The operator introduces the Freeport-McMoRan Second Quarter Conference Call, and David Joint, Vice President, Investor Relations, welcomes everyone and provides information on how to access the conference call. He also reminds participants of the non-GAAP measures and forward-looking statements that will be discussed. Richard Adkerson, Chairman of the Board, will make opening comments, followed by Kathleen Quirk, President and CEO, who will review the slide materials. The call will then be opened for questions. Adkerson mentions the recent market volatility.

The author discusses the recent fluctuations in the copper market, attributing them to a combination of factors such as softening demand in China, government policies, and global inventories. They express confidence in the long-term strength of the copper market due to increasing electrification and defense spending, but acknowledge ongoing supply challenges.

The company is optimistic about the future demand for copper and is proud of their team's work on commissioning a new smelter in Indonesia. This new facility will help the company become a fully-integrated producer in the country and extend their operations for the long-term. Despite challenges like COVID and inflation, the team was able to complete the project on time and within budget. The company looks forward to maximizing the value of this resource without any time limit.

In the fourth paragraph, Kathleen Quirk discusses the results of the second quarter and first half of 2024, highlighting the company's focus on driving value through reliable and responsible execution, cost management, and building organic growth. She also mentions two significant developments for the future: the advancement of the Indonesian smelter project and the ongoing momentum in the innovative leach project. Both of these initiatives are expected to drive value and differentiate Freeport from its competitors.

The company is focused on scaling their initiative and lowering unit costs in the U.S. They have executed their shareholder return framework with $0.5 billion in dividends and share purchases. The company is financially strong and has a positive outlook for the future. Copper prices have fluctuated due to macro sentiment and investor positioning. China's economic challenges and delays in stimulating growth have weighed on the market, while the U.S. continues to see strong demand for copper. Globally, there is a favorable outlook for copper due to its important role in electrification and increasing demand for copper in energy applications. The company expects above-trend growth in demand for copper in the future.

The paragraph discusses the current state of the copper market and the company's operations in the US and South America. It mentions the challenges of lower ore grades and the company's efforts to mitigate their impact through productivity improvements and new technologies. It also highlights the strong performance of the Cerro Verde operation in South America and the company's efforts to improve unit net cash costs.

In Indonesia, despite shipping delays in June, the results were strong with net unit cash credits of $0.21 per pound. Quarterly mill rates were lower due to advanced maintenance and a change in mine sequencing, but this is not a significant issue for long-term plans. The company is also seeing significant growth in incremental volumes from their innovative leach initiative, which involves recovering additional copper from already mined material. The goal is to reach 800 million pounds per annum, which will greatly enhance the value and competitiveness of their Americas production.

The company has been successful in increasing the amount of copper produced by using data and new operational tactics to enhance heat retention in leach stockpiles. They are now working on new initiatives, such as using drone technology and renewable energy sources, to further increase production. The company is well-positioned to achieve their ultimate goal of producing 800 million pounds of copper per year, with a strong innovation team and existing infrastructure. They also have a pipeline of projects in development to continue to grow their production.

Freeport is pursuing a leach initiative and a brownfield expansion at their Bagdad mine in Arizona to increase production. They are also looking into a brownfield expansion at their Lone Star, Safford District and a potential project at El Abra in Chile. These projects involve investments in automation, infrastructure, and employee housing, and are expected to significantly increase production levels in the next decade.

The company is estimating that the costs for their new concentrator project and related infrastructure will be around $7.5 billion and will provide a large amount of copper and molybdenum production. The project will take several years to complete due to permitting requirements. The company is also making progress on a development project in Indonesia and is exploring for additional resources. They are focused on disciplined growth opportunities and are working to extend their rights in Indonesia to continue providing benefits to the local community. The government has enacted a regulation that outlines the conditions for approval for an extension for license holders like PT-FI.

The company is in the process of completing an application to extend their rights to operate until 2024, in line with the government's recognition of the long lead times required for investment. Sales volumes for copper, gold, and molybdenum are expected to remain similar to previous estimates, with a slight increase in copper sales for 2024. The company's estimated unit cash costs for 2024 are slightly higher than previous estimates but still in line with initial guidance. The company's cash flow generating capacity is projected to be strong, with EBITDA ranging from $11 billion to $15 billion per annum, depending on copper prices.

The company's operating cash flows are expected to range from $7.5 billion to $11 billion at $5 copper, and they have strong reserves and production capabilities. Capital expenditures for 2024 and 2025 are forecasted to be relatively small, with a focus on disciplined deployment of capital and value-enhancing projects. The company's financial policy priorities include maintaining a strong balance sheet, returning cash to shareholders, and investing in growth projects. The company's credit rating was recently upgraded and they have distributed $4.3 billion to shareholders year-to-date.

The company has a positive outlook for its long-term portfolio and is focused on investing in projects that will bring value and return cash to shareholders. Market conditions are closely monitored and projects are carefully managed for financial flexibility. The team is driven by value and has a clear strategy in place. The company then took questions from analysts. The North American operations saw lower grades and decreased copper sales guidance, but the company is focused on improving productivity and addressing unplanned maintenance disruptions. The company is confident in turning the corner and has a sharp focus on improving asset health and reliability.

Kathleen Quirk discusses the impact of leach production on offsetting the effects of low ore grades and reducing the average cost of US production. She also mentions progress being made on improving productivity and reducing unplanned outages. She confirms that the $300 million to $400 million range for leach production by 2026 is not included in current sales volume guidance. Carlos De Alba asks about the lower cash costs associated with these initiatives, but Kathleen does not provide a specific figure.

The incremental cost for the leach initiatives is under $1 per pound because the mining cost has already been incurred. This is due to recovering more metal from stockpiles using censoring and data analytics. New technologies and expertise from other industries, such as agriculture and oil and gas, are helping with drilling techniques to access previously inaccessible areas. The use of drone technology and helicopters is also aiding in laying irrigation lines. This initiative, called Leach Everywhere, has the potential to change the competitive position of the US operations, particularly at the Morenci mine.

Kathleen Quirk discusses the potential for a new mine with low operating costs and how it will benefit their operations in the US. She also mentions the new regulation for IUPK in Indonesia and how it allows them to apply for a life of mine extension. They have been waiting for the regulation to be finalized and now that it has been issued, they can move forward with their application. They are currently putting together the application package and can apply at any time, but there is no set timeline for the government's response.

The government wants to move quickly with the new smelter in Indonesia and hopes to have it completed by 2024. There is widespread acceptance and positive momentum for this project, and it is seen as beneficial for all stakeholders. The ramp-up profile for the smelter is optimistic, but the company is confident in achieving full capacity by year-end. They plan to provide separate disclosure for the smelter's operating performance and profitability in the future.

Freeport has recognized the challenges of starting up a large smelter project and has been planning for it for some time. They have brought together expertise from their smelters in the US, Spain, and Indonesia to ensure efficient construction and operation. The company is well-prepared for any issues that may arise and has already employed a team to lead the startup. They have also planned for the different logistics and marketing strategies that will be required for the new smelter.

The team has been working on the smelter project and has expertise in operating smelters and marketing products. The results will be reported as part of PT-FI's results and will be reflected in the operating costs and revenue lines. Cory Stevens, who leads the project, is back from Indonesia and confirms that commissioning work is well underway with a large team of operating experts collaborating to commission the project.

The plant has 45,000 pieces of instrumentation and computer connections that are being double checked and verified before start-up. The ramp-up plan involves running the plant at 50% capacity initially, with safety checks and procedures in place. The company has a centralized team in place to support the start-up process, and they expect to begin processing concentrate in August. The company will benefit from higher revenues due to direct marketing and not having to pay a smelter.

The company's transition to a new revenue model will result in both financial benefits and operational changes. The engineering group, led by Cory Stevens, is currently working on commissioning the new smelter project and ensuring the readiness of operations. The team is collaborating with operating personnel from around the world and conducting safety checks to prepare for a smooth ramp-up. The team is well-prepared and eager to make the project a success.

The speaker emphasizes the benefits of having a centralized team at Freeport, which helps manage major projects and transitions to operations. They have the right people in place for a safe and efficient start-up. The first processing of concentrate is expected in August and the ramp-up is expected to move quickly until the end of 2024. The precious metal refinery will also be starting up in the same time frame. The speaker highlights the importance of the second stage of the smelting furnace and the extra precautions being taken. The speaker also mentions a revision in gold sales.

In response to a question about the wet conditions in the Block Cave affecting the mine sequencing and resulting in a loss of 150,000 ounces of gold, Kathleen Quirk explains that the ounces will reappear in the plan over the next few years. She also mentions that the team is working on implementing a remote pumping system to more quickly clean up spills in the future. Mark Johnson adds that the company has been managing wet muck for over 20 years and the remote pumping system will help mitigate the issue.

The GBC has built in operational flexibility by developing more draw points than required to meet production rates. This allowed them to shift to an area with similar copper grades but lower gold grades. The goal mentioned earlier is back in the plan and they plan to have mitigation measures in place by the fourth quarter. The third condition for the IUPK application involves a commitment to conduct additional exploration and increase refining capacity, which will be approved by the Minister of Energy & Minerals. The company has plans for both and is discussing with the government the possibility of having additional capacity located in Papua. There is no specific dollar amount required for this investment.

During a conference call, an analyst from Scotiabank asked about the potential extension of an IUPK. The company is considering offering an extra 10% stake in the asset post 2041 to a state-owned company, and discussions with the government have involved reimbursing the company's capital costs incurred through 2041. This is seen as a cost of the deal and a win-win for both parties. The company also plans to resume share buybacks in the second half of the year, but the smelter investments are not included in their financial policy of distributing 50% of available cash through dividends and share purchases.

During a recent earnings call, Freeport-McMoRan's CEO and CFO discussed the company's available cash and future investments. They clarified that available cash is the flow of money minus required CapEx and does not include future growth projects. The company plans to continue buying back stock, but this will depend on their cash flow. The company also mentioned their positive relationship with the Indonesian government and the strong desire for more mining investments in Peru and Chile. However, they emphasized the importance of addressing community and social concerns in these areas.

The speaker discusses the current state of permitting processes in Chile and the US for mining projects, highlighting the need for streamlining and the positive environment for investment in the mining industry. They also mention the importance of considering social and environmental responsibilities, but note that there is a growing recognition of the need for metals like copper. The speaker also mentions the advantage of pursuing projects in the US, where existing operations can be built upon and permitting requirements are not as extensive. They mention the Lone Star and Safford projects as examples.

Lawson Winder asks about the Kucing Liar project, which has high returns for the company.

The speaker is asking for an update on the progress of the Grasberg underground blockade project and when production is expected to start. They note that $400 million has been spent over two years, but spending is expected to increase in the future. The project is estimated to cost $4 billion and is expected to start production towards the end of the decade, with a significant amount of copper and gold production. The project is seen as a great extension of Grasberg and will utilize new technologies and learnings from previous developments.

The speaker explains that they are in a good position with their project and expect good production by 2030. They then take a question from a caller about the 10% ownership of the IUPK and clarify that their ownership will remain at 48.76% until 2041, when the 10% ownership will be transferred. The transfer will be a reimbursement of capital incurred between now and 2041, and the cash flows will not be impacted by it.

Richard Adkerson and Brian MacArthur are discussing a transaction that will occur after 2041, which is different from the Rio deal that happened in the mid-90s. If the transaction does not occur, their interest will remain the same. The government is expected to acquire 10% and the cost reimbursement agreement will be triggered. The final question is from Bill Peterson, who asks about the trajectory of leaching output in the future. Kathleen Quirk responds that the current run rate is what is in their numbers, but they see opportunities to increase it through initiatives and tactics. They will continue to update their plans as they progress towards their goal of 300-400 million pounds per year.

The operator concludes the call and thanks participants for their participation, reminding them to contact David for any follow-up questions.

This summary was generated with AI and may contain some inaccuracies.