Freeport-McMoran Inc. Morgan Stanley's 14th Annual Laguna Conference

Great. Thank you, Carlos, and thanks, Morgan Stanley, for hosting this conference. We enjoy being here every year and look forward to the continued engagement with the investors here. There's a lot of interest in what we're doing at Freeport. We've got a big agenda going on. Copper is our focus, and we're working. We're entering a new period here of growth. We've got some key initiatives that we're pursuing. One is the recovery of the Grasberg, which is going very well, and we can talk more about that. We've got a very exciting growth profile in the U.S. that we're pursuing. We've got brownfield expansion opportunities that we're moving forward to make a decision on in the U.S., as well as a big investment or a big opportunity we have in technology.

We're leaning very heavily into innovation and technology, which will allow us to capture some significant value associated with the processing of above-ground material that is ripe for Freeport to take advantage of. That's a big initiative, and then we've got growth also in South America. It's a very exciting time within our industry at Freeport. In the near term, our focus is going to be on growth in the U.S., where Freeport enjoys a very advantaged position as being America's copper champion, where we supply about 70% of the copper that's produced in the U.S. comes from the Freeport operation. Anyways, great time to be in copper. Big challenges, because as we look forward, we see a world that's becoming more copper-intensive with electrification, and it's up to us to continue to be able to supply that market efficiently and reliably.

We're up to the challenge, and that's what we're working to do.

When you look at our industry and go back historically, there have always been, it seems, periods of time where demand is accelerated, and there are supply responses. There have been projects waiting for the opportunity to develop when demand accelerates. This time, we don't have that. I think you start with one of the issues for copper supply is that discoveries, major new discoveries of new resources, is extremely rare. You don't see constant replenishing of projects because there aren't significant new discoveries. When you do have a discovery, it can take two decades or so to be able to develop it. So there is a real challenge now with a lack of greenfield opportunities.

There are a number of projects that the industry is pursuing, and you've seen a lot in Argentina and different places, but we don't have the pipeline of projects that we once had in the industry. Copper prices could go. You've seen copper prices go from $4 through $5 through $6, and to your point, not a near-term supply response. What it's going to take for our industry, there is still a lot of copper out there, and what it's going to take for our industry is to be more innovative. At the same time, you're seeing inflationary pressures. It costs a lot more to develop a major new copper mine than it used to cost.

It's going to require us to be more innovative, and what we're doing at Freeport is working on technology and other innovative opportunities to recover more of what we have. We still have a lot of copper within our operations that, for various reasons, hasn't been recovered. The technology wasn't there to be able to recover all the copper out of the ore. One of the things we're doing is investing in technology to get us there. We're also investing in brownfield opportunities. Those can be done more quickly with less risk than a greenfield development. I think you're going to see not only Freeport, but others in the industry start to work to get the brownfield projects moving. The fundamentals of copper, in my view, as we look forward, have not been this strong in some time.

Over the past 20 years, you're seeing demand grow. Most of the growth has come from China in terms of demand drivers over the past 20 years. Now, with what you referenced in terms of the electrification, all of the power and energy infrastructure that's needed, it's more broad-based. We're going to need to work hard as an industry to find new ways of developing supply on a cost-effective basis in light of all the inflation we're seeing. At Freeport, we're up to the challenge, and we've got a number of levers that we're working to pull.

Yeah, thanks. This is a very exciting and ambitious undertaking for Freeport. In recent decades, really starting in the '80s, there was a technology developed that allowed companies to extract copper from a process we call leaching, where solution is released into the ore, and you can recover copper and actually produce copper cathode directly. That was effective for some time, but over time, the amount of production available from leaching started to decline, and that's because you only get a small portion of the overall recovery through this process using historical technology. You may only get 30% of the copper that's in the ore recovered using old technology. But what we've been working on at Freeport is using new technologies to recover more of that copper. We've been at it for the last few years, using some different operational tactics initially.

Now we're starting to get into deploying some of the new chemistry that we're applying, and other initiatives that we're applying to these stockpiles to recover even more copper. When you think about it, having 800 million pounds a year from ore that has already been mined, and we're essentially just reprocessing. It's not a capital-intensive initiative. It's low incremental operating costs because you've already incurred the mining cost, so this is essentially reprocessing material. You have the ability to do it at scale. So far on our journey, we've gotten 200 million pounds a year, roughly, out of the 800. We've still got a lot more to go. What we're doing now to be able to scale it, as Carlos says, we're working to get to a run rate around 300 million at the end of the year.

That would allow us to increase our production, increase the scale. We're doing two things, really. We have been working to qualify a new additive, a new chemical reagent that we could apply to these stockpiles. The one we're using now, that is a new technology, was readily available, and so we procured some of it and started testing it, and it's providing some positive results. But there are two additional additives that we've been working on in our laboratories, which are showing multiples of the recovery potential compared to the one we're using now. So we had to specially go and get this material procured and manufactured, and so we've been working with various chemicals manufacturers to manufacture the products. Now it's on order. It's being manufactured, and we expect to get it at the end of this year and early into next year, which will allow us to start deploying it at scale in the field rather than just in a lab.