Richard C. Adkerson
Chairman and Chief Executive Officer at Freeport-McMoRan
Thanks, Kathleen, and hello everyone. The end of 2021 is a special time for our Freeport team. We met a series of multi-year complex challenges with great success. You start by looking at the debt picture, which Kathleen mentioned. Just six years ago, our debt was a $20 billion and the way to manage it was really unclear. We have now reached a point where our debt is de minimis. We have started a program of shareholder returns with higher dividends and share buybacks. We have assets and a outlook that will allow us to increase those over time. Our credit rating have been raised to investment grade by two of the agencies.
Then you look at the Grasberg underground project which goes back much further. We begin our initial plans for this underground operation in the mid-1990s. We began spending capital 20 years ago. By the end of the year, we met our target by reaching our metal long-term run rate. We are taking steps successfully and have the way forward to increase our mining rate to well over 200,000 tons per day from the underground, that's just remarkable.
During this period of ramping up Grasberg, we had challenges in our dealings with the Indonesian Government about our contract of work. We resolved those three years ago. And I am pleased to report that our relationships with the Government of Indonesia is one now of cooperation, working together mutually for common goals. Relationships have never been better. Then two years ago, we started facing COVID. That was a huge uncertainty for us. At the time, we took aggressive steps to be prepared to manage the risks that were emerging. We've successfully managed our way through that and achieved our debt reduction in Grasberg underground from that standpoint.
ESG is on everybody's mind these days. It's always been part of our psyche at Freeport because the nature of operations, but we've begun aggressive efforts to deal with climate change impacts of our operations. We're working with the copper industry with this Copper Mark designation, which we have been a leader in. Working with ICMM with communities. I became Chairman about a year ago, I made commitments to myself to strengthen Freeport's Board. This year we've added six new directors. Four are well-known, highly regarded CEOs with extensive international business experience who add a lot to our board. We have two women we added, both our financial experts experienced in audit committee dealings. One is proudly an Hispanic. It's just been a great work by our team. We have a real sense of accomplishment. And we're really looking forward now to the future with optimism, commitment and excitement.
Turning to our results. Our copper volumes grew by 19% compared with the prior year, reflecting this ramp up in Indonesia. Our unit costs declined despite rising energy costs and other unit -- and other input costs. Our team has done a great job of managing the challenges of supply chain and cost inflation. We generated strong margins. Our EBITDA and cash flow rose by 2.5 times over 2020. And we ended the year with just over $1 billion in net debt. And we are well prepared with our long-lived reserve and resource base to advance organic growth over time. Now with the ramp up at Grasberg reaching the point of where it is, we're now looking to our operations in the Americas for future growth. It's nice to talk about accomplishments, but we're all focused on what we go -- where we go from here, how we build more value for our company, and we have a great opportunity to do that.
Copper, over 20 years ago, our company made a commitment to copper and it was driven by supply side constraints that we saw in the global marketplace; at that time, growth in China, and we have fundamentally stuck with that. Our board made a diversion with this oil and gas deal, but that's behind us now. But the fundamental outlook for copper, as positive as it was 20 years ago, is now even more positive and becoming increasingly positive. It's driven by copper's role in the global economy, just fundamentally the need for copper as the world develops. We saw it in China. China continues to be an important part of the market.
Global growth will occur outside China, but the new elements of demand are really significant. Any investments in carbon reduction, and everyone's talking about carbon reduction, require significantly more copper than the world has required in the past. Electrification is the key to climate change. And two-thirds to three quarters of copper's use is dealt with electrification, whether it's electric vehicles, alternative energy generations, all of these require much more copper than the traditional power.
Then you look beyond that to technology advances and communications, artificial intelligence, expanding connectivity as infrastructure is developed around the world, public health initiatives, all of these are creating what I'm calling a new era of copper demand. And these are broad-based, they are inevitable. Copper will be affected by risks to the global economy from time to time. But underlying that is a long-term very positive outlook for copper, and our company is solidly positioned to benefit from that.
You add that together with supply scarcity and the demand factors and you have a real compelling case for investing in our company. We are seeing increasing scarcity in supply at a time when demand is growing so significantly. There are a limited number of projects which have been under development for some time now that are scheduled to come on stream in the near-term. But when you look beyond that, it's hard to find actionable projects that can be developed within a very short period of time. This takes a long time.
And then there is increasing political risk around the world that will have its impact on copper supply development, notably in Chile and Peru, where 40% of the world's copper comes from, there's new presidents who run on agendas that are oriented towards social programs that require more revenues to implement, and how the industry and the governments deal with that will be very important. But beyond that, you've seen this in countries like the United States. You see other countries restricting new supply development for community social issues. Countries around the world are demanding more of miners in terms of revenues, and it goes beyond Chile and Peru, ranging all the way from Asia to Central America to Africa. All of these things add into supply constraints at a time when the world needs more copper.
We're focused on the long-term outlook for our markets. We always prepare ourselves and recognize that near-term risk may emerge to the global economy. Now we are strong financially to deal with those risks. We've structured our business in a way that we have flexibilities of managing it. So we're much more comfortable today about whether our company is positioned to take advantage for what we believe will be a very positive view for copper as a commodity.
If you look at our reserve base, we report reserves -- we'll report reserves this year based on mine plans of $2.50 copper. We don't limit ourselves to looking at projects on that basis because we have an optimistic view about copper. But we have more than -- at $2.50 copper, we have more than a 25-year reserve life at proved and probable reserves. And beyond that, in our incremental mineral resources, we have enormous amounts of copper that over time will be brought into reserves as we do delineation drilling and engineering work if you bring those into reserves and up with the new projects. This is really a key asset for Freeport. It provides us a lot of options for the future when you look at the scarcity in the industry for development opportunities. Freeport does not need to rely on acquisitions to support our long-term future. We always monitor opportunities, but we have the assets within our company now to sustain our business in growing it significantly over time.
With these favorable markets, our margins and cash flows are growing. We have well established plans. Our whole team globally is focused on executing plans to produce more copper, produce it at a lower cost. We've built a strong foundation for the future. We had significant sales increase in 2021. We've got growth factored in for the near-term, additional 13% in 2022, improving in 2023. We have derisked our plans, expect growing margins and are really prepared to execute, to generate the cash, to support returns to shareholders as we invest in future growth.
Looking at the slide now that shows the successful ramp up of the Grasberg underground. And I just wish you all could seen me because I got a big smile on my face when I look at this. It's really significant with what we've done there. Our team there is just really to be complimented in meeting all these challenges. It was nothing short of a monumental task. As I mentioned earlier, it was years to achieve this.
The underground development, turning to the next slide, over 350 miles of tunnels, seven miles of an underground railroad with 10 electric trains running, four huge crushers, five miles of conveyor belts, these shafts to take large numbers of people down underground, it's all underground. Over 500 drawbells have been opened, almost 350,000 meters of undercut. And we're really on track to achieve long-term sustainable rates in excess of 200,000 tons a day from our mines through our mills. This gives us a very strong base of long-term.
We've done this now to create -- return Grasberg to be the second largest copper mine in the world. The largest single gold mine, even though it's a byproduct. If we look at the fourth quarter when we had our net cash costs in the face of all this inflation of only $0.08 per pound for the second largest copper mine in the world. We are on track to achieve our long-term run rate of 1.6 billion pounds of copper a year, over 750,000 tons. All this looks simple on paper, but man it was a challenge to get it done, and our team deserves a tremendous amount of credit for doing that.
Now we look at where are we going to grow for the future? How are we going to sustain our business for the future? This new lease technologies that we're working in the Americas is a huge opportunity for Freeport. Our company historically was a leader in developing leaching. Our Morenci Mine in Arizona is the world's largest leaching operation in today's global copper market. And this technology that we will have to improve recoveries and achieve recoveries from historical waste stacks is creating copper that no one thought we had the opportunity to recover is really significant for us.
Then we have our mine in Northwestern Arizona, the Bagdad mine, which has a long reserve life, setup perfectly for mill expansion and to achieve greater volumes out of it in a relatively straightforward way. In Eastern Arizona, we have the Lone Star mine, which I truly believe someday will be the All Star mine for Freeport. We're working and expanding recoveries from the oxide ore that's there, taking advantage of facilities that are nearby Safford mine, which is where production is declining as planned. But underneath that, the Lone Star mine has a sulfide resource that I really believe will make it be the All Star mine for us.
The project in Chile that the world will need. We're waiting to see how things unfold there. And then this Kucing Liar mine that we have undeveloped at Grasberg is going to be an important part of our future there. This will be one of the world's largest Block Cave mines in its own life. 80,000 tons a day. It's got resource of 6 billion pounds of copper, 5 million ounces of gold through 2041. We're talking with the government now with preliminarily about extending rights beyond that, and that mine will be producing well below 2041.
Well, that's on stream. We are targeting getting up to 240,000 tons a day of mine rate, mill rate out of the operations at Grasberg. There's a slide on Lone Star that I referred to earlier, you can see the data of how we are increasing it. But the real price there is the oxide development will be profitable at the volumes, attractive cost, but the real long-term price there is this sulfide resource that underlies the oxide. It's very large. It take time to do it, but it will have a complex we believe ultimately similar to the Morenci mine, which is the largest mine in North America now.
This leach technology is something you'll hear a lot about from us, throughout the energy industry. We will be a leader here. We are looking at several different types of technologies. All of them are excited. Cory is leading our team here. And it's really a new element of demand just in our existing waste stacks. We have -- we believe we have almost 40 billion pounds of copper in those stacks. And even small recoveries out of that could result in copper that would be equivalent to developing a whole new mine. So it's early stage technology, lot of work to do, a lot of excitement by our team about doing this. So it's really good.
I want to close by just recognizing our team around the world. I'm so proud to be part of this team. We got a group of people that are technically competent, that are highly motivated, that work together cooperatively, that are buying into making Freeport the foremost copper company in the world and keeping it there. And we have the capabilities on hand to meet and exceed our expectations. Exceptional opportunities for our business. And I want you to know that regardless of what you read out in London, I'm planning on staying part of this team for as long as God's willing to allow me to do it. I'm having more fun now than I've had in years. And I'm really excited to be part of this team as we go forward.
So Kathleen, I will turn it over to you.
