Earnings Call Transcript - FCX Q4 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the conference over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer. Please go ahead, ma'am.

Kathleen Quirk, CFO

Thank you, and good morning, everyone. Welcome to the Freeport-McMoRan fourth quarter conference call. Earlier this morning, we reported our fourth quarter and full-year operating and financial results, and a copy of today's press release and our slides are available on our website at fcx.com. Our call today is being broadcast live on the Internet, and anyone may listen to it by accessing our website homepage and clicking on the webcast link for the conference call. In addition to analysts and investors, the financial press has been invited to listen to today's call, and 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 this call will include forward-looking statements, and actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings. On the call today are Richard Adkerson. We also have a number of our senior team with us today: Mark Johnson, Josh Olmsted, Mike Kendrick, Rick Coleman, and Steve Higgins. I'll start by briefly summarizing the results for the quarter, and then, we'll turn the call over to Richard, who will be reviewing our outlook. After our prepared remarks, we'll be taking questions. Today, FCX reported net income attributable to common stock of $708 million, or $0.48 per share in the fourth quarter, and $599 million, or $0.41 per share for the year ended 2020. We had a number of special items in the fourth quarter, which are detailed on Roman numeral VII of our press release; those totaled net credits of $142 million, or $0.10 a share, mainly associated with the gain on the sale of assets, partly offset by charges for litigation settlement and international tax matters. Our adjusted net income attributable to common stock after these items totaled $566 million, or $0.39 per share for the fourth quarter of 2020. Our adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, approximated $1.9 billion for the fourth quarter, and we generated $4.2 billion of adjusted EBITDA for the year 2020. A reconciliation of our EBITDA is available on Page 38 of the slide materials. We had a very strong fourth quarter. Our sales volumes of copper of 866 million pounds were 3% above our October 2020 estimate, and our gold sales of 293,000 ounces were 9% higher than our October 2020 guidance. These primarily reflected higher copper sales from Cerro Verde and in Indonesia, and higher gold ore grades in Indonesia. We benefited during the quarter from improved pricing for both copper and gold. The realized price of copper was $3.40 per pound in the fourth quarter, which was 24% above the year-ago quarterly average. The fourth-quarter gold realized price was $1,870 per ounce, about 25% above the year-ago average. Our unit net cash cost came in at an average of $1.28 per pound of copper and that was lower than what we had guided to in October. Notably, in the fourth quarter, we generated very strong cash flows, which totaled $1.3 billion during the quarter and exceeded our capital spending of just under $400 million during the period. Together with our asset sale proceeds in the fourth quarter, we successfully reduced our net debt by about $1.6 billion in the fourth quarter alone. We ended the year with net debt approximating $6.1 billion. We had no borrowings under our revolving credit facility and consolidated cash of $3.7 billion, putting us in a strong position as we look forward to generating increasing cash flows. Now, I'd like to turn the call over to Richard, who will be referring to our slide materials that you can reference on our website.

Richard Adkerson, CEO

Good morning, and thank you all for participating in today's call. It's great to be able to talk to you today about our performance in 2020 and our positive outlook. It's been a head-spinning year when we think back to March and April, with all the challenges we faced then and the world was facing. Being at this point is remarkable in many ways. But it's been quite a year for Freeport. I hope you and your families and colleagues are staying safe and well. We've all made personal sacrifices. It's been a tough year for us at Freeport, but the progress our company has made has been a godsend as we've all been working in ways that are so different than in the past. We remain focused on working to protect the health and safety of our people. We're supporting the communities where we operate during this crisis, and we are really encouraged by the scientific advances with therapeutics and now that vaccines are finally being distributed. We know all this will take time to be widely distributed, and we're all looking forward to returning to normal lives. In the meantime, we are staying diligent with our protocols, which have proven effective for us at Freeport. I am immensely proud of our Freeport team for their response to the COVID challenge and navigating through a pandemic that none of us has ever seen. Its duration has been difficult for everyone and all the communities around us. Our team has demonstrated real resilience, confidence, and drive. They have proactively addressed the situation while maintaining focus on continuing to protect and enhance our business, benefiting all stakeholders. On Slide 3, we show highlights for 2020, a year of extraordinary accomplishment for Freeport. We laid a strong foundation for future growth in cash flows and profitability, which is exactly what we set out to do. Achieving what we did in the face of COVID is nothing short of remarkable. Earlier in 2020, we moved quickly to develop new operating protocols to maintain our business continuity. We totally redesigned our operating plans from what we had announced this time last year to safeguard our business, protect our liquidity, and be responsive to the heightened uncertainty that we faced. At Freeport, all hands were on deck to build an optimal plan. Each of our operating teams around the globe played an important role in developing and then executing these aggressive plans. The end result was tremendous. Our team's collaboration, which has always been a strength of our organization, is now stronger than ever. Employment engagement, commitment, energy, and morale are at very high levels. We effectively executed the revised plans, focusing on cost and capital management. Significantly, we advanced the largest block caving operation in the world at our Grasberg mine in Indonesia. You will see we met our key milestones for this massive multi-year, multi-billion dollar undertaking. At the same time, we also completed on time and on budget the Lone Star project in Arizona, which is a potential future keystone asset for our company. The progress we made this year sets a foundation for strong cash flows for years to come. We turned the corner in 2020 and began generating sustainable and substantial free cash flow, continuing into the fourth quarter. We generated significant free cash flow that enabled us to reduce our net debt by $2.4 billion in the second half of the year. Slide 4 highlights key financial metrics by comparing our actual results for 2020 with the plan we presented to you last January prior to the pandemic onset. Our unit net cash costs for 2020 were 15% lower than January 2020 guidance. EBITDA and operating cash flow improved by over 25%, and capital spending was reduced by 29%. We also generated approximately $550 million in after-tax proceeds from the sale of non-cash flow producing assets disposed of this year. We ended the year with $2.7 billion lower debt than our original January plan. Think about that. Facing COVID, with all the uncertainties, we made changes and came back to do much better than we set out to do before COVID was known. This was accomplished with an average copper price realization of $2.95 for the year, well below current prices, with the team doing an outstanding job. We're strongly positioned for the future. In addition to our strong operational and financial performance in 2020, we achieved new milestones in the ESG area, as shown on Slide 5. We committed to the Copper Mark, a new assurance framework developed by the International Copper Association. Our Steve Higgins is now the President of the ICA, promoting and demonstrating responsible production practices focused on meeting the United Nations' sustainability development goals—a big step forward. We established climate targets and added transparency with a new Climate Report, available on our website. We took a leading role with the ICMM, beginning over a year ago, serving as the industry representative in a multi-stakeholder initiative to develop a new tailings standard for the mining industry. This was a major undertaking by the industry and our company, reflecting the importance of safely managing tailings storage facilities. I've recently accepted a new term as ICMM Chairman. ICMM currently has 27 CEO Council Members from the largest global mining and metals companies, and I'm leading a strategic review of the organization to meet the increasing importance of ESG issues facing our industry. We advanced our inclusion and diversity initiatives core to our values at Freeport, invested in our communities, and continued to expand organizational resources in this effort. Worker safety is our highest priority. Our safety statistics in 2020, measured by incidence rates, met our targets. Unfortunately, we had five fatalities in our operations last year. On Slide 6, I've often mentioned that copper prices would benefit from favorable fundamental outlook. Prices rose significantly in late 2020, recognizing copper's favorable demand trends and the limited ability of the industry to increase supply. The recent price move is significant, but prices are still lower than they were just about 10 years ago. The fundamental outlook for copper today is arguably better than it was then. China's leading the recovery, and global stimulus measures worldwide are also positively affecting copper demand. Freeport is a leading copper producer, critical for the economy of the future and essential for supporting global growth and transitioning to a cleaner global energy future. More and more, we're seeing policies adopted to reduce carbon emissions worldwide. As clean energy initiatives are implemented, the intensity of copper use will increase. The chart on Slide 7 shows that copper utilization in electric vehicles and the generation of renewable power is over four times greater per unit than in traditional vehicles and power generation. Estimates indicate that copper demand for electrification and renewables will significantly increase in the coming years. Global demand from these green initiatives could equal today's U.S. copper market size in a relatively short timeframe. As demand accelerates, copper supply will continue to struggle to keep up, supporting favorable near-term and long-term fundamental outlook. This current situation echoes the early 2000s when I became CEO of Freeport when Chinese demand accelerated dramatically without a supply response, creating a commodity super cycle and sharp copper price increases. Moving to Indonesia on slide 8, our PTFI team is achieving impressive results. In 2020, we built momentum for the ramp-up of our massive underground mines, reaching nearly 70% of targeted annual run rates for sales volumes by the fourth quarter. This progress is notable considering the operational health challenges faced in Papua, as we stayed on schedule and met our objectives. The project is massive and complex, successfully maintaining effective COVID protocols in a challenging remote location. Our ramp-up has significantly reduced PTFI's underground mining risk. Major risks have been developing the necessary infrastructure, now successfully in place. Although inherent in mining, major risks for this underground development are behind us, and we are confident in managing the types of risks we will face going forward. Discussions continue regarding a new smelter in Indonesia. In early 2020, we requested a delay in the agreed timeline to complete the construction of a new smelter in Eastern Java. Work has been stalled due to COVID issues affecting the local workforce and international contracts. This greenfield smelter has an estimated total cost of about $3 billion, which continues to be refined. This project would be debt-financed by PTFI. Recently, PTFI and our partner, the Indonesian state-owned company MIND ID, have discussed alternatives regarding our commitment to build a new smelter, as stated in our IUPK mining license granted in December 2018. During the fourth quarter, we advanced discussions for expanding the existing PT smelting facility in Gresik to add smelting capacity in Indonesia and partially satisfy our government commitment. Engineering is in progress, and initial estimates for this project indicate a completion cost around $250 million, efficiently addressing the current TCRC environment. Separately, at the government's request, PTFI is engaged in discussions with a third-party regarding developing a new greenfield smelter at an alternate location away from Eastern Java, instead of constructing the aforementioned new smelter. A third-party would lead the development and financing, while PTFI would supply concentrate for the project. The partners and government are working to reach a decision expeditiously. On Slide 10, we outline our 2021 priorities for continuing to create value for our company. We are building on our progress in 2020 by focusing on execution of plans to grow production volumes, manage costs, and capital spending efficiently. We're expanding our recent innovation efforts, supplying technology and innovative management processes across our operations while managing our responsibilities to workers, communities, governments, and other stakeholders. We look forward to resuming cash returns to shareholders during 2021, as we anticipate a position to do so. Discussions with our Board on taking such actions will occur. We're entering a period for long-term harvesting of cash flows now that we are completing our significant long-term investment program in Indonesia. We're discussing with our Board a financial policy that would enable a near-term dividend resumption and then establish a performance-based shareholder return policy over time. We have also resumed work we suspended in 2020 to evaluate and advance future organic growth opportunities from our large portfolio of undeveloped reserves and mineral resources. The 2020 efforts and work of our team over the years have improved margins and cash flow substantially for 2021 and beyond. At $3.50 copper, we are on a path to nearly double EBITDA from 2020 levels. Projected copper sales for 2021 aim for a 20% increase over 2020, while gold volumes project an over 50% rise, all with a declining unit net cash cost of production occurring alongside improved copper pricing. I've previously remarked that an ideal situation for Freeport would involve completing the Grasberg expansion amid good copper prices; here we are. Significantly higher cash flows will allow us to maintain a robust balance sheet and return substantial cash flows to shareholders. As shown on Slide 12, we have a long portfolio of mineral reserves, with a reserve life for our proved and probable reserves exceeding 30 years. We have substantial potential to expand our reserve base through our inventory of mineral resources beyond reported reserves—all linked to brownfield expansions. For our company's long-term success, we are not required to succeed in exploration, although we hope we do. While there may be strategic opportunities, we already have a solid base in our portfolio ensuring sustainable long-term prospects for Freeport. Slide 13 highlights the organic projects we are now assessing. During 2020, to conserve cash, we paused on expansion projects. We are now reengaged with a broad range of opportunities. In 2021, we will prioritize developing these projects to guide our sequencing and long-term planning. We do not plan to substantially increase capital spending on projects in the near term, but we will approach long-term growth opportunities in a measured and disciplined manner. I will close with Slide 14, titled the Freeport Edge, a term we're using internally. Our management team at Freeport possesses extensive experience in managing this business. The leadership teams throughout the company are seasoned, value-oriented, and intensely engaged. Our collaborative management structure leverages experience effectively, making decisive decisions and executing efficiently. We appreciate our responsibilities when granted licenses to operate and never cut corners on essential issues. Looking at Freeport, we have a combination of long-tenured experienced management and younger managers bringing new ideas, perspectives, and energy. We have strategically hired external talent, including promoting effective internal replacements. This demonstrates significant talent depth within our organization. Freeport is foremost in copper, with a large, high-quality asset portfolio as an industry leader. Our operating mines are among the largest worldwide, with embedded options for reserve and resource growth. Importantly, we have strong operating franchises in the United States, South America, and Indonesia, reliably supplying the global copper industry. We boast industry-leading technical capabilities supported by an impressive project execution and business management track record. Our block caving experience is among the most extensive in the global mining industry. We've been operating block caves in Indonesia since the early 1980s. I want to close before opening to your questions by thanking our people and recognizing their strength, resilience, and performance. I'm proud to be part of this team and look forward to participating in our future successes. We will build on our accomplishments. As depicted in our 2020 Annual Report to shareholders, we are charging ahead responsibly, reliably, and relentlessly. Thank you for your attention. Operator, let's open the lines for questions.

Kathleen Quirk, CFO

Richard, I'm just going to make a few comments, and then, we can take questions. I'll be brief. Continuing with the slide presentation on Slide 16, we provide some additional details on the quarter and our operating plans. We are continuing in the U.S. to ramp up production from the new Lone Star mine, and in January of this year, we commenced the restart of the Chino mine, which we previously announced. In South America, we continue to operate Cerro Verde at a reduced rate of roughly 360,000 tons per day. We did a little more than that in the fourth quarter, and our team is prepared to increase rates to around 400,000 tons per day, about where we were before COVID, as restrictions are lifted. At El Abra, we've incorporated in our latest plans an increase in operating rates, providing additional volumes beginning in 2022. At Grasberg, we made excellent progress in the fourth quarter and are continuing to execute the ramp-up plan to achieve the targeted metal run rates by year-end. Slide 17 presents the 2021 outlook, largely in line with previous estimates. We made minor revisions to 2021 volumes, reflecting the latest Grasberg mine plans. We've updated our cost models to incorporate current pricing for energy, currencies, and ongoing maintenance programs. We expect to sell just over 3.8 billion pounds of copper in 2021 at an average unit net cash cost of $1.25 per pound. At $3.50 copper, this would generate about $8 billion of EBITDA and $5.5 billion in operating cash flows for 2021, nearly double 2020 levels. As seen in Slide 18, we anticipate growth in 2022 and 2023, projecting a nearly 20% growth in copper and over 50% in gold in 2021. Most capital is behind us, allowing for increased cash flows and margins. The build-up in volumes for 2021 is outlined on Slide 19, while Slide 20 emphasizes the significance of cash flow generation using these volumes and cost estimates, showing a range of prices from $3.50 to $4 copper, holding gold flat at $1,850 per ounce and molybdenum at $9 per pound. The increased volumes at low incremental costs yield average EBITDA over $10 billion for 2022 and 2023, exceeding $12 billion per year at $4 copper. Operating cash flows, net of taxes and interest costs, would range from $7 billion at $3.50 per pound of copper to over $8.5 billion at $4 copper. $4 copper is still below historical periods of demand strength. The cash generation is set to exceed planned capital spending, resulting in substantial free cash flows. Slide 21 includes our projected capital of $2.3 billion in 2021, excluding potential spending on the Indonesian smelter, which would be debt-financed and remains under evaluation. We are maintaining our basic capital plans and have been disciplined about capital spending. The 2021 capital is roughly $100 million higher than the previous forecast, incorporating an acceleration of some mining equipment investments to ensure capacity for our plans. We are in a strong financial position and have entered a period of exceptional free cash flow generation. Our long-lived asset base and ongoing cost and capital management will strengthen our balance sheet, enabling cash returns to shareholders and building additional value in our asset base. Regarding financial policy, we're working with our Board on a shareholder return policy that balances priorities while providing increasing returns based on performance. It's a very exciting time for Freeport. We remain focused on continuing our momentum, and now Operator, we'd like to take questions.

Richard Adkerson, CEO

Kathleen, I apologize for the earlier comments. I wasn't trying to cut you off. Let's have some questions.

Operator, Operator

Ladies and gentlemen, we will now begin the question-and-answer session. The first question comes from the line of Emily Chieng with Goldman Sachs.

Emily Chieng, Analyst

Hi, guys. Congratulations on a great quarter here. My first question revolves around digging into some of the capital allocation strategy plans. Are you able to provide any narrowed timing or key financial metrics and operational targets ahead of thinking about raising the dividend or around when we might see some movement on growth projects? 2021 seems to be very much a harvest year, but any guidelines would be appreciated. Thank you.

Richard Adkerson, CEO

With respect to the dividend, we're already there. We have Board meetings early this year, and we will sit down with the Board about a broader long-term financial policy that I referenced. We are positioned to recommend reinstating the dividend. There is no need for further financial metrics with this new look at our improved financial situation compared to when we were paying the dividend before. Regarding the growth project, it requires more work and some time evaluating the market going forward. They range in size, but we have a significant expansion opportunity in El Abra, Chile, with our partner Codelco. The U.S. has advantages, with favorable tax rates and owning most of the land and fees, which eliminates royalties. So we had to suspend this work due to COVID uncertainties. Now Rick Coleman and his team are digging back into it, doing trade-offs on individual projects, and we’ll report our intentions to you as we progress. We are constantly approached by others in the industry who want to partner with us, creating numerous opportunities.

Operator, Operator

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

Chris LaFemina, Analyst

Hi, Richard, Kathleen, and thank you for taking my call. Just two questions about Grasberg. First, you made a substantial increase to your annual production guidance for the Grasberg block cave from 850 million pounds to 950 million pounds. What is driving this increase in annual production? Second, regarding Indonesia and the smelter options, could you clarify the costs related to expanding the Gresik smelter and the potential precious metals refinery you mentioned?

Richard Adkerson, CEO

The Grasberg block cave has gone extraordinarily well. It's an ore body we know well from mining it previously. We're ahead of schedule thanks to the team's efficiency. It’s nothing to do with unexpected grades; just effective mining practices and updates to our mine plans. Regarding the smelter, we are discussing the Gresik expansion, and we have a trio of options: expanding Gresik, building a new smelter costing around $3 billion which would be debt financed, or having a third party develop it. If PTFI goes forward with the expansion instead of building a new greenfield smelter, costs may shift. Under this scenario, the expenses would be around $200 million for the smelter expansion and about $250 million for a precious metals refinery.

Chris LaFemina, Analyst

Understood, so the Gresik expansion would be more manageable than constructing a new facility, right?

Richard Adkerson, CEO

Correct, and in context, any expansion would likely see some cost implications on TCRCs that will require negotiation. We have ongoing discussions with our partners and the government to explore cost-effective ways to structure the project while serving as a supplier to the smelter.

Kathleen Quirk, CFO

We are running the processes in parallel to compare the economics of each option effectively. We're focused on ensuring the best economic outcomes for PTFI.

Richard Adkerson, CEO

Remember, if we construct the original commitment smelter, over 70% of the negative economics will be borne by the Government of Indonesia, reducing the economic burden on FCX. Many assign more negative value to FCX than the economics justify.

Operator, Operator

Your next question comes from the line of Alex Hacking with Citi.

Alex Hacking, Analyst

Good morning, Richard and Kathleen, and congrats on the achievements last year.

Richard Adkerson, CEO

Thanks, Alex.

Alex Hacking, Analyst

My question is around CapEx. If we look back to the beginning of last year, you planned to spend $2.8 billion then $2.4 billion in this year but ended up spending $2 billion and $2.3 billion. Could you please clarify where that money has gone?

Kathleen Quirk, CFO

Part of the capital deferred in 2020 was related to the smelter. We managed mining rates and deferred some projects. However, we also brought forward $100 million for mining equipment, allowing quick rebuilds that would have been in the original plan. Some spending is timing-related, and we're ensuring efficiency with our equipment fleets.

Operator, Operator

Your next question comes from the line of Timna Tanners with Bank of America.

Timna Tanners, Analyst

I wanted to ask about two things: first on the cost side, it seems to have crept up a little. Can you clarify if this increase incorporates any of your cost-containment measures, or could it change as the year progresses? Secondly, Richard, are you able to share your thoughts on your plans regarding ICMM?

Richard Adkerson, CEO

Some of our costs correlate to copper prices, including profit-sharing for our workforce. We've seen an uptick in energy costs and other variables; while we aim to manage these costs through efficiencies, we may not eliminate them entirely. Kathleen, do you want to touch on the second question?

Kathleen Quirk, CFO

We're focused on maintaining our core structure while driving efficiencies. As energy prices rise, we'll remain vigilant about preserving the base structure while managing costs.

Richard Adkerson, CEO

Reflecting on my future with Freeport, I value the relationships built and the company’s work over the years. Despite COVID complications, our team’s spirit is strong, and I’m healthy. Although I may step down, our organization has depth and sustainability for continued success.

Operator, Operator

Your next question will come from the line of Chris Terry with Deutsche Bank.

Chris Terry, Analyst

Hi, Richard, and Kathleen. I wanted to further discuss Grasberg—could you provide updates on December and the fourth-quarter development rates, and how do those align with your 2021 guidance?

Richard Adkerson, CEO

We have multiple underground mines at Grasberg, with optimal flexibility within the operations. The Grasberg block cave is progressing well, and we are ahead of schedule on that front. As details emerge, our targets will remain focused and realistic.

Mark Johnson, Senior Vice President

In the fourth quarter, the Grasberg block cave performed well, and we are ahead on draw-belling and undercutting. While we faced some challenges in material flow, we are developing methods to address these issues.

Richard Adkerson, CEO

We will continue to closely monitor developments, ensuring accuracy in our publicly disclosed guidance and addressing unexpected circumstances proactively.

Operator, Operator

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

Orest Wowkodaw, Analyst

Following up on the Indonesian smelter alternative, do you anticipate that the ultimate plan will be resolved in the next six to twelve months?

Richard Adkerson, CEO

Yes, we need to resolve the smelter situation; decisions must be efficient and timely.

Kathleen Quirk, CFO

For the PT smelting expansion, we expect to advance as a loan. We're currently working diligently toward agreements.

Orest Wowkodaw, Analyst

Would you say that Freeport is in no hurry to construct new copper capacity on a greenfield level and more towards maintaining discipline?

Richard Adkerson, CEO

Absolutely, we will focus more on project efficiency over hasty investments. Success in operations comes first.

Operator, Operator

Your next question comes from the line of Carlos de Alba with Morgan Stanley.

Carlos de Alba, Analyst

Has the management team formulated potential proposals for the Board regarding the shareholders' program that you would like to discuss and implement? Also, regarding DMLZ, there have been some changes in the forecast for your open draw bell blasts—what is behind this, and could you address the copper and gold sales forecast reduction for 2021?

Richard Adkerson, CEO

We have informal discussions with the Board on restoring dividends and structured financial policies. The draw bell adjustments are not significant, with no notable changes affecting overall copper and gold sales forecasts.

Operator, Operator

Your next question will come from the line of Matthew Murphy with Barclays.

Matthew Murphy, Analyst

I had a question regarding your innovation initiatives. This time last year, you discussed some specific programs with data science and machine learning. Should we consider that embedded in this guidance, or is this program still on pause that might be reinitiated?

Kathleen Quirk, CFO

We're moving forward with these projects, having internalized many aspects. We're working on automated models for mill throughput and enhancing operations with effective data analytics.

Josh Olmsted, SVP of Operations

We've embedded much of our previously envisioned initiative work internally, leveraging the workforce's energy to enhance operational efficiency and capture value across various department levels.

Richard Adkerson, CEO

We’re focusing on the company’s effective output as a whole and evaluating individual initiatives efficiently across all operations.

Lucas Pipes, Analyst

I want to pick up on your comment regarding early 2000s sentiments. What is your confidence level today that we are on a cusp of this period again? Also, could you speak on M&A, organic growth, and your perspective about this potential super cycle?

Richard Adkerson, CEO

Reflecting on the super cycle of the early 2000s when Chinese demand surged, we face similar pressures today. With declining copper inventories and obstacles to project investments, I think we are in a good position to leverage growth similarly.

Operator, Operator

Your next question comes from the line of Curt Woodworth with Credit Suisse.

Curt Woodworth, Analyst

As you consider potential growth, how do you balance that versus returning cash to shareholders amidst the possible super cycle?

Kathleen Quirk, CFO

We already have planned growth, and coordinating 2021 will drive cash flow that supports shareholder returns, enhancing overall value for our company.

Richard Adkerson, CEO

At $3.50 copper, our cash flow projection allows us to return cash to investors while maintaining solid growth without needing a commodities boom to support future endeavors. Our operational prowess ensures we can sustain our momentum. Thank you all for participating. We look forward to reporting our progress in 2021. Please take care of yourselves and your families. We're not over the hump yet with COVID, but hang in there; life will get better.

Operator, Operator

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