PHOENIX--(BUSINESS WIRE)--
Freeport-McMoRan Inc. (NYSE: FCX):
-
Net income attributable to common stock totaled $1.0 billion,
$0.71 per share, for fourth-quarter 2017. After adjusting for net
gains of $291 million, $0.20 per share, fourth-quarter 2017 adjusted
net income attributable to common stock totaled $750 million, $0.51
per share.
-
Consolidated sales totaled 1.0 billion pounds of copper, 593
thousand ounces of gold and 24 million pounds of molybdenum for
fourth-quarter 2017 and 3.7 billion pounds of copper, 1.6 million
ounces of gold and 95 million pounds of molybdenum for the year 2017.
-
Consolidated sales for the year 2018 are expected to
approximate 3.9 billion pounds of copper, 2.4 million ounces of gold
and 91 million pounds of molybdenum, including 1.0 billion pounds of
copper, 675 thousand ounces of gold and 24 million pounds of
molybdenum for first-quarter 2018.
-
Average realized prices for fourth-quarter 2017 were $3.21 per
pound for copper, $1,285 per ounce for gold and $9.79 per pound for
molybdenum.
-
Average unit net cash costs for fourth-quarter 2017 were $1.04
per pound of copper and $1.20 per pound for the year 2017. Unit net
cash costs are expected to average $0.97 per pound of copper for the
year 2018.
-
Operating cash flows totaled $1.7 billion (including $0.2
billion in working capital sources and timing of other tax payments)
for fourth-quarter 2017 and $4.7 billion (including $0.6 billion in
working capital sources and timing of other tax payments) for the year
2017. Based on current sales volume and cost estimates, and assuming
average prices of $3.15 per pound for copper, $1,300 per ounce for
gold and $10.00 per pound for molybdenum, operating cash flows for the
year 2018 are expected to exceed $5.8 billion (including $0.3 billion
in working capital sources and timing of other tax payments).
-
Capital expenditures for fourth-quarter 2017 totaled $390
million (including approximately $250 million for major mining
projects) and $1.4 billion for the year 2017 (including $0.9 billion
for major mining projects). Capital expenditures for the year 2018 are
expected to approximate $2.1 billion, including $1.2 billion for major
mining projects primarily associated with underground development
activities in the Grasberg minerals district and development of the
Lone Star oxide project.
-
During fourth-quarter 2017, FCX repaid $1.7 billion in debt,
including the redemption of $617 million of senior notes due 2020 and
the repurchase of $74 million of senior notes due 2018 in open-market
transactions.
-
At December 31, 2017, consolidated cash totaled $4.4
billion and consolidated debt totaled $13.1 billion. FCX
had no borrowings and $3.5 billion available under its revolving
credit facility at December 31, 2017.
Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to
common stock of $1.0 billion ($0.71 per share) for fourth-quarter 2017
and $1.8 billion ($1.25 per share) for the year 2017, compared with net
income attributable to common stock of $292 million ($0.21 per share)
for fourth-quarter 2016 and a net loss attributable to common stock of
$4.2 billion ($3.16 per share) for the year 2016. After adjusting for
net gains of $291 million ($0.20 per share) primarily related to tax
benefits associated with U.S. tax reform, partly offset by charges for
adjustments to environmental obligations, adjusted net income
attributable to common stock totaled $750 million ($0.51 per share) for
fourth-quarter 2017. Refer to the supplemental schedule, "Adjusted Net
Income," on page VII, which is available on FCX's website, "fcx.com,"
for additional information.
Richard C. Adkerson, President and Chief Executive Officer, said,
"During 2017, our global team’s focus on productivity and cost and
capital discipline, together with improved market conditions for copper,
produced solid results. We generated strong cash flows, continued to
strengthen our balance sheet and advanced several long-term initiatives
to build value for shareholders. Our actions during 2016 and 2017
achieved our debt reduction objectives efficiently while retaining a
strong asset base for the future. As we enter 2018, our shareholders are
well positioned to benefit from our global leadership position in
copper, supported by a large, high-quality portfolio of long-lived
geographically diverse assets and favorable copper market conditions. We
are continuing to make significant progress in our ongoing negotiations
with the Indonesian government to restore long-term stability for our
Grasberg operations as we remain focused on executing our business
strategy for the benefit of our shareholders and other stakeholders."
SUMMARY FINANCIAL DATA
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(in millions, except per share amounts)
|
Revenuesa,b
|
|
$
|
5,041
|
|
|
$
|
4,377
|
|
|
$
|
16,403
|
|
|
$
|
14,830
|
|
Operating income (loss)a
|
|
$
|
1,467
|
|
|
$
|
703
|
|
|
$
|
3,633
|
|
|
$
|
(2,792
|
)
|
Net income (loss) from continuing operations
|
|
$
|
1,193
|
|
|
$
|
202
|
|
|
$
|
2,029
|
|
|
$
|
(3,832
|
)
|
Net income (loss) from discontinued operations
|
|
$
|
16
|
|
c
|
$
|
(2
|
)
|
|
$
|
66
|
|
c
|
$
|
(193
|
)
|
Net income (loss) attributable to common stockd,e
|
|
$
|
1,041
|
|
|
$
|
292
|
|
|
$
|
1,817
|
|
|
$
|
(4,154
|
)
|
Diluted net income (loss) per share of common stock:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.70
|
|
|
$
|
0.22
|
|
|
$
|
1.21
|
|
|
$
|
(2.96
|
)
|
Discontinued operations
|
|
0.01
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
(0.20
|
)
|
|
|
$
|
0.71
|
|
|
$
|
0.21
|
|
|
$
|
1.25
|
|
|
$
|
(3.16
|
)
|
Diluted weighted-average common shares outstanding
|
|
1,455
|
|
|
1,410
|
|
|
1,454
|
|
|
1,318
|
|
Operating cash flowsf
|
|
$
|
1,664
|
|
|
$
|
1,135
|
|
|
$
|
4,682
|
|
|
$
|
3,729
|
|
Capital expenditures
|
|
$
|
390
|
|
|
$
|
504
|
|
|
$
|
1,410
|
|
|
$
|
2,813
|
|
At December 31:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,447
|
|
|
$
|
4,245
|
|
|
$
|
4,447
|
|
|
$
|
4,245
|
|
Total debt, including current portion
|
|
$
|
13,117
|
|
|
$
|
16,027
|
|
|
$
|
13,117
|
|
|
$
|
16,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
For segment financial results, refer to the supplemental
schedules, "Business Segments," beginning on page IX, which are
available on FCX's website, "fcx.com."
|
b.
|
Includes favorable adjustments to provisionally priced
concentrate and cathode copper sales recognized in prior periods
totaling $104 million ($42 million to net income attributable to
common stock or $0.03 per share) in fourth-quarter 2017, $129
million ($57 million to net income attributable to common stock or
$0.04 per share) in fourth-quarter 2016, $81 million ($34 million
to net income attributable to common stock or $0.02 per share) for
the year 2017 and $5 million ($2 million to net loss attributable
to common stock or less than $0.01 per share) for the year 2016.
For further discussion, refer to the supplemental schedule,
"Derivative Instruments," on page IX, which is available on FCX's
website, "fcx.com."
|
c.
|
Primarily reflects adjustments to the fair value of the
potential $120 million in contingent consideration related to the
2016 sale of FCX's interest in TF Holdings Limited (TFHL), which
totaled $74 million at December 31, 2017, and will continue to be
adjusted through December 31, 2019.
|
d.
|
Includes net gains (charges) of $291 million ($0.20 per share)
in fourth-quarter 2017, $(59) million ($(0.04) per share) in
fourth-quarter 2016, $113 million ($0.08 per share) for the year
2017 and $(4.5) billion ($3.39 per share) for the year 2016 that
are described in the supplemental schedule, "Adjusted Net Income,"
on page VII, which is available on FCX's website, "fcx.com."
|
e.
|
FCX defers recognizing profits on intercompany sales until
final sales to third parties occur. For a summary of net impacts
from changes in these deferrals, refer to the supplemental
schedule, "Deferred Profits," on page IX, which is available on
FCX's website, "fcx.com."
|
f.
|
Includes net working capital sources (uses) and timing of other
tax payments of $194 million in fourth-quarter 2017, $(396)
million in fourth-quarter 2016, $589 million for the year 2017 and
$87 million for the year 2016.
|
SUMMARY OPERATING DATA
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016a
|
|
2017
|
|
2016a
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
1,007
|
|
|
1,131
|
|
|
3,737
|
|
|
4,222
|
Sales, excluding purchases
|
|
1,017
|
|
|
1,127
|
|
|
3,700
|
|
|
4,227
|
Average realized price per pound
|
|
$
|
3.21
|
|
|
$
|
2.48
|
|
|
$
|
2.93
|
|
|
$
|
2.28
|
Site production and delivery costs per poundb
|
|
$
|
1.62
|
|
|
$
|
1.44
|
|
|
$
|
1.61
|
|
|
$
|
1.42
|
Unit net cash costs per poundb
|
|
$
|
1.04
|
|
|
$
|
1.21
|
|
|
$
|
1.20
|
|
|
$
|
1.26
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
Production
|
|
567
|
|
|
430
|
|
|
1,577
|
|
|
1,088
|
Sales, excluding purchases
|
|
593
|
|
|
405
|
|
|
1,562
|
|
|
1,079
|
Average realized price per ounce
|
|
$
|
1,285
|
|
|
$
|
1,174
|
|
|
$
|
1,268
|
|
|
$
|
1,238
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
22
|
|
|
22
|
|
|
92
|
|
|
80
|
Sales, excluding purchases
|
|
24
|
|
|
22
|
|
|
95
|
|
|
74
|
Average realized price per pound
|
|
$
|
9.79
|
|
|
$
|
8.27
|
|
|
$
|
9.33
|
|
|
$
|
8.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Excludes the results of the Tenke Fungurume (Tenke) mine, which
was sold in November 2016 and is reported as discontinued
operations. Copper sales from the Tenke mine totaled 59 million
pounds in fourth-quarter 2016 and 424 million pounds for the year
2016.
|
b.
|
Reflects per pound weighted-average production and delivery
costs and unit net cash costs (net of by-product credits) for all
copper mines, before net noncash and other costs. For
reconciliations of per pound unit costs by operating division to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page XII, which are available on FCX's website, "fcx.com."
|
Consolidated Sales Volumes
Fourth-quarter 2017 copper sales of 1.0 billion pounds
approximated the October 2017 estimate and were lower than
fourth-quarter 2016 sales of 1.1 billion pounds, primarily reflecting
lower sales volumes in North America and at Cerro Verde.
Fourth-quarter 2017 gold sales of 593 thousand ounces were lower
than the October 2017 estimate of 625 thousand ounces, primarily
reflecting lower mill rates at PT Freeport Indonesia (PT-FI).
Fourth-quarter 2017 gold sales were higher than fourth-quarter 2016
sales of 405 thousand ounces, primarily reflecting anticipated higher
ore grades from Indonesia.
Fourth-quarter 2017 molybdenum sales of 24 million pounds were
slightly higher than the October 2017 estimate of 23 million pounds and
fourth-quarter 2016 sales of 22 million pounds.
Sales volumes for the year 2018 are expected to approximate 3.9 billion
pounds of copper, 2.4 million ounces of gold and 91 million pounds of
molybdenum, including 1.0 billion pounds of copper, 675 thousand ounces
of gold and 24 million pounds of molybdenum in first-quarter 2018.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for
FCX's copper mines of $1.04 per pound of copper in fourth-quarter 2017
were lower than unit net cash costs of $1.21 per pound in fourth-quarter
2016, primarily reflecting higher by-product credits, partly offset by
lower copper sales volumes and higher mining and milling costs in South
America.
Assuming average prices of $1,300 per ounce of gold and $10.00 per pound
of molybdenum for 2018 and achievement of current sales volume and cost
estimates, consolidated unit net cash costs (net of by-product credits)
for copper mines are expected to average $0.97 per pound of copper for
the year 2018. The impact of price changes on 2018 consolidated unit net
cash costs would approximate $0.03 per pound for each $50 per ounce
change in the average price of gold and $0.025 per pound for each $2 per
pound change in the average price of molybdenum. Quarterly unit net cash
costs vary with fluctuations in sales volumes and realized prices,
primarily for gold and molybdenum.
MINING OPERATIONS
North America Copper Mines. FCX operates seven open-pit copper
mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in
Arizona, and Chino and Tyrone in New Mexico. In addition to copper,
certain of FCX's North America copper mines produce molybdenum
concentrate, gold and silver.
All of the North America mining operations are wholly owned, except for
Morenci. FCX records its 72 percent undivided joint venture interest in
Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has significant
undeveloped reserves and resources in North America and a portfolio of
potential long-term development projects. Future investments will be
undertaken based on the results of economic and technical feasibility
studies, and are dependent on market conditions. FCX continues to study
opportunities to reduce the capital intensity of its potential long-term
development projects.
Through exploration drilling, FCX has identified a significant resource
at its wholly owned Lone Star project located near the Safford operation
in eastern Arizona. FCX has commenced a project to develop the Lone Star
oxide ores with first production expected by the end of 2020. Total
estimated capital costs for the project, including mine equipment and
pre-production stripping, approximates $850 million and will benefit
from the utilization of existing infrastructure at the adjacent Safford
operation. Production from the Lone Star oxide ores is expected to
average approximately 200 million pounds of copper per year with an
approximate 20-year mine life. The project also advances the potential
for development of a larger-scale district opportunity. FCX is
conducting additional drilling as it continues to evaluate longer term
opportunities available from the significant sulfide potential in
the Lone Star/Safford minerals district.
Operating Data. Following is summary consolidated operating data
for the North America copper mines for the fourth quarters and years
2017 and 2016:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
367
|
|
|
420
|
|
|
1,518
|
|
|
1,831
|
|
Sales, excluding purchases
|
|
354
|
|
|
416
|
|
|
1,484
|
|
|
1,841
|
|
Average realized price per pound
|
|
$
|
3.15
|
|
|
$
|
2.45
|
|
|
$
|
2.85
|
|
|
$
|
2.24
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Productiona
|
|
8
|
|
|
8
|
|
|
33
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.79
|
|
|
$
|
1.46
|
|
|
$
|
1.64
|
|
|
$
|
1.42
|
|
By-product credits
|
|
(0.21
|
)
|
|
(0.13
|
)
|
|
(0.17
|
)
|
|
(0.12
|
)
|
Treatment charges
|
|
0.10
|
|
|
0.11
|
|
|
0.10
|
|
|
0.11
|
|
Unit net cash costs
|
|
$
|
1.68
|
|
|
$
|
1.44
|
|
|
$
|
1.57
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the North America copper mines.
|
b.
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page XII, which are available on FCX's website, "fcx.com."
|
North America's consolidated copper sales volumes of 354 million pounds
in fourth-quarter 2017 were lower than fourth-quarter 2016 sales of 416
million pounds, primarily reflecting anticipated lower ore grades. North
America copper sales are estimated to approximate 1.5 billion pounds for
the year 2018, compared with 1.5 billion pounds in 2017.
Average unit net cash costs (net of by-product credits) for the North
America copper mines of $1.68 per pound of copper in fourth-quarter 2017
were higher than unit net cash costs of $1.44 per pound in
fourth-quarter 2016, primarily reflecting lower sales volumes.
Average unit net cash costs (net of by-product credits) for the North
America copper mines are expected to approximate $1.67 per pound of
copper for the year 2018, based on achievement of current sales volume
and cost estimates and assuming an average molybdenum price of $10.00
per pound. North America's average unit net cash costs for the year 2018
would change by approximately $0.04 per pound for each $2 per pound
change in the average price of molybdenum.
South America Mining. FCX operates two copper mines in South
America - Cerro Verde in Peru (in which FCX owns a 53.56 percent
interest) and El Abra in Chile (in which FCX owns a 51 percent
interest). These operations are consolidated in FCX's financial
statements. In addition to copper, the Cerro Verde mine produces
molybdenum concentrate and silver.
Operating and Development Activities. The Cerro Verde expansion
project commenced operations in September 2015. The project expanded the
concentrator facilities from 120,000 metric tons of ore per day to
360,000 metric tons of ore per day, and averaged 374,200 metric tons of
ore per day in fourth-quarter 2017. Cerro Verde's expanded operations
benefit from its large-scale, long-lived reserves and cost efficiencies.
FCX continues to evaluate a major expansion at El Abra to process
additional sulfide material and to achieve higher recoveries.
Exploration results at El Abra indicate a significant sulfide resource,
which could potentially support a major mill project similar to
facilities recently constructed at Cerro Verde. Future investments will
depend on technical studies, which are being advanced, economic factors
and market conditions.
Operating Data. Following is summary consolidated operating data
for the South America mining operations for the fourth quarters and
years 2017 and 2016:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
303
|
|
|
342
|
|
|
1,235
|
|
|
1,328
|
|
Sales
|
|
312
|
|
|
359
|
|
|
1,235
|
|
|
1,332
|
|
Average realized price per pound
|
|
$
|
3.22
|
|
|
$
|
2.50
|
|
|
$
|
2.97
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Productiona
|
|
6
|
|
|
7
|
|
|
27
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.71
|
|
|
$
|
1.35
|
|
|
$
|
1.59
|
|
|
$
|
1.26
|
|
By-product credits
|
|
(0.20
|
)
|
|
(0.10
|
)
|
|
(0.18
|
)
|
|
(0.10
|
)
|
Treatment charges
|
|
0.21
|
|
|
0.25
|
|
|
0.22
|
|
|
0.24
|
|
Royalty on metals
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
Unit net cash costs
|
|
$
|
1.73
|
|
|
$
|
1.51
|
|
|
$
|
1.64
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Refer to summary operating data on page 3 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at Cerro Verde.
|
b.
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page XII, which are available on FCX's website, "fcx.com."
|
South America's consolidated copper sales volumes of 312 million pounds
in fourth-quarter 2017 were lower than fourth-quarter 2016 sales of 359
million pounds, primarily reflecting lower recovery rates at Cerro
Verde. Sales from South America mining are expected to approximate 1.2
billion pounds of copper for the year 2018, compared with 1.2 billion
pounds of copper in 2017.
Average unit net cash costs (net of by-product credits) for South
America mining of $1.73 per pound of copper in fourth-quarter 2017 were
higher than unit net cash costs of $1.51 per pound in fourth-quarter
2016, primarily reflecting lower sales volumes and higher mining and
milling costs at Cerro Verde, partly offset by higher by-product
credits. Average unit net cash costs (net of by-product credits) for
South America mining are expected to approximate $1.63 per pound of
copper for the year 2018, based on current sales volume and cost
estimates and assuming an average price of $10.00 per pound of
molybdenum.
Indonesia Mining. Through its 90.64 percent owned and
consolidated subsidiary PT-FI, FCX's assets include one of the world's
largest copper and gold deposits at the Grasberg minerals district in
Papua, Indonesia. PT-FI operates a proportionately consolidated joint
venture, which produces copper concentrate that contains significant
quantities of gold and silver.
Regulatory Matters. PT-FI continues to actively engage with
Indonesian government officials to address regulatory changes that
conflict with its contractual rights in a manner that provides long-term
stability for PT-FI’s operations and investment plans, and protects
value for FCX’s shareholders.
Following a framework understanding reached in August 2017, the parties
have been engaged in negotiation and documentation of a special license
(IUPK) and accompanying documentation for assurances on legal and fiscal
terms to provide PT-FI with long-term rights through 2041. In addition,
the IUPK would provide that PT-FI construct a smelter within five years
of reaching a definitive agreement and include agreement for the
divestment of 51 percent of the project area interests to Indonesian
participants at fair market value.
In late 2017, the Indonesian government (including the regional
government of Papua Province and Mimika Regency) and PT Indonesia Asahan
Aluminium (Inalum), a state-owned enterprise, which will lead a
consortium of investors, agreed to form a special purpose company to
acquire Grasberg project area interests. Inalum is owned 100 percent by
the Indonesian government and currently holds 9.36 percent of PT-FI's
outstanding common stock.
FCX is engaged in discussions with Inalum and PT-FI’s joint venture
partner regarding potential arrangements that would result in the Inalum
consortium acquiring interests that would meet the Indonesian
government’s 51 percent ownership objective in a manner satisfactory to
all parties, and in a structure that would provide for continuity of
FCX’s management of PT-FI’s operations and governance of the business.
The parties continue to negotiate documentation on a comprehensive
agreement for PT-FI’s extended operations and to reach agreement on
timing, process and governance matters relating to the divestment. The
parties have a mutual objective of completing negotiations and the
required documentation during the first half of 2018.
In December 2017, the Indonesian government extended PT-FI’s temporary
IUPK to June 30, 2018, and PT-FI is seeking an extension of its export
license which currently expires on February 16, 2018, to enable normal
operations to continue during the negotiation period.
Until a definitive agreement is reached, PT-FI has reserved all rights
under its Contract of Work (COW).
Operating and Development Activities. PT-FI is currently mining
the final phase of the Grasberg open pit, which contains high copper and
gold ore grades. PT-FI expects to mine high-grade ore over the next
several quarters prior to transitioning to the Grasberg Block Cave
underground mine in the first half of 2019.
PT-FI has several projects in the Grasberg minerals district related to
the development of its large-scale, long-lived, high-grade underground
ore bodies. In aggregate, these underground ore bodies are expected to
produce large-scale quantities of copper and gold following the
transition from the Grasberg open pit. Substantial progress has been
made to prepare for the transition to mining of the Grasberg Block Cave
underground mine. Mine development activities are sufficiently advanced
to commence caving in early 2019. The ore flow system and underground
rail line are expected to be installed during 2018.
Subject to reaching a definitive agreement with the Indonesian
government to support PT-FI's long-term investment plans, estimated
annual capital spending on these projects would average $0.9 billion per
year ($0.7 billion per year net to PT-FI) over the next five years.
Considering the long-term nature and size of these projects, actual
costs could vary from these estimates. In response to market conditions
and Indonesian regulatory uncertainty, timing of these expenditures
continues to be reviewed. If PT-FI is unable to reach a definitive
agreement with the Indonesian government on its long-term mining rights,
FCX intends to reduce or defer investments significantly in its
underground development projects and will pursue dispute resolution
procedures under its COW.
Operating Data. Following is summary consolidated operating data
for the Indonesia mining operations for the fourth quarters and years
2017 and 2016:
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
Production
|
|
337
|
|
|
369
|
|
|
984
|
|
|
1,063
|
|
Sales
|
|
351
|
|
|
352
|
|
|
981
|
|
|
1,054
|
|
Average realized price per pound
|
|
$
|
3.25
|
|
|
$
|
2.48
|
|
|
$
|
3.00
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
Production
|
|
562
|
|
|
424
|
|
|
1,554
|
|
|
1,061
|
|
Sales
|
|
584
|
|
|
401
|
|
|
1,540
|
|
|
1,054
|
|
Average realized price per ounce
|
|
$
|
1,285
|
|
|
$
|
1,174
|
|
|
$
|
1,268
|
|
|
$
|
1,237
|
|
|
|
|
|
|
|
|
|
|
Unit net cash (credits) costs per pound of coppera
|
|
|
|
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.36
|
|
b
|
$
|
1.50
|
|
|
$
|
1.58
|
|
b
|
$
|
1.63
|
|
Gold and silver credits
|
|
(2.18
|
)
|
|
(1.34
|
)
|
|
(2.05
|
)
|
|
(1.30
|
)
|
Treatment charges
|
|
0.26
|
|
|
0.27
|
|
|
0.27
|
|
|
0.28
|
|
Export duties
|
|
0.15
|
|
|
0.09
|
|
|
0.12
|
|
|
0.09
|
|
Royalty on metals
|
|
0.19
|
|
|
0.13
|
|
|
0.17
|
|
|
0.13
|
|
Unit net cash (credits) costs
|
|
$
|
(0.22
|
)
|
|
$
|
0.65
|
|
|
$
|
0.09
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
For a reconciliation of unit net cash (credits) costs per pound
to production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page XII, which are available on FCX's website, "fcx.com."
|
b.
|
Excludes fixed costs charged directly to production and
delivery costs totaling $8 million ($0.02 per pound of copper) in
fourth-quarter 2017 and $120 million ($0.12 per pound of copper)
for the year 2017 associated with workforce reductions.
|
Indonesia's consolidated copper sales of 351 million pounds in
fourth-quarter 2017 approximated fourth-quarter 2016 sales of 352
million pounds. Indonesia's consolidated gold sales of 584 thousand
ounces in fourth-quarter 2017 were higher than fourth-quarter 2016 sales
of 401 thousand ounces, reflecting higher gold ore grades.
PT-FI's labor productivity continues to improve following disruptions
that occurred in the first half of 2017. During fourth-quarter 2017,
PT-FI and union officials reached terms for a new two-year labor
agreement, effective October 1, 2017.
Assuming achievement of planned operating rates for 2018, consolidated
sales volumes from Indonesia mining are expected to approximate 1.2
billion pounds of copper and 2.4 million ounces of gold for the year
2018, compared with 1.0 billion pounds of copper and 1.5 million ounces
of gold for the year 2017.
A significant portion of PT-FI's costs are fixed and unit costs vary
depending on production volumes and other factors. As a result of higher
gold and silver credits, Indonesia had unit net cash credits (including
gold and silver credits) of $0.22 per pound of copper in fourth-quarter
2017, compared with unit net cash costs of $0.65 per pound in
fourth-quarter 2016.
Assuming an average gold price of $1,300 per ounce for 2018 and
achievement of current sales volume and cost estimates, unit net cash
credits (including gold and silver credits) for Indonesia mining are
expected to approximate $0.57 per pound of copper for the year 2018.
Indonesia mining's unit net cash credits for the year 2018 would change
by approximately $0.09 per pound for each $50 per ounce change in the
average price of gold. Because of the fixed nature of a large portion of
Indonesia's costs, unit net cash credits/costs vary from quarter to
quarter depending on copper and gold volumes.
Indonesia mining's projected sales volumes for the year 2018 are
dependent on a number of factors, including operational performance,
workforce productivity, timing of shipments, the extension of PT-FI's
export license (which currently expires on February 16, 2018), the
extension of PT-FI's IUPK after June 30, 2018, and satisfactory progress
on the resolution of PT-FI's long-term mining rights.
Molybdenum Mines. FCX has two wholly owned molybdenum mines - the
Henderson underground mine and the Climax open-pit mine, both in
Colorado. The Henderson and Climax mines produce high-purity,
chemical-grade molybdenum concentrate, which is typically further
processed into value-added molybdenum chemical products. The majority of
molybdenum concentrate produced at the Henderson and Climax mines, as
well as from FCX's North America and South America copper mines, is
processed at FCX's conversion facilities.
Operating and Development Activities. Production from the
Molybdenum mines totaled 8 million pounds of molybdenum in
fourth-quarter 2017 and 7 million pounds in fourth-quarter 2016. Refer
to summary operating data on page 3 for FCX's consolidated molybdenum
sales and average realized prices, which includes sales of molybdenum
produced at the Molybdenum mines, and from FCX's North America and South
America copper mines.
Unit net cash costs for the Molybdenum mines averaged $8.40 per pound of
molybdenum in fourth-quarter 2017 and $8.26 per pound in fourth-quarter
2016. Based on current sales volume and cost estimates, average unit net
cash costs for the Molybdenum mines are expected to approximate $9.00
per pound of molybdenum for the year 2018.
For a reconciliation of unit net cash costs per pound to production and
delivery costs applicable to sales reported in FCX's consolidated
financial statements, refer to the supplemental schedules, "Product
Revenues and Production Costs," beginning on page XII, which are
available on FCX's website, "fcx.com."
Mining Exploration Activities. FCX's mining exploration
activities are generally associated with its existing mines, focusing on
opportunities to expand reserves and resources to support development of
additional future production capacity. Exploration results continue to
indicate opportunities for significant future potential reserve
additions in North America and South America. Exploration spending is
expected to approximate $65 million for the year 2018, compared to $72
million in 2017.
Preliminary Recoverable Proven and Probable Mineral Reserves. FCX
has significant reserves, resources and future development opportunities
within its portfolio of mining assets. FCX's preliminary estimated
consolidated recoverable proven and probable reserves from its mines at
December 31, 2017, include 86.7 billion pounds of copper, 23.5 million
ounces of gold and 2.84 billion pounds of molybdenum, which were
determined using $2.00 per pound for copper, $1,000 per ounce for gold
and $10.00 per pound for molybdenum. The preliminary recoverable proven
and probable mining reserves presented in the table below represent the
estimated metal quantities from which FCX expects to be paid after
application of estimated metallurgical recovery rates and smelter
recovery rates, where applicable. Recoverable reserve volumes are those
which FCX estimates can be economically and legally extracted or
produced at the time of the reserve determination.
|
|
|
|
|
Preliminary Recoverable Proven and Probable Mineral Reserves
|
|
|
Estimated at December 31, 2017
|
|
|
Copper
|
|
Gold
|
|
Molybdenum
|
|
|
(billion pounds)
|
|
(million ounces)
|
|
(billion pounds)
|
North America
|
|
33.5
|
|
|
0.3
|
|
|
2.22
|
South America
|
|
28.1
|
|
|
—
|
|
|
0.62
|
Indonesiaa
|
|
25.1
|
|
|
23.2
|
|
|
—
|
Consolidated basisb
|
|
86.7
|
|
|
23.5
|
|
|
2.84
|
|
|
|
|
|
|
|
Net equity interestc
|
|
71.3
|
|
|
21.3
|
|
|
2.56
|
|
|
|
|
|
|
|
|
|
a.
|
Preliminary recoverable proven and probable reserves from
Indonesia reflect estimates of minerals that can be recovered
through the end of 2041. Refer to "Indonesia Mining" above and to
"Risk Factors" in FCX's U.S Securities and Exchange Commission
(SEC) filings for discussion of PT-FI's COW and Indonesia
regulatory matters.
|
b.
|
Consolidated reserves represent estimated metal quantities
after reduction for joint venture partner interests at the Morenci
mine in North America and the Grasberg minerals district in
Indonesia. Excluded from the table above were FCX’s estimated
recoverable proven and probable reserves of 273.4 million ounces
of silver, which were determined using $15 per ounce.
|
c.
|
Net equity interest reserves represent estimated consolidated
metal quantities further reduced for noncontrolling interest
ownership. Excluded from the table above were FCX’s estimated
recoverable proven and probable reserves of 218.2 million ounces
of silver.
|
The following table summarizes changes in FCX's preliminary estimated
consolidated recoverable proven and probable copper, gold and molybdenum
reserves during 2017:
|
|
|
|
|
|
|
|
|
Copper
|
|
Gold
|
|
Molybdenum
|
|
|
(billions of lbs)
|
|
(millions of ozs)
|
|
(billions of lbs)
|
Reserves at December 31, 2016
|
|
86.8
|
|
|
26.1
|
|
|
2.95
|
|
Net additions (revisions)
|
|
3.6
|
|
a
|
(1.0
|
)
|
|
(0.02
|
)
|
Production
|
|
(3.7
|
)
|
|
(1.6
|
)
|
|
(0.09
|
)
|
Reserves at December 31, 2017
|
|
86.7
|
|
|
23.5
|
|
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Includes 4.4 billion pounds associated with the Lone Star
project located near the Safford mine.
|
In addition to the preliminary consolidated recoverable proven and
probable reserves, FCX's preliminary estimated mineralized material at
December 31, 2017, which was assessed using $2.20 per pound for copper,
totaled 92 billion pounds of incremental contained copper (including 5
billion pounds associated with Kisanfu in the Democratic Republic of
Congo, which is an asset held for sale). FCX continues to pursue
opportunities to convert this material into reserves, future production
volumes and cash flow.
CASH FLOWS, CASH and DEBT
Operating Cash Flows. FCX generated operating cash flows of $1.7
billion (including $0.2 billion in working capital sources and timing of
other tax payments) in fourth-quarter 2017 and $4.7 billion (including
$0.6 billion in working capital sources and timing of other tax
payments) for the year 2017.
Based on current sales volume and cost estimates, and assuming average
prices of $3.15 per pound of copper, $1,300 per ounce of gold and $10.00
per pound of molybdenum, FCX's consolidated operating cash flows are
estimated to exceed $5.8 billion for the year 2018 (including $0.3
billion in working capital sources and timing of other tax payments).
The impact of price changes during 2018 on operating cash flows would
approximate $360 million for each $0.10 per pound change in the average
price of copper, $115 million for each $50 per ounce change in the
average price of gold and $130 million for each $2 per pound change in
the average price of molybdenum.
Capital Expenditures. Capital expenditures totaled $390 million
for fourth-quarter 2017 (including approximately $250 million for major
mining projects) and $1.4 billion for the year ended 2017 (including
$0.9 billion for major mining projects). Capital expenditures are
expected to approximate $2.1 billion for the year 2018, including $1.2
billion for major mining projects primarily associated with underground
development activities in the Grasberg minerals district and development
of the Lone Star oxide project.
If PT-FI is unable to reach a definitive agreement with the Indonesian
government on its long-term mining rights, FCX intends to reduce or
defer investments significantly in its underground development projects
and will pursue dispute resolution procedures under its COW.
Cash. Following is a summary of the U.S. and international
components of consolidated cash and cash equivalents available to the
parent company, net of noncontrolling interests' share, taxes and other
costs at December 31, 2017 (in billions):
Cash at domestic companies
|
|
$
|
3.3
|
|
Cash at international operations
|
|
1.1
|
|
Total consolidated cash and cash equivalents
|
|
4.4
|
|
Noncontrolling interests' share
|
|
(0.4
|
)
|
Cash, net of noncontrolling interests' share
|
|
4.0
|
|
Withholding taxes and other
|
|
—
|
|
Net cash available
|
|
$
|
4.0
|
|
Debt. Following is a summary of total debt and the related
weighted-average interest rates at December 31, 2017 (in billions,
except percentages):
|
|
|
|
Weighted-
|
|
|
|
|
Average
|
|
|
|
|
Interest Rate
|
Senior Notes
|
|
$
|
11.8
|
|
|
4.4%
|
Cerro Verde credit facility
|
|
1.3
|
|
|
3.5%
|
Total debt
|
|
$
|
13.1
|
|
|
4.3%
|
During fourth-quarter 2017, FCX redeemed $617 million aggregate
principal amount of senior notes due 2020 and repurchased $74 million of
FCX senior notes due 2018 in open-market transactions, resulting in
annual cash interest savings of over $40 million. During fourth-quarter
2017, FCX also repaid $730 million of senior notes due 2017 and $220
million of the Cerro Verde credit facility. Debt repayments in
fourth-quarter 2017 totaled $1.7 billion.
At December 31, 2017, FCX had no borrowings, $13 million in letters of
credit issued and $3.5 billion available under its revolving credit
facility.
FINANCIAL POLICY
In December 2015, FCX's common stock dividend was suspended. The
declaration of dividends is at the discretion of the Board of Directors
(the Board) and will depend upon FCX’s financial results, cash
requirements, future prospects and other factors deemed relevant by the
Board.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's
fourth-quarter 2017 results is scheduled for today at 10:00 a.m. Eastern
Time. The conference call will be broadcast on the Internet along with
slides. Interested parties may listen to the conference call live and
view the slides by accessing “fcx.com.”
A replay of the webcast will be available through Friday, February 23,
2018.
-----------------------------------------------------------------------------------------------------------
FCX is a leading international mining company with headquarters in
Phoenix, Arizona. FCX operates large, long-lived, geographically diverse
assets with significant proven and probable reserves of copper, gold and
molybdenum. FCX is the world's largest publicly traded copper producer.
FCX’s portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world's largest copper and gold deposits; and
significant mining operations in the Americas, including the large-scale
Morenci minerals district in North America and the Cerro Verde operation
in South America. Additional information about FCX is available on FCX's
website at "fcx.com."
Cautionary Statement and Regulation G Disclosure: This press
release contains forward-looking statements in which FCX discusses its
potential future performance. Forward-looking statements are all
statements other than statements of historical facts, such as
projections or expectations relating to ore grades and milling rates,
production and sales volumes, unit net cash costs, operating cash flows,
anticipated tax refunds resulting from U.S. tax reform, capital
expenditures, exploration efforts and results, development and
production activities and costs, liquidity, tax rates, the impact of
copper, gold and molybdenum price changes, the impact of deferred
intercompany profits on earnings, reserve estimates, future dividend
payments, and share purchases and sales. The words “anticipates,” “may,”
“can,” “plans,” “believes,” “estimates,” “expects,” “projects,”
"targets," “intends,” “likely,” “will,” “should,” “to be,” ”potential"
and any similar expressions are intended to identify those assertions as
forward-looking statements. This press release also contains
forward-looking statements and estimates regarding the anticipated
effects of the Tax Cuts and Jobs Act enacted on December 22, 2017. These
statements and estimates are based on FCX's current interpretation of
this legislation, which may change as a result of additional
implementation guidance, changes in assumptions, and potential future
refinements of or revisions to calculations.
This press release also includes forward-looking statements regarding
mineralized material not included in proven and probable mineral
reserves. Mineralized material is a mineralized body that has
been delineated by appropriately spaced drilling and/or underground
sampling to support the estimated tonnage and average metal grades. Such
a deposit cannot qualify as recoverable proven and probable reserves
until legal and economic feasibility are confirmed based upon a
comprehensive evaluation of development costs, unit costs, grades,
recoveries and other material factors. Accordingly, no assurance can be
given that the estimated mineralized material not included in reserves
will become proven and probable reserves.
FCX cautions readers that forward-looking statements are not
guarantees of future performance and actual results may differ
materially from those anticipated, projected or assumed in the
forward-looking statements. Important factors that can cause FCX's
actual results to differ materially from those anticipated in the
forward-looking statements include supply of and demand for, and prices
of, copper, gold and molybdenum; mine sequencing; production
rates; potential inventory adjustments; potential impairment of
long-lived mining assets; the outcome of negotiations with the
Indonesian government regarding PT-FI's long-term mining rights; the
potential effects of violence in Indonesia generally and in the province
of Papua; industry risks; regulatory changes; political risks; labor
relations; weather- and climate-related risks; environmental risks;
litigation results (including the final disposition of Indonesian tax
disputes and the outcome of Cerro Verde's royalty dispute with the
Peruvian national tax authority); and other factors described in more
detail under the heading “Risk Factors” in FCX's Annual Report on Form
10-K for the year ended December 31, 2016, filed with the SEC as updated
by FCX's subsequent filings with the SEC. With respect to FCX's
operations in Indonesia, such factors include whether PT-FI will be able
to resolve complex regulatory matters in Indonesia and continue to
export copper after February 16, 2018.
Investors are cautioned that many of the assumptions upon which FCX's
forward-looking statements are based are likely to change after the
forward-looking statements are made, including for example commodity
prices, which FCX cannot control, and production volumes and costs, some
aspects of which FCX may not be able to control. Further, FCX may make
changes to its business plans that could affect its results. FCX
cautions investors that it does not intend to update forward-looking
statements more frequently than quarterly notwithstanding any changes in
its assumptions, changes in business plans, actual experience or other
changes, and FCX undertakes no obligation to update any forward-looking
statements.
This press release also contains certain financial measures such as
unit net cash costs per pound of copper and molybdenum, which are not
recognized under U.S. generally accepted accounting principles. As
required by SEC Regulation G, reconciliations of these measures to
amounts reported in FCX's consolidated financial statements are in the
supplemental schedules of this press release, which are also available
on FCX's website, "fcx.com."
|
|
|
FREEPORT-McMoRan INC.
|
|
SELECTED OPERATING DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
MINING OPERATIONS:
|
|
Production
|
|
Sales
|
|
|
COPPER (millions of
recoverable pounds)
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a
|
|
183
|
|
|
190
|
|
|
176
|
|
|
188
|
|
|
|
Bagdad (100%)
|
|
45
|
|
|
38
|
|
|
42
|
|
|
39
|
|
|
|
Safford (100%)
|
|
34
|
|
|
57
|
|
|
34
|
|
|
56
|
|
|
|
Sierrita (100%)
|
|
39
|
|
|
40
|
|
|
37
|
|
|
39
|
|
|
|
Miami (100%)
|
|
5
|
|
|
5
|
|
|
4
|
|
|
6
|
|
|
|
Chino (100%)
|
|
47
|
|
|
69
|
|
|
47
|
|
|
69
|
|
|
|
Tyrone (100%)
|
|
14
|
|
|
20
|
|
|
14
|
|
|
18
|
|
|
|
Other (100%)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
Total North America
|
|
367
|
|
|
420
|
|
|
354
|
|
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
256
|
|
|
293
|
|
|
259
|
|
|
307
|
|
|
|
El Abra (51%)
|
|
47
|
|
|
49
|
|
|
53
|
|
|
52
|
|
|
|
Total South America
|
|
303
|
|
|
342
|
|
|
312
|
|
|
359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b
|
|
337
|
|
|
369
|
|
|
351
|
|
|
352
|
|
|
|
Consolidated - continuing operations
|
|
1,007
|
|
|
1,131
|
|
|
1,017
|
|
c
|
1,127
|
|
c
|
|
Discontinued operations - Tenke Fungurume (Tenke) (56%)d
|
|
—
|
|
|
69
|
|
|
—
|
|
|
59
|
|
|
|
Total
|
|
1,007
|
|
|
1,200
|
|
|
1,017
|
|
|
1,186
|
|
|
|
Less noncontrolling interests
|
|
173
|
|
|
225
|
|
|
179
|
|
|
227
|
|
|
|
Net
|
|
834
|
|
|
975
|
|
|
838
|
|
|
959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound (continuing operations)
|
|
|
|
|
|
$
|
3.21
|
|
|
$
|
2.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOLD (thousands of recoverable
ounces)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
5
|
|
|
6
|
|
|
9
|
|
|
4
|
|
|
|
Indonesia (90.64%)b
|
|
562
|
|
|
424
|
|
|
584
|
|
|
401
|
|
|
|
Consolidated
|
|
567
|
|
|
430
|
|
|
593
|
|
|
405
|
|
|
|
Less noncontrolling interests
|
|
52
|
|
|
40
|
|
|
55
|
|
|
38
|
|
|
|
Net
|
|
515
|
|
|
390
|
|
|
538
|
|
|
367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
$
|
1,285
|
|
|
$
|
1,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOLYBDENUM (millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
3
|
|
|
3
|
|
|
N/A
|
|
N/A
|
|
|
Climax (100%)
|
|
5
|
|
|
4
|
|
|
N/A
|
|
N/A
|
|
|
North America copper mines (100%)a
|
|
8
|
|
|
8
|
|
|
N/A
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
6
|
|
|
7
|
|
|
N/A
|
|
N/A
|
|
|
Consolidated
|
|
22
|
|
|
22
|
|
|
24
|
|
|
22
|
|
|
|
Less noncontrolling interests
|
|
3
|
|
|
3
|
|
|
3
|
|
|
2
|
|
|
|
Net
|
|
19
|
|
|
19
|
|
|
21
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
9.79
|
|
|
$
|
8.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. OIL AND GAS OPERATIONSe:
|
|
Sales Volumes
|
|
Sales per Day
|
|
|
Oil (thousand barrels, or MBbls)
|
|
407
|
|
|
8,273
|
|
|
4
|
|
|
90
|
|
|
|
Natural gas (million cubic feet or MMcf)
|
|
2,418
|
|
|
12,852
|
|
|
26
|
|
|
140
|
|
|
|
Natural gas liquids (NGLs) (MBbls)
|
|
21
|
|
|
76
|
|
|
—
|
|
|
1
|
|
|
|
Thousand barrels of oil equivalents (MBOE)
|
|
831
|
|
|
10,492
|
|
|
9
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Amounts are net of Morenci's undivided joint venture partners'
interest.
|
|
|
|
|
|
|
|
|
|
|
|
b.
|
Amounts are net of Grasberg's joint venture partner's interest,
which varies in accordance with the terms of the joint venture
agreement.
|
|
|
|
|
|
|
|
|
|
|
|
c.
|
Consolidated sales volumes exclude purchased copper of 78
million pounds in fourth-quarter 2017 and 57 million pounds in
fourth-quarter 2016.
|
|
|
|
|
|
|
|
|
|
|
|
d.
|
On November 16, 2016, FCX completed the sale of its interest in
the Tenke mine.
|
|
|
|
|
|
|
|
|
|
|
|
e.
|
During 2016, FCX completed the sales of a majority of its oil
and gas properties.
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
MINING OPERATIONS:
|
|
Production
|
|
Sales
|
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
Morenci (72%)a
|
|
737
|
|
|
848
|
|
|
713
|
|
|
855
|
|
|
|
Bagdad (100%)
|
|
173
|
|
|
177
|
|
|
164
|
|
|
180
|
|
|
|
Safford (100%)
|
|
150
|
|
|
230
|
|
|
154
|
|
|
229
|
|
|
|
Sierrita (100%)
|
|
160
|
|
|
162
|
|
|
154
|
|
|
162
|
|
|
|
Miami (100%)
|
|
19
|
|
|
25
|
|
|
18
|
|
|
27
|
|
|
|
Chino (100%)
|
|
215
|
|
|
308
|
|
|
217
|
|
|
308
|
|
|
|
Tyrone (100%)
|
|
61
|
|
|
76
|
|
|
61
|
|
|
75
|
|
|
|
Other (100%)
|
|
3
|
|
|
5
|
|
|
3
|
|
|
5
|
|
|
|
Total North America
|
|
1,518
|
|
|
1,831
|
|
|
1,484
|
|
|
1,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
1,062
|
|
|
1,108
|
|
|
1,062
|
|
|
1,105
|
|
|
|
El Abra (51%)
|
|
173
|
|
|
220
|
|
|
173
|
|
|
227
|
|
|
|
Total South America
|
|
1,235
|
|
|
1,328
|
|
|
1,235
|
|
|
1,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b
|
|
984
|
|
|
1,063
|
|
|
981
|
|
|
1,054
|
|
|
|
Consolidated - continuing operations
|
|
3,737
|
|
|
4,222
|
|
|
3,700
|
|
c
|
4,227
|
|
c
|
|
Discontinued operations - Tenke (56%)d
|
|
—
|
|
|
425
|
|
|
—
|
|
|
424
|
|
|
|
Total
|
|
3,737
|
|
|
4,647
|
|
|
3,700
|
|
|
4,651
|
|
|
|
Less noncontrolling interests
|
|
670
|
|
|
909
|
|
|
670
|
|
|
910
|
|
|
|
Net
|
|
3,067
|
|
|
3,738
|
|
|
3,030
|
|
|
3,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound (continuing operations)
|
|
|
|
|
|
$
|
2.93
|
|
|
$
|
2.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
23
|
|
|
27
|
|
|
22
|
|
|
25
|
|
|
|
Indonesia (90.64%)b
|
|
1,554
|
|
|
1,061
|
|
|
1,540
|
|
|
1,054
|
|
|
|
Consolidated
|
|
1,577
|
|
|
1,088
|
|
|
1,562
|
|
|
1,079
|
|
|
|
Less noncontrolling interests
|
|
145
|
|
|
99
|
|
|
144
|
|
|
99
|
|
|
|
Net
|
|
1,432
|
|
|
989
|
|
|
1,418
|
|
|
980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
$
|
1,268
|
|
|
$
|
1,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
12
|
|
|
10
|
|
|
N/A
|
|
N/A
|
|
|
Climax (100%)
|
|
20
|
|
|
16
|
|
|
N/A
|
|
N/A
|
|
|
North America (100%)a
|
|
33
|
|
|
33
|
|
|
N/A
|
|
N/A
|
|
|
Cerro Verde (53.56%)
|
|
27
|
|
|
21
|
|
|
N/A
|
|
N/A
|
|
|
Consolidated
|
|
92
|
|
|
80
|
|
|
95
|
|
|
74
|
|
|
|
Less noncontrolling interests
|
|
13
|
|
|
9
|
|
|
12
|
|
|
6
|
|
|
|
Net
|
|
79
|
|
|
71
|
|
|
83
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
$
|
9.33
|
|
|
$
|
8.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. OIL AND GAS OPERATIONSe:
|
|
Sales Volumes
|
|
Sales per Day
|
|
|
Oil (MBbls)
|
|
1,797
|
|
|
34,371
|
|
|
5
|
|
|
94
|
|
|
|
Natural gas (MMcf)
|
|
15,767
|
|
|
65,085
|
|
|
43
|
|
|
178
|
|
|
|
NGLs (MBbls)
|
|
207
|
|
|
1,839
|
|
|
1
|
|
|
5
|
|
|
|
MBOE
|
|
4,632
|
|
|
47,058
|
|
|
13
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Amounts are net of Morenci's undivided joint venture partners'
interest; effective May 31, 2016, FCX's undivided interest in
Morenci was prospectively reduced from 85 percent to 72 percent.
The year 2016 includes approximately 60 million pounds of copper
from the 13 percent undivided interest in Morenci that FCX sold in
May 2016.
|
|
|
|
|
|
|
|
|
|
|
|
b.
|
Amounts are net of Grasberg's joint venture partner's interest,
which varies in accordance with the terms of the joint venture
agreement.
|
|
|
|
|
|
|
|
|
|
|
|
c.
|
Consolidated sales volumes exclude purchased copper of 273
million pounds for the year 2017 and 188 million pounds for the
year 2016.
|
|
|
|
|
|
|
|
|
|
|
|
d.
|
On November 16, 2016, FCX completed the sale of its interest in
the Tenke mine.
|
|
|
|
|
|
|
|
|
|
|
|
e.
|
During 2016, FCX completed the sales of a majority of its oil
and gas properties.
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
|
SELECTED OPERATING DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
100% North America Copper Mines
|
|
|
|
|
|
|
|
|
|
Solution Extraction/Electrowinning
(SX/EW) Operations
|
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
664,900
|
|
|
663,700
|
|
|
679,000
|
|
|
737,400
|
|
Average copper ore grade (percent)
|
|
0.27
|
|
|
0.30
|
|
|
0.28
|
|
|
0.31
|
|
Copper production (millions of recoverable pounds)
|
|
282
|
|
|
303
|
|
|
1,121
|
|
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
297,800
|
|
|
302,300
|
|
|
299,500
|
|
|
300,500
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
|
Copper
|
|
0.37
|
|
|
0.44
|
|
|
0.39
|
|
|
0.47
|
|
Molybdenum
|
|
0.02
|
|
|
0.03
|
|
|
0.03
|
|
|
0.03
|
|
Copper recovery rate (percent)
|
|
85.9
|
|
|
83.0
|
|
|
86.4
|
|
|
85.5
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
|
Copper
|
|
156
|
|
|
193
|
|
|
683
|
|
|
854
|
|
Molybdenum
|
|
9
|
|
|
10
|
|
|
36
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
|
|
|
|
SX/EW Operations
|
|
|
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
160,600
|
|
|
128,200
|
|
|
142,800
|
|
|
149,100
|
|
Average copper ore grade (percent)
|
|
0.36
|
|
|
0.43
|
|
|
0.37
|
|
|
0.41
|
|
Copper production (millions of recoverable pounds)
|
|
65
|
|
|
78
|
|
|
255
|
|
|
328
|
|
|
|
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
374,200
|
|
|
366,500
|
|
|
360,100
|
|
|
353,400
|
|
Average ore grades (percent):
|
|
|
|
|
|
|
|
|
|
Copper
|
|
0.43
|
|
|
0.43
|
|
|
0.44
|
|
|
0.43
|
|
Molybdenum
|
|
0.01
|
|
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
Copper recovery rate (percent)
|
|
76.7
|
|
|
85.1
|
|
|
81.2
|
|
|
85.8
|
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
|
|
|
Copper
|
|
238
|
|
|
264
|
|
|
980
|
|
|
1,000
|
|
Molybdenum
|
|
6
|
|
|
7
|
|
|
27
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day):a
|
|
|
|
|
|
|
|
|
|
Grasberg open pit
|
|
133,200
|
|
|
126,900
|
|
|
101,800
|
|
|
119,700
|
|
Deep Ore Zone underground mine
|
|
36,700
|
|
|
36,000
|
|
|
31,200
|
|
|
38,000
|
|
Deep Mill Level Zone (DMLZ) underground mineb
|
|
3,700
|
|
|
2,500
|
|
|
3,200
|
|
|
4,400
|
|
Grasberg Block Cave underground mineb
|
|
3,800
|
|
|
3,000
|
|
|
3,600
|
|
|
2,700
|
|
Big Gossan underground mineb
|
|
700
|
|
|
1,500
|
|
|
600
|
|
|
900
|
|
Total
|
|
178,100
|
|
|
169,900
|
|
|
140,400
|
|
|
165,700
|
|
Average ore grades:
|
|
|
|
|
|
|
|
|
|
Copper (percent)
|
|
1.03
|
|
|
1.08
|
|
|
1.01
|
|
|
0.91
|
|
Gold (grams per metric ton)
|
|
1.28
|
|
|
0.97
|
|
|
1.15
|
|
|
0.68
|
|
Recovery rates (percent):
|
|
|
|
|
|
|
|
|
|
Copper
|
|
91.8
|
|
|
92.0
|
|
|
91.6
|
|
|
91.0
|
|
Gold
|
|
85.2
|
|
|
83.7
|
|
|
85.0
|
|
|
82.2
|
|
Production (recoverable):
|
|
|
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
326
|
|
|
327
|
|
|
996
|
|
|
1,063
|
|
Gold (thousands of ounces)
|
|
562
|
|
|
397
|
|
|
1,554
|
|
|
1,061
|
|
|
|
|
|
|
|
|
|
|
|
100% Molybdenum Mines
|
|
|
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
22,300
|
|
|
20,000
|
|
|
22,500
|
|
|
18,300
|
|
Average molybdenum ore grade (percent)
|
|
0.19
|
|
|
0.18
|
|
|
0.20
|
|
|
0.21
|
|
Molybdenum production (millions of recoverable pounds)
|
|
8
|
|
|
7
|
|
|
32
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
a.
|
Amounts represent the approximate average daily throughput
processed at PT Freeport Indonesia's (PT-FI) mill facilities from
each producing mine and from development activities that result in
metal production.
|
|
|
b.
|
Targeted production rates once the DMLZ underground mine
reaches full capacity are expected to approximate 80,000 metric
tons of ore per day in 2021; production from the Grasberg Block
Cave underground mine is expected to commence in the first half of
2019, and production from the Big Gossan underground mine
restarted in fourth-quarter 2017.
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(In Millions, Except Per Share Amounts)
|
|
Revenuesa
|
|
$
|
5,041
|
|
|
$
|
4,377
|
|
|
$
|
16,403
|
|
|
$
|
14,830
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
Production and delivery
|
|
2,811
|
|
b
|
2,740
|
|
b
|
10,300
|
|
b,c
|
10,697
|
|
b
|
Depreciation, depletion and amortization
|
|
457
|
|
|
593
|
|
|
1,714
|
|
|
2,530
|
|
|
Metals inventory adjustments
|
|
—
|
|
|
9
|
|
b
|
8
|
|
b
|
36
|
|
b
|
Impairment of oil and gas properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,317
|
|
|
Total cost of sales
|
|
3,268
|
|
|
3,342
|
|
|
12,022
|
|
|
17,580
|
|
|
Selling, general and administrative expenses
|
|
118
|
|
|
199
|
|
b
|
484
|
|
b
|
607
|
|
b
|
Mining exploration and research expenses
|
|
33
|
|
|
18
|
|
|
94
|
|
|
64
|
|
|
Environmental obligations and shutdown costsd
|
|
170
|
|
|
2
|
|
|
251
|
|
|
20
|
|
|
Net (gain) loss on sales of assets
|
|
(15
|
)
|
|
113
|
|
|
(81
|
)
|
|
(649
|
)
|
|
Total costs and expenses
|
|
3,574
|
|
|
3,674
|
|
|
12,770
|
|
|
17,622
|
|
|
Operating income (loss)
|
|
1,467
|
|
|
703
|
|
|
3,633
|
|
|
(2,792
|
)
|
|
Interest expense, nete
|
|
(168
|
)
|
|
(181
|
)
|
|
(801
|
)
|
c
|
(755
|
)
|
|
Net gain (loss) on early extinguishment and exchanges of debt
|
|
13
|
|
|
(25
|
)
|
|
21
|
|
|
26
|
|
|
Other income (expense), net
|
|
13
|
|
|
(5
|
)
|
|
49
|
|
|
49
|
|
|
Income (loss) from continuing operations before income taxes and
equity in affiliated companies' net earnings
|
|
1,325
|
|
|
492
|
|
|
2,902
|
|
|
(3,472
|
)
|
|
Provision for income taxesf
|
|
(136
|
)
|
|
(292
|
)
|
|
(883
|
)
|
c
|
(371
|
)
|
|
Equity in affiliated companies' net earnings
|
|
4
|
|
|
2
|
|
|
10
|
|
|
11
|
|
|
Net income (loss) from continuing operations
|
|
1,193
|
|
|
202
|
|
|
2,029
|
|
|
(3,832
|
)
|
|
Net income (loss) from discontinued operationsg
|
|
16
|
|
|
(2
|
)
|
|
66
|
|
|
(193
|
)
|
|
Net income (loss)
|
|
1,209
|
|
|
200
|
|
|
2,095
|
|
|
(4,025
|
)
|
|
Net income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
(168
|
)
|
|
(81
|
)
|
|
(274
|
)
|
c
|
(227
|
)
|
|
Discontinued operations
|
|
—
|
|
|
(19
|
)
|
|
(4
|
)
|
|
(63
|
)
|
|
Gain on redemption and preferred dividends attributable to
redeemable noncontrolling interest
|
|
—
|
|
|
192
|
|
|
—
|
|
|
161
|
|
|
Net income (loss) attributable to FCX common stockh
|
|
$
|
1,041
|
|
|
$
|
292
|
|
|
$
|
1,817
|
|
|
$
|
(4,154
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share attributable to common stock:
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.70
|
|
|
$
|
0.22
|
|
|
$
|
1.21
|
|
|
$
|
(2.96
|
)
|
|
Discontinued operations
|
|
0.01
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
(0.20
|
)
|
|
|
|
$
|
0.71
|
|
|
$
|
0.21
|
|
|
$
|
1.25
|
|
|
$
|
(3.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
1,448
|
|
|
1,403
|
|
|
1,447
|
|
|
1,318
|
|
|
Diluted
|
|
1,455
|
|
|
1,410
|
|
|
1,454
|
|
|
1,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Revenues include adjustments to provisionally priced
concentrate and cathode copper sales recognized in prior periods,
which are summarized in the supplemental schedule, "Derivative
Instruments," on page IX. The fourth quarter and year 2016 also
include net noncash mark-to-market losses associated with oil
derivative contracts, which are summarized in the supplemental
schedule, “Adjusted Net Income,” on page VII.
|
b.
|
Includes net charges at mining and oil and gas operations,
which are summarized in the supplemental schedule, “Adjusted Net
Income,” on page VII.
|
c.
|
Includes net charges of $186 million associated with disputed
Cerro Verde royalties for prior years, consisting of $203 million
to production and delivery costs, $145 million to interest expense
and $7 million to provision for income taxes, net of $169 million
to noncontrolling interests.
|
d.
|
The increase in the fourth quarter and year 2017, compared to
the 2016 periods, primarily reflects adjustments to environmental
obligations resulting from revised cost estimates.
|
e.
|
Consolidated interest costs (before capitalization and
excluding interest expense associated with disputed Cerro Verde
royalties) totaled $194 million in fourth-quarter 2017, $207
million in fourth-quarter 2016, $777 million for the year 2017 and
$854 million for the year 2016.
|
f.
|
Refer to the supplemental schedule, "Income Taxes," on page
VIII for a summary of FCX's provision for income taxes.
|
g.
|
Refer to the supplemental schedule, “Adjusted Net Income,” on
page VII for a summary of gains (losses) from discontinued
operations.
|
h.
|
FCX defers recognizing profits on intercompany sales until
final sales to third parties occur. Refer to the supplemental
schedule, "Deferred Profits," on page IX for a summary of net
impacts from changes in these deferrals.
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
|
(In Millions)
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,447
|
|
|
$
|
4,245
|
|
Trade accounts receivable
|
|
1,246
|
|
|
1,126
|
|
Income and other tax receivables
|
|
325
|
|
|
879
|
|
Inventories:
|
|
|
|
|
Mill and leach stockpiles
|
|
1,422
|
|
|
1,338
|
|
Materials and supplies, net
|
|
1,305
|
|
|
1,306
|
|
Product
|
|
1,166
|
|
|
998
|
|
Other current assets
|
|
270
|
|
|
199
|
|
Held for sale
|
|
598
|
|
|
344
|
|
Total current assets
|
|
10,779
|
|
|
10,435
|
|
Property, plant, equipment and mine development costs, net
|
|
22,836
|
|
|
23,219
|
|
Oil and gas properties, subject to amortization, less accumulated
amortization and impairments
|
|
8
|
|
|
74
|
|
Long-term mill and leach stockpiles
|
|
1,409
|
|
|
1,633
|
|
Other assets
|
|
2,270
|
|
|
1,956
|
|
Total assets
|
|
$
|
37,302
|
|
|
$
|
37,317
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,321
|
|
|
$
|
2,393
|
|
Current portion of debt
|
|
1,414
|
|
|
1,232
|
|
Accrued income taxes
|
|
565
|
|
|
66
|
|
Current portion of environmental and asset retirement obligations
|
|
388
|
|
|
369
|
|
Held for sale
|
|
350
|
|
|
205
|
|
Total current liabilities
|
|
5,038
|
|
|
4,265
|
|
Long-term debt, less current portion
|
|
11,703
|
|
|
14,795
|
|
Deferred income taxes
|
|
3,622
|
|
|
3,768
|
|
Environmental and asset retirement obligations, less current portion
|
|
3,631
|
|
|
3,487
|
|
Other liabilities
|
|
2,012
|
|
|
1,745
|
|
Total liabilities
|
|
26,006
|
|
|
28,060
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
|
158
|
|
|
157
|
|
Capital in excess of par value
|
|
26,751
|
|
|
26,690
|
|
Accumulated deficit
|
|
(14,722
|
)
|
|
(16,540
|
)
|
Accumulated other comprehensive loss
|
|
(487
|
)
|
|
(548
|
)
|
Common stock held in treasury
|
|
(3,723
|
)
|
|
(3,708
|
)
|
Total stockholders' equity
|
|
7,977
|
|
|
6,051
|
|
Noncontrolling interests
|
|
3,319
|
|
|
3,206
|
|
Total equity
|
|
11,296
|
|
|
9,257
|
|
Total liabilities and equity
|
|
$
|
37,302
|
|
|
$
|
37,317
|
|
|
|
|
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2017
|
|
2016
|
|
|
(In Millions)
|
Cash flow from operating activities:
|
|
|
|
|
Net income (loss)
|
|
$
|
2,095
|
|
|
$
|
(4,025
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
Depreciation, depletion and amortization
|
|
1,714
|
|
|
2,610
|
|
U.S. tax reform benefit
|
|
(393
|
)
|
|
—
|
|
Net charges for Cerro Verde royalty dispute
|
|
355
|
|
|
—
|
|
Payments for Cerro Verde royalty dispute
|
|
(53
|
)
|
|
(30
|
)
|
Impairment of oil and gas properties
|
|
—
|
|
|
4,317
|
|
Oil and gas non-cash drillship settlement costs and other adjustments
|
|
(33
|
)
|
|
803
|
|
Net gain on sales of assets
|
|
(81
|
)
|
|
(649
|
)
|
Stock-based compensation
|
|
71
|
|
|
86
|
|
Net charges for environmental and asset retirement obligations,
including accretion
|
|
383
|
|
|
191
|
|
Payments for environmental and asset retirement obligations
|
|
(131
|
)
|
|
(242
|
)
|
Net charges for defined pension and postretirement plans
|
|
120
|
|
|
113
|
|
Pension plan contributions
|
|
(174
|
)
|
|
(57
|
)
|
Net gain on early extinguishment and exchanges of debt
|
|
(21
|
)
|
|
(26
|
)
|
Deferred income taxes
|
|
76
|
|
|
239
|
|
(Gain) loss on disposal of discontinued operations
|
|
(57
|
)
|
|
198
|
|
Decrease in long-term mill and leach stockpiles
|
|
224
|
|
|
10
|
|
Oil and gas contract settlement payments
|
|
(70
|
)
|
|
—
|
|
Other, net
|
|
68
|
|
|
104
|
|
Changes in working capital and tax payments, excluding disposition
amounts:
|
|
|
|
|
Accounts receivable
|
|
427
|
|
|
(175
|
)
|
Inventories
|
|
(393
|
)
|
|
117
|
|
Other current assets
|
|
(28
|
)
|
|
37
|
|
Accounts payable and accrued liabilities
|
|
110
|
|
|
(28
|
)
|
Accrued income taxes and timing of other tax payments
|
|
473
|
|
|
136
|
|
Net cash provided by operating activities
|
|
4,682
|
|
|
3,729
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
North America copper mines
|
|
(167
|
)
|
|
(102
|
)
|
South America
|
|
(115
|
)
|
|
(382
|
)
|
Indonesia
|
|
(875
|
)
|
|
(1,025
|
)
|
Molybdenum mines
|
|
(5
|
)
|
|
(2
|
)
|
Other, including oil and gas operations
|
|
(248
|
)
|
|
(1,302
|
)
|
Proceeds from sales of:
|
|
|
|
|
Interest in TF Holdings Limited
|
|
—
|
|
|
2,664
|
|
Deepwater GOM and onshore California oil and gas properties
|
|
—
|
|
|
2,272
|
|
Additional interest in Morenci
|
|
—
|
|
|
996
|
|
Other assets
|
|
72
|
|
|
423
|
|
Other, net
|
|
(25
|
)
|
|
8
|
|
Net cash (used in) provided by investing activities
|
|
(1,363
|
)
|
|
3,550
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
Proceeds from debt
|
|
955
|
|
|
3,681
|
|
Repayments of debt
|
|
(3,812
|
)
|
|
(7,625
|
)
|
Net proceeds from sale of common stock
|
|
—
|
|
|
1,515
|
|
Cash dividends paid:
|
|
|
|
|
Common stock
|
|
(2
|
)
|
|
(6
|
)
|
Noncontrolling interests
|
|
(174
|
)
|
|
(693
|
)
|
Stock-based awards net payments
|
|
(10
|
)
|
|
(6
|
)
|
Debt financing costs and other, net
|
|
(12
|
)
|
|
(32
|
)
|
Net cash used in financing activities
|
|
(3,055
|
)
|
|
(3,166
|
)
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
264
|
|
|
4,113
|
|
Increase in cash and cash equivalents in assets held for sale
|
|
(62
|
)
|
|
(45
|
)
|
Cash and cash equivalents at beginning of year
|
|
4,245
|
|
|
177
|
|
Cash and cash equivalents at end of year
|
|
$
|
4,447
|
|
|
$
|
4,245
|
|
|
|
|
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
ADJUSTED NET INCOME
|
|
Adjusted net income is intended to provide investors and others
with information about FCX's recurring operating performance. This
information differs from net income (loss) attributable to common
stock determined in accordance with U.S. generally accepted
accounting principles (GAAP) and should not be considered in
isolation or as a substitute for measures of performance
determined in accordance with U.S. GAAP. FCX's adjusted net income
follows, which may not be comparable to similarly titled measures
reported by other companies (in millions, except per share
amounts).
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
|
Per Share
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
|
Per Share
|
Net income attributable to common stock
|
|
N/A
|
|
|
$
|
1,041
|
|
|
|
$
|
0.71
|
|
|
|
N/A
|
|
|
$
|
292
|
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net mining charges
|
|
(21
|
)
|
b
|
|
(18
|
)
|
|
|
(0.01
|
)
|
|
|
(25
|
)
|
|
|
(15
|
)
|
|
|
(0.01
|
)
|
Oil and gas restructuring and other net credits (costs)
|
|
5
|
|
|
|
5
|
|
|
|
—
|
|
|
|
(39
|
)
|
c
|
|
(39
|
)
|
|
|
(0.02
|
)
|
Oil and gas idle rig costs/drillship settlements
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(103
|
)
|
|
|
(103
|
)
|
|
|
(0.07
|
)
|
Net noncash mark-to-market losses on oil derivative contracts
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(41
|
)
|
|
|
(41
|
)
|
|
|
(0.03
|
)
|
Net adjustments to environmental obligations and related litigation
reserves
|
|
(157
|
)
|
|
|
(157
|
)
|
|
|
(0.11
|
)
|
|
|
5
|
|
|
|
5
|
|
|
|
—
|
|
Net gain (loss) on sales of assets
|
|
15
|
|
|
|
15
|
|
|
|
0.01
|
|
|
|
(113
|
)
|
|
|
(108
|
)
|
|
|
(0.08
|
)
|
Net gain (loss) on early extinguishment and exchanges of debt
|
|
13
|
|
|
|
13
|
|
|
|
0.01
|
|
|
|
(25
|
)
|
|
|
(25
|
)
|
|
|
(0.02
|
)
|
Net tax creditsd
|
|
N/A
|
|
|
417
|
|
|
|
0.29
|
|
|
|
N/A
|
|
|
84
|
|
|
|
0.06
|
|
Gain (loss) on discontinued operations
|
|
16
|
|
e
|
|
16
|
|
|
|
0.01
|
|
|
|
(16
|
)
|
|
|
(16
|
)
|
|
|
(0.01
|
)
|
Gain on redemption of redeemable noncontrolling interest
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
199
|
|
|
|
199
|
|
|
|
0.14
|
|
|
|
$
|
(129
|
)
|
|
|
$
|
291
|
|
|
|
$
|
0.20
|
|
|
|
$
|
(158
|
)
|
|
|
$
|
(59
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
N/A
|
|
|
$
|
750
|
|
|
|
$
|
0.51
|
|
|
|
N/A
|
|
|
$
|
351
|
|
|
|
$
|
0.25
|
|
|
|
Years Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
|
Per Share
|
|
|
Pre-tax
|
|
|
After-taxa
|
|
Per Share
|
Net income (loss) attributable to common stock
|
|
N/A
|
|
|
$
|
1,817
|
|
|
|
$
|
1.25
|
|
|
|
N/A
|
|
|
$
|
(4,154
|
)
|
|
$
|
|
(3.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde royalty disputef
|
|
$
|
(348
|
)
|
|
|
$
|
(186
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
|
—
|
|
PT-FI net charges for workforce reductions
|
|
(125
|
)
|
g
|
|
(66
|
)
|
|
|
(0.04
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Metals inventory adjustments and other net mining charges
|
|
(46
|
)
|
|
|
(40
|
)
|
|
|
(0.03
|
)
|
|
|
(69
|
)
|
|
|
(50
|
)
|
|
(0.04
|
)
|
Oil and gas inventory adjustments, asset impairment and other net
charges
|
|
(11
|
)
|
c
|
|
(11
|
)
|
|
|
(0.01
|
)
|
|
|
(196
|
)
|
c
|
|
(196
|
)
|
|
(0.14
|
)
|
Oil and gas drillship settlements/idle rig credits (costs)
|
|
24
|
|
|
|
24
|
|
|
|
0.02
|
|
|
|
(926
|
)
|
|
|
(926
|
)
|
|
(0.70
|
)
|
Impairment of oil and gas properties
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,317
|
)
|
|
|
(4,317
|
)
|
|
(3.28
|
)
|
Net noncash mark-to-market losses on oil derivative contracts
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(41
|
)
|
|
|
(41
|
)
|
|
(0.03
|
)
|
Net adjustments to environmental obligations and related litigation
reserves
|
|
(210
|
)
|
|
|
(210
|
)
|
|
|
(0.14
|
)
|
|
|
16
|
|
|
|
16
|
|
|
0.01
|
|
Net gain on sales of assets
|
|
81
|
|
|
|
81
|
|
|
|
0.06
|
|
|
|
649
|
|
|
|
649
|
|
|
0.49
|
|
Net gain on early extinguishment and exchanges of debt
|
|
21
|
|
|
|
21
|
|
|
|
0.01
|
|
|
|
26
|
|
|
|
26
|
|
|
0.02
|
|
Net tax creditsd
|
|
N/A
|
|
|
438
|
|
|
|
0.30
|
|
|
|
N/A
|
|
|
374
|
|
|
0.28
|
|
Gain (loss) on discontinued operations
|
|
70
|
|
e
|
|
62
|
|
|
|
0.04
|
|
|
|
(198
|
)
|
|
|
(198
|
)
|
|
(0.15
|
)
|
Gain on redemption of redeemable noncontrolling interest
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
199
|
|
|
|
199
|
|
|
0.15
|
|
|
|
$
|
(544
|
)
|
|
|
$
|
113
|
|
|
|
$
|
0.08
|
|
|
|
$
|
(4,857
|
)
|
|
|
$
|
(4,464
|
)
|
|
$
|
|
(3.39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to common stock
|
|
N/A
|
|
|
$
|
1,704
|
|
|
|
$
|
1.17
|
|
|
|
N/A
|
|
|
$
|
310
|
|
|
$
|
|
0.23
|
|
a.
|
Reflects impact to FCX net income (loss) attributable to common
stock (i.e., net of any taxes and noncontrolling interests).
|
b.
|
Primarily reflects net charges at Cerro Verde for tax related
matters, including $11 million to production and delivery costs
and $8 million to interest expense.
|
c.
|
Includes net charges in selling, general and administrative
expenses totaling $17 million for the year 2017 for contract
termination costs and $47 million in fourth-quarter 2016 and $85
million for the year 2016 for restructuring.
|
d.
|
Refer to “Income Taxes,” on page VIII, for further discussion
of net tax credits.
|
e.
|
Primarily reflects adjustments to the estimated fair value of
the potential $120 million in contingent consideration related to
the 2016 sale of FCX’s interest in TFHL, which totaled $74 million
at December 31, 2017, and will continue to be adjusted through
December 31, 2019.
|
f.
|
Refer to “Consolidated Statements of Operations,” on page IV
for a summary of these amounts.
|
g.
|
Includes net charges in selling, general and administrative
expenses totaling $5 million.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180125005573/en/
Source: Freeport-McMoRan Inc.