Income Taxes
Following is a summary of the approximate amounts used in the calculation of our consolidated income tax provision (in millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
|
Income
(Loss)
a
|
|
Effective
Tax Rate
|
|
Income Tax (Provision) Benefit
|
|
Income
a
|
|
Effective
Tax Rate
|
|
Income Tax (Provision) Benefit
|
|
U.S.
b
|
$
|
(97
|
)
|
|
1%
|
|
$
|
1
|
|
|
$
|
170
|
|
|
(2)%
|
|
$
|
4
|
|
|
South America
|
263
|
|
|
40%
|
|
(105
|
)
|
|
183
|
|
|
39%
|
|
(72
|
)
|
|
Indonesia
|
79
|
|
|
33%
|
|
(26
|
)
|
c
|
933
|
|
|
43%
|
|
(401
|
)
|
|
Eliminations and other
|
(62
|
)
|
|
N/A
|
|
10
|
|
|
50
|
|
|
N/A
|
|
(3
|
)
|
|
Rate adjustment
d
|
—
|
|
|
N/A
|
|
15
|
|
|
—
|
|
|
N/A
|
|
(34
|
)
|
|
Consolidated FCX
|
$
|
183
|
|
|
57%
|
e
|
$
|
(105
|
)
|
|
$
|
1,336
|
|
|
38%
|
|
$
|
(506
|
)
|
|
|
|
a.
|
Represents income (loss) from continuing operations before income taxes and equity in affiliated companies’ net losses.
|
|
|
b.
|
In addition to our North America mining operations, the U.S. jurisdiction reflects corporate-level expenses, which include interest expense associated with senior notes, general and administrative expenses, and environmental obligations and shutdown costs.
|
|
|
c.
|
Includes a tax credit of
$8 million
(
$6 million
net of noncontrolling interest) associated with the reduction in PT-FI's statutory tax rates in accordance with its special mining license (IUPK).
|
|
|
d.
|
In accordance with applicable accounting rules, we adjust our interim provision for income taxes to equal our consolidated tax rate.
|
|
|
e.
|
Our first-quarter 2019 consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate, excluding the U.S. jurisdiction. Because our U.S. jurisdiction generated net losses in first-quarter 2019 that will not result in a realized tax benefit, applicable accounting rules require us to adjust our estimated annual effective tax rate to exclude the impact of U.S. net losses.
|
Assuming achievement of current sales volume and cost estimates and average prices of
$3.00
per pound for copper,
$1,300
per ounce for gold and
$13.00
per pound for molybdenum for the remainder of
2019
, we estimate our consolidated effective tax rate for the year
2019
would approximate
41 percent
(comprised of an estimated effective rate of 41 percent on South America income, 38 percent on Indonesia income and 0 percent for the U.S.). Variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Because of our U.S. tax position, we do not record a financial statement impact for income or losses generated in the U.S.; therefore, the consolidated effective tax rate is generally higher than the international rates at lower copper prices and lower than international rates at higher copper prices.
OPERATIONS
North America Copper Mines
We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. We record our 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper sales is in the form of copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate, gold and silver are also produced by certain of our North America copper mines.
Operating and Development Activities.
We have significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. Future investments will be undertaken based on the results of economic and technical feasibility studies, and are dependent on market conditions. We continue to pursue projects to enhance productivity through innovative technologies and to study opportunities to reduce the capital intensity of our potential long-term development projects.
Through exploration drilling, we have identified a significant resource at our wholly owned Lone Star project located near the Safford operation in eastern Arizona. An initial project to develop the Lone Star leachable ores commenced in first-quarter 2018, with first production expected by the end of 2020. Initial production from the Lone Star leachable ores is expected to average approximately
200 million
pounds of copper per year, with the potential for future expansion options. Total capital costs for the initial project, including mine equipment and pre-production stripping, are expected to approximate $850 million and will benefit from the utilization of existing infrastructure at the adjacent Safford operation. As of
March 31, 2019
, approximately
$385 million
has been incurred for this project. The project also advances exposure to a significant sulfide resource. We expect to incorporate recent positive drilling and ongoing results in our future development plans.
Operating Data.
Following is summary consolidated operating data for the North America copper mines:
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Operating Data, Net of Joint Venture Interests
|
|
|
|
Copper
(millions of recoverable pounds)
|
|
|
|
Production
|
336
|
|
|
348
|
|
Sales, excluding purchases
|
320
|
|
|
384
|
|
Average realized price per pound
|
$
|
2.85
|
|
|
$
|
3.16
|
|
|
|
|
|
Molybdenum
(millions of recoverable pounds)
|
|
|
|
Production
a
|
7
|
|
|
7
|
|
|
|
|
|
100% Operating Data
|
|
|
|
Leach operations
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
705,000
|
|
|
674,600
|
|
Average copper ore grade (percent)
|
0.23
|
|
|
0.27
|
|
Copper production (millions of recoverable pounds)
|
226
|
|
|
239
|
|
|
|
|
|
Mill operations
|
|
|
|
Ore milled (metric tons per day)
|
315,600
|
|
|
288,600
|
|
Average ore grade (percent):
|
|
|
|
Copper
|
0.33
|
|
|
0.35
|
|
Molybdenum
|
0.02
|
|
|
0.02
|
|
Copper recovery rate (percent)
|
87.8
|
|
|
88.0
|
|
Copper production (millions of recoverable pounds)
|
176
|
|
|
174
|
|
|
|
a.
|
Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines.
|
North America’s consolidated copper sales volumes of
320 million
pounds in
first-quarter
2019
were lower than
first-quarter
2018
sales of
384 million
pounds, primarily reflecting timing of shipments. North America copper sales are estimated to approximate
1.4 billion
pounds for the year
2019
, similar to
2018
.
Unit Net Cash Costs.
Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.
Gross Profit per Pound of Copper and Molybdenum
The following table summarizes unit net cash costs and gross profit per pound at our North America copper mines. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
|
By- Product Method
|
|
Co-Product Method
|
|
By- Product Method
|
|
Co-Product Method
|
|
|
|
Copper
|
|
Molyb-
denum
a
|
|
|
Copper
|
|
Molyb-
denum
a
|
|
Revenues, excluding adjustments
|
$
|
2.85
|
|
|
$
|
2.85
|
|
|
$
|
11.68
|
|
|
$
|
3.16
|
|
|
$
|
3.16
|
|
|
$
|
10.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site production and delivery, before net noncash and other costs shown below
|
2.06
|
|
|
1.92
|
|
|
6.98
|
|
|
1.84
|
|
|
1.73
|
|
|
7.81
|
|
|
By-product credits
|
(0.26
|
)
|
|
—
|
|
|
—
|
|
|
(0.20
|
)
|
|
—
|
|
|
—
|
|
|
Treatment charges
|
0.11
|
|
|
0.11
|
|
|
—
|
|
|
0.10
|
|
|
0.09
|
|
|
—
|
|
|
Unit net cash costs
|
1.91
|
|
|
2.03
|
|
|
6.98
|
|
|
1.74
|
|
|
1.82
|
|
|
7.81
|
|
|
DD&A
|
0.26
|
|
|
0.24
|
|
|
0.44
|
|
|
0.25
|
|
|
0.23
|
|
|
0.66
|
|
|
Noncash and other costs, net
|
0.07
|
|
|
0.07
|
|
|
0.14
|
|
|
0.05
|
|
|
0.05
|
|
|
0.09
|
|
|
Total unit costs
|
2.24
|
|
|
2.34
|
|
|
7.56
|
|
|
2.04
|
|
|
2.10
|
|
|
8.56
|
|
|
Other revenue adjustments, primarily for pricing on prior period open sales
|
0.04
|
|
|
0.04
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
Gross profit per pound
|
$
|
0.65
|
|
|
$
|
0.55
|
|
|
$
|
4.12
|
|
|
$
|
1.11
|
|
|
$
|
1.05
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
320
|
|
|
320
|
|
|
|
|
383
|
|
|
383
|
|
|
|
|
Molybdenum sales (millions of recoverable pounds)
a
|
|
|
|
|
7
|
|
|
|
|
|
|
7
|
|
|
|
|
a.
|
Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.
|
Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) for the North America copper mines of
$1.91
per pound of copper in
first-quarter
2019
were higher than unit net cash costs of
$1.74
per pound in
first-quarter
2018
, primarily reflecting lower copper sales volumes.
Because certain assets are depreciated on a straight-line basis, North America’s average unit depreciation rate may vary with asset additions and the level of copper production and sales.
Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate
$1.91
per pound of copper for the year
2019
, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of
$13.00
per pound for the remainder of
2019
. North
America’s average unit net cash costs for the year
2019
would change by approximately
$0.03
per pound for each
$2
per pound change in the average price of molybdenum for the remainder of
2019
.
South America Mining
We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest), which are consolidated in our financial statements.
South America mining includes open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or cathode under long-term contracts. Our South America mines also sell a portion of their copper concentrate production to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.
Operating and Development Activities.
Cerro Verde’s expanded operations benefit from its large-scale, long-lived reserves and cost efficiencies. Cerro Verde's concentrator facilities have continued to perform well, with average mill throughput rates of
386,500
metric tons of ore per day in
first-quarter
2019
. Debottlenecking projects and additional initiatives to enhance operating rates are being advanced.
We continue to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher recoveries. El Abra’s large sulfide resource could potentially support a major mill project similar to facilities constructed at Cerro Verde. Technical and economic studies are being advanced to determine the optimal scope and timing for the project.
Operating Data.
Following is summary consolidated operating data for South America mining:
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Copper
(millions of recoverable pounds)
|
|
|
|
Production
|
299
|
|
|
293
|
|
Sales
|
290
|
|
|
290
|
|
Average realized price per pound
|
$
|
2.93
|
|
|
$
|
3.08
|
|
|
|
|
|
Molybdenum
(millions of recoverable pounds)
|
|
|
|
Production
a
|
8
|
|
|
6
|
|
|
|
|
|
Leach operations
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
166,700
|
|
|
168,000
|
|
Average copper ore grade (percent)
|
0.34
|
|
|
0.33
|
|
Copper production (millions of recoverable pounds)
|
59
|
|
|
67
|
|
|
|
|
|
Mill operations
|
|
|
|
Ore milled (metric tons per day)
|
386,500
|
|
|
385,500
|
|
Average ore grade (percent):
|
|
|
|
Copper
|
0.37
|
|
|
0.39
|
|
Molybdenum
|
0.02
|
|
|
0.01
|
|
Copper recovery rate (percent)
|
87.2
|
|
|
79.0
|
|
Copper production (millions of recoverable pounds)
|
240
|
|
|
226
|
|
|
|
a.
|
Refer to “Consolidated Results” for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde.
|
South America’s consolidated copper sales volumes of
290 million
pounds in
first-quarter
2019
approximated
first-quarter
2018
, with lower volumes from El Abra being offset by higher volumes at Cerro Verde.
During first-quarter 2019, heavy rainfall and electrical storms resulted in a suspension of El Abra’s crushed leach stacking operations for approximately 35 days; operations resumed in mid-March. The estimated impact of the disruption on FCX's 2019 consolidated copper production approximates 30 million pounds, approximately half of which was in first-quarter 2019.
Copper sales from South America mines are expected to approximate
1.3 billion
pounds for the year
2019
, similar to
2018
.
Unit Net Cash Costs.
Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.
Gross Profit per Pound of Copper
The following table summarizes unit net cash costs and gross profit per pound of copper at the South America mining operations. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had sales of molybdenum and silver. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
|
By-Product
Method
|
|
Co-Product
Method
|
|
By-Product
Method
|
|
Co-Product
Method
|
Revenues, excluding adjustments
|
$
|
2.93
|
|
|
$
|
2.93
|
|
|
$
|
3.08
|
|
|
$
|
3.08
|
|
|
|
|
|
|
|
|
|
Site production and delivery, before net noncash and other costs shown below
|
1.73
|
|
|
1.55
|
|
|
1.78
|
|
|
1.64
|
|
By-product credits
|
(0.34
|
)
|
|
—
|
|
|
(0.25
|
)
|
|
—
|
|
Treatment charges
|
0.19
|
|
|
0.19
|
|
|
0.20
|
|
|
0.20
|
|
Royalty on metals
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
Unit net cash costs
|
1.59
|
|
|
1.75
|
|
|
1.74
|
|
|
1.85
|
|
DD&A
|
0.39
|
|
|
0.34
|
|
|
0.43
|
|
|
0.40
|
|
Noncash and other costs, net
|
0.09
|
|
a
|
0.09
|
|
|
0.05
|
|
|
0.05
|
|
Total unit costs
|
2.07
|
|
|
2.18
|
|
|
2.22
|
|
|
2.30
|
|
Other revenue adjustments, primarily for pricing on prior period open sales
|
0.16
|
|
|
0.16
|
|
|
(0.15
|
)
|
|
(0.15
|
)
|
Gross profit per pound
|
$
|
1.02
|
|
|
$
|
0.91
|
|
|
$
|
0.71
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
290
|
|
|
290
|
|
|
290
|
|
|
290
|
|
|
|
a.
|
Includes
$12 million
(
$0.04
per pound of copper) associated with weather-related impacts at El Abra.
|
Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) of
$1.59
per pound of copper in
first-quarter
2019
were lower than unit net cash costs of
$1.74
per pound in
first-quarter
2018
, primarily reflecting higher by-product credits.
Revenues from Cerro Verde’s concentrate sales are recorded net of treatment charges, which will vary with Cerro Verde’s sales volumes and the price of copper.
Because certain assets are depreciated on a straight-line basis, South America’s unit depreciation rate may vary with asset additions and the level of copper production and sales.
Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results – Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.
Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate
$1.66
per pound of copper for the year
2019
, based on current sales volume and cost estimates and assuming an average price of
$13.00
per pound of molybdenum for the remainder of
2019
.
Indonesia Mining
PT-FI’s assets include one of the world’s largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. Substantially all of PT-FI’s copper concentrate is sold under long-term contracts, and during
first-quarter
2019
, approximately half of PT-FI’s concentrate production was sold to PT Smelting (PT-FI’s 25-percent-owned smelter and refinery in Gresik, Indonesia).
Effective December 21, 2018, our ownership interest in PT-FI is 48.76 percent. We manage PT-FI’s mining operations and consolidate PT-FI in our financial statements. As further discussed in Note 1, our economic interest in PT-FI is expected to approximate 81 percent through 2022.
Operating and Development Activities.
PT-FI is currently mining the final phase of the Grasberg open pit and expects to transition to the Grasberg Block Cave (GBC) underground mine in mid-2019. PT-FI continues to assess opportunities to recover additional ore from the open pit during the remainder of 2019, subject to mine planning considerations.
PT-FI continues to advance several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit.
PT-FI's estimated annual capital spending on underground mine development projects is expected to average
$0.7 billion
per year over the next four years, net of scheduled contributions from PT Indonesia Asahan Aluminium (Persero) (PT Inalum). In accordance with applicable accounting guidance, aggregate costs (before scheduled contributions from PT Inalum), which are expected to average
$0.9 billion
per year through 2022, will be reflected as an investing activity in our cash flow statement, and contributions from PT Inalum will be reflected as a financing activity. Considering the long-term nature and size of these projects, actual costs could vary from these estimates.
In connection with completion of the December 2018 transaction, PT-FI committed to construct a new smelter in Indonesia by December 21, 2023. PT-FI has reviewed various process technologies and has initiated front-end engineering and design for the selected technology. The preliminary capital cost estimate for the project is in the $3 billion range, and PT-FI intends to pursue financing, commercial and potential partner arrangements for this project. The economics of PT-FI’s share of the new smelter will be borne by PT-FI’s shareholders according to their respective share ownership percentages.
The following provides additional information on the continued development of the Common Infrastructure project, the GBC underground mine and the Deep Mill Level Zone (DMLZ) ore body that lies below the Deep Ore Zone (DOZ) underground mine.
Common Infrastructure and GBC Underground Mine.
The Common Infrastructure project provides access to PT-FI’s large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than the existing underground tunnel system. In addition to providing access to the underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and development of the GBC and DMLZ underground mines is advancing using the Common Infrastructure project tunnels as access.
The GBC underground mine accounts for approximately half of PT-FI’s recoverable proven and probable reserves. Substantial progress has been made to prepare for the transition to mining of the GBC underground mine. First undercut blasting occurred in late 2018, and several drawbells have been constructed and blasted to prepare for mining. Cave production is in progress and on schedule. All underground mining levels and the ore flow system are being commissioned. Production rates over the next five years are expected to ramp up to 130,000 metric tons of ore per day.
Mine development capital for the GBC underground mine and associated Common Infrastructure is expected to approximate $6.8 billion, including
$4.1 billion
incurred through
March 31, 2019
($0.2 billion during
first-quarter
2019
).
DMLZ.
The DMLZ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. In September 2015, PT-FI initiated pre-commercial production that represented ore extracted during the development phase for the purpose of obtaining access to the ore body. During third-quarter 2018, PT-FI commenced hydraulic fracturing activities to manage rock stresses and pre-condition the DMLZ underground mine for large-scale production following mining induced seismic activity experienced in 2017 and 2018. Results to date have been effective in managing rock stresses and pre-conditioning the cave. PT-FI expects to commence the ramp up of production in the DMLZ underground mine by mid-2019 and to reach full production rates of 80,000 metric tons per day in 2022. Estimates of timing of future production continue to be reviewed and may be modified as additional information becomes available.
Mine development capital costs for the DMLZ underground mine are expected to approximate $3.3 billion, including
$2.6 billion
incurred through
March 31, 2019
($0.1 billion during
first-quarter
2019
).
Operating Data.
Following is summary consolidated operating data for Indonesia mining:
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
Operating Data
|
|
|
|
Copper
(millions of recoverable pounds)
|
|
|
|
Production
|
145
|
|
|
311
|
|
Sales
|
174
|
|
|
319
|
|
Average realized price per pound
|
$
|
2.92
|
|
|
$
|
3.06
|
|
|
|
|
|
Gold
(thousands of recoverable ounces)
|
|
|
|
Production
|
162
|
|
|
595
|
|
Sales
|
235
|
|
|
603
|
|
Average realized price per ounce
|
$
|
1,291
|
|
|
$
|
1,312
|
|
|
|
|
|
100% Operating Data
|
|
|
|
Ore milled (metric tons per day):
a
|
|
|
|
Grasberg open pit
|
102,800
|
|
|
125,200
|
|
DOZ underground mine
|
30,300
|
|
|
39,400
|
|
DMLZ underground mine
|
6,800
|
|
|
2,600
|
|
GBC underground mine
|
5,000
|
|
|
4,000
|
|
Big Gossan underground mine
|
5,600
|
|
|
2,400
|
|
Total
|
150,500
|
|
|
173,600
|
|
Average ore grades:
|
|
|
|
Copper (percent)
|
0.62
|
|
|
1.12
|
|
Gold (grams per metric ton)
|
0.58
|
|
|
1.63
|
|
Recovery rates (percent):
|
|
|
|
Copper
|
84.7
|
|
|
92.0
|
|
Gold
|
68.7
|
|
|
84.7
|
|
Production:
|
|
|
|
Copper (millions of recoverable pounds)
|
145
|
|
|
340
|
|
Gold (thousands of recoverable ounces)
|
162
|
|
|
673
|
|
|
|
a.
|
Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine, related stockpiles and development activities that result in metal production.
|
In March 2019, PT-FI's export license was extended to March 8, 2020. PT-FI's approved export quota for the current export period totals approximately 180,000 dry metric tons of concentrate. PT-FI plans to seek approval from the Indonesian government for an increase in its export quota for the current export period for expected higher production volumes associated with changes made to PT-FI’s production plan that was submitted to the Indonesian government in November 2018.
Indonesia mining’s consolidated sales of
174 million
pounds of copper and
235 thousand
ounces of gold in
first-quarter
2019
were lower than
first-quarter
2018
sales of
319 million
pounds of copper and
603 thousand
ounces of gold, primarily reflecting anticipated lower mill rates and ore grades as PT-FI transitions mining from the open pit to underground.
As PT-FI transitions mining from the open pit to underground, production is expected to be significantly lower in 2019 and 2020, compared with 2018. Metal production is expected to improve significantly by 2021 following a ramp-up period. Consolidated sales volumes from Indonesia mining are expected to approximate
0.6 billion
pounds of copper and
0.8 million
ounces of gold in 2019.
Unit Net Cash Costs.
Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.
Gross Profit per Pound of Copper and per Ounce of Gold
The following table summarizes the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations. Refer to “Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2019
|
|
2018
|
|
By-Product Method
|
|
Co-Product Method
|
|
By-Product Method
|
|
Co-Product Method
|
|
|
Copper
|
|
Gold
|
|
|
Copper
|
|
Gold
|
Revenues, excluding adjustments
|
$
|
2.92
|
|
|
$
|
2.92
|
|
|
$
|
1,291
|
|
|
$
|
3.06
|
|
|
$
|
3.06
|
|
|
$
|
1,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site production and delivery, before net noncash and other costs shown below
|
3.10
|
|
|
1.92
|
|
|
850
|
|
|
1.36
|
|
|
0.75
|
|
|
319
|
|
Gold and silver credits
|
(1.81
|
)
|
|
—
|
|
|
—
|
|
|
(2.59
|
)
|
|
—
|
|
|
—
|
|
Treatment charges
|
0.29
|
|
|
0.18
|
|
|
80
|
|
|
0.25
|
|
|
0.13
|
|
|
57
|
|
Export duties
|
0.10
|
|
|
0.06
|
|
|
27
|
|
|
0.14
|
|
|
0.08
|
|
|
34
|
|
Royalty on metals
|
0.16
|
|
|
0.10
|
|
|
46
|
|
|
0.21
|
|
|
0.11
|
|
|
49
|
|
Unit net cash costs (credits)
|
1.84
|
|
|
2.26
|
|
|
1,003
|
|
|
(0.63
|
)
|
|
1.07
|
|
|
459
|
|
DD&A
|
0.61
|
|
|
0.37
|
|
|
166
|
|
|
0.57
|
|
|
0.31
|
|
|
133
|
|
Noncash and other costs, net
|
0.01
|
|
a
|
0.01
|
|
|
4
|
|
|
0.04
|
|
|
0.02
|
|
|
11
|
|
Total unit costs (credits)
|
2.46
|
|
|
2.64
|
|
|
1,173
|
|
|
(0.02
|
)
|
|
1.40
|
|
|
603
|
|
Other revenue adjustments, primarily for pricing on prior period open sales
|
0.11
|
|
|
0.11
|
|
|
9
|
|
|
(0.12
|
)
|
|
(0.12
|
)
|
|
27
|
|
PT Smelting intercompany profit (loss)
|
0.02
|
|
|
0.01
|
|
|
5
|
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(7
|
)
|
Gross profit per pound/ounce
|
$
|
0.59
|
|
|
$
|
0.40
|
|
|
$
|
132
|
|
|
$
|
2.93
|
|
|
$
|
1.52
|
|
|
$
|
729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
174
|
|
|
174
|
|
|
|
|
319
|
|
|
319
|
|
|
|
Gold sales (thousands of recoverable ounces)
|
|
|
|
|
235
|
|
|
|
|
|
|
603
|
|
|
|
a.
|
Includes credits of
$19 million
(
$0.11
per pound of copper) associated with adjustments to prior year treatment and refining charges.
|
A significant portion of PT-FI’s costs are fixed, and unit costs vary depending on production volumes and other factors. Indonesia mining had unit net cash costs (including gold and silver credits) of
$1.84
per pound of copper in
first-quarter
2019
, compared with unit net cash credits of
$0.63
per pound in
first-quarter
2018
, primarily reflecting lower gold and silver credits and lower copper sales volumes.
Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold.
Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods.
Because certain assets are depreciated on a straight-line basis, Indonesia mining’s unit depreciation rate may vary with asset additions and the level of copper production and sales.
PT Smelting intercompany profit (loss) represents the change in the deferral of 25 percent of PT-FI’s profit on sales to PT Smelting. Refer to “Smelting & Refining” below for further discussion.
Because of the fixed nature of a large portion of Indonesia’s costs, unit net cash costs vary from quarter to quarter depending on copper and gold volumes. Assuming an average gold price of
$1,300
per ounce for the remainder of
2019
and achievement of current sales volume and cost estimates, unit net cash costs (including gold and silver credits) for Indonesia mining are expected to approximate
$1.54
per pound of copper for the year
2019
. Indonesia mining’s unit net cash costs for the year
2019
would change by approximately
$0.05
per pound for each
$50
per ounce change in the average price of gold for the remainder of
2019
.
Indonesia mining's projected sales volumes and unit net cash costs for the year
2019
are dependent on a number of factors, including operational performance, timing of shipments, export quotas and workforce productivity.
Molybdenum Mines
We have two wholly owned molybdenum mines – the Henderson underground mine and the Climax open-pit mine - both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North America and South America copper mines, is processed at our own conversion facilities.
Operating and Development Activities.
Production from the Molybdenum mines totaled
8 million
pounds of molybdenum in
first-quarter
2019
and
9 million
pounds in
first-quarter
2018
. Refer to “Consolidated Results” for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our Molybdenum mines, and from our North America and South America copper mines, and refer to “Outlook” for projected consolidated molybdenum sales volumes.
Unit Net Cash Costs Per Pound of Molybdenum.
Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.
Unit net cash costs for our Molybdenum mines averaged
$9.80
per pound of molybdenum in
first-quarter
2019
and
$8.57
per pound in
first-quarter
2018
. Based on current sales volume and cost estimates, average unit net cash costs for the Molybdenum mines are expected to approximate
$9.60
per pound of molybdenum for the year
2019
. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.
Smelting and Refining
We wholly own and operate a smelter in Arizona (Miami smelter), a refinery in Texas (El Paso refinery) and a smelter and refinery in Spain (Atlantic Copper). Additionally, PT-FI owns 25 percent of a smelter and refinery in Gresik, Indonesia (PT Smelting). Treatment charges for smelting and refining copper concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter and El Paso refinery. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.
Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. During
first-quarter
2019
, Atlantic Copper’s concentrate purchases include 35 percent from our copper mining operations and 65 percent from third parties.
PT-FI’s contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum treatment charge rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During
first-quarter
2019
, PT-FI supplied all of PT
Smelting’s concentrate requirements. In March 2019, PT Smelting received a one-year extension of its anode slimes export license through March 11, 2020.
We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of PT-FI’s sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net reductions to net income attributable to common stock of
$14 million
for
first-quarter
2019
and
$7 million
for
first-quarter
2018
. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock totaled
$34 million
at
March 31, 2019
. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.
CAPITAL RESOURCES AND LIQUIDITY
Our consolidated operating cash flows vary with prices realized from copper, gold and molybdenum; our sales volumes; production costs; income taxes; other working capital changes; and other factors. We believe that we have a high-quality portfolio of long-lived copper assets positioned to generate long-term value. We continue to advance a project to develop the Lone Star leachable ores near our Safford operation in eastern Arizona, and PT-FI has several projects in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. We are also pursuing other opportunities to enhance net present values, and we continue to advance studies for future development of our copper resources, the timing of which will be dependent on market conditions.
As presented in “Outlook”, our projected capital expenditures for 2019 are approximately $0.2 billion higher than projected operating cash flows. A large portion of the capital expenditures relate to projects that are expected to add significant production and cash flow in future periods, enabling us to generate operating cash flows exceeding capital expenditures in future years. We have cash on hand and the financial flexibility to fund these expenditures and will continue to be disciplined in deploying capital. Subject to future commodity prices for copper, gold and molybdenum, we expect estimated consolidated operating cash flows in 2019, plus available cash and availability under our credit facility, to be sufficient to fund our budgeted capital expenditures, cash dividends, noncontrolling interest distributions and other cash requirements for the year.
Cash
Following is a summary of the U.S. and international components of consolidated cash and cash equivalents available to the parent company, net of noncontrolling interests’ share, taxes and other costs at
March 31, 2019
(in billions):
|
|
|
|
|
|
Cash at domestic companies
|
$
|
1.9
|
|
|
Cash at international operations
|
0.9
|
|
|
Total consolidated cash and cash equivalents
|
2.8
|
|
|
Noncontrolling interests’ share
|
(0.4
|
)
|
|
Cash, net of noncontrolling interests’ share
|
2.4
|
|
|
Withholding taxes and other
|
—
|
|
a
|
Net cash available
|
$
|
2.4
|
|
|
a. Rounds to less than $0.1 billion.
Cash held at our international operations is generally used to support our foreign operations’ capital expenditures, operating expenses, debt repayment, working capital and other tax payments, or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility. We have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests’ share.
Debt
At
March 31, 2019
, we had no borrowings,
$13 million
in letters of credit issued and
$3.5 billion
of availability under our revolving credit facility. Refer to Note 5 for further discussion of debt, including an amendment to extend our credit facility, and “Financing Activities” below.
Operating Activities
We generated consolidated operating cash flows of
$534 million
(net of
$27 million
in working capital uses and timing of other tax payments) in
first-quarter
2019
and
$1.4 billion
(net of
$21 million
in working capital uses and timing of other tax payments) in
first-quarter
2018
. Lower operating cash flows in
first-quarter
2019
, compared with
first-quarter
2018
, primarily reflect lower copper and gold sales volumes.
Investing Activities
Capital Expenditures.
Capital expenditures, including capitalized interest, totaled
$622 million
in
first-quarter
2019
, including approximately
$370 million
for major mining projects. Capital expenditures, including capitalized interest, totaled
$402 million
in
first-quarter
2018
, including approximately $250 million for major mining projects. Higher capital expenditures in first-quarter
2019
, compared with first-quarter
2018
, primarily reflects underground development activities in the Grasberg minerals district and development of the Lone Star project. Refer to “Outlook” for further discussion of projected capital expenditures for the year
2019
.
Proceeds from sales of oil and gas properties.
We received $84 million of proceeds from sales of oil and gas properties in first-quarter 2019, including $50 million in contingent consideration received associated with the 2016 sale of onshore California oil and gas properties.
Intangible water rights and other, net.
During first-quarter 2018, our North America copper mines purchased intangible water rights totaling $88 million.
Financing Activities
Debt Transactions.
Net repayments of debt in
first-quarter
2019
totaled
$1.2 billion
, consisting of the redemption of $1.0 billion aggregate principal amount of our 3.100% Senior Notes due 2020 and the repayment of $200 million under Cerro Verde's credit facility. We recorded losses on early extinguishment of debt totaling
$6 million
in
first-quarter
2019
.
Net repayments of debt in
first-quarter
2018
totaled
$1.5 billion
, consisting of $1.4 billion of 2.375% Senior Notes that matured in March 2018 and $100 million under the Cerro Verde credit facility.
Cash Dividends and Distributions Paid.
We paid cash dividends on our common stock totaling
$73 million
in
first-quarter
2019
. On March 27, 2019, we declared a quarterly cash dividend of $0.05 per share on our common stock, which was paid on May 1, 2019, to shareholders of record as of April 15, 2019. The declaration of dividends is at the discretion of our Board of Directors (Board) and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by our Board.
Cash dividends and distributions paid to noncontrolling interests totaled $9 million in first-quarter 2019 and
$80 million
in
first-quarter
2018
. These payments will vary based on the operating results and cash requirements of our consolidated subsidiaries.
CONTRACTUAL OBLIGATIONS
As further discussed in Note 5, during first-quarter 2019, we reduced our December 31, 2018, total debt by $1.2 billion. There have been no other material changes in our contractual obligations since
December 31, 2018
. Refer to Part II, Items 7. and 7A. in our 2018 Form 10-K, for information regarding our contractual obligations.
CONTINGENCIES
Environmental and Asset Retirement Obligations
Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and asset retirement obligations and also review changes in facts and circumstances associated with these obligations at least quarterly.
There have been no material changes to our environmental and asset retirement obligations since
December 31, 2018
. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental obligations. Refer to Note 12 in our 2018 Form 10-K, for further information regarding our environmental and asset retirement obligations.
Litigation and Other Contingencies
Other than as discussed in Note 8, there have been no material changes to our contingencies associated with legal proceedings, environmental and other matters since
December 31, 2018
. Refer to Note 12 and “Legal Proceedings” contained in Part I, Item 3. of our 2018 Form 10-K, as updated by Note 8, for further information regarding legal proceedings, environmental and other matters.
NEW ACCOUNTING STANDARDS
Refer to Note 11 for a summary of recently adopted accounting standards.
PRODUCT REVENUES AND PRODUCTION COSTS
Unit net cash costs (credits) per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. These measures are presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.
We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce and (iv) it is the method used by our management and Board to monitor our mining operations and to compare mining operations in certain industry publications. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.
We show revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period
sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit
net cash costs (credits), consist of items such as stock-based compensation costs, start-up costs, inventory adjustments, long-lived asset impairments, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
|
Method
|
|
Copper
|
|
Molybdenum
a
|
|
Other
b
|
|
Total
|
|
Revenues, excluding adjustments
|
|
$
|
914
|
|
|
$
|
914
|
|
|
$
|
87
|
|
|
$
|
23
|
|
|
$
|
1,024
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
658
|
|
|
616
|
|
|
52
|
|
|
17
|
|
|
685
|
|
|
By-product credits
|
|
(83
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Treatment charges
|
|
36
|
|
|
35
|
|
|
—
|
|
|
1
|
|
|
36
|
|
|
Net cash costs
|
|
611
|
|
|
651
|
|
|
52
|
|
|
18
|
|
|
721
|
|
|
DD&A
|
|
83
|
|
|
77
|
|
|
3
|
|
|
3
|
|
|
83
|
|
|
Noncash and other costs, net
|
|
23
|
|
|
22
|
|
|
1
|
|
|
—
|
|
|
23
|
|
|
Total costs
|
|
717
|
|
|
750
|
|
|
56
|
|
|
21
|
|
|
827
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
Gross profit
|
|
$
|
209
|
|
|
$
|
176
|
|
|
$
|
31
|
|
|
$
|
2
|
|
|
$
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
320
|
|
|
320
|
|
|
|
|
|
|
|
|
Molybdenum sales (millions of recoverable pounds)
a
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper/molybdenum:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
2.85
|
|
|
$
|
2.85
|
|
|
$
|
11.68
|
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
2.06
|
|
|
1.92
|
|
|
6.98
|
|
|
|
|
|
|
By-product credits
|
|
(0.26
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Treatment charges
|
|
0.11
|
|
|
0.11
|
|
|
—
|
|
|
|
|
|
|
Unit net cash costs
|
|
1.91
|
|
|
2.03
|
|
|
6.98
|
|
|
|
|
|
|
DD&A
|
|
0.26
|
|
|
0.24
|
|
|
0.44
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.07
|
|
|
0.07
|
|
|
0.14
|
|
|
|
|
|
|
Total unit costs
|
|
2.24
|
|
|
2.34
|
|
|
7.56
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
0.04
|
|
|
0.04
|
|
|
—
|
|
|
|
|
|
|
Gross profit per pound
|
|
$
|
0.65
|
|
|
$
|
0.55
|
|
|
$
|
4.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
|
|
Totals presented above
|
|
$
|
1,024
|
|
|
$
|
685
|
|
|
$
|
83
|
|
|
|
|
|
|
Treatment charges
|
|
(13
|
)
|
|
23
|
|
|
—
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
23
|
|
|
—
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
12
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Eliminations and other
|
|
11
|
|
|
12
|
|
|
—
|
|
|
|
|
|
|
North America copper mines
|
|
1,034
|
|
|
743
|
|
|
83
|
|
|
|
|
|
|
Other
c
|
|
3,515
|
|
|
2,851
|
|
|
244
|
|
|
|
|
|
|
Corporate, other & eliminations
|
|
(757
|
)
|
|
(675
|
)
|
|
20
|
|
|
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
3,792
|
|
|
$
|
2,919
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
a.
|
Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.
|
|
|
b.
|
Includes gold and silver product revenues and production costs.
|
|
|
c.
|
Represents the combined total for our other segments, as presented in Note 9.
|
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
|
Method
|
|
Copper
|
|
Molybdenum
a
|
|
Other
b
|
|
Total
|
|
Revenues, excluding adjustments
|
|
$
|
1,209
|
|
|
$
|
1,209
|
|
|
$
|
76
|
|
|
$
|
23
|
|
|
$
|
1,308
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
705
|
|
|
660
|
|
|
55
|
|
|
13
|
|
|
728
|
|
|
By-product credits
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Treatment charges
|
|
37
|
|
|
35
|
|
|
—
|
|
|
2
|
|
|
37
|
|
|
Net cash costs
|
|
666
|
|
|
695
|
|
|
55
|
|
|
15
|
|
|
765
|
|
|
DD&A
|
|
94
|
|
|
88
|
|
|
4
|
|
|
2
|
|
|
94
|
|
|
Noncash and other costs, net
|
|
19
|
|
|
18
|
|
|
1
|
|
|
—
|
|
|
19
|
|
|
Total costs
|
|
779
|
|
|
801
|
|
|
60
|
|
|
17
|
|
|
878
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
Gross profit
|
|
$
|
425
|
|
|
$
|
403
|
|
|
$
|
16
|
|
|
$
|
6
|
|
|
$
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
383
|
|
|
383
|
|
|
|
|
|
|
|
|
Molybdenum sales (millions of recoverable pounds)
a
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper/molybdenum:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
3.16
|
|
|
$
|
3.16
|
|
|
$
|
10.87
|
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
1.84
|
|
|
1.73
|
|
|
7.81
|
|
|
|
|
|
|
By-product credits
|
|
(0.20
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Treatment charges
|
|
0.10
|
|
|
0.09
|
|
|
—
|
|
|
|
|
|
|
Unit net cash costs
|
|
1.74
|
|
|
1.82
|
|
|
7.81
|
|
|
|
|
|
|
DD&A
|
|
0.25
|
|
|
0.23
|
|
|
0.66
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.05
|
|
|
0.05
|
|
|
0.09
|
|
|
|
|
|
|
Total unit costs
|
|
2.04
|
|
|
2.10
|
|
|
8.56
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
|
|
|
|
Gross profit per pound
|
|
$
|
1.11
|
|
|
$
|
1.05
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
|
|
Totals presented above
|
|
$
|
1,308
|
|
|
$
|
728
|
|
|
$
|
94
|
|
|
|
|
|
|
Treatment charges
|
|
(8
|
)
|
|
29
|
|
|
—
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
19
|
|
|
—
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Eliminations and other
|
|
13
|
|
|
15
|
|
|
—
|
|
|
|
|
|
|
North America copper mines
|
|
1,308
|
|
|
791
|
|
|
94
|
|
|
|
|
|
|
Other
c
|
|
4,517
|
|
|
3,011
|
|
|
336
|
|
|
|
|
|
|
Corporate, other & eliminations
|
|
(957
|
)
|
|
(994
|
)
|
|
21
|
|
|
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
4,868
|
|
|
$
|
2,808
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
a.
|
Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.
|
|
|
b.
|
Includes gold and silver product revenues and production costs.
|
|
|
c.
|
Represents the combined total for our other segments, as presented in Note 9.
|
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
Method
|
|
Copper
|
|
Other
a
|
|
Total
|
Revenues, excluding adjustments
|
|
$
|
850
|
|
|
$
|
850
|
|
|
$
|
112
|
|
|
$
|
962
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
503
|
|
|
450
|
|
|
66
|
|
|
516
|
|
By-product credits
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Treatment charges
|
|
56
|
|
|
56
|
|
|
—
|
|
|
56
|
|
Royalty on metals
|
|
2
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Net cash costs
|
|
462
|
|
|
508
|
|
|
66
|
|
|
574
|
|
DD&A
|
|
114
|
|
|
101
|
|
|
13
|
|
|
114
|
|
Noncash and other costs, net
|
|
24
|
|
b
|
24
|
|
|
—
|
|
|
24
|
|
Total costs
|
|
600
|
|
|
633
|
|
|
79
|
|
|
712
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
47
|
|
|
47
|
|
|
—
|
|
|
47
|
|
Gross profit
|
|
$
|
297
|
|
|
$
|
264
|
|
|
$
|
33
|
|
|
$
|
297
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
290
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
2.93
|
|
|
$
|
2.93
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
1.73
|
|
|
1.55
|
|
|
|
|
|
By-product credits
|
|
(0.34
|
)
|
|
—
|
|
|
|
|
|
Treatment charges
|
|
0.19
|
|
|
0.19
|
|
|
|
|
|
Royalty on metals
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
Unit net cash costs
|
|
1.59
|
|
|
1.75
|
|
|
|
|
|
DD&A
|
|
0.39
|
|
|
0.34
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.09
|
|
b
|
0.09
|
|
|
|
|
|
Total unit costs
|
|
2.07
|
|
|
2.18
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
0.16
|
|
|
0.16
|
|
|
|
|
|
Gross profit per pound
|
|
$
|
1.02
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Production
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
Totals presented above
|
|
$
|
962
|
|
|
$
|
516
|
|
|
$
|
114
|
|
|
|
Treatment charges
|
|
(56
|
)
|
|
—
|
|
|
—
|
|
|
|
Royalty on metals
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
24
|
|
|
—
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
47
|
|
|
—
|
|
|
—
|
|
|
|
Eliminations and other
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
|
South America mining
|
|
951
|
|
|
539
|
|
|
114
|
|
|
|
Other
c
|
|
3,598
|
|
|
3,055
|
|
|
213
|
|
|
|
Corporate, other & eliminations
|
|
(757
|
)
|
|
(675
|
)
|
|
20
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
3,792
|
|
|
$
|
2,919
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Includes silver sales of
1.3 million
ounces (
$15.75
per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.
|
|
|
b.
|
Includes charges of
$12 million
(
$0.04
per pound of copper) associated with weather-related impacts at El Abra.
|
|
|
c.
|
Represents the combined total for our other segments, as presented in Note 9.
|
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
|
Method
|
|
Copper
|
|
Other
a
|
|
Total
|
|
Revenues, excluding adjustments
|
|
$
|
894
|
|
|
$
|
894
|
|
|
$
|
85
|
|
|
$
|
979
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
517
|
|
|
476
|
|
|
52
|
|
|
528
|
|
|
By-product credits
|
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Treatment charges
|
|
59
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|
Royalty on metals
|
|
2
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Net cash costs
|
|
504
|
|
|
537
|
|
|
52
|
|
|
589
|
|
|
DD&A
|
|
126
|
|
|
115
|
|
|
11
|
|
|
126
|
|
|
Noncash and other costs, net
|
|
15
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
Total costs
|
|
645
|
|
|
667
|
|
|
63
|
|
|
730
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(43
|
)
|
|
(43
|
)
|
|
—
|
|
|
(43
|
)
|
|
Gross profit
|
|
$
|
206
|
|
|
$
|
184
|
|
|
$
|
22
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
290
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
3.08
|
|
|
$
|
3.08
|
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
1.78
|
|
|
1.64
|
|
|
|
|
|
|
By-product credits
|
|
(0.25
|
)
|
|
—
|
|
|
|
|
|
|
Treatment charges
|
|
0.20
|
|
|
0.20
|
|
|
|
|
|
|
Royalty on metals
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
Unit net cash costs
|
|
1.74
|
|
|
1.85
|
|
|
|
|
|
|
DD&A
|
|
0.43
|
|
|
0.40
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.05
|
|
|
0.05
|
|
|
|
|
|
|
Total unit costs
|
|
2.22
|
|
|
2.30
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(0.15
|
)
|
|
(0.15
|
)
|
|
|
|
|
|
Gross profit per pound
|
|
$
|
0.71
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Production
|
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
Totals presented above
|
|
$
|
979
|
|
|
$
|
528
|
|
|
$
|
126
|
|
|
|
|
Treatment charges
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Royalty on metals
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
15
|
|
|
—
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Eliminations and other
|
|
2
|
|
|
—
|
|
|
1
|
|
|
|
|
South America mining
|
|
877
|
|
|
543
|
|
|
127
|
|
|
|
|
Other
b
|
|
4,948
|
|
|
3,259
|
|
|
303
|
|
|
|
|
Corporate, other & eliminations
|
|
(957
|
)
|
|
(994
|
)
|
|
21
|
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
4,868
|
|
|
$
|
2,808
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Includes silver sales of
1.0 million
ounces (
$16.52
per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.
|
|
|
b.
|
Represents the combined total for our other segments, as presented in Note 9.
|
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
Method
|
|
Copper
|
|
Gold
|
|
Silver
a
|
|
Total
|
Revenues, excluding adjustments
|
|
$
|
507
|
|
|
$
|
507
|
|
|
$
|
303
|
|
|
$
|
9
|
|
|
$
|
819
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
538
|
|
|
333
|
|
|
199
|
|
|
6
|
|
|
538
|
|
Gold and silver credits
|
|
(314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Treatment charges
|
|
51
|
|
|
31
|
|
|
19
|
|
|
1
|
|
|
51
|
|
Export duties
|
|
17
|
|
|
11
|
|
|
6
|
|
|
—
|
|
|
17
|
|
Royalty on metals
|
|
28
|
|
|
17
|
|
|
11
|
|
|
—
|
|
|
28
|
|
Net cash costs
|
|
320
|
|
|
392
|
|
|
235
|
|
|
7
|
|
|
634
|
|
DD&A
|
|
105
|
|
|
65
|
|
|
39
|
|
|
1
|
|
|
105
|
|
Noncash and other costs, net
|
|
2
|
|
b
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Total costs
|
|
427
|
|
|
458
|
|
|
275
|
|
|
8
|
|
|
741
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
19
|
|
|
19
|
|
|
2
|
|
|
—
|
|
|
21
|
|
PT Smelting intercompany profit
|
|
3
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
Gross profit
|
|
$
|
102
|
|
|
$
|
70
|
|
|
$
|
31
|
|
|
$
|
1
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
174
|
|
|
174
|
|
|
|
|
|
|
|
Gold sales (thousands of recoverable ounces)
|
|
|
|
|
|
235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper/per ounce of gold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
2.92
|
|
|
$
|
2.92
|
|
|
$
|
1,291
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
3.10
|
|
|
1.92
|
|
|
850
|
|
|
|
|
|
Gold and silver credits
|
|
(1.81
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
Treatment charges
|
|
0.29
|
|
|
0.18
|
|
|
80
|
|
|
|
|
|
Export duties
|
|
0.10
|
|
|
0.06
|
|
|
27
|
|
|
|
|
|
Royalty on metals
|
|
0.16
|
|
|
0.10
|
|
|
46
|
|
|
|
|
|
Unit net cash costs
|
|
1.84
|
|
|
2.26
|
|
|
1,003
|
|
|
|
|
|
DD&A
|
|
0.61
|
|
|
0.37
|
|
|
166
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.01
|
|
b
|
0.01
|
|
|
4
|
|
|
|
|
|
Total unit costs
|
|
2.46
|
|
|
2.64
|
|
|
1,173
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
0.11
|
|
|
0.11
|
|
|
9
|
|
|
|
|
|
PT Smelting intercompany profit
|
|
0.02
|
|
|
0.01
|
|
|
5
|
|
|
|
|
|
Gross profit per pound/ounce
|
|
$
|
0.59
|
|
|
$
|
0.40
|
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
|
Totals presented above
|
|
$
|
819
|
|
|
$
|
538
|
|
|
$
|
105
|
|
|
|
|
|
Treatment charges
|
|
(32
|
)
|
|
19
|
|
|
—
|
|
|
|
|
|
Export duties
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
Royalty on metals
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
21
|
|
|
—
|
|
|
—
|
|
|
|
|
|
PT Smelting intercompany profit
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
|
|
|
Indonesia mining
|
|
763
|
|
|
556
|
|
|
105
|
|
|
|
|
|
Other
c
|
|
3,786
|
|
|
3,038
|
|
|
222
|
|
|
|
|
|
Corporate, other & eliminations
|
|
(757
|
)
|
|
(675
|
)
|
|
20
|
|
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
3,792
|
|
|
$
|
2,919
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Includes silver sales of
0.6 million
ounces (
$14.85
per ounce average realized price).
|
|
|
b.
|
Includes credits of
$19 million
(
$0.11
per pound of copper) associated with adjustments to prior year treatment and refining charges.
|
|
|
c.
|
Represents the combined total for our other segments, as presented in Note 9.
|
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash (Credits) Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
(In millions)
|
|
By-Product
|
|
Co-Product Method
|
|
|
|
Method
|
|
Copper
|
|
Gold
|
|
Silver
a
|
|
Total
|
|
Revenues, excluding adjustments
|
|
$
|
976
|
|
|
$
|
976
|
|
|
$
|
791
|
|
|
$
|
19
|
|
|
$
|
1,786
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
433
|
|
|
237
|
|
|
192
|
|
|
4
|
|
|
433
|
|
|
Gold and silver credits
|
|
(826
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Treatment charges
|
|
78
|
|
|
43
|
|
|
34
|
|
|
1
|
|
|
78
|
|
|
Export duties
|
|
46
|
|
|
25
|
|
|
21
|
|
|
—
|
|
|
46
|
|
|
Royalty on metals
|
|
67
|
|
|
36
|
|
|
30
|
|
|
1
|
|
|
67
|
|
|
Net cash (credits) costs
|
|
(202
|
)
|
|
341
|
|
|
277
|
|
|
6
|
|
|
624
|
|
|
DD&A
|
|
181
|
|
|
99
|
|
|
80
|
|
|
2
|
|
|
181
|
|
|
Noncash and other costs, net
|
|
15
|
|
|
8
|
|
|
6
|
|
|
1
|
|
|
15
|
|
|
Total (credits) costs
|
|
(6
|
)
|
|
448
|
|
|
363
|
|
|
9
|
|
|
820
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(38
|
)
|
|
(38
|
)
|
|
16
|
|
|
—
|
|
|
(22
|
)
|
|
PT Smelting intercompany loss
|
|
(9
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
—
|
|
|
(9
|
)
|
|
Gross profit
|
|
$
|
935
|
|
|
$
|
485
|
|
|
$
|
440
|
|
|
$
|
10
|
|
|
$
|
935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper sales (millions of recoverable pounds)
|
|
319
|
|
|
319
|
|
|
|
|
|
|
|
|
Gold sales (thousands of recoverable ounces)
|
|
|
|
|
|
603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of copper/per ounce of gold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
|
|
$
|
3.06
|
|
|
$
|
3.06
|
|
|
$
|
1,312
|
|
|
|
|
|
|
Site production and delivery, before net noncash
|
|
|
|
|
|
|
|
|
|
|
|
and other costs shown below
|
|
1.36
|
|
|
0.75
|
|
|
319
|
|
|
|
|
|
|
Gold and silver credits
|
|
(2.59
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Treatment charges
|
|
0.25
|
|
|
0.13
|
|
|
57
|
|
|
|
|
|
|
Export duties
|
|
0.14
|
|
|
0.08
|
|
|
34
|
|
|
|
|
|
|
Royalty on metals
|
|
0.21
|
|
|
0.11
|
|
|
49
|
|
|
|
|
|
|
Unit net cash (credits) costs
|
|
(0.63
|
)
|
|
1.07
|
|
|
459
|
|
|
|
|
|
|
DD&A
|
|
0.57
|
|
|
0.31
|
|
|
133
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
0.04
|
|
|
0.02
|
|
|
11
|
|
|
|
|
|
|
Total unit (credits) costs
|
|
(0.02
|
)
|
|
1.40
|
|
|
603
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(0.12
|
)
|
|
(0.12
|
)
|
|
27
|
|
|
|
|
|
|
PT Smelting intercompany loss
|
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(7
|
)
|
|
|
|
|
|
Gross profit per pound/ounce
|
|
$
|
2.93
|
|
|
$
|
1.52
|
|
|
$
|
729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
|
|
Totals presented above
|
|
$
|
1,786
|
|
|
$
|
433
|
|
|
$
|
181
|
|
|
|
|
|
|
Treatment charges
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Export duties
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Royalty on metals
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Noncash and other costs, net
|
|
—
|
|
|
15
|
|
|
—
|
|
|
|
|
|
|
Other revenue adjustments, primarily for pricing
|
|
|
|
|
|
|
|
|
|
|
|
on prior period open sales
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
PT Smelting intercompany loss
|
|
—
|
|
|
9
|
|
|
—
|
|
|
|
|
|
|
Indonesia mining
|
|
1,573
|
|
|
457
|
|
|
181
|
|
|
|
|
|
|
Other
b
|
|
4,252
|
|
|
3,345
|
|
|
249
|
|
|
|
|
|
|
Corporate, other & eliminations
|
|
(957
|
)
|
|
(994
|
)
|
|
21
|
|
|
|
|
|
|
As reported in our consolidated financial statements
|
|
$
|
4,868
|
|
|
$
|
2,808
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Includes silver sales of
1.2 million
ounces (
$15.76
per ounce average realized price).
|
|
|
b.
|
Represents the combined total for our other segments, as presented in Note 9.
|
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
a
|
$
|
98
|
|
|
$
|
102
|
|
|
|
|
|
|
Site production and delivery, before net noncash
and other costs shown below
|
70
|
|
|
65
|
|
|
|
|
|
|
Treatment charges and other
|
7
|
|
|
7
|
|
|
|
|
|
|
Net cash costs
|
77
|
|
|
72
|
|
|
|
|
|
|
DD&A
|
16
|
|
|
19
|
|
|
|
|
|
|
Noncash and other costs, net
|
1
|
|
|
2
|
|
|
|
|
|
|
Total costs
|
94
|
|
|
93
|
|
|
|
|
|
|
Gross profit
|
$
|
4
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molybdenum sales (millions of recoverable pounds)
a
|
8
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per pound of molybdenum:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, excluding adjustments
a
|
$
|
12.49
|
|
|
$
|
11.99
|
|
|
|
|
|
|
Site production and delivery, before net noncash
and other costs shown below
|
8.94
|
|
|
7.71
|
|
|
|
|
|
|
Treatment charges and other
|
0.86
|
|
|
0.86
|
|
|
|
|
|
|
Unit net cash costs
|
9.80
|
|
|
8.57
|
|
|
|
|
|
|
DD&A
|
2.00
|
|
|
2.24
|
|
|
|
|
|
|
Noncash and other costs, net
|
0.16
|
|
|
0.15
|
|
|
|
|
|
|
Total unit costs
|
11.96
|
|
|
10.96
|
|
|
|
|
|
|
Gross profit per pound
|
$
|
0.53
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Amounts Reported
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
Revenues
|
|
and Delivery
|
|
DD&A
|
|
|
|
Totals presented above
|
$
|
98
|
|
|
$
|
70
|
|
|
$
|
16
|
|
|
|
|
Treatment charges and other
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Noncash and other costs, net
|
—
|
|
|
1
|
|
|
—
|
|
|
|
|
Molybdenum mines
|
91
|
|
|
71
|
|
|
16
|
|
|
|
|
Other
b
|
4,458
|
|
|
3,523
|
|
|
311
|
|
|
|
|
Corporate, other & eliminations
|
(757
|
)
|
|
(675
|
)
|
|
20
|
|
|
|
|
As reported in our consolidated financial statements
|
$
|
3,792
|
|
|
$
|
2,919
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
Totals presented above
|
$
|
102
|
|
|
$
|
65
|
|
|
$
|
19
|
|
|
|
|
Treatment charges and other
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Noncash and other costs, net
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
Molybdenum mines
|
95
|
|
|
67
|
|
|
19
|
|
|
|
|
Other
b
|
5,730
|
|
|
3,735
|
|
|
411
|
|
|
|
|
Corporate, other & eliminations
|
(957
|
)
|
|
(994
|
)
|
|
21
|
|
|
|
|
As reported in our consolidated financial statements
|
$
|
4,868
|
|
|
$
|
2,808
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
Reflects sales of the Molybdenum mines’ production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
|
|
|
b.
|
Represents the combined total for our other segments, as presented in Note 9. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.
|
CAUTIONARY STATEMENT
Our discussion and analysis contains forward-looking statements in which we discuss our potential future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; operating cash flows; capital expenditures; our expectations regarding our share of PT-FI’s net income and future cash flows through 2022; PT-FI’s development, financing, construction and completion of a new smelter in Indonesia; PT-FI’s compliance with environmental standards under the new framework established by the Ministry of Environment and Forestry; exploration efforts and results; development and production activities, rates and costs; liquidity; tax rates; export quotas and duties; the impact of copper, gold and molybdenum price changes; the impact of deferred intercompany profits on earnings; reserve estimates; and future dividend payments, share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to be,” “potential” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.
We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, supply of and demand for, and prices of, copper, gold and molybdenum; mine sequencing; production rates; timing of shipments; results of feasibility studies; potential inventory adjustments; potential impairment of long-lived mining assets; the potential effects of violence in Indonesia generally and in the province of Papua; the Indonesian government’s approval of an increase in PT-FI's export quota for the current export period, which ends March 8, 2020, and extension of PT-FI's export license after March 8, 2020; risks associated with underground mining; satisfaction of requirements in accordance with PT-FI’s IUPK to extend mining rights from 2031 through 2041; industry risks; regulatory changes; political and social risks; labor relations; weather- and climate-related risks; environmental risks; litigation results; cybersecurity incidents; and other factors described in more detail in Part I, Item 1A. “Risk Factors” of our 2018 Form 10-K.
Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may not be able to control. Further, we may make changes to our business plans that could affect our results. We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.