Freeport-McMoRan Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 24, 2025
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Operator

I would now like to turn the conference over to Mr.

Operator

David Joint, Vice President, Investor Relations. Please go ahead, sir.

David Joint
David Joint
VP-IR at Freeport-McMoRan

Thank you, Regina, and good morning, everyone. Welcome to the Freeport McMoran conference call. Earlier this morning, FCX reported first quarter twenty twenty five operating and financial results. A copy of today's release with supplemental schedules and slides are available on our website, fcx.com. Today's conference call is being broadcast live on the Internet.

David Joint
David Joint
VP-IR at Freeport-McMoRan

Anyone may listen to the conference call by accessing our website homepage and clicking on the webcast link. In addition to analysts and investors, the financial press has been invited to listen to today's call. A replay of the webcast will be available on our website later today. Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include non GAAP measures and forward looking statements, and actual results may differ materially. Please refer to the cautionary language in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website.

David Joint
David Joint
VP-IR at Freeport-McMoRan

Also on the call with me today are Richard Actresson, Chairman of the Board of FCX Kathleen Quirk, President and Chief Executive Officer Marie Robertson, Executive Vice President and Chief Financial Officer and other senior members of our management team. Richard will make some opening remarks, Kathleen and Marie will review our slide materials, and then we'll open up the call for

David Joint
David Joint
VP-IR at Freeport-McMoRan

questions. Richard?

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

Thank you, David, and thank you all for joining us. Kathleen and our team will review the details of the quarter and our outlook. Team Freeport is executing well in a complex environment. Over the years, we've got a lot of experience in doing just that, facing problems with resilience and relentlessness and successfully executing our plans. Government policy and tariffs are dominating financial markets.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

At Freeport, we are focused on the basics to drive long term value. Our strategy has been clear for many years, centered on being a global leader in copper. We have built our business with large scale copper producing assets and a long term pipeline of organic growth projects supported by strong balance sheet and a clearly articulated financial policy. This strategy places Freeport in a strong position with where the world is heading. Copper is an essential metal for the future and Freeport is foremost in copper.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

We also have significant financial exposure to gold and the world class molybdenum business. Kathleen and our senior management team are engaged in important initiatives to support this strategy. As you will see, we're making significant positive progress. Our team is driving efficiencies and reducing cost, while setting up the next generation of copper development projects, which will have attractive returns for shareholders by delivering more copper to a world with increasing requirements. Our Freeport team's accomplishments in Indonesia are striking in the upstream mining at the Grasberg District and with our massively expanded downstream processing and refining.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

The smelter is progressing ahead of our earlier targets. We are honored that Indonesia's President, but Pravov inaugurated our Pressure Metals refinery in March. ETF '5 celebrated its fifty eighth anniversary in Indonesia this month. My first trip in Indonesia was thirty five years ago. I am delighted with our current positive relationship with the government under President Pribola's leadership.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

We are well positioned in working together to secure long term operating rights for this incredible asset. It's the world's second largest copper mine and one of the world's largest gold mines. All of this would generate large values for all stakeholders for decades to come. Kathleen?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you, Richard. And I'm going to start on Slide three with our first quarter highlights, where production of copper and gold were in line with our expectations going into the year, incorporating planned maintenance activities at Grasberg. We exceeded expectations on copper sales. And as as we flagged in our March 31 update, our gold shipments were impacted by timing. Unit costs were similar to what we guided to in January for the quarter and a bit better than our late March update, and we generated $1,900,000,000 in EBITDA with expectations that margins and cash flows will benefit from improved results in the balance of the year.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Importantly, our annual sales guidance is on track, and we expect operating and financial performance to improve significantly in the balance of the year. To put this in context, compared with the first quarter levels, our quarterly copper sales volumes are expected to average about 20% more in the balance of the year. Gold sales are expected to average nearly four times the first quarter rates and unit net cash costs are expected to be 30% lower on average in the remaining quarters. This will drive strong performance and free cash flow in the balance of 2025 and continuing over the next several years. Other notable highlights in the quarter include solid progress on the smelter with repairs tracking ahead of plan, continued momentum on our low cost leach innovation projects in The U.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

S, the premium we are receiving on our US copper sales, which we'll talk more about, favorable gold pricing and the advancement of optionality in our organic growth portfolio. We're well positioned for the future as a leader in the global copper industry, and we remain focused on operational excellence and our innovative and exciting growth pipeline to drive our future results. We took advantage of recent market volatility as you see and year to date have repurchased 2,300,000.0 shares in the open market for approximately $80,000,000 On the next slide, slide four, we are summarizing our priorities for 2025. We covered these on our January call, and these areas are defining our everyday pursuit of value creation. The first one is executing our plans safely and efficiently.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

That remains a top priority. Team Freeport has a history of strong execution, delivering on our plan volumes, cost targets, and capital projects safely and efficiently while seeking opportunities to capture upside values. Given inflationary pressures in recent years, we're particularly focused on aggressive cost management and driving our costs lower, particularly in The US. A second key focus area is scaling the leach opportunity. We've talked a lot about that in recent years.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Achievement of our targets will significantly enhance margins and profitability. We continue to target a 40% increase in our run rate to achieve £300,000,000 per annum by the end of the year and on our path to £800,000,000 per annum in the future. Third is the PTFI smelter. The team has expedited the repair process and set us up for start up by the May. That's about one month sooner than the earlier schedule.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Our startup has been derisked, and success here will be beneficial as we work to extend our operating rights long term in Indonesia. We see innovation as a major value driver for our business. We're pursuing aggressively new tools to enable better productivity and cost performance, and we're continuing to build optionality in our growth portfolio for the next generation of copper producing assets. We have key milestones identified at three major projects that we're pursuing in The Americas. Turning to the copper markets, we've got some commentary on slide five.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

The market fundamentals remain positive, and that's underpinned by copper's increasing use in the global economy to drive electrification. Copper prices during the quarter traded between $3.94 per pound and $4.53 per pound on the London Metals Exchange and reached a new high of $5.22 per pound on the US COMEX Exchange in March. US tariff policy has heavily influenced sentiment on the global economy in recent weeks, but the facts are that copper demand remains strong globally and benefits from the secular trends and major new investments in power infrastructure, technology, decarbonization, and transportation. The US remains strong, supported by rising demand for electrical power, and we are seeing improving demand trends in China, which has been particularly strong year to date, and also green shoots in Europe. The fundamentals of the copper markets are among the most compelling of any commodity.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

While macro sentiment impacts short term pricing, we recognize that market analysts expect a tight market in 2025 and are projecting demand growth to outpace available supplies as we go forward. Freeport is in a great position to increase volumes in the coming years to meet rising demand. We'll talk about on Slide six, the U. S. Copper pricing and the premiums currently priced in to The US copper market.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We present information on regional premiums and The ongoing US investigation on copper for considering a potential tariff. In late February, the Trump administration issued an executive order identifying copper as a critical material and instructing the secretary of commerce to conduct an investigation into the copper market and the impact of imports on national security. The US currently imports approximately half of its copper requirements. The domestic supplies in The US, the rest of them are majority produced by Freeport. The investigation, is expected to be completed by November and potentially sooner, will also cover recommendations to provide incentives to increase domestic production and policies to strengthen The US copper supply chain, including permitting reforms.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

While copper is currently exempt from the new tariffs, the outcome of this investigation may lead to tariffs on imported copper, and markets have begun to price in a potential tariff as you can see from the growing US premium. For background, the reference price for Freeport's international operations utilize the London Metals Exchange. And in The U. S, which comprises about one third of our copper sales, our sales contracts are based on the COMEX exchange prices pricing. Historically, the pricing on the two exchanges have been similar.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

But in recent months, The US pricing has reflected market expectations for a tariff on US imports, and this premium has widened over time and is currently approximately 13% above LME. This equates to about 57¢ per pound as of yesterday, and that premium currently implies an approximate $800,000,000 bottom line annual financial benefit on Freeport's US copper sales. For reference, the tariff on steel and aluminum is 25% compared to the current market premium of 13% for copper. As Freeport has not taken a position on whether or not copper tariffs should be imposed, but we have highlighted in our public comment submission some of the items for consideration, including the potential broader impact of tariffs on the economy, inflation, and where US domestic copper production is currently placed on the global cost curve. We also highlighted in our comments the importance of Freeport to US copper supply, the critical role we play in supplying 70% of The US domestically sourced refined copper, and the opportunity we have at Freeport for US brownfield growth in copper supplies.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

In the next slide,

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

we we

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

highlight Freeport as America's copper champion, and we appreciate the administration's recognition of copper as a critical mineral and the actions by the US government to provide permitting reforms and incentives to boost domestic production. Freeport is an iconic American copper producer and is by far the largest contributor to The US copper market with an established and successful franchise dating back to the late eighteen hundreds. We employ a large workforce of thirty thirty nine thousand, people, including contractors, mostly in rural commune communities in The US, and have earned the trust of the communities where we operate in the Southwestern United States and with our US copper customers, some of whom have placed trust in us to source all of their copper requirements. Our operations in The United States are fully integrated with mines and smelting and refining facilities and innovative leach processes that efficiently produce refined cathode. Freeport is well positioned to grow in The U.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

S. As you'll see from our pipeline. We've got sizable resource position and brownfield expansion opportunities. Turning to our global operations for the first quarter on Slide eight, we'll provide some operating highlights by geographic region. Starting with The U.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

S, we continue to make progress on enhancing efficiencies and improving costs and margins. Our operating teams are benefiting from data analytics to identify the highest value opportunity for efficiency gains and to assist in decision making to eliminate efficiency losses. On the cost front, improved retention of our of our workforce has allowed us to rebuild skills within our workforce with lower reliance on more expensive contractors. As an example, contractor hours at Morenci, our largest mine in The US, are down about 20% over the last few quarters. As we look forward, we expect production in The US to increase in 2025 compared to 2024 and also to increase further in 2026 and 2027.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Absent changes in commodity based input costs, we're targeting unit costs to trend lower each year over this three year period. Our autonomous haul truck conversion at Baghdad is going very well. That is going to allow us to test the potential for this application for potential use at other locations in The US. At Baghdad, we've already converted 12 of 33 autonomous trucks. We have them in service now, and we expect to have the balance in service over the next several months.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We are confident in further scaling in our innovative leach program. We've got several projects underway using existing technologies to achieve our targeted 40% increase in run rate to £300,000,000 per annum of low cost copper by year end 2025. We're also integrating new technology and automation to optimize performance in our basic mining functions and believe there is significant potential for value creation through meaningful cost reduction, which would enhance margins and expand reserves from known mineralization, which is currently economically limited under our current reserve pricing. We can do this through further using and integrating new technology into our basic operations. We're also continuing to follow and pursue the potential for US legislation to recognize copper as a critical mineral and bring eligibility consistent with other critical minerals for a potential tax credit of 10% of our operating costs in The US.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Turning to South America, the team at our Cerro Verde operation posted another solid quarter with improved mill rates, better recoveries, and higher molybdenum volumes that helped us mitigate the impact of lower ore grades. Our unit net cash costs in the quarter were $0.20 per pound lower than the comparable quarter last year. At Alabra in Chile, we are positive about testing an initiative to add heat to our leach process, which has promised to provide incremental near term production. And we continue to advance a major project at El Abra in partnership with Codelco, which would capitalize on a large resource we have defined and bring substantial scale and operating efficiencies to this high class mine. In Indonesia, as we've already discussed, our operating rates in the quarter were impacted by maintenance on one of our SAG mills that resulted in a 25% reduction in mill rates during the quarter.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

The maintenance work was timed to coincide with our work to extend our export permit, which was received in mid March. As we look forward, we expect strong production from Grasberg in the balance of the year with 2025 annual sales of 1,600,000,000 pounds of copper and 1,600,000 ounces of gold at a net cash credit of $0.47 per pound, meaning our our gold revenues will more than offset all of our production costs. The team has made outstanding progress in completing the smelter repairs, and as I mentioned, we're a bit ahead of schedule. The precious metals refinery, as Richard referenced, was inaugurated by the president of Indonesia in March and is ramping up to full capacity. The successful completion of these projects position us to advance approval for extension of our operating rights in the second half of this year.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Turning to our growth, which we're really excited about. As we look forward, we see a world that will require additional copper supplies to support energy infrastructure, new technologies, and more advanced societies. And Freeport is really well positioned, with an extensive copper resource position and a broad range of projects in various stages of development. These initiatives, as you can see from this chart on slide nine, total 2,500,000,000 pounds of copper per annum, and those can be developed from Freeport's known resources in jurisdictions where we have established history and experience. Our projects in Indonesia also have the benefit of high gold content that go along with the copper, so they really are supercharged from a from an economic standpoint.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Because all of these projects are brownfield in nature, we benefit from leveraging existing infrastructure, experienced workforces, and relationships with key stakeholders to move more quickly with less risk than a greenfield project. In The US, these projects include the incremental leach volumes of £600,000,000 per annum. As I mentioned, we're already hit the initial target of 200 and are going to £800,000,000 pounds per annum over the next three to five years. The Baghdad expansion, which we're we're we're currently evaluating, and potential expansion to double the production in the Safford Lone Star District, which is a an enormous district with enormous amounts of of copper that we're excited about the future on. In South America, we and our partner, Codelco, are planning a major expansion at Alabra through the addition of a new concentrator, which would provide 750,000,000 pounds of incremental copper per annum.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We're in the process of completing a permit application, and we expect to file the application by the end of this year. In Indonesia, after successfully developing several world class underground ore bodies. We're now progressing development of the Cuchin Liard development, and we expect to commence production here by the, end of this decade by 2030. We're also conducting additional exploration below our existing deep end MLZ ore body, and we expect that an extension of our operating rights beyond 2041 will set up for additional long term development options in this highly attractive district. Our objective is to move quickly to define the opportunities and value potential and allocate capital on a risk reward basis to provide profitable growth options for the future.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

There are additional details on these projects on Slide 25 in the reference materials. As usual, we will continue to be disciplined in our approach, targeting opportunities that enhance long term value. Several of these projects are in advanced stages, particularly the Leach initiative where we can have near term impacts. We're providing near term low cost of incremental pounds, and then we've also have medium term opportunities and longer term optionality in our portfolio. I'd now like to ask Marie Robertson to review our financial outlook, and then we'll take your questions.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Marie?

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

Thanks, Kathleen. Just moving to slide 10, we show our three year outlook for sales volumes of copper, gold, and molybdenum. Our guidance for the three year period is consistent with our previous estimates. And for 2025, the US represents 33% of our consolidated copper sales. South America, around 27%, and Indonesia, approximately 40%.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

And as Kathleen mentioned earlier, continued success in our leaching initiative would provide upside to these estimates. On slide 22 of the reference materials, we provide quarterly forecast, which shows sales in the balance of the year substantially higher than first quarter levels. Our current estimate for unit net unit costs for the full year 2025 using $3,000 for gold and $20 for moly is approximately a dollar 50 per pound, lower than our previous guidance of a dollar 60 per pound. Unit costs in the balance of the year reflect improved operating rates compared with the first quarter. The details of the costs by region are presented on Slide 21 in the reference materials.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

Moving to slide 11, putting together our projected volumes and cost estimates, we show modeled results for EBITDA and cash flow at various copper prices ranging from $4 per pound to $5 per pound. These model results using the average of 2026 and 2027 with current volume and cost estimates and holding gold flat at $3,000 per ounce and the lignum flat at $20 per pound. Annual EBITDA would range from over $11,000,000,000 per annum at $4 copper to over $15,000,000,000 per annum at $5 copper, with operating cash flows ranging from $8,000,000,000 per year at $4 to over $11,000,000,000 at $5 copper. These estimates assume no premium on our US copper asset, copper sales. If we apply the current premium of 13%, our EBITDA and operating cash flows would increase by approximately $800,000,000 per annum.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

We show sensitivities to various commodities on the right. You will note we are highly leveraged to copper prices with each 10¢ per pound change equating to approximately $425,000,000 in annual EBITDA. We will also benefit from improving gold prices with each hundred dollar per ounce change in price approximating a hundred and $50,000,000 in annual EBITDA. With our long life reserves and large scale production, we are well positioned to generate substantial cash flow to fund future organic growth and cash returns under our performance based payout framework. Slide 12 shows our current forecast for capital expenditures in 2025 and 2026.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

Again, expenditures are similar to our previous guidance, expected to approximate $4,400,000,000 in 2025 and 2026. The discretionary projects approximated a billion dollars in 2024 and are expected to approximate 1.6 to 1 point 7 billion dollars per year in 2025 and 2026, with roughly 50% related to the Kuching Liard development and the LNG project at Grasberg. The balance includes acceleration of tailings and other infrastructure to support the Baghdad expansion, the Atlantic Copper Circular Project, which is expected to be completed in the first half of twenty twenty six, and allocated capitalized interest. The discretionary cap category reflects the capital investments we're making in new value enhancing projects that under our financial policy are funded with the 50% of available cash that is not distributed. These projects, which are detailed on slide 30 in the reference materials, will benefit our results in the future, and we'll continue to be disciplined in allocating capital to projects that enhance our position and generate attractive returns.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

This is consistent with our track record of efficient capital allocation and value driven approach. On slide 13, we reiterate the financial policy priorities centered on a strong balance sheet, cash returns to shareholders, and investments in value enhancing growth projects. Our balance sheet is solid with investment grade ratings, solid credit metrics, and flexibility within our debt targets to execute on our projects. We do not have any significant debt maturities until 2027. In addition to paying our first quarter base and variable dividend, we have repurchased $80,000,000 of SCF's common stock in the open market year to date.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

In total, we have distributed $5,000,000,000 to shareholders through dividends and share purchases since adopting our financial policy of returning 50% of excess cash flow in 2021. And we have an attractive future long term portfolio, as we've previously discussed, that will enable us to continue to build long term value for shareholders with the remaining 50. We actively monitor current market conditions and carefully manage the timing of our projects to ensure our financial flexibility remains strong. Our global team is focused on driving value in our business, committed to strong execution of our plans, providing cash to invest in profitable growth, and return cash to shareholders. And just on slide 14, in concluding today's presentation, Freeport's large scale, our proven producing assets, actionable low risk growth, leadership in the global copper industry, significant exposure to a rising gold price, and an advantageous US footprint all provide a strong foundation for the future.

Maree Robertson
Maree Robertson
EVP & CFO at Freeport-McMoRan

Thanks for your attention. I'll now hand it back to Kathleen, and we'll take your questions.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you, Marie. We're ready for questions.

Operator

Ladies and gentlemen, we will now begin the question and answer session. If your question has been answered or you wish to remove yourself from the queue, please press star one again. If you are using a speakerphone, please pick up your handset before pressing the numbers. We ask that you limit your questions to one. And the first question comes from Carlos De Alba with Morgan Stanley.

Operator

Your line is open.

Carlos de Alba
Carlos de Alba
Analyst at Morgan Stanley

Yes. Good morning, everyone. Thank you very much. Kathleen, I wanted to check with you what is the expected cost reduction or efficiency gains in terms of volumes that you would expect for the Baghdad autonomous haulage system when it is fully in place and running at capacity? A range would be quite useful just to get a sense of the potential lift in results.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you, Carlos. We're really excited about what the autonomous haulage will allow us to do at Baghdad. This was one of the sites that we had struggled with over the pandemic period in keeping staffing levels. And and with high rates of turnover there in this very remote location, it it it affected our cost structure and our efficiencies. And so what we see here is with this project done, it'll reduce the amount of of people we need to hire for an expansion, and it'll leverage, you know, leverage us to be able to get consistent and safe results without, you know, without having to hire hire people.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

So the project itself has an attractive rate of return on on its on its face. The the the the capital cost that that we're incurring for that for that project, and we've got some details on in the back reference materials. But the the capital cost itself is for to convert these whole trucks is in the $80,000,000 range, and the project itself will will produce a a good rate of return and and allow us, again, leverage to to to expand that operation in the future. So it's it's strategic for us. It's also very strategic from the perspective of allowing us potentially to adopt this at other sites within within The US, and it could have, you know, meaningful impacts for us.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

In in general, Carlos, in terms of the the the targets for our cash costs in The US, we have a target to get to within the 2027 time frame to get to an average cost of in the $2.50 range. We're currently around $3, and we've got projects underway now that will allow us to bring our costs in The US down. And so we're targeting over the next couple of years to get to, on average, $2.50 per pound, and we're not gonna stop there. So a big focus of ours in The U. S.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Is on bringing down that unit cost to look more like it does in South America even though we've got lower grades in The U. S.

Carlos de Alba
Carlos de Alba
Analyst at Morgan Stanley

Thank you very much, Anthony.

Operator

And your next question comes from the line of Liam Fitzpatrick with Deutsche Bank. Your line is open.

Liam Fitzpatrick
Liam Fitzpatrick
Managing Director, Head of European Metals & Mining at Deutsche Bank

Good morning, Kathleen. My question is on Indonesia and the new smelter and how that links into the concentrate export permit. Are you aiming to proactively extend the allowance to export concentrate beyond the midyear point? Or could we again see a situation where there are delays to shipments in Q3? And then linked to that, can you give any sort of color or guidance on how long you expect the new smelter to take to ramp up towards full capacity?

Liam Fitzpatrick
Liam Fitzpatrick
Managing Director, Head of European Metals & Mining at Deutsche Bank

Thank you.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Okay. Thank you, Liam. I'm going to let Corey talk about the smelter ramp up, Corey Stephens, and he's over there right now. But in terms of the first question on our on our sales forecast, we have enough quota within the approved level that we got in March to meet our our sales targets for this year. We're assuming that we export through the September timeframe of the license.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And then in the fourth quarter, we would be using our existing smelters, not just the new smelter at Mannar, but also in the established smelter we have at PT Smelting. So we within our our guidance that we show, that's within within our permit limits. If we need to get for some reason, if we produce more, we need to get more flexibility, we'll go and and speak with the government about it. But at this point in time, we have sufficient room under our permit to to meet our our our sales targets for this year. The the the work we're doing on the start up is is comprehensive.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We we're fortunate that Freeport as an organization has a lot of experience with smelters. Of course, we have a smelter in in Huelva, Spain that we've operated for some time. We have a smelter here in The US as well, and then we have in partnership with Mitsubishi the the smelter in in Indonesia. So we're calling on resources, internal resources, external resources to plan an efficient start up. And, and and, Corey, if you wanna add, you know, just some color on on our start up plans and and and how how this how this will play out.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Smelters are complex, and we we understand that, and that's why we've done so much preplanning. They're complex to to start up, and we recognize that. But but, Corey, why don't you to cover how we're how we're planning to, sequence the start up?

Cory Stevens
Cory Stevens
Senior Vice President & President of FM Technical Services at Freeport-McMoRan

Sure.

Cory Stevens
Cory Stevens
Senior Vice President & President of FM Technical Services at Freeport-McMoRan

Yeah. So the the mechanical repairs are essentially complete in pre commissioning and commissioning activities in the area where the fire was are well underway. In the remainder of the facility, the the teams have been refining their operating practices and going through drills, and we've been basically operating those facilities, those other unit operations, in preparation to combine everything with the main smelter coming online. So both furnaces are hot. The boilers are ready.

Cory Stevens
Cory Stevens
Senior Vice President & President of FM Technical Services at Freeport-McMoRan

You know, the the teams have been practicing. We've got maintenance teams and and a number of support from operations and and contractors with experience. So so in the in the May time frame, we're gonna start the the process up, and we'll essentially ramp up to 100% capacity over a six month period and plan to run 2026 at 100% capacity throughout.

Cory Stevens
Cory Stevens
Senior Vice President & President of FM Technical Services at Freeport-McMoRan

And

Operator

your next question comes from the line of Katja Jantzik with BMO Capital Markets. Your line is open.

Katja Jancic
Katja Jancic
Analyst at BMO Capital Markets

Hi, Katja. Thank you for taking my question. Maybe on the potential Baghdad expansion. If I'm not mistaking, the feasibility study was completed in 2023. So is the $3,500,000,000 CapEx still attainable in this environment, especially with tariffs and other inflationary pressures?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We are reviewing that now, and and and we do that with all of our projects to keep them fresh. And so we're going through a a process to review rereview all the economics associated with the project, capital, and operating costs. And and so that that will be part of the decision making that we that we make, you know, we we to the end of this year. We're we're want to get the the autonomous trucks in place because that will allow us to to manage the the workforce that we have now. And as I said before, not not have to rely on a big hiring program and and less experienced people.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

So, that's a important part of it. We're also doing some work, some some infrastructure work. We've we've boosted housing. We're doing infrastructure work on our tailings facilities to put us in a position so that when we do make the decision, we can do it in a in a in a in a derisked fashion, in a more fast track fashion. But we wanna make sure that the economics are are robust.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

These are this is an option for us. It is with the reserves are there, and this will allow us to bring forward those values and bring forward reserves. But, but we it's not something we have to do, and we can assess the right timing. We wanna we wanna bring it to market at a time when we can do it efficiently and and generate the return. So that'll be that'll be part of our analysis, Katya, as we go through the balance of this year and to your point to better understand the tariffs as well.

Katja Jancic
Katja Jancic
Analyst at BMO Capital Markets

Thanks, Kathleen.

Operator

And your next question comes from the line of Timna Tanners with Wolfe Research. Your line is open.

Timna Tanners
Managing Director - Equity Research at Wolfe Research, LLC

Hey, good morning. I wanted to ask a bigger picture question, if I could. In light of the different levels of support being provided to the copper industry from the U. S. Government.

Timna Tanners
Managing Director - Equity Research at Wolfe Research, LLC

Are there any measures that you can take to accelerate some of these efforts? Do you think about adding smelting? The world is oversupplied clearly, but not in The U. S. Any update on the 45 x benefits?

Timna Tanners
Managing Director - Equity Research at Wolfe Research, LLC

Just just like to hear about what incremental you might be able to do given the new initiatives that we hear about from the Trump administration. Thanks again.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thanks, Tinna. Actually, Freeport is in a terrific position to expand its US production. We already had several things underway. As we talked about, we're fully integrated. So we're we're producing concentrate, and those go to our our smelter in Arizona.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We also a big part of what we do in The US, as you know, is is is leach production where we don't need a smelter, and we can produce leach pounds very efficiently, we were already on that path to increase our our our leach production capacity and, again, produce refined copper. We've got innovation around leaching concentrate. We've got a we've got a facility which we're expanding in in The US to to to leach concentrates. Again, that avoids the big capital intensity of a smelter. And then potentially, you know, longer run can look at potentially expanding the Miami smelter to to produce more cathode.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

There even is a potential you know, one of the one of the areas that The US is interested in is there's a lot of scrap produced in the in The US that ends up getting exported. We're going to look into can Freeport use existing infrastructure and low low capital intensity projects to potentially process scrap material in The US. So of all the the the things out there that you hear about, Freeport really is in a good position, because our projects are brownfield in nature. We have infrastructure. We have the workforce in the area.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We have community support. And so, you know, I feel in in many ways that Freeport is the poster child when it comes to what The US is trying to achieve in in in bringing back, expanding copper production in The US. Now we recognize that, The US has, some real positives in its regulatory framework, but the resources, as as as you're aware, are generally lower grade, or more mature and generally lower grade than some of the operations internationally. So that's where these incentives come in to really support not only the the base production in The US, but, incentivize, new new new investments and new production. And and that's why we're interested in the 45 x potential credits where the executive order already says that copper is a critical mineral, but we need to have legislation to modify the the treasury regulations to to to allow for copper to be listed under 45 x of the IRA to be eligible for the 10% production credit.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

That would be very, very helpful. But as you know, with tax policy, there's lots of pluses and minuses and give and takes going on. And so we'll just have to keep advocating for the benefits to The US national security of having copper produced domestically, and that's something that we'll continue to work on. But, Timna, we have great opportunities in The US. This Lone Star District has a a huge resource.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We have visions that the Lone Star Safford District could be another Morenci with both bleach production and concentrate production in the future. Of course, we talked about Baghdad. We talked about our leach initiative. So we're in we're in a really good position to help The US and its objectives to to bring more copper production into into The US.

Timna Tanners
Managing Director - Equity Research at Wolfe Research, LLC

Okay. Thanks for the overview. We'll look forward to updates from you and from the administration. Thanks again.

Operator

And your next question comes from the line of Daniel Major with UBS. Your line is open.

Daniel Major
Metals & Mining Analyst at UBS Investment Bank

Hi, thanks for taking my questions. Can I ask a question on the change in the cost guidance for North America? I noticed site production delivery costs have increased somewhat, albeit not that much. But note in Note six in the presentation, it said that this excludes the impact of additional tariff costs. Can you give us a sense of what those impacts are?

Daniel Major
Metals & Mining Analyst at UBS Investment Bank

I think you mentioned a 5% increase in cost of purchased inputs. How much of your cost base does that account for? And what's the upside to this number if you're unable to mitigate some of those impacts?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you for the question. We did disclose in our earnings release, when these tariffs came out, we began talking with our suppliers. The direct impacts that we have, and and where we're the vendor of record are are material, and we are working to diversify our supply chains to to mitigate those impacts. The bigger impact as we're working with our suppliers is potentially the the cost that they that they incur on the various components that they purchase. And as you can imagine, it gets complicated because it's just not one supply chain.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

They have you know, when they're fabricating something, they have multiple supply chains that are involved. And so they're going through an analysis themselves to understand what the potential impacts are and what they can do to potentially diversify their their sources to to mitigate these impacts. The when we look at our overall costs in The US, about 40% of those costs are related to to to labor and and and and services that that wouldn't be subject to tariffs. So it's it's it's the balance. The the other piece that we applied the the estimate of of 5% to.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Of that, when you look at the components of the of the of the potential 5% impact, the biggest driver is the 45% Chinese tariff. And while the dollar amount, as we've if we've as we've talked with our vendors, the dollar amount of of Chinese purchased components in their supply chain is not significant. The magnitude of a 45% is what what adds up quickly. And so if that's reduced and if we can mitigate that, this this tariff impact will be reduced significantly potential impact will be reduced significantly. I'm confident that working with our suppliers, we can find ways to to mitigate these impacts.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We wanted to set up a system, to really understand the various components so that when we get a, attempt from a vendor to pass through something that we can confirm and verify and that we can work collaboratively with them to source products that that do not have high tariffs with them. So I feel confident that we can we can mitigate this. We all would love to see more certainty and and these issues get resolved because it it it does impact these these these conversations and trade flows, etcetera. But I do feel confident that we can find ways to mitigate these potential impacts.

Daniel Major
Metals & Mining Analyst at UBS Investment Bank

Okay. Thanks. Sorry, just a quick follow-up on the same subject. What proportion of the cost base is exposed to energy, particularly oil? Obviously, we're seeing some benefit there.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We haven't we have not we basically used the same oil price assumption in our in our guidance that we used at the start of the year. And you are right to say that there is there is benefit. We we purchased about a hundred million gallons of of of diesel in The US. And right now, the price is probably $0.20 a gallon or so less than what we assumed in our original forecast going into the quarter.

Daniel Major
Metals & Mining Analyst at UBS Investment Bank

Great. Thanks a lot.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Electricity is another component and we have seen some pressures in that area. We have seen some slight pickup in in electricity. But just in in the oil component, that is that that that and when I I'm talking about the hundred million gallons, that's that's specific to North America.

Daniel Major
Metals & Mining Analyst at UBS Investment Bank

Great. Thanks a lot. Your

Operator

next question comes from the line of Chris Lofamena with Jefferies. Your line is open.

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

Hi, thanks operator. Hi, Kathleen, Richard and Marie. Hope you're doing well.

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

Hi, Chris. Good

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

to ask on the buyback. So you've been running a net debt level that's well below your targeted net debt threshold. And you're kind of entering this period now where free cash flow should materially improve. I mean, you have this COMEX premium, you have high gold prices, you're going to have rising volumes, price in The US coming down. Mean, everything's kind of heading in the right direction and cash flow should get very strong.

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

And your share price has been kind of a victim of the macro and it's been, you know, it's been relatively weak, recovering a little bit now, but still at a low level. And back when your stock was in the 50s and free cash flow was zero, it made sense to not be maybe not be really accelerating the pace of the buybacks. But I would think, where we are today and where you're heading, the, the attractiveness of repurposing your shares, it really almost can't be beat. And especially when you consider, you know, if the focus is on kind of pivot to growth, you can shrink your share count, you can grow your volumes on a per share basis in an accretive way, and you can use free cash flow to do that and maintain a very strong balance sheet, which is a pretty compelling combination of factors. So just really wondering how you think about, potentially ramping up the buyback if market conditions continue to be as they are.

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

I mean, back in the thirties, do you just buy back more aggressively now? Or do you want to save money for the capital projects you have in the pipeline? Thank you.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you for that, Chris. And and and we're balancing all those things, but we agree with what you with everything you just said. And particularly as we go through the balance of this year, we've got in the first quarter, we had this this maintenance and and and some some some timing in the numbers. But as we go through the balance of the year, our cash flow should improve. You you highlighted the the potential premium.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

If that continues, that'll allow us to have more free cash flow that goes right to the bottom line. And so we, you know, we see the disconnect in the long term outlook for the company in terms of what the value of these assets are relative to how our stock has been performed relative to these macro issues. And so we we we really wanna be aggressive about about the the buyback, but we also wanna make sure we're balancing our our objectives to maintain a strong balance sheet and to and and and to pursue our growth plan. So we're gonna be balancing all that. We've got a established policy to to direct free cash flows to to to shareholder returns.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And as cash flows, free cash flows increase, that'll give us this opportunity. So but in general, what everything you said, we agree with. And Richard, I don't know if you want to add anything to those comments.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

Chris, I'll just say I'm totally aligned with what you said. As Chairman of the company and the shareholder, I agree totally with that. And we're going to be history has taught us to be disciplined, but we're in such good shape. And as the cash flows increase, we will talk with our Board and I believe we'll have great support for buying more shares back.

Chris LaFemina
Chris LaFemina
Equity Research Analyst at Jefferies Financial Group

That's great. Thank you for that.

Operator

Our next question comes from Bob Brackett with Bernstein Research. Your line is open.

Bob Brackett
Head - Research Division at Sanford C Bernstein & Co LLC

Thanks. Good morning.

Bob Brackett
Head - Research Division at Sanford C Bernstein & Co LLC

Returning back to Baghdad 2x expansion. If I think about the discretionary CapEx being put into Baghdad 2x expansion this year, it's almost $05,000,000,000 You've slated a few hundred million dollars 3 hundred million dollars perhaps next year. If the if the price of admission is 3 and a half billion and you've effectively sunk approaching 800,000,000, the investment decision is always gonna be a money forward decision. And doesn't that just make it more and more obvious that Baghdad 2 X is gonna move forward?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

One one thing to to keep in mind on the money we're spending right now in, at Baghdad, a good bit of that is money that we would have to spend in any case in the future to build up the infrastructure for tailings. So at some point, you run out of tailings storage, and you need the you need the the the storage there that we'd need over time. So the the the money that we're spending now doesn't commit us to the project. It just accelerates when we would have otherwise had to spend the money. So it's really a low risk investment that we're making to put us in a position that when the project is ready to go, when the when the decision's made, that we can we we don't have to spend the money, and we don't have to to take the time to put this the starter dam in.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

So the this funding that we're doing now is not part of the three and a half. There there may be some small amounts that's part of the three and a half, but this funding is principally related to tailings infrastructure that we'd have to do anyway down the road. And we're calling it discretionary because we don't have to do it now. So if we decided tomorrow not to not to move forward right now with Baghdad, we'd probably defer this the the spending on on the on the tailings infrastructure.

Bob Brackett
Head - Research Division at Sanford C Bernstein & Co LLC

Very clear. Thanks for that.

Operator

And your next question comes from the line of Lawson Winder with Bank of America Securities. Your line is open.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Thank you very much, operator. Good morning, Richard, Kathleen and Marie. Thank you for fitting me in. Just thinking about The U. S.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Policy environment and the fact that Freeport is by far the largest player in The United States. And and then looking at it from an merger and acquisition overlay point of view, I mean, it make sense for Freeport to potentially be accumulating assets in The US today? Thank you.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We always look, Lawson. We always look at at at opportunities. We have a very sizable resource position in The US. We have, you know, the the the the Leach stockpiles, which is a a a huge resource, and then we additionally have very significant re undeveloped resources in our footprint. So we have, you know, a very long term pipeline in The US, but if there are opportunities for synergies or things that we could enhance our position, we are certainly certainly interested in in in in looking at those things.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And there's a lot, you know, there's a lot more activity in The US, a lot more projects potential projects in The US than there has been in the past. Many of those don't have smelters. And while, you know, people have historically thought, you know, it's not great to to invest money in smelters, we already have the smelter. We already have the tank house capacity to make refined copper. We already have the concentrate leach facilities that are expandable.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

So we have a lot of things that could provide, you know, potential synergies, And we'll so we'll continue to look, but we already have a very strong position that that that that in The US.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Okay. Great. Thank you so much.

Operator

And our next question comes from the line of Brian MacArthur with Raymond James. Your line is open.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Good morning and thank you for taking my question. You talked about earlier in Indonesia, how you have permits to the September 30, and you can use the smelter in the fourth quarter to meet your shipments this year. And you also took down your guidance for cost this year. Was that just the gold price being higher? Or did you make an assumption that the 7.5% export tax went away in the fourth quarter at Indonesia because the smelter is up and running?

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Or should I think of that duty going away as an up side as I go into 2026, or or how do you see that developing?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

In terms of our our Indonesian costs for the year, we had projected a net credit of of 27¢, and and now it's 47. Most of that is related to the change in in byproduct credits. So that that's that's what most of it's related to. We'd we'd we only pay a duty on sales that are exported or concentrate sales. And so in the fourth quarter, we we we don't have projected to pay a duty in the fourth quarter because we're we're using our internal smelters.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

But that was the timing the timing may have changed from from our last update, but as a whole, we only in our previous estimates only included duties for what we were exporting.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Great. Thanks very much. That's very clear.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

And I just want to say, Corey and his team have just done an outstanding job. It was unfortunate we had that fire. It was a force majeure event, and we had a lot of uncertainties going into dealing with the repairs. And these guys have just done an incredible job of making the progress they've made to date.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Thanks very much, Rich and Kathleen.

Operator

Our last question comes from the line of Bill Peterson Your line is open.

Bill Peterson
Bill Peterson
Equity Research at JP Morgan

Yes. Hi, good morning team and thanks for speaking me. I might have missed it, but on leaching, you're reaching your sustained $200,000,000 per year. I guess you saw a modest decline in the first quarter, quarter on quarter. Was this decline just kind of typical variability?

Bill Peterson
Bill Peterson
Equity Research at JP Morgan

And maybe more importantly, ahead, what are the key areas to improve to reach your £75,000,000 quarterly rate exiting the year? I guess how should we think about the trajectory?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

In terms of of getting to the £300,000,000 per year, run rate, we have several projects that are underway. These are not these don't require new technologies. This is the scaling effort of of essentially scaling up what we're already doing. Some examples of that include we're we're in in what we call leach everywhere where we already have identified areas within the stockpile that were difficult to get to physically. And so we've come up with a a way to lay the irrigation lines using helicopters that we assemble along, a very long football field of irrigation lines, and a helicopter goes and places these irrigation lines in areas that are that are very hard to get to.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We are increasing the number of helicopter trips that we were doing previously. That was part of the reason why some of the projects that we had in the first quarter. We came in very close to what we thought, but we probably could have got produced a little bit more if if if if our projects had been been on schedule. But by the end of the year, we're gonna have more runs of helicopters. And not just at Morenci, we're we're starting this technique at other other sites.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

The other thing that we have had success with is what we call deep raffinate drilling where instead of just letting the solutions drip from irrigation lines at the top of the stockpile, we're actually drilling and putting solution targeted solution at strategic places within the stock pile that our data analytics and sensors have told us would benefit from more direct application of solutions. And so we've we and and and and with some third parties have figured out a way to scale the deep raffinate drilling. And, you know, taking some pages from what's being used in other industries, we're able to apply this deep drilling at a bigger scale. We've got several of those in place now to to to to that that'll boost production in the future. We're also and this is separate from getting to the 300, but we also have some trials going on with new additives that we have successfully tested in a lab and are doing it at scale in some of those strategic stockpiles.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And so we've got an additive test going on now, and the results of that will will will be very helpful for us to guide our future. The other thing that we're doing that will help us as we look into 2026 and beyond to get to the 400 level is heat trials where we started we it's been proven that the hotter the temperature within these stockpiles, the better the recovery of copper. And we started with insulating the stockpiles to to to to retain heat, And now we've got a project to actually heat the the raffinate injection, the solution that's going into the stockpiles. We we've got a project at El Abra that that we expect will will allow us to start testing heat there in in 2026. And then we've got opportunities big opportunities at Morenci.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And one of the heat sources that we're pursuing at Morenci is geothermal steam, which would be very low cost. So there's some new technologies that we're pursuing that would help us go from 300 beyond. But to get to 300, we feel confident we can do it with existing technologies, just doing it at scale.

Bill Peterson
Bill Peterson
Equity Research at JP Morgan

Yes. If I can follow-up on the leaching and also the last part of your answer. I guess in terms of the supply chain, both the raw materials, additives, equipment, heating sources, are you using non China sources for these, I guess, currently two projects? And I guess on the path to 800, are you able to achieve that with a non China supply chain? And more to the point, can you achieve this with The US based supply chain?

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

We are testing a variety of of of of additives, and that's a big point of what what of what we're looking at is is is does the additive work, number one, and is there a robust supply chain for that that additive? And it to answer your question, what we've identified does not rely on on on on China. And there is there is some of the product that's produced in The US. Some of the technology is not necessarily US technology, but but with that part of what we're doing is making sure there's a that you don't just go down a path and you don't have a supply chain for this additive And that there's efficient ways to recycle the additive as well so you minimize the use of it. So there are a number of things going on, but we're really excited, Bill, about about the potential here.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

And there's no better company that can take advantage of this given, you know, we've got 40,000,000,000 pounds of copper sitting in stockpiles that we thought was waste before. And now we're very excited about, you know, essentially having a a new mine in The US, a new low cost mine in The US, producing 800,000,000 pounds a year essentially. So it's very, very exciting.

Bill Peterson
Bill Peterson
Equity Research at JP Morgan

Terrific. And thanks again and nice job on a quarterly execution.

Operator

Now

Operator

we will turn the call over to management for any closing remarks.

Kathleen Quirk
Kathleen Quirk
CEO, President & Director at Freeport-McMoRan

Thank you, everyone, for your participation, and we look forward to continuing to keep you updated. If you have any follow ups, David is available to address them. Thanks so much for your attention and interest.

Richard Adkerson
Richard Adkerson
Chairman of the Board at Freeport-McMoRan

Thank you all.

Operator

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.

Executives
    • David Joint
      David Joint
      VP-IR
    • Richard Adkerson
      Richard Adkerson
      Chairman of the Board
    • Kathleen Quirk
      Kathleen Quirk
      CEO, President & Director
    • Maree Robertson
      Maree Robertson
      EVP & CFO
    • Cory Stevens
      Cory Stevens
      Senior Vice President & President of FM Technical Services
Analysts
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Key Takeaways

  • Freeport delivered Q1 2025 copper and gold production in line with expectations, generated $1.9 billion in EBITDA, and reiterated that quarterly copper sales volumes should average about 20% higher and unit cash costs 30% lower in the balance of the year.
  • The company’s long-term strategy remains centered on being a global leader in copper, with a pipeline of brownfield growth projects totaling 2.5 billion pounds per annum and an innovative U.S. leach initiative targeting 300 million pounds per annum by year-end and 800 million in the future.
  • U.S. copper pricing on the COMEX now carries a 13% premium (≈$0.57/lb) over LME prices amid a Section 232 import investigation, implying an ~$800 million annual benefit and highlighting Freeport’s role in supplying 70% of U.S. domestically sourced refined copper.
  • In Indonesia, the Grasberg smelter repairs are running a month ahead of plan with May start-up and full ramp over six months, the new Pressure Metals refinery is inaugurated, and export permits extend through September as the company works to secure long-term operating rights.
  • Freeport maintains a strong investment-grade balance sheet, forecasts $8–11 billion in annual cash flow at $4–5 copper (plus $800 million from the U.S. premium), and has returned $5 billion to shareholders since 2021 under its 50% excess cash flow policy, with buybacks likely to accelerate as cash flow improves.
A.I. generated. May contain errors.
Earnings Conference Call
Freeport-McMoRan Q1 2025
00:00 / 00:00

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