BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2020

BUSINESS SEGMENTS

FCX has organized its mining operations into four primary divisions – North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. Separately disclosed in the following tables are FCX’s reportable segments, which include the Morenci, Bagdad, Cerro Verde and Grasberg (Indonesia Mining) copper mines, the Rod & Refining operations and Atlantic Copper Smelting & Refining.

Beginning in fourth-quarter 2019, the Bagdad copper mine became a reportable segment. As a result, FCX revised its segment disclosure for the three and nine months ended September 30, 2019, to conform with the current year presentation.

Intersegment sales between FCX’s business segments are based on terms similar to arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

FCX defers recognizing profits on sales from its mines to other segments, including Atlantic Copper Smelting & Refining, and on 25 percent of PT-FI’s sales to PT Smelting, until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX’s net deferred profits and quarterly earnings.

FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs, along with some selling, general and administrative costs, are not allocated to the operating divisions or individual segments. Accordingly, the following Financial Information by Business Segment reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

Product Revenues. FCX’s revenues attributable to the products it sold for the third quarters and first nine months of 2020 and 2019 follow (in millions):


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020		2019
Copper:
Concentrate	$	1,185	$	952		$	2,783	$	3,251
Cathode	1,085		878			3,046		2,696
Rod and other refined copper products	634		537			1,479		1,560
Purchased coppera	167		210			568		872
Gold	497		415			1,108		1,111
Molybdenum	189		295			626		910
Otherb	159		202			431		697
Adjustments to revenues:
Treatment charges	(95)		(87)			(250)		(292)
Royalty expensec	(56)		(24)			(102)		(73)
Export dutiesd	(23)		(174)		e	(43)		(201)		e
Revenues from contracts with customers	3,742		3,204			9,646		10,531
Embedded derivativesf	109		(51)			57		(40)
Total consolidated revenues	$	3,851	$	3,153		$	9,703	$	10,491

a.FCX purchases copper cathode primarily for processing by its Rod & Refining operations.

b.Primarily includes revenues associated with cobalt and silver.

c.Reflects royalties on sales from PT-FI and Cerro Verde that will vary with the volume of metal sold and prices.

d.Reflects PT-FI export duties.

e.Includes charges totaling $166 million primarily associated with an unfavorable Indonesia Supreme Court ruling related to certain disputed PT-FI export duties.

f.Refer to Note 6 for discussion of embedded derivatives related to FCX’s provisionally priced concentrate and cathode sales contracts.

Financial Information by Business Segment



(In millions)

																						Atlantic		Corporate,
	North America Copper Mines								South America Mining													Copper		Other
									Cerro						Indonesia			Molybdenum		Rod &		Smelting		& Elimi-			FCX
	Morenci		Bagdad		Other		Total		Verde		Other		Total		Mining			Mines		Refining		& Refining		nations			Total
Three Months Ended September 30, 2020
Revenues:
Unaffiliated customers	$	4	$	—	$	12	$	16	$	632	$	108	$	740	$	1,023	a	$	—	$	1,270	$	536	$	266	b	$	3,851
Intersegment	584		207		430		1,221		66		—		66		3			42		8		3		(1,343)			—
Production and delivery	308		123		337		768		394		83		477		409			51		1,272		522		(1,034)			2,465
Depreciation, depletion and amortization	42		14		35		91		92		13		105		150			13		6		8		21			394

Metals inventory adjustments	—		—		(4)		(4)		—		—		—		—			3		2		—		8			9
Selling, general and administrative expenses	1		—		—		1		2		—		2		25			—		—		5		39			72
Mining exploration and research expenses	—		—		—		—		—		—		—		—			—		—		—		8			8
Environmental obligations and shutdown costs	—		—		(3)		(3)		—		—		—		—			—		—		—		24			21
Net loss on sales of assets	—		—		—		—		—		—		—		—			—		—		—		2			2
Operating income (loss)	237		70		77		384		210		12		222		442			(25)		(2)		4		(145)			880

Interest expense, net	—		—		—		—		21		—		21		—			—		—		—		99			120
Provision for (benefit from) income taxes	—		—		—		—		105		4		109		211			—		—		—		(23)			297
Total assets at September 30, 2020	2,654		785		4,352		7,791		8,569		1,640		10,209		17,098			1,770		251		877		3,103			41,099
Capital expenditures	21		7		38		66		26		5		31		325			3		1		6		4			436

Three Months Ended September 30, 2019
Revenues:
Unaffiliated customers	$	61	$	—	$	19	$	80	$	504	$	117	$	621	$	488	a	$	—	$	1,104	$	437	$	423	b	$	3,153
Intersegment	462		209		389		1,060		65		—		65		—			90		8		—		(1,223)			—
Production and delivery	377		140		379		896		417		111		528		399			85		1,111		421		(770)			2,670
Depreciation, depletion and amortization	45		12		34		91		93		16		109		77			16		2		7		20			322

Metals inventory adjustments	1		—		37		38		2		—		2		—			1		—		—		—			41
Selling, general and administrative expenses	1		1		—		2		2		—		2		31			—		—		5		61			101
Mining exploration and research expenses	—		—		—		—		—		—		—		—			—		—		—		25			25
Environmental obligations and shutdown costs	—		—		—		—		—		—		—		—			—		—		—		20			20
Net loss on sales of assets	—		—		—		—		—		—		—		—			—		—		—		12			12
Operating income (loss)	99		56		(42)		113		55		(10)		45		(19)			(12)		(1)		4		(168)			(38)

Interest expense, net	—		—		1		1		25		—		25		1			—		—		5		91			123
Provision for (benefit from) income taxes	—		—		—		—		29		4		33		(8)			—		—		(1)		67			91
Total assets at September 30, 2019	2,943		769		4,236		7,948		8,500		1,723		10,223		16,447			1,786		236		680		3,623			40,943
Capital expenditures	61		42		121		224		61		7		68		334			5		1		9		25			666

a.Includes PT-FI's sales to PT Smelting totaling $506 million in third-quarter 2020 and $475 million in third-quarter 2019.

b.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.


(In millions)

																						Atlantic		Corporate,
	North America Copper Mines								South America Mining											Copper		Other
					Other				Cerro		Other				Indonesia			Molybdenum		Rod &		Smelting		& Elimi-			FCX
	Morenci		Bagdad		Mines		Total		Verde		Mines		Total		Mining			Mines		Refining		& Refining		nations			Total
Nine Months Ended September 30, 2020
Revenues:
Unaffiliated customers	$	26	$	—	$	35	$	61	$	1,479	$	312	$	1,791	$	2,151	a	$	—	$	3,491	$	1,429	$	780	b	$	9,703
Intersegment	1,473		532		1,144		3,149		156		—		156		38			171		24		16		(3,554)			—
Production and delivery	1,005		367		1,043		2,415		1,152		297		1,449		1,130			178		3,529		1,379		(2,676)			7,404
Depreciation, depletion and amortization	129		41		102		272		273		42		315		375			44		14		22		51			1,093

Metals inventory adjustments	4		—		48		52		—		3		3		—			8		3		—		26			92
Selling, general and administrative expenses	2		—		1		3		5		—		5		81			—		—		15		169			273
Mining exploration and research expenses	—		—		2		2		—		—		—		—			—		—		—		40			42
Environmental obligations and shutdown costs	—		—		(3)		(3)		—		—		—		—			—		1		—		60			58

Net loss on sales of assets	—		—		—		—		—		—		—		—			—		—		—		13			13
Operating income (loss)	359		124		(14)		469		205		(30)		175		603			(59)		(32)		29		(457)			728

Interest expense, net	2		—		—		2		69		—		69		2			—		—		4		285			362
Provision for (benefit from) income taxes	—		—		—		—		82		(6)		76		302			—		—		1		(46)			333

Capital expenditures	92		44		262		398		116		40		156		959			14		5		17		24			1,573

Nine Months Ended September 30, 2019
Revenues:
Unaffiliated customers	$	89	$	—	$	183	$	272	$	1,793	$	343	$	2,136	$	1,776	a	$	—	$	3,403	$	1,554	$	1,350	b	$	10,491
Intersegment	1,411		591		1,020		3,022		262		—		262		57			290		18		5		(3,654)			—
Production and delivery	1,020		388		1,055		2,463		1,311		337		1,648		1,509			234		3,415		1,488		(2,158)			8,599
Depreciation, depletion and amortization	128		33		100		261		294		48		342		281			50		7		21		59			1,021

Metals inventory adjustments	1		—		38		39		2		—		2		—			1		—		—		58			100
Selling, general and administrative expenses	2		1		1		4		6		—		6		91			—		—		15		184			300
Mining exploration and research expenses	—		—		1		1		—		—		—		—			—		—		—		82			83
Environmental obligations and shutdown costs	—		—		—		—		—		—		—		—			—		—		—		85			85

Net gain on sales of assets	—		—		—		—		—		—		—		—			—		—		—		(13)			(13)
Operating income (loss)	349		169		8		526		442		(42)		400		(48)			5		(1)		35		(601)			316

Interest expense, net	2		—		1		3		79		—		79		2			—		—		17		300			401
Provision for (benefit from) income taxes	—		—		—		—		159		(10)		149		(9)			—		—		2		39			181

Capital expenditures	172		100		369		641		160		16		176		992			11		3		18		76			1,917

a.Includes PT-FI's sales to PT Smelting totaling $1.3 billion for the first nine months of 2020 and $1.4 billion for the first nine months of 2019.

b.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North America and South America copper mines.