FREEPORT-MCMORAN INC - Annual Report: 2022 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the fiscal year ended December 31, 2022
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
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 | Arizona | 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:
| 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 | ||||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☑ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☑ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No
The aggregate market value of common stock held by non-affiliates of the registrant was $41.8 billion on June 30, 2022.
Common stock issued and outstanding was 1,430,693,689 shares on January 31, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
| Portions of the registrant’s proxy statement for its 2023 annual meeting of stockholders are incorporated by reference into Part III of this report. | ||
Freeport-McMoRan Inc.
| TABLE OF CONTENTS | |||||
| Page | |||||
Item 6. Reserved | |||||
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PART I
Items 1. and 2. Business and Properties.
All of our periodic reports filed with the United States (U.S.) Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, through our website, “fcx.com,” including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. These reports and amendments are available through our website as soon as reasonably practicable after we electronically file or furnish such material to the SEC. Our website is for information only and the contents of our website or information connected thereto are not incorporated in, or otherwise to be regarded as part of, this Form 10-K.
References to “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. References to “Notes” refer to the Notes to Consolidated Financial Statements included herein (refer to Item 8.), and references to “MD&A” refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk included herein (refer to Items 7. and 7A.).
GENERAL
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 mineral reserves of copper, gold and molybdenum. We are one of the world’s largest publicly traded copper 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 North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru.
Our results for the year 2022 reflect strong production performance, with higher consolidated copper and gold production and sales volumes when compared to 2021 and 2020. We achieved an 11% increase in copper sales volumes and a 34% increase in gold sales volumes in 2022, compared to 2021. Despite economic uncertainty, we continued to generate positive operating income and operating cash flows. We believe the actions we have taken in recent years to build a solid balance sheet, successfully expand low-cost operations, and maintain flexible organic growth options while maintaining liquidity, will allow us to continue to execute our business plans in a prudent manner and preserve substantial future asset values.
For the year 2022, the London Metal Exchange (LME) copper settlement prices ranged from a high of $4.87 per pound in March (record high) to a low for the year of $3.18 per pound in July, closed at $3.80 per pound on December 30, 2022, and averaged $3.99 per pound. Current physical market conditions are strong as evidenced by low levels of global exchange stocks. FCX's global customer base reports continued healthy demand for copper.
Improved market sentiment beginning in late 2022 was associated with prospects for improved demand from China, rising demand from global decarbonization initiatives, supply constraints, U.S. dollar exchange rates and low inventories. Despite near-term uncertainties in the global economy and potential volatility in the copper market, we believe the outlook for copper fundamentals in the medium- and long-term are favorable, with third-party studies indicating that demand for copper may double in 15 years as a result of global decarbonization trends. We believe substantial new mine supply development will be required to meet the goals of the global energy transition, and higher copper prices will be required to support new mine supply development.
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Following are our ownership interests at December 31, 2022, in operating mines through our consolidated subsidiaries, Freeport Minerals Corporation (FMC) and PT Freeport Indonesia (PT-FI):
a.Beginning January 1, 2023, our economic interest in PT-FI is 48.76%. Prior to January 1, 2023, our economic interest in PT-FI approximated 81%. Refer to Note 3 for further discussion.
b.FMC has a 72% undivided interest in Morenci via an unincorporated joint venture. Refer to Note 3 for further discussion.
Following is the allocation of our estimated consolidated recoverable proven and probable mineral reserves at December 31, 2022, by geographic location (refer to “Mining Operations” and “Mineral Reserves” for further discussion):
| Copper | Gold | Molybdenum | |||||||||||||||||||||
| North America | 44 | % | 2 | % | 80 | % | a | ||||||||||||||||
| South America | 28 | — | 20 | ||||||||||||||||||||
| Indonesia | 28 | 98 | — | ||||||||||||||||||||
| 100 | % | 100 | % | 100 | % | ||||||||||||||||||
a.Our Henderson and Climax molybdenum mines contain 17% of our estimated consolidated recoverable proven and probable molybdenum reserves, and our North America copper mines contain 63%.
In North America, we operate seven copper mines - Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico, and two molybdenum mines - Henderson and Climax in Colorado. In addition to copper, certain of our North America copper mines also produce molybdenum concentrate, gold and silver. In South America, we operate two copper mines - Cerro Verde in Peru and El Abra in Chile. In addition to copper, the Cerro Verde mine also produces molybdenum concentrate and silver. In Indonesia, PT-FI operates in the Grasberg minerals district. In addition to copper, the Grasberg minerals district also produces gold and silver.
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Following is the allocation of our consolidated copper, gold and molybdenum production for the year 2022 by geographic location (refer to “Mining Operations” and MD&A for further information):
| Copper | Gold | Molybdenum | ||||||||||||||||||
| North America | 35 | % | 1 | % | 73 | % | a | |||||||||||||
| South America | 28 | — | 27 | |||||||||||||||||
| Indonesia | 37 | 99 | — | |||||||||||||||||
| 100 | % | 100 | % | 100 | % | |||||||||||||||
a.Our Henderson and Climax molybdenum mines produced 39% of our consolidated molybdenum production, and our North America copper mines produced 34%.
Copper production from three of our mines, the Morenci mine in North America, the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia, together totaled 75% of our consolidated copper production in 2022.
The geographic locations of our operating mines are shown on the world map below.
COPPER, GOLD AND MOLYBDENUM
The following provides a summary of our primary natural resources - copper, gold and molybdenum. Refer to MD&A for further discussion of historical and current market prices of these commodities and Item 1A. “Risk Factors” for discussion of factors that can cause price fluctuations.
Copper
Copper is an internationally traded commodity, and its prices are determined by the major metals exchanges - the LME, Commodity Exchange Inc. (COMEX) and Shanghai Futures Exchange. Prices on these exchanges generally reflect the worldwide balance of copper supply and demand, and can be volatile and cyclical.
In general, demand for copper reflects the rate of underlying world economic growth, particularly in industrial production and construction. According to Wood Mackenzie, a widely followed independent metals market consultant, copper’s end-use markets (and their estimated shares of total consumption) are electrical applications
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(28%), construction (27%), consumer products (22%), transportation (12%) and industrial machinery (11%). We believe copper will continue to be essential in these basic uses as well as contribute significantly to new technologies for clean energy, to advance communications and to enhance public health. Examples of areas we believe will require additional copper in the future include: (i) high efficiency motors, which consume up to 75% more copper than a standard motor; (ii) electric vehicles, which consume up to four times the amount of copper in terms of weight compared to vehicles of similar size with an internal combustion engine, and require copper-intensive charging station infrastructure to refuel; and (iii) renewable energy such as wind and solar, which consume four to five times the amount of copper compared to traditional fossil fuel generated power.
Gold
Gold is used for jewelry, coinage and bullion as well as various industrial and electronic applications. Gold can be readily sold on numerous markets throughout the world. Benchmark prices are generally based on London Bullion Market Association (London) quotations.
Molybdenum
Molybdenum is a key alloying element in steel and the raw material for several chemical-grade products used in catalysts, lubrication, smoke suppression, corrosion inhibition and pigmentation. Molybdenum-based chemicals are used to produce high-purity molybdenum metal used in electronics such as flat-panel displays and in super alloys used in aerospace. Reference prices for molybdenum are available in several publications, including Platts Metals Daily, CRU Prices Service and Fastmarkets Metals Bulletin.
PRODUCTS AND SALES
Our consolidated revenues for 2022 primarily included sales of copper (77%), gold (14%) and molybdenum (6%). For the three years ended December 31, 2022, the only customer that accounted for 10% or more of our consolidated revenues was PT Smelting (PT-FI’s 39.5% owned copper smelter and refinery - refer to “Smelting Facilities and Other Mining Properties” for further discussion, including that on January 1, 2023, PT-FI's commercial arrangement with PT Smelting converted to a tolling arrangement). Refer to Note 16 for a summary of our consolidated revenues and operating income (loss) by business segment and geographic area.
Copper Products
We are one of the world’s leading producers of copper concentrate, cathode and continuous cast copper rod. During 2022, 61% of our mined copper was sold in concentrate, 18% as cathode and 21% as rod from our North America operations. The copper ore from our mines is generally processed either by smelting and refining or by solution extraction and electrowinning (SX/EW) as described below.
Copper Concentrate. We produce copper concentrate at six of our mines in which mined ore is crushed and treated to produce a copper concentrate with copper content of approximately 20% to 30%. In North America, copper concentrate is produced at the Morenci, Bagdad, Sierrita and Chino mines, and a significant portion is shipped to our Miami smelter in Arizona for further processing. Copper concentrate is also produced at the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia.
Copper Cathode. We produce copper cathode at our electrolytic refinery located in El Paso, Texas, and at nine of our mines.
SX/EW cathode is produced from the Morenci, Bagdad, Safford, Sierrita, Miami, Chino and Tyrone mines in North America, and from the Cerro Verde and El Abra mines in South America. For ore subject to the SX/EW process, the ore is placed on stockpiles and copper is extracted from the ore by dissolving it with a weak sulfuric acid solution. The copper content of the solution is increased in two additional SX stages, and then the copper-bearing solution undergoes an EW process to produce cathode that is, on average, 99.99% copper. Our copper cathode is used as the raw material input for copper rod, brass mill products and for other uses.
Copper cathode is also produced at Atlantic Copper (our wholly owned copper smelting and refining unit in Spain) and PT Smelting. Copper concentrate is smelted (i.e., subjected to extreme heat) to produce copper anode, which weighs between 800 and 900 pounds and has an average copper content of 99.5%. The anode is further treated by electrolytic refining to produce copper cathode, which weighs between 100 and 350 pounds and has an average copper content of 99.99%. Refer to “Mining Operations - Smelting Facilities and Other Mining Properties” for further discussion of Atlantic Copper and PT Smelting.
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Continuous Cast Copper Rod. We manufacture continuous cast copper rod at our facilities in El Paso, Texas and Miami, Arizona, primarily using copper cathode produced at our North America copper mines.
Copper Sales
North America. The majority of the copper produced at our North America copper mines and refined in our El Paso, Texas refinery is consumed at our rod plants to produce copper rod, which is then sold to wire and cable manufacturers. The remainder of our North America copper production is sold in the form of copper cathode or copper concentrate under U.S. dollar-denominated annual contracts. Generally, copper cathode is sold to rod, brass or tube fabricators. Cathode and rod contract prices are generally based on the prevailing COMEX monthly average settlement price for the month of shipment and include a premium. During 2022, our North America mines shipped 7% of their copper concentrate sales volumes to Atlantic Copper for smelting and refining and sold as copper anode and copper cathode by Atlantic Copper.
South America. Production from our South America mines is sold as copper concentrate or copper cathode under U.S. dollar-denominated, annual and multi-year contracts. During 2022, our South America mines sold approximately 75% of their copper production in concentrate and 25% as cathode. During 2022, 4% of our South America mines’ copper concentrate sales volumes were shipped to Atlantic Copper for smelting and refining and sold as copper anode and copper cathode by Atlantic Copper.
Substantially all of our South America copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average settlement copper prices. Revenues from our South America concentrate sales are recorded net of royalties and treatment charges (i.e., fees paid to smelters that are generally negotiated annually). In addition, because a portion of the metals contained in copper concentrate is unrecoverable from the smelting process, revenues from our South America concentrate sales are also recorded net of allowances for unrecoverable metals, which are a negotiated term of the contracts and vary by customer.
Indonesia. PT-FI has historically sold its production in the form of copper concentrate, which contains significant quantities of gold and silver, primarily under U.S. dollar-denominated, long-term contracts. PT-FI also sells a small amount of copper concentrate in the spot market. Following is a summary of PT-FI’s aggregate percentage of concentrate sales to unaffiliated third parties, PT Smelting and Atlantic Copper for the years ended December 31:
| 2022 | 2021 | 2020 | |||||||||||||||
| Third parties | 61 | % | 55 | % | 48 | % | |||||||||||
| PT Smelting | 34 | 41 | 50 | ||||||||||||||
| Atlantic Copper | 5 | 4 | 2 | ||||||||||||||
| 100 | % | 100 | % | 100 | % | ||||||||||||
Substantially all of PT-FI’s sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) primarily based on quoted LME monthly average settlement copper prices. Revenues from PT-FI’s concentrate sales are recorded net of royalties, export duties, treatment charges and allowances for unrecoverable metals.
Beginning in 2023, PT-FI’s commercial arrangement with PT Smelting converted to a tolling arrangement. Under the arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its concentrate and will retain title to all products for sale to third parties (i.e., there are no further sales from PT-FI to PT Smelting). Refer to MD&A and Note 3 for further discussion.
Refer to Item 1A. “Risk Factors” for discussion of Indonesia regulations regarding PT-FI’s concentrate exports.
Gold Products and Sales
We produce gold almost exclusively from our mines in the Grasberg minerals district. The gold we produce is primarily sold as a component of our copper concentrate or in slimes, which are a product of the smelting and refining process. Gold generally is priced at the average London price for a specified month near the month of shipment. Revenues from gold sold as a component of our copper concentrate are recorded net of treatment charges, royalties, export duties and allowances for unrecoverable metals. Revenues from gold sold in slimes are recorded net of refining charges.
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Molybdenum Products and Sales
According to Wood Mackenzie, we are the world’s largest producer of molybdenum and molybdenum-based chemicals. In addition to production from the Henderson and Climax molybdenum mines, we produce molybdenum concentrate at certain of the North America copper mines and the Cerro Verde copper mine in Peru. The majority of our molybdenum concentrate is processed in our own conversion facilities. Our molybdenum sales are primarily priced based on the average published Platts Metals Daily price for the month prior to the month of shipment.
GOVERNMENTAL REGULATIONS
Our operations are subject to a broad range of laws and regulations imposed by governments and regulatory bodies, both in the U.S. and internationally. These regulations touch all aspects of our operations, including how we extract, process and explore for minerals and how we conduct our business, including regulations governing matters such as mining rights, environmental and reclamation matters, climate change, occupational health and safety and human rights.
Mining Rights
We conduct our mining and exploration activities pursuant to concessions granted by, or under contracts with, the host government in the countries where we operate. These countries include, among others, the U.S., Peru, Chile and Indonesia. Mining rights include our license to operate and involve our payment of applicable taxes and royalties to the host governments. The concessions and contracts are subject to the political risks associated with the host countries. For information about mining rights, governmental agreements, licenses to operate, and tax regulations and matters refer to “Mining Operations” below, Item 1A. “Risk Factors” and Notes 3, 11, 12 and 13.
Environmental and Reclamation Matters
Our operations are subject to extensive and complex laws and regulations, including environmental laws and regulations governing the generation, storage, treatment, transportation and disposal of hazardous substances; solid waste disposal; air emissions; wastewater discharges; remediation, restoration and reclamation of environmental contamination, including mine closures and reclamation; protection of endangered and threatened species and designation of critical habitats; and other related matters. In addition, we must obtain regulatory permits and approvals to start, continue and expand operations. As a mining company, compliance with environmental, health and safety laws and regulations is an integral and costly part of our business. We conduct our operations in a manner that aims to protect public health and the environment, and we believe our operations are in compliance with applicable laws and regulations in all material respects.
At December 31, 2022, we had $1.7 billion recorded in our consolidated balance sheet for environmental obligations and $3.0 billion recorded for asset reclamation obligations. We incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) to comply with applicable environmental laws and regulations that affect our operations totaling $0.4 billion in 2022 and $0.3 billion in both 2021 and 2020. For 2023, we expect to incur approximately $0.6 billion of aggregate environmental capital expenditures and other environmental costs. The timing and amounts of estimated payments could change as a result of changes in regulatory requirements, changes in scope and costs of reclamation activities, the settlement of environmental matters and the rate at which actual spending occurs on continuing matters.
United States. Laws such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA) and similar state laws may expose us to joint and several liability for environmental damages caused by our operations, or by previous owners or operators of properties we acquired or are currently operating or at sites where we previously sent materials for processing, recycling or disposal. We have substantial obligations for environmental remediation on mining properties previously owned or operated by FMC and certain of its affiliates.
We are required by U.S. federal and state laws and regulations to provide financial assurance sufficient to allow a third party to implement approved closure and reclamation plans for our mining properties if we are unable to do so. Most of our financial assurance obligations are imposed by state laws that vary significantly by jurisdiction, depending on how each state regulates land use and groundwater quality. The U.S. Environmental Protection Agency (EPA) and state agencies may also require financial assurance for investigation and remediation actions that are required under settlements of enforcement actions under CERCLA or similar state laws.
Regulations have been considered at various governmental levels to increase financial responsibility requirements both for mine closure and reclamation. In 2019, legislation was enacted in Colorado that eliminates our ability to use
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parent company guarantees and requires proof of an end date for water treatment as a condition of permit issuance authorizing mining operations, with some exceptions for existing operations. In 2018, EPA concluded a rulemaking that considered the need for financial responsibility for hardrock mining operations under CERCLA by publishing its determination that it did not intend to require financial responsibility for the hardrock mining industry sector. In 2019, the District of Columbia Circuit upheld the EPA’s decision. In connection with the presidential executive order issued on January 20, 2021, EPA will review this final action, though the timing of its review is unknown. During 2022, in connection with a presidential executive order issued on February 24, 2021, the Federal government established an Interagency Working Group (IWG) led by the Department of Interior (DOI) with expertise in mine permitting and environmental law “to identify gaps in statutes and regulations that may need to be updated to ensure new production meets strong environmental standards throughout the lifecycle of the project.” During 2022, the IWG received more than 31,600 comments in response to multiple questions in a request for information regarding possible changes to legislation, regulation and policies that affect the mining sector. Financial assurance as well as environmental requirements governing hardrock mining continue to be key topics in comments to DOI.
Our U.S. mining operations are also subject to regulations under the Endangered Species Act that are intended to protect species listed by the DOI’s Fish & Wildlife Service (FWS) as endangered or threatened, along with critical habitat designated by FWS for these listed species. The regulations may affect the ability of landowners, including us, to obtain federal permits or authorizations needed for expansion of our operations, and may also affect our ability to obtain, retain or deliver water to some operations.
New or revised environmental regulatory requirements are frequently proposed, many of which result in substantially increased costs for our business, including those regarding financial assurance discussed above and in Item 1A. “Risk Factors.” For example, our Miami, Arizona, smelter processes a significant portion of the copper concentrate produced by our North America copper mines. In 2022, EPA proposed to revise the standards for hazardous air pollutants from primary copper smelters and is now in the process of considering comments and collecting additional data. EPA may issue a new proposal after considering these comments and data, and any proposal could impose additional requirements on our operations. We may be required to modify our systems or install additional equipment to address findings, new requirements or for other reasons, which could result in significant costs, including increased capital expenditures and operating costs, and could adversely impact our business.
EPA and state agencies continue to consider regulations for man-made organic compounds that could be present in soil, groundwater and surface water at our existing and former operations. These regulations may include drinking water standards, hazardous waste requirements, and hazardous substance designations for Perfluorooctanesulfonic and Perfluorooctanoic acids. EPA is also considering how to reduce lead exposure in the environment under multiple environmental programs. Certain federal and state health agencies also support more stringent lead cleanup levels. EPA expects to make substantial progress on these proposals in 2023, and changes to EPA’s lead cleanup levels could result in material increases to our environmental reserves for ongoing residential property cleanup projects near former smelter sites.
On January 18, 2023, the final revised definition of the “waters of the United States” issued by EPA and U.S. Army Corps of Engineers was published. The final rule emphasizes a case-by-case approach to “waters of the United States” for tributaries and may impose significant additional restrictions on land uses in remote and arid areas. Although court decisions can affect the scope of the final rule and legal challenges have already been filed, we will likely need federal authorization under the Clean Water Act to expand some of our operations.
For information about environmental laws and regulations, litigation and related costs, and reclamation matters related to our North America operations, refer to “Mining Operations” below, Item 1A. “Risk Factors,” Item 3 “Legal Proceedings” and Notes 1 and 12.
South America. Peru. In 2005, Peru enacted the General Environmental Law (Law No. 28611), which establishes the main environmental guidelines and principles applicable in Peru. Pursuant to the General Environmental Law, Ministry of Energy and Mines (MINEM) issued national environmental regulations, which have gradually replaced prior guidelines governing governmental agencies environmental competencies. The Environmental Evaluation and Oversight Agency has the authority to inspect mining operations and fine companies that fail to comply with prescribed environmental regulations and their approved environmental assessments.
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Cerro Verde is subject to regulation under the Mine Closure Law administered by MINEM. Under the closure regulations, mines must submit a closure plan that includes the reclamation methods, closure cost estimates, methods of control and verification, closure and post-closure plans, and financial assurance. In compliance with the requirement for five-year updates, Cerro Verde is preparing to submit its updated closure plan and cost estimate in February 2023.
The Cerro Verde mine has developed and continues to implement detailed, comprehensive mine waste and tailings management programs to meet the applicable Peru waste regulations and our environmental management practices. These programs incorporate commitments included in the Environmental and Social Impact Studies and the Engineer of Record designs, for the specific cases of tailings storage facilities and certain leach pad stockpiles. The site also follows our Tailings Management Policy, which outlines our continued commitment to managing tailings responsibly and addresses the implementation of the Global Industry Standard on Tailings Management for the tailings storage facilities.
For information about environmental laws and regulations and reclamation matters related to our Peru operations refer to “Mining Operations” below, Item 1A. “Risk Factors” and Note 12.
Chile. El Abra is subject to regulation under the Mine Closure Law administered by the Chile Mining and Geology Agency. In compliance with the requirement for five-year updates, in November 2018, El Abra submitted an updated plan with closure cost estimates based on the existing approved closure plan. Approval of the updated closure plan and cost estimates was received in August 2020, and did not result in a material increase to closure costs.
For information about environmental laws and regulations and reclamation matters related to our Chile operations refer to refer to Item 1A. “Risk Factors” and Note 12.
Indonesia. PT-FI holds multiple permits from national, provincial, and regency regulatory agencies, including groundwater use permits, effluent and air discharge permits, solid and hazardous waste storage and management permits and protection of forest borrow-to-use permits. Where permits have specific terms, renewal applications are made to the relevant regulatory authority as required, prior to the end of the permit term.
In December 2018, Indonesia’s Ministry of Environment and Forestry (MOEF) issued a revised environmental permit to PT-FI to address certain operational activities that it alleged were inconsistent with earlier studies. PT-FI and the MOEF also established a new framework known as the Tailings Management Roadmap for continuous improvement in environmental practices at PT-FI’s operations, including initiatives that will examine options to potentially increase tailings retention and to evaluate large scale beneficial uses of tailings within Indonesia. The third-party expert nominated by MOEF to perform the framework evaluation submitted its report to the MOEF in June 2021. In 2022, PT-FI continued to work with MOEF on the Tailings Management Roadmap objectives. This included further reduction of non-tailings sediment entering the tailings management area, construction of permeable groins in the estuary portion of the tailings management area to increase sedimentation and reduce erosion, as well as continue pursuing beneficial uses of tailings in infrastructure and other projects.
Permitting continues to progress for certain facilities related to the expansion of underground mining production operations as well as for additional protection structures necessary to continue to contain the tailings within the approved lowlands tailings management areas. In 2020, PT-FI initiated a new environmental impact analysis (called an Analisis Mengenai Dampak Lingkungan or AMDAL) in preparation for the proposed activities associated with the transition from Grasberg surface to underground operations. PT-FI continues to work with the MOEF to complete the approval requirements of the AMDAL, which is currently estimated to be received in 2023. PT-FI has completed the initial regulatory review of technical approvals associated with the current AMDAL filing and is now undergoing AMDAL Commission review and public consultations.
A detailed mine closure plan and 5-year reclamation plan have been approved by Indonesia regulators as required by Indonesia law. The plans are reviewed annually and revised every five years. Required reclamation bonds are in place. In the future, additional approval will be required for the diversion of the Aghawagon/Otomona River out of the tailings management area at the end of mine life. In 2019, PT-FI completed and received approval on an updated mine closure plan to reflect Grasberg minerals district production operations until 2041. PT-FI has complied with the annual renewal of the financial guarantees corresponding to the closure plan.
For information about environmental laws and regulations and reclamation matters related to our Indonesia operations, refer to “Mining Operations” below, Item 1A. “Risk Factors” and Notes 12 and 13.
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Climate Change
In many of the jurisdictions in which we operate, governmental bodies are increasingly enacting legislation and regulations in response to the potential impacts of climate change. For example, as a result of the 2015 Paris Agreement, a number of governments, including the U.S., have pledged “Nationally Determined Contributions” to control and reduce greenhouse gas emissions (GHG). Additionally, the pledges made as part of the 2021 Glasgow Climate Pact could result in further policy changes in many of the jurisdictions in which we operate. Further, several states in the U.S., including Colorado and New Mexico, have advanced goals reducing or eliminating fossil fuel-based energy production. Carbon tax legislation also has been adopted in jurisdictions where we operate, including Indonesia, and we expect that such carbon taxes and other carbon pricing mechanisms will increase over time. Further, in March 2021, the SEC proposed new climate-related disclosure rules, which if finalized as expected in 2023, would require new climate-related disclosures in SEC filings and audited financial statements, including certain climate-related metrics and GHG emissions data, information about climate-related targets and goals, transition plans, if any, and attestation requirements. While it is not yet possible to reasonably estimate the nature, extent, timing and cost or other impacts of any future carbon pricing mechanisms, other climate change regulatory programs or future legislative action that may be enacted, we anticipate that we will dedicate more resources and money to comply and remediate in response to legislative or regulatory changes.
For information about the potential impacts of climate change and related regulations, refer to Item 1A. “Risk Factors.”
Health and Safety
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. As a result, we consider the safety and health of our workforce as one of our highest priorities. We are subject to extensive regulation of worker health and safety, including the requirements of the U.S. Occupational Safety and Health Act and similar laws of other jurisdictions. In the U.S., the operation of our mines is subject to regulation by the U.S. Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (Mine Act). MSHA inspects our mines on a regular basis and issues citations and orders when it believes a violation has occurred under the Mine Act. Additionally, in the U.S. various state agencies have concurrent jurisdiction arising under state law that regulate worker health and safety in both our industrial facilities and mines. If regulatory inspections result in an alleged violation, we may be subject to fines and penalties and, in instances of alleged significant violations, our mining operations or industrial facilities could be subject to temporary or extended closures. Refer to Exhibit 95.1 to this Form 10-K for additional information regarding certain orders and citations issued by MSHA for our operations during the year ended December 31, 2022. For information about health and safety, refer to “Human Capital” below and Item 4. “Mine Safety Disclosures.”
Human Rights
We have adopted policies that govern our working relationships with the communities and governments where we operate and that are designed to guide our practices and programs in a manner that respects human rights and the culture of the local people impacted by our operations. For information about human rights, refer to “Community and Human Rights” below.
COMPETITION
The top 10 producers of copper comprise approximately 42% of total worldwide mined copper production. For the year 2022, we ranked first among those producers, with approximately 7% of estimated total worldwide mined copper production. We believe our competitive position is based on the size, quality and grade of our ore bodies and our ability to manage costs compared with other producers. We have a diverse portfolio of mining operations with varying ore grades and cost structures. Our costs are driven by the location, grade and nature of our ore bodies, and the level of input costs, including energy, labor and equipment. The metals markets are cyclical, and we believe our ability to maintain our competitive position over the long term is based on our ability to acquire and develop quality deposits (including the expansion of deposits at our existing mine sites), hire, develop and retain a skilled workforce, and to manage our costs.
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MINING OPERATIONS
The Copper Mark
We are committed to maintaining the validation of all of our copper producing sites with the Copper Mark, a comprehensive assurance framework designed to demonstrate the copper industry's responsible production practices. To achieve the Copper Mark, each site is required to complete an external assurance process to assess conformance with 32 environmental, social and governance (ESG) requirements. In February 2023, PT-FI was awarded the Copper Mark and we have now achieved the Copper Mark at all 12 of our eligible copper producing sites globally.
In fourth-quarter 2022, the Copper Mark announced an extension of its framework to include molybdenum producers, among other metal producers. In February 2023, our Climax and Henderson molybdenum mines were awarded the Molybdenum Mark, making FCX the first molybdenum miner to achieve this distinction. Our four copper mines that produce by-product molybdenum (Bagdad, Cerro Verde, Morenci and Sierrita) have also been awarded the Molybdenum Mark.
ICMM
We are a founding member of the International Council on Mining & Metals (ICMM), an organization dedicated to a safe, fair and sustainable mining and metals industry, aiming continuously to strengthen ESG performance across the global mining and metals industry. As a member company, we are required to implement the 10 Mining Principles which define good ESG practices, and associated position statements, while also meeting 39 performance expectations and producing an externally verified sustainability report in accordance with the Global Reporting Initiative Sustainability Reporting Standards subject to the ICMM Assurance & Validation Procedure.
Tailings Management
We dedicate substantial financial resources and internal and external technical resources to pursue the safe management of our tailings facilities and to reduce or eliminate the number of and potential consequences of credible failure modes. Our tailings management and stewardship program, which involves qualified external Engineers of Record and periodic oversight by independent tailings Technical Review Boards and our Tailings Stewardship Team, complies with the tailings governance framework on preventing catastrophic failure of tailings storage facilities adopted by the ICMM. In August 2020, the co-conveners of the Global Tailings Review, which included ICMM, published the Global Industry Standard on Tailings Management (the Tailings Standard). The Tailings Standard includes 77 requirements across 6 key areas, including the design, construction, operation and monitoring of tailings facilities, management and governance, emergency response and long-term recovery, and public disclosure. As a member of ICMM, we are committed to implementation of the Tailings Standard by August 2023 for our tailings storage facilities with “Extreme” or “Very High” potential consequences of credible failure modes (as defined in the Tailings Standard) and by August 2025 for our remaining facilities. We believe we have the financial capacity to meet current estimated lifecycle costs, including estimated closure, post-closure and reclamation obligations associated with our tailings storage facilities. We continue to enhance our existing practices to strengthen the design, operation and closure of tailings storage facilities in an effort to reduce the risk of severe or catastrophic failure of those facilities. Refer to Item 1A. “Risk Factors” for further discussion.
Overview of Mines
Following are maps and descriptions of our copper and molybdenum mining operations in North America, South America and Indonesia. We consider our material mines, as defined under the disclosure requirements of Subpart 1300 of SEC Regulation S-K, to be the Morenci mine in North America, the Cerro Verde mine in Peru and the Grasberg minerals district in Indonesia. Refer to Exhibits 96.1, 96.2 and 96.3 for the Technical Report Summaries that have been prepared for our material mines.
North America
In the U.S., most of the land occupied by our copper and molybdenum mines, concentrators, SX/EW facilities, smelter, refinery, rod mills, molybdenum roasters and processing facilities is owned by us or is located on unpatented mining claims owned by us. Certain portions of our Bagdad, Sierrita, Miami, Chino, Tyrone, Henderson and Climax operations are located on government-owned land and are operated under a Mine Plan of Operations or other use permit. We hold various federal and state permits or leases on government land for purposes incidental to mine operations.
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Morenci
We own a 72% undivided interest in Morenci, with the remaining 28% owned by Sumitomo Metal Mining Arizona, Inc. (15%) and SMM Morenci, Inc. (13%). Each partner takes in kind its share of Morenci’s production.
Morenci is an open-pit copper mining complex that has been in continuous operation since 1939 and previously was mined through underground workings. In the 1880s, Phelps Dodge & Company (Phelps Dodge) first invested in the area, and through acquisition, consolidated all mining operations in the area by the 1920s. Phelps Dodge was acquired by FCX in 2007. Morenci is located in Greenlee County, Arizona, approximately 50 miles northeast of Safford on U.S. Highway 191. The property is located at latitude 33.07 degrees north and longitude 109.35 degrees west using the World Geodetic System (WGS) 84 coordinate system. The site is accessible by a paved highway and a railway spur.
The Morenci mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper mineral is chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, with chalcopyrite as the dominant primary copper sulfide.
The Morenci operation consists of two concentrators with a milling design capacity of 132,000 metric tons of ore per day, which produce copper and molybdenum concentrate (one of Morenci’s concentrators, which has a milling capacity of approximately 50,000 metric tons of ore per day, was restarted in July 2021 and resumed operating at full capacity in early 2022); a 72,500 metric ton-per-day, crushed-ore leach pad and stacking system; a low-grade run-of-mine (ROM) leaching system; four SX plants; and three EW tank houses that produce copper cathode. Total EW tank house capacity is approximately 900 million pounds of copper per year. Morenci’s available mining fleet consists of one hundred and forty-six 236-metric-ton haul trucks loaded by 13 electric shovels with bucket sizes ranging from 47 to 57 cubic meters. Morenci’s mining fleet is capable of moving an average of 815,000 metric tons of material per day. Our share of Morenci's net property, plant, equipment (PP&E) and mine development costs at December 31, 2022, totaled $2.1 billion.
Morenci’s production, including our joint venture partners’ share, totaled 0.9 billion pounds of copper and 4 million pounds of molybdenum in 2022, 0.9 billion pounds of copper and 5 million pounds of molybdenum in 2021, and 1.0 billion pounds of copper and 6 million pounds of molybdenum in 2020.
Morenci is located in a desert environment with rainfall averaging 13 inches per year. The highest bench elevation is 1,900 meters above sea level and the ultimate pit bottom is expected to have an elevation of 550 meters above sea level. The Morenci operation encompasses approximately 61,700 acres, comprising 51,300 acres of fee lands and 10,400 acres of unpatented mining claims held on public mineral estate and numerous state or federal permits, easements and rights-of-way.
The Morenci operation’s electrical power is supplied by our wholly owned subsidiary, The Morenci Water & Electric Company (MW&E). MW&E sources its generation services through our wholly owned subsidiary, Freeport-McMoRan Copper & Gold Energy Services LLC, through capacity rights at the Luna Energy Facility in Deming, New Mexico, and other power purchase agreements. Although we believe the Morenci operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Morenci operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion.
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Bagdad
Our wholly owned Bagdad mine is an open-pit copper and molybdenum mining complex that has been in continuous operations since 1945 and prior mining was conducted through underground workings. Bagdad is located in Yavapai County in west-central Arizona, approximately 60 miles west of Prescott and 100 miles northwest of Phoenix. The property can be reached by U.S. Highway 93 to State Route 97 or Arizona Highway 96, which ends at the town of Bagdad. The closest railroad is at Hillside, Arizona, 24 miles southeast on Arizona Highway 96.
The Bagdad mine is a porphyry copper deposit containing both sulfide and oxide mineralization. Chalcopyrite and molybdenite are the dominant primary sulfides and are the primary economic minerals in the mine. Chalcocite is the most common secondary copper sulfide mineral, and the predominant oxide copper minerals are chrysocolla, malachite and azurite.
The Bagdad operation consists of a concentrator with a milling design capacity of 77,100 metric tons of ore per day that produces copper and molybdenum concentrate, a SX/EW plant that can produce approximately 9 million pounds per year of copper cathode from solution generated by low-grade stockpile leaching, and a pressure-leach plant to process molybdenum concentrate. The available mining fleet consists of thirty-four 235-metric-ton haul trucks loaded by eight electric shovels with bucket sizes ranging from 30 to 48 cubic meters, which are capable of moving an average of 236,000 metric tons of material per day. Bagdad’s net PP&E and mine development costs at December 31, 2022, totaled $0.7 billion.
We are planning an expansion to double the concentrator capacity of the Bagdad operation. We are engaging stakeholders and are conducting a feasibility study, which is expected to be completed in 2023. The timing of future development will be dependent on market conditions, labor and supply chain considerations and other economic factors. Refer to Item 1A. “Risk Factors” for further discussion.
Bagdad’s production totaled 165 million pounds of copper and 9 million pounds of molybdenum in 2022, 184 million pounds of copper and 9 million pounds of molybdenum in 2021, and 216 million pounds of copper and 11 million pounds of molybdenum in 2020.
Bagdad is located in a desert environment with rainfall averaging 15 inches per year. The highest bench elevation is 1,250 meters above sea level and the ultimate pit bottom is expected to be 120 meters above sea level. The Bagdad operation encompasses approximately 51,200 acres, comprising 40,000 acres of fee lands and 11,200 acres of unpatented mining claims held on public mineral estate and numerous state or federal permits, easements and rights-of-ways.
Bagdad receives electrical power from Arizona Public Service Company. We believe the Bagdad operation has sufficient water sources to support current operations.
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Safford, including Lone Star
Our wholly owned Safford mine is an open-pit copper mining complex that has been in operation since 2007. Safford is located in Graham County, Arizona, 8 miles north of the town of Safford and 170 miles east of Phoenix. The site is accessible by paved county road off U.S. Highway 70.
The Safford mine includes three copper deposits that have oxide mineralization overlaying primary copper sulfide mineralization. The predominant oxide copper minerals are chrysocolla and copper-bearing iron oxides with the predominant copper sulfide material being chalcopyrite. The only Safford deposit currently being mined is Lone Star, which began leaching operations in the second half of 2020 and is increasing its operating rates to achieve targeted production of approximately 300 million pounds of copper per year from oxide ores in 2023 (compared with the initial design of 200 million pounds per year). The oxide project at Lone Star advances the opportunity for development of the underlying, large-scale sulfide resources. We are conducting follow-on exploration in the area to support metallurgical testing and mine development planning for a potential significant long-term investment to build additional scale on an economically attractive basis.
Safford is a mine-for-leach operation that produces copper cathode. The operation consists of three open pits, of which only Lone Star is currently being mined, feeding a crushing facility with a design capacity of 103,500 metric tons of ore per day. The crushed ore is delivered to a leach pad by a series of overland and portable conveyors. Leach solutions feed a SX/EW facility with a capacity of 305 million pounds of copper per year. A sulfur burner plant is also in operation at Safford, providing a cost-effective source of sulfuric acid used in SX/EW operations. The available mining fleet consists of fifty-eight 235-metric-ton haul trucks loaded by seven electric shovels with bucket sizes ranging from 34 to 47 cubic meters, which are capable of moving an average of 408,000 metric tons of material per day. Safford’s net PP&E and mine development costs at December 31, 2022, totaled $1.3 billion.
Safford’s copper production totaled 285 million pounds in 2022, 265 million pounds in 2021 and 161 million pounds in 2020.
Safford is located in a desert environment with rainfall averaging 10 inches per year. The highest bench elevation is 1,783 meters above sea level and the ultimate pit bottom is expected to have an elevation of 747 meters above sea level. The Safford operation encompasses approximately 78,300 acres, comprising 37,700 acres of fee lands and 40,600 acres of unpatented claims held on public mineral estate.
The Safford operation’s electrical power is primarily sourced from Tucson Electric Power Company, Arizona Public Service Company and the Luna Energy facility. Although we believe the Safford operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water right claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Safford operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion.
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Sierrita
Our wholly owned Sierrita mine is an open-pit copper and molybdenum mining complex that has been in operation since 1959. Sierrita is located in Pima County, Arizona, approximately 20 miles southwest of Tucson and 7 miles west of the town of Green Valley and Interstate Highway 19. The site is accessible by a paved highway and by rail.
The Sierrita mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper minerals are malachite, azurite and chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite are the dominant primary sulfides.
The Sierrita operation includes a concentrator with a milling design capacity of 100,000 metric tons of ore per day that produces copper and molybdenum concentrate. Sierrita also produces copper from a ROM oxide-leaching system. Cathode copper is plated at the Twin Buttes EW facility, which has a design capacity of approximately 50 million pounds of copper per year. The Sierrita operation also has molybdenum facilities consisting of a leaching circuit, two molybdenum roasters and a packaging facility. The molybdenum facilities process molybdenum concentrate produced by Sierrita, from our other mines and from third-party sources. The available mining fleet consists of twenty-four 235-metric-ton haul trucks loaded by four electric shovels with bucket sizes ranging from 34 to 56 cubic meters, which are capable of moving an average of 200,000 metric tons of material per day. Sierrita’s net PP&E and mine development costs at December 31, 2022, totaled $0.7 billion.
Sierrita’s production totaled 184 million pounds of copper and 17 million pounds of molybdenum in 2022, 189 million pounds of copper and 21 million pounds of molybdenum in 2021, and 178 million pounds of copper and 17 million pounds of molybdenum in 2020.
Sierrita is located in a desert environment with rainfall averaging 14 inches per year. The highest bench elevation is 1,387 meters above sea level and the ultimate pit bottom is expected to be 427 meters above sea level. The Sierrita operation, including the adjacent Twin Buttes site, encompasses approximately 47,600 acres, comprising 38,700 acres of fee lands including split estate lands and 8,900 acres of unpatented mining claims held on public mineral estate.
Sierrita receives electrical power through long-term contracts with the Tucson Electric Power Company. Although we believe the Sierrita operation has sufficient water sources to support current operations, we are a party to litigation that may impact our water rights claims or rights to continued use of currently available water supplies, which could adversely affect our water supply for the Sierrita operation. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings” for further discussion.
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Miami
Our wholly owned Miami mine is an open-pit copper mining complex located in Gila County, Arizona, 90 miles east of Phoenix and 6 miles west of the city of Globe on U.S. Highway 60. The site is accessible by a paved highway and by rail.
The Miami mine is a porphyry copper deposit that has leachable oxide and secondary sulfide mineralization. The predominant oxide copper minerals are chrysocolla, copper-bearing clays, malachite and azurite. Chalcocite and covellite are the most important secondary copper sulfide minerals.
Since about 1915, the Miami mining operation had processed copper ore using both flotation and leaching technologies. The design capacity of the SX/EW plant is 200 million pounds of copper per year. Miami is no longer mining ore, but currently produces copper through leaching material already placed on stockpiles. Miami’s net PP&E and mine development costs at December 31, 2022, totaled $6 million.
Miami’s copper production totaled 11 million pounds in 2022, 12 million pounds in 2021 and 17 million pounds in 2020.
Miami is located in a desert environment with rainfall averaging 18 inches per year. The highest bench elevation is 1,390 meters above sea level and mining advanced the pit bottom to an elevation of 810 meters above sea level. Subsequent sloughing of material into the pit has filled it back to an elevation estimated to be 900 meters above sea level. The Miami operation encompasses approximately 14,700 acres, comprising 10,400 acres of fee lands and 4,300 acres of unpatented mining claims held on public mineral estate.
Miami receives electrical power through long-term contracts with the Salt River Project and natural gas through long-term contracts with El Paso Natural Gas as the transporter. We believe the Miami operation has sufficient water sources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
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Chino and Tyrone
Chino
Our wholly owned Chino mine is an open-pit copper mining complex that has been in operation since 1910. Chino is located in Grant County, New Mexico, approximately 15 miles east of the town of Silver City off of State Highway 180. The mine is accessible by paved roads and by rail.
The Chino mine is a porphyry copper deposit with adjacent copper skarn deposits. There is leachable oxide, secondary sulfide and millable primary sulfide mineralization. The predominant oxide copper mineral is chrysocolla. Chalcocite is the most important secondary copper sulfide mineral, and chalcopyrite and molybdenite the dominant primary sulfides.
The Chino operation consists of a concentrator with a milling design capacity of 36,000 metric tons of ore per day that produces copper concentrate, and a 150 million pound-per-year SX/EW plant that produces copper cathode from solution generated by ROM leaching. The available mining fleet consists of eighteen 240-metric-ton haul trucks loaded by three electric shovels with bucket sizes ranging from 31 to 48 cubic meters, which are capable of moving an average of 180,000 metric tons of material per day. Chino’s net PP&E and mine development costs at December 31, 2022, totaled $0.5 billion.
In April 2020, operations at Chino were suspended in connection with our revised operating plans in response to the COVID-19 pandemic. During 2021, we restarted mining activities at Chino, which has continued to operate at approximately 50% of capacity. Chino’s copper production totaled 130 million pounds in 2022, 124 million pounds in 2021 and 92 million pounds in 2020.
Chino is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,250 meters above sea level and the ultimate pit bottom is expected to be 1,508 meters above sea level. The Chino operation encompasses approximately 125,100 acres, comprising 109,000 acres of fee lands and 16,100 acres of unpatented mining claims held on public mineral estate.
Chino receives electrical power from the Luna Energy facility and from the open market. We believe the Chino operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
Tyrone
Our wholly owned Tyrone mine is an open-pit copper mining complex and has been in operation since 1967. Tyrone is located in Grant County, New Mexico, 10 miles south of Silver City, New Mexico, along State Highway 90. The site is accessible by paved road and by rail.
The Tyrone mine is a porphyry copper deposit. Mineralization is predominantly secondary sulfide consisting of chalcocite, with leachable oxide mineralization consisting of chrysocolla.
Copper processing facilities consist of a SX/EW operation with a maximum capacity of approximately 100 million pounds of copper cathode per year. The available mining fleet consists of nine 240-metric-ton haul trucks loaded by one electric shovel with a bucket size of 47 cubic meters, which is capable of moving an average of 108,000 metric tons of material per day. Tyrone’s net PP&E and mine development costs at December 31, 2022, totaled $0.1
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billion. Tyrone’s copper production totaled 59 million pounds in 2022, 55 million pounds in 2021 and 45 million pounds in 2020.
Tyrone is located in a desert environment with rainfall averaging 16 inches per year. The highest bench elevation is 2,070 meters above sea level and the ultimate pit bottom is expected to have an elevation of 1,475 meters above sea level. The Tyrone operation encompasses approximately 80,700 acres, comprising 67,700 acres of fee lands and 13,000 acres of unpatented mining claims held on public mineral estate.
Tyrone receives electrical power from the Luna Energy facility and from the open market. We believe the Tyrone operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
Climax and Henderson
Climax
Our wholly owned Climax mine is an open-pit molybdenum mine that is located 13 miles northeast of Leadville, Colorado, off Colorado State Highway 91 at the top of Fremont Pass. The mine is accessible by paved roads. Climax was placed on care and maintenance status by its previous owner in 1995 and, after being acquired by us, began commercial production in 2012.
The Climax ore body is a porphyry molybdenum deposit, with molybdenite as the primary sulfide mineral.
The Climax mine includes a 25,000 metric tons of ore per day mill facility. Climax has the capacity to produce approximately 30 million pounds of molybdenum per year. The available mining fleet consists of eleven 177-metric-ton haul trucks loaded by two hydraulic shovels with bucket sizes of 34 cubic meters, which are capable of moving an average of 90,000 metric tons of material per day. Climax’s net PP&E and mine development costs at December 31, 2022, totaled $1.2 billion.
In April 2020, operating plans at Climax were revised in response to the COVID-19 pandemic. During 2021, Climax returned to pre-April 2020 production levels and is currently operating at approximately 75% of capacity. Molybdenum production from Climax totaled 21 million pounds in 2022, 18 million pounds in 2021 and 14 million pounds in 2020.
The Climax mine is located in a mountainous region. The highest bench elevation is approximately 4,050 meters above sea level and the ultimate pit bottom is expected to have an elevation of approximately 3,100 meters above sea level. This region experiences significant snowfall during the winter months.
The Climax operation encompasses approximately 15,100 acres, comprising 14,300 of privately owned land and 800 acres of federal claims.
Climax operations receive electrical power through long-term contracts with Xcel Energy and natural gas supply with United Energy Trading (with Xcel as the transporter). We believe the Climax operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
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Henderson
Our wholly owned Henderson molybdenum mining complex has been in operation since 1976. Henderson is located 42 miles west of Denver, Colorado, off U.S. Highway 40. Nearby communities include the towns of Empire, Georgetown and Idaho Springs. The Henderson mill site is located 15 miles west of the mine and is accessible from Colorado State Highway 9. The Henderson mine and mill are connected by a 10-mile conveyor tunnel under the Continental Divide and an additional five-mile surface conveyor. The tunnel portal is located five miles east of the mill.
The Henderson mine is a porphyry molybdenum deposit, with molybdenite as the primary sulfide mineral.
The Henderson operation consists of a block-cave underground mining complex feeding a concentrator with a design capacity of approximately 32,000 metric tons per day. Henderson has the capacity to produce approximately 15 million pounds of molybdenum per year. The majority of the molybdenum concentrate produced is shipped to our Fort Madison, Iowa, processing facility. The available underground mining equipment fleet consists of fifteen 9-metric-ton load-haul-dump (LHD) units and seven 73-metric-ton haul trucks, which deliver ore to a gyratory crusher feeding a series of three overland conveyors to the mill stockpiles. Henderson’s net PP&E and mine development costs at December 31, 2022, totaled $0.3 billion.
Henderson’s molybdenum production totaled 12 million pounds in both 2022 and 2021 and 10 million pounds in 2020.
The Henderson mine is located in a mountainous region with the main access shaft at 3,180 meters above sea level. The main production levels are currently at elevations of 2,200 and 2,350 meters above sea level. This region experiences significant snowfall during the winter months.
The Henderson mine and mill operations encompass approximately 17,200 acres, comprising 13,000 acres of fee lands, 4,200 acres of unpatented mining claims held on public mineral estate and a 50-acre easement with the U.S. Forest Service for the surface portion of the conveyor corridor.
Henderson operations receive electrical power through long-term contracts with Xcel Energy and natural gas supply with United Energy Trading (with Xcel Energy as the transporter). We believe the Henderson operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
South America
At our operations in South America, mine properties and facilities are controlled through mining claims or concessions under the general mining laws of the relevant country. The claims or concessions are owned or controlled by the operating companies in which we or our subsidiaries have a controlling ownership interest. Roads, power lines and aqueducts are controlled by easements.
Cerro Verde
We have a 53.56% ownership interest in Cerro Verde, with the remaining 46.44% held by SMM Cerro Verde Netherlands B.V. (21.0%), Compañia de Minas Buenaventura S.A.A. (19.58%) and other stockholders whose Cerro Verde shares are publicly traded on the Lima Stock Exchange (5.86%).
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Cerro Verde is an open-pit copper and molybdenum mining complex that has been in operation since 1976. Cerro Verde is located 20 miles southwest of Arequipa, Peru. Prior to being acquired in 1994 by a predecessor of Phelps Dodge, the mine was previously operated by the Peru government. The property is located at latitude 16.53 degrees south and longitude 71.58 degrees west using the WGS 84 coordinate system. The site is accessible by paved highway. Cerro Verde’s copper cathode and concentrate production that is not sold locally is transported approximately 70 miles by truck and by rail to the Port of Matarani for shipment to international markets. Molybdenum concentrate is transported by truck to either the Ports of Callao or Matarani for shipment.
The Cerro Verde mine is a porphyry copper deposit that has oxide, secondary sulfide and primary sulfide mineralization. The predominant oxide copper minerals are brochantite, chrysocolla, malachite and copper “pitch.” Chalcocite and covellite are the most important secondary copper sulfide minerals. Chalcopyrite and molybdenite are the dominant primary sulfides.
Cerro Verde’s operation consists of two concentrating facilities with a total milling design capacity of 360,000 metric tons of ore per day and SX/EW leaching facilities. As a result of several efficiency initiatives implemented over the past several years, Cerro Verde’s two concentrators were able to achieve a combined average milling rate exceeding 400,000 metric tons of ore per day in 2022. Leach copper production is derived from a 39,000-metric-ton-per-day crushed leach facility and a 100,000-metric-ton-per-day ROM leach system. This SX/EW leaching operation has a capacity of approximately 200 million pounds of copper per year.
The available fleet consists of fifty-four 300-metric-ton haul trucks and ninety-three 245-metric-ton haul trucks (17 of which are currently on standby) and seven leased haul trucks (three 360-metric-ton and four 363-metric-ton) loaded by thirteen electric shovels with bucket sizes ranging in size from 33 to 57 cubic meters and two hydraulic shovels with a bucket size of 21 cubic meters (one of them is currently on standby). This fleet is capable of moving an average of approximately 1,000,000 metric tons of material per day. Cerro Verde’s net PP&E and mine development costs at December 31, 2022, totaled $6.0 billion.
Cerro Verde’s production totaled 1.0 billion pounds of copper and 23 million pounds of molybdenum in 2022, 0.9 billion pounds of copper and 21 million pounds of molybdenum in 2021, and 0.8 billion pounds of copper and 19 million pounds of molybdenum in 2020.
Cerro Verde is located in a desert environment with rainfall averaging 1.5 inches per year and is in an active seismic zone. The highest bench elevation is 2,768 meters above sea level and the ultimate pit bottom is expected to be 1,538 meters above sea level. The Peru general mining law and Cerro Verde’s mining stability agreement grant the surface rights of mining concessions located on government land. Government land obtained after 1997 must be leased or purchased. Cerro Verde has a mining concession covering approximately 178,000 acres, including 62,000 acres of surface rights and access to 14,600 acres granted through an easement from the Peru National Assets Office, plus 150 acres of owned property, and 1,151 acres of rights-of-way outside the mining concession area leased from both government agencies and private parties.
Cerro Verde currently receives electrical power, including hydro-generated power, under long-term contracts with ElectroPeru and Engie Energia Peru S.A.
Water for our Cerro Verde processing operations comes from renewable sources through a series of storage reservoirs on the Río Chili watershed that collect water primarily from seasonal precipitation and from wastewater collected from the city of Arequipa and treated at a wastewater treatment plant. We believe the Cerro Verde operation has sufficient water resources to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
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El Abra
We have a 51% ownership interest in El Abra, and the remaining 49% interest is held by the state-owned copper enterprise Corporación Nacional del Cobre de Chile.
El Abra is an open-pit copper mining complex that has been in operation since 1996. El Abra is located 47 miles north of Calama in Chile’s El Loa province, Region II. The site is accessible by paved highway and by rail.
The El Abra mine is a porphyry copper deposit that has sulfide and oxide mineralization. The predominant primary sulfide copper minerals are bornite and chalcopyrite. There is a minor amount of secondary sulfide mineralization as chalcocite. The oxide copper minerals are chrysocolla and pseudomalachite. There are lesser amounts of copper bearing clays and tenorite.
The El Abra operation consists of a SX/EW facility with a capacity of 500 million pounds of copper cathode per year from a 125,000-metric-ton-per-day crushed leach circuit and a ROM leaching operation. The available fleet consists of twenty-three 242-metric-ton haul trucks loaded by four electric shovels with buckets ranging in size from 29 to 41 cubic meters, which are capable of moving 217,000 metric tons of material per day. El Abra’s net PP&E and mine development costs at December 31, 2022, totaled $0.8 billion.
El Abra’s copper production totaled 202 million pounds in 2022, 160 million pounds in 2021 and 159 million pounds in 2020. Higher mining and stacking activities at El Abra resulted in a 26% increase in copper production for the year 2022, compared with the year 2021 (which was impacted by COVID-19 protocols).
El Abra's large sulfide resource supports a potential major mill project similar to the large-scale concentrator constructed at Cerro Verde in 2015. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project. We are advancing plans to invest in water infrastructure to provide options to extend existing operations, while continuing to monitor potential changes in Chile's regulatory and fiscal matters. We will defer major investment decisions pending clarity on such matters.
El Abra is located in a desert environment with rainfall averaging less than one inch per year and is in an active seismic zone. The highest bench elevation is 4,225 meters above sea level and the ultimate pit bottom is expected to be 3,385 meters above sea level. El Abra controls a total of approximately 183,600 acres of mining claims covering the ore deposit, stockpiles, process plant, and water wellfield and pipeline. In addition, El Abra has land surface rights for the road between the processing plant and the mine, the water wellfield, power transmission lines and for the water pipeline from the Salar de Ascotán aquifer.
El Abra currently receives electrical power under a long-term contract with Engie Energia Chile S.A. Water for our El Abra processing operations comes from the continued pumping of groundwater from the Salar de Ascotán aquifer pursuant to regulatory approval. We believe El Abra has sufficient water rights and regulatory approvals to support current operations. Refer to “Governmental Regulations” above and Item 1A. “Risk Factors” for further discussion.
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Indonesia
Ownership. PT-FI is a limited liability company organized under the laws of the Republic of Indonesia. On December 21, 2018, we completed the transaction with the Indonesia government regarding PT-FI’s long-term mining rights and share ownership (the 2018 Transaction). Following the 2018 Transaction, we have a 48.76% share ownership in PT-FI and the remaining 51.24% share ownership is collectively held by PT Indonesia Asahan Aluminum (Persero) (PT Inalum, also known as MIND ID), an Indonesia state-owned enterprise, and PT Indonesia Papua Metal Dan Mineral (formerly known as PT Indocopper Investama), which is expected to be owned by MIND ID and the provincial/regional government in Central Papua, Indonesia. The arrangements related to the 2018 Transaction also provided for us and the other pre-transaction PT-FI shareholders to initially retain the economics of the revenue and cost sharing arrangements under the former unincorporated joint venture with Rio Tinto plc (Rio Tinto). As a result, our economic interest in PT-FI approximated 81% through 2022. Beginning January 1, 2023, our economic interest in PT-FI is 48.76%. Refer to Note 3 for further discussion.
IUPK. Concurrent with closing the 2018 Transaction, the Indonesia government granted PT-FI a special mining license (IUPK) to replace its former Contract of Work (COW), enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041, subject to PT-FI completing the construction of additional domestic smelting capacity in Indonesia and fulfilling its defined fiscal obligations to the Indonesia government. The IUPK, and related documentation, contains legal and fiscal terms and is legally enforceable through 2041. In addition, we, as a foreign investor, have rights to resolve investment disputes with the Indonesia government through international arbitration. Refer to Note 13 and Item 1A. “Risk Factors” for discussion of PT-FI’s IUPK and risks associated with our Indonesia mining operations.
PT-FI's IUPK provides that exports continue through 2023, subject to force majeure considerations. Indonesia regulations require PT-FI to renew its export license annually. The current license is scheduled for renewal in March 2023 and PT-FI is preparing its renewal application. PT-FI plans to work cooperatively with the Indonesia government to continue exports as required until the smelter is fully commissioned. Refer to Item 1A. “Risk Factors” for further discussion of risks associated with PT-FI’s export of copper concentrate.
Mining Rights. PT-FI and the Indonesia government continue to engage in preliminary discussions regarding the extension of PT-FI's mining rights under its IUPK beyond 2041. PT-FI believes an extension beyond 2041 would enable continuity of operations and the identification of additional resource development opportunities in the Grasberg minerals district.
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Indonesia Smelter Capacity. Under the terms of the IUPK, PT-FI has been granted mining rights through 2031, with rights to extend its mining rights through 2041, subject to, among other things, PT-FI’s completion of construction of additional domestic smelting capacity totaling 2 million dry metric tons of concentrate per year by the end of 2023 (subject to force majeure provisions) and fulfilling its defined fiscal obligations to the Indonesia government. In accordance with Indonesia regulations, PT-FI submits a smelter progress report to the Indonesia government for review every six months. Refer to “Governmental Regulations” above, Item 1A. “Risk Factors,” MD&A and Notes 12 and 13 for additional discussion of the Indonesia smelter projects.
Grasberg Minerals District. PT-FI operates in the remote highlands of the Sudirman Mountain Range in the province of Central Papua, Indonesia, which is on the western half of the island of New Guinea. Since 1967, we and our predecessors have been the only operator of exploration and mining activities in the approximately 24,600-acre operating area. The operating area is accessible by coastal portsite facilities on the Arafura Sea and by the Timika airport. The project site is located at latitude 4.08 degrees south and longitude 137.12 degrees east using the WGS 84 coordinate system. The project area includes a 70-mile main service road from portsite to the mill complex.
PT-FI currently has three underground operating mines in the Grasberg minerals district: the Grasberg Block Cave, the Deep Mill Level Zone (DMLZ) and Big Gossan.
Production from the Grasberg minerals district totaled 1.6 billion pounds of copper and 1.8 million ounces of gold in 2022, 1.3 billion pounds of copper and 1.4 million ounces of gold in 2021, and 0.8 billion pounds of copper and 0.8 million ounces of gold in 2020. PT-FI’s net PP&E and mine development costs at December 31, 2022, totaled $16.9 billion.
The installation of additional milling facilities at PT-FI is currently expected to be completed in late 2023, which would increase milling capacity to approximately 240,000 metric tons of ore per day and provide for continued annualized copper and gold production volumes of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold. PT-FI is also advancing a mill recovery project with the installation of a new copper cleaner circuit that is expected to be completed in 2024 and is expected to provide incremental metal production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year. Additionally, in 2021, PT-FI commenced long-term mine development activities for its Kucing Liar deposit. Refer to Item 1A. “Risk Factors” for discussion of risks associated with development projects and underground mines.
Our principal source of power for our Indonesia operations is a coal-fired power plant that we built in 1998. Diesel generators supply peaking and backup electrical power generating capacity; however, PT-FI is constructing a dual-fuel power plant that is expected to be fully commissioned in 2023 to support increased power requirements as underground mining continues to ramp up.
A combination of naturally occurring mountain streams and water derived from our underground operations provides water for our operations. Our Indonesia operations are in an active seismic zone and experience average annual rainfall of approximately 200 inches.
Grasberg Block Cave Underground Mine
The Grasberg Block Cave ore body is the same ore body historically mined from the surface in the Grasberg open pit. Undercutting, drawbell construction and ore extraction activities in the Grasberg Block Cave underground mine continue to track expectations. Monitoring data on cave propagation in the Grasberg Block Cave underground mine is providing confidence in growing production rates over time. As existing drawpoints mature and additional drawpoints are added, cave expansion is expected to accelerate production rates to an average 116,000 metric tons of ore per day in 2023 and 130,000 metric tons of ore per day in 2024 from five production blocks spanning 335,000 square meters. As of December 31, 2022, the Grasberg Block Cave underground mine had 386 open drawbells.
Ore milled from the Grasberg Block Cave underground mine averaged 103,300 metric tons per day in 2022, 70,600 metric tons per day in 2021 and 30,800 metric tons per day in 2020. Production at the Grasberg Block Cave underground mine is expected to continue through 2041.
The Grasberg Block Cave fleet consists of approximately 580 pieces of mobile equipment. The primary mining equipment directly associated with production and development includes an available fleet of 97 LHD units and 26 haul trucks. Each production LHD unit typically carries approximately 11 metric tons of ore and transfers ore into the rail haulage system. The Grasberg Block Cave has a rail haulage system currently operating with 10 locomotives and 120 ore wagons that haul the ore to the first 2 of the 3 planned gyratory crushers located underground via an
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automated rail system. Each ore wagon typically carries 35 metric tons. The crushed ore is conveyed to surface stockpiles for processing.
DMLZ Underground Mine
The DMLZ ore body lies below the Deep Ore Zone (DOZ) underground mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry.
The DMLZ has continued its ramp-up of production. Hydraulic fracturing operations have been effective in managing rock stresses and pre-conditioning the cave following mining-induced seismic activity experienced from time to time. Ongoing hydraulic fracturing operations combined with continued undercutting and drawbell openings in the two currently active production blocks are expected to expand the cave, supporting higher production rates that are expected to average nearly 80,000 metric tons of ore per day in both 2023 and 2024 from three production blocks. As of December 31, 2022, the DMLZ underground mine had 207 open drawbells.
Ore milled from the DMLZ underground mine averaged 76,300 metric tons per day in 2022, 58,000 metric tons per day in 2021 and 28,600 metric tons per day in 2020. Production at the DMLZ underground mine is expected to continue through 2041.
The DMLZ fleet consists of over 400 pieces of mobile equipment, which includes 60 LHD units and 36 haul trucks used in production and development activities. Each production LHD unit typically carries approximately 9 metric tons of ore and transfers ore into the truck haulage system. The haul trucks have a capacity of 55 to 60 metric tons and load ore from chutes fed by the LHDs and transfer it to one of two gyratory crushers. The crushed ore is conveyed to surface stockpiles for processing.
Big Gossan Underground Mine
The Big Gossan ore body lies underground and adjacent to the current mill site. It is a tabular, near vertical ore body with approximate dimensions of 1,200 meters along strike and 800 meters down dip with varying thicknesses from 20 meters to 120 meters. The mine utilizes a blasthole stoping method with delayed paste backfill. Stopes of varying sizes are mined and the ore dropped down passes to a truck haulage level. Trucks are chute loaded and transport the ore to a jaw crusher. The crushed ore is then hoisted vertically via a two-skip production shaft to a level where it is loaded onto a conveyor belt. The belt carries the ore to one of the main underground conveyors where the ore is transferred and conveyed to the surface stockpiles for processing.
Ore milled from the Big Gossan underground mine averaged 7,600 metric tons per day in 2022, 7,500 metric tons per day in 2021 and 7,000 metric tons per day in 2020. Production at the Big Gossan underground mine is expected to continue through 2041.
The Big Gossan fleet consists of over 80 pieces of mobile equipment, which include 13 LHD units and 7 haul trucks used in development and production activities.
Kucing Liar Underground Mine
Long-term mine development activities are ongoing for PT-FI's Kucing Liar deposit in the Grasberg minerals district, which is expected to produce over 6 billion pounds of copper and 6 million ounces of gold between 2028 and the end of 2041. Pre-production development activities commenced in 2022 and are expected to continue over an approximate 10-year timeframe. Capital investments are estimated to average approximately $400 million per year over this period (including $470 million for the year 2023). At full operating rates of approximately 90,000 metric tons of ore per day, annual production from Kucing Liar is expected to approximate 550 million pounds of copper and 560 thousand ounces of gold, providing PT-FI with sustained long-term, large-scale and low-cost production. Kucing Liar will benefit from substantial shared infrastructure and PT-FI's experience and long-term success in block-cave mining.
DOZ Underground Mine
The DOZ ore body lies vertically below the depleted Intermediate Ore Zone. PT-FI began production from the DOZ ore body in 1989 and the ore body was depleted at the end of 2021. Ore milled from the DOZ underground mine averaged 8,700 metric tons per day in 2021 and 20,900 metric tons per day in 2020.
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Grasberg Open Pit
PT-FI began open-pit mining of the Grasberg ore body in 1990 and the final phase was mined during 2019. In aggregate, the Grasberg open pit produced over 27 billion pounds of copper and 46 million ounces of gold in the 30-year period from 1990 through 2019.
Description of Indonesia Ore Bodies. Our Indonesia ore bodies are located within and around two main igneous intrusions, the Grasberg monzodiorite and the Ertsberg diorite. The host rocks of these ore bodies include both carbonate and clastic rocks that form the ridge crests and upper flanks of the Sudirman Range, and the igneous rocks of monzonitic to dioritic composition that intrude them. The igneous-hosted ore bodies (the Grasberg Block Cave and portions of the DMLZ) occur as vein stockworks and disseminations of copper sulfides, dominated by chalcopyrite and, to a lesser extent, bornite. The sedimentary-rock hosted ore bodies (portions of the DMLZ and Kucing Liar and all of the Big Gossan) occur as “magnetite-rich, calcium/magnesian skarn” replacements, whose location and orientation are strongly influenced by major faults and by the chemistry of the carbonate rocks along the margins of the intrusions.
The copper mineralization in these skarn deposits is dominated by chalcopyrite, but higher bornite concentrations are common. Moreover, gold occurs in significant concentrations in all of the district’s ore bodies, though rarely visible to the naked eye. These gold concentrations usually occur as inclusions within the copper sulfide minerals, though, in some deposits, these concentrations can also be strongly associated with pyrite.
The following diagram indicates the relative elevations (in meters) of our reported Indonesia ore bodies.
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The following map, which encompasses an area of 42 square kilometers, indicates the relative positions and sizes of our reported Indonesia ore bodies and their locations.
Smelting Facilities and Other Mining Properties
Greenfield Smelter and Precious Metal Refinery. PT-FI is actively engaged in the construction of a greenfield smelter in Gresik, Indonesia. The greenfield smelter will be owned and operated by PT-FI and have a capacity to process approximately 1.7 million metric tons of copper concentrate per year. The smelter construction is advancing and is expected to be completed during 2024.
Construction of a precious metal refinery to process gold and silver from the greenfield smelter and PT Smelting at an estimated capital cost of $400 million is in progress with commissioning also expected during 2024.
Atlantic Copper. Our wholly owned Atlantic Copper smelter and refinery is located on land concessions from the Huelva, Spain, port authorities, which are scheduled to expire in 2038.
The design capacity of the smelter is approximately 300,000 metric tons of copper per year, and the refinery has a capacity of 286,000 metric tons of copper per year. Atlantic Copper’s anode production from its smelter totaled 215,000 metric tons of copper in 2022, 278,600 metric tons in 2021 and 275,900 metric tons in 2020. Copper cathode production from its refinery totaled 218,400 metric tons of copper in 2022, 277,000 metric tons in 2021 and 275,000 metric tons in 2020.
Atlantic Copper completed a 78-day major maintenance turnaround in 2022. Atlantic Copper’s major maintenance turnarounds typically occur approximately every eight years, with shorter-term maintenance turnarounds in the interim.
Following is the allocation of Atlantic Copper’s concentrate purchases from unaffiliated third parties and our copper mining operations for the years ended December 31:
| 2022 | 2021 | 2020 | ||||||||||||||||||
| Third parties | 65 | % | 66 | % | 79 | % | ||||||||||||||
| Indonesia mining | 18 | 9 | 4 | |||||||||||||||||
| South America mining | 10 | 7 | 7 | |||||||||||||||||
| North America copper mines | 7 | 18 | 10 | |||||||||||||||||
| 100 | % | 100 | % | 100 | % | |||||||||||||||
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Atlantic Copper is developing an e-material recycling project as a result of the significant and continued
growth in electronic waste material. Atlantic Copper’s existing smelting and refining facilities provide synergies to recycle this type of material, and the project, which is expected to commence in 2025, would include an addition of a smelting furnace and associated equipment to recover copper, gold, silver, palladium, tin, nickel and platinum from e-materials. Atlantic Copper estimates that the initial project capital will approximate $325 million.
PT Smelting. PT Smelting, an Indonesia company, owns a copper smelter and refinery in Gresik, Indonesia. On April 30, 2021, PT-FI acquired an additional 14.5% of the outstanding common stock of PT Smelting, increasing its ownership interest to 39.5%. Mitsubishi Materials Corporation (MMC) owns the remaining 60.5% and serves as the operator of PT Smelting.
In November 2021, PT-FI completed agreements with MMC to implement the expansion of PT Smelting’s capacity by 30% to 1.3 million metric tons of concentrate per year, which is expected to be completed by the end of 2023. PT-FI is funding the cost of the expansion with a loan that is expected to convert to equity, increasing its ownership in PT Smelting from 39.5% to a majority ownership once the expansion is complete. Refer to Note 3 for further discussion.
Prior to 2023, PT-FI’s contract with PT Smelting provided for PT-FI to supply 100% 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 could also then sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually.
Beginning in 2023, PT-FI's commercial arrangement with PT Smelting converted to a tolling arrangement. Under the arrangement, PT-FI pays PT Smelting a tolling fee to smelt and refine its concentrate and will retain title to all products for sale to third parties. This arrangement is not expected to result in a significant change in PT-FI's economics but will impact the timing of PT-FI’s sales during 2023. We estimate that approximately 90 million pounds of copper and 120 thousand ounces of gold from PT-FI’s first-quarter 2023 production will remain in inventory until final sale later in 2023.
PT Smelting received a one-year extension of its anode slimes export license, which currently expires November 3, 2023. Refer to Item 1A. “Risk Factors” for further discussion of risks associated with PT Smelting’s export of anode slimes.
PT Smelting’s anode production from its smelter totaled 316,700 metric tons of copper in 2022, 280,400 metric tons in 2021 and 276,900 metric tons in 2020. Copper cathode production from its refinery totaled 268,400 metric tons of copper in 2022, 256,900 metric tons in 2021 and 273,000 metric tons in 2020.
PT Smelting’s maintenance turnarounds (which range from two weeks to a month to complete) typically are expected to occur approximately every two years, with short-term maintenance turnarounds in the interim. PT Smelting completed a 30-day maintenance turnaround during December 2020 and an 18-day maintenance turnaround in October 2022. PT Smelting has a planned 75-day shutdown scheduled for mid-2023 associated with its expansion project with a 7-day shutdown in fourth-quarter 2023 to complete final tie-in of the expansion project.
Miami Smelter. We own and operate a smelter at our Miami mining operation in Arizona. The smelter has been operating for over 100 years and has been upgraded numerous times during that period to implement new technologies, improve production and comply with air quality requirements.
The Miami smelter processes copper concentrate primarily from our North America copper mines. Concentrate processed through the smelter totaled 781,000 metric tons in 2022, 674,000 metric tons in 2021 and 764,000 metric tons in 2020, and copper anode production from the smelter totaled 202,000 metric tons in 2022, 194,000 metric tons in 2021 and 211,000 metric tons in 2020. In addition, because sulfuric acid is a by-product of smelting concentrate, the Miami smelter is also the most significant source of sulfuric acid for our North America leaching operations.
Major maintenance turnarounds are anticipated to occur approximately every two or three years for the Miami smelter. We performed a major maintenance turnaround during 2021. The next major maintenance turnaround is scheduled for the last half of 2024.
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Rod & Refining Operations. Our Rod & Refining operations consist of conversion facilities located in North America, including a refinery in El Paso, Texas and rod mills in El Paso, Texas, and Miami, Arizona. We refine our copper anode production from our Miami smelter at our El Paso refinery. The El Paso refinery has the potential to operate at an annual production capacity of approximately 410,000 metric tons of copper cathode, which is sufficient to refine all of the copper anode we produce at our Miami smelter. Copper cathode production from the El Paso refinery totaled 208,900 metric tons in 2022, 187,300 metric tons in 2021 and 212,600 metric tons in 2020. Our El Paso refinery also produces nickel carbonate, copper telluride and autoclaved slimes material containing gold, silver, platinum and palladium.
Molybdenum Conversion Facilities. We process molybdenum concentrate at our conversion plants in the U.S. and Europe into such products as technical-grade molybdic oxide, ferromolybdenum, pure molybdic oxide, ammonium molybdates and molybdenum disulfide. We operate molybdenum roasters in Sierrita, Arizona; Fort Madison, Iowa; and Rotterdam, the Netherlands, and we operate a molybdenum pressure-leach plant in Bagdad, Arizona. We also produce ferromolybdenum for customers worldwide at our conversion plant located in Stowmarket, United Kingdom.
Other North America Copper Mines. We have five non-operating copper mines - Ajo, Bisbee, Tohono, Twin Buttes and Christmas, which are located in Arizona - that have been on care and maintenance status for several years and would require new or updated environmental studies, new permits, and additional capital investment, which could be significant, to return them to operating status.
MINING DEVELOPMENT PROJECTS AND EXPLORATION ACTIVITIES
Capital expenditures totaled $3.5 billion (including $1.7 billion for major mining projects and $0.8 billion for Indonesia smelter projects) in 2022, $2.1 billion (including $1.25 billion for major mining projects and $0.2 billion for Indonesia smelter projects) in 2021 and $2.0 billion (including $1.2 billion for major mining projects and $0.1 billion for Indonesia smelter projects) in 2020. Capital expenditures for major mining projects were primarily associated with underground development activities in the Grasberg minerals district, and also included expenditures associated with the Lone Star copper leach project at our Safford mine in 2021 and 2020.
We have several projects and potential opportunities to expand production volumes, extend mine lives and develop large-scale underground ore bodies. As further discussed in MD&A, our near-term major development projects will focus on the underground development activities in the Grasberg minerals district. Considering the long-term nature and large size of our development projects, actual costs and timing could vary from estimates. Additionally, in response to market conditions, the timing of our expenditures will continue to be reviewed. We continue to review our mine development and processing plans to maximize the value of our mineral reserves.
Additionally, full development of PT-FI’s underground mineral reserves at the Grasberg minerals district is expected to require approximately $3 billion (most of which will be incurred over an approximate 12-year period) of capital expenditures at our processing facilities to optimize the handling of underground ore from the Grasberg Block Cave, DMLZ and Kucing Liar deposits. Increases in power loads at these processing facilities and the underground mines are expected to require additional power generation with capital expenditures approximating $0.6 billion for new dual-fuel power generation, upgrades to existing transmission lines, and refurbishment of the existing three coal units.
Our mining exploration activities are primarily associated with our existing mines, focusing on opportunities to expand mineral reserves and resources to support development of additional future production capacity. Exploration results continue to indicate opportunities for significant future potential reserve additions at our existing properties in North America and South America. Exploration spending associated with mining operations totaled $105 million in 2022 (primarily to advance Lone Star and other opportunities at our North America copper mines), $50 million in 2021 and $34 million in 2020.
Refer to Item 1A. “Risk Factors” for further discussion of risks associated with mine development projects and exploration activities, and PT-FI’s IUPK.
SOURCES AND AVAILABILITY OF ENERGY, NATURAL RESOURCES AND RAW MATERIALS
Our copper mining operations require significant amounts of energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Historically, copper prices have been correlated to various input costs, including energy and other commodity-related consumables. During 2022, prices
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for a number of commodity-related consumables increased at a time when copper prices declined. While a number of commodity-related consumables have retreated from the highs of 2022, most cost elements remain high relative to long-term correlations. For a further discussion of risks associated with various input costs, refer to Item 1A. “Risk Factors.”
Energy represented approximately 21% of our copper mine site operating costs in 2022, including purchases of approximately 230 million gallons of diesel fuel; approximately 8,400 gigawatt hours of electricity at our North America and South America copper mining operations (we generate all of our power at our Indonesia mining operation); approximately 820 thousand metric tons of coal for our coal power plant in Indonesia; and approximately 1 million MMBtu (million British thermal units) of natural gas at certain of our North America mines. Based on current cost estimates, energy is expected to approximate 24% of our copper mine site operating costs in 2023.
Our mining operations also require significant quantities of water for mining, ore processing and related support facilities. The loss of water rights for any of our mines, in whole or in part, or shortages of water to which we have rights, could require us to curtail or shut down mining operations. For a further discussion of risks and legal proceedings associated with the availability of water, refer to “Governmental Regulations” above, Item 1A. “Risk Factors” and Item 3. “Legal Proceedings.”
Sulfuric acid is used in the SX/EW process and is produced as a by-product of the smelting process at our smelters and from our sulfur burners at the Safford mine. Sulfuric acid needs in excess of the sulfuric acid produced by our operations are purchased from third parties.
HUMAN CAPITAL
We are committed to promoting the health, safety and well-being of our workforce and striving to further strengthen our commitment to promoting an inclusive, diverse and agile workplace. We believe our global workforce is the foundation of our success. Our Board of Directors (Board) oversees our policies and implementation programs that govern our approach to management of our human capital, with the Corporate Responsibility Committee (CRC) having oversight of health and safety matters and the Compensation Committee having oversight of other human capital matters, including those relating to workforce recruitment, retention and development, pay equity and inclusion and diversity.
Workforce
At December 31, 2022, we had approximately 25,600 employees (12,400 in North America, 5,900 in Indonesia, 6,300 in South America and 1,000 in Europe and other locations). We also had contractors that employ personnel at many of our operations, including approximately 23,500 at the Grasberg minerals district in Indonesia, 16,600 in North America, 6,400 at our South America mining operations and 2,400 in Europe and other locations.
Approximately 30% of our global employee population is covered by collective labor agreements (CLAs). In North America, our workforce is not covered by a CLA. Our North America hourly employees choose to work directly with management utilizing our Freeport Guiding Principles, which establishes how we work together within the values of the company to achieve our collective goals.
Employees covered by CLAs on December 31, 2022, are listed below, with the number of employees covered and the expiration date of the applicable CLA:
| Location | Number of Unions | Number of Employees Covered by a CLA | Expiration Date | ||||||||||||||
| PT-FI - Indonesia | 3 | 2,758 | March 2024 | ||||||||||||||
| Cerro Verde - Peru | 2 | 3,265 | August 2024 and August 2025 | ||||||||||||||
| El Abra - Chile | 2 | 943 | April 2026 | a | |||||||||||||
| Atlantic Copper - Spain | 3 | 511 | December 2022 | b | |||||||||||||
| Rotterdam - The Netherlands | 1 | 52 | September 2023 | c | |||||||||||||
| Stowmarket - United Kingdom | 1 | 40 | May 2023 | ||||||||||||||
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a.In September 2022, El Abra completed negotiations with its unions on a new three-year CLA that is effective through April 2026.
b.The CLA between Atlantic Copper and its three unions expired in December 2022, but has been extended indefinitely and remains active by mutual agreement from both parties while a new agreement is negotiated.
c.In December 2022, Rotterdam implemented the wage and bonus increases agreed to during union negotiations and extended the current CLA through September 2023.
We engage openly with our employee and union leadership to negotiate and uphold labor agreements, recognizing that labor disruptions such as prolonged strikes or other work stoppages can adversely affect our business operations, our workforce and regional stakeholders. There were no strikes or lockouts at any of our operations in 2022.
Health and Safety
Our highest priority is the health, safety and well-being of our employees and contractors. We also aim to instill health and safety processes for our suppliers and the communities where we operate. We believe that health and safety considerations are integral to, and fundamental for, all other functions in our organization, and we understand that the health and safety of our workforce is critical to our operational efficiency and long-term success. Our global health and safety approach, “Safe Production Matters,” is focused on fatality prevention and continuous improvement through the use of robust management systems, empowering safe work behaviors and strengthening our safety culture.
We focus on fatality prevention through the use of data and technology as well as behavioral science principles. Our framework for managing risks and compliance obligations is certified company wide in accordance with the ISO 45001 Health and Safety Management System (ISO 45001), most recently certified in January 2023. ISO 45001 requires third-party site-level verification of requirements, with a goal to prevent fatalities and reduce safety incidents.
As part of our commitment to providing a safe and healthy workplace, we strive to provide the training, tools and resources needed so our workforce can identify risks and consistently apply effective controls. We share information and key learnings about potentially fatal events, near misses and best practices throughout the company and engage with industry peers outside the organization to continuously improve our health and safety performance. We also review and discuss all fatalities with the CRC and the full Board.
Our objective is to achieve zero workplace fatalities and to decrease injuries and occupational illnesses. We measure our safety performance through regularly established benchmarks, including our company-wide Total Recordable Incident Rate (TRIR), which includes both employees and contractors. Regrettably, we had one work-related fatality in 2022 and two work-related fatalities in 2021. Additionally, three other fatalities occurred onsite in 2022; which, as of February 15, 2023, have not yet been classified by MSHA as independent medical episodes or work-related. We had 30 potential fatal events (PFE) in 2022 and 17 PFEs in 2021. Our TRIR per 200,000 man-hours worked was 0.77 in 2022 and 0.70 in 2021, which were higher than our 0.69 target for each year. The metal mining sector industry average per 200,000 man-hours worked reported by MSHA was 1.83 for 2022 (preliminary for the period of January 1, 2022, through September 30, 2022) and 1.71 in 2021.
In 2022, we continued to take steps to protect our workforce from COVID-19, by continuing operating protocols at each of our operating sites to contain and mitigate the risk of spread of COVID-19. We will continue to monitor, assess and update our public health crisis response, including COVID-19 protocols. Looking beyond the COVID-19 pandemic, we have committed to maintaining health benefits and offer guidance resources to support mental and physical well-being.
Employee Engagement, Training and Development
In addition to the health, safety and well-being of our global workforce, we have prioritized retaining a flexible, highly engaged and agile workforce. A key to our success is the ability to recruit, retain, develop and advance talented employees with diverse perspectives.
We are committed to ongoing training and development of our workforce. We focus on recruiting and retaining talented people by offering quality employment with competitive compensation and benefits as well as opportunities for professional development and growth. Strategic talent reviews and succession planning occur regularly and across all business areas. To support the advancement of our employees, we offer training and development programs encouraging advancement from within and continue to promote strong and experienced management
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talent. We leverage both formal and informal programs to identify, foster and retain top talent at both the corporate and operations levels.
Inclusion and Diversity
We are committed to fostering a culture that is safety focused, respectful, inclusive and representative of the communities where we operate. As a global organization that operates in diverse parts of the world, inclusion and diversity is a company priority, and we believe an inclusive and diverse workforce with a broad range of experience, knowledge, background, culture and heritage drives innovation, enhances operational performance and improves relationships with stakeholders.
We are often the largest employer in our local communities and hiring locally is a commitment we make to the host communities surrounding our operations and to our host countries. As of December 31, 2022, the vast majority of our employees are from the countries where we operate. We retain expatriate expertise for managerial and technical roles when we determine it is not available in local communities. To further these efforts, expatriates receive cultural training upon their arrival to a new location.
We aim to tailor our approach to inclusion and diversity across our global business and we seek to design programs and initiatives with standardized processes and priorities while being adaptable to site-specific or situational circumstances. We strive for, promote and foster a workplace where everyone feels a sense of belonging, is treated with respect and their opinions are valued. We believe an inclusive environment gives our people the confidence to speak up, share ideas that drive innovation and achieve operational excellence. We believe our inclusive environment is the foundation of our high-performance culture and is paramount to the long-term sustainable success of our business.
In addition to our Inclusion and Diversity Policy, our inclusion and diversity principles align with our core values of safety, respect, integrity, excellence and commitment, and are incorporated into our Principles of Business Conduct and other related policies. We have dedicated human resources team members to focus on inclusion and diversity initiatives and a cross-functional inclusion and diversity leadership team to help guide the strategy and direction of our inclusion and diversity programs. To help incentivize continued progress by our executive team on our priorities, inclusion and diversity has also been integrated into executive compensation, contributing to the sustainability component of our performance-based annual incentive program.
Additional information regarding our activities related to our people, including our workforce diversity data, can be found in our 2021 Annual Report on Sustainability and our 2021 EEO-1 Disclosure Supplement on our website. The Annual Report on Sustainability is updated annually. None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein.
Refer to Item 1A. “Risk Factors” for further information on human capital matters.
COMMUNITY AND HUMAN RIGHTS
We have adopted policies that govern our working relationships with the communities where we operate and that are designed to guide our practices and programs in a manner that respects human rights and the culture of the local people impacted by our operations.
We continue to make significant expenditures on community development, health, education, training and cultural programs, which include:
•comprehensive job training programs
•clean water and sanitation projects
•public health programs, including malaria control and human immunodeficiency virus
•agricultural assistance programs
•small and medium enterprise development programs
•basic education programs
•cultural resources promotion and preservation programs
•community infrastructure development
•charitable donations
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In 2000, we endorsed the joint U.S. State Department-British Foreign Office Voluntary Principles on Security and Human Rights (Voluntary Principles). We participated in developing these Voluntary Principles with other major natural resource companies and international human rights organizations and they are incorporated into our human rights policy. The Voluntary Principles provide guidelines for our security programs, including interaction with host-government security personnel, private security contractors and our internal security employees.
Our Human Rights Policy reflects our commitment to implementing the United Nations Guiding Principles on Business and Human Rights. We have embarked on a program to plan and conduct site-level human rights impact assessments (HRIA) at our global operations, which help us to embed human rights considerations into our business practices, including site-level sustainability risk registers. We completed HRIAs at our Arizona operations in 2022, at El Abra in 2021, at our New Mexico operations in 2018, and at Cerro Verde in 2017. In 2022, we initiated the planning phase of the HRIA at PT-FI. We also participate in a multi-industry human rights working group to gain insight from peer companies and experts in the field to learn how best practices are evolving.
We believe that our social and economic development programs are responsive to the issues raised by the local communities near our areas of operation and help us maintain good relations with the surrounding communities and avoid disruptions of mining operations. As part of our ongoing commitment to our community stakeholders, we have made and expect to continue making investments in certain social programs, including in-kind support and administration, across our global operations from time to time. Over the last three years, these investments have averaged $150 million per year. Nevertheless, social and political instability in the areas of our operations may adversely impact our mining operations. Refer to Item 1A. “Risk Factors” for further discussion.
South America. Cerro Verde has provided a variety of community support projects over the years. Following engagements with regional and local governments, civic leaders and development agencies, in 2006, Cerro Verde committed to support the costs for a new potable water treatment plant to serve Arequipa. In addition, an agreement was reached with the Peru government for development of a water storage network that was financed by Cerro Verde and a distribution network that was financed by the Cerro Verde Civil Association.
Cerro Verde constructed a wastewater treatment plant for the city of Arequipa, which was completed in 2015. The wastewater treatment plant supplements existing water supplies to support Cerro Verde’s concentrator expansion and also improves the local water quality, enhances agriculture products grown in the area and reduces the risk of waterborne illnesses. In addition to these projects, Cerro Verde annually makes significant community development investments in the Arequipa region.
Security Matters. Consistent with our operating permits in Peru and our commitment to protect our employees and property, we have taken steps to provide a safe and secure working environment. As part of its security program, Cerro Verde maintains its own internal security department. Both employees and contractors perform functions such as protecting company facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The security department receives human rights and Voluntary Principles training annually. Cerro Verde’s costs for its internal civilian security department totaled approximately $7 million in each of the years 2022, 2021 and 2020.
Cerro Verde, like all businesses and residents of Peru, relies on the Peru government for the maintenance of public order, upholding the rule of law and the protection of personnel and property. The Peru government is responsible for employing police personnel and directing their operations. Cerro Verde has limited public security forces in support of its operation, with the arrangement defined through an Inter-institutional Cooperation Agreement with the Peru National Police. Cerro Verde’s share of support costs for government-provided security approximated $1 million in each of the years 2022, 2021 and 2020. Refer to Item 1A. “Risk Factors” for further discussion of security risks in Peru.
Indonesia. PT-FI provides funding and technical assistance to support various community development programs in areas such as health, education, economic development and local infrastructure. In 1996, PT-FI established a social investment fund with the aim of contributing to social and economic development in the Mimika Regency. Prior to 2019, the fund was mainly managed by the Amungme and Kamoro Community Development Organization, a community-led institution. In 2019, a new foundation, the Amungme and Kamoro Community Empowerment Foundation (Yayasan Pemberdayaan Masyarakat Amungme dan Kamoro, or YPMAK), was established, and in 2020, PT-FI appointed YPMAK to assist in distributing a significant portion of PT-FI’s funding to support the development and empowerment of the local Indigenous Papuan people. YPMAK is governed by a Board of Governors consisting of seven representatives, including four from PT-FI.
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In addition, since 2001, PT-FI has voluntarily established and contributed to land rights trust funds administered by Amungme and Kamoro representatives that focus on socioeconomic initiatives, human rights and environmental issues.
PT-FI is committed to the continued funding of YPMAK programs and the land rights trust funds, as well as for other local-community development initiatives through 2041 and has made and expects to continue making annual investments in public health, education, and local economic development. PT-FI recorded charges totaling $123 million in 2022, $109 million in 2021 and $67 million in 2020 to cost of sales for social and economic development programs.
Security Matters. Consistent with our ongoing commitment to protect our employees and property, we have taken steps to provide a safe and secure working environment. As part of its security program, PT-FI maintains its own internal civilian security department. Both employees and contractors perform functions such as protecting company facilities, monitoring shipments of supplies and products, assisting in traffic control and aiding in emergency response operations. The security department receives human rights training annually.
PT-FI’s costs for its internal civilian security department totaled $50 million in both 2022 and 2021 and $47 million in 2020.
PT-FI, like all businesses and residents of Indonesia, relies on the Indonesia government for the maintenance of public order, upholding the rule of law and protection of personnel and property. The Grasberg minerals district has been designated by the Indonesia government as one of Indonesia’s vital national assets. This designation results in the police, and to a lesser extent, the military, playing a significant role in protecting the area of our operations. The Indonesia government is responsible for employing police and military personnel and directing their operations.
From the outset of PT-FI’s operations, the Indonesia government has looked to PT-FI to provide logistical and infrastructure support and assistance for these necessary services because of the limited resources of the Indonesia government and the remote location of and lack of development in Central Papua. PT-FI’s financial support of the Indonesia government security institutions assigned to PT-FI’s operations area represents a prudent response to PT-FI’s requirements and commitments to protect its workforce and property better ensuring that personnel are properly fed and lodged and have the logistical resources to patrol PT-FI’s roads and secure its area of operations. In addition, the provision of such support is consistent with our philosophy of responsible corporate citizenship, and reflects our commitment to pursue practices that protect and respect human rights.
PT-FI’s support costs for the government-provided security totaled $25 million in both 2022 and 2021 and $22 million in 2020. This supplemental support consists of various infrastructure and other costs, including food, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military and police. Refer to Item 1A. “Risk Factors” for further discussion of security risks in Indonesia.
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MINING PRODUCTION AND SALES DATA
| Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| Production | Sales | |||||||||||||||||||||||||||||||||||||
COPPER (millions of recoverable pounds) | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
| (FCX’s net interest in %) | ||||||||||||||||||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||||||||||||||
Morenci (72%)a | 636 | 631 | 707 | 639 | 632 | 711 | ||||||||||||||||||||||||||||||||
| Safford (100%) | 285 | 265 | 161 | 281 | 252 | 150 | ||||||||||||||||||||||||||||||||
| Sierrita (100%) | 184 | 189 | 178 | 186 | 187 | 177 | ||||||||||||||||||||||||||||||||
| Bagdad (100%) | 165 | 184 | 216 | 169 | 185 | 213 | ||||||||||||||||||||||||||||||||
| Chino (100%) | 130 | 124 | 92 | 127 | 114 | 108 | ||||||||||||||||||||||||||||||||
| Tyrone (100%) | 59 | 55 | 45 | 59 | 53 | 45 | ||||||||||||||||||||||||||||||||
| Miami (100%) | 11 | 12 | 17 | 11 | 13 | 16 | ||||||||||||||||||||||||||||||||
| Other (100%) | (3) | — | 2 | (3) | — | 2 | ||||||||||||||||||||||||||||||||
| Total North America | 1,467 | 1,460 | 1,418 | 1,469 | 1,436 | 1,422 | ||||||||||||||||||||||||||||||||
| South America | ||||||||||||||||||||||||||||||||||||||
| Cerro Verde (53.56%) | 974 | 887 | 820 | 964 | 888 | 825 | ||||||||||||||||||||||||||||||||
| El Abra (51%) | 202 | 160 | 159 | 198 | 167 | 151 | ||||||||||||||||||||||||||||||||
| Total South America | 1,176 | 1,047 | 979 | 1,162 | 1,055 | 976 | ||||||||||||||||||||||||||||||||
| Indonesia | ||||||||||||||||||||||||||||||||||||||
Grasberg minerals district (48.76%)b | 1,567 | 1,336 | 809 | 1,582 | 1,316 | 804 | ||||||||||||||||||||||||||||||||
| Consolidated | 4,210 | 3,843 | 3,206 | 4,213 | c | 3,807 | c | 3,202 | c | |||||||||||||||||||||||||||||
| Less noncontrolling interests | 845 | 741 | 610 | 840 | 741 | 608 | ||||||||||||||||||||||||||||||||
| Net | 3,365 | 3,102 | 2,596 | 3,373 | 3,066 | 2,594 | ||||||||||||||||||||||||||||||||
| Average realized price per pound | $ | 3.90 | $ | 4.33 | $ | 2.95 | ||||||||||||||||||||||||||||||||
GOLD (thousands of recoverable ounces) | ||||||||||||||||||||||||||||||||||||||
| (FCX’s net interest in %) | ||||||||||||||||||||||||||||||||||||||
| North America (100%) | 13 | 11 | 9 | 12 | 11 | 13 | ||||||||||||||||||||||||||||||||
Indonesia (48.76%)b | 1,798 | 1,370 | 848 | 1,811 | 1,349 | 842 | ||||||||||||||||||||||||||||||||
| Consolidated | 1,811 | 1,381 | 857 | 1,823 | 1,360 | 855 | ||||||||||||||||||||||||||||||||
| Less noncontrolling interests | 337 | 257 | 159 | 339 | 252 | 158 | ||||||||||||||||||||||||||||||||
| Net | 1,474 | 1,124 | 698 | 1,484 | 1,108 | 697 | ||||||||||||||||||||||||||||||||
| Average realized price per ounce | $ | 1,787 | $ | 1,796 | $ | 1,832 | ||||||||||||||||||||||||||||||||
MOLYBDENUM (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||||||||
| (FCX’s net interest in %) | ||||||||||||||||||||||||||||||||||||||
| Climax (100%) | 21 | 18 | 14 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Henderson (100%) | 12 | 12 | 10 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
North America copper mines (100%)a | 29 | 34 | 33 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Cerro Verde (53.56%) | 23 | 21 | 19 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Consolidated | 85 | 85 | 76 | 75 | 82 | 80 | ||||||||||||||||||||||||||||||||
| Less noncontrolling interest | 11 | 10 | 9 | 10 | 9 | 10 | ||||||||||||||||||||||||||||||||
| Net | 74 | 75 | 67 | 65 | 73 | 70 | ||||||||||||||||||||||||||||||||
| Average realized price per pound | $ | 18.71 | $ | 15.56 | $ | 10.20 | ||||||||||||||||||||||||||||||||
a.Amounts are net of Morenci’s joint venture partners’ undivided interest.
b.Our economic interest in PT-FI approximated 81% through 2022, and is 48.76% thereafter (refer to Note 3 for further discussion).
c.Consolidated sales volumes exclude purchased copper of 124 million pounds in 2022, 173 million pounds in 2021 and 290 million pounds in 2020.
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SELECTED OPERATING DATA
| Years Ended December 31, | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||
| CONSOLIDATED MINING | ||||||||||||||||||||||||||||||||
| Copper (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 4,210 | 3,843 | 3,206 | 3,247 | 3,813 | |||||||||||||||||||||||||||
| Sales, excluding purchases | 4,213 | 3,807 | 3,202 | 3,292 | 3,811 | |||||||||||||||||||||||||||
| Average realized price per pound | $ | 3.90 | $ | 4.33 | $ | 2.95 | $ | 2.73 | $ | 2.91 | ||||||||||||||||||||||
| Gold (thousands of recoverable ounces) | ||||||||||||||||||||||||||||||||
| Production | 1,811 | 1,381 | 857 | 882 | 2,439 | |||||||||||||||||||||||||||
| Sales, excluding purchases | 1,823 | 1,360 | 855 | 991 | 2,389 | |||||||||||||||||||||||||||
| Average realized price per ounce | $ | 1,787 | $ | 1,796 | $ | 1,832 | $ | 1,415 | $ | 1,254 | ||||||||||||||||||||||
| Molybdenum (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 85 | 85 | 76 | 90 | 95 | |||||||||||||||||||||||||||
| Sales, excluding purchases | 75 | 82 | 80 | 90 | 94 | |||||||||||||||||||||||||||
| Average realized price per pound | $ | 18.71 | $ | 15.56 | $ | 10.20 | $ | 12.61 | $ | 12.50 | ||||||||||||||||||||||
| NORTH AMERICA COPPER MINES | ||||||||||||||||||||||||||||||||
Operating Data, Net of Joint Venture Interestsa | ||||||||||||||||||||||||||||||||
| Copper (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 1,467 | 1,460 | 1,418 | 1,457 | 1,404 | |||||||||||||||||||||||||||
| Sales, excluding purchases | 1,469 | 1,436 | 1,422 | 1,442 | 1,428 | |||||||||||||||||||||||||||
| Average realized price per pound | $ | 4.08 | $ | 4.30 | $ | 2.82 | $ | 2.74 | $ | 2.96 | ||||||||||||||||||||||
| Molybdenum (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 29 | 34 | 33 | 32 | 32 | |||||||||||||||||||||||||||
| 100% Operating Data | ||||||||||||||||||||||||||||||||
| Leach operations | ||||||||||||||||||||||||||||||||
| Leach ore placed in stockpiles (metric tons per day) | 676,400 | 665,900 | 714,300 | 750,900 | 681,400 | |||||||||||||||||||||||||||
| Average copper ore grade (%) | 0.29 | 0.29 | 0.27 | 0.23 | 0.24 | |||||||||||||||||||||||||||
| Copper production (millions of recoverable pounds) | 1,019 | 1,056 | 1,047 | 993 | 951 | |||||||||||||||||||||||||||
| Mill operations | ||||||||||||||||||||||||||||||||
| Ore milled (metric tons per day) | 294,200 | 269,500 | 279,700 | 326,100 | 301,000 | |||||||||||||||||||||||||||
| Average ore grade (%): | ||||||||||||||||||||||||||||||||
| Copper | 0.37 | 0.38 | 0.35 | 0.34 | 0.35 | |||||||||||||||||||||||||||
| Molybdenum | 0.02 | 0.03 | 0.02 | 0.02 | 0.02 | |||||||||||||||||||||||||||
| Copper recovery rate (%) | 81.8 | 81.2 | 84.1 | 87.0 | 87.8 | |||||||||||||||||||||||||||
| Copper production (millions of recoverable pounds) | 695 | 649 | 647 | 748 | 719 | |||||||||||||||||||||||||||
| SOUTH AMERICA MINING | ||||||||||||||||||||||||||||||||
| Copper (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 1,176 | 1,047 | 979 | 1,183 | 1,249 | |||||||||||||||||||||||||||
| Sales | 1,162 | 1,055 | 976 | 1,183 | 1,253 | |||||||||||||||||||||||||||
| Average realized price per pound | $ | 3.80 | $ | 4.34 | $ | 3.05 | $ | 2.71 | $ | 2.87 | ||||||||||||||||||||||
| Molybdenum (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 23 | 21 | 19 | 29 | 28 | |||||||||||||||||||||||||||
| Leach operations | ||||||||||||||||||||||||||||||||
| Leach ore placed in stockpiles (metric tons per day) | 163,000 | 163,900 | 160,300 | 205,900 | 195,200 | |||||||||||||||||||||||||||
| Average copper ore grade (%) | 0.35 | 0.32 | 0.35 | 0.37 | 0.33 | |||||||||||||||||||||||||||
| Copper production (millions of recoverable pounds) | 302 | 256 | 241 | 268 | 287 | |||||||||||||||||||||||||||
| Mill operations | ||||||||||||||||||||||||||||||||
| Ore milled (metric tons per day) | 409,200 | 380,300 | 331,600 | 393,100 | 387,600 | |||||||||||||||||||||||||||
| Average ore grade (%): | ||||||||||||||||||||||||||||||||
| Copper | 0.32 | 0.31 | 0.34 | 0.36 | 0.38 | |||||||||||||||||||||||||||
| Molybdenum | 0.01 | 0.01 | 0.01 | 0.02 | 0.01 | |||||||||||||||||||||||||||
| Copper recovery rate (%) | 85.3 | 87.3 | 84.3 | 83.5 | 84.3 | |||||||||||||||||||||||||||
| Copper production (millions of recoverable pounds) | 874 | 791 | 738 | 916 | 962 | |||||||||||||||||||||||||||
a.Amounts are net of Morenci’s joint venture partners’ undivided interest.
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SELECTED OPERATING DATA (Continued)
| Years Ended December 31, | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||
| INDONESIA MINING | ||||||||||||||||||||||||||||||||
Operating Dataa | ||||||||||||||||||||||||||||||||
| Copper (millions of recoverable pounds) | ||||||||||||||||||||||||||||||||
| Production | 1,567 | 1,336 | 809 | 607 | 1,160 | |||||||||||||||||||||||||||
| Sales | 1,582 | 1,316 | 804 | 667 | 1,130 | |||||||||||||||||||||||||||
| Average realized price per pound | $ | 3.80 | $ | 4.34 | $ | 3.08 | $ | 2.72 | $ | 2.89 | ||||||||||||||||||||||
| Gold (thousands of recoverable ounces) | ||||||||||||||||||||||||||||||||
| Production | 1,798 | 1,370 | 848 | 863 | 2,416 | |||||||||||||||||||||||||||
| Sales | 1,811 | 1,349 | 842 | 973 | 2,366 | |||||||||||||||||||||||||||
| Average realized price per ounce | $ | 1,787 | $ | 1,796 | $ | 1,832 | $ | 1,416 | $ | 1,254 | ||||||||||||||||||||||
| 100% Operating Data | ||||||||||||||||||||||||||||||||
| Ore milled (metric tons per day) | 192,600 | 151,600 | 87,700 | 110,100 | 178,100 | |||||||||||||||||||||||||||
| Average ore grade: | ||||||||||||||||||||||||||||||||
| Copper (%) | 1.19 | 1.30 | 1.32 | 0.84 | 0.98 | |||||||||||||||||||||||||||
| Gold (grams per metric ton) | 1.05 | 1.04 | 1.10 | 0.93 | 1.58 | |||||||||||||||||||||||||||
| Recovery rates (%): | ||||||||||||||||||||||||||||||||
| Copper | 90.0 | 89.8 | 91.9 | 88.4 | 91.8 | |||||||||||||||||||||||||||
| Gold | 77.7 | 77.0 | 78.1 | 75.0 | 84.7 | |||||||||||||||||||||||||||
| Production: | ||||||||||||||||||||||||||||||||
| Copper (millions of recoverable pounds) | 1,567 | 1,336 | 809 | 607 | 1,227 | |||||||||||||||||||||||||||
| Gold (thousands of recoverable ounces) | 1,798 | 1,370 | 848 | 863 | 2,697 | |||||||||||||||||||||||||||
| MOLYBDENUM MINES | ||||||||||||||||||||||||||||||||
| Ore milled (metric tons per day) | 26,100 | 21,800 | 20,700 | 30,100 | 27,900 | |||||||||||||||||||||||||||
| Average molybdenum ore grade (%) | 0.18 | 0.19 | 0.17 | 0.14 | 0.18 | |||||||||||||||||||||||||||
| Molybdenum production (millions of recoverable pounds) | 33 | 30 | 24 | 29 | 35 | |||||||||||||||||||||||||||
a.Prior to December 21, 2018, PT-FI had an unincorporated joint venture with Rio Tinto; 2018 operating data is net of Rio Tinto’s joint venture interest.
MINERAL RESERVES
Our estimates of mineral reserves have been prepared using industry accepted practice and conform to the disclosure requirements of Subpart 1300 of SEC Regulation S-K. Proven and probable mineral reserves were determined from the application of relevant modifying factors to geological data to establish an operational, economically viable mine plan. The estimates are based on mapping, drilling, sampling, assaying and evaluation methods generally applied in the mining industry. Mineral reserves, as used in the mineral reserve data presented here, means the economically mineable part of a measured or indicated resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. Proven mineral reserves mean the economically mineable part of a measured mineral resource, from geological evidence revealed in outcrops, trenches, workings or drill holes with grades and/or quality estimates from detailed, closely spaced sampling, and geologic characterization that defines the size, shape, depth and mineral content to a high degree of confidence. Probable mineral reserves means the economically mineable part of an indicated mineral resource, for which quantity and grade are estimated from information similar to that used for measured mineral resources where the samples are farther apart, and the geological characterization is adequate. Probable mineral reserves can also include remaining portions of a measured mineral resource. The degree of assurance, although lower than that for proven mineral reserves, is high enough to assume continuity between points of observation.
Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees. These estimates are reviewed and verified regularly by independent experts in mining, geology and reserve determination. Our mineral reserve estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our ore bodies to optimize economic values and to manage risk. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Refer to Item 1A. “Risk Factors” for discussion of risks associated with our estimates of proven and probable mineral reserves.
Estimated recoverable proven and probable mineral reserves at December 31, 2022, were determined using metal price assumptions of $3.00 per pound for copper, $1,500 per ounce for gold and $12 per pound for molybdenum. For the three-year period ended December 31, 2022, LME copper settlement prices averaged $3.67 per pound, London PM gold prices averaged $1,789 per ounce and the weekly average price for molybdenum quoted by Platts Metals Daily averaged $14.44 per pound.
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The estimated recoverable proven and probable mineral reserves presented in the table below represent the estimated metal quantities from which we expect to be paid after application of estimated metallurgical recoveries and smelter recoveries, where applicable.
| Estimated Recoverable Proven and Probable Mineral Reserves at December 31, 2022 | ||||||||||||||||||||
Coppera (billion pounds) | Gold (million ounces) | Molybdenum (billion pounds) | ||||||||||||||||||
| North America | 48.6 | 0.6 | 2.83 | |||||||||||||||||
| South America | 31.7 | — | 0.70 | |||||||||||||||||
Indonesiab | 30.8 | 26.3 | — | |||||||||||||||||
Consolidated basisc | 111.0 | 26.9 | 3.53 | |||||||||||||||||
Net equity interestd | 80.4 | 13.5 | 3.20 | |||||||||||||||||
Note: May not foot because of rounding.
a.Estimated consolidated recoverable copper reserves include 1.8 billion pounds in leach stockpiles and 0.3 billion pounds in mill stockpiles (refer to “Mill and Leach Stockpiles” for further discussion).
b.Estimated recoverable proven and probable mineral reserves from Indonesia reflect estimates of minerals that can be recovered through 2041. Refer to Note 13 for discussion of PT-FI’s IUPK.
c.Consolidated mineral reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America (refer to Note 3 for further discussion of our Morenci joint venture). Excluded from the table above are our estimated recoverable proven and probable silver reserves of 340 million ounces, which were determined using $20 per ounce.
d.Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries). Excluded from the table above are our estimated recoverable proven and probable silver reserves of 226 million ounces.
36
| Estimated Recoverable Proven and Probable Mineral Reserves | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| at December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Proven Mineral Reserves | Probable Mineral Reserves | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Million Metric Tons | Average Ore Grade | Million Metric Tons | Average Ore Grade | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FCX’s | Processing | FCX’s | 100% | Copper | Gold | Moly | Silver | FCX’s | 100% | Copper | Gold | Moly | Silver | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Method | Interest | Basis | % | g/t | % | g/t | Interest | Basis | % | g/t | % | g/t | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Morenci | 72% | Mill | 759 | 1,054 | 0.29 | — | 0.02 | — | 262 | 363 | 0.29 | — | 0.02 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Crushed leach | 359 | 499 | 0.38 | — | — | — | 106 | 148 | 0.36 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 1,398 | 1,941 | 0.15 | — | — | — | 641 | 890 | 0.17 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bagdad | 100% | Mill | 2,010 | 2,010 | 0.34 | — | a | 0.02 | 1.41 | 602 | 602 | 0.30 | — | a | 0.02 | 1.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 12 | 12 | 0.28 | — | — | — | 13 | 13 | 0.20 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Safford, including Lone Star | 100% | Crushed leach | 779 | 779 | 0.41 | — | — | — | 292 | 292 | 0.36 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sierrita | 100% | Mill | 1,875 | 1,875 | 0.23 | — | a | 0.02 | 1.06 | 860 | 860 | 0.22 | — | a | 0.02 | 1.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chino, including Cobre | 100% | Mill | 170 | 170 | 0.49 | 0.04 | — | 0.87 | 85 | 85 | 0.50 | 0.05 | — | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 58 | 58 | 0.25 | — | — | — | 6 | 6 | 0.23 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tyrone | 100% | ROM leach | 72 | 72 | 0.17 | — | — | — | 19 | 19 | 0.18 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Henderson | 100% | Mill | 36 | 36 | — | — | 0.18 | — | 15 | 15 | — | — | 0.12 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Climax | 100% | Mill | 137 | 137 | — | — | 0.15 | — | 15 | 15 | — | — | 0.10 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,664 | 8,642 | 2,916 | 3,308 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| South America | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cerro Verde | 53.56% | Mill | 332 | 620 | 0.37 | — | 0.02 | 1.94 | 1,869 | 3,489 | 0.35 | — | 0.01 | 1.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Crushed leach | 4 | 8 | 0.42 | — | — | — | 1 | 1 | 0.45 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 19 | 36 | 0.35 | — | — | — | 43 | 81 | 0.21 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| El Abra | 51% | Crushed leach | 240 | 471 | 0.46 | — | — | — | 79 | 156 | 0.41 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 35 | 68 | 0.23 | — | — | — | 14 | 27 | 0.21 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 630 | 1,203 | 2,006 | 3,754 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indonesia | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grasberg Block Cave | 48.76%b | Mill | 151 | 309 | 1.26 | 0.92 | — | 3.15 | 244 | 501 | 1.00 | 0.65 | — | 3.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DMLZ | 48.76%b | Mill | 38 | 77 | 0.90 | 0.75 | — | 4.13 | 149 | 305 | 0.71 | 0.58 | — | 3.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Big Gossan | 48.76%b | Mill | 9 | 18 | 2.50 | 0.99 | — | 15.18 | 15 | 31 | 2.14 | 0.92 | — | 12.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kucing Liarc | 48.76%b | Mill | 45 | 93 | 1.05 | 0.96 | — | 5.26 | 141 | 288 | 0.96 | 0.85 | — | 4.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 242 | 496 | 549 | 1,126 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total FCX - 100% Basis | 10,341 | 8,188 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total FCX - Consolidated basisd | 9,362 | 7,795 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total FCX - Net equity interestb,e | 8,536 | 5,471 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note: Totals may not foot because of rounding.
a.Amounts not shown because of rounding.
b.Beginning January 1, 2023, our economic interest in PT-FI is 48.76% (refer to Note 3 for further discussion).
c.PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments.
d.Consolidated reserves represent estimated quantities after reduction for Morenci's joint venture partner interests (refer to Note 3 for further discussion).
e.Net equity interest represents estimated consolidated quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries).
The reserve table above and the tables on the following pages utilize the abbreviations described below:
•g/t - grams per metric ton
•Moly - Molybdenum
37
| Estimated Recoverable Proven and Probable Mineral Reserves | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| at December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Proven and Probable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Million Metric Tons | Average Ore Grade | Recoveriesa | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FCX’s | Processing | FCX’s | 100% | Copper | Gold | Moly | Silver | Copper | Gold | Moly | Silver | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Method | Interest | Basis | % | g/t | % | g/t | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Morenci | 72% | Mill | 1,020 | 1,417 | 0.29 | — | 0.02 | — | 82.5 | — | 46.2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Crushed leach | 465 | 646 | 0.38 | — | — | — | 80.8 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 2,039 | 2,831 | 0.16 | — | — | — | 33.6 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bagdad | 100% | Mill | 2,612 | 2,612 | 0.33 | — | b | 0.02 | 1.37 | 84.0 | 59.1 | 76.9 | 49.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 25 | 25 | 0.24 | — | — | — | 41.5 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Safford, including Lone Star | 100% | Crushed leach | 1,071 | 1,071 | 0.40 | — | — | — | 71.4 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sierrita | 100% | Mill | 2,735 | 2,735 | 0.22 | — | b | 0.02 | 1.05 | 80.4 | 59.1 | 76.7 | 49.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chino, including Cobre | 100% | Mill | 255 | 255 | 0.49 | 0.04 | — | 0.89 | 79.0 | 77.9 | — | 78.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 64 | 64 | 0.24 | — | — | — | 45.0 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tyrone | 100% | ROM leach | 91 | 91 | 0.17 | — | — | — | 56.4 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Henderson | 100% | Mill | 51 | 51 | — | — | 0.16 | — | — | — | 87.8 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Climax | 100% | Mill | 151 | 151 | — | — | 0.14 | — | — | — | 88.7 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,580 | 11,951 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| South America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cerro Verde | 53.56% | Mill | 2,201 | 4,109 | 0.35 | — | 0.01 | 1.85 | 85.5 | — | 54.4 | 44.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Crushed leach | 5 | 9 | 0.43 | — | — | — | 77.0 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 62 | 116 | 0.25 | — | — | — | 50.9 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| El Abra | 51% | Crushed leach | 320 | 627 | 0.45 | — | — | — | 52.0 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ROM leach | 48 | 95 | 0.23 | — | — | — | 32.4 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,636 | 4,957 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indonesia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grasberg Block Cave | 48.76%c | Mill | 395 | 810 | 1.10 | 0.75 | — | 3.55 | 83.9 | 65.9 | — | 58.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DMLZ | 48.76%c | Mill | 186 | 382 | 0.75 | 0.62 | — | 3.64 | 84.8 | 78.3 | — | 64.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Big Gossan | 48.76%c | Mill | 24 | 49 | 2.27 | 0.95 | — | 13.76 | 91.5 | 68.1 | — | 64.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kucing Liard | 48.76%c | Mill | 186 | 381 | 0.99 | 0.88 | — | 4.59 | 81.8 | 59.8 | — | 44.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 791 | 1,621 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total FCX - 100% Basis | 18,528 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total FCX - Consolidated basise | 17,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total FCX - Net equity interestc,f | 14,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note: Amounts may not equal the sum of proven and probable mineral reserves as presented on the previous page because of rounding. In addition, totals may not foot because of rounding.
a.Recoveries are net of estimated mill and smelter losses.
b.Amounts not shown because of rounding.
c.Beginning January 1, 2023, our economic interest in PT-FI is 48.76% (refer to Note 3 for further discussion).
d.PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments.
e.Consolidated reserves represent estimated quantities after reduction for Morenci's joint venture partner interests (refer to Note 3 for further discussion).
f.Net equity interest represents estimated consolidated quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries).
38
| Estimated Recoverable Proven and Probable Mineral Reserves | ||||||||||||||||||||||||||||||||||||||
| at December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
| (continued) | ||||||||||||||||||||||||||||||||||||||
| Recoverable Mineral Reserves | ||||||||||||||||||||||||||||||||||||||
| Copper | Gold | Moly | Silver | |||||||||||||||||||||||||||||||||||
| FCX’s | Processing | billion | million | billion | million | |||||||||||||||||||||||||||||||||
| Interest | Method | lbs. | ozs. | lbs. | ozs. | |||||||||||||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||||||||||||||
| Morenci | 72% | Mill | 7.5 | — | 0.29 | — | ||||||||||||||||||||||||||||||||
| Crushed leach | 4.3 | — | — | — | ||||||||||||||||||||||||||||||||||
| ROM leach | 3.3 | — | — | — | ||||||||||||||||||||||||||||||||||
| Bagdad | 100% | Mill | 16.1 | 0.2 | 0.91 | 56.6 | ||||||||||||||||||||||||||||||||
| ROM leach | 0.1 | — | — | — | ||||||||||||||||||||||||||||||||||
| Safford, including Lone Star | 100% | Crushed leach | 6.7 | — | — | — | ||||||||||||||||||||||||||||||||
| Sierrita | 100% | Mill | 10.9 | 0.1 | 1.10 | 45.5 | ||||||||||||||||||||||||||||||||
| Chino, including Cobre | 100% | Mill | 2.2 | 0.3 | — | 5.7 | ||||||||||||||||||||||||||||||||
| ROM leach | 0.2 | — | — | — | ||||||||||||||||||||||||||||||||||
| Tyrone | 100% | ROM leach | 0.2 | — | — | — | ||||||||||||||||||||||||||||||||
| Henderson | 100% | Mill | — | — | 0.16 | — | ||||||||||||||||||||||||||||||||
| Climax | 100% | Mill | — | — | 0.43 | — | ||||||||||||||||||||||||||||||||
| 51.5 | 0.6 | 2.88 | 107.8 | |||||||||||||||||||||||||||||||||||
Recoverable metal in stockpilesb | 1.5 | — | a | 0.02 | 0.1 | |||||||||||||||||||||||||||||||||
| 100% operations | 52.9 | 0.6 | 2.91 | 107.9 | ||||||||||||||||||||||||||||||||||
| Consolidated | 48.6 | 0.6 | 2.83 | 107.9 | ||||||||||||||||||||||||||||||||||
| Net equity interest | 48.6 | 0.6 | 2.83 | 107.9 | ||||||||||||||||||||||||||||||||||
| South America | ||||||||||||||||||||||||||||||||||||||
| Cerro Verde | 53.56% | Mill | 27.1 | — | 0.70 | 109.5 | ||||||||||||||||||||||||||||||||
| Crushed leach | 0.1 | — | — | — | ||||||||||||||||||||||||||||||||||
| ROM leach | 0.3 | — | — | — | ||||||||||||||||||||||||||||||||||
| El Abra | 51% | Crushed leach | 3.2 | — | — | — | ||||||||||||||||||||||||||||||||
| ROM leach | 0.2 | — | — | — | ||||||||||||||||||||||||||||||||||
| 30.9 | — | 0.70 | 109.5 | |||||||||||||||||||||||||||||||||||
Recoverable metal in stockpilesb | 0.8 | — | 0.01 | 1.0 | ||||||||||||||||||||||||||||||||||
| 100% operations | 31.7 | — | 0.70 | 110.5 | ||||||||||||||||||||||||||||||||||
| Consolidated | 31.7 | — | 0.70 | 110.5 | ||||||||||||||||||||||||||||||||||
| Net equity interest | 16.9 | — | 0.38 | 59.2 | ||||||||||||||||||||||||||||||||||
| Indonesia | ||||||||||||||||||||||||||||||||||||||
| Grasberg Block Cave | 48.76%c | Mill | 16.5 | 12.9 | — | 53.9 | ||||||||||||||||||||||||||||||||
| DMLZ | 48.76%c | Mill | 5.4 | 5.9 | — | 28.6 | ||||||||||||||||||||||||||||||||
| Big Gossan | 48.76%c | Mill | 2.2 | 1.0 | — | 13.7 | ||||||||||||||||||||||||||||||||
Kucing Liard | 48.76%c | Mill | 6.8 | 6.5 | — | 25.0 | ||||||||||||||||||||||||||||||||
| 100% operations | 30.8 | 26.3 | — | 121.3 | ||||||||||||||||||||||||||||||||||
| Consolidated | 30.8 | 26.3 | — | 121.3 | ||||||||||||||||||||||||||||||||||
| Net equity interest | 15.0 | 12.9 | — | 59.2 | ||||||||||||||||||||||||||||||||||
| Total FCX - 100% basis | 115.4 | 26.9 | 3.61 | 339.7 | ||||||||||||||||||||||||||||||||||
Total FCX - Consolidated basise | 111.0 | 26.9 | 3.53 | 339.7 | ||||||||||||||||||||||||||||||||||
Total FCX - Net equity interestf | 80.4 | 13.5 | 3.20 | 226.2 | ||||||||||||||||||||||||||||||||||
Note: Totals may not foot because of rounding.
a.Amounts not shown because of rounding.
b.Refer to “Mill and Leach Stockpiles” for additional information.
c.Beginning January 1, 2023, our economic interest in PT-FI is 48.76% (refer to Note 3 for further discussion).
d.PT-FI has commenced long-term mine development activities for the Kucing Liar deposit. See “Mining Operations - Indonesia” for discussion of Kucing Liar capital investments.
e.Consolidated mineral reserves represent estimated metal quantities after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion).
f.Net equity interest mineral reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries).
39
The table below summarizes changes in estimated recoverable copper, gold and molybdenum in mineral reserves between December 31, 2021 and 2022, for our material properties:
| Estimated Recoverable Mineral Reserves at 100% Basis | |||||||||||||||||||||||||||||||||||
| Copper (billion lbs.) | Gold (million ozs.) | Molybdenum (billion lbs.) | |||||||||||||||||||||||||||||||||
| Morenci | Cerro Verde | Grasberg minerals district | Grasberg minerals district | Morenci | Cerro Verde | ||||||||||||||||||||||||||||||
| Mineral reserves as of December 31, 2021 | 13.1 | 27.9 | 32.2 | 26.6 | 0.15 | 0.69 | |||||||||||||||||||||||||||||
| Production | (0.9) | (1.0) | (1.6) | (1.8) | — | c | (0.02) | ||||||||||||||||||||||||||||
Adjustmentsa | 3.5 | 1.1 | 0.2 | 1.5 | 0.14 | 0.03 | |||||||||||||||||||||||||||||
| Mineral reserves as of December 31, 2022 | 15.7 | 28.0 | 30.8 | 26.3 | 0.29 | 0.70 | |||||||||||||||||||||||||||||
| Estimated Recoverable Mineral Reserves at Net Equity Basis | |||||||||||||||||||||||||||||||||||
| Copper (billion lbs.) | Gold (million ozs.) | Molybdenum (billion lbs.) | |||||||||||||||||||||||||||||||||
| Morenci | Cerro Verde | Grasberg minerals district | Grasberg minerals district | Morenci | Cerro Verde | ||||||||||||||||||||||||||||||
| 72% | 53.56% | 48.76%b | 48.76%b | 72% | 53.56% | ||||||||||||||||||||||||||||||
| Mineral reserves as of December 31, 2021 | 9.4 | 14.9 | 16.2 | 13.6 | 0.11 | 0.37 | |||||||||||||||||||||||||||||
| Production | (0.6) | (0.5) | (1.3) | (1.5) | — | c | (0.01) | ||||||||||||||||||||||||||||
Adjustmentsa | 2.5 | 0.6 | 0.1 | 0.8 | 0.10 | 0.02 | |||||||||||||||||||||||||||||
| Mineral reserves as of December 31, 2022 | 11.3 | 15.0 | 15.0 | 12.9 | 0.21 | 0.38 | |||||||||||||||||||||||||||||
a.Adjustments at Morenci and Cerro Verde are primarily the result of higher reserve metal prices, and the adjustments at the Grasberg minerals district are primarily the result of updated cave plans, accelerating the ramp-up of Kucing Liar and higher Kucing Liar gold recoveries.
b.Beginning January 1, 2023, our economic interest in PT-FI is 48.76% (refer to Note 3 for further discussion).
c.Amounts not shown because of rounding.
In defining our open-pit mineral reserves, we apply an “operational cutoff grade” strategy, wherein multiple processing options, throughput constraints, mine development and ore availability are given consideration to maximize the value of our operations. In defining our open-pit mineral resources, internal cutoff grades are applied. The internal cutoff grade is defined for a metric ton of ore as that equivalent copper grade, once produced and sold, that generates sufficient revenue to cover estimated processing and administrative costs. We use “break-even cutoff grades” to define the in-situ mineral reserves and resources for our underground ore bodies. The break-even cutoff grade is defined for a metric ton of ore as that equivalent copper grade, once produced and sold, that generates sufficient revenue to cover all operating and administrative costs associated with our production.
Our copper mines may contain other commercially recoverable metals, such as gold, molybdenum and silver. We value all commercially recoverable metals in terms of a copper equivalent percentage to determine a single cutoff grade. Copper equivalent percentage is used to express the relative value of multi-metal ores in terms of one metal. The calculation expresses the relative value of the ore using estimates of contained metal quantities, metals prices as used for reserve or resource determination, recovery rates, treatment charges and royalties. Our molybdenum properties use a molybdenum cutoff grade.
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The table below shows the minimum cutoff grade for mineral reserves by process for each of our existing ore bodies as of December 31, 2022:
| Copper Equivalent Cutoff Grade (%) | Molybdenum Cutoff Grade (%) | ||||||||||||||||||||||
| Mill | Crushed Leach | ROM Leach | Mill | ||||||||||||||||||||
| North America | |||||||||||||||||||||||
| Morenci | 0.16 | 0.11 | 0.03 | — | |||||||||||||||||||
| Bagdad | 0.11 | — | 0.04 | — | |||||||||||||||||||
| Safford, including Lone Star | — | 0.13 | — | — | |||||||||||||||||||
| Sierrita | 0.14 | — | — | — | |||||||||||||||||||
| Chino, including Cobre | 0.22 | — | 0.07 | — | |||||||||||||||||||
| Tyrone | — | — | 0.03 | — | |||||||||||||||||||
| Henderson | — | — | — | 0.13 | |||||||||||||||||||
| Climax | — | — | — | 0.05 | |||||||||||||||||||
| South America | |||||||||||||||||||||||
| Cerro Verde | 0.13 | 0.25 | 0.08 | — | |||||||||||||||||||
| El Abra | — | 0.14 | 0.08 | — | |||||||||||||||||||
| Indonesia | |||||||||||||||||||||||
| Grasberg Block Cave | 0.54 | — | — | — | |||||||||||||||||||
| DMLZ | 0.63 | — | — | — | |||||||||||||||||||
| Big Gossan | 1.70 | — | — | — | |||||||||||||||||||
| Kucing Liar | 0.60 | — | — | — | |||||||||||||||||||
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Production Sequencing
The following chart illustrates our current plans for sequencing and producing our proven and probable mineral reserves at each of our ore bodies and the years in which we currently expect production from each ore body and related stockpiles. Our proven and probable mineral reserves in Indonesia reflect estimates of minerals that can be recovered through the end of 2041, and our current mine plan and planned operations are based on the assumption that PT-FI will comply with its obligations under the IUPK and receive the second 10-year extension from 2031 through 2041 (refer to Item 1A. “Risk Factors” and Note 13 for further discussion). We develop our mine plans based on maximizing the net present value from the ore bodies. Significant additional capital expenditures will be required at many of these mines in order to achieve the life-of-mine plans reflected below.
a.Development commenced in October 2021. The ultimate timing of the start of production is dependent upon a number of factors and may vary from the date shown here.
Mill and Leach Stockpiles
Mill and leach stockpiles generally contain lower grade ores that have been extracted from an ore body and are available for metal recovery. Mill stockpiles contain sulfide ores and recovery of metal is through milling, concentrating, smelting and refining or, alternatively, by concentrate leaching. Leach stockpiles contain oxide ores and certain secondary sulfide ores and recovery of metal is through exposure to acidic solutions that dissolve contained copper and deliver it in solution to extraction processing facilities.
Because it is impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper grades of material delivered to mill and leach stockpiles.
Expected copper recoveries for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately.
Expected copper recoveries for leach stockpiles are determined using small-scale laboratory tests, small- to large-scale column testing (which simulates the production process), historical trends and other factors, including
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mineralogy of the ore and rock type. Total copper recovery in leach stockpiles can vary significantly from a low percentage to more than 90% depending on several variables, including processing methodology, processing variables, mineralogy and particle size of the rock. For newly placed material on active stockpiles, as much as 80% of total copper recovery may be extracted during the first year, and the remaining copper may be recovered over many years. Processes and recoveries are monitored regularly, and recovery estimates are adjusted periodically as additional information becomes available and as related technology changes.
Following are our stockpiles and the estimated recoverable copper contained within those stockpiles as of December 31, 2022:
| Recoverable | ||||||||||||||||||||||||||||||||||||||
| FCX’s | Million Metric Tons | Average | Recoveries | Copper | ||||||||||||||||||||||||||||||||||
| Interest | FCX’s Interest | 100% Basis | Ore Grade (%) | (%) | (billion lbs.) | |||||||||||||||||||||||||||||||||
| Mill stockpiles | ||||||||||||||||||||||||||||||||||||||
| Cerro Verde | 53.56 | % | 37 | 69 | 0.27 | 64.2 | 0.3 | |||||||||||||||||||||||||||||||
North America copper minesa | 5 | 5 | 0.45 | 90.0 | — | b | ||||||||||||||||||||||||||||||||
| 42 | 74 | 0.3 | ||||||||||||||||||||||||||||||||||||
| Leach stockpiles | ||||||||||||||||||||||||||||||||||||||
| Morenci | 72 | % | 5,330 | 7,408 | 0.24 | 1.3 | 0.5 | |||||||||||||||||||||||||||||||
| Bagdad | 100 | % | 505 | 505 | 0.25 | 1.0 | — | b | ||||||||||||||||||||||||||||||
| Safford, including Lone Star | 100 | % | 414 | 414 | 0.43 | 6.1 | 0.2 | |||||||||||||||||||||||||||||||
| Sierrita | 100 | % | 650 | 650 | 0.15 | 8.2 | 0.2 | |||||||||||||||||||||||||||||||
| Miami | 100 | % | 498 | 498 | 0.39 | 1.8 | 0.1 | |||||||||||||||||||||||||||||||
| Chino, including Cobre | 100 | % | 1,782 | 1,782 | 0.25 | 2.6 | 0.3 | |||||||||||||||||||||||||||||||
| Tyrone | 100 | % | 1,208 | 1,208 | 0.28 | 1.6 | 0.1 | |||||||||||||||||||||||||||||||
| Cerro Verde | 53.56 | % | 314 | 587 | 0.44 | 4.6 | 0.3 | |||||||||||||||||||||||||||||||
| El Abra | 51 | % | 456 | 893 | 0.43 | 2.7 | 0.2 | |||||||||||||||||||||||||||||||
| 11,158 | 13,947 | 1.9 | ||||||||||||||||||||||||||||||||||||
| Total FCX - 100% basis | 2.2 | |||||||||||||||||||||||||||||||||||||
Total FCX - Consolidated basisc | 2.1 | |||||||||||||||||||||||||||||||||||||
Total FCX - Net equity interestd | 1.7 | |||||||||||||||||||||||||||||||||||||
Note: Totals may not foot because of rounding.
a.Our net equity interest in all North America copper mines is 100% except for Morenci, which is 72%.
b.Rounds to less than 0.1 billion pounds of recoverable copper.
c.Consolidated stockpiles represent estimated metal quantities after reduction for Morenci’s joint venture partner interests (refer to Note 3 for further discussion).
d.Net equity interest represents estimated consolidated metal quantities further reduced for noncontrolling interest ownership (refer to Note 3 for further discussion of our ownership in subsidiaries).
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Mineral Resources
In addition to mineral reserves, our properties contain mineral resources that we believe could be brought into production should market conditions warrant. However, permitting and significant capital expenditures may be required before mining of these resources could commence at these properties. A mineral resource is a concentration or occurrence of material of economic interest in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. Such a deposit cannot qualify as recoverable proven and probable mineral reserves until engineering, legal and economic feasibility are confirmed based upon a comprehensive evaluation of development and operating costs, grades, recoveries and other material factors. Mineral resources include measured, indicated and inferred mineral classifications.
•A measured mineral resource is a resource for which the quantity and grade are estimated from detailed, closely spaced sampling, and geologic characterization that defines the size, shape, depth and mineral content to a high degree of confidence.
•An indicated mineral resource is a resource for which quantity and grade are estimated from information similar to that used for measured mineral resources where the samples are farther apart, and the geological characterization is adequate.
•An inferred mineral resource is a resource for which quantity and grade are estimated from information similar to that used for measured and indicated mineral resources, but with limited geological evidence and sampling. Inferred mineral resource grade and mineralization continuity have a lower degree of confidence.
Our estimates of mineral resources have been prepared in accordance with the disclosure requirements of Subpart 1300 of SEC Regulation S-K. No assurance can be given that the estimated mineral resources not included in mineral reserves will become proven and probable mineral reserves.
Estimated mineral resources as presented on the following pages were assessed using prices of $3.50 per pound for copper, $1,500 per ounce for gold, $15 per pound for molybdenum and $20 per ounce for silver. Cutoff grade strategy and expected recoveries used to evaluate mineral resources are consistent with those for mineral reserves but would require additional work to substantiate. Refer to Item 1A. “Risk Factors” for discussion of risks associated with our estimates of mineral resources.
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| Estimated Mineral Resources | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
at December 31, 2022a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Measured | Indicated | Inferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Million Metric Tons | Average Ore Grade | Million Metric Tons | Average Ore Grade | Million Metric Tons | Average Ore Grade | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FCX’s | Processing | FCX’s | 100% | Copper | Gold | Moly | Silver | FCX’s | 100% | Copper | Gold | Moly | Silver | FCX’s | 100% | Copper | Gold | Moly | Silver | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Method | Interest | Basis | % | g/t | % | g/t | Interest | Basis | % | g/t | % | g/t | Interest | Basis | % | g/t | % | g/t | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| North America | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Morenci | 72% | Milling | 1,210 | 1,681 | 0.22 | — | 0.02 | — | 1,231 | 1,709 | 0.22 | — | 0.02 | — | 1,086 | 1,509 | 0.21 | — | 0.02 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leaching | 837 | 1,165 | 0.14 | — | — | — | 713 | 991 | 0.14 | — | — | — | 529 | 736 | 0.11 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bagdad | 100% | Milling | 467 | 467 | 0.31 | — | b | 0.03 | 1.29 | 884 | 884 | 0.27 | — | b | 0.02 | 1.13 | 1,560 | 1,560 | 0.18 | — | b | 0.01 | 0.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leaching | 1 | 1 | 0.10 | — | — | — | 12 | 12 | 0.07 | — | — | — | 27 | 27 | 0.06 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Safford, including Lone Star | 100% | Milling | 1,059 | 1,059 | 0.32 | 0.02 | — | 0.43 | 2,239 | 2,239 | 0.35 | 0.02 | — | 0.46 | 1,235 | 1,235 | 0.28 | — | b | — | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leaching | 379 | 379 | 0.27 | — | — | — | 519 | 519 | 0.27 | — | — | — | 261 | 261 | 0.25 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sierrita | 100% | Milling | 496 | 496 | 0.17 | — | b | 0.02 | 0.77 | 1,090 | 1,090 | 0.18 | — | b | 0.02 | 0.82 | 1,645 | 1,645 | 0.17 | — | b | 0.02 | 0.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chino, including Cobre | 100% | Milling | 387 | 387 | 0.32 | 0.03 | 0.02 | 0.57 | 246 | 246 | 0.35 | 0.03 | 0.01 | 0.60 | 98 | 98 | 0.32 | 0.03 | 0.01 | 0.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leaching | 23 | 23 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||