FCX Plans Expansion To Double Concentrator Capacity At Bagdad Operation

PHOENIX, AZ – Richard C. Adkerson, Chairman and Chief Executive Officer Of Freeport-McMoRan Inc. (FCX), said, “The Freeport team’s performance in 2022 was solid. We achieved another year of growth in production volumes and enhanced our position as a leading producer of copper. I am particularly proud of the notable successful execution of our long-term projects in Indonesia and the significant accomplishments of our entire global team to address challenges faced by the global mining industry.

Our long-lived, large-scale and geographically diverse assets provide a solid foundation for the future production of metals required to support the global economy and the energy transition. Our plans focus on execution, building on our strong momentum and pursuing value responsibly and sustainably for the benefit of our stakeholders. FCX has significant mineral reserves, mineral resources and future development opportunities within its portfolio of mining assets. FCX’s preliminary estimated consolidated recoverable proven and probable mineral reserves from its mines at December 31, 2022, include 111.0 billion pounds of copper, 26.9 million ounces of gold and 3.53 billion pounds of molybdenum.”

The Company’s leaching innovation initiatives is advancing efforts to improve copper recovery from its leach processes, including initiatives across FCX’s North America and South America operations to incorporate new applications, technologies and data analytics. FCX believes these leach innovation initiatives provide potential opportunities to produce incremental copper from its large existing leach stockpiles and lower-grade material currently classified as waste. Initial results support the potential for incremental low-cost additions to the production and reserve profile and has identified opportunities to achieve an annual run rate of 200 million pounds of copper per year through these initiatives by the end of 2023.

FCX operates seven open-pit copper mines in North America – Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, certain of these mines produce molybdenum concentrate, gold and silver. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72% undivided joint venture interest in Morenci using the proportionate consolidation method.

The Lone Star is increasing its operating rates to achieve targeted production of approximately 300 million pounds of copper per year from oxide ores in 2023 (compared with the initial design capacity of 200 million pounds of copper per year). The oxide project at Lone Star advances the opportunity for development of the underlying, large-scale sulfide resources. FCX is conducting follow-on exploration in the area to support metallurgical testing and mine development planning for a potential significant long-term investment to build additional scale on an economically attractive basis.

The Company is planning an expansion to double the concentrator capacity of the Bagdad operation in northwest Arizona. It is engaging stakeholders and is conducting a feasibility study, which is expected to be completed in 2023. FCX is advancing plans for expanded tailings infrastructure projects to support Bagdad’s long-range plans. The timing of future development will be dependent on market conditions, labor and supply chain considerations and other economic factors.

In South America Mining, the Company operates two copper mines – Cerro Verde in Peru (in which FCX owns a 53.56% interest) and El Abra in Chile (in which FCX owns a 51% interest). In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver. Beginning in late 2022, heightened tensions, protests and social unrest emerged in Peru following a change in the country’s political leadership. Demonstrations have continued in early 2023, and the civil unrest continues to disrupt commerce and supply chains in Peru. To date, there has been limited impact on Cerro Verde’s operations. FCX continues to monitor the situation with a priority on safety and security. A prolonged disruption of logistics and supply chains could impact future operations.

There has been increased operating rates at Cerro Verde and higher mining and stacking activities at El Abra resulted in a 12% increase in copper production from South America mining for the year 2022, compared with the year 2021 (which was impacted by COVID-19 protocols). El Abra’s large sulfide resource supports a potential major mill project similar to the large-scale concentrator constructed at Cerro Verde in 2015. Technical and economic studies continue to be evaluated to determine the optimal scope and timing for the sulfide project. The Company is advancing plans to invest in water infrastructure to provide options to extend existing operations, while continuing to monitor potential changes in Chile’s regulatory and fiscal matters.

PT-FI operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Central Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76% ownership interest in PT-FI and manages its mining operations.

Under the terms of agreements entered into in 2018, FCX’s economic interest in PT-FI approximated 81% through 2022, and beginning in January 2023, FCX’s economic interest in PT-FI is 48.76%. This arrangement was developed to replicate the economics of PT-FI’s former joint venture partner interests, which were acquired by the Indonesia government in 2018.

PT-FI currently has three underground operating mines in the Grasberg minerals district: Grasberg Block Cave, Deep Mill Level Zone (DMLZ) and Big Gossan. The milling rates for ore extracted from its underground mines averaged 198,100 metric tons of ore per day in fourth-quarter 2022. The installation of additional milling facilities at PT-FI is currently expected to be completed in late 2023, which would increase milling capacity to approximately 240,000 metric tons of ore per day to provide for continued annualized copper and gold production volumes of approximately 1.6 billion pounds of copper and 1.6 million ounces of gold. PT-FI is also advancing a mill recovery project with the installation of a new copper cleaner circuit that is expected to be completed in 2024, which is expected to provide incremental metal production of approximately 60 million pounds of copper and 40 thousand ounces of gold per year.

At the Kucing Liar deposit, in the Grasberg minerals district, long-term mine development activities are ongoing which is expected to produce over 6 billion pounds of copper and 6 million ounces of gold between 2028 and the end of 2041. Pre-production development activities commenced in 2022 and are expected to continue over an approximate 10-year timeframe. At full operating rates at approximately 90,000 metric tons of ore per day, annual production from Kucing Liar is expected to approximate 550 million pounds of copper and 560 thousand ounces of gold, providing PT-FI with sustained longterm, large-scale and low-cost production. Kucing Liar will benefit from substantial shared infrastructure and PT-FI’s experience and long-term success in block-cave mining.

In connection with PT-FI’s 2018 agreement with the Indonesia government to secure the extension of its long-term mining rights, PT-FI committed to construct additional domestic smelting capacity totaling 2 million metric tons of concentrate per year by the end of 2023 (subject to force majeure provisions). In

accordance with Indonesia regulations, PT-FI submits a smelter progress report to the Indonesia government for review every six months.

PT-FI is actively engaged in the following projects for additional domestic smelting capacity: 1)Construction of a greenfield smelter in Gresik, Indonesia with a capacity to process approximately 1.7 million metric tons of copper concentrate per year. Smelter construction was approximately 50% complete at December 31, 2022, and is expected to be commissioned during 2024. 2) Expansion of PT Smelting’s capacity by 30% to 1.3 million metric tons of copper concentrate per year, which is expected to be completed by the end of 2023. PT-FI is funding the cost of the expansion, estimated to approximate $250 million, with a loan that will convert to equity, increasing ownership in PT Smelting from PT-FI’s current 39.5% ownership interest to a majority ownership interest upon project completion. PT-FI will consolidate PT Smelting’s results following the increase to a majority ownership. 3) Construction of a precious metals refinery (PMR) to process gold and silver from the greenfield smelter and Indonesia regulations require PT-FI to renew its export license annually. The current license is scheduled for renewal in March 2023 and PT-FI is preparing its renewal application. PT-FI’s special mining license (IUPK) provides that exports may continue through 2023, subject to force majeure considerations. PT-FI will work cooperatively with the Indonesia government to continue exports as required until the smelter is fully commissioned. PT-FI and the Indonesia government continue to engage in preliminary discussions regarding the extension of PT-FI’s mining rights under its IUPK beyond 2041. PT-FI believes an extension beyond 2041 would enable continuity of operations and the identification of additional resource development opportunities in the Grasberg minerals district.

The two Molybdenum Mines in Colorado – the Climax open-pit mine and the Henderson underground mine produce high-purity molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrate produced at the Climax and Henderson mines and at the Comapny’s  North America and South America copper mines is processed at FCX’s conversion facilities.

Production from the molybdenum mines totaled 10 million pounds of molybdenum in fourth-quarter 2022 and was higher than production of 7 million pounds of molybdenum in fourth quarter 2021, primarily reflecting increased mining rates in response to improved market demand for molybdenum.

FCX’s mining exploration activities are primarily associated with its existing mines, focusing on opportunities to expand reserves and resources to support development of additional future production capacity. Exploration results continue to indicate opportunities for significant future potential reserve additions at FCX’s existing properties in North America and South America. FCX plans to advance Lone Star and other opportunities at FCX’s North America copper mines.

By supplying responsibly produced copper, the Company is proud to be a positive contributor to the world well beyond its operational boundaries.