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FINANCIAL INSTRUMENTS (Notes)
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments FINANCIAL INSTRUMENTS
FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates.

Commodity Contracts.  From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions.

In April 2020, FCX entered into forward sales contracts for 150 million pounds of copper for settlement in May and June of 2020. The forward sales provided for fixed pricing of $2.34 per pound of copper on approximately 60% of North America's sales volumes for May and June 2020. These contracts resulted in hedging losses totaling $24 million for the year ended December 31, 2020. There were no remaining forward sales contracts after June 30, 2020.

A discussion of FCX’s other derivative contracts and programs follows.

Derivatives Designated as Hedging Instruments - Fair Value Hedges
Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod and cathode customers request a fixed market price instead of the COMEX average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures or swap contracts. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses resulting from hedge ineffectiveness during the years ended December 31, 2022, 2021 and 2020. At December 31, 2022, FCX held copper futures and swap contracts that qualified for hedge accounting for 82 million pounds at an average contract price of $3.80 per pound, with maturities through May 2024.

A summary of (losses) gains recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, including on the related hedged item for the years ended December 31 follows (in millions):
 202220212020
Copper futures and swap contracts:
Unrealized (losses) gains:
Derivative financial instruments$(11)$(4)$9 
Hedged item - firm sales commitments11 4 (9)
Realized (losses) gains:
Matured derivative financial instruments
(63)65 22 
Derivatives Not Designated as Hedging Instruments
Embedded Derivatives. Certain FCX concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the LME copper price or the COMEX copper price and the London gold price at the time of shipment as specified in the contract. FCX receives market prices based on prices in the specified future month, which results in price fluctuations recorded in revenues until the date of settlement. FCX records revenues and invoices customers at the time of shipment based on then-current LME or COMEX copper prices and the London gold prices as specified in the contracts, which results in an embedded derivative (i.e., a pricing mechanism that is finalized after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale of the metals contained in the concentrate or cathode at the then-current LME or COMEX copper price and the London gold price. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host contract in its concentrate or cathode sales agreements since these contracts do not allow for net settlement and always result in physical delivery. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through earnings each period, using the period-end LME or COMEX copper forward prices and the adjusted London gold price, until the date of final pricing. Similarly, FCX purchases copper under contracts that provide for provisional pricing. Mark-to-market price
fluctuations from these embedded derivatives are recorded through the settlement date and are reflected in revenues for sales contracts and in inventory for purchase contracts.

A summary of FCX’s embedded derivatives at December 31, 2022, follows:
OpenAverage Price
Per Unit		Maturities
 PositionsContractMarketThrough
Embedded derivatives in provisional sales contracts:    
Copper (millions of pounds)861 $3.62 $3.80 June 2023
Gold (thousands of ounces)240 1,769 1,823 April 2023
Embedded derivatives in provisional purchase contracts:    
Copper (millions of pounds)180 3.59 3.80 April 2023

Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into copper forward contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in production and delivery costs. At December 31, 2022, Atlantic Copper held net copper forward purchase contracts for 6 million pounds at an average contract price of $3.82 per pound, with maturities through February 2023.

Summary of (Losses) Gains. A summary of the realized and unrealized (losses) gains recognized in operating income for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, for the years ended December 31 follows (in millions):
 202220212020
Embedded derivatives in provisional sales contractsa:
 Copper$(479)$425 $259 
 Gold and other(12)(2)45 
Copper forward contractsb
37 (15)3 
a.Amounts recorded in revenues.
b.Amounts recorded in cost of sales as production and delivery costs.

Unsettled Derivative Financial Instruments
A summary of the fair values of unsettled commodity derivative financial instruments follows:
 December 31,
 20222021
Commodity Derivative Assets:
Derivatives designated as hedging instruments:  
Copper futures and swap contracts$3 $12 
Derivatives not designated as hedging instruments:  
Embedded derivatives in provisional sales/purchase contracts166 64 
Copper forward contracts1 1 
Total derivative assets$170 $77 
Commodity Derivative Liabilities:  
Derivatives designated as hedging instruments:  
Copper futures and swap contracts$3 $— 
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional sales/purchase contracts39 27 
Copper forward contracts— 1 
Total derivative liabilities$42 $28 
FCX’s commodity contracts have netting arrangements with counterparties with which the right of offset exists, and it is FCX’s policy to generally offset balances by contract on its balance sheet. FCX’s embedded derivatives on provisional sales/purchase contracts are netted with the corresponding outstanding receivable/payable balances.

A summary of these unsettled commodity contracts that are offset in the balance sheet follows (in millions):
Assets at December 31,Liabilities at December 31,
2022202120222021
Gross amounts recognized:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts$166 $64 $39 $27 
Copper derivatives4 13 3 1 
170 77 42 28 
Less gross amounts of offset:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts— 3 — 3 
Copper derivatives— 1 — 1 
— 4 — 4 
Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts166 61 39 24 
Copper derivatives4 12 3 — 
$170 $73 $42 $24 
Balance sheet classification:
Trade accounts receivable$163 $51 $7 $14 
Other current assets4 12 — — 
Accounts payable and accrued liabilities3 10 34 10 
Other liabilities— — 1 — 
$170 $73 $42 $24 

Credit Risk. FCX is exposed to credit loss when financial institutions with which it has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties. As of December 31, 2022, the maximum amount of credit exposure associated with derivative transactions was $170 million.

Other Financial Instruments. Other financial instruments include cash, cash equivalents, restricted cash and cash equivalents, accounts receivable, investment securities, legally restricted trust assets, accounts payable and accrued liabilities, accrued income taxes, dividends payable and debt. The carrying value for these financial instruments classified as current assets or liabilities approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 15 for the fair values of investment securities, legally restricted funds and debt).

In addition, as of December 31, 2022, FCX has contingent consideration assets related to the sales of certain oil and gas properties (refer to Note 15 for the related fair values).
Trade Accounts Receivable Agreements. In 2021, PT-FI entered into agreements to sell certain trade accounts receivables to unrelated third-party financial institutions. The agreements were entered into in the normal course of business to fund the working capital for the additional quantity of copper to be supplied by PT-FI to PT Smelting. The balances sold under the agreements were excluded from trade accounts receivable on the consolidated balance sheets at December 31, 2022 and 2021. Receivables are considered sold when (i) they are transferred beyond the reach of PT-FI and its creditors, (ii) the purchaser has the right to pledge or exchange the receivables, and (iii) PT-FI has no continuing involvement in the transferred receivables. In addition, PT-FI provides no other forms of continued financial support to the purchaser of the receivables once the receivables are sold.

Gross amounts sold under these arrangements totaled $444 million in 2022 and $431 million in 2021. Discounts on the sold receivables totaled $4 million in 2022 and $2 million in 2021. As a result of the new tolling arrangements discussed in Note 3, no additional receivables will be sold under these agreements beginning in 2023.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents. The following table provides a reconciliation of total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows (in millions):
December 31,
20222021
Balance sheet components:
Cash and cash equivalentsa
$8,146 
b
$8,068 
Restricted cash and restricted cash equivalents included in:
Other current assets111 114 
Other assets133 132 
Total cash, cash equivalents, restricted cash and restricted cash equivalents presented in the consolidated statements of cash flows$8,390 $8,314 
a.Includes time deposits of $0.5 billion at December 31, 2022, and $0.2 billion at December 31, 2021.
b.Includes $1.8 billion of cash designated for smelter development projects related to PT-FI’s April 2022 senior notes offering.