Freeport-McMoRan Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Liam Fitzpatrick - Deutsche Bank AG - Analyst : Good morning, Kathleen and Richard. I'll just stick to one question, given the guidance there. Just around the approval of the -- approval to export concentrate from Indonesia, you said you hope to receive it in Q1, but do you have any more visibility on when in Q1? And does there come a point in this quarter when you'll start to run out of storage capacity; and therefore, could that start to impact your production rates and your guidance? Thank you.

Question: Liam Fitzpatrick - Deutsche Bank AG - Analyst : Okay, thank you.

Question: Katja Jancic - BMO Capital Markets - Analyst : Hi, thank you for taking my question. Kathleen, you mentioned the 10% tax credit potential. What are some of the next steps that need to happen for copper to actually qualify for that? And is there any timeline? In other words, is this still possible in '25?

Question: Katja Jancic - BMO Capital Markets - Analyst : Okay, thank you.

Question: Alex Hacking - Citigroup Inc. - Analyst : Yes, thank you. Good morning. Just digging into the discretionary CapEx spend for 2025, the $400 million of Bagdad on the tailings infrastructure, is that explicitly tied to the expansion? Or is that something you would need to do anyway? And is that part of the $3.5 billion CapEx for the project? And then the $600 million at Kucing Liar, when that arrives, can you remind me, does it increase Grasberg production, or it's just going to fill the mill as other sources of ore are depleting? Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Alex Hacking - Citigroup Inc. - Analyst : Thank you.

Question: Chris LaFemina - Jefferies Group LLC - Analyst : Thanks, operator. Hi, Kathleen. Hi, Richard. Thanks for taking my question. I'm just thinking about kind of the geopolitical risk profile for Freeport. So your organic growth is mostly in the Americas. But Indonesia at the end of the day, because it's such an amazing ore body, it's always going to be a significant contributor to earnings and a really important part of the Freeport investment case. And if we think back to the acquisition of Phelps Dodge, in hindsight, that was brilliant because it gave you geographic diversification. And when you did have challenges in Indonesia, you had other assets in the portfolio that were able to basically sustain the business as you dealt with those other challenges. So one option now, which is an option that I sense that you're pursuing is early-stage investments in these longer lead time organic growth projects, which at the end of the day, would help diversify your earnings mix a little bit more to the Americas. But I wonder, is M&A, similar to Phelps Dodge nearly 20 years ago -- is M&A a potential path to derisking the business from a geopolitical perspective? I mean, again, Grasberg, amazing ore body, always going to be near the bottom of the cost curve. But a lot of the kind of value leakage that we consistently see there, it seems like these problems don't really ever come to an end. There's always some new negotiation that has to happen or REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Chris LaFemina - Jefferies Group LLC - Analyst : Thank you for that. Good luck.

Question: Daniel Major - UBS Equities - Analyst : Great, thanks. A few questions. Just the first one, I noticed an increase in the CapEx allocated to the smelter at Grasberg. Is there any insurance coverage for the additional work to fix the fire at the smelter?

Question: Daniel Major - UBS Equities - Analyst : Okay, that's clear. Thank you. And then second question, prior to the election -- well, the change of government in Indonesia, you were heading towards, I guess, the conclusion of the review of the license extension, et cetera. Do you have a visibility on the timeline for when you'll be entering a similar process with the new government?

Question: Daniel Major - UBS Equities - Analyst : Okay, so 2025 timeline. Okay, thanks. And then finally, if I could just squeeze one more in, just to follow up on the legislative pathway in the Senate for the critical minerals, do you have any visibility on when the Senate will be reviewing the bill?

Question: Daniel Major - UBS Equities - Analyst : Great. Thanks for taking my questions.

Question: Orest Wowkodaw - Scotiabank GBM - Analyst : Hi, good morning. A question about your CapEx guidance, I was surprised to see the increase in '25. But probably the '26 guide of $4.4 billion seemed high to me, just given that you haven't approved any of the major growth projects yet. Is there any CapEx associated with those new growth projects in that '26 guidance already?

Question: Orest Wowkodaw - Scotiabank GBM - Analyst : If I could just follow up, what's a good run rate to assume for sustaining capital now for the business, say, beyond '26? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Orest Wowkodaw - Scotiabank GBM - Analyst : Thank you.

Question: Bill Peterson - JPMorgan Securities LLC - Analyst : Good morning, and thanks for taking the questions and all the details thus far. Realizing the question is hypothetical, but how does Freeport view the potential impacts to copper markets in general and then Freeport specifically from tariffs, whether they be 10% blanket or 25% towards Mexico or Canada? I mean, I guess, what is the ability of Freeport to move product from one region to another? And I guess, how does having the US assets help protect or even benefit Freeport relative to other copper producers?

Question: Bill Peterson - JPMorgan Securities LLC - Analyst : Thanks for those insights. And then on leaching, and I may have missed it, but we saw the step down in the quarter, but you're targeting now 300 million pounds run rate in exiting '25. I guess, maybe in more detail, what drove the sequential decline? And on the latter, on the increase, is that driven by expanding efforts in El Abra or is this further tech advances or benefiting from, I guess, prior development that you've already accomplished? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Bill Peterson - JPMorgan Securities LLC - Analyst : Thanks, Kathleen. Best wishes to you and the team in '25.

Question: Timna Tanners - Wolfe Research LLC - Analyst : Yes, hi. Thanks for including me. Wanted to just follow up on the -- a little bit more detail, if you could, on the North American cost-cutting initiatives. How much of that is the more favorable mine plan? How are you seeing labor challenges? How are you considering 45X when you think about growth opportunities on top of already favorable NOLs? Just a little more color there, please.

Question: Timna Tanners - Wolfe Research LLC - Analyst : Thanks, Kathleen, for the additional color.

Question: Michael Dudas - Vertical Research Partners LLC - Analyst : Good morning, Richard, Kathleen, Maree.

Question: Michael Dudas - Vertical Research Partners LLC - Analyst : Looking at the financial profile, Kathleen, with net debt at 0.4 times and net $1 billion, I guess, smelter funding, and looking -- and given comfort levels that you've indicated $3 billion to $4 billion of range and staging of the capital spending -- and you've got a lot of moving parts, I understand, in the next couple of years. But are you -- the strategy to keep this really tight financial profile even as the -- is it going to be much more of the CapEx moving forward funded internally? Or is there ability, given where market prices are and the fundamentals of the business to maybe be a little bit more opportunistic in some capital allocation?

Question: Michael Dudas - Vertical Research Partners LLC - Analyst : Thanks, Kathleen.

Question: Bob Brackett - Sanford C. Bernstein & Co., LLC - Analyst : Good morning. A couple US-related questions, one is probably just buckets of capital. But the Lone Star oxide expansion, for example, where has that moved in terms of discretionary capital projects? And the other would be an update on Jetti Resources and sulfide leaching. I think the trial at Bagdad has been there since '22, El Abra since '23. Where is your level of prudent optimism, should I say?

Question: Bob Brackett - Sanford C. Bernstein & Co., LLC - Analyst : Thank you much.

Question: Lawson Winder - BofA Global Research - Analyst : Thanks, operator, and thanks for fitting me in, guys. I appreciate it. Good morning, Richard, Kathleen, and Maree. Just wanted to quickly ask on El Abra. So Richard, you spoke about submitting permits in 2025 back in December or early -- actually, early November, I think it was. Just curious, when you think about that project, what do you think about the right copper price for that to work? And what's the right IRR to justify that investment? And then can we expect a stability agreement as part of the Board approval for that full funds decision? Thanks so much.

Question: Lawson Winder - BofA Global Research - Analyst : Okay, very well said. Thank you.

Question: Brian MacArthur - Raymond James Ltd. - Analyst : Hi. Good morning, and thank you for taking my question. Can I just get a clarification on the 7.5% export tax? You talked about the smelter being repaired by midyear, but you also mentioned you're probably going to pay the 7.5% export tax all through 2025. Is that going to happen even if REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Brian MacArthur - Raymond James Ltd. - Analyst : But then in 2026, it would still change, assuming the smelter is up and running at full capacity by year end, right?

Question: Brian MacArthur - Raymond James Ltd. - Analyst : Great. Thanks very much.