Freeport-McMoRan's Q2 2025 Earnings Call: Contradictions on Mine Plans, Gold Guidance, and Tariff Impacts

Mine plan changes and grade estimations, gold production guidance variability, Miami smelter expansion, and tariffs and cost impact are the key contradictions discussed in Freeport-McMoRan's latest 2025Q2 earnings call.



Strong Copper Market and U.S. Premium:
- Copper prices averaged $4.32 on the London Metals Exchange and $4.72 on the U.S. COMEX Exchange during the quarter.
- A significant U.S. premium emerged, reaching $1.25 per pound, approximately 28% above the LME price, implying an approximate $1.7 billion annual financial benefit for Freeport.
- The premium is a result of the U.S. opening a Section 232 investigation and announcing a 50% tariff on copper imports, which has led to increased domestic supply demand.

Freeport's Copper Sales and Production Costs:
- The company's sales of copper exceeded production, supported by successful inventory reduction in Indonesia and strong performance at the new precious metals refinery.
- Net unit cash production costs for the quarter were $1.13 per pound, significantly improved from previous guidance and last year's levels.
- This was achieved through a combination of higher copper realizations, efficient operating disciplines, and strategic initiatives like the new copper smelter in Indonesia.

Global Integrated Copper Production:
- The start-up of the new copper smelter in Indonesia was a key milestone, with the first cathodes expected by the end of the month.
- This will provide a significant financial benefit, with net operating costs expected to be approximately $0.16 per pound after considering revenue impacts and export duty elimination.
- The new smelter enhances Freeport's global strategic position by enabling full internal processing of its mine production and reducing reliance on third-party smelters.

Organic Growth and Innovation Initiatives:
- Freeport is targeting a 40% increase in its leach run rate to achieve 300 million pounds by the end of the year, en route to 800 million pounds per annum.
- This initiative aims to increase U.S. refined copper production, supported by internally developed leach additives and precision leaching practices.
- The company is focused on leveraging technology and automation to drive efficiency and reduce costs, positioning it well for future growth opportunities.