Ladies and gentlemen, thank you for being here. Welcome to the Freeport-McMoRan Second Quarter Conference Call. I would now like to hand the conference over to Mr. David Joint, Vice President of Investor Relations. Please proceed, sir.

Good morning, everyone, and welcome to the Freeport conference call. Earlier this morning, FCX reported its second quarter 2025 operating and financial results. A copy of today's release with supplemental schedules and slides is available on our website, fcx.com. Today's conference call is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link. In addition to analysts and investors, the financial press has been invited to listen to today's call. A replay of the webcast will be available on our website later today. Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and actual results may differ materially. Please refer to the cautionary language included in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website. Also on the call with me today are Richard Adkerson, Chairman of the Board; Kathleen Quirk, President and Chief Executive Officer; Maree Robertson, Executive Vice President and CFO; and other senior members of our management team. Richard will make some opening remarks. Kathleen and Maree will review our slide materials, and then we'll open up the call for questions. Richard?

Thank you, David, and thank you all for joining us. Copper is currently in the spotlight, of course. COMEX prices are hitting all-time highs. LME prices are strong. Uses are growing. Electricity means copper, and the world is increasingly electric. This results in high demand, and the industry continues to be challenged to find the supplies to meet this demand and future demand. Governments are focused on critical minerals, including copper. Our company is strongly positioned. One-third of our copper is in the U.S., roughly one-third in Indonesia, and one-third in Peru and Chile. We are the dominant producer in the U.S., producing over 70% of the country's refined copper. We're fully integrated. We have substantial organic growth in the U.S., and we're committed to that growth. Freeport committed to its strategy in copper over 20 years ago. Our tagline has been "foremost in copper," and that's what we're striving to be. The start-up of the Indonesian smelter is a big accomplishment. Congratulations to the team at Freeport. We will now be effectively fully integrated producers globally. We are pleased to see the trade agreement between Indonesia and the United States and productive discussions with President Prabowo and President Trump. We conveyed to the Indonesian leaders negotiating the deal to note that Freeport, a widely held public company in the U.S. with almost a 60-year history of operating in Indonesia, is the operator of the world's second-largest copper mine located there. The Grasberg operations and district is our cornerstone asset, the second largest copper mine in the world. In this most recent quarter, we had a net credit for operating cost of $1 a pound. This asset has enabled us to create the modern Freeport. With the smelter nearing completion, we are progressing our discussions with the Indonesian government about extending our operating rights beyond 2041. Doing so would create great value for FCX shareholders, but it also would be very positive for all stakeholders in the operation. With those comments, I'll turn the call over to Kathleen and Maree to report on our quarter and our outlook.

Great. Thank you, Richard, and I'll cover the highlights of the second quarter starting on Page 3. We generated strong margins and cash flows during the quarter and achieved significant milestones on several important initiatives. Our sales of copper and gold were better than anticipated, and net unit cash production costs during the quarter of $1.13 per pound were significantly improved from what we guided to and from last year's second quarter. With an average quarter copper realization of over $4.50 per pound, which was about $0.20 per pound above the international benchmark pricing, we generated quarterly EBITDA of $3.2 billion and operating cash flows of $2.2 billion. Our sales volumes exceeded production as we were successful in reducing inventories in Indonesia, both at the mine site and in our newly commissioned precious metals refinery, which performed well during the second quarter. As we look at the balance of the year, we're well positioned for continued strong financial performance. Our sales of copper in the second half are expected to be nearly 10% higher than our first half volumes, and gold sales, after taking into account revisions to our Grasberg gold production, which we'll talk more about, are expected to be similar to the first half levels. The current premium on our U.S. copper sales, which recently tripled from second quarter levels, adds additional margins and cash flows. And as we look ahead to 2026 and 2027, volume growth and lower costs set us up nicely to expand margins and cash flows as we go forward. We achieved a major milestone in the quarter with the start-up of our new copper smelter in Indonesia, a project we've been working on for the past 10 years. We started up about a month ahead of schedule and have progressed start-up activities to the stage of producing our first cathodes, which we expect by the end of this month. We remain focused on ramping up to reach design capacity by the end of the year. Another exciting development during the quarter was the start of a field trial at our U.S. Morenci mine using an internally developed leach additive. Our team of scientists has been working on this for some time, and we are progressing work on additional options, which are showing very impressive lab results. There's more work to do, but we're making real progress. Identifying the right additive combined with our precision leaching operating practices will be a big step toward reaching our objective of producing 800 million pounds per annum from this initiative. We continue to advance optionality in our organic growth pipeline, and we're well positioned with our significant resources and experienced team and our strong financial position. We purchased 1.5 million shares of stock during the second quarter, bringing our first half stock purchases to 2.9 million shares at an average cost of $36.41 per share. We continue to target 50% of excess cash flow for shareholder returns in line with our financial policy. Turning to the next slide on 4, it's a summary of our 2025 priorities. We've covered these on previous calls, and these are the areas that are defining our everyday pursuit of value creation. First, execution, mastering the basics, and making every day count as our key objectives. We're focused on delivering our plans safely and efficiently and driving our costs lower, particularly in the U.S. Scaling the leach opportunity is a major value driver for Freeport. We continue to target a 40% increase in our run rate to achieve 300 million pounds by the end of the year on our path to 800 million pounds per annum. Delivering the smelter, a safe and efficient ramp-up of the PTFI smelter, is strategically important. It will derisk our plans and position us for extension of our long-term operating rights in Indonesia. With the early startup, we're well on our way. We posted a video this morning of the progress on our website, and we hope you had the chance to review it. We're very proud of what our team is accomplishing there. Innovation is an increasingly important value driver for our business. Our operating teams are embracing technologies and new tools to enable better productivity and cost performance. And we're continuing to build optionality in our growth portfolio. We have three major project opportunities being advanced in the Americas, which we'll talk more about. Turning to copper markets on Slide 5. Copper has been actively covered in the media recently with widespread recognition of the rising strategic importance of this essential metal and a broad use of applications. Market fundamentals remain positive, underpinned by copper's increasing use in the global economy and is an important driver of electrification, global energy requirements, and defense systems. Copper prices averaged $4.32 on the London Metals Exchange during the quarter and $4.72 on the U.S. COMEX Exchange. Following the July 8 U.S. tariff announcement, U.S. prices rose significantly. While tariff policies have dominated headlines and resulted in rising inventories in the U.S., global exchange inventories remain at low levels, particularly in relation to consumption trends. Copper demand globally continues to benefit from the secular trends and major new investments in AI technology, power infrastructure, decarbonization, and transportation. In the U.S., demand continues to be supported by these secular drivers, and we are seeing improving trends in Europe. China continues to be a major driver of copper demand, and India represents an important growth market in the future. As we've talked about in the past, the fundamentals of the copper markets are highly attractive with the outlook for demand growth to outpace available supplies as we go forward. Here at Freeport, we're in a great position to increase volumes in the coming years to supply a world with growing requirements. Moving to Slide 6, we talk about the regional premiums and the market differentials between the U.S. pricing benchmarks and international benchmarks. For background, the reference price for Freeport's copper sales contracts is based on geography. Our international sales are based on the London Metals Exchange price, and our U.S. sales are based on the U.S. COMEX reference price. These two benchmarks have been closely correlated in the past. But as you can see, a differential emerged earlier this year after the U.S. opened the Section 232 investigation, and the differential widened significantly earlier in July following the U.S. announcement of a 50% tariff on copper imports with an expected implementation date on August 1. We're still waiting on additional details on the implementation of the tariff announcement. The U.S. currently imports approximately half of its copper cathode requirements, and the current domestic supply of cathodes is primarily produced by Freeport. As indicated in the charts, as of yesterday's close, the U.S. premium approximates $1.25 per pound or about 28% above the LME price. This implies an approximate $1.7 billion annual financial benefit on Freeport's U.S. sales. Longer-range, the differential will be determined by market factors, including how the tariff structure is applied to various copper products, available domestic supplies, and requirements for imported copper, among other factors. We're actively working to boost domestic supplies of copper with a special emphasis on growing our refined production in a cost-effective manner through our innovative leach initiative, and we're focused on supporting the growing requirement for our U.S. customer base. Freeport is an important American copper producer and is by far the largest contributor to the U.S. copper market with an established and successful franchise dating to the late 1800s. As America's copper champion, we appreciate the administration's recognition of copper as a critical mineral and the efforts underway by the U.S. government to boost domestic production. Our operations in the U.S. supply approximately 70% of the refined copper produced here. Our operations in the U.S. are fully integrated with mines and smelting and refining facilities and innovative leach processes that efficiently produce refined cathode. About 60% of our U.S. production is sourced through leaching processes, and the balance through our smelter. We employ a large workforce in the U.S. and importantly, we've earned the trust of communities in the Southwest U.S. where we operate and with our U.S. copper customers. In talking about our global refined metal on Slide 8, Freeport is a significant producer. With the completion of our new smelter in Indonesia, Freeport will essentially be fully integrated globally with internal processing facilities for its mine production. This is important because countries are becoming more and more focused on critical mineral supply chain resilience, national security issues, and global trade. Freeport's positioning as a major producer of refined copper is of strategic significance for the long term. As indicated, we produce a substantial amount of refined copper from leach processing, which does not require a smelter process, and we're going to continue to pursue innovative opportunities to add refined copper on a cost-effective basis. Moving to operations on Slide 9, we'll talk about the operating highlights by geographic region, starting in the U.S., where we continue to drive operating disciplines to enhance efficiencies and improve costs and margins. We're making progress as indicated by the improved performance compared with the year-ago quarter. With several initiatives underway, there's more opportunity ahead. Our operating teams are benefiting from new tools and data analytics to drive value. We continue to rebuild skills within our workforce to reduce reliance on more costly contractors. As we look forward, we expect production in the U.S. to increase in 2025 and 2026 compared with 2024 levels. Absent changes in commodity-based input costs, we're targeting unit costs to trend to the $2.50 per pound range in 2027. The autonomous haul truck conversion at our Bagdad mine in the U.S. will allow us to test this potential of applying this technology for use at other locations. At Bagdad, we have half of the autonomous trucks in service and expect to complete the balance over the next few months. We have several initiatives in progress to achieve further scaling in our innovative leach program. This is a high priority. Our teams are now much better equipped with new data and analytic tools, expanded areas under leach, and precision leaching processes to achieve higher recoveries from material previously considered waste. Achieving our targeted run rate of 300 million pounds per annum will benefit 2026 production. We are planning projects to use heat in our injection process to further enhance recoveries, and we're advancing internally developed leach additives to provide additional volumes toward our ultimate target of 800 million pounds per annum. As I mentioned, a field trial is underway at Morenci with our first internal generated additive, and we've recently identified a potential second additive with initial lab testing indicating superior performance compared with anything we've seen to date. In addition, we're advancing new technology and automation in our basic mining processes to optimize performance. Our work to date indicates a significant opportunity for value creation through meaningful cost reduction and reserve expansion within our existing operations. We'll also continue to advocate for U.S. legislation to formally recognize copper as a critical mineral and as eligible for incentives to promote domestic production. Moving to South America, the team at our Cerro Verde operation posted another solid quarter with volumes and costs in line with our expectations. As anticipated, volumes at Cerro Verde were below the year-ago quarter because of lower ore grades. At El Abra, we have advanced plans to test heated raffinate injections in our leach stockpile there, expected in 2026, and that is targeted to increase copper recovery and metal volumes. We continue to plan for a major expansion at El Abra, which would capitalize on the large resource we have there and bring substantial scale and operating efficiencies to the mine. In Indonesia, during the second quarter, copper and gold sales were boosted significantly by a reduction in concentrate and in-process inventory following the mid-March approval of our export permit and good performance at the newly commissioned precious metals refinery, which processed all of the anode slimes produced at PT Smelting during the quarter. Milling rates improved in the second quarter compared with first quarter levels, and that reflected a restart of our SAG3 mill in the second quarter. In April, we commenced a large planned maintenance project on our SAG2 mill, which is expected to be completed by the end of the third quarter. This will set us up for a return to mill rates in the 220,000 tonne per day range in the fourth quarter and beyond. Notably, during the second quarter, net unit cash costs at Grasberg were actually a net credit of $0.99 per pound. As indicated, the smelter start-up in the second quarter was a meaningful accomplishment, and we're working to ramp up in the balance of the year. We have revised our near-term outlook for gold to incorporate adjustments to our drawpoint flow model in the Grasberg Block Cave. This resulted in an approximate 15% reduction in expected 2025 gold production, but did not significantly impact long-range plans as indicated on the next slide. We provided some information on Grasberg ore grades on Slide 10. For background, the Grasberg Block Cave is one of three currently producing block cave mines in the Grasberg District. It's the same ore body we mined from the surface for over 25 years prior to transitioning to underground mining in the 2020 time frame. For those of you who have followed us over time, you'll recall there are sections within the Grasberg ore body with significant grade variation, especially for gold. This results in large swings in gold grades depending on where the material is coming from within the ore body. At the Grasberg Block Cave, we extract ore from five production blocks and have over 900 drawpoints currently producing within these five production blocks. We have a practice across the company of updating our forecast quarterly, taking into account all available information. For our block cave mines, we use industry-proven software to model cave flows and ore grades. And during the second quarter, we experienced lower grades for gold than our scheduling model estimated and undertook a process to review our ore grade models. We recalibrated the model on a drawpoint-by-drawpoint basis to better reflect the timing of various ore grades flowing through the drawpoints. Importantly, the changes are timing-related and not expected to impact the ultimate recoveries over the life of the deposit. In looking at the updated model, we were able to replicate historical results with better precision than the prior ore grade distribution model. With mining, there are always learnings throughout the life of a mine, but the management systems and data tools we use today, particularly in our underground operations, are much improved from the historical open pit era. You can see from the revised multiyear production forecast that the impact is limited to 2025 gold production. Over the five-year period, the actual aggregate production of gold is close to our prior estimates, and there was no significant impact on copper production. With the completion of major mill maintenance in 2025, we're set up to increase mill operating rates in the future. Also in our 2025 forecast, we've incorporated an increase in copper concentrate consumption at the new smelter in Indonesia because of the earlier than forecast start-up. This results in more in-process inventory than previously forecast and is a timing item. We want to point out that as we transition from an exporter of concentrate to a fully integrated producer in Indonesia, there will be timing differences between production and sales by quarter. The sale of concentrates historically was recognized immediately on loading of ships at our mine site. And with the smelter, sales will be recognized after processing and sale of refined metal. So this is really a timing match between production and sales. As we look forward, and I'm moving now to our project pipeline, it's clear that additional copper supplies are required to support energy infrastructure, new technologies, and more advanced societies. We have an extensive copper resource position and a broad range of projects in various stages of development. These initiatives total 2.5 billion pounds of copper, which can be developed from Freeport's known resources in jurisdictions where we have established history and experience. Our projects in Indonesia also have the benefit of high gold content that goes along with the copper. Because these projects are brownfield in nature, we benefit from leveraging existing infrastructure, our experienced workforces, and relationships with key stakeholders to move more quickly with less risk than a greenfield project.

Thanks, Kathleen. Just moving on to Slide 12. We show our three-year outlook for sales volumes of copper, gold, and molybdenum. Our guidance for 2025 takes into account the Grasberg ore grade revision, which Kathleen has already discussed, and the timing of production versus sales associated with the smelter startup. 2025 guidance for copper is around 1% below the prior forecast, with gold sales down around 17%. But as discussed, these changes are not expected to impact our long-range plans, and guidance for 2026 and 2027 remain consistent with our previous estimates, and continued success in our leaching initiative would provide upside to these estimates. We provide quarterly estimates on Slide 23 of the reference material. As you can see, copper sales in the second half of the year are nearly 10% higher than the first half. Our current estimate for net unit costs for the year 2025, using $3,300 for gold and $22 for moly, is approximately $1.55 per pound, about $0.05 per pound above the April estimate, principally reflecting the impact of lower gold volumes, partly offset by higher prices of gold and molybdenum. The current unit net cash cost estimate is better than our estimate going into the year of $1.60 per pound. We are continuing initiatives to drive costs lower as we go forward. Moving to Slide 13. Putting together our projected volumes and cost estimates, we show modeled results for EBITDA and cash flow at various copper prices ranging from $4 to $5 copper. These are modeled results using the average of 2026 and 2027 with current volume and cost estimates and holding gold flat at $3,300 per ounce and molybdenum flat at $22 per pound. Annual EBITDA would range from over $11.5 billion per annum at $4 copper to over $15.5 billion per annum at $5 copper, with operating cash flows ranging from $8.5 billion per year at $4 to over $11.5 billion at $5. These estimates assume the U.S. price is the same as the international benchmark price. If we incorporate a 25% premium to our U.S. sales, which is similar to current levels, annual EBITDA would increase by approximately 10%, and operating cash flows would increase by approximately 15%. A 50% premium would increase EBITDA by over 20% and operating cash flows by almost 30%. We show sensitivities to various commodities on the right side of the slide. You will note we are highly leveraged to copper prices, with each $0.10 per pound change equating to approximately $425 million in annual EBITDA. We will also benefit from improving gold prices, with each $100 per ounce change in price approximating $150 million in annual EBITDA. Moving on to Slide 14. This shows our current forecast for capital expenditure in 2025 and 2026. Total capital expenditures over the two-year period are similar to our previous guidance with some timing variances, which has deferred approximately $100 million of spend from 2025 to 2026. The discretionary projects are expected to approximate $1.6 billion to $1.7 billion per year in 2025 and 2026, with roughly 50% related to the Kucing Liar development and the LNG project at Grasberg. The balance includes the acceleration of tailings and other infrastructure to support the Bagdad expansion, the Atlantic Copper Circular Project, which is expected to be completed by mid-2026, and capitalized interest. The discretionary category reflects the capital investments we're making in new value-enhancing projects that under our financial policy are funded with the 50% of available cash that is not distributed. These projects, which are detailed on Slide 31, will benefit our results in the future. We will continue to be disciplined in allocating capital to projects that enhance our position and generate attractive returns. This is consistent with our track record of efficient capital allocation and value-driven approach. On Slide 15, we reiterate the financial policy priorities centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing projects. Our balance sheet is solid with investment-grade ratings, strong credit metrics, and flexibility within our debt targets to execute on our projects. We don't have any significant debt maturities until 2027. In addition to paying our first-quarter base and variable dividend, we have repurchased $107 million of FCX common stock in the open market year-to-date. In total, we have distributed over $5 billion to shareholders through dividends and share purchases since adopting our financial policy of returning 50% of excess cash flow in 2021. We have an attractive future long-term portfolio that will enable us to continue to build long-term value for shareholders with the remaining 50%. We actively monitor current market conditions and carefully manage the timing of our projects to ensure our financial flexibility remains strong. Our global team is focused on driving value in our business, committed to strong execution of our plans, providing cash to invest in profitable growth and return cash to shareholders. In concluding today's presentation on Slide 16, Freeport's large scale, low-cost, proven producing assets, actionable low-risk growth options, experience and leadership in the global copper industry, as well as our advantageous U.S. footprint, provide a strong foundation for the future. Thanks for your attention. We'll now take your questions.

Our first question comes from William Peterson with JPMorgan.

I wanted to ask about the mine plan change. It seems like you look at this on a quarterly basis, but I'm trying to understand what has changed now. Is this something you noticed earlier, but felt you needed more data to adjust the plan? Also, can you share anything else that contributed to the modeling update and plan?

Yes. Thanks for the question. And Mark Johnson is here on the call if we need to fill in anything. But we update our quarterly forecast, as I mentioned, we update our multiyear forecast every quarter. In Grasberg, we go through a process for each of the ore bodies and look at what the expected rates are in determining the grades; we use an established software package that the industry uses for modeling block caves. We did detect starting in the first half of the year some differentials between what we were actually getting out of the recovery of ore grades versus what the model suggested. Historically, it's been a pretty close match. We did recalibrate it once before at the end of 2023. It didn't have material impacts. But we took on a process to look at the various settings within the scheduling model and were able to develop an update to the calibration that replicated very, very closely the match that we had been historically realizing. So we have updated that. You need to consider just the background of the variation of grade within this ore body. And we have 900 drawpoints that we're collecting ore through, and there could be changes in the timing of how that ore flows through the drawpoints from which sections it's coming from, particularly below the pit where, you remember, we had a very high-grade core of gold at the bottom of the pit. So the interplay of the flows, where it's moving, is really just a timing of figuring out scheduling of how that will roll through our grades. And we were very close when we recalibrated the model over the long term, but it did have this short-term impact. So I don't know, Mark, if you want to add anything, any perspectives to those comments.

No, I think you handled it very well, Kathleen. One thing I want to mention is that as we begin mining from a drawpoint, we feel very confident because the material is directly above the area we are mining as we continue to extract from this column of rock; some of it is up to 500 meters above us. This estimation gets a bit more complicated. Not all the material flows through that column at the same rate. The smaller pieces tend to move through the rock column faster. Additionally, we have material that shifts laterally and can end up in other drawpoints. This results in a bit more mixing as you go higher up. Also, as Kathleen noted, our team and the tools we use are world-class. We observed little variability in the copper; its grades are quite stable, but the gold can change value dramatically over a relatively short distance, similar to what we saw in the open pit. However, in the open pit, we could precisely gauge the volume of material being mined at any moment. In the block cave, estimating how that material travels from the higher areas down into these drawpoints is more complex.

Our next question comes from the line of Katja Jancic with BMO.

Maybe, Kathleen, you mentioned you continue to expect costs in North America to decline over the next 2 years. But if I'm not mistaken, that doesn't incorporate expectations for the impact from tariffs. Can you maybe talk a bit about how could tariffs impact that outlook?

We are closely monitoring the effects of tariffs. From Freeport's perspective as the importer of record, the impact has not been significant thus far. The more considerable concern lies with our suppliers and the various inputs influencing their costs. We have a task force in place to ensure that suppliers are not taking advantage of the situation to raise prices unnecessarily. We are delving deeply into the data to comprehend potential implications. Currently, we estimate that tariffs may lead to a 5% increase in our costs, which we are closely watching. We are also looking for ways to adjust our supply chains where feasible and collaborating with vendors to secure as much tariff-free material as possible. Tariffs on steel and aluminum are affecting us to some extent as well. While we are benefiting from the copper situation, tariffs are impacting our operating costs, albeit not significantly. The cost savings we’re aiming for stem from ongoing efforts to enhance efficiencies through our innovations, focusing on core operations, streamlining contractors, reducing unplanned downtime, and improving asset efficiency. Our asset health in the U.S. is in a much better state than in previous years. With inflation stabilizing, we are now positioned to drive costs lower. We have numerous automation projects in progress, and the leach initiative will also significantly help us as it provides incremental pounds at a low cost. We are optimistic about the potential in the U.S. to reduce costs, and simultaneously, we are experiencing a premium. Therefore, we anticipate strong performance from our U.S. business moving forward. It’s important to note that we have net operating losses in the U.S., which can enhance our margins and cash flows, benefiting our overall results. We are keenly focused on generating value in our U.S. operations through efficiency and cost reduction initiatives, alongside the advantages of the premium we are experiencing.

Our next question comes from the line of Orest Wowkodaw with Scotiabank.

A couple of questions, if I could. Firstly, I was wondering if there's been any discussions with the U.S. administration with respect to financing or incentives to advance any of your U.S.-based growth?

We have had discussions with various government authorities regarding Freeport. We have submitted comments related to Section 232 and engaged with representatives of the U.S. government to educate them about Freeport's role as a leading producer in the U.S. We supply 70% of the refined copper produced in the country. We have discussed the technology and innovation in our business that may enable us to bring additional refined copper to the market in the short term. However, it is important to note that increasing refined copper production quickly is challenging due to the limited number of operating smelters in the U.S. Instead, we are focusing on enhancing refined production through our leach initiative. We have also discussed the IRA benefits associated with critical minerals, which currently include a 10% production credit, but copper is not on that list, and we are actively working to change that. With recent legislation phasing out some IRA benefits, we are hopeful for long-term incentives that could significantly increase U.S. refined production. This is a two-way conversation, and Richard has been involved in discussions as well. We believe we are in a strong position regarding this matter. Our Bagdad expansion is actionable, and we aim to complete our autonomous truck conversion while examining how the tariff situation will be implemented. In the near term, we view our leach initiative as a key opportunity to grow refined production in the U.S.

And just as a quick follow-up, do you see any opportunity for potential tariff exemptions on your refined copper coming from either Atlantic Copper or Indonesia into the U.S.?

We don't know. We're waiting on the details of the implementation to be released. We're not aware of any exemptions at this point.

Your next question comes from the line of Alan Spence from BNP Paribas.

Indonesia has $0.27 per pound related to treatment charges in cash cost guidance for 2025. Into next year with the smelter up and running, what do you think your internal cost to operate that smelter would be on a per pound basis?

The impacts of the smelter will vary across different categories. The operating cost for the new smelter is approximately $0.27 per pound. This figure doesn't include the extra revenue generated from selling concentrate to the smelter, which retains a percentage of the metal sold. We expect about 2.5% of the revenues from additional volumes to contribute to our overall revenue. After considering the revenue impact, the net cost will be around $0.15 or $0.16. Additionally, the export duty, which was about $0.30 or more in the second quarter, will no longer apply. Overall, this should enhance our margins.

Your next question comes from the line of Lawson Winder from BofA Securities.

I wanted to follow up on the question about sending refined copper from Grasberg to the U.S. Considering the agreement as it currently stands and the proposed import tariffs of 50% versus 19%, is there any internal discussion about potentially shipping refined copper from Indonesia to the U.S. to take advantage of that difference, assuming the agreements and the Section 232 tariffs are finalized as proposed?

Historically, Indonesia has not exported significant amounts of copper to the U.S. We have primarily been a concentrate producer, although we do have the existing smelter at PT Smelting. Traditionally, the copper produced has been exported as concentrate or consumed locally or in Southeast Asia. We will evaluate future opportunities for selling cathode from our new smelter, with immediate plans focusing on continued sales in Asia. However, we will assess the most viable options. As the U.S. prioritizes strategic interests in critical minerals, having a U.S. company with substantial ownership and management of this operation in Indonesia provides a security of supply if necessary. Currently, most copper imports to the U.S. come from Chile, with additional supplies from Canada and Peru. We will need to monitor how these dynamics evolve and determine the best strategy for trade flows. Yes. And then just a sort of follow-up on that concept in terms of refined copper within the United States. Have you given any thought to whether if Freeport were to build a smelter in the U.S., whether a brownfield expansion at Miami would make more sense? Or would it possibly make more sense to build a greenfield smelter? We are evaluating the potential for a cost-effective expansion of the Miami smelter, which we have been considering for some time. We're also exploring whether we can recover more scrap using our existing U.S. infrastructure, although this has been very limited in the past. We're looking into an expansion of Miami, but establishing a new smelter in the U.S. would be quite challenging. Regarding the Indonesian smelter, we've been working on that for a decade, identifying a suitable site and going through the necessary permitting and engineering processes. Indonesia was eager to fast track it, but these things take time. We do have infrastructure in the U.S. and Arizona that we can examine for expansion. However, I want to highlight that our best near-term opportunity for producing more refined metal in the U.S. lies in the success of our leach program. We are making headway with our additive trials, and we’ll be introducing heated raffinate into the solutions injected into our stockpiles. These developments can progress much faster than creating a new, more expensive greenfield smelter.

Our next question comes from the line of Liam Fitzpatrick with Deutsche Bank.

First one on the buyback. It was still very modest in Q2 in terms of the pace of buyback, and despite net debt being well below your target now. Can you just outline what's holding you back at the moment in terms of increasing the pace of share repurchases? And if I can, one quick follow-up on Indonesia. I know you've said the 2026 guidance on copper and gold is unchanged. But given the variability you're experiencing, what level of confidence do you have or can you really have in that medium-term gold guidance?

On the first question regarding the buyback, we are following our financial policy to distribute 50% of our available cash flows through dividends and share buybacks. We are currently at about 50% of the program. Recently, we noticed a significant increase in the U.S. premium, which has tripled since the second quarter. If this trend continues, it will generate additional cash flow for shareholder returns. As for our net debt target, half is allocated for shareholder returns and the other half for balance sheet and profitable growth. We are considering several projects, including the Bagdad expansion project, which we have yet to decide on, but it could utilize a portion of the remaining 50% generated since we implemented the policy in late 2021. Looking ahead, we anticipate having more cash flow available for shareholder returns based on current prices. Regarding gold volumes, we conduct a thorough process every quarter and are confident in our modeling and the gold grades we are seeing. We will continue to strive to enhance our rates. The first half was impacted by two significant maintenance projects, with one concentrator down in the first quarter in Indonesia, and the second one is currently down. Maintenance should be completed by the end of the third quarter, allowing us to improve our mill and mine rates. Mining does have risks, but we are committed to working with the data available. Our historical performance shows that we have managed to execute well and keep our information current to avoid surprises. Another crucial area for us is getting the smelter operational. We do not expect to export concentrates from the U.S. in the fourth quarter, as all operations will be sourced from the new smelter. We are focused on ensuring its successful launch, and while issues may arise, we have factored in the ramp-up curve in our estimates and will work diligently to execute our plans effectively.

Our next question comes from the line of Carlos De Alba with Morgan Stanley.

So returning to the topic of smelting, Kathleen, will the potential Miami expansion be able to handle the increased concentrate from Bagdad and the concentrate portion of the Lone Star expansions when they are ready? If not, what options does Freeport have to manage those additional concentrates?

Yes. Regarding the Miami expansion, we are looking at a potential 30% increase in the current concentrate treatment. The Miami smelter is operating very well, and the team there has been extremely supportive, as has the Atlantic Copper team, in assisting our new smelter in Indonesia with achieving the ramp-up. For the Lone Star project, over time it will resemble the Morenci operation, with a substantial portion of production expected from the leach volume. Depending on our performance with the leach additive, we might be able to divert more production to leach processing rather than concentrating. The Lone Star project does contain deposits with both copper and gold, which will likely necessitate a concentrator. However, we are well positioned with our focus on increasing refined production, as we can take advantage of our existing smelters and leverage our significant experience in leach processing. While it is challenging to determine how to increase refined copper supply in the future, we are satisfied with our current portfolio that allows us to act swiftly.

No, definitely, the optionality that you have is quite unique here in the U.S. I wonder if, as part of your discussions with the U.S. administration, you have talked about the challenges of bringing smelting capacity in the U.S. How have they responded to that? Would they potentially consider some loans or investments, private/public partnerships, or something to that end to solve that issue and maybe accelerate the refining expansions?

We have not engaged in detailed discussions with the government. There is an interest in increasing the production of refined copper in the U.S., but we have not talked about new greenfield projects. Our focus has primarily been on what Freeport is doing in the short term through our lead innovation initiative and advancing our Bagdad project.

Our next question comes from the line of Daniel Major with UBS.

Just a follow-up on the Indonesia smelter and the sales destinations for those volumes. You mentioned the possibility of selling to the U.S. in an environment with a preferential tariff regime. Can you comment on whether any of the volumes are contractually committed from either the existing or the new smelter over the next 12 months that would prevent you from selling to the U.S.?

I just want to come back. I'm not sure that you've characterized exactly what we're saying about Indonesia. In the near term, our plans are based on selling our copper cathode that will be produced. We've been working on marketing plans, and our near-term plans are that that will be sold in Asia. We have flexibility. We don't have long-term contracts locked up. We do have flexibility to send it to the place that makes the most sense. I mentioned that the trade flows currently are logistically advantaged for selling it in Asia. We're very aware of what's happening in Indonesia with respect to domestic production. There's a real desire in Indonesia to bring up its domestic consumption of copper, and there's actually been some infrastructure developed by other companies near our operating sites. So we'll sell domestically and then look to where the best market is to sell. But we're not locked up long term.

Okay, that's clear. I have a couple of modeling questions. Could you provide any guidance on working capital for Q3 considering the changes in shipment timings from Indonesia?

Yes. We do have some working capital requirements in the third quarter, but that's expected to turn in the fourth quarter. For the year, we've had a use of working capital so far this year. But for the year, we're not expecting any kind of material working capital requirements for 2025.

Our next question comes from the line of Chris LaFemina with Jefferies.

I want to ask about the market. COMEX prices are up more than 40% year-to-date, and I’m not sure we’ve seen such a significant price rally in such a short timeframe from a relatively high starting point. The U.S. industrial economy isn’t performing at its best right now, so I’m curious about the demand implications of this substantial price spike both in the U.S. and globally, especially with LME prices also increasing. Do you think these price increases can be sustained without affecting demand, or are we nearing a point where COMEX prices approaching $6 a pound could lead to negative consequences for demand?

Thank you, Chris. It's an interesting question. When we look at the demand drivers for copper and the secular trends, we see continued strong demand. What we do see from time to time, and we saw it last year in China, and you may see some of it going on in the U.S., is when prices move rapidly in a short period, some customers will try to figure out if it's real before they buy, and people are trying to understand what the implications of this tariff are, and the details haven't been released yet. But underlying what's going on, you hear about it every day, the AI data centers, the need for more energy infrastructure, more power generation, the underlying trends are significant. Copper within big projects doesn't end up being the biggest item. People need it, and it is the best metal when it comes to conducting electricity. So I can't give you a precise answer about whether there will be any short-term impacts from it, but I think the long-term trends are positive in terms of needing copper to fulfill what we're trying to do from a technology standpoint and overall energy infrastructure standpoint. Richard and Steve Higgins are on as well. Richard, I don't know if you want to add anything or Steve to what I said.

Yes. I want to emphasize a few points, Chris. The move you mentioned is a result of the global exporting of copper from the United States before the tariffs were implemented. Now, we are left wondering what the final tariffs will be. They certainly don’t reflect a 50% tariff that has been discussed, but we are uncertain. Once the tariffs are announced, we can expect adjustments in flows, which may positively impact LME prices. Ultimately, it will be the global supply and demand dynamics that drive the situation. The way tariffs are absorbed in the U.S. market will also play a role. Copper is extremely hard to replace due to its unique properties. While there may be efforts to find substitutes or reduce usage as prices increase, nothing conducts electricity like copper, and the world relies heavily on electricity. Therefore, the fundamental demand for copper will remain strong. Steve, do you have any additional insights?

No, nothing to add. That was very well said.

Yes, I was thinking about the competitiveness of the downstream market in the U.S. If these tariffs become permanent, do we see a shift in demand to other regions globally? I understand that the LME price is influenced by global supply and demand, but for Freeport, the COMEX premium is also significant. Will there be a movement of tons away from the U.S. to other areas, which would reduce the benefit of the tariffs for U.S. producers over time?

Well, I think that very much depends on how it's applied to downstream derivative products, which we don't know.

And there's another factor here that we haven't mentioned on this call that's a big uncertain. Going back to a previous question in the past, we've really only lobbied the federal government to try to make permitting more efficient and try to coordinate permitting between state and federal government. Today, we're encouraging the government not lobbying, but encouraging the government to reach deals with our international partners that are favorable to both companies and both countries and trying to educate people. I'm sure you all watch news commentators and you hear things that sometimes are just astounding, like people wanting to open up these old smelters, reopening the old smelters. They don't realize they're gone. The smelters that were once there are no longer here. To try to build a new smelter in today's world where you have zero or negative treatment charges is a tough deal. They have not raised the idea of government subsidies and so forth. We've been trying, as Kathleen said, to get this production credit applied to copper, but that's a challenge. The thing that's overhanging this that we're looking into more is the impact of scrap in the U.S. There's primary scrap and secondary scrap, and the U.S. had over time closed the secondary scrap processors because of the environmental issues and cost issues associated with it. Almost all secondary scrap has been going to China or elsewhere. Now, there's been some new secondary scrap facilities opened up. That is the potential source of U.S. refined supply. But it's complicated for the reasons I just mentioned. But that's what we're watching as we look at all of these things going forward. It's just a complicated world, and we just all have to focus on doing it. I'm really proud of what our team is doing. We've been through history at Freeport of having to dig our way out of some real tough problems over the years. Now we've got a lot of those past problems behind us. Kathleen is leading the team and focusing on technology, getting more copper out of what we have there, reducing costs. There are ways of doing that, and that's what we're really focused on as we wait for this political situation to clear and to see where we're going from here.

Our next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

Could you explain some of the hurdles in engineering the Bagdad expansion? Clearly, you've been mining a long time. You know about the reliability of the ore grades, the estimation character. And explain just how it takes a year or so to get to definitive fees. And concerning Lone Star, is the expansion and consideration increasing the mining and stacking rate 120,000 tonnes a day oxide? Or is it also bringing forward the sulfide mill? Just looking forward to all the good progress.

Thank you, John. We have made significant progress on the Bagdad project, working closely with our internal team and external engineers to define its scope. Our main challenge has been executing the project in the current inflationary environment with tight labor availability. We have observed other projects in the industry facing substantial cost overruns, which we want to avoid. We can produce reserves from Bagdad without expansion, but expanding would enhance our near-term production and cash flow. The key consideration is timing. While evaluating this, we are also advancing our autonomous truck conversion, which will lessen our dependency on labor. We do plan to expand our workforce but not as much as if all trucks were operated manually. We have also been addressing housing needs at Bagdad and progressing on tailings work necessary for the long term, ensuring that we are prepared to move forward with construction when the time is right. We aim to create flexibility within the project. Our primary concern remains ensuring that we can execute efficiently within our capital budget, especially in light of tariff impacts on costs. We're monitoring that as we continue with the autonomous truck fleet. Regarding Lone Star, we are conducting a study for its next phase of expansion. The high-grade deposit at Safford, which also contains gold, is part of a concentrator project. For Lone Star sulfides, we'll evaluate the optimal balance between leach and concentration processes. If we proceed with the concentrator at Safford, it will ultimately improve the economics for processing some of the ore. Our long-term vision is to establish a cornerstone asset like Morenci, capable of producing both leach and concentrate at scale over many years. Safford/Lone Star was the last major U.S. mine established, coming online in the 2007-2008 timeframe, with expansions since then. Although it was some time ago, it remains relatively new for U.S. mines. We're excited about the prospects and look forward to completing the study to determine what the flow sheet will entail.

Our final question will come from the line of Brian MacArthur with Raymond James.

Can I just go back to Grasberg to make sure I understand this? You sort of lost 200,000 ounces over your 5-year plan. And again, that sounds to me it's just different flow-through drawpoints. But if I look past the 5 years, is there anything different I should worry about there? And is there anything you've learned through this whole process that would change your thinking on KL, just given it is a lot higher gold grade going forward?

Yes. Nothing has changed with respect to our long-range Grasberg Block Cave plans. We are, to your point, about KL, looking at what is the best NPV when we're developing KL, but what's the best NPV? We always look at the interplay between grades coming from various ore bodies that could maximize the net present value. We'll have that opportunity. The development of Kucing Liar adds additional optionality within the portfolio. You've pointed out, we've got high grades there, both copper and gold. Currently, the recovery assumptions in our reserves are lower than what we're getting in the mill recoveries, what we're getting in Grasberg Block Cave, but that's a real opportunity for us. But you're right to point that out, Brian, and we're constantly relooking at what the right sequencing is between these ore bodies. With a 2041 extension, it's going to open up a whole lot of opportunities for us to recover more than we could have otherwise. So we're very excited about the long range and what we can do there.

I apologize, but you addressed my second question. As you mentioned, the recoveries at KL and the metallurgy were significantly lower for gold. Based on what you see now, do you believe you will be able to achieve the current recoveries observed at GBC? This seems like a substantial opportunity.

Yes. We have not yet. I mean we've been able to make some changes over time and have brought the recoveries up, but that's still an opportunity for us.

Brian, this is Richard. Let me add just one quick thing on this because I've observed some things about this grade issue with the Grasberg Block Cave. I just want to point out a couple of things. One, when you look at that shortfall, don't forget to take into account the tax effect of that, and also the non-controlling interest effect. The government of Indonesia has 51% of that, and there's a tax effect to it. I've observed some people overstating the impact of it. As Kathleen and Mark said, this is not a fundamental change that the resource is requiring us to make operating changes in the way we operate. What we're talking about here is getting a better handle on when that gold in the ore is going to be processed. We're learning more about it. We're using better models. It's not a resource question; it's a timing question, and we want to give the market, as we always do, our best effort in giving you guidance as to when that gold is coming. It's going to be there; it's going to come. It's a question of when.

And with that, I'll hand the call back to management for any closing remarks.

Thank you, everyone, for a thorough call. We are here to answer any follow-up questions you may have. We appreciate your support and will keep you informed as we move forward.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.