, we have reduced our total debt balance by $1.25 billion. Maturities of debt at September 30, 2017, total $0.7 billion in fourth-quarter 2017, $1.5 billion in 2018, $1.9 billion in 2020, $1.3 billion in 2021 and $9.4 billion thereafter.

~~At September 30, 2017,~~2019, we had no borrowings, ~~$36~~$13 million in letters of credit issued and ~~availability~~$3.5 billion of ~~$3.5 billion~~availability under our revolving credit ~~facility, which matures on May 31, 2019.~~facility.

Refer to Note 65 for ~~further~~ discussion of ~~debt.~~debt (including an amendment that extended the maturity date for our credit facility) and to Note 12 for discussion of the August 2019 debt transactions.

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Operating Activities

We generated consolidated operating cash flows of ~~$3.0~~$1.1 billion (including ~~$0.4~~$0.3 billion inof working capital sources and ~~changes in~~timing of other tax payments) for the first ~~nine~~six months of ~~2017~~2019 and ~~$2.6~~$2.7 billion ~~(including $0.5~~(net of $0.2 billion in working capital ~~sources~~uses and ~~changes in~~timing of other tax payments) for the first ~~nine~~six months of ~~2016.~~

~~Subject to future commodity prices for copper, gold and molybdenum, we expect estimated consolidated~~2018. Lower operating cash flows for the ~~years 2017~~first six months of 2019, compared with the first six months of 2018, primarily reflect lower copper and ~~2018, plus available cash~~gold sales volumes and availability under our credit facility and uncommitted lines of credit, to be sufficient to fund our budgeted capital expenditures, scheduled debt maturities, noncontrolling interest distributions and other cash requirements for the year. Refer to “Outlook” for further discussion of projected operating cash flows for the year 2017, and to “Risk Factors,” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2016, for discussion of regulatory matters in Indonesia, which could have a significant impact on future results.lower copper prices.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled ~~$1.0~~$1.25 billion for the first ~~nine~~six months of ~~2017,~~2019, including ~~$0.6~~approximately $0.7 billion for major mining projects. Capital expenditures, including capitalized interest, totaled ~~$2.3~~$0.9 billion for the first ~~nine~~six months of ~~2016, consisting of $1.2 billion for mining operations (including~~2018, including approximately ~~$0.9~~$0.5 billion for major ~~projects) and $1.1 billion for oil and gas operations.~~

~~Lower~~mining projects. Higher capital expenditures for the first ~~nine~~six months of ~~2017,~~2019, compared with the first ~~nine~~six months of ~~2016,~~2018, primarily reflect ~~a decrease~~underground development activities in ~~oil~~the Grasberg minerals district and ~~gas activities as a result~~development of the ~~sales of significant oil and gas properties in 2016 and a decrease in major mining projects associated with the completion of the Cerro Verde expansion.~~Lone Star copper leach project. Refer to “Outlook” for further discussion of projected capital expenditures for the year ~~2017.~~2019.

~~Dispositions.~~ ~~Net~~Proceeds from sales of oil and gas properties. We received $91 million of proceeds from ~~asset~~ sales ~~totaled $1.4 billion~~of oil and gas properties for the first ~~nine~~six months of ~~2016 primarily~~2019, including $50 million in contingent consideration received associated with the ~~$1.0 billion~~2016 sale of ~~an additional 13 percent undivided interest in Morenci, the sale of an interest in the Timok exploration project in Serbia and from~~onshore California oil and gas ~~asset sales, including the Haynesville shale assets~~properties.

Intangible water rights and ~~certain oil and gas royalty interests. Refer to Note 2 for further discussion~~other, net. During first-quarter 2018, our North America copper mines purchased intangible water rights totaling $88 million.

Table of ~~these transactions.~~Contents

Financing Activities

Debt Transactions. Net repayments of debt for the first ~~nine~~six months of ~~2017~~2019 totaled $1.2 billion, ~~primarily for~~consisting of the redemption ~~and repayment~~ of ~~senior notes~~$1.0 billion aggregate principal amount of our 3.100% Senior Notes due 2020 and the repayment of $200 million under Cerro ~~Verde’s shareholder loans, partly offset by the additional borrowings on Cerro Verde’s~~Verde's credit facility.

Net repayments of debt for the first ~~nine~~six months of ~~2016~~2018 totaled ~~$1.1~~$1.9 billion, ~~primarily reflecting payments~~consisting of ~~$0.6~~$1.4 billion of 2.375% Senior Notes that matured in March 2018 and $454 million for senior notes due in 2022 and 2023.

Cash Dividends and Distributions Paid. We paid cash dividends on our ~~term loan, $0.2 billion on the Cerro Verde credit facility and $0.2 billion on lines of credit.~~

~~Dividends.~~ ~~The Board suspended our annual~~ common stock totaling $146 million for the first six months of 2019 and $73 million for the first six months of 2018. On June 26, 2019, we declared a quarterly cash dividend ~~in December 2015.~~of $0.05 per share on our common stock, which was paid on August 1, 2019, to shareholders of record as of July 15, 2019. The declaration of dividends is at the discretion of our Board of Directors (Board) and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by our Board.

~~Common stock dividends of $2 million for the first nine months of 2017 and $5 million for the first nine months of 2016 related to accumulated dividends paid for vested stock-based compensation.~~

Cash dividends and distributions paid to noncontrolling interests totaled ~~$67~~$79 million for the first ~~nine~~six months of ~~2017~~2019 and ~~$87~~$241 million for the first ~~nine~~six months of ~~2016.~~2018. These payments will vary based on the operating results and cash requirements of our consolidated subsidiaries.

Contributions from Noncontrolling Interests. During second-quarter 2019, we received equity contributions totaling $100 million from PT Inalum for their share of smelter costs and capital spending on PT-FI underground mine development projects.

CONTRACTUAL OBLIGATIONS

As further discussed in Note 6,5, during the first ~~nine~~six months of ~~2017,~~2019, we ~~have~~ reduced our December 31, ~~2016,~~2018, total debt ~~balance~~ by ~~$1.25~~$1.2 billion. There have been no other material changes in our contractual obligations since December 31, ~~2016.~~2018. Refer to Part II, Items 7. and 7A. in our ~~annual report on~~2018 Form 10-K, ~~for the year ended December 31, 2016,~~ for information regarding our contractual obligations.

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CONTINGENCIES

Environmental and Asset Retirement Obligations

Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and asset retirement obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. ~~Other than as disclosed in Note 9, there~~

There have been no material changes to our environmental and asset retirement obligations since December 31, ~~2016.~~2018. 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 obligations. Refer to Note 12 in our ~~annual report on~~2018 Form 10-K, ~~for the year ended December 31, 2016,~~ for further information regarding our environmental and asset retirement obligations.

Litigation and Other Contingencies

Other than as discussed in Note 9,8, there have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since December 31, ~~2016.~~2018. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our ~~annual report on~~2018 Form 10-K, ~~for the year ended December 31, 2016,~~ as updated inby Note ~~9 in our quarterly reports on Form 10-Q for the quarters ended March 31, 2017, and June 30, 2017,~~8, for further information regarding legal proceedings, environmental and other matters.

NEW ACCOUNTING STANDARDS

Refer to Note 1211 for a summary of recently adopted accounting standards.

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PRODUCT REVENUES AND PRODUCTION COSTS

~~Mining Product Revenues and Unit Net Cash Cost~~

Unit net cash costs (credits) per pound of copper and molybdenum are measures intended to 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 this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.

We present gross profit (loss) per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit (loss) per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce and (iv) it is the method used by our management and ~~our~~ Board to monitor our mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.

We show revenue adjustments for prior period open sales as a separate line item. 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, 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, start-up costs, inventory adjustments,

long-lived asset impairments, 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. The following schedules are presentations under both the by-product and co-product methods

together with reconciliations to amounts reported in our consolidated financial statements.

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



Three Months Ended September 30, 2017
Three Months Ended June 30, 2019
(In millions)		By-Product			Co-Product Method										By-Product			Co-Product Method
		Method			Copper			Molybdenum^a		Other^b		Total			Method			Copper			Molybdenum^a			Other^b		Total
Revenues, excluding adjustments		$	1,011		$	1,011		$	62	$	19	$	1,092		$	1,026		$	1,026		$	103		$	20	$	1,149
Site production and delivery, before net noncash and other costs shown below		576			541			45		11		597			758			692			79			13		784
By-product credits		(60		)	—			—		—		—			(97		)	—			—			—		—
Treatment charges		39			38			—		1		39			40			39			—			1		40
Net cash costs		555			579			45		12		636			701			731			79			14		824
DD&A		96			90			4		2		96			88			79			7			2		88
Noncash and other costs, net		15			14			1		—		15			10			8			2			—		10
Total costs		666			683			50		14		747			799			818			88			16		922
Revenue adjustments, primarily for pricing on prior period open sales		7			7			—		—		7
Other revenue adjustments, primarily for pricing on prior period open sales															(16		)	(16		)	—			—		(16		)
Gross profit		$	352		$	335		$	12	$	5	$	352		$	211		$	192		$	15		$	4	$	211

Copper sales (millions of recoverable pounds)		345			345										369			369
Molybdenum sales (millions of recoverable pounds)^a								8													9

Gross profit per pound of copper/molybdenum:	Gross profit per pound of copper/molybdenum:													Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments		$	2.92		$	2.92		$	7.59						$	2.78		$	2.78		$	12.39
Site production and delivery, before net noncash and other costs shown below		1.67			1.56			5.58							2.05			1.88			9.53
By-product credits		(0.17		)	—			—							(0.26		)	—			—
Treatment charges		0.11			0.11			—							0.11			0.10			—
Unit net cash costs		1.61			1.67			5.58							1.90			1.98			9.53
DD&A		0.28			0.27			0.49							0.24			0.22			0.77
Noncash and other costs, net		0.04			0.04			0.05							0.03			0.02			0.23
Total unit costs		1.93			1.98			6.12							2.17			2.22			10.53
Revenue adjustments, primarily for pricing on prior period open sales		0.03			0.03			—
Other revenue adjustments, primarily for pricing on prior period open sales															(0.04		)	(0.04		)	—
Gross profit per pound		$	1.02		$	0.97		$	1.47						$	0.57		$	0.52		$	1.86

Reconciliation to Amounts Reported
(In millions)		Revenues			Production and Delivery			DD&A
															Revenues			Production and Delivery			DD&A
Totals presented above		$	1,092		$	597		$	96						$	1,149		$	784		$	88
Treatment charges		(8		)	31			—							(19		)	21			—
Noncash and other costs, net		—			15			—							—			10			—
Revenue adjustments, primarily for pricing on prior period open sales		7			—			—
Other revenue adjustments, primarily for pricing on prior period open sales															(16		)	—			—
Eliminations and other		14			15			—							6			10			(1		)
North America copper mines		1,105			658			96							1,120			825			87
Other mining^c		3,909			2,897			299							3,173			2,899			246
Corporate, other & eliminations		(704		)	(753		)	23							(747		)	(722		)	19
As reported in FCX’s consolidated financial statements		$	4,310		$	2,802		$	418
As reported in our consolidated financial statements															$	3,546		$	3,002		$	352


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


b.	Includes gold and silver product revenues and production costs.


c.	Represents the combined total for our other ~~mining operations, including South America mining, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

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



Three Months Ended September 30, 2016
Three Months Ended June 30, 2018
(In millions)	By-Product			Co-Product Method											By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total				Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	1,002		$	1,002		$	65	$	35	$	1,102			$	1,126		$	1,126		$	91	$	22	$	1,239
Site production and delivery, before net noncash and other costs shown below	659			610			48		25		683				701			644			68		12		724
By-product credits	(76		)	—			—		—		—				(90		)	—			—		—		—
Treatment charges	45			42			—		3		45				37			36			—		1		37
Net cash costs	628			652			48		28		728				648			680			68		13		761
DD&A	127			117			6		4		127				91			83			6		2		91
Noncash and other costs, net	26			25			1		—		26				23			21			1		1		23
Total costs	781			794			55		32		881				762			784			75		16		875
Revenue adjustments, primarily for pricing on prior period open sales	(3		)	(3		)	—		—		(3		)
Other revenue adjustments, primarily for pricing on prior period open sales															1			1			—		—		1
Gross profit	$	218		$	205		$	10	$	3	$	218			$	365		$	343		$	16	$	6	$	365

Copper sales (millions of recoverable pounds)	457			457											361			361
Molybdenum sales (millions of recoverable pounds)^a	Molybdenum sales (millions of recoverable pounds)^a						9							Molybdenum sales (millions of recoverable pounds)^a							8

Gross profit per pound of copper/molybdenum:	Gross profit per pound of copper/molybdenum:													Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.19		$	2.19		$	7.39							$	3.12		$	3.12		$	12.13
Site production and delivery, before net noncash and other costs shown below	1.44			1.34			5.51								1.94			1.78			9.09
By-product credits	(0.17		)	—			—								(0.25		)	—			—
Treatment charges	0.10			0.09			—								0.10			0.10			—
Unit net cash costs	1.37			1.43			5.51								1.79			1.88			9.09
DD&A	0.28			0.26			0.70								0.25			0.23			0.80
Noncash and other costs, net	0.06			0.05			0.13								0.07			0.06			0.15
Total unit costs	1.71			1.74			6.34								2.11			2.17			10.04
Revenue adjustments, primarily for pricing on prior period open sales	—			—			—
Other revenue adjustments, primarily for pricing on prior period open sales															—			—			—
Gross profit per pound	$	0.48		$	0.45		$	1.05							$	1.01		$	0.95		$	2.09

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A								Revenues			Production and Delivery			DD&A
Totals presented above	$	1,102		$	683		$	127							$	1,239		$	724		$	91
Treatment charges	(26		)	19			—								(5		)	32			—
Noncash and other costs, net	—			26			—								—			23			—
Revenue adjustments, primarily for pricing on prior period open sales	(3		)	—			—
Other revenue adjustments, primarily for pricing on prior period open sales															1			—			—
Eliminations and other	11			11			2								12			10			1
North America copper mines	1,084			739			129								1,247			789			92
Other mining^c	3,085			2,306			268								4,738			3,042			336
Corporate, other & eliminations	(292		)	(516		)	246								(817		)	(916		)	14
As reported in FCX’s consolidated financial statements	$	3,877		$	2,529		$	643
As reported in our consolidated financial statements															$	5,168		$	2,915		$	442


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


b.	Includes gold and silver product revenues and production costs.


c.	Represents the combined total for our other ~~mining operations, including South America mining, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

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

Nine Months Ended September 30, 2017
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 3,091
$ 3,091
$ 184
$ 62
$ 3,337

Site production and delivery, before net noncash
and other costs shown below 1,794
1,688
137
34
1,859

By-product credits (181 ) —
—
—
—

Treatment charges 121
116
—
5
121

Net cash costs 1,734
1,804
137
39
1,980

DD&A 329
309
14
6
329

Noncash and other costs, net 68
^c
66
1
1
68

Total costs 2,131
2,179
152
46
2,377

Revenue adjustments, primarily for pricing
on prior period open sales 4
4
—
—
4

Gross profit $ 964
$ 916
$ 32
$ 16
$ 964

Copper sales (millions of recoverable pounds) 1,127
1,127

Molybdenum sales (millions of recoverable pounds)^a
25

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.74
$ 2.74
$ 7.57

Site production and delivery, before net noncash
and other costs shown below 1.59
1.50
5.62

By-product credits (0.16 ) —
—

Treatment charges 0.11
0.10
—

Unit net cash costs 1.54
1.60
5.62

DD&A 0.29
0.27
0.56

Noncash and other costs, net 0.06
^c
0.06
0.06

Total unit costs 1.89
1.93
6.24

Revenue adjustments, primarily for pricing
on prior period open sales —
—
—

Gross profit per pound $ 0.85
$ 0.81
$ 1.33

Reconciliation to Amounts Reported
(In millions)
Production
Revenues and Delivery DD&A
Totals presented above $ 3,337
$ 1,859
$ 329

Treatment charges (36 ) 85
—

Noncash and other costs, net —
68
—

Revenue adjustments, primarily for pricing
on prior period open sales 4
—
—

Eliminations and other 43
44
1

North America copper mines 3,348
2,056
330

Other mining^d
10,270
7,765
850

Corporate, other & eliminations (2,256 ) (2,324 ) 77

As reported in FCX’s consolidated financial statements $ 11,362
$ 7,497
$ 1,257


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


b.	~~Includes gold and silver product revenues and production costs.~~


c.	~~Includes $21 million ($0.02 per pound of copper) for asset impairment charges at Morenci.~~


d.	Represents the combined total for our other mining operations, including South America mining, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining, as presented in Note 10.

~~Table of Contents~~

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



Nine Months Ended September 30, 2016
Six Months Ended June 30, 2019
(In millions)		By-Product			Co-Product Method											By-Product			Co-Product Method
		Method			Copper			Molybdenum^a		Other^b		Total				Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments		$	3,092		$	3,092		$	155	$	76	$	3,323			$	1,931		$	1,931		$	190	$	43	$	2,164
Site production and delivery, before net noncash
and other costs shown below		2,008			1,904			121		46		2,071
Site production and delivery, before net noncash and other costs shown below																1,416			1,288			153		28		1,469
By-product credits		(168		)	—			—		—		—				(180		)	—			—		—		—
Treatment charges		148			142			—		6		148				76			73			—		3		76
Net cash costs		1,988			2,046			121		52		2,219				1,312			1,361			153		31		1,545
DD&A		405			381			15		9		405				170			155			12		3		170
Noncash and other costs, net		74			72			1		1		74				33			29			3		1		33
Total costs		2,467			2,499			137		62		2,698				1,515			1,545			168		35		1,748
Revenue adjustments, primarily for pricing
on prior period open sales		(1		)	(1		)	—		—		(1		)
Other revenue adjustments, primarily for pricing on prior period open sales																4			4			—		—		4
Gross profit		$	624		$	592		$	18	$	14	$	624			$	420		$	390		$	22	$	8	$	420

Copper sales (millions of recoverable pounds)		1,421			1,421											689			689
Molybdenum sales (millions of recoverable pounds)^a								25														16

Gross profit per pound of copper/molybdenum:	Gross profit per pound of copper/molybdenum:														Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments		$	2.18		$	2.18		$	6.24							$	2.80		$	2.80		$	12.06
Site production and delivery, before net noncash
and other costs shown below		1.41			1.34			4.86
Site production and delivery, before net noncash and other costs shown below																2.05			1.87			9.69
By-product credits		(0.12		)	—			—								(0.26		)	—			—
Treatment charges		0.11			0.10			—								0.11			0.11			—
Unit net cash costs		1.40			1.44			4.86								1.90			1.98			9.69
DD&A		0.29			0.27			0.61								0.25			0.22			0.75
Noncash and other costs, net		0.05			0.05			0.06								0.05			0.04			0.22
Total unit costs		1.74			1.76			5.53								2.20			2.24			10.66
Revenue adjustments, primarily for pricing
on prior period open sales		—			—			—
Other revenue adjustments, primarily for pricing on prior period open sales																0.01			0.01			—
Gross profit per pound		$	0.44		$	0.42		$	0.71							$	0.61		$	0.57		$	1.40

Reconciliation to Amounts Reported
(In millions)					Production
		Revenues			and Delivery			DD&A											Production
																Revenues			and Delivery			DD&A
Totals presented above		$	3,323		$	2,071		$	405							$	2,164		$	1,469		$	170
Treatment charges		(74		)	74			—								(32		)	44			—
Noncash and other costs, net		—			74			—								—			33			—
Revenue adjustments, primarily for pricing
on prior period open sales		(1		)	—			—
Other revenue adjustments, primarily for pricing on prior period open sales																4			—			—
Eliminations and other		32			34			2								18			22			—
North America copper mines		3,280			2,253			407								2,154			1,568			170
Other mining^c		8,433			6,722			766								6,688			5,750			490
Corporate, other & eliminations		(1,260		)	(991		)	764								(1,504		)	(1,340		)	39
As reported in FCX’s consolidated financial statements		$	10,453		$	7,984		$	1,937
As reported in our consolidated financial statements																$	7,338		$	5,978		$	699


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


b.	Includes gold and silver product revenues and production costs.


c.	Represents the combined total for our other ~~mining operations, including South America mining, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

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



Three Months Ended September 30, 2017
Six Months Ended June 30, 2018
(In millions)	By-Product				Co-Product Method								By-Product			Co-Product Method
	Method				Copper			Other^a		Total			Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	965			$	965		$	75	$	1,040		$	2,337		$	2,337		$	167	$	45	$	2,549
Site production and delivery, before net noncash
and other costs shown below	524				490			46		536
Site production and delivery, before net noncash and other costs shown below													1,405			1,304			123		25		1,452
By-product credits	(63		)		—			—		—			(165		)	—			—		—		—
Treatment charges	73				73			—		73			74			71			—		3		74
Royalty on metals	2				2			—		2
Net cash costs	536				565			46		611			1,314			1,375			123		28		1,526
DD&A	134				125			9		134			185			171			10		4		185
Noncash and other costs, net	225			^b	207			18		225			42			40			2		—		42
Total costs	895				897			73		970			1,541			1,586			135		32		1,753
Revenue adjustments, primarily for pricing
on prior period open sales	59				59			—		59
Other revenue adjustments, primarily for pricing on prior period open sales													(5		)	(5		)	—		—		(5		)
Gross profit	$	129			$	127		$	2	$	129		$	791		$	746		$	32	$	13	$	791

Copper sales (millions of recoverable pounds)	327				327								744			744
Molybdenum sales (millions of recoverable pounds)^a																			15

Gross profit per pound of copper:
Gross profit per pound of copper/molybdenum:												Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.95			$	2.95							$	3.14		$	3.14		$	11.52
Site production and delivery, before net noncash
and other costs shown below	1.60				1.50
Site production and delivery, before net noncash and other costs shown below													1.89			1.75			8.47
By-product credits	(0.19		)		—								(0.22		)	—			—
Treatment charges	0.22				0.22								0.10			0.10			—
Royalty on metals	0.01				0.01
Unit net cash costs	1.64				1.73								1.77			1.85			8.47
DD&A	0.41				0.38								0.25			0.23			0.74
Noncash and other costs, net	0.69			^b	0.63								0.05			0.05			0.12
Total unit costs	2.74				2.74								2.07			2.13			9.33
Revenue adjustments, primarily for pricing
on prior period open sales	0.18				0.18
Other revenue adjustments, primarily for pricing on prior period open sales													(0.01		)	(0.01		)	—
Gross profit per pound	$	0.39			$	0.39							$	1.06		$	1.00		$	2.19

Reconciliation to Amounts Reported
(In millions)																Production
					Production								Revenues			and Delivery			DD&A
	Revenues				and Delivery			DD&A
Totals presented above	$	1,040			$	536		$	134				$	2,549		$	1,452		$	185
Treatment charges	(73		)		—			—					(13		)	61			—
Royalty on metals	(2		)		—			—
Noncash and other costs, net	—				225			—					—			42			—
Revenue adjustments, primarily for pricing
on prior period open sales	59				—			—
Other revenue adjustments, primarily for pricing on prior period open sales													(5		)	—			—
Eliminations and other	(1		)		(2		)	—					24			25			1
South America mining	1,023				759			134
North America copper mines													2,555			1,580			186
Other mining^c	3,991				2,796			261					9,255			6,053			672
Corporate, other & eliminations	(704		)		(753		)	23					(1,774		)	(1,910		)	35
As reported in FCX’s consolidated financial statements	$	4,310			$	2,802		$	418
As reported in our consolidated financial statements													$	10,036		$	5,723		$	893


a.	~~Includes silver sales of 1.0 million ounces ($16.15 per ounce average realized price). Also reflects~~Reflects sales of molybdenum produced by ~~Cerro Verde~~certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes ~~charges totaling $216 million ($0.66 per pound of copper) associated with disputed Cerro Verde royalties for prior years.~~gold and silver product revenues and production costs.


c.	Represents the combined total for our other ~~mining operations, including North America copper mines, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

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



Three Months Ended September 30, 2016
Three Months Ended June 30, 2019
(In millions)		By-Product			Co-Product Method									By-Product			Co-Product Method
		Method			Copper			Other^a		Total				Method			Copper			Other^a		Total
Revenues, excluding adjustments		$	709		$	709		$	50	$	759			$	781		$	781		$	92	$	873
Site production and delivery, before net noncash
and other costs shown below		409			386			35		421
Site production and delivery, before net noncash and other costs shown below														550			498			64		562
By-product credits		(38		)	—			—		—				(80		)	—			—		—
Treatment charges		79			79			—		79				52			52			—		52
Royalty on metals		2			2			—		2				2			2			—		2
Net cash costs		452			467			35		502				524			552			64		616
DD&A		134			126			8		134				119			107			12		119
Noncash and other costs, net		4			3			1		4				21			20			1		21
Total costs		590			596			44		640				664			679			77		756
Revenue adjustments, primarily for pricing
on prior period open sales		(7		)	(7		)	—		(7		)
Other revenue adjustments, primarily for pricing on prior period open sales														(57		)	(57		)	—		(57		)
Gross profit		$	112		$	106		$	6	$	112			$	60		$	45		$	15	$	60

Copper sales (millions of recoverable pounds)		323			323									287			287

Gross profit per pound of copper:	Gross profit per pound of copper:												Gross profit per pound of copper:

Revenues, excluding adjustments		$	2.19		$	2.19								$	2.72		$	2.72
Site production and delivery, before net noncash
and other costs shown below		1.27			1.20
Site production and delivery, before net noncash and other costs shown below														1.92			1.74
By-product credits		(0.12		)	—									(0.28		)	—
Treatment charges		0.24			0.24									0.18			0.18
Royalty on metals		0.01			—									0.01			0.01
Unit net cash costs		1.40			1.44									1.83			1.93
DD&A		0.41			0.39									0.41			0.37
Noncash and other costs, net		0.01			0.01									0.07			0.07
Total unit costs		1.82			1.84									2.31			2.37
Revenue adjustments, primarily for pricing
on prior period open sales		(0.02		)	(0.02		)
Other revenue adjustments, primarily for pricing on prior period open sales														(0.20		)	(0.20		)
Gross profit per pound		$	0.35		$	0.33								$	0.21		$	0.15

Reconciliation to Amounts Reported
(In millions)					Production
		Revenues			and Delivery			DD&A									Production
														Revenues			and Delivery			DD&A
Totals presented above		$	759		$	421		$	134					$	873		$	562		$	119
Treatment charges		(79		)	—			—						(52		)	—			—
Royalty on metals		(2		)	—			—						(2		)	—			—
Noncash and other costs, net		—			4			—						—			21			—
Revenue adjustments, primarily for pricing
on prior period open sales		(7		)	—			—
Other revenue adjustments, primarily for pricing on prior period open sales														(57		)	—			—
Eliminations and other		—			(1		)	—						(1		)	(2		)	—
South America mining		671			424			134						761			581			119
Other mining^b		3,498			2,621			263						3,532			3,143			214
Corporate, other & eliminations		(292		)	(516		)	246						(747		)	(722		)	19
As reported in FCX’s consolidated financial statements		$	3,877		$	2,529		$	643
As reported in our consolidated financial statements														$	3,546		$	3,002		$	352


a.	Includes silver sales of ~~952 thousand~~1.2 million ounces ($~~21.72~~15.39 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Represents the combined total for our other ~~mining operations, including North America copper mines, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

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



Nine Months Ended September 30, 2017
Three Months Ended June 30, 2018
(In millions)		By-Product				Co-Product Method								By-Product			Co-Product Method
		Method				Copper			Other^a		Total			Method			Copper			Other^a		Total
Revenues, excluding adjustments		$	2,605			$	2,605		$	190	$	2,795		$	958		$	958		$	81	$	1,039
Site production and delivery, before net noncash
and other costs shown below		1,429				1,340			123		1,463
Site production and delivery, before net noncash and other costs shown below														552			513			50		563
By-product credits		(156		)		—			—		—			(70		)	—			—		—
Treatment charges		204				204			—		204			59			59			—		59
Royalty on metals		6				5			1		6			2			2			—		2
Net cash costs		1,483				1,549			124		1,673			543			574			50		624
DD&A		392				365			27		392			133			123			10		133
Noncash and other costs, net		234			^b	217			17		234			17			17			—		17
Total costs		2,109				2,131			168		2,299			693			714			60		774
Revenue adjustments, primarily for pricing
on prior period open sales		40				40			—		40
Other revenue adjustments, primarily for pricing on prior period open sales														13			13			—		13
Gross profit		$	536			$	514		$	22	$	536		$	278		$	257		$	21	$	278

Copper sales (millions of recoverable pounds)		923				923								312			312

Gross profit per pound of copper:	Gross profit per pound of copper:												Gross profit per pound of copper:

Revenues, excluding adjustments		$	2.82			$	2.82							$	3.07		$	3.07
Site production and delivery, before net noncash
and other costs shown below		1.55				1.45
Site production and delivery, before net noncash and other costs shown below														1.77			1.65
By-product credits		(0.17		)		—								(0.22		)	—
Treatment charges		0.22				0.22								0.18			0.18
Royalty on metals		0.01				0.01								0.01			0.01
Unit net cash costs		1.61				1.68								1.74			1.84
DD&A		0.42				0.40								0.43			0.40
Noncash and other costs, net		0.25			^b	0.23								0.05			0.05
Total unit costs		2.28				2.31								2.22			2.29
Revenue adjustments, primarily for pricing
on prior period open sales		0.04				0.04
Other revenue adjustments, primarily for pricing on prior period open sales														0.04			0.04
Gross profit per pound		$	0.58			$	0.55							$	0.89		$	0.82

Reconciliation to Amounts Reported
(In millions)						Production											Production
		Revenues				and Delivery			DD&A					Revenues			and Delivery			DD&A
Totals presented above		$	2,795			$	1,463		$	392				$	1,039		$	563		$	133
Treatment charges		(204		)		—			—					(59		)	—			—
Royalty on metals		(6		)		—			—					(2		)	—			—
Noncash and other costs, net		—				234			—					—			17			—
Revenue adjustments, primarily for pricing
on prior period open sales		40				—			—
Other revenue adjustments, primarily for pricing on prior period open sales														13			—			—
Eliminations and other		1				(2		)	—					(1		)	(2		)	—
South America mining		2,626				1,695			392					990			578			133
Other mining^c	—	10,992				8,126			788
Other mining^b														4,995			3,253			295
Corporate, other & eliminations	—	(2,256		)		(2,324		)	77					(817		)	(916		)	14
As reported in FCX’s consolidated financial statements		$	11,362			$	7,497		$	1,257
As reported in our consolidated financial statements														$	5,168		$	2,915		$	442


a.	Includes silver sales of ~~2.8~~1.1 million ounces ($~~16.66 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.~~


b.	~~Includes charges totaling $216 million ($0.23 per pound of copper) associated with disputed Cerro Verde royalties for prior years.~~


c.	Represents the combined total for our other mining operations, including North America copper mines, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining, as presented in Note 10.

~~Table of Contents~~

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

Nine Months Ended September 30, 2016
(In millions) By-Product Co-Product Method
Method Copper
Other^a
Total
Revenues, excluding adjustments $ 2,115
$ 2,115
$ 129
$ 2,244

Site production and delivery, before net noncash
and other costs shown below 1,199
1,140
88
1,228

By-product credits (100 ) —
—
—

Treatment charges 230
230
—
230

Royalty on metals 5
5
—
5

Net cash costs 1,334
1,375
88
1,463

DD&A 401
379
22
401

Noncash and other costs, net 15
14
1
15

Total costs 1,750
1,768
111
1,879

Revenue adjustments, primarily for pricing
on prior period open sales 9
9
—
9

Gross profit $ 374
$ 356
$ 18
$ 374

Copper sales (millions of recoverable pounds) 973
973

Gross profit per pound of copper:

Revenues, excluding adjustments $ 2.17
$ 2.17

Site production and delivery, before net noncash
and other costs shown below 1.23
1.17

By-product credits (0.10 ) —

Treatment charges 0.24
0.24

Royalty on metals —
—

Unit net cash costs 1.37
1.41

DD&A 0.41
0.39

Noncash and other costs, net 0.02
0.02

Total unit costs 1.80
1.82

Revenue adjustments, primarily for pricing
on prior period open sales 0.01
0.01

Gross profit per pound $ 0.38
$ 0.36

Reconciliation to Amounts Reported
(In millions) Production
Revenues and Delivery DD&A
Totals presented above $ 2,244
$ 1,228
$ 401

Treatment charges (230 ) —
—

Royalty on metals (5 ) —
—

Noncash and other costs, net —
15
—

Revenue adjustments, primarily for pricing
on prior period open sales 9
—
—

Eliminations and other 1
(3 ) 1

South America mining 2,019
1,240
402

Other mining^b
9,694
7,735

771

Corporate, other & eliminations (1,260 ) (991 ) 764

As reported in FCX’s consolidated financial statements $ 10,453
$ 7,984
$ 1,937


a.	~~Includes silver sales of 2.8 million ounces ($17.99~~16.38 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Represents the combined total for our other ~~mining operations, including North America copper mines, Indonesia mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

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




Six Months Ended June 30, 2019
(In millions)	By-Product			Co-Product Method
	Method			Copper			Other^a		Total
Revenues, excluding adjustments	$	1,584		$	1,584		$	204	$	1,788
Site production and delivery, before net noncash and other costs shown below	1,053			949			129		1,078
By-product credits	(179		)	—			—		—
Treatment charges	108			108			—		108
Royalty on metals	3			3			—		3
Net cash costs	985			1,060			129		1,189
DD&A	233			207			26		233
Noncash and other costs, net	46			45			1		46
Total costs	1,264			1,312			156		1,468
Other revenue adjustments, primarily for pricing on prior period open sales	37			37			—		37
Gross profit	$	357		$	309		$	48	$	357

Copper sales (millions of recoverable pounds)	577			577

Gross profit per pound of copper:

Revenues, excluding adjustments	$	2.75		$	2.75
Site production and delivery, before net noncash and other costs shown below	1.82			1.64
By-product credits	(0.31		)	—
Treatment charges	0.19			0.19
Royalty on metals	0.01			0.01
Unit net cash costs	1.71			1.84
DD&A	0.40			0.35
Noncash and other costs, net	0.08			0.08
Total unit costs	2.19			2.27
Other revenue adjustments, primarily for pricing on prior period open sales	0.06			0.06
Gross profit per pound	$	0.62		$	0.54

Reconciliation to Amounts Reported
(In millions)				Production
	Revenues			and Delivery			DD&A
Totals presented above	$	1,788		$	1,078		$	233
Treatment charges	(108		)	—			—
Royalty on metals	(3		)	—			—
Noncash and other costs, net	—			46			—
Other revenue adjustments, primarily for pricing on prior period open sales	37			—			—
Eliminations and other	(2		)	(4		)	—
South America mining	1,712			1,120			233
Other mining^b	7,130			6,198			427
Corporate, other & eliminations	(1,504		)	(1,340		)	39
As reported in our consolidated financial statements	$	7,338		$	5,978		$	699


a.	Includes silver sales of 2.5 million ounces ($15.58 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


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

Table of Contents

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




Six Months Ended June 30, 2018
(In millions)	By-Product			Co-Product Method
	Method			Copper			Other^a		Total
Revenues, excluding adjustments	$	1,859		$	1,859		$	167	$	2,026
Site production and delivery, before net noncash and other costs shown below	1,069			990			102		1,092
By-product credits	(144		)	—			—		—
Treatment charges	117			117			—		117
Royalty on metals	4			4			—		4
Net cash costs	1,046			1,111			102		1,213
DD&A	260			239			21		260
Noncash and other costs, net	32			32			—		32
Total costs	1,338			1,382			123		1,505
Other revenue adjustments, primarily for pricing on prior period open sales	(37		)	(37		)	—		(37		)
Gross profit	$	484		$	440		$	44	$	484

Copper sales (millions of recoverable pounds)	602			602

Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.09		$	3.09
Site production and delivery, before net noncash and other costs shown below	1.78			1.64
By-product credits	(0.24		)	—
Treatment charges	0.19			0.19
Royalty on metals	0.01			0.01
Unit net cash costs	1.74			1.84
DD&A	0.43			0.40
Noncash and other costs, net	0.05			0.05
Total unit costs	2.22			2.29
Other revenue adjustments, primarily for pricing on prior period open sales	(0.06		)	(0.06		)
Gross profit per pound	$	0.81		$	0.74

Reconciliation to Amounts Reported
(In millions)				Production
	Revenues			and Delivery			DD&A
Totals presented above	$	2,026		$	1,092		$	260
Treatment charges	(117		)	—			—
Royalty on metals	(4		)	—			—
Noncash and other costs, net	—			32			—
Other revenue adjustments, primarily for pricing on prior period open sales	(37		)	—			—
Eliminations and other	(1		)	(3		)	—
South America mining	1,867			1,121			260
Other mining^b	9,943			6,512			598
Corporate, other & eliminations	(1,774		)	(1,910		)	35
As reported in our consolidated financial statements	$	10,036		$	5,723		$	893


a.	Includes silver sales of 2.1 million ounces ($16.45 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


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

Table of Contents

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



Three Months Ended September 30, 2017
Three Months Ended June 30, 2019
(In millions)	By-Product				Co-Product Method												By-Product				Co-Product Method
	Method				Copper			Gold			Silver^a		Total				Method				Copper			Gold			Silver^a		Total
Revenues, excluding adjustments	$	762			$	762		$	453		$	11	$	1,226			$	412			$	412		$	250		$	8	$	670
Site production and delivery, before net noncash
and other costs shown below	364				226			134			4		364
Site production and delivery, before net noncash and other costs shown below																	516				317			193			6		516
Gold and silver credits	(466		)		—			—			—		—				(256		)		—			—			—		—
Treatment charges	71				44			26			1		71				40				25			14			1		40
Export duties	21				13			8			—		21				10				6			4			—		10
Royalty on metals	43				26			17			—		43				17				12			5			—		17
Net cash costs	33				309			185			5		499				327				360			216			7		583
DD&A	136				85			50			1		136				99				61			37			1		99
Noncash and other costs, net	24			^b	15			9			—		24				45			^b	28			17			—		45
Total costs	193				409			244			6		659				471				449			270			8		727
Revenue adjustments, primarily for pricing on
prior period open sales	28				28			2			—		30
PT Smelting intercompany loss	(18		)		(11		)	(7		)	—		(18		)
Gross profit	$	579			$	370		$	204		$	5	$	579
Other revenue adjustments, primarily for pricing on prior period open sales																	(19		)		(19		)	(2		)	—		(21		)
PT Smelting intercompany profit																	7				4			3			—		7
Gross loss																	$	(71	)		$	(52	)	$	(19	)	$	—	$	(71	)

Copper sales (millions of recoverable pounds)	258				258												151				151
Gold sales (thousands of recoverable ounces)								352																185

Gross profit per pound of copper/per ounce of gold:
Gross loss per pound of copper/per ounce of gold:																Gross loss per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	2.95			$	2.95		$	1,290								$	2.71			$	2.71		$	1,350
Site production and delivery, before net noncash
and other costs shown below	1.41				0.87			383
Site production and delivery, before net noncash and other costs shown below																	3.40				2.09			1,041
Gold and silver credits	(1.80		)		—			—									(1.69		)		—			—
Treatment charges	0.27				0.17			74									0.26				0.16			80
Export duties	0.08				0.05			22									0.07				0.04			20
Royalty on metals	0.17				0.10			48									0.11				0.08			28
Unit net cash costs	0.13				1.19			527									2.15				2.37			1,169
DD&A	0.53				0.33			143									0.65				0.40			199
Noncash and other costs, net	0.09			^b	0.06			25									0.30			^b	0.18			91
Total unit costs	0.75				1.58			695									3.10				2.95			1,459
Revenue adjustments, primarily for pricing on
prior period open sales	0.11				0.11			4
PT Smelting intercompany loss	(0.07		)		(0.04		)	(19		)
Gross profit per pound/ounce	$	2.24			$	1.44		$	580
Other revenue adjustments, primarily for pricing on prior period open sales																	(0.13		)		(0.13		)	(7		)
PT Smelting intercompany profit																	0.06				0.03			16
Gross loss per pound/ounce																	$	(0.46	)		$	(0.34	)	$	(100	)

Reconciliation to Amounts Reported
(In millions)					Production																Production
	Revenues				and Delivery			DD&A									Revenues				and Delivery			DD&A
Totals presented above	$	1,226			$	364		$	136								$	670			$	516		$	99
Treatment charges	(71		)		—			—									(40		)		—			—
Export duties	(21		)		—			—									(10		)		—			—
Royalty on metals	(43		)		—			—									(17		)		—			—
Noncash and other costs, net	—				24			—									—				45			—
Revenue adjustments, primarily for pricing on
prior period open sales	30				—			—
PT Smelting intercompany loss	—				18			—
Other revenue adjustments, primarily for pricing on prior period open sales																	(21		)		—			—
PT Smelting intercompany profit																	—				(7		)	—
Indonesia mining	1,121				406			136									582				554			99
Other mining^c	3,893				3,149			259									3,711				3,170			234
Corporate, other & eliminations	(704		)		(753		)	23									(747		)		(722		)	19
As reported in FCX’s consolidated financial statements	$	4,310			$	2,802		$	418
As reported in our consolidated financial statements																	$	3,546			$	3,002		$	352


a.	Includes silver sales of ~~666 thousand~~0.5 million ounces ($~~16.64~~14.57 per ounce average realized price).


b.	Includes $9charges totaling $28 million ($~~0.03~~0.18 per pound of copper) associated with adjustments to the settlement of ~~costs charged directly~~the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia. Refer to ~~production and delivery costs as a result of workforce reductions.~~Note 8.


c.	Represents the combined total for our other ~~mining operations, including North America copper mines, South America mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs




Three Months Ended June 30, 2018
(In millions)	By-Product			Co-Product Method
	Method			Copper			Gold			Silver^a		Total
Revenues, excluding adjustments	$	965		$	965		$	855		$	17	$	1,837
Site production and delivery, before net noncash and other credits shown below	420			221			195			4		420
Gold and silver credits	(871		)	—			—			—		—
Treatment charges	82			43			38			1		82
Export duties	55			29			26			—		55
Royalty on metals	71			36			34			1		71
Net cash (credits) costs	(243		)	329			293			6		628
DD&A	172			90			80			2		172
Noncash and other credits, net	(3		)	(1		)	(2		)	—		(3		)
Total (credits) costs	(74		)	418			371			8		797
Other revenue adjustments, primarily for pricing on prior period open sales	12			12			(2		)	1		11
PT Smelting intercompany loss	(8		)	(4		)	(4		)	—		(8		)
Gross profit	$	1,043		$	555		$	478		$	10	$	1,043

Copper sales (millions of recoverable pounds)	316			316
Gold sales (thousands of recoverable ounces)							671

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.05		$	3.05		$	1,274
Site production and delivery, before net noncash and other credits shown below	1.33			0.70			291
Gold and silver credits	(2.76		)	—			—
Treatment charges	0.26			0.14			57
Export duties	0.18			0.09			38
Royalty on metals	0.22			0.11			51
Unit net cash (credits) costs	(0.77		)	1.04			437
DD&A	0.54			0.28			119
Noncash and other credits, net	(0.01		)	—			(2		)
Total unit (credits) costs	(0.24		)	1.32			554
Other revenue adjustments, primarily for pricing on prior period open sales	0.04			0.04			(2		)
PT Smelting intercompany loss	(0.03		)	(0.01		)	(6		)
Gross profit per pound/ounce	$	3.30		$	1.76		$	712

Reconciliation to Amounts Reported
(In millions)				Production
	Revenues			and Delivery			DD&A
Totals presented above	$	1,837		$	420		$	172
Treatment charges	(82		)	—			—
Export duties	(55		)	—			—
Royalty on metals	(71		)	—			—
Noncash and other credits, net	—			(3		)	—
Other revenue adjustments, primarily for pricing on prior period open sales	11			—			—
PT Smelting intercompany loss	—			8			—
Indonesia mining	1,640			425			172
Other mining^b	4,345			3,406			256
Corporate, other & eliminations	(817		)	(916		)	14
As reported in our consolidated financial statements	$	5,168		$	2,915		$	442


a.	Includes silver sales of 1.1 million ounces ($15.89 per ounce average realized price).


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

Table of Contents

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



Three Months Ended September 30, 2016
Six Months Ended June 30, 2019
(In millions)		By-Product				Co-Product Method												By-Product				Co-Product Method
		Method				Copper			Gold			Silver^a		Total				Method				Copper			Gold		Silver^a		Total
Revenues, excluding adjustments		$	729			$	729		$	408		$	18	$	1,155			$	900			$	900		$	552	$	17	$	1,469
Site production and delivery, before net noncash
and other costs shown below		453				286			160			7		453
Site production and delivery, before net noncash and other costs shown below																		1,054				646			396		12		1,054
Gold and silver credits		(427		)		—			—			—		—				(571		)		—			—		—		—
Treatment charges		90				57			32			1		90				91				56			34		1		91
Export duties		34				21			12			1		34				27				17			10		—		27
Royalty on metals		40				24			15			1		40				45				28			16		1		45
Net cash costs		190				388			219			10		617				646				747			456		14		1,217
DD&A		110				69			39			2		110				204				125			77		2		204
Noncash and other costs, net		16			^b	11			5			—		16				48			^b	29			18		1		48
Total costs		316				468			263			12		743				898				901			551		17		1,469
Revenue adjustments, primarily for pricing on
prior period open sales		(6		)		(6		)	—			1		(5		)
PT Smelting intercompany loss		(9		)		(6		)	(3		)	—		(9		)
Other revenue adjustments, primarily for pricing on prior period open sales																		18				18			2		—		20
PT Smelting intercompany profit																		11				7			4		—		11
Gross profit		$	398			$	249		$	142		$	7	$	398			$	31			$	24		$	7	$	—	$	31

Copper sales (millions of recoverable pounds)		332				332												325				325
Gold sales (thousands of recoverable ounces)									307																420

Gross profit per pound of copper/per ounce of gold:	Gross profit per pound of copper/per ounce of gold:																Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments		$	2.20			$	2.20		$	1,327								$	2.77			$	2.77		$	1,314
Site production and delivery, before net noncash
and other costs shown below		1.37				0.86			520
Site production and delivery, before net noncash and other costs shown below																		3.24				1.99			944
Gold and silver credits		(1.29		)		—			—									(1.75		)		—			—
Treatment charges		0.27				0.17			104									0.28				0.17			81
Export duties		0.10				0.07			39									0.08				0.05			24
Royalty on metals		0.12				0.07			50									0.14				0.09			38
Unit net cash costs		0.57				1.17			713									1.99				2.30			1,087
DD&A		0.33				0.21			125									0.63				0.38			183
Noncash and other costs, net		0.05			^b	0.03			19									0.14			^b	0.09			43
Total unit costs		0.95				1.41			857									2.76				2.77			1,313
Revenue adjustments, primarily for pricing on
prior period open sales		(0.02		)		(0.02		)	1
PT Smelting intercompany loss		(0.03		)		(0.02		)	(10		)
Other revenue adjustments, primarily for pricing on prior period open sales																		0.05				0.05			5
PT Smelting intercompany profit																		0.04				0.02			10
Gross profit per pound/ounce		$	1.20			$	0.75		$	461								$	0.10			$	0.07		$	16

Reconciliation to Amounts Reported
(In millions)						Production																Production
		Revenues				and Delivery			DD&A									Revenues				and Delivery			DD&A
Totals presented above		$	1,155			$	453		$	110								$	1,469			$	1,054		$	204
Treatment charges		(90		)		—			—									(72		)		19			—
Export duties		(34		)		—			—									(27		)		—			—
Royalty on metals		(40		)		—			—									(45		)		—			—
Noncash and other costs, net		—				16			—									—				48			—
Revenue adjustments, primarily for pricing on
prior period open sales		(5		)		—			—
PT Smelting intercompany loss		—				9			—
Other revenue adjustments, primarily for pricing on prior period open sales																		20				—			—
PT Smelting intercompany profit																		—				(11		)	—
Indonesia mining		986				478			110									1,345				1,110			204
Other mining^c		3,183				2,567			287									7,497				6,208			456
Corporate, other & eliminations		(292		)		(516		)	246									(1,504		)		(1,340		)	39
As reported in FCX’s consolidated financial statements		$	3,877			$	2,529		$	643
As reported in our consolidated financial statements																		$	7,338			$	5,978		$	699


a.	Includes silver sales of ~~928 thousand~~1.1 million ounces ($~~18.97~~14.66 per ounce average realized price).


b.	Includes ~~asset retirement~~ charges ~~of $17~~totaling $28 million ($~~0.05~~0.09 per pound of copper). associated with adjustments to the settlement of the historical surface water tax disputes with the local regional tax authority in Papua, Indonesia. Refer to Note 8.


c.	Represents the combined total for our other ~~mining operations, including North America copper mines, South America mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs



Nine Months Ended September 30, 2017
Six Months Ended June 30, 2018
(In millions)		By-Product				Co-Product Method												By-Product			Co-Product Method
		Method				Copper			Gold			Silver^a		Total				Method			Copper			Gold			Silver^a		Total
Revenues, excluding adjustments		$	1,772			$	1,772		$	1,206		$	32	$	3,010			$	1,949		$	1,949		$	1,644		$	36	$	3,629
Site production and delivery, before net noncash
and other costs shown below		1,076				634			431			11		1,076
Site production and delivery, before net noncash and other costs shown below																		853			458			387			8		853
Gold and silver credits		(1,247		)		—			—			—		—				(1,697		)	—			—			—		—
Treatment charges		170				100			68			2		170				160			86			72			2		160
Export duties		62				36			25			1		62				101			54			46			1		101
Royalty on metals		106				60			45			1		106				138			73			64			1		138
Net cash costs		167				830			569			15		1,414
Net cash (credits) costs																		(445		)	671			569			12		1,252
DD&A		372				219			149			4		372				353			189			160			4		353
Noncash and other costs, net		140			^b	82			56			2		140				12			7			5			—		12
Total costs		679				1,131			774			21		1,926
Revenue adjustments, primarily for pricing on
prior period open sales		39				39			9			—		48
Total (credits) costs																		(80		)	867			734			16		1,617
Other revenue adjustments, primarily for pricing on prior period open sales																		(34		)	(34		)	17			—		(17		)
PT Smelting intercompany loss		(17		)		(10		)	(7		)	—		(17		)		(17		)	(9		)	(8		)	—		(17		)
Gross profit		$	1,115			$	670		$	434		$	11	$	1,115			$	1,978		$	1,039		$	919		$	20	$	1,978

Copper sales (millions of recoverable pounds)		630				630												635			635
Gold sales (thousands of recoverable ounces)									956															1,274

Gross profit per pound of copper/per ounce of gold:	Gross profit per pound of copper/per ounce of gold:																Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments		$	2.81			$	2.81		$	1,261								$	3.07		$	3.07		$	1,291
Site production and delivery, before net noncash
and other costs shown below		1.71				1.01			451
Site production and delivery, before net noncash and other costs shown below																		1.34			0.72			304
Gold and silver credits		(1.98		)		—			—									(2.67		)	—			—
Treatment charges		0.27				0.16			71									0.25			0.14			57
Export duties		0.10				0.06			26									0.16			0.09			36
Royalty on metals		0.16				0.09			47									0.22			0.11			50
Unit net cash costs		0.26				1.32			595
Unit net cash (credits) costs																		(0.70		)	1.06			447
DD&A		0.59				0.35			156									0.55			0.30			125
Noncash and other costs, net		0.22			^b	0.13			58									0.02			0.01			4
Total unit costs		1.07				1.80			809
Revenue adjustments, primarily for pricing on
prior period open sales		0.06				0.06			9
Total unit (credits) costs																		(0.13		)	1.37			576
Other revenue adjustments, primarily for pricing on prior period open sales																		(0.05		)	(0.05		)	13
PT Smelting intercompany loss		(0.03		)		(0.01		)	(7		)							(0.04		)	(0.01		)	(7		)
Gross profit per pound/ounce		$	1.77			$	1.06		$	454								$	3.11		$	1.64		$	721

Reconciliation to Amounts Reported
(In millions)						Production															Production
		Revenues				and Delivery			DD&A									Revenues			and Delivery			DD&A
Totals presented above		$	3,010			$	1,076		$	372								$	3,629		$	853		$	353
Treatment charges		(170		)		—			—									(160		)	—			—
Export duties		(62		)		—			—									(101		)	—			—
Royalty on metals		(106		)		—			—									(138		)	—			—
Noncash and other costs, net		—				140			—									—			12			—
Revenue adjustments, primarily for pricing on
prior period open sales		48				—			—
Other revenue adjustments, primarily for pricing on prior period open sales																		(17		)	—			—
PT Smelting intercompany loss		—				17			—									—			17			—
Indonesia mining		2,720				1,233			372									3,213			882			353
Other mining^c		10,898				8,588			808
Other mining^b																		8,597			6,751			505
Corporate, other & eliminations		(2,256		)		(2,324		)	77									(1,774		)	(1,910		)	35
As reported in FCX’s consolidated financial statements		$	11,362			$	7,497		$	1,257
As reported in our consolidated financial statements																		$	10,036		$	5,723		$	893


a.	Includes silver sales of ~~1.9~~2.3 million ounces ($~~16.70~~15.93 per ounce average realized price).


b.	~~Includes $112 million ($0.18 per pound of copper) of costs charged directly to production and delivery costs as a result of workforce reductions.~~


c.	Represents the combined total for our other ~~mining operations, including North America copper mines, South America mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9.

~~Table of Contents~~

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

Nine Months Ended September 30, 2016
(In millions) By-Product Co-Product Method
Method Copper Gold
Silver^a
Total
Revenues, excluding adjustments $ 1,525
$ 1,525
$ 844
$ 36
$ 2,405

Site production and delivery, before net noncash
and other costs shown below 1,190
754
418
18
1,190

Gold and silver credits (897 ) —
—
—
—

Treatment charges 202
128
71
3
202

Export duties 63
40
22
1
63

Royalty on metals 84
51
32
1
84

Net cash costs 642
973
543
23
1,539

DD&A 284
180
100
4
284

Noncash and other costs, net 31
^b
20
10
1
31

Total costs 957
1,173
653
28
1,854

Revenue adjustments, primarily for pricing on
prior period open sales —
—
17
—
17

PT Smelting intercompany loss (7 ) (5 ) (2 ) —
(7 )
Gross profit $ 561
$ 347
$ 206
$ 8
$ 561

Copper sales (millions of recoverable pounds) 702
702

Gold sales (thousands of recoverable ounces) 653

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments $ 2.17
$ 2.17
$ 1,292

Site production and delivery, before net noncash
and other costs shown below 1.70
1.08
639

Gold and silver credits (1.28 ) —
—

Treatment charges 0.29
0.18
109

Export duties 0.09
0.06
34

Royalty on metals 0.12
0.07
48

Unit net cash costs 0.92
1.39
830

DD&A 0.40
0.25
152

Noncash and other costs, net 0.04
^b
0.03
16

Total unit costs 1.36
1.67
998

Revenue adjustments, primarily for pricing on
prior period open sales —
—
25

PT Smelting intercompany loss (0.01 ) (0.01 ) (4 )
Gross profit per pound/ounce $ 0.80
$ 0.49
$ 315

Reconciliation to Amounts Reported
(In millions) Production
Revenues and Delivery DD&A
Totals presented above $ 2,405
$ 1,190
$ 284

Treatment charges (202 ) —
—

Export duties (63 ) —
—

Royalty on metals (84 ) —
—

Noncash and other costs, net —
31
—

Revenue adjustments, primarily for pricing on
prior period open sales 17
—
—

PT Smelting intercompany loss —
7
—

Indonesia mining 2,073
1,228
284

Other mining^c
9,640
7,747
889

Corporate, other & eliminations (1,260 ) (991 ) 764

As reported in FCX’s consolidated financial statements $ 10,453
$ 7,984
$ 1,937

~~Includes silver sales of 2.0 million ounces ($17.95 per ounce average realized price).~~


b.	~~Includes asset retirement charges of $17 million ($0.02 per pound of copper).~~


c.	Represents the combined total for our other mining operations, including North America copper mines, South America mining, Molybdenum mines, Rod & Refining and Atlantic Copper Smelting & Refining, as presented in Note 10.

Table of Contents

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



	Three Months Ended September 30,								Three Months Ended June 30,
(In millions)	2017			2016					2019			2018

Revenues, excluding adjustments^a	$	72		$	51				$	117		$	119
Site production and delivery, before net noncash and other costs shown below	56			53					76			71
Treatment charges and other	7			5					8			8
Net cash costs	63			58					84			79
DD&A	20			15					18			21
Noncash and other costs, net	2			4					2			—
Total costs	85			77					104			100
Gross loss	$	(13	)	$	(26	)
Gross profit									$	13		$	19

Molybdenum sales (millions of recoverable pounds)^a	8			5					9			9

Gross loss per pound of molybdenum:
Gross profit per pound of molybdenum:									Gross profit per pound of molybdenum:

Revenues, excluding adjustments^a	$	9.02		$	9.08				$	12.74		$	12.72
Site production and delivery, before net noncash and other costs shown below	7.05			9.42					8.31			7.51
Treatment charges and other	0.85			0.86					0.84			0.85
Unit net cash costs	7.90			10.28					9.15			8.36
DD&A	2.44			2.63					2.07			2.24
Noncash and other costs, net	0.28			0.77					0.15			0.05
Total unit costs	10.62			13.68					11.37			10.65
Gross loss per pound	$	(1.60	)	$	(4.60	)
Gross profit per pound									$	1.37		$	2.07

Reconciliation to Amounts Reported
(In millions)

				Production								Production
Three Months Ended September 30, 2017	Revenues			and Delivery			DD&A
Three Months Ended June 30, 2019									Revenues			and Delivery			DD&A
Totals presented above	$	72		$	56		$	20	$	117		$	76		$	18
Treatment charges and other	(7		)	—			—		(8		)	—			—
Noncash and other costs, net	—			2			—		—			2			—
Molybdenum mines	65			58			20		109			78			18
Other mining^b	4,949			3,497			375		4,184			3,646			315
Corporate, other & eliminations	(704		)	(753		)	23		(747		)	(722		)	19
As reported in FCX’s consolidated financial statements	$	4,310		$	2,802		$	418
As reported in our consolidated financial statements									$	3,546		$	3,002		$	352

Three Months Ended September 30, 2016
Three Months Ended June 30, 2018
Totals presented above	$	51		$	53		$	15	$	119		$	71		$	21
Treatment charges and other	(5		)	—			—		(8		)	—			—
Noncash and other costs, net	—			4			—		—			—			—
Molybdenum mines	46			57			15		111			71			21
Other mining^b	4,123			2,988			382		5,874			3,760			407
Corporate, other & eliminations	(292		)	(516		)	246		(817		)	(916		)	14
As reported in FCX’s consolidated financial statements	$	3,877		$	2,529		$	643
As reported in our consolidated financial statements									$	5,168		$	2,915		$	442


a.	Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.

Represents the combined total for our other ~~mining operations, including North America copper mines, South America mining, Indonesia mining, Rod & Refining and Atlantic Copper Smelting & Refining,~~segments, as presented in Note ~~10.~~9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.

Table of Contents

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



	Nine Months Ended September 30,								Six Months Ended June 30,
(In millions)	2017			2016					2019			2018

Revenues, excluding adjustments^a	$	220		$	153				$	215		$	221
Site production and delivery, before net noncash and other costs shown below	164			146					146			136
Treatment charges and other	21			17					15			15
Net cash costs	185			163					161			151
DD&A	58			51					34			40
Noncash and other costs, net	5			13					3			2
Total costs	248			227					198			193
Gross loss	$	(28	)	$	(74	)
Gross profit									$	17		$	28

Molybdenum sales (millions of recoverable pounds)^a	24			19					17			18

Gross loss per pound of molybdenum:
Gross profit per pound of molybdenum:									Gross profit per pound of molybdenum:

Revenues, excluding adjustments^a	$	9.05		$	7.94				$	12.63		$	12.38
Site production and delivery, before net noncash and other costs shown below	6.75			7.53					8.60			7.61
Treatment charges and other	0.85			0.86					0.85			0.85
Unit net cash costs	7.60			8.39					9.45			8.46
DD&A	2.38			2.65					2.04			2.24
Noncash and other costs, net	0.23			0.72					0.15			0.10
Total unit costs	10.21			11.76					11.64			10.80
Gross loss per pound	$	(1.16	)	$	(3.82	)
Gross profit per pound									$	0.99		$	1.58

Reconciliation to Amounts Reported
(In millions)

				Production								Production
Nine Months Ended September 30, 2017	Revenues			and Delivery			DD&A
Six Months Ended June 30, 2019									Revenues			and Delivery			DD&A
Totals presented above	$	220		$	164		$	58	$	215		$	146		$	34
Treatment charges and other	(21		)	—			—		(15		)	—			—
Noncash and other costs, net	—			5			—		—			3			—
Molybdenum mines	199			169			58		200			149			34
Other mining^b	13,419			9,652			1,122		8,642			7,169			626
Corporate, other & eliminations	(2,256		)	(2,324		)	77		(1,504		)	(1,340		)	39
As reported in FCX’s consolidated financial statements	$	11,362		$	7,497		$	1,257
As reported in our consolidated financial statements									$	7,338		$	5,978		$	699

Nine Months Ended September 30, 2016
Six Months Ended June 30, 2018
Totals presented above	$	153		$	146		$	51	$	221		$	136		$	40
Treatment charges and other	(17		)	—			—		(15		)	—			—
Noncash and other costs, net	—			13			—		—			2			—
Molybdenum mines	136			159			51		206			138			40
Other mining^b	11,577			8,816			1,122		11,604			7,495			818
Corporate, other & eliminations	(1,260		)	(991		)	764		(1,774		)	(1,910		)	35
As reported in FCX’s consolidated financial statements	$	10,453		$	7,984		$	1,937
As reported in our consolidated financial statements									$	10,036		$	5,723		$	893


a.	Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.

Table of Contents

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling ~~rates,~~rates; production and sales ~~volumes,~~volumes; unit net cash ~~costs,~~costs; operating cash flows; capital expenditures; our expectations regarding our share of PT-FI’s net (loss) income and future cash flows ~~capital expenditures,~~through 2022; PT-FI’s development, financing, construction and completion of a new smelter in Indonesia; PT-FI’s compliance with environmental standards under the framework established by Indonesia’s Ministry of Environment and Forestry; exploration efforts and ~~results,~~results; development and production activities, rates and ~~costs, liquidity,~~costs; liquidity; tax ~~rates,~~rates; export quotas and duties; the impact of copper, gold and molybdenum price ~~changes,~~changes; the impact of deferred intercompany profits on ~~earnings,~~earnings; reserve ~~estimates,~~estimates; consummation of the pending Freeport Cobalt transaction; and future dividend payments, ~~and~~ share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to be,” “potential” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; changes in mine plans; production rates; ~~potential effects~~timing of ~~cost and capital expenditure reductions and production curtailments on financial~~shipments; results ~~and cash flow;~~of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; satisfaction of customary closing conditions, including receipt of regulatory approvals to consummate the ~~outcome of negotiations with the Indonesian government regarding PT-FI’s long-term operating rights;~~pending Freeport Cobalt transaction; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesian government’s approval of an increase in PT-FI's export quota for the current export period ending March 8, 2020, and extension of PT-FI's export license after March 8, 2020; risks associated with underground mining; satisfaction of requirements in accordance with PT-FI’s IUPK to extend mining rights from 2031 through 2041; industry risks; regulatory ~~changes (including adoption of financial assurance regulations as proposed by the U.S. Environmental Protection Agency under CERCLA for the hard rock mining industry);~~changes; political and social risks; labor relations; weather- and climate-related risks; environmental risks; litigation results (including the final disposition of the unfavorable Indonesia Tax Court ruling relating to surface water taxes and the outcome of Cerro Verde’s royalty dispute with the Peruvian national tax authority);results; cybersecurity incidents; and other factors described in more detail in Part I, Item 1A. “Risk Factors” of our ~~annual report on~~2018 Form 10-K for the year ended December 31, 2016, filed with the SEC as updated by our subsequent filings with the SEC. With respect to our operations in Indonesia, such factors include whether PT-FI will be able to resolve complex regulatory matters in Indonesia and continue to export copper after December 31, 2017.10-K.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, 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 do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.

Table of Contents


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risks during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2017.~~2019. For additional information on market risks, refer to “Disclosures About Market Risks” included in Part II, Items 7. and 7A. of our ~~annual report on~~2018 Form ~~10-K for the year ended December 31, 2016.~~10-K. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~September~~June 30, ~~2017;~~2019; for projected sensitivities of our provisionally priced copper sales ~~and derivative instruments~~ to changes in commodity prices refer to “Consolidated Results – Revenues” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~September~~June 30, ~~2017.~~2019.


Item 4.	Controls and Procedures.

(a)

Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on their evaluation, they have concluded that our disclosure controls and procedures are effective as of ~~September~~June 30, ~~2017.~~2019.


(b)	Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2017,~~2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Part II.	OTHER INFORMATION


Item 1.	Legal Proceedings.

We are involved in numerous legal proceedings that arise in the ordinary course of our business or ~~that~~ are associated with environmental ~~issues arising from legacy operations conducted over the years by Freeport Minerals Corporation and its affiliates.~~issues. We are also involved ~~from time to time~~periodically in ~~other~~ reviews, inquiries, investigations and other proceedings initiated by or involving government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

Management does not believe, based on currently available information, that the outcome of any legal proceeding reported ~~in Note 9 of this quarterly report on Form 10-Q for the period ended September 30, 2017, and~~ in Part I, Item 3. “Legal Proceedings” and Note 12 of our ~~annual report on~~2018 Form 10-K, ~~for the year ended December 31, 2016,~~ as updated in Note ~~9 in~~8 of our quarterly reports on Form 10-Q for the quarters ended March 31, ~~2017,~~2019 and June 30, ~~2017,~~2019, will have a material adverse effect on our financial condition; although individual or cumulative outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period.

~~Environmental Proceedings~~

~~Notices of Violation - Cerro Verde~~

In September 2017, Cerro Verde paid approximately $148,000, including interest, in connection with final resolution of a Notice of Violation (NOV) issued in December 2006 by Peru’s Agency for Environmental Assessment and Enforcement (OEFA) alleging a spill of dry tailings from a pipeline near the Enlozada tailings dam and findings of dissolved oxidized copper in excess of permissible limits near the Hyuarondo dam. In September 2017, Cerro Verde also paid approximately $169,000, including interest, in connection with final resolution of an NOV issued in October 2008 by OEFA alleging findings of dissolved oxidized copper in excess of permissible limits, that sprinklers were not being used to moisten stockpiles or the conveyer belt at a concentrator plant, and that the uncleanliness of septic tanks at the transfer station resulted in findings of raw sewage in the treated water used for landscaping around administrative buildings.

~~Table of Contents~~

Item 1A. Risk Factors.

There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our ~~annual report~~2018 Form 10-K. For additional information on ~~Form 10-K for the year ended December 31, 2016, except as disclosed in~~risk factors, refer to Part ~~II,~~I, Item 1A. “Risk Factors” of our ~~quarterly report on~~2018 Form ~~10-Q for the quarter ended March 31, 2017, which provided as follows:~~10-K.

The risk factor “Mine closure and reclamation regulations impose substantial costs on our operations and include requirements that we provide financial assurance supporting those obligations. We also have plugging and abandonment obligations related to our remaining oil and gas properties, and are required to provide bonds or other forms of financial assurance in connection with those operations. Changes in or the failure to comply with these requirements could have a material adverse effect on us” which was included in our annual report on Form 10-K for the year ended December 31, 2016, is updated to add the following:

The United States (U.S.) Environmental Protection Agency extended the comment period for the proposed regulations under Section 108(b) of CERCLA to July 11, 2017. Since filing our annual report on Form 10-K in February 2017, we have evaluated the potential impact of these proposed rules. Based on this evaluation, we believe that, if adopted without material modification, the rules would impose financial responsibility obligations on U.S. hard rock mining operations that are unnecessary, duplicative of existing state and other federal requirements, and unreasonable. Our initial calculations also suggest that the financial responsibility amounts would be difficult, if not impossible, for us and others to meet with corporate resources, and would be extremely expensive, if not impossible, to finance with third-party financial instruments such as letters of credit, bonds or insurance. We and others in the industry will continue to participate in the public comment process and oppose the adoption of these rules in anything like their proposed form, as adoption in that form would severely harm the international competitiveness of the U.S. hard rock mining industry and would materially and adversely affect our cash flows, results of operations and financial condition.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the three months ended ~~September~~June 30, ~~2017.~~2019.

There were no shares of common stock purchased by us during the three months ended ~~September~~June 30, ~~2017.~~2019. On July 21, 2008, our Board of Directors approved an increase in our open-market share purchase program for up to 30 million shares. There have been no purchases under this program since 2008. This program does not have an expiration date. At ~~September~~June 30, ~~2017,~~2019, there were 23.7 million shares that could still be purchased under the program.


Item 4.	Mine Safety Disclosures.

The safety and health of all employees is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. Our approach towards the safety and health of our workforce is to continuously improve performance through implementing robust management systems and providing adequate training, safety incentive and occupational health programs. The information concerning mine

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safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this quarterly report on Form 10-Q.

~~Table of Contents~~


Item 6.	Exhibits.



		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
2.1	PTFI Divestment Agreement dated as of September 27, 2018 among FCX, International Support LLC, PT Freeport Indonesia, PT Indocopper Investama and PT Indonesia Asahan Aluminium (Persero). (*)		10-Q	001-11307-01	11/9/2018
2.2	Supplemental and Amendment Agreement to the PT-FI Divestment Agreement, dated December 21, 2018, among FCX, PT Freeport Indonesia, PT Indonesia Papua Metal Dan Mineral (f/k/a PT Indocopper Investama), PT Indonesia Asahan Aluminium (Persero) and International Support LLC.		10-K	001-11307-01	2/15/2019
3.1	Amended and Restated Certificate of Incorporation of FCX, effective as of June 8, 2016.		8-K	001-11307-01	6/9/2016
3.2	Amended and Restated By-Laws of FCX, effective as of June 8, 2016.		8-K	001-11307-01	6/9/2016
4.1	Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 3.55% Senior Notes due 2022, ~~the 2.30% Senior Notes due 2017,~~ the 4.00% Senior Notes due 2021, the 4.55% Senior Notes due 2024, and the 5.40% Senior Notes due 2034).		8-K	001-11307-01	2/13/2012
4.2	Third Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 3.55% Senior Notes due 2022).		8-K	001-11307-01	2/13/2012
4.3	Fourth Supplemental Indenture dated as of May 31, 2013, among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 3.55% Senior Notes due 2022, the ~~2.30% Senior Notes due 2017, the~~ 4.00% Senior Notes due 2021, the 4.55% Senior Notes due 2024, and the 5.40% Senior Notes due 2034).		8-K	001-11307-01	6/3/2013
4.4	~~Fifth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 2.30% Senior Notes due 2017).~~		~~8-K~~	~~001-11307-01~~	~~11/14/2014~~
~~4.5~~	Sixth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 4.00% Senior Notes due 2021).		8-K	001-11307-01	11/14/2014
~~4.6~~4.5	Seventh Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 4.55% Senior Notes due 2024).		8-K	001-11307-01	11/14/2014
~~4.7~~4.6	Eighth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 5.40% Senior Notes due 2034).		8-K	001-11307-01	11/14/2014
~~4.8~~4.7	Indenture dated as of March 7, 2013, between FCX and U.S. Bank National Association, as Trustee (relating to ~~the 2.375% Senior Notes due 2018, the 3.100% Senior Notes due 2020,~~ the 3.875% Senior Notes due 2023, and the 5.450% Senior Notes due 2043).		8-K	001-11307-01	3/7/2013

~~Table of Contents~~



		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
~~4.9~~4.8	Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto, and Wells Fargo Bank, N.A., as Trustee (relating to the 6.5% Senior Notes due 2020 and the 6.875% Senior Notes due 2023).		~~8-K~~	~~001-31470~~	~~3/13/2007~~
~~4.10~~	Sixteenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.5% Senior Notes due 2020).		~~8-K~~	~~001-31470~~	~~10/26/2012~~
~~4.11~~	Seventeenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.875% Senior Notes due 2023).		~~8-K~~	~~001-31470~~	~~10/26/2012~~
~~4.12~~	~~Eighteenth~~ Supplemental Indenture dated as of May 31, 2013, ~~to the Indenture dated as of March 13, 2007,~~ among FCX, Freeport-McMoRan Oil & Gas LLC, as ~~Successor Issuer, FCX Oil & Gas Inc., as Co-Issuer, FCX, as Parent Guarantor, Plains Exploration & Production Company, as Original Issuer,~~guarantor, and ~~Wells Fargo~~U.S. Bank ~~N.A.,~~National Association, as Trustee (relating to the ~~6.5%~~3.875% Senior Notes due ~~2020~~2023 and the ~~6.875%~~5.450% Senior Notes due ~~2023)~~2043).		8-K	001-11307-01	6/3/2013
~~4.13~~	Nineteenth Supplemental Indenture dated as of September 30, 2016 to the Indenture dated as of March 13, 2007, among Freeport-McMoRan Oil & Gas LLC, as Successor Issuer, FCX Oil & Gas Inc., as Co-Issuer, FMSTP Inc., as Additional Co-Issuer, FCX, as Parent Guarantor, and Wells Fargo Bank, N.A., as Trustee (relating to the 6.50% Senior Notes due 2020 and the 6.875% Senior Notes due 2023).		~~10-Q~~	~~001-11307-01~~	~~11/9/2016~~
~~4.14~~	Twentieth Supplemental Indenture dated as of December 13, 2016 to the Indenture dated as of March 13, 2007, among Freeport-McMoRan Oil & Gas LLC, as Successor Issuer, FCX Oil & Gas LLC, as Co-Issuer, FMSTP Inc., as Additional Co-Issuer, FCX, as Parent Guarantor, and Wells Fargo Bank, N.A., as Trustee (relating to the 6.50% Senior Notes due 2020 and the 6.875% Senior Notes due 2023).		~~8-K~~	~~001-11307-01~~	~~12/13/2016~~
~~4.15~~4.9	Form of Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027, the 9.50% Senior Notes due 2031, and the 6.125% Senior Notes due 2034).		S-3	333-36415	9/25/1997

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		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
~~4.16~~4.10	Form of 7.125% Debenture due November 1, 2027 of Phelps Dodge Corporation issued on November 5, 1997, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027).		8-K	01-00082	11/3/1997
~~4.17~~4.11	Form of 9.5% Note due June 1, 2031 of Phelps Dodge Corporation issued on May 30, 2001, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 9.50% Senior Notes due 2031).		8-K	01-00082	5/30/2001
~~4.18~~4.12	Form of 6.125% Note due March 15, 2034 of Phelps Dodge Corporation issued on March 4, 2004, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 6.125% Senior Notes due 2034).		10-K	01-00082	3/7/2005

~~Table of Contents~~



		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
~~4.19~~4.13	Supplemental Indenture dated as of April 4, 2007 to the Indenture dated as of September 22, 1997, among Phelps Dodge Corporation, as Issuer, Freeport-McMoRan Copper & Gold Inc., as Parent Guarantor, and U.S. Bank National Association, as Trustee (relating to the 7.125% Senior Notes due 2027, the 9.50% Senior Notes due 2031, and the 6.125% Senior Notes due 2034).		10-K	001-11307-01	2/26/2016
~~4.20~~4.14	Indenture dated as of December 13, 2016, among FCX, Freeport-McMoRan Oil & Gas LLC, as guarantor, and U.S. Bank National Association, as Trustee (relating to the ~~6.125% Senior Notes due 2019, the 6.50% Senior Notes due 2020, the 6.625% Senior Notes due 2021, the 6.75% Senior Notes due 2022, and the~~ 6.875% Senior Notes due 2023).		8-K	001-11307-01	12/13/2016
~~4.21~~	Registration Rights Agreement dated as of December 13, 2016 among FCX, Freeport-McMoRan Oil & Gas LLC, as Guarantor, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Managers, relating to the 6.125% Senior Notes due 2019.		~~8-K~~	~~001-11307-01~~	~~12/13/2016~~
~~4.22~~	Registration Rights Agreement dated as of December 13, 2016 among FCX, Freeport-McMoRan Oil & Gas LLC, as Guarantor, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Managers, relating to the 6.50% Senior Notes due 2020.		~~8-K~~	~~001-11307-01~~	~~12/13/2016~~
~~4.23~~	Registration Rights Agreement dated as of December 13, 2016 among FCX, Freeport-McMoRan Oil & Gas LLC, as Guarantor, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Managers, relating to the 6.625% Senior Notes due 2021.		~~8-K~~	~~001-11307-01~~	~~12/13/2016~~
~~4.24~~	Registration Rights Agreement dated as of December 13, 2016 among FCX, Freeport-McMoRan Oil & Gas LLC, as Guarantor, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Managers, relating to the 6.75% Senior Notes due 2022.		~~8-K~~	~~001-11307-01~~	~~12/13/2016~~
~~4.25~~4.15	Registration Rights Agreement dated as of December 13, 2016 among FCX, Freeport-McMoRan Oil & Gas LLC, as Guarantor, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Managers, relating to the 6.875% Senior Notes due 2023.		8-K	001-11307-01	12/13/2016
4.16	Form of Certificate representing shares of common stock, par value $0.10.		8-A/A	001-11307-01	8/10/2015
10.1	First Amendment dated as of May 2, 2019 to the Revolving Credit Agreement dated as of April 20, 2018, among FCX, PT Freeport Indonesia, Freeport-McMoRan Oil & Gas LLC, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and each of the lenders and issuing banks party thereto.		8-K	001-11307-01	5/2/2019
15.1	Letter from Ernst & Young LLP regarding unaudited interim financial statements.	X
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350.	X
~~95.1~~	~~Mine Safety and Health Administration Safety Data.~~	X

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		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
95.1	Mine Safety and Health Administration Safety Data.	X
101.INS	XBRL Instance ~~Document.~~Document- the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X
101.SCH	Inline XBRL Taxonomy Extension Schema.	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase.	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase.	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase.	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase.	X

* Indicates management contract

(*) The registrant agrees to furnish supplementally to the Securities and Exchange Commission (SEC) a copy of any omitted schedule or ~~compensatory plan or arrangement.~~exhibit upon the request of the SEC in accordance with Item 601(a)(5) of Regulation S-K.

Note: Certain instruments with respect to long-term debt of FCX have not been filed as exhibits to this Quarterly Report on Form 10-Q since the total amount of securities authorized under any such instrument does not exceed 10 percent of the total assets of FCX and its subsidiaries on a consolidated basis. FCX agrees to furnish a copy of each such instrument upon request of the Securities and Exchange Commission.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	~~FREEPORT-McMoRan INC.~~Freeport-McMoRan Inc.

	By:	/s/ C. Donald Whitmire, Jr.
		C. Donald Whitmire, Jr.
		Vice President and
		Controller - Financial Reporting
		(authorized signatory
		and Principal Accounting Officer)

Date: ~~November 7, 2017~~August 6, 2019

S-1



	September 30, 2017		December 31, 2016
Current inventories:
Total materials and supplies, net^a	$	1,276	$	1,306

Mill stockpiles	$	336	$	259
Leach stockpiles	1,057		1,079
Total current mill and leach stockpiles	$	1,393	$	1,338

Raw materials (primarily concentrate)	$	285	$	255
Work-in-process	154		114
Finished goods	749		629
Total product inventories	$	1,188	$	998

Long-term inventories:
Mill stockpiles	$	346	$	487
Leach stockpiles	1,107		1,146
Total long-term mill and leach stockpiles^b	$	1,453	$	1,633



	Principal Amount		Net Adjustments		Book Value		Redemption Value		Gain
FCX 6.125% Senior Notes due 2019	$	179	$	5	$	184	$	182	$	2
FM O&G 6.125% Senior Notes due 2019	58		2		60		59		1
FCX 6.625% Senior Notes due 2021	228		12		240		234		6
FM O&G 6.625% Senior Notes due 2021	33		2		35		34		1
FM O&G 6.75% Senior Notes due 2022	45		2		47		46		1
	$	543	$	23	$	566	$	555	$	11



	Assets				Liabilities
	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016

Gross amounts recognized:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	$	74	$	137	$	46	$	56
Copper derivatives	7		9		2		2
	81		146		48		58

Less gross amounts of offset:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	1		12		1		12
Copper derivatives	2		2		2		2
	3		14		3		14

Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	73		125		45		44
Copper derivatives	5		7		—		—
	$	78	$	132	$	45	$	44

Balance sheet classification:
Trade accounts receivable	$	69	$	119	$	24	$	13
Other current assets	5		7		—		—
Accounts payable and accrued liabilities	4		6		21		31
	$	78	$	132	$	45	$	44



	At December 31, 2016
	Carrying		Fair Value
	Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	23	$	23	$	23	$	—	$	—	$	—
Money market funds	22		22		—		22		—		—
Equity securities	5		5		—		5		—		—
Total	50		50		23		27		—		—

Legally restricted funds:^a
U.S. core fixed income fund	53		53		53		—		—		—
Government bonds and notes	36		36		—		—		36		—
Corporate bonds	32		32		—		—		32		—
Government mortgage-backed securities	25		25		—		—		25		—
Asset-backed securities	16		16		—		—		16		—
Money market funds	12		12		—		12		—		—
Collateralized mortgage-backed securities	8		8		—		—		8		—
Municipal bonds	1		1		—		—		1		—
Total	183		183		53		12		118		—

Derivatives:
Embedded derivatives in provisional sales/
purchase contracts in a gross asset position^c	137		137		—		—		137		—
Copper futures and swap contracts^c	9		9		—		8		1		—
Contingent consideration for the sales of TFHL
and onshore California oil and gas properties^a	46		46		—		—		46		—
Total	192		192		—		8		184		—

Contingent consideration for the sale of the
Deepwater GOM oil and gas properties^a	150		135		—		—		—		135

Total assets			$	560	$	76	$	47	$	302	$	135

Liabilities
Derivatives:^c
Embedded derivatives in provisional sales/
purchase contracts in a gross liability position	56		$	56	$	—	$	—	$	56	$	—
Copper futures and swap contracts	2		2		—		2		—		—
Total	58		58		—		2		56		—

Contingent payments for the settlements of
drilling rig contracts^e	23		23		—		—		23		—

Long-term debt, including current portion^d	16,027		15,196		—		—		15,196		—

Total liabilities			$	15,277	$	—	$	2	$	15,275	$	—



Fair value at January 1, 2017	$	135
Net unrealized gain related to assets still held at the end of the period	3
Fair value at September 30, 2017	$	138



Royalty and related assessment charges:
	Production and delivery	$	216		^a
	Interest expense, net	141
	Provision for income taxes	2			^b
Net loss attributable to noncontrolling interests		(171		)
		$	188



			Weighted-
			Average
			Interest Rate
Senior Notes	$	13.3	4.4%
Cerro Verde credit facility	1.5		3.1%
Total debt	$	14.8	4.2%