Q3 2024 Freeport-McMoRan Inc Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Freeport Mcmoran third quarter Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you wish to ask a question during the Q&A session.
Speaker Change: Star one on your Touchtone phone if you require assistance during the conference. Please press Star Zero I would now like to turn the conference over to Mr. David joined Vice President Investor Relations. Please go ahead Sir.
Speaker Change: Good morning, everyone and welcome to the Freeport Conference call.
Speaker Change: Earlier this morning, Freeport reported its third quarter 2020 for operating and financial results.
Speaker Change: A copy of today's press release supplemental schedules and slides is available on our website at <unk> Dot com.
Speaker Change: Today's conference call is being broadcast live on the Internet and anyone may listen to the conference call by accessing our website homepage and clicking on the webcast link.
Speaker Change: In addition to analysts and investors the financial press has been invited to listen to today's call.
Speaker Change: A replay of the webcast will be available on our website later today.
Speaker Change: 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.
Speaker Change: Actual results may differ materially please refer to the cautionary language included in our press release and slides into the risk factors described in our SEC filings.
Speaker Change: All of which are available on our website.
Speaker Change: Also on the call with me today are Richard Akerson Chairman of the board.
Speaker Change: Linkwork, President and Chief Executive Officer.
Speaker Change: Robertson Executive Vice President and CFO and other senior members of our management team.
Speaker Change: Richard will make some opening remarks, Kathleen will review our slide materials and then we'll open up the call for questions Richard.
Speaker Change: Okay.
Richard Akerson: Thanks, David and thanks, everyone for joining us it was a solid quarter as you can see in that.
Speaker Change: As a result of the good.
Richard Akerson: The work that our global three board.
Speaker Change: <unk> has accomplished.
Speaker Change: And I'm really proud of them in there.
Speaker Change: I look forward to the future we've got.
Speaker Change: Great outlook for our company.
Speaker Change: Great outlook long term for our.
Speaker Change: For copper as a commodity that JCR strategy AUM.
Speaker Change: Kathleen will review with you the results of the quarter.
Speaker Change: And talk about it and we are making progress with this.
Speaker Change: While we had at our new smelter in <unk>.
Speaker Change: Indonesia, and we'll review that as well, we have a new president in Indonesia Cobo Subianto.
Speaker Change:
Speaker Change: When.
Speaker Change: Although it was a general three decades ago, we work together closely.
Speaker Change: On issues affecting our operations in Papua.
Speaker Change: He knows our business. He was appointed a cabinet, which includes a number of cabinet members from Yoko widows cabinet cabinet and other people that we've known over the years.
Speaker Change: We look forward to working with him in.
Speaker Change: <unk>.
Speaker Change: He is understanding.
Speaker Change: <unk> of our business and of our location and possible will be a big benefit as we work with this administration going forward.
Richard Adkerson: Kathleen, I'll turn the call over to you to review our results and our outlook.
Speaker Change: Kathleen I'll turn the call over to you to review our results and our outlook.
Kathleen Lynne Quirk: Thank you, Richard, and I'm going to start on our slide presentation and starting on slide three with our highlights to the third quarter in first nine months of 2024. Our team continues to deliver on our operating plans and pursue value through enhancing efficiencies, managing costs aggressively, and building value in our organic growth portfolio. So, see here, we've generated strong margins and cash flows during the quarter with 2.7 billion in EBITDA and 1.9 billion in operating cash flows. Our operating performance was supported by sales volumes, exceeding guidance for both copper and gold, and favorable unit cash cost performance compared to both our guidance and the year-ago quarter.
Kathleen: Okay, great. Thank you, Richard and I'm going to Spike.
Kathleen: On our slide presentation, starting on slide three.
Kathleen: With our highlights for the third quarter and first nine months of 2024.
Kathleen: Our team continues to deliver on our operating plans and pursue value through enhancing efficiencies managing cost aggressively and building value in our organic growth portfolio.
Kathleen: Lets see here, we've generated strong margins and cash flows during the quarter with $2 7 billion.
Kathleen: EBITDAR and $1 9 billion in operating cash flows.
Kathleen: Our operating performance was supported by sales volumes exceeding guidance for both copper and gold and favorable euro cash cost performance compared to both our goggles in the year ago quarter.
Kathleen Lynne Quirk: We've focused on initiatives to build values from organic growth. At Freeport, we've benefited from a large reserve and resource position with near-term, medium-term, and longer-term embedded growth options. The high potential innovative leach technologies are delivering results, and we're several ongoing initiatives to add scale and low-cost copper volumes in our America's business. In the first nine months of 2024, the incremental copper production from our leach initiative was nearly 70% higher than the comparable period last year, and we've additional projects underway to build scale and improve on our US cost position. We're also advancing our Brownfield expansion opportunities to position the business for long-term growth to supply a market with increased requirements for copper.
Kathleen: We're focused on initiatives to build value from our organic growth at Freeport, we benefited from a large reserve and resource position with near term medium term and longer term embedded growth options.
Kathleen: The high potential innovative leach technologies are delivering results and we have several ongoing initiatives to add scale and low cost copper volumes in our Americas business.
Kathleen: On the first nine months of 2024 are they incremental copper production.
Kathleen: Our reach initiative was nearly 70% higher than the comparable period last year, and we have additional projects underway to build scale and improve on our U S cost position.
Kathleen: We're also advancing our brownfield expansion opportunities there.
Kathleen: And the business for long term growth the supplier market with increased requirements for Papa.
Kathleen Quirk: During the third quarter, we've purchased 5.3 million shares of Sara Verdy in at-market transactions on a protein stock exchange at a cost of 210 million, and not allowed us to increase our ownership and the highly attractive asset from the prior level of 53.6% to 55%. The public service there already now represents about 4.3% of the outstanding shares. We ended the quarter in a strong position, cemented to Italy, and as you look forward, we're very optimistic about the markets we serve, our portfolio of high-quality copper assets, and the future prospects for strong cash flow generation to support investments and value-enhancing projects and returns to shareholders.
Kathleen: During the third quarter, we purchased $5 3 million shares of Cerro Verde and at market transactions on the Peruvian stock exchange at a cost of $210 million.
Kathleen: It allowed us to increase our ownership in this highly attractive asset from the prior level of 53, 6% to 55%.
Kathleen: <unk> Cerro Verde now represents about four 3% of the outstanding shares we.
We ended the quarter in a strong position financially and as we look forward, we're very optimistic about the markets we serve.
Kathleen: Portfolio of high quality copper assets and the future prospects.
Kathleen: Strong cash flow generation to support investments in value enhancing projects and returns to shareholders.
Kathleen Lynne Quirk: I will talk about markets on slide four. Copper prices again during the third quarter traded in a broad range. On the LMA, they range between 3.91 and 4.47 per pound, and on the Comets exchange range from 3.94 per pound to 4.66 per pound. The settlement prices on the LMA for the quarter averaged $4.18 per pound. As we look at the quarter and where prices traded, it largely followed macro sentiment, which weighed grossly economic data and economic pressures in China, against actions by the Fed and other central banks to cut interest rates, and the potential for large economic stimulus in China.
Kathleen: We'll talk about markets on on slides four copper prices again during the third quarter trade. It in a broad range of on the Ela me they range between 391 and $4 47 per pound.
Kathleen: And on the Comex exchange range from $3 94 per pound to $4 66 per pound.
Kathleen: The settlement.
Kathleen: Prices on the yellow me for the quarter averaged $4 18 per pound.
Kathleen: As we look at the quarter end, and where prices traded largely followed macro sentiment, which weighed global economic data and economic pressures in China.
Kathleen: Against the actions by the fed and other central banks to cut interest rates and the potential for a large economic stimulus in China.
Kathleen Quirk: At the micro-robo, we continue to see secular demand trends associated with electrification throughout his strong demand for copper and offsetting the impact of a cyclical soda dam. In the U.S., our customers continue to report strong demand for power cable and building wire associated with substantial investment in electrical infrastructure and AI data centers. This growing sector, more than offset, we've been since additional demand sectors in residential construction and a lot of it. The man from China continues to be supported by significant investments in the electrical grid and continued growth in China's production of electric vehicles. Noteably, China's demand for copper continues to grow despite a weak property sector.
Kathleen: At the micro level, we continue to see secular demand trends associated with electrification.
Strong demand for copper and offsetting the impact of a cyclical slowdown in the U S. Our customers continue to report strong demand for power cable and building wire associated with substantial investment in electrical infrastructure and AI data centers.
Kathleen: Growing sector more than offset weakness in traditional demand sectors in residential construction and autos.
Kathleen: Demand from China continues to be supported by significant investments in the electrical grid and continued growth in China's production of electric vehicles.
Kathleen: Notably China's demand for copper continues to grow despite a weak property sector.
Kathleen Lynne Quirk: We send announcements for economic stimulus in China to support the country's economic growth targets. We provide further support for metals demand as we move through 2024 and into 2025. As we've discussed in the past, copper is a foundational metal and a key component of electrification. It's physical characteristics and superior economic activity making essential to electric electrification. New massive investment in the power grid, renewable generation, technology infrastructure, and transportation, we're driving increased demand for copper and forecast call for a buck trend growth in demand for the foreseeable future. As we look at these fundamentals of demand and match it up with supply, we continue to see a tightly balanced market in the near term and deficit conditions along the run.
Kathleen: Recent announcements for economic stimulus in China to support the country's economic growth targets could provide further support for metals demand as we move through.
Kathleen: Slide 24 and into 2025.
Kathleen: As we've discussed in the past copper as a foundational metal and a key component of electrification, it's physical characteristics and superior connectivity, making a central electric electrification new massive investment in the power grid renewable generation technology infrastructure and transportation.
Kathleen: And we're driving increased demand for copper.
Kathleen: Forecast call for above trend growth in demand for the foreseeable future.
Kathleen: As we look at these fundamentals of demand and match it up with our supply we continue to see a tightly balanced market in the near term and deficit conditions longer wrong. This is going to require new investments in innovative technologies to build supply longer term and that Freeport would do.
Kathleen Quirk: This is going to require new investments and innovative technologies to build supplies along the term. In a three-port, we're driven to supply copper reliably and responsibly to a growing market. With our leading industry position, our large scale current operations and our future growth pipeline, we're well positioned to benefit from this fundamental outlook for copper. Remind everyone that in addition to copper, we're also a major goal for these, sir, and benefiting from increasing global prices.
Kathleen: Rather than a supply copper reliably in a responsible way to a growing growing market.
Kathleen: With our leading industry position, a large scale current operations and our future growth pipeline.
Kathleen: We're well positioned to benefit from this fundamental outlook for Papa.
Kathleen: I remind everyone that in addition to copper were also a major gold producer and are benefiting from increasing gold prices.
Kathleen Quirk: We'll turn the operations on on slide five, where we summarize the quarterly operating results by geographic regions. In the U.S., we're continuing to take action to improve efficiencies and cost performance to mitigate the impact of low grades. We have more work to do; the recent trends are improving. We're closely monitoring key performance indicators and seeing positive trends in recent months and asset efficiency associated with key areas of loading, hauling, crushing, and stacking. Our equivalent reliability is a focus area, and we're making the slides and reducing unplanned downtime. We're also rationalizing the use of contractors to reduce costs and allocate internal resources to a key focus area.
Kathleen: We'll turn to operations on slide five where we summarize the quarterly operating results by geographic region.
Kathleen: In the U S. We are continuing to take action actions to improve efficiencies and cost performance to mitigate the impact of lower grades.
Kathleen: We have more work to do but recent trends are improving.
Kathleen: We're closely monitoring key performance indicators and seeing positive trends in recent months and asset efficiency associated with key areas of loading and hauling crushing and.
Kathleen: In snacking.
Kathleen: Our equipment reliability is a focus area and we're making strides in reducing unplanned unplanned downtime. We're also rationalizing the use of contractors to reduce costs and allocating internal resources to our key focus areas.
Kathleen Quirk: In addition, success in our reach and initiative and further scaling incremental low cost production will also drive reductions in our cost run.
Kathleen: In addition success in our leaching initiative and further scaling incremental low cost production will also drive reductions in our cost structure.
Kathleen: In South America, the team at Cerro Verde, the Cerro Verde operation posted another solid quarter mill.
Kathleen: Mill throughput exceeded 420000 metric tons of ore per day during the quarter and our mill recovery and improved from last year's third quarter.
Kathleen: Our unit net cash costs were slightly less than last year's third quarter.
Kathleen: After excluding the 12 cents per pound nonrecurring charge in the quarter for a new labor agreement.
Kathleen: After reaching agreement with Cerro Verde is second Union, we now have multiyear labor agreements covering Cerro Verde hourly workforce.
Kathleen: Mentioned earlier, we purchased additional Cerro Verde shares it gives us more exposure to this established la live in high quality asset.
Kathleen: And Indonesia results were quite strong and that's evidenced by our unit net cash cost of credit of 71 cents per pound.
Kathleen: The team is consistently delivering strong volumes of both copper and gold by large scale underground ore bodies.
Kathleen: Our sales in the quarter were higher than our estimates going into the period with increase mill rates in all grades.
Kathleen: We also benefited from strong gold sales in the quarter, reflecting good production performance and a reduction in inventory from June 30th levels are.
Kathleen: Our near term focus areas include continued strong execution of our operating plans.
Kathleen: Mentioning of a value driven copper cleaning circuit.
Kathleen: At our at our site in Papua to support strong mill recoveries.
Kathleen: And commissioning the precious metals refinery. We're also working to restore smelter operations. Following a recent smelter fire event, which we'll talk about more on the next slide.
Kathleen: Ah yes.
Speaker Change: Give us an update on where we are with with the smelter. We made good progress during the third quarter on our commissioning and startup.
This is a project that our team managed construction in in a in a challenging market and are in a very effective manner.
Speaker Change: But we did experience a setback last week on October 14th.
From a fire incident in a glass gas cleaning facility used in our sulfuric acid production process.
Speaker Change: Safety protocols were effective in the fire was extinguished in a short period of time without injury to our personnel.
Startup activities have been temporarily suspended as a result, while we conduct damage and root cause assessments and develop our recovery plans.
Speaker Change: We presented a picture on the slide that you can you can review, but as you can see the incident affected a relatively small area of the overall project we.
Speaker Change: We have teams actively engaged in planning our repairs and assessing lead times for replacement replacement equipment.
Speaker Change: We expect that the repair cost will be covered by our insurance programs and.
Speaker Change: We're also working with the Indonesian government on continuity of concentrate exports during the outage.
Speaker Change: Our mining operations in Papua have not been impacted and our team is focused on restoring smelter operations safely and expeditiously.
Speaker Change: We look forward to achieving our objective of being a fully integrated producer in Indonesia, which position positions us to secure a long term extension.
Speaker Change: Of our operating likes there.
Speaker Change: Well continue to be very excited about our innovated innovative Leach initiative I'm on slide seven you can see that early results continue to indicate significant value potential.
Speaker Change: Just a reminder, we achieved our initial targeted run rate of 200 million pounds per annum of copper per annum at the end of last year and are now driving initiatives to scale.
Speaker Change: All of this.
Speaker Change: Our initiative to three to 400 million pounds per annum in the next couple of years ultimately our goal is to achieve 800 million pounds per annum from this value enhancing growth initiative.
Speaker Change: Just the size of a major new mine with low capital investment required low incremental operating costs and that will significantly enhance the value and competitive position of our Americas production.
Speaker Change: You can see on the slide the significant growth and incremental volumes from these initiatives over the last several quarters.
Speaker Change: Our results have been achieved by enhancing heat retention and the leach stockpiles.
Speaker Change: And data from sensors and analytics to identify targets and three deploying new operational tactics to direct solution injection to areas that were previously inaccessible.
Speaker Change: We continue to build confidence and boosting the run rate to three to 400 million pounds per year during 2026.
Some of the examples of the initiatives that are now under way that will add volumes in the future, including expanding our surface area under leach by using helicopters to install irrigation in areas previously inaccessible on a conventional techniques.
Speaker Change: And by scaling our targeted solution injection wells.
Speaker Change: We're making great progress on our leach injection technology.
Speaker Change: Great progress on our drilling were drilling them much more efficiently and we were able to increase the rate of well development.
Speaker Change: In parallel we're also advancing innovation driven initiatives, which would support our ultimate objective of reaching 800 million pounds per annum.
Speaker Change: We believe there's significant opportunity from increasing heat to the stockpiles.
Speaker Change: We're looking at them, adding heat to the leach solution using external energy or using pyrite hosted ores to generate additional he he has a proven doors to improve recoveries and this type of application.
We're also continuing to advance testing of new additives at scale and we look forward to reporting to you on our progress on these initiatives.
Speaker Change: At Freeport, we're really well positioned to capture the value of this opportunity with an extensive inventory of substantial residual copper for material already mine and industry, leading technical team with expertise in and leaching technology and.
Speaker Change: And our strong multi disciplined innovation team dedicated to this initiative.
Speaker Change: We've got additional opportunities for growth beyond that the leach opportunity and you can see that.
Speaker Change: On slide eight.
Speaker Change: Where we missed our organic growth projects all of these projects are brownfield opportunities, where we're leveraging existing assets and established operations.
Speaker Change: The leach out the initiatives that we just talked about is our best opportunity to grow in the near term and we're pursuing this initiatives very aggressively.
Speaker Change: In the U S. We also have opportunities for expansion at our Bagdad and Safford Lone Star operations.
Speaker Change: And at Bagdad, where we're advancing investments in automation tailings in energy infrastructure and expanded employee housing in this remote location to position us to execute the project more efficiently wintertime is right we.
Speaker Change: We don't have major permitting hurdles and and it's just really a straightforward option.
Speaker Change: Monitoring conditions and progress with our Derisking initiative.
Speaker Change: And continue to expect to be in a position to make a decision next year on the expansion plans.
Speaker Change: And the Safford Lone Star District, where we have a very large resource. We're engaged in study is to define a brownfield expansion, we're targeting opportunities to more than double kind of production levels, which are currently around 300 million pounds per annum.
Speaker Change: So the large resource that we have at this dislocation.
Speaker Change: It gives us an opportunity for Safford Lone star to become a generational cornerstone asset for Freeport in Arizona in the next decade.
Speaker Change: At elaborate in Chile. This is our partnership with Codelco, we've as we've previously reported we completed a pre feasibility studies.
Speaker Change: And we're in the process of preparing an environmental impact statement, which is we expect to be completed by the end of next year.
Speaker Change: Raj Act involves investment in a new concentrator a scale similar to the size of Cerro Verde that we installed nearly 10 years ago.
Speaker Change: Investments in the desalinization and pipeline system to support our water requirements.
Speaker Change: This project is large it would provide a 750 million pounds of annual copper production and 9 million pounds of <unk>.
Speaker Change: Annual molybdenum production. It is a long lead project it would require something on the order of seven to eight years because of the timeframe.
Speaker Change: For permitting in Chile.
Speaker Change: And we're going to continue to review economics in the context of market conditions.
But we believe this is a project that that will be required in the future to support long term copper demand trends and this is a project in our portfolio that that that Freeport can execute.
Speaker Change: In Indonesia, we continue to progress our large scale cuccinelli our development.
Speaker Change: This is a very large ore body and adjacent to our existing operations and our existing ore bodies in Papua.
We expect to commence production by 2030.
Speaker Change: We're also conducting.
Speaker Change: Exploration below our deep MLG ore body, we're getting encouraging results.
Speaker Change: We expect that an extension of our operating rights in Indonesia beyond 2041 will set us up for additional long term development options in this highly attractive district.
Speaker Change: Bye bye pursuing all of these these initiatives and advancing them, we're really focused on building optionality for future growth.
Speaker Change: We're going to continue to be disciplined in our approach and focused on targeting opportunities that can be executed over time.
Speaker Change: That enhance long term value.
Speaker Change: Our our slides slide nine shows our three year outlook, which we show every quarter and keep updated.
Speaker Change: This is the outlook for sales of of copper gold and Melinda them.
Speaker Change: And then you'll see the sales guidance is very similar to our previous outlook.
Speaker Change: We also have updated our estimates for our unit net cash cost we expect our average for 'twenty 'twenty four to approximate $1 58 per pound.
Speaker Change: That is below our our July estimate of $1 63 per pound and similar to our guidance at the start of the year of $1 60 per pound.
Speaker Change: Got some details of all of this information by region on slide 19 in the reference materials.
Speaker Change: So as we move to cash flows at margins and cash flows and putting together our projected volumes and in cost projections on slide nine slide 10, we show modeled results for EBITDA and cash flow at various copper prices.
Speaker Change: Ranging from $4 to $5 per pound.
Speaker Change: These are modeled results using the average of 25 2025 and 2026.
Speaker Change: With our current volume projections and cost estimates and holding gold flat at 2600 per ounce and molybdenum flat at $20 per pound and you'll see here that annual EBITDA.
Speaker Change: It at $4 copper would range from $11 billion and it would go to to approximately $15 billion per annum at $5 copper.
Speaker Change: Our operating cash flows and at these prices the strangers would be over $7 billion.
Speaker Change: And at $4 copper two to 10 and a half billion at $5 copper.
Speaker Change: We've got sensitivities that we've presented them.
Speaker Change: On the right of this chart.
Speaker Change: You'll note that we're highly leveraged to copper price with each 10 cents per pound.
Speaker Change: Waiting to about $420 million in annual EBITDA.
Speaker Change: Also leverage to gold and will benefit from improving gold prices with each hundred dollar change in gold prices approximating $150 million in annual EBITDA.
Speaker Change: With long life reserves large scale production Freeport is well positioned to generate substantial cash flow to fund future organic growth and cash returns under our performance based pay out framework.
Speaker Change: Moving to the next slide on Slide 11, we're showing our current forecast for capital expenditures for this year and next.
Speaker Change: Capital expenditures for 2024 are forecast at about $3 6 billion and we estimate capital expenditures for next year to total about $4 2 billion.
Speaker Change: You'll see there'd been some timing shifts between the two years, but over the two years of changes.
Speaker Change: Or are not material well note that the discretionary projects over this two year period.
Speaker Change: <unk> totaled two and a half billion there.
Speaker Change: This is the category that reflects the capital investments, we're making in new projects.
Speaker Change: Under our financial policy are funded with the 50% of available cash its not distributed.
Speaker Change: They're they're value enhancing projects growth projects.
Speaker Change: Hi, good returns and they are detailed on slide 23, and our and I'll reference materials.
Speaker Change: As we look forward, we're going to continue to be disciplined and.
In deploying capital and really focused on those opportunities that build value in our business.
And finally on slide 12, we reiterate the financial policy priorities centered on a strong balance sheet cash returns to shareholders.
Speaker Change: Vestments and value enhancing growth projects, we've got a very solid balance sheet.
Speaker Change: That's my grade ratings from all three agencies strong credit metrics and flexibility within our debt targets to execute on our projects. We've distributed distributed four and a half billion to shareholders through dividends and share purchases.
Speaker Change: Since implementing this there's a framework that a very attractive future long term portfolio. They will enable us to continue to build value for shareholders.
Speaker Change: Our global team is very focused on driving value, we're committed to strong execution of our plans, providing cash to invest in profitable growth and returns to shareholders.
Speaker Change: Thanks for everyone for your attention and now we'd like to open the call to take your questions.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question press star one on your Touchtone phone. If your question has been answered or you wish to remove yourself from the queue. Please press star one again, if you are using a speakerphone. Please pick up your handset before pressing the numbers.
Speaker Change: I ask that you limit your questions to one did you have additional questions. Please return to the Q1 moment. Please for our first question.
Speaker Change: Our first question comes from the line of Christmas time, and now with Jefferies. Please go ahead.
Christmas time: Thanks, Operator, Hi, Kathleen Hi, Richard I'm doing well.
Speaker Change: Just wanted to ask Hey, just wanted to ask a couple of questions about Indonesia and first on the smelter Friday with the insurance Kathleen you mentioned that the insurance would cover the cost for repairs, what if there is a.
Christmas time: Situation, where.
Christmas time: A way to being able to export concentrate.
Christmas time: Do you have any business interruption insurance that might cover the cost of <unk> shipments or any insurance that might cover the incremental royalty. You said you have to pay on concentrate on exports.
Christmas time: Yep.
Christmas time:
Speaker Change: Policy that we're referring to is a as a construction insurance policy that it does not have have business interruption.
Speaker Change: Coverage it does recover as that does cover the cost of the repairs. Yeah. This is not a.
Speaker Change: As you can see from the pictures, it's not a big area.
<unk> facilities or is it an essential area and the processes are central to the overall production of.
Speaker Change: Of copper.
Speaker Change: Refining of copper, but but it's not it is not a large part of the overall facility. So our focus Chris really is.
Speaker Change: Is getting the repairs done as quickly as possible, we do have discussions with the government. It's in everyone's interest that.
Speaker Change: The concentrate out.
Speaker Change: Continue.
Speaker Change: We do have some flexibility within our existing quota of what we can ship through 'twenty 'twenty four but we'll be asking for additional flexibility to them to make sure that we can we can ship everything that we produce in in 'twenty 'twenty four and then depending on.
Speaker Change: The time frame that it takes to restore operations.
Speaker Change: Work with the government for continuity in in a portion of 2025 that'll be affected.
Speaker Change: It's in it's in everyone's interest as you run through the math.
Speaker Change: The government gets.
Speaker Change: Essentially through taxes and royalties and dividends.
Speaker Change: Over 70% of the of the economics or the cash flow. So it'll be in everyone's interest for this to continue and we will work hard to get this.
Speaker Change: Operations restored as quickly as possible, but in the interim we expect that will continue to be able to do to export.
Speaker Change: Very good thanks, and then just secondly on Indonesia as well so the $1 billion of restricted cash, which I think is worth 30% of the export proceeds and that's held for 90 days in Indonesian banks does that restricted cash policy continue even after the smelter ramps up and can you just remind us of kind of the background behind that and what's the reason for that.
Speaker Change: Cash restriction is.
Speaker Change: <unk>.
Speaker Change: Yep.
Speaker Change: Of course it is.
First of all exports. So it doesn't just as that copper and it affects all all exports in Indonesia, requiring two to hold and bank accounts for 90 days temporarily your your export proceeds and it was a measure taken last year by the governor.
Speaker Change: <unk>.
Speaker Change: Two on to look at it its currency and and and and fiscal situation and so it don't not only applies to us but implies the oil companies and other people that are that are that are exporting so that.
Speaker Change: That will continue and lesser regulation has changed that will continue I'm beyond.
Speaker Change: Beyond 2020, you know beyond the smelter.
Speaker Change: Start up so but it is it is there were earning a we're earning returns on the on the investments.
It's it's there temporarily withdrawn after after 90 days and so it's it's right now. It's just you just held in in deposit.
But that's something that the government will continue to consider in light of its its objectives.
Speaker Change: That's very helpful. Thank you for that.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Liam Fitzpatrick with Deutsche Bank. Please go ahead.
Yeah.
Speaker Change: Good morning.
Speaker Change: Good morning.
Liam Fitzpatrick: A couple more on the smelter I'm afraid.
Liam Fitzpatrick: Lee I appreciate you're still assessing the situation, but can you give some high level guidance on the lakes a delay that we're talking about three months could it be substantially longer than that.
Liam Fitzpatrick: And then in terms of the the government reaction.
Liam Fitzpatrick: Do you think and Mdx School extension do you think this would be just a formality and received in good time or could that be.
Liam Fitzpatrick: But it could be delayed beyond the year end.
Speaker Change: And then a quick one just separate to the smelter on the Cerro Verde stake increase its small, but probably the best type of M&A that you can be is this a one off or do you think there could be more opportunities to increase your stake.
Speaker Change: Thanks Liam.
Speaker Change: On the on the timeframe for the repairs, we don't have that information yet.
Speaker Change: This is an event that happened you know essentially a week ago.
Speaker Change: And our teams have been.
Speaker Change: I'm on the ground inspecting the.
Speaker Change: The damaged equipment determining what needs to be replaced and what is what is what does not need to be replaced.
Speaker Change: And we're working in parallel with our vendors on understanding lead times for various equipment.
Speaker Change: The early results in terms of.
Speaker Change: This area affected no not everything on the structure was damaged.
Speaker Change: Where we were we were fortunate we did not have.
Speaker Change: Big impacts to structural steel them, there will be some equipment and piping that needs to be replaced.
Speaker Change: And so we're just working through that right now trying to understand what the lead times are for this equipment and this is not this is not equipment off the shelf. So we'll need to be fabricated in and we'll work quickly. The fortunate thing is right now.
Speaker Change: Not a time in the market where supply chains are or a real tight so are we.
Speaker Change: We're getting really good response from our vendors.
Speaker Change: You know working to understand the root cause of this and when the vendors are involved in and in that exercise with us as well, but so we don't have a we don't have a specific timeframe other than to assure you that.
Speaker Change: We've got the right teams in place we've got the right.
Speaker Change: Organization, that's that's working through this.
Speaker Change: Hey in a in a in a professional way to to expedite what we can and get this back up and running them. So that we can achieve our startup goes the.
Speaker Change: Government has been supportive they they've sent.
Speaker Change: You know we have our own fire department there at the site, but the government also sent them sent support and has been.
Speaker Change: Very supportive.
Speaker Change: They've been looking also you know the police's, what's normal procedure I'm looking at it and in the investigation of the clauses in them.
Speaker Change: Collaborating on on that exercise as well.
Speaker Change: No I think if you look at the world and in the Smelters. You know this is not the first time, it's been a been a fire in Indonesia. There are people that we're talking with understand the hazards involved in these types of operations, where you know work.
Speaker Change: In hard in designing designing these operations so that they don't have hazards, but if you look at history there have been.
Speaker Change: And then other similar type incidents.
Speaker Change: So they understand it they understand our good faith.
Speaker Change: And as smelter completed them and they also understand the economics that.
Speaker Change: At this time.
Speaker Change: Continuity will benefit will benefit them as is as we go forward. So I you know I think we will just continue to work collaboratively to to them to make sure that all of the impacts of this are mitigated and they can be mitigated through insurance and through continued exports.
Speaker Change: That's what we want to make sure that we do to every extent possible as mitigate the impact of this incident.
Speaker Change: With the Cerro Verde question.
Speaker Change: Cerro Verde has a.
Speaker Change: A public.
Speaker Change: A public market trades in the relatively small slowed the trades on the Peruvian stock exchange.
Speaker Change: And so we've we were in <unk>.
Speaker Change: Interested in buying more if there's opportunities to do it there was some.
Speaker Change: Funds that were interested in selling them, we were able to pick up those shares but it says it's a.
Speaker Change: High quality asset very difficult to to to replicate and so to the extent there are opportunities to purchase additional shares were where we were interested in doing that but as you know that takes a willing buyer willing seller as well. So we'll just continue to monitor that as we as we go forward.
Speaker Change: Okay. Thank you.
Speaker Change: Sure.
Speaker Change: Our next question will come from the line of Bob Brackett with Bernstein Research. Please go ahead.
Speaker Change: Good morning, a question back to Indonesia, but this around our U P. K, if I overly analyze the <unk> versus <unk>. There was an expectation that you might file for all your attention in 2024, and the Q2 release, but in <unk>.
Speaker Change: A little more vague in my own interpreting words, there is there anything about the end of the year and filing that matters to you.
Speaker Change: Hum.
Speaker Change: This is definitely definitely let me make one comment here first.
Speaker Change:
Speaker Change: We had hoped based on discussions that go back a couple of years.
Speaker Change: We would be able to accomplish this.
Speaker Change: Hum.
Joe <unk>.
Speaker Change: And with everything that went on.
Speaker Change: Uh huh.
Speaker Change: Transition to the new election occurred months ago, let's say.
Speaker Change: Transition was.
Ooh occurred later, we just weren't able to get it there soon.
Speaker Change: Stablish.
Speaker Change: Regulation in place.
Speaker Change: Provides us the ability to solve for them.
Speaker Change: We'll be working with the new government.
Speaker Change: And working on the right time to do that we're still confident that you're aware of it.
Speaker Change: Very clear quick follow up could you tease us a little with the pre feasibility study launched on Safford Lone Star what should really broad goalposts, what are what's sort of the opportunity should we think about.
Speaker Change: This is a very large resource we've been doing a lot of drilling.
Speaker Change: Over the last several years and have identified a resource that is multiples of the current reserve.
Speaker Change: And it's in an established area, it's over the mountain range from from Morency, where we've operated for us.
Speaker Change: For a century.
Speaker Change: And and in Safford is a relatively new I mean, it's one of the newest mines in the U S. We.
Brought it online and in 2007 eight time frame.
Speaker Change: And then have expanded it.
Speaker Change:
Speaker Change: To date so what.
Speaker Change: What we what we have is this opportunity too.
Speaker Change: A vision, where you could have a another cornerstone asset.
Speaker Change: In this district, where we've got <unk>.
Speaker Change: I wanted workforce.
Speaker Change: We've got you know is an established community.
Speaker Change: Support and we've got a resource and.
Speaker Change: So you could have a operation there that is both doing leaching, which that's what it's it's it's it's 100% Leach operation today.
Speaker Change: I could add.
Speaker Change: Additional milling there to essentially double the production.
Speaker Change: The resource might support even more than doubling but what we're looking at is the opportunity to go to go from 300 million pounds of copper a year there to two to 600.
Speaker Change: And through us.
Speaker Change: Fishing leaching and in knowing operation and so what we're doing now is designing based on the resource what the next step would be in terms of.
Speaker Change: Expanding the operation and Ah.
Speaker Change: We're all very.
Speaker Change: I'm excited about it.
Speaker Change: Pushing too to really define you know what it what it what it could be we know from the resource it could be something that will be with us for a very long time and and so that's the that's the that's the objective we were doing the pre feasibility study work and we'll have more information.
Speaker Change: Next year about what you know what a project could look like.
Speaker Change: You know one of the things that is important.
Speaker Change: Important to recognize here is it's it's not like El Abra and that you know of Libra is going to elaborate as a very attractive project.
Speaker Change: But it takes a long time.
Speaker Change: Because of the permitting requirements. We don't have the same degree we don't believe we'll have the same degree of permitting required for this that you would have in something like an a libra so it's possible that.
Speaker Change: This is fast tracked it could come online.
Speaker Change: Not to do too much different than where libra is so.
So that's that's exciting as well you know we were fortunate at Freeport that we had these brownfield opportunities we have big resources and we have the community support that allows us to do to grow and that's that's what we're doing we're focused on technology.
Speaker Change: <unk> ER, we're focused on all of them, but we do.
Speaker Change: To make sure that where can we can be as efficient as possible long term them and I think you know technology not only in our in our wage initiative.
Speaker Change: Also in our in our mining initiatives. He has kind of turned the corner and make our U S operations are much more attractive as we go forward. So that they were working on that in parallel with that with these studies.
Speaker Change: That's great color thanks for that.
Speaker Change: Our next question comes from the line of Michael Dudas with vertical Research partners. Please go ahead.
Michael Dudas: Good morning, David Richard and Kathleen.
Speaker Change: Good morning, Mike.
Speaker Change:
Michael Dudas: Maybe you could shed.
Michael Dudas: Appreciate the comments about North America.
Michael Dudas: Some of your initiatives on the cost side. So maybe you could give a sense of.
Michael Dudas: How quickly some of these efficiency.
Michael Dudas: These forward looking at.
Michael Dudas: Looking at the marketplace for laborers, how where do you stand on that and is there a normalized level or expectation.
Michael Dudas: Away from the improvement from the beach in contribution.
Michael Dudas: See a moderation in the mining costs.
Speaker Change: Of course.
Speaker Change: And she said.
Speaker Change: Yeah.
Speaker Change: Well you know over the last several quarters. We've had two it's been twofold. One as you know we we starting in.
Speaker Change: 22, we have rising costs and that came at a time when when we started getting into lower grade. So we've had two things that we've been dealing with the the good news is that we're not seeing the rise in cost like we were previously and actually there's some some.
Speaker Change: Things that like energy that have that you know to come become that are actually.
Speaker Change: Trying to lower them.
Speaker Change: But.
Speaker Change: The.
Speaker Change: We're focused on now is.
Speaker Change: Making sure that our assets are as productive as possible.
Speaker Change: It's we did some benchmarking against our South America operations.
Speaker Change: Back in 2022, the two where we're pretty much on top of each other in terms of their unit cost.
Speaker Change: Now when we look at the comparison is a big gap between South America, and North America, and and that's mainly this grade issue.
Speaker Change: We haven't had the grade decline in South America like we've had in and in North America, but that that requires us to be more efficient and we think we can do that we think that we can be more productive with our equipment more a more productive with our people as our people are or are you getting better Trey.
Speaker Change: Many more experience and that is a that is a big help the other issue that we were making some progress on is our downtime.
Speaker Change: We've had some experience in recent years with pretty mature equipment failures.
Speaker Change: We're turning the corner on that we're focused on systems and planning our downtime. So that when we do go down for planned maintenance that the downtime is is is deliver the projects delivered and on.
Speaker Change: The cost we expected in the timeframe, we expected, but it's it's it's it's a lot of basics, but.
Speaker Change: But we're making progress when we look at all the Kpis that we track the key performance indicators that we track, we're seeing them better utilization better availability on our equipment than we've experienced in recent quarters and that's just going to have to you know continue to to.
Speaker Change: To be the case that we have to work day in day out to achieve better better asset availability and productivity metrics are the other thing we're focused on is contractor costs.
Speaker Change: You know we've had some labor rate increases.
Speaker Change: That has not been insignificant, but these contractor costs have been.
Speaker Change: And then even more significant so what we're doing there is we're reducing the amount of contractors that we that we have in our in our operations.
Speaker Change: We're down about 10% or so from where we were.
Speaker Change: And we're allocating or our own internal resources differently.
Speaker Change: Two to reduce costs, there that'll be something we're continuing to work on them. The other thing we're doing and our global supply chain group is is leading an effort to do.
Speaker Change: Really pushed back you know what's happened over the last couple of years with component parts and and in all aspects of maintenance supplies.
Speaker Change: People are trying to push through cost increases price increases on an on equipment and parts.
Speaker Change: And we just don't see the data that supports that so we're pushing back on that.
Speaker Change: We're looking at just to bring cost back down.
Speaker Change: Two two to reasonable levels, where are our vendors can generate returns, but not a great return so we've.
Speaker Change: We've got multifaceted.
Speaker Change: Multifaceted initiatives going on as you mentioned that the Leach initiative is one component of that and that's going to that's going to help a lot, but there are other areas that we've got teams focused on.
Speaker Change: And we will make progress.
Speaker Change: If you if we if we continue to follow them. These key performance indicators and achieve these targets that we've set out that each of our teams know about no with no need to do we will bring down the cost even though grades may not improve.
Speaker Change: So that that is that's something that we're committed to and I think you'll start to see in 2025 mm and all other things being equal in terms of input costs, but you'll see our our unit costs are.
Speaker Change: Trending lower in the in the in the U S compared to where they are now and Ah.
Speaker Change: I'll ask Josh or Murray either of you. If you want to add to anything I commented on on costs. This is a this is a big effort for us for our whole team. So anybody else want to comment. Please please do.
Speaker Change: Kathleen I think you touched on everything that I was going to touch on.
Speaker Change: Really the laser focus by the team.
Speaker Change: You know what efficiencies productivity and managing our costs.
Speaker Change: Contractor spend or a really key in driving our unit costs down in addition to the work and the maintenance and reliability space. The more reliable our equipment is the more productive it has and therefore that just helps all the way across the board not only from a divisor perspective, but also from a cost perspective cause my equipment is down it typically costs.
Speaker Change: More so you touched on the things that are the most important for us and we're very very focused organizationally.
Speaker Change: On those key.
Speaker Change: Performance indicators, so that we can manage that stuff on a day to day week to week month to month basis and drive it in the direction, we need to go.
Speaker Change: Thank you Josh.
Speaker Change: Yep. Thank you Catherine Thank you Joseph Schwartz of progress.
Speaker Change: Our next question comes from the line of or small Codell with Scotiabank. Please go ahead.
Speaker Change: Hi, Good morning. My question is around the same lines with respect to costs I mean with North American cost.
Speaker Change: Above $3 in South American around 250.
Speaker Change: I understand that you're working on some cost reduction initiatives, but should we think about sort of the go forward run rate for costs in North America more in the 250 to $3 range post these initiatives with South America more than the 225 to $2 50, a pound of like is that just the new reality is.
Speaker Change: Today's.
Cost is variable.
Speaker Change: I I think that you know directionally, that's that's that's right.
Speaker Change: Now to the extent that.
Speaker Change: We can bring down some of these.
Speaker Change: These input cost yeah, that'll that'll that'll help them, but I I think I think that is that is what you're saying is accurate.
Speaker Change: Okay.
Speaker Change: Mind everybody that.
Speaker Change: Our Allegiant initiative, if were successful there and continuing to scale, that's a big deal.
Speaker Change: So you know you're talking about you know in the U S.
Speaker Change: For for average today and the $3 range.
Speaker Change:
Speaker Change: Reach initiative is bringing on incremental pounds at a cost of.
Speaker Change: Less than a dollar.
Speaker Change: And so that will bring down the average as we scale it as we scale it more because the reason why it's so it's so attractive is because this is getting more copper out of what's already been mined so.
Speaker Change: Mining cost is a big part of the overall cost of copper production and this has.
Speaker Change: Taking advantage of material, that's already been mined and and and.
Speaker Change: I've seen some.
Speaker Change: Incremental cost to do to get more so that could that could really make a difference and that's why we were talking about it so much and we're making progress on it it's it it could it could really change the cost structure in the U S and we've got some we've got some opportunity.
Speaker Change: It is true for leach at in particular that Libra that I'm that we're pursuing but but the meaningful impact will be will be in our U S operations, principally morency and.
Speaker Change: And in our Chino mine.
Speaker Change: Just as a follow up to that I mean, we've seen North American college creep up seemingly quarter over quarter, where do you see that inflection point should we do you think we peaked here at $3 14, a pound or could we still see those cots Borgwarner go higher before they start coming down on the new retreat.
Speaker Change: Or.
Speaker Change: Our objective and our targets are that they will come down.
Speaker Change: So we should you should see in 2025, you should see lower costs.
Speaker Change: It's what we had in 2024 now.
Speaker Change: Now you know that depends on Mali, and some other things, but it just is.
Speaker Change: You know site production costs, you should you should see cost trending lower in 2025 from where they were in 'twenty four.
Thank you.
Speaker Change: Okay.
Speaker Change: Our next question will come from the line of Daniel Major with UBS. Please go ahead.
Daniel Major: Oh that can hear me okay, yes.
Speaker Change: Great. Thank you.
Speaker Change: Great. Thanks for the questions.
Daniel Major: The first one just on the sort of M&A capital allocation.
Daniel Major: You've caught some more store conservative, but as you mentioned you need a willing seller.
Daniel Major: Two parts of your question I'm, assuming you're calling Bonnie most all concerned about it going forward should we expect.
Daniel Major: Repo share buybacks in Q4 and into Q1 of next year. That's the first part of the question.
Daniel Major: Yeah.
Richard Akerson: Well I was just gonna say, Richard it was probably not.
Richard Akerson: Our framework for them for cash allocation for shareholder returns.
Richard Akerson: And so we really deploy 50% of cash flow to.
Richard Akerson: Cash flow available after after capex, excluding the discretionary items.
Richard Akerson: Of 50 per cent of shareholder returns and 50% to.
Richard Akerson: Two two organic growth and so I, we do expect that share purchases to the extent that we're generating cash above the current dividend levels will will will be available for us in the future to continue to buy back stock.
Richard Akerson: But the Cerro Verde was opportunistic.
Richard Akerson: If there are opportunities in the future to buy Cerro Verde sockets, you know like we said, it's a very high quality asset and so that that's really just an opportunistic.
Richard Akerson: Purchase.
Speaker Change: Okay. Thanks, and then you have ongoing discussions we have ongoing discussions with our shareholders.
Richard Akerson: Hmm.
Richard Akerson: You bet.
Richard Akerson: Dividends versus stock buybacks.
Richard Akerson: Yeah.
Richard Akerson: We discuss with our board at every meeting and we will be making decisions, it's great to be in a position.
Richard Akerson: Now to be able to have those discussions.
Richard Akerson: Hum.
Richard Akerson: Well below our debt levels.
Richard Akerson: So.
Speaker Change: Excuse me.
Richard Akerson: This policy to Kathleen.
Richard Akerson: I spoke with you about.
Speaker Change: Great. Thanks, maybe a follow up if I could just a bigger picture M&A left you're seeing larger scale transactions starting to.
Richard Akerson: <unk> become more prominent in the sector.
Richard Akerson: Is this something that you see as an opportunity going forward before.
Richard Akerson: Some of these larger assets potentially get kind of taken off the market.
Richard Akerson: Yeah, we we monitor market activity that I've said.
Richard Akerson: I've said I've said for a long time.
Richard Akerson: M&A is coming in our industry.
Richard Akerson: It certainly will.
Richard Akerson: And we're engaged in.
Richard Akerson: Observing what goes on in discussions.
Richard Akerson: With our bankers and with other companies to see what opportunities might arise.
Richard Akerson: M&A is not fundamental to our strategy.
Richard Akerson: Sure.
Richard Akerson: Brokerage and have opportunities to grow value for our shareholders organically.
Richard Akerson: And that's our primary focus will be.
Richard Akerson: In the market place and prepared to respond to.
Richard Akerson: Opportunities I've always felt that the best M&A comes from opportunities as opposed to.
Richard Akerson: Pre determined strategic themes.
Speaker Change: Very clear thanks very much.
Speaker Change: Our next question comes from the line up of Lawson Winder with Bank of America Securities. Please go ahead.
Speaker Change: Yeah.
Lawson Winder: Thank you operator and good morning.
Lawson Winder: Kathleen and Richard Thank you for taking my question was actually up there just wanted to ask.
Lawson Winder: Thank you I just wanted to ask about capital allocation.
Lawson Winder: So really with respect to the larger project, so I'm thinking of Baghdad, I'm thinking of El Abra and I'm thinking now Lone star.
Lawson Winder: Would it be fair to characterize your decision, making is one where you would wait on a decision on Baghdad.
Lawson Winder: Two you have the information on the studies that you're now expecting the theaters next year for for both El Abra and long term.
Speaker Change: Well bad Daddy's is a project that we can execute in in the near term.
Speaker Change: We do want to do and we've got the information on our Libra. So we know the comparison between El Abra and and Baghdad.
Speaker Change: If we're lone star we need to get these studies done and that's why we're pushing to get the studies done next year.
Speaker Change: That'll that'll help us assess that but.
Speaker Change: Baghdad is it's something that can be executed in a.
Speaker Change: In a in a three to four year horizon.
Speaker Change: Lone Star Sacredh, it'll take take longer to evaluate but we yes in a perfect world, we would like to have and that's that's the beauty of our Freeport in that.
Speaker Change: We have.
Speaker Change: You know we manage all of these assets and so we can look at capital allocation.
Speaker Change: As to where it makes the most sense, where it has the best impact the best.
Speaker Change: Turns are for us to evaluate projects next to each other so that's it that's a real advantage and we do that regularly to make sure we're allocating capital to the projects that make the most sense not just to the projects that.
Speaker Change: We can do you know we wanted to we wanted to invest our capital in the in the projects that drive the most value.
Speaker Change: There are other considerations in terms of timeframes that can that can be executed within etc, but but generally that's our philosophy is to allocate capital to the to the to the most valuable projects within our portfolio and to compare and contrast, those but so we will have more information on safran.
Speaker Change: Next year and look at that next to next to them next to Baghdad, but we think that Baghdad Wil.
Speaker Change: The project will benefit Baghdad long term again, we're talking about you know we've got an 80 year plus reserve life, there and so that is a place where we feel investments makes sense and that's you know part of what guides our investment decisions as where do we have the resource.
Speaker Change: And and in this case, an established operation that we can leverage for them, so, but they're not mutually exclusive we can do more than one project and so are our goal is to if we've got projects that create value and we can execute those efficiently.
Speaker Change: We want to advance those aggressively.
Speaker Change: Okay. That's perfect actually and then just my follow up would be just thinking about 2025 capex.
Speaker Change:
Speaker Change: I mean, how would you handicap thinking about that I mean should we be thinking about 25, capex being sort of in line with 24 X smelter or should we be thinking about the possibility of putting.
Speaker Change: What is your Capex commitment at some point in 'twenty, five but that would be cash outflow next year.
Speaker Change: Yeah at this point in time, we don't see.
Speaker Change: Or a major change to twenty-five Capex you know, we do have some investments in our discretionary bucket and 25 to advance Baghdad to Derisk Baghdad were making some investments in empower infrastructure, we're making some investments in in in tailings.
Speaker Change: Tailings work that were doing that they would have to do any way longer term.
Speaker Change: But so we do have some some investments and in Baghdad and in 2025 to Derisk. The overall project, but I don't see them based on the projects were talking about in terms of El Abra.
Speaker Change: The Libra Baghdad Lone Star I don't see significant capex in it you know above what we have in our 2025 plans, but we'll continue to review those if there's opportunity for us too.
Speaker Change: To advance things in a in an in it that makes sense, we'll certainly be open to it but at this point in time. This is our best estimate of what what capital would look like and in 2025.
Speaker Change: That's fantastic Thanks again for the update guys.
Speaker Change: Thanks Lawson.
Speaker Change: Our final question comes from the line of Bill Peterson with Jpmorgan. Please go ahead.
Speaker Change: Good morning, Kathleen and Richard This is Ben on for Bill. Thank you, particularly my questions.
Speaker Change: I wanted to start real quick if you could provide any updates on some of your smaller and near term discretionary projects on slide 23, namely increasing stacking at Lone Star Atlantic copper recycling and the improvements at the Grasberg milk.
Speaker Change: Yeah aren't.
Speaker Change: What what was just for everyone else what he's talking about is easily discretionary projects that are included in our capital.
Speaker Change: And generally are not maintenance related that are that are actually have have investment returns associated with them.
Speaker Change:
Speaker Change: The Lone star oxide expansion is coming to an end where we're.
Speaker Change: Gonna be completing that.
Speaker Change: In in in a in the 2025 time frame and so that'll allow us to to to basically sustain a 300 million pounds of copper per annum.
Speaker Change: Beyond that Lone Star, where we're talking about a major expansion in that that is what we were talking about earlier studying.
Speaker Change: At Grasberg, we're installing a a copper cleaner that'll allow us to improve our concentrate grades.
Speaker Change: And our our metal recoveries.
Speaker Change: That investment is.
Speaker Change: Is.
Essentially we've we've completed the the major construction and we'll be installing that project commissioning that project here in the fourth quarter. So that one is coming to an annual won't see.
Speaker Change: Any significant costs for that one and 2025, the circular projected Atlanta Koppers has taken advantage of Atlanta koppers position in the market the existing infrastructure and we're developing a new circuit there to recycle E scrap electrodes.
Sonic scrap material and that project is is underway it's expected to be.
Speaker Change: To the in production and next year at the end of next year.
Speaker Change: And it is and it's gonna add to Atlantic copper as you know may not be significant overhaul to Freeport 60 million per annum, but it's significant to Atlantic copper and particularly in the context of a low T. CRC since allows Atlanta copper to continue to generate them generate business outside of.
Speaker Change: Of of copper and it's it's it's a it's an Atlantic is very well suited to do this kind of work in and recycling the.
Speaker Change: The material that are in phones and other other things that that have value. So that's that that project is is in construction and as I said expected to be completed next year.
Speaker Change: Thanks for that and then real quick if I could just ask about the progress of the clean up work going on at Grasberg, you've had success with placing their pumping equipment not that you were speaking to last quarter.
Speaker Change: Yeah, we've made a lot of progress there things are you know continue to go very well at at Grasberg. The.
Speaker Change: Team did well this quarter and actually you know exceeded the forecast.
Speaker Change: Was able to to get more tonnes through the mill than we had forecast and in grades where we're strong in and so operations there or continuing to go very well.
Speaker Change: Thank you and best of luck going forward.
Speaker Change: And with that I have ever known.
Speaker Change: Management.
Speaker Change: Thanks, Regina and thank you everyone for all your good questions and participation and we look forward to continuing to keep you updated and if you have any follow ups. Please contact David.
Speaker Change: Ladies and gentlemen.
Speaker Change: Joining our call.
Speaker Change: And that will conclude today's call. We thank you all for joining you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.