Earnings Call Transcript
FREEPORT-MCMORAN INC (FCX)
Earnings Call Transcript - FCX Q2 2023
Operator, Operator
Ladies and gentlemen, thank you for being here. Welcome to the Freeport-McMoRan Second Quarter Conference Call. All participants are currently in listen-only mode. We will have a question-and-answer session later. I would now like to hand over the conference to Ms. Kathleen Quirk, President. Please proceed, ma'am.
Kathleen Quirk, President
Thank you and good morning everyone. Welcome to our conference call. Earlier this morning, we reported our second quarter 2023 operating and financial results. A copy of the press release and slides are available on our website at fcx.com. Our call today 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 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 the call include forward-looking statements, and actual results may differ materially. I'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 with me today are Richard Adkerson, our Chairman of the Board and CEO; Maree Robertson, our Chief Financial Officer; Josh Olmsted, who leads our Americas operations; Mark Johnson, who leads our Indonesian operations; Cory Stevens, who heads up our engineering, construction and technical services group; Mike Kendrick, who leads our molybdenum business; and Steve Higgins, our Chief Administrative Officer. We'll start the call. Richard will make some opening comments, and then I'll go through the prepared materials, our slide materials, and then we'll open the call to take your questions. So I'd like to turn the call over to Richard.
Richard Adkerson, Chairman and CEO
Thanks, Kathleen, and good morning everybody. Thanks for joining us. The positive second quarter results and outlook we're reporting today reflect that our operational performance has been in line with our plans and our prior guidance. Our teams and Freeport's global operations are executing with focus, drive and enthusiasm, all hallmarks of the Freeport culture. Fundamentals in the global copper market remain positive. Despite the frequently expressed concerns about a global economic slowdown and issues in China, electrification is expanding with ongoing advances in alternative energy, electric vehicles, connectivity, and supporting infrastructure. Global copper inventories remain remarkably low, and this is notable in the context of the concerns about the global economy in China. The current demand for copper is much stronger than headline economic data. While market experts have significantly varying views about the short-term outlook for the economy and for the price of copper, there's a growing positive consensus on the medium and longer term outlook based on projected demand growing faster than supply development. Freeport is extraordinarily well situated in these circumstances with our large scale currently producing assets, which we're focused on executing the ongoing positive performance and attractive pipeline for future growth from the large scale undeveloped reserves and resources already in our current asset base. Kathleen, we'll now summarize the quarter and our outlook, and then I'll be back along with our team to answer any questions you may have.
Kathleen Quirk, President
Thank you, Richard, and I'll start on Slide 3, where we summarize our key operating and financial highlights for the second quarter. Production results across the portfolio were strong in the second quarter, approaching 1.1 billion pounds of copper and nearly 500,000 ounces of gold. Our copper sales were about 3% below our guidance due to administrative delays in obtaining PT-FI's export license approval. We expect that PT-FI will receive approval to resume concentrate exports over the next several days. Our unit net cash costs during the quarter averaged $1.47 per pound, which was a little better than our guidance of $1.51 per pound. With average copper prices realized of $3.84 per pound in the quarter, we generated strong margins and EBITDA of $2.14 billion. Our operating cash flows totaled $1.7 billion, substantially above our mining capital expenditures, which totaled roughly $700 million. This excludes approximately $500 million in smelter capital for the quarter, which is being funded from proceeds we raised last year. The balance sheet liquidity and financial flexibility remain in great shape. Excluding net debt associated with the smelter, we ended the quarter with under $1 billion in net debt. You'll see that we completed and conducted some additional open market purchases of our public debt in the quarter at prices below par. Looking forward, we're well positioned for strong results in the second half of the year as second half copper volumes are projected to be over 15% higher than the first half, and second half gold sales are projected to be over 25% higher than what we sold in the first half of the year. I'm going to move to Slide 4, where we showcase a few of the operational highlights that we are particularly proud of in the second quarter. At Cerro Verde, where we operate one of the largest concentrate sites in the world, the mill averaged 425,000 tons of ore throughput per day during the quarter. This site was designed several years ago for 360,000 tons per day. Over time, our team has found ways to improve efficiencies and will continue to do that in the future. At Grasberg, mill rates averaged over 200,000 tons per day and reached 207,000 tons per day in the quarter, processing very high grades of both copper and gold ore. It was significantly above the first quarter level and actually the highest average quarterly throughput in over a decade. This ore is coming from our large-scale, modern, and efficient underground mines. Notably, the large-scale operation at Grasberg produced copper during the quarter at a net cash credit of $0.09 per pound, which was extraordinary performance. We are making steady progress on the smelter in Indonesia. This is an important initiative, and we're now at 75% completion compared to 60% three months ago. Our project execution is going well, and our team is very focused on completing the project efficiently. Over the next several months, we expect to complete construction by the second quarter of 2024 and begin commissioning and ramping up over the balance of 2024. We are also happy to report ongoing progress with our leach initiative, which is particularly helping our sites in the U.S. During the second quarter, this effort yielded incremental copper of 29 million pounds, which was over two times the level in last year's second quarter. We're about 60% of our targeted annual run rate at this level, and we are well on our way to our target of roughly 200 million pounds of incremental copper per year from this initiative. We'll discuss this further later in the presentation, but our confidence is increasing in meeting our initial target and in the significant upside for this highly valuable initiative. Turning to Slide 5, you've seen a lot of press reports over the last several weeks about the regulatory situation in Indonesia, so we’re providing an update on recent regulatory changes in the country. As many of you know, Indonesia is highly focused on downstream resource development, evolving over many years and reflecting the country's national strategic priorities. The evolution of this ultimately led to our agreement in 2018 to expand our domestic smelting and refining capacity in the country. In 2020, Indonesia passed a law restricting exports of certain minerals, which began in June of 2023. Given our IUPK license and rights, and progress on the smelter, we continue to work with the government to allow time for us to complete our projects, which were delayed by the pandemic. As we mentioned, the projects are well advanced and nearing completion, and we were honored to host Indonesia's President, Joko Widodo, at our smelter site in June. Beginning in June and July of this year, various ministries completed regulatory processes to enable ongoing exports of copper concentrates through May of 2024 for exporters with more than 50% smelter progress, and we are over 70%. Last week, the trade ministry enacted legislation to allow for exports, and now we expect to receive formal approval to resume exports over the next several days. We will continue to work with the government to enable exports in 2024 until the new smelter is fully ramped up and operational. The Ministry of Finance also passed regulations last week to increase duties on exports for various products, including copper concentrates for companies with more than 70% progress, with a new duty rate of 7.5% for the second half of this year. Under our IUPK, which provides stabilized terms for taxes, royalties, and duties, duties are phased out after 50% progress. We are currently reviewing the IUPK provisions with the ministry and are engaged in discussions on this matter. To date, the production impacts on our operations from the shipping delays have been limited and more of a timing consideration between production and sales. We currently have a sizeable volume of copper concentrate at our port site ready for shipment, and we expect to work down inventories over the next several months. Moving to the copper markets on Slide 6, Richard touched on this in his comments. Copper is the metal when it comes to electrification, and Freeport is really well-positioned as a leader in the global copper industry. The short-term market situation is characterized by favorable demand drivers from growing intensity in autos, renewables, and data centers, partially offset by slowing manufacturing growth. China remains the world's largest consumer of copper, and despite the country's current economic challenges and the weakness in the property sector, copper consumption continues to grow, bolstered by large investments in copper-intensive electrical grid and strong growth in electric vehicle production. Richard referenced the inventories, which are at very low levels by historical standards; they are now lower than they were at the start of this year, and we see this as evidence of a tightly balanced market. As we look forward over the next several years, demand is expected to accelerate with third-party projections for demand to double by 2035. Investments in low carbon renewable power and electrification will lead to massive growth in demand. Additionally, initiatives by many countries for major infrastructure programs and the uses of copper for connectivity and data, including artificial intelligence, are also growing demand drivers. At the same time, the ability of the copper industry to meet rising demand is a significant challenge, and we are working diligently to increase our supplies as we look forward. We believe prices will need to rise to incentivize new supplies of copper. At Freeport, we benefit from a large reserve position and even greater resource position to grow our business in the future. As I mentioned, we're focused on continuing to support growing demand, producing responsibly, and we're pursuing several initiatives to enhance our production going forward. Moving to Slide 7, we provide an update of our three-year outlook for sales volumes. This is largely unchanged from our prior forecast. We've reduced our 2023 copper sales volumes by about 40 million pounds, or about 1%, to account for shipping schedules in the balance of the year. The guidance for 2024 and 2025 is unchanged. We are focusing on continued success in our leach efforts, which we believe have the potential to provide some upside to these estimates. Moving to the regional information on Slide 8, we show our projected 2023 volumes and unit net cash costs by region. Our business in the Americas, including the U.S. and South America, comprises about two-thirds of our 2023 copper sales and all of our molybdenum sales, while Indonesia represents about one-third of copper sales and all of our gold sales. On a consolidated basis, our unit net cash cost forecast of $1.55 per pound for the year 2023 is consistent with our prior estimate. We've had some small offsetting changes between the regions. But in total, we continue to project cash costs of $1.55 for the year. As we move through the year, we're continuing to experience improving cost trends for several of our commodity-based input costs, and we're seeing more stability in labor, services, and equipment component costs. We remain focused on cost management and all of our ongoing initiatives to improve productivity to offset the cost increases we've experienced in recent years. The estimates for Slide 8 assume that the export duties in Indonesia remain unchanged from our existing duties. The new regulations impose higher duties than our stabilized rates under the IUPK, and we're currently engaging with the government to review this. We provided sensitivities on potential impacts of the higher duty rates on this page, which could have a $0.07 per pound impact on consolidated unit net cash cost for the year, considering the impact of Indonesia at $0.19 per pound. On Slide 9, we updated our outlook for our margins and cash flows. By compiling our projected volumes and cost projections, we show modeled results for our EBITDA and cash flow at various copper prices ranging from $4 to $5 copper. These results are modeled using the average of our 2024 and 2025 volume and cost estimates, maintaining gold flat at $1,950 per ounce and molybdenum at $20 per pound, both of which are slightly above today. Annual EBITDA under these assumptions would range from about $11 billion per annum at $4 copper to $15 billion per annum at $5. The $11 billion was at $4, while our operating cash flows before working capital would range from nearly $8 billion per year at $4 copper to $11 billion per year at $5 copper. We’ve included sensitivities for the various commodities, both sales commodities and our input costs. On the right side of the chart, we are well-positioned with our long-lived reserves and large-scale production to benefit from future metals-intensive growth trends. We foresee prospects for increasing cash returns under our performance-based financial policy payout framework. Moving to Slide 10, we show our current forecast for capital expenditures in 2023 and 2024. These include capital that we’re investing in the Indonesian smelter project, funded from a debt offering we did last year, alongside cash on the balance sheet. The details of those expenditures can be found on Slide 25 of the deck. Overall, on the non-smelter related investments, we’ve had some timing adjustments moving spending from 2023 to 2024, but the current forecast for the two years remains similar to what we had before, approximately 3% higher for the two-year period reflecting some updated estimates primarily for projects at Grasberg. We have discretionary projects highlighted on the slide, totaling $2 billion for 2023 and 2024. These value-enhancing initiatives are detailed on Slide 24 of our reference materials, aimed at improving our position as we look forward. On Slide 11, we focus on development options and our growth. We’re keenly aware of the growing copper demand and our brownfield strategy due to the risk and actionability of greenfield projects. We’re focused on expanding our existing operations and our broad portfolio of brownfield opportunities. We’ve categorized growth into near-term, medium-term, and longer-term development options. In the near term, the best options for us are achieving our initial leach targets and actions we have taken particularly within our U.S. operations to enhance productivity and reliability. By increasing our mining rates in the U.S. through workforce additions, automation, and meeting higher targets for asset efficiency and reliability, we believe we can add 200 million pounds of copper a year with very limited capital investment. We’re closely focusing on the details of the reliability and asset efficiency we are pursuing and see this potential as we look forward. We have also outlined the potential of our leach opportunity beyond the initial target of 200 million pounds per annum. We talked extensively about this on our last call. We have large areas under leach and employ new approaches and operational practices that we are deploying on this effort. The more we work on it, the more optimistic we are about this opportunity, which is much larger than the initial 200 million pounds. We continue to see a clear opportunity to expand this initial 200 million pounds of copper per annum to 800 million pounds over the next three to five years. We are actively enhancing our leach stockpiles and are advancing our ability to identify and deploy solutions in areas of the stockpiles that aren’t getting adequate solutions. Additionally, we are working on additives through internal testing and exploring technology that others have. This is a major value opportunity and catalyst for us. Freeport is one of the best-positioned companies in the industry to capture value from this due to our large existing stockpiles with billions of pounds of copper still in them, our technical know-how, and our team's ability to quickly deploy learnings across all mines we have interests in. In addition to the leach opportunity, we’re pursuing traditional growth sources. We are evaluating the expansion of our Bagdad mine in Arizona and completing feasibility studies on that expansion. We also have the major El Abra opportunity in Chile, where we have an existing operation and substantial reserves to support future expansion. Furthermore, we are making progress with the 90,000 tons per day Kucing Liar block-cave in Indonesia that's expected to commence production by the end of the decade. At Bagdad, we’re making investments to advance tailings and other infrastructure to enhance optionality for the project. We're doing the same at El Abra, considering investments in water infrastructure to not only support current operations but provide future optionality for a large mill project. Beyond these projects, we see significant opportunity at our Safford/Lone Star district in eastern Arizona, which has current production and identified significant resources that could position it as another cornerstone asset for Freeport into the 2030 timeframe. We also identify brownfield projects in the U.S., as well as an extension of our operating rights beyond 2041 in Indonesia that would facilitate long-term large-scale mining and potential reserve expansion. On Slide 12, we reiterate our financial policy priorities centered on our strong balance sheet, cash returns to shareholders, and investments in our value-enhancing growth projects. The balance sheet is solid; we have very strong credit metrics and flexibility within our debt targets to execute on projects. Simultaneously, we've distributed over $3 billion to shareholders through dividends and share purchases since commencing this performance-based policy, and we have an attractive future long-term portfolio allowing us to use a portion of our cash flow to build long-term value for shareholders. Richard mentioned our team is energized, motivated, and we’re focused on continuing to drive value in our business while executing these plans responsibly, safely, and efficiently. Thank you for your attention and participation, and operator, we will now open the call for questions.
Operator, Operator
Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from Alex Hacking with Citi. Please go ahead.
Alex Hacking, Analyst
Yes. Good morning, Kathleen and Richard.
Kathleen Quirk, President
Good morning.
Alex Hacking, Analyst
Yes, morning. So I guess, I only have one question. I saw a press release this morning about a strike at Cerro Verde for 72 hours. Could you maybe give us some context on that? Thanks.
Richard Adkerson, Chairman and CEO
Sure. Josh, you’re on the line. Why don’t you respond to that? I was just at Cerro Verde, and I got to tell you, I was so proud of what the team’s done there.
Josh Olmsted, Operations Lead Americas
Yes. Good morning. One other thing – we really pride ourselves on our ongoing conversations with all of our employees and the union. There are two unions at Cerro Verde. This is one of the original unions, which accounts for roughly 28% of our total workforce. There’s been some ongoing conversations, and we’ve generated dialogue. We have a meeting with the labor department tomorrow to continue fostering that conversation and avoid the potential strike. We're committed to keeping those dialogues open and transparent with the union to work through and address any of the issues.
Alex Hacking, Analyst
Okay, thanks.
Richard Adkerson, Chairman and CEO
We have a long history in Peru and Cerro Verde of managing through these challenges. Sometimes we get affected by strikes not related to our operations, but our team is prepared. We're hopeful that this issue can be resolved, as it doesn't appear to be a major substantive issue from my perspective, and our team will be able to manage our way through it if we have to deal with it.
Alex Hacking, Analyst
Okay. Thanks, Josh.
Operator, Operator
Your next question will come from the line of Christopher LaFemina with Jefferies. Please go ahead.
Christopher LaFemina, Analyst
Hi Richard. Hi Kathleen. Thanks for taking my question. I actually have quite a few questions about the situation in Indonesia, but I’ll limit it to just two for now. The first question is, our understanding at the beginning of July is that the concentrate storage areas were nearly filled, and you would likely have to shut down operations if you did not have an export license imminently. I’m wondering whether you’ve been able to continue to operate at Grasberg or if the mines are shut down for now. The second question is just related to the export. Sorry, do you want to answer that one first?
Richard Adkerson, Chairman and CEO
Let’s answer your first question. One complication we had was with the domestic smelter at Gresik that PT Smelting owns, which was undergoing a maintenance turnaround. There was limited concentrates we could ship domestically. That maintenance is complete, and we’ve begun returning to shipping to Gresik. We haven't shut down at all. Our team has adjusted to the situation by advancing some plant maintenance activities that we had planned for the second half of the year. While the storage facilities were approaching their limits, we have managed to avoid significant impacts on operations. We anticipate resuming exports very shortly, with a considerable amount of concentrate produced and ready for sale.
Christopher LaFemina, Analyst
Okay. That's helpful. Thank you for that. The second question is regarding, I think Kathleen said the export license is days away. Obviously under the IUPK, once smelter construction passes 50%, you would expect no more export duties. I’m wondering if the export license will be granted to you even if you're disputing having to pay the new higher export duty because you might be protected under the IUPK.
Kathleen Quirk, President
Well, in order to export…
Richard Adkerson, Chairman and CEO
All indications and expectations suggest that we will be able to export. We’re having discussions right now to present our case, and if we can resolve it, that would be the best outcome. If we can’t, we’ll begin exports and then pursue our legal rights separately.
Christopher LaFemina, Analyst
Great. Thank you for that.
Richard Adkerson, Chairman and CEO
Kathleen, do you have something to add?
Kathleen Quirk, President
No. That’s great. Thank you, Richard.
Operator, Operator
Your next question comes from the line of Carlos de Alba with Morgan Stanley. Please go ahead.
Carlos de Alba, Analyst
Yes. Good morning, Kathleen and Richard. My first question is on Cerro Verde. You are operating quite well there, and if I understand correctly, the company doesn’t really have significant debt anymore. With the cash generation there, what are your plans? Do you expect to continue paying dividends? I think you announced twice payments in the second quarter. Will you pay more in the third quarter? Typically, in the past you have paid in the second and fourth quarters. Should we expect another payment in the fourth quarter? What can you tell us about Cerro Verde overall?
Kathleen Quirk, President
We think you characterized it correctly. We’re essentially distributing cash flow out of Cerro Verde. We’ve done very well on the debt side. We do reserve cash for known obligations, but we expect to generate cash flow at Cerro Verde continuously. We don’t have a decision at this point regarding cash flow and dividends quarter by quarter, but we do expect to distribute cash out of Cerro Verde.
Carlos de Alba, Analyst
Thanks, Kathleen. My second question is regarding CapEx. You’ve mentioned that your overall CapEx isn’t changing much, but when I looked at individual projects, I noticed increases in the PMR in Indonesia and the Grasberg mill recovery project—10% to 20% higher than the last update. Could you provide some comments on what is driving that?
Kathleen Quirk, President
Yes. We did have an increase in our precious metals refinery due to updates in cost estimates as we've gone through more engineering. This operation is relatively small compared to the overall capital. We’ve been successful with the Manyar project where lots were ordered and priced in before the rise in inflation. However, the precious metals refinery has seen some cost increases related to availability of experts and contractors.
Carlos de Alba, Analyst
Thank you.
Richard Adkerson, Chairman and CEO
Carlos, you are familiar with the industry and know what’s been happening with project costs globally. I join Kathleen in complimenting our smelter team, but also our operations and supply chain management teams for their strong performance despite inflationary pressures. When analyzing our operating costs and project costs, I’m not only proud of our teams, but optimistic about our future.
Carlos de Alba, Analyst
Yeah, definitely. Thank you, Richard. Thank you, Kathleen.
Kathleen Quirk, President
Thank you, Carlos.
Richard Adkerson, Chairman and CEO
Thanks, Carlos.
Operator, Operator
Your next question comes from the line of Timna Tanners with Wolfe Research. Please go ahead.
Timna Tanners, Analyst
Hey, good morning everyone.
Kathleen Quirk, President
Good morning.
Richard Adkerson, Chairman and CEO
Good morning.
Timna Tanners, Analyst
Wanted to speak in detail, but this is really a high-level inquiry. I know we have discussed Indonesia's short-term issues, but there’s also a broader issue concerning the additional 10% stake they’re asking for and the renegotiation of IUPK further out. Compared to five or six years ago, you seem less concerned about the relationship with Indonesia. Is that accurate, and can you elaborate on that? How much time do we have to think about a settlement or decision on this—near term or medium term?
Richard Adkerson, Chairman and CEO
Let me correct one thing you said: there’s no renegotiation of the IUPK. Our current IUPK runs to 2041, and we have no rights beyond that. We negotiated a lengthy process ending in 2018, proving extraordinarily positive for all stakeholders. The Indonesian government, which acquired Rio Tinto’s interest during that process, achieved its goals, and Freeport retained its interest. Over this period, the track record of our team’s achievements has been clear. Key to our current relationships is the visit from President Joko Widodo to our job site in Papua. He was positive about our progress, which helped establish mutual understanding of the importance of maximizing available resources. There’s recognition that setting a drop-dead date for the operation before 2041 is not beneficial to anyone. We have mutual interests now and discussions about extending our operational rights beyond 2041.
Timna Tanners, Analyst
Yes; I think…
Kathleen Quirk, President
I’d like to add that a significant change compared to historical discussions is the alignment we have with the Indonesian government and the state-owned enterprises who own 51% of shares, providing more economic interest than before. This alignment puts us in a positive position for creating value beyond 2041.
Richard Adkerson, Chairman and CEO
Just to reiterate, since the 2018 agreement, Freeport-McMoRan manages operation, and everyone is pleased with how we operate. The partnership is strong as we move forward.
Timna Tanners, Analyst
Okay. Thanks.
Operator, Operator
Your next question comes from the line of Michael Dudas with Vertical Research Partners. Please go ahead.
Michael Dudas, Analyst
Good morning, Kathleen, Richard.
Kathleen Quirk, President
Good morning, Mike.
Richard Adkerson, Chairman and CEO
Good morning.
Michael Dudas, Analyst
Kathleen, you mentioned that you want to buy back debt at a discount during the quarter, and the dividend plan is in place. As you look into the second half of the year and anticipated cash flows, how is the Board thinking about share repurchases? It appears you haven’t engaged that in the first half. Is this evaluation opportunistic?
Kathleen Quirk, President
Yes. If copper prices sharply recover, we'll generate a lot of free cash flow. Under our policy, we distribute 50%. Cumulatively since we started in late 2021, we’ve distributed over 50% between dividends and share buybacks. Improved market conditions will give us leverage for free cash flow, allowing for consideration of deploying it through share buybacks, dividends, etc. We're maintaining a balanced policy aiming at a robust balance sheet and shareholder returns while investing in our long-term growth.
Michael Dudas, Analyst
I appreciate that. Thanks, Kathleen.
Richard Adkerson, Chairman and CEO
Mike, we believe the shares are a good value at current levels.
Operator, Operator
Your next question will come from the line of Brian MacArthur with Raymond James. Please go ahead.
Brian MacArthur, Analyst
Hi, good morning. I just want to follow up and thank you for your answer on Timna’s question regarding the underground conversion. It took 15 years to build that operation. Going forward, when do you plan to efficiently develop the ore body post-KL? Do you need to have this all figured out 15 years in advance?
Kathleen Quirk, President
Brian, that’s exactly the point we are making. We discussed this with the government, emphasizing the need for long-term planning. The sooner we start, the better to avoid complications near 2041.
Richard Adkerson, Chairman and CEO
Due to the IUPK term, we only share reserves through 2041, but we’ve identified potential production that extends beyond that. Mark Johnson and our PT-FI team have already begun delineation to see what additional opportunities we can access. We’ll be initiating long-term planning for extending production.
Brian MacArthur, Analyst
So can I ask, regarding the additional resources past 2041, is it primarily depth? Or is it another area requiring new infrastructure?
Kathleen Quirk, President
Initially, it's that…
Richard Adkerson, Chairman and CEO
It wouldn’t necessitate complete new infrastructure. We can utilize current systems and extend beyond. Confirmation is needed via active delineation.
Kathleen Quirk, President
In our resource statement, there's considerable material that extends beyond 2041 and some requiring special handling. There's significant opportunity in DMLZ, and we're already initiating exploration below it, indicating a robust outlook extending beyond 2041.
Brian MacArthur, Analyst
Great. Thanks very much for all that detail. I appreciate it.
Operator, Operator
Your next question comes from the line of Cleve Rueckert with UBS. Please go ahead.
Cleve Rueckert, Analyst
Hey, good morning everybody. Thanks for taking my question. I just have one quick follow-up, more near-term focus. In Indonesia, can you frame the next 18 months? The approval expect to receive shortly—does this extend your ability to export concentrate? When will you expect to start transporting concentrated Indonesia, so this licensing issue is no longer relevant?
Kathleen Quirk, President
The new regulation allowing exports goes through May of 2024. Our current quota reflects that through the end of 2023. Updating that work plan will get us through May. While the smelter is set to complete mechanically in the second quarter of next year, it needs several months in 2024 for ramping operations. We’ll continue engaging with the government for exports during this period—not an issue beyond 2024 if we do it right.
Cleve Rueckert, Analyst
Got it. All right, great. Thank you for that. Appreciate it.
Operator, Operator
I will now hand the conference back over to management for any closing remarks.
Kathleen Quirk, President
Thank you everyone for your participation. If you have any follow-ups, feel free to contact David, and we look forward to continue updating you on our progress.
Richard Adkerson, Chairman and CEO
Thank you all.
Operator, Operator
Ladies and gentlemen, that concludes our call for today. Thank you for your participation, and you may now disconnect.