Freeport-McMoRan Q1 Earnings Call Highlights

Key Points

• Freeport’s Q1 results beat internal forecasts as strong copper prices (year‑to‑date average >$5.80/lb, peak >$6/lb) and robust U.S. operations drove higher revenue, EBITDA and cash flow despite reduced Indonesian capacity.
• The Grasberg ramp‑up was revised after wetter ore created chute/haulage bottlenecks, cutting PB2/PB3 throughput to about 60,000 tons/day in H2 2026 (vs. 100,000 prior) with recovery to ~90,000 tons/day by mid‑2027, reducing Grasberg’s five‑year copper and gold output by roughly 9% and 7% respectively and adding roughly $60–70 million of chute‑related capex.
• Management raised the 2026 net unit cost outlook to $1.95 per pound (from $1.75) driven by lower Grasberg contribution and volatile diesel costs (March spike ~$500 million annualized); capex guidance remains ~$4.3–4.5 billion for 2026–27 and each $0.10/lb move in copper implies about $400 million in annual EBITDA sensitivity.

Freeport-McMoRan NYSE: FCX executives said first-quarter results came in better than their internal forecasts for sales volumes and unit costs, aided by strong copper prices, while the company updated investors on a revised ramp-up profile at its Grasberg operation in Indonesia due to wet ore-related material handling constraints.

First-quarter results and portfolio performance

Vice President of Investor Relations David Joynt said the company reported its first-quarter operating and financial results earlier in the morning, with supplemental schedules and slides posted to the company’s website.

Chief Executive Officer Kathleen L. Quirk said first-quarter sales of copper and gold, as well as unit costs, “were better than our forecast,” and that higher metals prices helped drive growth in revenue, EBITDA and cash flow versus the prior-year quarter, “despite our Indonesia operations operating at reduced capacity.”

Quirk highlighted the contribution from the company’s U.S. operations, saying its U.S. mining business generated “2.5x more operating income” than in the first quarter of last year, with “strong conversion to the bottom line.” She added that U.S. production was higher than the year-ago quarter, though “a bit lower sequentially compared with the Q4 of 2025 and our expectations,” and said the company expects U.S. copper production to increase over the course of the year as higher mining rates translate into output.

Copper market backdrop and demand signals

Chairman Richard C. Adkerson framed the call with a positive long-term view of copper, telling listeners that “electricity equals copper” and describing what he called a “new era of growth about copper” driven by rising electricity needs.

Quirk said copper prices averaged “over $5.80 per pound year to date” and reached “an all-time high exceeding $6 per pound” in the first quarter. She also pointed to “rising demand associated with AI data centers and related energy infrastructure” in the U.S., which she said has “more than offset weakness in private construction and in the auto sector.” In China, she cited “a significant resurgence of demand,” including power grid spending and inventory draws on Chinese exchange stocks.

Grasberg ramp-up revised due to wet ore handling bottleneck

Management spent much of the Q&A addressing the company’s revised outlook for production at the Grasberg Block Cave (GBC). Quirk said Freeport completed remediation needed to restart mining in production blocks 2 and 3 (PB2 and PB3) and began limited mining in March. The company had suspended PB2 and PB3 in September 2025 while it installed concrete plugs to isolate production block 1C (PB1C) panels, completed cleanup, restored service-level infrastructure, and strengthened cave management plans.

After regaining access, the company inspected and sampled more than 600 drop points and determined that ore conditions within the cave had become wetter during the period of inactivity. Quirk said active mining typically helps manage accumulated water within the cave, and emphasized that the company can safely extract wet material using autonomous remote loaders. The current challenge, she said, is downstream: loading ore through chutes onto automated trains at the haulage level.

Historically, Freeport blended wet and dry material to meet the requirements of existing chute designs. With a higher proportion of wet material, the company plans to install specialized equipment to regulate ore flow for train loading. Quirk said the company “understand[s] the engineered solution,” but the modifications will take time, limiting production to what existing chute designs can handle until the upgrades are in place.

The revised ramp-up assumptions include:

• PB2 and PB3 throughput in the second half of 2026: approximately 60,000 tons per day, down from the prior target of 100,000 tons per day.
• Mid-2027 expectation: increasing to the 90,000 tons per day range as ore-loading infrastructure modifications are completed.
• Timing of bottleneck improvements: Quirk said the “majority of these bottlenecks can be addressed by mid-2027.”
• Five-year forecast impact: an approximate 9% reduction in copper and 7% reduction in gold for the Grasberg district over five years, with “the largest impacts in 2026 and 2027.”

Quirk said the issue is “a timing issue with a designed engineering solution,” not a significant cost issue and not expected to change ultimate resource recovery. She also said the company is continuing de-risking initiatives related to surface drainage and cave monitoring, including new imaging technology.

In response to questions about how the issue was identified, Quirk said monitoring did not detect anything of “significant concern” before access was regained, and that “it’s just a matter of getting access to each of these drawpoints.” Mark Johnson, President and COO of Freeport-McMoRan Indonesia, explained that rainfall onto broken rock in the subsidence zone percolates through the cave, and that “it’s only a couple of % difference in moisture content” that can change handling requirements.

Johnson said the company has already installed a re-engineered version of flow-regulating equipment—referred to on the call as “spillmanators”—and that testing was set to begin over the weekend. Quirk said risks to the ramp-up are largely tied to construction and delivery schedules for the chute equipment, noting some equipment is already on site and more is on order.

On capital spending, Quirk told UBS the chute-related modifications add “on the order of $60 million-$70 million” in capital expenditure, with other timing variances offsetting the increase such that it did not result in a major change to capital guidance.

Cost pressures, updated unit cost outlook, and capital allocation

Chief Financial Officer Maree Robertson said the company’s three-year sales volume outlook incorporates the adjusted Grasberg ramp-up and expects higher volumes in 2027 and 2028 as Grasberg returns to full recovery. She added that second-half 2026 volumes are expected to be about 30% higher for copper and about 50% higher for gold than the first half.

Robertson also flagged renewed cost pressures tied to diesel fuel since late February, calling prices volatile and saying the most significant impacts have been in Indonesia. She said the sharp rise in diesel prices in March equates to “an approximate $500 million cost increase on an annualized basis.” She also noted spot sulfuric acid prices have more than doubled, though she said Freeport has limited spot exposure and is insulated through a “natural hedge” from its smelters.

With updated diesel assumptions and revised production, Robertson said Freeport now expects net unit costs to average $1.95 per pound of copper for the year, versus a prior estimate of $1.75 per pound, with the “primary driver” being the lower contribution from Grasberg volumes.

For longer-term sensitivities, Robertson presented modeled 2027–2028 results showing annual EBITDA ranging from approximately $14 billion to $21 billion at $5 to $7 copper, and operating cash flow ranging from approximately $10 billion to $16 billion. She said each $0.10 per pound move in copper equates to about $400 million in annual EBITDA, and each $100 per ounce change in gold equates to about $110 million in annual EBITDA.

On capital spending, Robertson said forecast capital expenditures are expected to approximate $4.3 billion in 2026 and $4.5 billion in 2027, similar to prior estimates. She said discretionary projects are expected to total about $1.6 billion to $1.7 billion per year in 2026 and 2027, with roughly half tied to the Kucing Liar development and an LNG project at Grasberg.

Quirk said Freeport returned approximately $300 million to shareholders in the first quarter through dividends and the repurchase of 1.7 million shares. Robertson added that the company maintains investment-grade ratings, has no significant debt maturities during 2026, and has flexibility for 2027 maturities. She said that since adopting its financial policy in 2021, Freeport has distributed $6 billion to shareholders through dividends and share purchases.

Americas growth initiatives: leaching, Bagdad, and El Abra

Quirk reiterated the company’s emphasis on organic, largely brownfield growth, including a plan to scale innovative leaching technologies in the U.S. and advance expansion projects. In the U.S., she said Freeport has begun deploying its first internally developed leach additive and is testing heated leaching solutions at Morenci to increase stockpile temperatures and enhance recoveries. Quirk said the company remains encouraged by its ability to scale the leach initiative to 300 million to 400 million pounds per year in the 2026–2027 timeframe and to define a path to 800 million pounds per year “by as soon as 2030.”

In response to Goldman Sachs, Quirk said current leach improvements could support a 250–300 million pound range through operational initiatives, while reaching 800 million pounds would rely on “the combination of additives and heat.” President and COO Cory Stevens said Freeport is using a pilot to calibrate heap models at Morenci and is also advancing a larger heating project at El Abra, with additional concepts including chemical heat.

Quirk said the company is progressing toward a potential investment decision later this year on a brownfield expansion at the Bagdad mine in Arizona, noting “there are no permitting hurdles” and that prior planning could support completion within a three- to four-year timeframe. In Chile, she said Freeport submitted an environmental impact statement in March for a “major expansion project” at El Abra in partnership with Codelco, which she said would transform it into a larger contributor in the portfolio.

Adkerson closed the call by emphasizing transparency around the Grasberg ramp-up, saying, “I can assure you we’re going to be transparent in all things that go on with this ramp-up.”

About Freeport-McMoRan NYSE: FCX

Freeport-McMoRan Inc is a U.S.-based natural resources company primarily engaged in the exploration, mining and processing of copper, gold and molybdenum. Its operations encompass large-scale open-pit and underground mining as well as associated concentrator and milling facilities. The company produces copper in the form of concentrates and cathodes, and also recovers gold and molybdenum as co-products; its business model includes exploration, development, mining, beneficiation and the sale of bulk commodities to smelters and industrial customers.

Freeport-McMoRan conducts operations and development activities across multiple geographies, with substantial assets in the Americas and Indonesia.

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