Freeport-McMoRan(FCX) - 2023 Q2 - Quarterly Report

Cash and Cash Equivalents - Cash and cash equivalents decreased to $6,683 million in June 2023 from$8,146 million in December 2022[12] - Total cash, cash equivalents, and restricted cash and cash equivalents were $6.936 billion as of June 30, 2023, compared to$8.390 billion as of December 31, 2022[57] - At June 30, 2023, the company had $6.7 billion of consolidated cash and cash equivalents, including$1.1 billion designated for Indonesia smelter projects[208] Revenues and Net Income - Total revenues for the six months ended June 30, 2023, were $11,126 million, compared to$12,019 million in the same period in 2022[18] - Net income attributable to common stockholders for the six months ended June 30, 2023, was $1,006 million, down from$2,367 million in the same period in 2022[18] - Net income per share attributable to common stockholders (diluted) for the six months ended June 30, 2023, was $0.69, compared to$1.61 in the same period in 2022[31] - Total comprehensive income attributable to common stockholders for the six months ended June 30, 2023, was $1,008 million, down from$2,369 million in the same period in 2022[21] - Net income for Q2 2023 was $731 million, a decrease from$1,038 million in Q2 2022, while net income for the first six months of 2023 was $1,780 million, down from$2,942 million in the same period of 2022[34] - FCX's total consolidated revenues for the second quarter of 2023 were $5.737 billion, compared to$5.416 billion in the same period of 2022[83] - Revenues from unaffiliated customers for the first six months of 2023 totaled $11.126 billion, compared to$12.019 billion in the same period of 2022[89] - Net income attributable to common stockholders for the first six months of 2023 was $1.0 billion, compared to$2.4 billion in the same period of 2022[103] - Consolidated revenues for Q2 2023 were $5.7 billion, compared to$5.4 billion in Q2 2022[130][133] - Revenues for the first six months of 2023 were $3.85 billion, consistent with the same period in 2022[173] Capital Expenditures and Investments - Capital expenditures for the six months ended June 30, 2023, totaled$2,365 million, with significant investments in Indonesia mining ($833 million) and Indonesia smelter projects ($780 million)[23] - Capital expenditures for the first six months of 2023 were $2.284 billion, up from$1.586 billion in the same period of 2022[89] - Capital expenditures for 2023 are expected to be $4.8 billion, including$2.0 billion for major mining projects and $1.6 billion for Indonesia smelter projects[114] - Capital expenditures for the Indonesia smelter projects totaled$0.8 billion in the first six months of 2023, with an expected total of $1.6 billion for the year[185] Operating Cash Flows and Debt - Net cash provided by operating activities for the six months ended June 30, 2023, was$2,723 million, compared to $3,312 million in the same period in 2022[23] - FCX's total debt decreased to$9,495 million in June 2023 from $10,620 million in December 2022, with long-term debt at$9,458 million[41] - FCX repurchased $1.3 billion of its senior notes from 2022 through August 3, 2023, resulting in a$5 million gain on debt extinguishments in Q2 2023[43] - Consolidated debt at June 30, 2023 was $9.5 billion, with net debt of$2.8 billion[104] - The fair value of FCX's long-term debt, including the current portion, was $9.129 billion as of June 30, 2023[60] - Net debt, excluding Indonesia smelter projects, totaled$0.9 billion as of June 30, 2023[210] Dividends and Share Repurchases - Dividends declared per share of common stock remained consistent at $0.15 for the three months ended June 30, 2023, and$0.30 for the six months ended June 30, 2023[18] - FCX declared a cash dividend of $0.15 per share on June 21, 2023, consisting of a$0.075 base dividend and a $0.075 variable, performance-based dividend[45] - FCX's share repurchase program has$3.2 billion available for repurchases, with no shares purchased since July 11, 2022[44] - Cash dividends declared at $0.15 per share, including$0.075 base and $0.075 variable dividends, paid on August 1, 2023[210] - Anticipated total dividends for 2023 are$0.60 per share, comprising $0.30 base and$0.30 variable dividends[210] Commodity Prices and Hedging - FCX held copper futures and swap contracts for 88 million pounds at an average price of $3.88 per pound, with maturities through May 2025, to hedge price exposure[47] - Embedded derivatives in provisional sales contracts included 587 million pounds of copper at an average price of$3.90 per pound and 165 thousand ounces of gold at $1,980 per ounce, with maturities through November 2023[49] - Atlantic Copper held net copper forward purchase contracts for 7 million pounds at an average contract price of$3.81 per pound, with maturities through August 2023[51] - Embedded derivatives in provisional sales contracts for copper resulted in a realized and unrealized loss of $169 million for the three months ended June 30, 2023[52] - The fair value of unsettled commodity derivative financial instruments as of June 30, 2023, was$37 million for assets and $110 million for liabilities[53] - FCX's maximum credit exposure associated with derivative transactions was$537 million as of June 30, 2023[55] - LME copper settlement prices in Q2 2023 ranged from $3.59 to$4.12 per pound, averaging $3.84 per pound[120] - London PM gold prices in Q2 2023 ranged from$1,900 to $2,048 per ounce, averaging$1,976 per ounce[125] - Platts Metals Daily Molybdenum Dealer Oxide weekly average price in Q2 2023 ranged from $17.09 to$22.75 per pound, averaging $21.25 per pound[128] - Average realized prices in Q2 2023 were 5$142 million in pre-tax, nondeductible charges related to contested tax rulings in Peru[38] - Consolidated production and delivery costs increased to $3.5 billion in Q2 2023, up from$3.0 billion in Q2 2022, primarily due to higher operating rates and maintenance costs[142] - Site production and delivery costs averaged $2.39 per pound of copper in Q2 2023, compared to$2.09 per pound in Q2 2022[143] - Depreciation, depletion, and amortization (DD&A) totaled $547 million in Q2 2023, up from$507 million in Q2 2022[144] - Environmental obligation costs increased to $60 million in Q2 2023, compared to$13 million in Q2 2022, due to net revisions to long-term obligations[145] - Consolidated interest costs (before capitalization) rose to $234 million in Q2 2023, up from$189 million in Q2 2022, driven by contested tax rulings[146] - Capitalized interest increased to $62 million in Q2 2023, compared to$33 million in Q2 2022, due to ongoing development projects[147] - North America unit net cash costs for Q2 2023 were $2.51 per pound, up from$2.26 per pound in Q2 2022[164] - North America unit net cash costs for 2023 are expected to approximate $2.56 per pound[166] - Average unit net cash costs for South America mining were$2.24 per pound of copper in the first six months of 2023, slightly higher than $2.23 in 2022[174] - PT-FI's unit net cash credits were$0.08 per pound of copper for the first six months of 2023, higher than $0.04 per pound in the same period of 2022, driven by higher gold and silver credits and lower export duties[191] - PT-FI's royalties totaled$150 million for the first six months of 2023, compared to $201 million in the same period of 2022, primarily due to lower sales volumes and copper prices[193] - Average unit net cash costs for the Molybdenum mines were$13.95 per pound for the first six months of 2023, higher than $10.75 per pound in the same period of 2022, reflecting higher contract labor and input costs[201] Indonesia Operations and Export Regulations - FCX's economic ownership interest in PT-FI decreased from 81$35 million net benefit in Q1 2023 due to sales volumes attributed to the previous ownership interest[33] - PT-FI was granted an export license through May 2024 for 1.7 million metric tons of copper concentrate[73] - PT-FI's export duties were eliminated effective March 29, 2023, after smelter construction progress exceeded 50%[73] - The revised regulation assesses export duties for copper concentrates at 7.5% in the second half of 2023 and 10% in 2024 for companies with smelter progress of 70% to 90%[74] - PT-FI estimates construction of the Manyar smelter to be complete in mid-2024[75] - PT-FI paid an administrative fine totaling $57 million in March 2022 related to smelter development delays[75] - PT-FI submitted a third-party verified calculation resulting in a potential administrative fine of$55 million for the period from August 2020 through January 2022[76] - PT-FI has an existing assurance bond totaling $134 million at June 30, 2023, and may be required to make an additional refundable deposit of approximately$250 million[77] - The Indonesia government requires 30% of PT-FI's gross export proceeds to be temporarily deposited into Indonesia banks for a period of 90 days before withdrawal[78] - PT-FI was granted an export license through May 2024 for 1.7 million metric tons of copper concentrate[104] - PT-FI's Kucing Liar deposit is expected to produce over 6 billion pounds of copper and 6 million ounces of gold between 2028 and 2041[183] Financial Policy and Liquidity - The company's financial policy includes a base dividend and a performance-based payout framework, targeting net debt between $3.0 billion and$4.0 billion, excluding net project debt for additional smelting capacity in Indonesia[209] - International cash is primarily used for foreign operations' capital expenditures, operating expenses, and debt repayments[212] - Sufficient liquidity in the U.S. is maintained through cash balances and revolving credit facility availability[212] - Deferred tax liabilities recorded for foreign earnings available for repatriation to the U.S.[212] - Foreign subsidiaries distribute earnings to the U.S. via dividends, subject to withholding taxes and noncontrolling interests' share[212] Other Financial Metrics - Total assets as of June 30, 2023, were $50,907 million, slightly down from$51,093 million as of December 31, 2022[12] - Total inventories increased to $2,214 million in June 2023 from$1,833 million in December 2022, with finished goods inventory rising significantly to $1,643 million from$1,169 million[35] - The fair value of contingent consideration for the sale of the Deepwater GOM oil and gas properties was $51 million as of June 30, 2023[60] - FCX's embedded derivatives in provisional sales/purchase contracts were valued at$37 million as of June 30, 2023, classified within Level 2 of the fair value hierarchy[65] - The fair value of FCX's Level 3 instrument, contingent consideration for the sale of the Deepwater GOM oil and gas properties, decreased by $7 million during the first six months of 2023[68] - The company projects consolidated operating cash flows of$6.4 billion for 2023, exceeding expected consolidated capital expenditures of $4.8 billion[207] - Cash and cash equivalents available to the parent company, excluding Indonesia smelter projects, are summarized at June 30, 2023[211]