Freeport-McMoRan (FCX) Q3 2026 Earnings Call: Q&A Summary

Q: How should we think about the cadence of production for copper and gold in the first half of next year versus the second half, and the mine plan for 2028?

A: Kathleen Quirk, President and CEO, noted that the second half of 2027 will likely be higher than the first half, with the first quarter being the lowest of the year.

Q: How much of the idle facility costs are fixed versus repair-related, and will they go away as Grasberg ramps up?

A: Kathleen Quirk explained these are essentially fixed costs that will be included in unit costs starting in 2027 rather than treated separately, noting that rising volumes will lead to very low unit costs.

Q: What are the drivers for the changes in the long-dated production guidance at Grasberg, and what is the status of PB1C and PB1N?

A: Kathleen Quirk explained that the plan is generally consistent with prior guidance, with minor adjustments for mine sequencing and water availability, while Mark Johnson, Executive Vice President, added that they continue to evaluate options for PB1C and PB1N.

Q: How should we interpret the delay in the mud removal initiatives?

A: Mark Johnson explained that the delay is minor and that they are learning as they go, with the initiatives serving as tools to support the PB1 restart.

Q: Why have recovery rates been trending lower in the U.S., and is this temporary or related to ore changes?

A: Cory Stevens, Executive Vice President, explained that recovery rates are driven by how the ore body presents itself and noted that the company is focusing on increasing mine performance, using new technology, and deploying better mine plans to address this.

Q: What is driving the slower-than-expected ramp-up in leaching?

A: Kathleen Quirk stated that the current additive is performing as expected, but the next-generation additive, which has the potential to scale, has not yet been tested in the field.

Q: Are the potential benefits from the new leach additives included in the 2027 guidance?

A: Kathleen Quirk clarified that the 300 million pounds in the 2027 guidance is conservative and does not fully reflect the potential upside if the new additives perform as well in the field as they have in the lab.

Q: Should we expect a 6- to 12-month trial for the Gen 2 additives?

A: Kathleen Quirk agreed that this is a good benchmark and noted that they will provide quarterly updates on the progress.

Q: How much of the growth from 300 million to 800 million pounds is recovery improvement versus volume, and can you exceed 800 million?

A: Kathleen Quirk explained that the growth is primarily driven by recoveries and that while 800 million is an aspirational target, they need more field data before speculating further.

Q: What is driving the $400 million increase in 2027 CapEx guidance?

A: Kathleen Quirk attributed the increase to additional mining equipment to boost productivity, cost inflation, and the completion of the Atlantic Copper circular project.

Q: Should we expect elevated CapEx to continue into 2028?

A: Kathleen Quirk noted that the company is focused on economic and productive ways to build capacity and will monitor market conditions, but currently sees a need to produce more to meet demand.

Q: What is the status of the Bagdad expansion, including permits, capital cost estimates, and timeline?

A: Kathleen Quirk confirmed they have the necessary permits, the capital estimate remains around $4.5 billion, and the project is expected to take about 3.5 years from the final decision.

Q: Does the company consider M&A given the strong free cash flow outlook?

A: Kathleen Quirk stated that while the base case is organic growth, they will continue to monitor the landscape for value-adding opportunities.

Q: Can you provide a breakdown of the $500 million energy cost increase between diesel and electricity, and by region?

A: Kathleen Quirk explained that diesel was the biggest factor, with the company consuming about 275 million gallons annually, split between the U.S., Peru, and Indonesia.

Q: What is the timing for the Safford Lone Star PFS, and what factors influence capital intensity?

A: Kathleen Quirk noted that they are incorporating data from the leaching initiative into their studies, and Cory Stevens added that they are balancing capital intensity with the value proposition of the resource.

Q: How much of the U.S. cost increase will reverse with normalized weather versus remaining embedded?

A: Kathleen Quirk stated that current energy market conditions are baked into their numbers, and the primary driver for reducing unit costs will be increasing productivity and mining rates.

Q: What is the status of primary molybdenum capacity, and why would sales decrease next year?

A: Kathleen Quirk noted that they are evaluating opportunities to expand primary production but are prioritizing copper, and production will vary based on byproduct output.

Q: Does the 2027 CapEx guidance include the Bagdad expansion?

A: Kathleen Quirk confirmed that the 2027 guidance does not include the $4.5 billion Bagdad project.

Q: How often is the decision made regarding share buybacks?

A: Kathleen Quirk stated that they monitor cash flow and the 50% distribution policy on a quarterly basis.