The paragraph is from a transcript of the Freeport-McMoRan First Quarter Conference Call. The operator introduces the call and turns it over to David Joint, Vice President of Investor Relations, who provides an overview. He mentions the release of the company's first quarter 2025 results, available on their website, and notes that the call is being broadcast online. Joint advises that some statements are forward-looking and actual results may vary. He introduces Richard Adkerson, Kathleen Quirk, and Maree Robertson from the management team, outlining their roles in the call. Richard Adkerson thanks participants and previews the discussion of the quarterly results and future outlook.

Team Freeport is thriving in a challenging environment through its focused strategy centered on copper production, supported by organic growth projects and strong financial management. Their operations are well-aligned with global copper demand, further bolstered by their gold and molybdenum interests. The management team, led by Kathleen, is driving efficiencies and reducing costs, particularly in Indonesia, where Freeport's accomplishments, including upstream mining and downstream processing at the Grasberg district, have exceeded expectations. The positive relationship with the Indonesian government under President Jokowi has been beneficial for securing long-term operational rights.

Kathleen Quirk discussed first-quarter highlights from the world's second-largest copper and one of the largest gold mines, noting that production met expectations despite planned maintenance at Grasberg. Copper sales exceeded expectations, although gold shipments were affected by timing. They generated $1.9 billion in EBITDA, expecting improved margins, cash flow, and performance throughout 2025 and beyond. Copper sales volumes are projected to increase by 20% and gold sales nearly fourfold in the coming quarters, while unit net cash costs are anticipated to decrease by 30%. Progress was made on smelter repairs, low-cost leach projects, and increased US copper sales premiums. The company is well-positioned for future growth in the copper industry.

The paragraph outlines the company's strategic priorities and recent achievements. The focus is on operational excellence, cost management, and leveraging market conditions through share repurchase. Key priorities for 2025 include executing plans safely and efficiently, scaling leach opportunities to enhance margins, and expediting repairs to the PTFI smelter for an earlier startup. The company emphasizes innovation as a value driver and is working on expanding its growth portfolio for future copper production. Additionally, they highlight milestones for projects in the Americas and note discussions on copper markets will be continued on the next slide.

The article discusses the positive market fundamentals for copper due to its increasing use in electrification and global demand driven by investments in power infrastructure, technology, decarbonization, and transportation. Copper prices have fluctuated, reaching a high on the US COMEX exchange, while US tariff policy has influenced market sentiment. Despite this, demand remains strong in the US, China, and Europe. Analysts predict a tight copper market in 2025 with demand potentially outpacing supply. Freeport is well-positioned to increase production to meet rising demand. Considering US tariffs on copper imports, an executive order from February identified copper as a critical material, with an investigation into its market impact underway; the US imports about half of its copper needs, with Freeport producing the majority of domestic supply.

The investigation expected to conclude by November may lead to tariffs on imported copper, though copper is currently exempt. This possibility has increased the US copper market premium to around 13% above the London Metals Exchange price. If tariffs are imposed, it could financially benefit Freeport's US copper sales by approximately $800 million annually. While Freeport has not taken a stance on copper tariffs, it has outlined concerns about their economic impacts and emphasized its vital role in US copper supply. The company supplies 70% of domestically sourced refined copper and sees potential for growth in US copper production.

The paragraph highlights Freeport's significant role as the largest contributor to the US copper market, emphasizing the company's established presence and workforce primarily in rural US communities. It praises government support for copper production and details Freeport's integrated operations, including mining, smelting, and refining. The company is positioned for growth, with expansion opportunities and improved efficiencies aided by data analytics. Workforce retention has reduced reliance on costly contractors, exemplified by a 20% reduction in contractor hours at the Morenci mine. Freeport anticipates increasing production in the US from 2025 through 2027.

The company aims to lower unit costs over a three-year period, facilitated by successful autonomous haul truck conversions at their Baghdad site, with 12 out of 33 trucks already in operation. They are exploring the expansion of this technology to other U.S. locations and are scaling their innovative leach program to increase copper production to 300 million pounds annually by 2025. The integration of new technologies is expected to optimize mining operations, reduce costs, enhance margins, and unlock reserves. They are also seeking legislative support for copper to be recognized as a critical mineral for potential tax credits. In South America, their Cerro Verde operation showed improved performance due to better mill rates, recoveries, and molybdenum output, offsetting lower ore grades. Additionally, a new leach process at El Abra in Chile may boost production.

The paragraph discusses Freeport's ongoing projects and future outlook. At the El Abra mine, the company is working with Codelco to enhance scale and efficiency. In Indonesia, operating rates were temporarily reduced due to maintenance, coinciding with securing an export permit. Strong production from the Grasberg mine is anticipated, with significant copper and gold sales expected by 2025. The company has completed smelter repairs ahead of schedule and inaugurated a Precious Metals refinery, aiding the extension of operating rights. Freeport is optimistic about growth, driven by increased copper demand for energy and technology infrastructure, and is well-positioned with extensive resources and various development projects.

The paragraph outlines the company's ongoing and future mining projects in Indonesia, the US, and South America. In Indonesia, projects benefit from high gold and copper content and utilize existing infrastructure to minimize risk. US projects are expanding copper production, aiming to increase annual increment volumes to 800 million pounds within three to five years. The Baghdad and Safford Lone Star District expansions are also in evaluation. In South America, a major expansion is planned at El Abra with a new concentrator expected to add 750 million pounds of copper annually. In Indonesia, development of the Kucing Liar project is underway, with production expected by 2030 and exploration efforts in other areas potentially extending operational rights beyond 2041. The objective is to identify high-value opportunities and allocate capital for future growth efficiently. Additional project details are available on Slide 25 of the reference materials.

The paragraph discusses the company's disciplined approach to targeting opportunities for long-term value, highlighting advanced projects, particularly a leach initiative with near-term impacts. Maree Robertson presents the financial outlook, showing a consistent three-year sales volume forecast for copper, gold, and molybdenum, with specific contributions from the US, South America, and Indonesia by 2025. The unit cost estimate for copper in 2025 has been reduced to $1.50 from the previously guided $1.60 per pound, with improved operating rates cited as a factor. The paragraph also outlines projected EBITDA and cash flow results based on varying copper prices, keeping gold and platinum prices flat.

The paragraph discusses the financial outlook and strategic investments of a company highly sensitive to copper prices. It projects annual EBITDA of $11 to $15 billion and operating cash flows of $8 to $11 billion, depending on copper prices, with a potential $800 million increase due to a premium on US copper sales. Each 10¢ per pound change in copper price impacts EBITDA by $425 million, while every $100 increase in gold prices adds $150 million to EBITDA. The company plans significant capital expenditures of approximately $4.4 billion annually in 2025 and 2026, with major projects including development at Kucing Liar and the LNG project at Grasberg, along with other infrastructure initiatives. Investments in new projects are funded by half of the available cash, with these efforts aimed at supporting future growth and cash returns.

The paragraph outlines the company's financial strategy, emphasizing disciplined capital allocation to projects that enhance its position and generate attractive returns. The company prioritizes maintaining a strong balance sheet, delivering cash returns to shareholders, and investing in growth projects. Debt maturities are not a major concern until 2027, and significant shareholder returns have been made through dividends and share buybacks. The company aims to create long-term shareholder value by reinvesting 50% of excess cash flow, while actively monitoring market conditions to maintain financial flexibility. With a strong global team, the company is well-positioned in the copper and gold industries and has a solid foundation for future growth. The presentation concludes by opening the floor for questions.

In the paragraph, Carlos De Alba from Morgan Stanley asks Kathleen Quirk about the expected cost reductions or efficiency gains from the autonomous haulage system at the Baghdad site. Kathleen Quirk explains that the project will address staffing challenges at the remote site, particularly those experienced during the pandemic. The autonomous system will reduce the need for hiring additional staff, ensuring consistent and safe operations. The project, with a capital cost of about $80 million, promises an attractive rate of return and strategic benefits, potentially leading to adoption at other sites in the US.

In the paragraph, Kathleen Quirk discusses the company's efforts to reduce cash costs in the US, aiming for an average of $2.50 per pound by 2027 through ongoing projects, despite lower grades compared to South America. Additionally, Liam Fitzpatrick from Deutsche Bank inquires about the company's strategy for concentrate export permits in Indonesia amid the new smelter's development. Quirk indicates that current permits meet sales targets through September and anticipates using existing smelters in the fourth quarter. She notes plans to discuss with the government if additional permit flexibility is needed. Corey Stevens is mentioned as being responsible for overseeing the smelter ramp-up.

The paragraph discusses the startup plans for a smelter operation, emphasizing that there is enough room under the company's permit to meet sales targets for the year. The company, Freeport, has significant experience with smelters, operating in locations like Huelva, Spain, and the U.S., and partnering with Mitsubishi in Indonesia. Corey Stevens outlines the progress of repairs, pre-commissioning, and drills taking place in preparation for the startup. The plan is to begin the startup process in May and gradually ramp up to full capacity over six months, with the goal of operating at full capacity throughout 2026. Following this, Katja Jancic from BMO Capital Markets asks about the feasibility study for a potential expansion in Baghdad, completed in 2023.

Kathleen Quirk discusses the ongoing review of the $3.5 billion capital expenditure plan in light of economic pressures like tariffs and inflation. The company is evaluating project economics and costs to make an informed decision by the end of the year. Quirk emphasizes the importance of autonomous trucks and infrastructure development to streamline operations and reduce reliance on large-scale hiring. The company is also considering timing to ensure efficient market entry and maximize returns. Timna Tanners from Wolfe Research then asks about potential acceleration of efforts in the copper industry due to US government support and inquires about updates on 45x benefits and smelting options.

Kathleen Quirk discusses Freeport's strong position to expand its U.S. copper production amidst new initiatives from the Trump administration. She highlights existing projects, including increasing leach production capacity, refining copper, and innovation around leaching concentrate, which allows expansion without the need for costly smelters. There's potential for expanding the Miami smelter to produce more cathode and exploring processing U.S. scrap copper. Freeport benefits from brownfield projects with existing infrastructure, workforce, and community support, aligning well with U.S. goals to boost domestic copper production despite challenges like lower-grade resources compared to international operations.

The paragraph discusses the need for legislative changes to include copper under the 45x provision of the Inflation Reduction Act (IRA), which would make it eligible for a 10% production credit. The speaker emphasizes the importance of domestic copper production for U.S. national security and highlights potential opportunities in the Lone Star Safford district for increasing copper output. Timna Tanners acknowledges this information and looks forward to future updates. Subsequently, Daniel Major from UBS inquires about the increase in cost guidance for North America, specifically regarding site production delivery costs and additional tariff impacts. He seeks clarification on the extent of these impacts and how much of the cost base accounts for the increased 5% in purchased inputs, as well as potential upsides if these impacts are not mitigated.

In the paragraph, Kathleen Quirk discusses the impact of new tariffs on their supply chain and costs. She explains that the company is working with suppliers to diversify supply sources and mitigate these impacts. While 40% of US costs are related to labor and services unaffected by tariffs, the remaining costs face potential impacts due to tariffs, particularly a significant 45% Chinese tariff. Quirk expresses confidence in working with suppliers to find solutions to reduce these impacts, emphasizing the need for a system to verify vendor claims and collaboratively source products with lower tariffs. She hopes for more certainty in resolving these trade issues.

The paragraph involves a conversation about the company's financial strategies and current market conditions. Daniel Major asks Kathleen Quirk about the company's exposure to energy costs, particularly oil. Quirk responds that they are benefiting from a reduction in diesel prices by about 20 cents per gallon compared to their initial forecasts, specifically for their operations in North America, though they are seeing some increases in electricity costs. Chris LaFemina from Jefferies inquires about the company's stock buyback strategy, noting that the company has a net debt level below its target and anticipates improved free cash flow due to favorable market conditions like high gold prices and lower costs in the US. Despite previous low share prices due to macroeconomic factors, LaFemina suggests that the current strong cash flow might warrant accelerating the buyback program.

The paragraph discusses the company's strategy regarding share repurchases. It highlights the attractiveness of buying back shares to enhance per-share growth using free cash flow, while also maintaining a strong balance sheet and pursuing growth projects. Kathleen Quirk agrees with the strategy, emphasizing that improved cash flow throughout the year will facilitate these buybacks, acknowledging a disparity between the company's asset value and stock performance. The company plans to balance shareholder returns with growth objectives, relying on increased free cash flow to accelerate share buybacks. Richard Adkerson aligns with these views without additional comments.

In the discussion between company officials and analysts, there's a consensus on the disciplined financial approach and consideration for share buybacks as cash flows increase. Bob Brackett questions the significant capital expenditure on Baghdad's expansion, suggesting that prior investments make the continuation of the project inevitable. However, Kathleen Quirk clarifies that current spending mainly addresses essential infrastructure for tailings storage, which would have been necessary eventually regardless of the expansion decision. This spending does not commit them to the larger $3.5 billion project but instead positions them favorably for future development if they choose to proceed.

In the provided paragraph, there is a discussion about the potential for Freeport to acquire assets in the United States, considering they are the largest player in the country. Kathleen Quirk explains that while they have a substantial resource base and development pipeline within the US, they are open to exploring opportunities that could enhance their position, particularly if there are synergies to be gained. She highlights that, unlike some potential projects lacking infrastructure, Freeport already has significant facilities like smelters and leaching capabilities that could offer advantages in further acquisitions or partnerships.

In the paragraph, Brian MacArthur inquires about the cost projections in Indonesia, specifically regarding permits, smelter usage, export duties, and the effect of these factors on costs and guidance adjustments. Kathleen Quirk explains that the cost adjustments are largely due to changes in byproduct credits and that no duty is projected for the fourth quarter because they are using internal smelters, only previously included duties for exported sales. Richard Adkerson praises Corey's team's efforts in overcoming a fire and uncertainties in making substantial progress. The session then moves to Bill Peterson from JPMorgan, who asks about a modest decline in leaching performance.

To reach a goal of 75 million pounds quarterly, Kathleen Quirk outlines various strategies, focusing on scaling existing methods rather than adopting new technologies. Key initiatives include the "leach everywhere" technique, using helicopters to place irrigation lines in difficult-to-access stockpile areas, which is being expanded to more sites. Additionally, they are implementing "deep raffinate drilling," which involves targeted application of solutions in strategic stockpile locations, informed by data analytics. These efforts, some adapted from other industries, aim to enhance production efficiency and output by year's end.

The paragraph discusses ongoing trials and projects aimed at improving copper recovery from stockpiles, including testing new additives and implementing heat trials. Heating techniques, such as insulating stockpiles and heating the raffinate solution, are being tested, with future projects planned at El Abra and Morenci. Morenci is exploring cost-effective geothermal steam as a heat source. Confidence is expressed in reaching a production level of 300 using existing technologies at scale, with potential to exceed this level with new technologies. When questioned about the supply chain, Kathleen Quirk assures that the additives tested do not rely on China and some are produced in the US, supporting a non-China and potentially US-based supply chain.

The paragraph discusses the excitement and potential of a new low-cost copper mining operation in the US that will produce 800 million pounds annually, leveraging previously considered waste stockpiles. There is an emphasis on establishing a supply chain and recycling technology for an additive used in the process. The conversation ends with gratitude for participation in the call, mentioning that David is available for follow-up questions.

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