FREEPORT-MCMORAN INC Q3 FY2026 earnings call

• Grasberg Ramp-Up: Progress at Grasberg reached 67% of mine capacity in Q3. The team is executing a phased ramp-up safely, with both smelters operational. Upgrades to the automated rail material handling system are on schedule. Target is 80% capacity by mid-2027 and full capacity by end of 2027.
• U.S. Operations (Americas): Focus is on improving mining rates and productivity despite low ore grades. New ultra-class trucks and remote operating centers are being deployed. Extreme weather events disrupted momentum but new technology initiatives aim to restore efficiency.
• Innovative Leach Initiative: A major strategic priority involves deploying next-generation proprietary additives to recover copper from low-grade stockpiles previously considered unrecoverable. Lab tests show incremental recoveries >4x initial additives. Field deployment begins in 2027.
• Baghdad Expansion: An investment decision is expected in Q4 2026. This brownfield expansion aims to double concentrator size and add autonomy, potentially adding 200-250 million lbs of copper and 10-12 million lbs of molybdenum annually. Estimated cost remains ~$4.5 billion.
• Indonesia Government Relations: Continued cooperation with the Indonesian government to secure long-term operating rights beyond 2041, aligned with a signed Memorandum of Understanding. Support for extension has been expressed.
• Cost Pressures: Rising energy costs (diesel up significantly, electricity up) and sulfuric acid prices have increased costs by ~$500 million in 2026 vs. 2025. Freeport’s integrated model provides some insulation via its own sulfuric acid production.

The company does not provide a formal breakdown of financial performance by specific product segment (e.g., Copper vs. Gold vs. Molybdenum) in terms of absolute revenue contribution percentages in the transcript. However, operational highlights indicate that U.S. mining operations' operating income more than doubled year-over-year, contributing to an over 80% increase in consolidated net income. Copper is identified as the primary volume driver, with sales expected to rise significantly from 2026 to 2027.

• Copper Sales Volume: Trimmed 2026 copper sales guidance by approximately 2% due to shortfalls in the U.S. and Chile. 2027 copper sales trimmed by ~2.5%. 2028 copper sales remain consistent with previous estimates.
• Gold & Molybdenum: Gold and Molybdenum sales forecasts for the three-year period (2026-2028) are unchanged from prior guidance.
• Production Growth Outlook: Expects significant growth from 3 billion pounds in 2026 to 3.7 billion in 2027 and over 4 billion in 2028. Long-term goal is 4.5-5 billion pounds/year by the 2030s.
• Capital Expenditure: 2026 CapEx estimated at $4.4 billion (up 2%). 2027 CapEx estimated at $5.2 billion (up ~$400 million from July estimate), driven by additional mining equipment and inflation.
• Net Unit Cash Costs: Maintained full-year 2026 guidance of $1.90 per pound (with byproducts). Byproduct credits help offset higher input costs.
• Q4 2026 Expectations: Anticipated to be the strongest quarter of the year, with copper sales increasing 17% and gold sales nearly tripling compared to Q3.

• Operational Disruptions: Abnormally high frequency of extreme weather events (both severe weather in the U.S. and dry conditions/drought in Indonesia) impacting mining rates, mill throughput, and water availability.
• Cost Inflation: Significant upward pressure on energy costs (diesel, electricity) and key inputs like sulfuric acid, exacerbated by global conflicts and supply chain issues. Capital cost inflation also trending above headline CPI.
• Regulatory/Political Risk: Dependence on securing long-term operating licenses in Indonesia; while support exists, the process requires continued diplomatic effort.
• Geological/Technical Uncertainty: The success of the innovative leach initiative relies on unproven field performance of next-generation additives. Recovery rates vary by ore type, and there is uncertainty if lab results will translate fully to commercial scale.
• Labor Market Constraints: Tight labor markets in the U.S. (particularly Arizona) affecting project execution and requiring increased reliance on automation.

Q: Analyst asked about the cadence of Grasberg production in H1 vs H2 2027 and the impact of PB1 South restart. / A: Management stated H2 2027 production will likely be higher than H1, with Q1 being the lowest. PB1 South restart in mid-2027 adds significant volume, though it is not a huge contributor in 2027 overall. Full run rates are targeted by end of 2027.

Q: Analyst asked about idle facility costs at Grasberg ($900M YTD) and whether they are fixed or variable. / A: These are essentially fixed accounting costs required by rules to be charged to production rather than cost of sales. They will not disappear but will be absorbed into unit costs as volumes rise. With volumes doubling from 700M to 1.2B lbs, unit costs will remain very low despite these charges.

Q: Analyst asked why recovery rates in the U.S. are trending lower and if this is temporary. / A: Recovery rates depend on ore body presentation. As mining volumes increase to catch up, the ore presents differently. Management is deploying new technologies, including Gen 2 additives for leaching and ultra-class trucks, to improve recoveries and productivity. Success of additives could unlock significant value from stockpiles.

Q: Analyst asked if the new leach additive upside is included in current numbers or future potential. / A: Current forecasts include 300 million pounds from leaching in 2027/2028. The aspirational 800 million pound target by 2030 depends on the success of the new additive in field trials. It is not yet in the forecast, but successful testing could allow leach recoveries to compete with mill recoveries.

Q: Analyst asked about the $400M increase in 2027 CapEx guidance and if it includes Baghdad. / A: The increase reflects added mining equipment (ultra-class trucks), capital cost inflation, and completion of the Atlantic Copper circular project. It does NOT include the $4.5 billion Baghdad expansion. Management is prioritizing brownfield expansions to meet demand efficiently despite inflationary pressures.