Freeport-McMoRan Reports Twentieth Year Of Sustainability Progress

PHOENIX, AZ – Freeport-McMoRan Inc. (FCX) published its 2020 Annual Report on Sustainability. It has a long history of environmental, social and governance programs and is continuously striving to improve and embrace evolving stakeholder expectations. This report marks FCX’s 20th year of reporting on its sustainability progress and FCX’s first year reporting in alignment with the Sustainability Accounting Standards Board (SASB) Metals & Mining framework. FCX is committed to building upon its achievements in sustainability and seeks to contribute positively to society by supplying the world with responsibly produced copper.

The Copper Mark. In April 2021, the Morenci operations were awarded the Copper Mark – a new, robust assurance framework demonstrating the copper industry’s responsible production practices and contribution to the United Nations Sustainable Development Goals. FCX now has six sites that have achieved the Copper Mark (the Morenci operations, Miami smelter and mine, and El Paso refinery in North America; Cerro Verde and El Abra mines in South America; and Atlantic Copper smelter and refinery in Spain). FCX has future plans to validate all of its copper producing sites against the Copper Mark requirements.

First-quarter 2021 copper sales of 825 million pounds approximated the January 2021 estimate. First- quarter 2021 copper sales were higher than first-quarter 2020 sales of 729 million pounds of copper, primarily reflecting continued progress of the ramp-up of underground mining at PT Freeport Indonesia (PT-FI), partly offset by timing of shipments. Gold production in first-quarter 2021 was in line with the January 2021 estimate; however, a deferral of certain shipments in Indonesia to second-quarter 2021 resulted in first-quarter 2021 gold sales of 258 thousand ounces being 6 percent lower than the January 2021 estimate. First-quarter 2021 gold sales were higher than first- quarter 2020 sales of 144 thousand ounces of gold, primarily reflecting continued progress of the ramp-up of underground mining at PT-FI.

First-quarter 2021 molybdenum sales of 21 million pounds were slightly higher than the January 2021 estimate of 20 million pounds of molybdenum and approximated first-quarter 2020 molybdenum sales.

Consolidated sales volumes for the year 2021 are expected to approximate 3.85 billion pounds of copper, 1.3 million ounces of gold and 85 million pounds of molybdenum, including 975 million pounds of copper, 330 thousand ounces of gold and 21 million pounds of molybdenum in second-quarter 2021.

FCX’s North America operating sites, Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico, continue to focus on strong execution of operating plans. FCX successfully completed the initial development of the Lone Star copper leach project in the second half of 2020 and is on track to achieve expected annual copper production of approximately 200 million pounds beginning in 2021. FCX is advancing studies for potential near-term incremental oxide expansions and long-term development options for its large-scale sulfide resources at Lone Star. During first-quarter 2021, mining activities at the Chino mine were restarted at a rate of approximately 100 million pounds of copper per year (approximately 50 percent of capacity). The Company has substantial resources in the United States (U.S.), primarily associated with existing mining operations, and is advancing the evaluation of project options for future growth.

In South America, during first-quarter 2021, Cerro Verde’s concentrator facilities exceeded planned milling rates and averaged 390,100 metric tons of ore per day. Operating plan assumptions, which reflect strict COVID-19 restrictions and protocols, include an estimated milling rate of 360,000 metric tons of ore per day for the remainder of 2021, with plans to return to pre-COVID-19 pandemic levels of approximately 400,000 metric tons of ore per day in 2022. El Abra is implementing plans to increase operating rates during 2021 to pre-COVID-19 pandemic levels, subject to ongoing monitoring of public health conditions in Chile. Stacking rates at El Abra are expected to increase to over 100,000 metric tons of ore per day by mid-2022, resulting in incremental annual production of approximately 70 million pounds of copper. FCX continues to evaluate a large-scale expansion at El Abra to process additional sulfide material and to achieve higher copper recoveries. El Abra’s large sulfide resource could potentially support a major mill project similar to facilities 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 in parallel with extending the life of the current leaching operation. The Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). Copper sales from South America mining are expected to approximate 1.0 billion pounds for the year 2021, consistent with the year 2020.

PT-FI operates one of the world’s largest copper and gold mines at the Grasberg minerals district in Papua, Indonesia. PT-FI produces copper concentrate that contains significant quantities of gold and silver. FCX has a 48.76 percent ownership interest in PT-FI and manages its mining operations. Under the terms of the shareholders agreement, FCX’s economic interest in PT-FI approximates 81 percent through 2022. PT-FI’s results are consolidated in FCX’s financial statements. The ramp-up of underground production at the Grasberg minerals district in Indonesia continues to advance on schedule. First-quarter 2021 highlights include: Production approximated 75 percent of the projected ultimate annualized level; A total of 50 new drawbells were constructed at the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines, bringing cumulative open drawbells to over 420; and Combined average production from the Grasberg Block Cave and DMLZ underground mines approximated 98,500 metric tons of ore per day. The successful completion of this ramp up is expected to enable PT-FI to generate average annual production for the next several years of 1.55 billion pounds of copper and 1.6 million ounces of gold at an attractive unit net cash cost, providing significant margins and cash flows. PT-FI expects production for the year 2021 to approximate 1.3 billion pounds of copper and 1.3 million ounces of gold, which is nearly double 2020 levels. In March 2021, PT-FI received a one-year extension of its export license through March 15, 2022. Export licenses are valid for one year periods, subject to review and approval by the Indonesia government every six months, depending on smelter construction progress. In connection with PT-FI’s 2018 agreement with the Indonesia government associated with the extension of its long-term mining rights, PT-FI committed to construct new domestic smelting capacity totaling 2 million metric tons of concentrate per year by December 2023. Prior to the COVID-19 pandemic, PT-FI selected a site for a greenfield smelter in East Java and initiated ground preparation and commenced engineering and commercial negotiations. During 2020, PT-FI notified the Indonesia government of schedule delays resulting from the COVID-19 pandemic and continues to discuss with the government a revised schedule for the project. In recent months, PT-FI has explored alternatives to the greenfield smelter and has advanced discussions with the other shareholders of the existing Indonesia smelter (PT Smelting) regarding an expansion to increase smelter concentrate treatment capacity by approximately 30 percent (300,000 metric tons of concentrate per year). Commercial and financial arrangements for this project are being advanced and engineering is in progress. The current estimate for the cost of the expansion, which would be funded by PT-FI, approximates $250 million.

PT-FI has also engaged in discussions with a third party to develop new smelter capacity at an alternate location in Indonesia to fulfill its smelter commitment. To date, commercial discussions have not resulted in a mutually acceptable agreement. In the interim, PT-FI is continuing planning for the development of a greenfield smelter and related refinery in East Java with a capacity to process 1.7 million metric tons of concentrate per year. The estimated capital cost associated with this project approximates $3 billion. Under this option, PT-FI would finance the smelter development with debt which, pursuant to the shareholders agreement, would be shared 51 percent by PT Inalum and 49 percent by FCX. Construction of new smelter capacity would result in the elimination of export duties, providing an offset to the economic cost associated with the smelter development.

The Henderson and Climax wholly owned molybdenum mines in Colorado, 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 FCX’s North America and South America copper mines, is processed at FCX’s conversion facilities. Production from the molybdenum mines totaled 7 million pounds of molybdenum in both first-quarter 2021 and first-quarter 2020.

FCX’s mining exploration activities are generally 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 in North America and South America. Exploration expenditures for the year 2021 are expected to approximate $45 million. FCX has long-lived reserves and a significant resource position in its existing portfolio.