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Freeport-McMoRan (FCX)
NYSE:FCX
Risk Overview Q4, 2024
Risk Distribution
37% Production
20% Legal & Regulatory
20% Macro & Political
17% Finance & Corporate
7% Tech & Innovation
0% Ability to Sell
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Freeport-McMoRan Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q4, 2024
Main Risk Category
Production
With 11 Risks
Production
With 11 Risks
Number of Disclosed Risks
30
+1
From last reportS&P 500 Average: 32
30
+1
From last reportS&P 500 Average: 32
Recent Changes
1Risks added
0Risks removed
6Risks changed
Since Dec 2024
1Risks added
0Risks removed
6Risks changed
Since Dec 2024
Number of Risk Changed
6
+6
From last reportS&P 500 Average: 4
6
+6
From last reportS&P 500 Average: 4
See the risk highlights of Freeport-McMoRan in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 30
Production
Total Risks: 11/30 (37%)Above Sector Average
Manufacturing3 | 10.0%
Manufacturing - Risk 1
We may not be able to maintain or grow our mineral reserves.Manufacturing - Risk 2
Our management of waste rock and tailings are subject to significant environmental, safety and engineering challenges and risks that could adversely affect our business.The waste rock (including overburden) and tailings produced in our mining operations represent our largest volume of mine waste material. Managing the volume of waste rock and tailings presents significant environmental, safety and engineering challenges and risks primarily relating to structural stability, geochemistry, water quality and dust generation. Management of this waste is regulated in the jurisdictions where we operate and our programs are designed to comply with applicable national, state and local laws, permits and approved environmental impact studies.
We maintain large leach pads and tailings impoundments containing viscous material. Our leaching innovation initiatives include measures that are intended to enhance solution flow through our leach stockpiles, which may increase risks for physical instability of such stockpiles. Tailings impoundments include large embankments that must be engineered, constructed and monitored to ensure structural stability and avoid structural collapse. Our tailings impoundments in arid areas must have effective programs to suppress fugitive dust emissions to meet regulatory requirements, which vary depending on location, and to limit potential impacts of dust emissions from our operations on surrounding communities and the environment. Additionally, we must effectively monitor, prevent and treat acid rock drainage at all of our operations. In Indonesia, we use a controlled riverine tailings management system, which presents other risks discussed in more detail in the risk factor below relating to the environmental challenges at our Indonesia mining operations.
As of December 31, 2024, we operated 15 active tailings storage facilities (13 in the U.S. and 2 in Peru), of which 10 have an upstream design and 5 have a centerline design. Additionally, we have one centerline tailing storage facility in development. We also manage 29 tailings storage facilities in the U.S. that are inactive or closed (23 with an upstream design, 2 with a centerline design and 4 with a downstream design) and another 25 that are deemed "safely closed" according to the definition in the Tailings Standard (22 with an upstream design and 3 with a centerline design). In 2024, we produced approximately 346 million metric tons of tailings globally. The failure of tailings storage facilities, other embankments or stockpiles at any of our mining operations could cause severe, and in some cases catastrophic, property and environmental damage and loss of life, as well as adverse effects on our business and reputation. Some of our tailings storage facilities are located in areas where a failure has the potential to impact individual dwellings, and at least one of our impoundments is in an area where a failure has the potential to impact nearby communities or mining infrastructure. There can be no assurance that a severe or catastrophic failure of any of our facilities will not occur in the future. For additional information regarding the company's tailings management and stewardship program, including our implementation of the requirements of the Tailings Standard, refer to Items 1. and 2. "Business and Properties."
Based on observations from tailings failures at unaffiliated mines and our risk assessment process, which assesses a range of potential risks to our tailings storage facilities, in addition to fatalities and severe personal, property and environmental damages, these events could result in limited or restricted access to mine sites, physical failures at sites (such as overtopping of an impoundment), suspension of operations, decrease in mineral reserves, legal liability, government investigations, additional regulations and restrictions on mining operations in response to any such failure, increased monitoring costs and production costs, increased insurance costs or costs associated with insufficiency of or inability to obtain insurance, increased costs and/or limited access to capital, remediation costs, inability to comply with any additional safety requirements or obtain necessary certifications, evacuation or relocation of communities or other emergency action, impacts on occupational health and safety, social risks, and other impacts, which could have a material adverse effect on our operations and financial position.
Manufacturing - Risk 3
Our operations are subject to significant operational risks that could adversely affect our business, including the ability to smelt and refine, and our underground mining operations have higher risks than a surface mine.Changed
We have assets in a variety of geographic locations, all of which exist in and around broader communities and environments. Maintaining the operational integrity and performance of our assets is crucial to protect our people, the environment and communities in which we operate. Our operations are very large in scale and, by their nature are subject to significant operational risks, some of which are outside of our control, and many of which are not covered fully, or in some cases even partially, by insurance. These operational risks, which could materially adversely affect our business, operating results and cash flows, include earthquakes, rainstorms, floods, landslides, wildfires and other natural disasters and extreme weather events; environmental hazards, including discharge of metals, concentrates, pollutants or hazardous chemicals; surface or underground fires; equipment failures; accidents, including in connection with mining equipment, milling equipment or conveyor systems, transportation of chemicals, explosives or other materials and in the transportation of employees and other individuals to and from sites (including where these services are provided by third parties such as vehicle and aircraft transport); wall failures and rock slides in our open-pit mines, and structural collapses of our underground mines or tailings impoundments; underground water and ore management; lower than expected ore grades or recovery rates; and seismic activity resulting from unexpected or difficult geological formations or conditions (whether in mineral or gaseous form).
For a discussion of risks specific to our tailings management, see the risk factors below relating to our management of waste rock and tailings, including our river transport system for tailings management in Indonesia.
We are facing continued geotechnical challenges because of the older age of some of our open-pit mines and a trend toward mining deeper pits and more complex deposits. There can be no assurance that unanticipated geotechnical and hydrological conditions may not occur, nor whether these conditions may lead to events such as landslides and pit wall failures, or that such events will be detected in advance. Geotechnical instabilities can be difficult to predict and are often affected by risks and hazards outside of our control, such as seismic activity or extreme weather, which have in the past and may in the future lead to floods, mudslides, pit-wall instability and possibly even slippage of material, which has and may in the future require suspension of operations and impact operating results.
We also experience mining induced seismic activity, including landslides, from time to time in the Grasberg minerals district in addition to extreme weather. The mine site is in an active seismic area and has experienced earth tremors from time to time. In addition to the usual risks encountered in the mining industry, our Indonesia mining operations involve additional risks given their location in steep mountainous terrain in a remote area of Indonesia. These conditions have required us to overcome special engineering difficulties and develop extensive infrastructure facilities. The area also receives extreme rainfall, which has led to periodic floods and mudslides. In February 2023, PT-FI's operations were temporarily disrupted because of significant rainfall and landslides, which restricted access to infrastructure near its milling operations. We cannot predict whether similar weather-related or seismic events will occur in the future or the extent to which any such event would affect these, or any of our other operations.
Underground mining operations have unique risks that can be particularly dangerous, such as those associated with supporting the underground openings. In May 2013, the rock structure above the ceiling of an underground training facility at the Grasberg minerals district collapsed, which resulted in 28 fatalities and 10 injuries. While we have implemented preventative measures, we cannot guarantee that any incidents will not occur in the future.
The occurrence of one or more of these operational risks in connection with our operations may result in the death of, or personal injury or illness to, our employees, other personnel or third parties, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, significant repair costs, monetary losses, deferral or unanticipated fluctuations in production, extensive community disruption (including short- and long-term health and safety risks), loss of licenses, permits or necessary approvals to operate, loss of workforce confidence,loss of infrastructure and services, disruption to essential supplies or delivery of our products, environmental damage and potential legal liabilities, any of which may adversely affect our reputation, business, prospects, results of operations and financial position. Further, the impacts of any serious incidents that occur may also be amplified if we fail to respond timely or in an appropriate manner.
In addition, we could also be subject to additional operational risks at our smelters and refineries, including those specific to PT-FI once it is fully dependent on its ability to smelt and refine domestically all its concentrates. Any delay, suspension, loss of access, shutdown of affected facilities or limited availability and capacity related to these smelting and refinery facilities, including equipment or mechanical failures, fires, explosions, unanticipated or extended shutdowns, inability to sell certain by-products, lack of capacity to store certain by-products, extreme weather or natural disasters, social or political unrest or any major public health crisis, any of which may not be recognized as a force majeure event, may significantly impact our ability to export and sell our products, particularly in Indonesia even if alternative refineries or smelters outside of Indonesia are available, and could adversely impact our costs, revenues and results of operations or require us to revise our operating plans, including curtailing or modifying our mining and milling operations. As discussed above and in Note 10, a fire occurred in October 2024 during start-up activities at PT-FI's new smelter, requiring a temporary suspension of smelting operations to complete repairs. PT-FI expects repairs to be completed by mid-2025 and ramp-up to full capacity to be achieved by year-end 2025.
We maintain insurance at amounts we believe to be reasonable to cover some of these risks and hazards; however, our insurance may not sufficiently cover losses from certain of these risks and hazards. There can be no assurance that such insurance will continue to be maintained or available at economically feasible premiums, that the proceeds of such insurance will be paid in a timely manner or that we will be adequately compensated for losses actually incurred, if at all. We may elect not to purchase insurance for certain risks because of the high premium costs associated with insuring such risk or for various other reasons. For example, we do not have coverage for certain environmental losses, including the legal liabilities associated with these risks. The lack of, or insufficiency of, insurance coverage could adversely affect our cash flows and overall profitability.
Employment / Personnel2 | 6.7%
Employment / Personnel - Risk 1
Labor disputes or labor unrest could disrupt our operations.Employment / Personnel - Risk 2
Our success depends on our ability to recruit, retain, develop and advance qualified personnel.Our success is dependent on the contributions of our highly skilled and experienced workforce. Our business depends on our ability to recruit, retain, develop and advance a qualified, inclusive and diverse workforce at all levels, including sufficient personnel to develop, implement and operate new technologies. Our ability to recruit qualified personnel is affected by the available pool of candidates with the training and skills necessary to fill the vacant positions, the impact on the labor supply because of general economic conditions and our ability to offer competitive compensation and benefit packages. We continued to face challenges in 2024 with an increasingly competitive and tight labor market, specifically in North America. The tight labor market, hiring more contract workers, and increased competition from other employers in North America continue to represent strategic challenges that are increasing our costs, reducing efficiency, impacting production and our ability to further expand current mining rates and will impact the timing of future developments in North America. If we fail to recruit, retain, develop and advance qualified, inclusive and diverse personnel necessary for the efficient operation of our business or fail to maintain a safe environment, we could continue to face labor challenges, which may result in, but are not limited to, decreased profitability, further decreases to productivity and efficiency, ongoing safety performance challenges, and the further delay of current and potential development projects, any of which may have a material adverse effect on our performance. Refer to Items 1. and 2. "Business and Properties" for further discussion of our human capital management, including health and safety, and employee engagement, training and development.
Supply Chain2 | 6.7%
Supply Chain - Risk 1
Our operations, including future expansions or developments, depend on the availability of significant quantities of secure water supplies.Changed
Supply Chain - Risk 2
Failure or the perceived failure to manage our relationships with the communities and/or Indigenous Peoples where we operate or that are near our operations could harm our reputation and social license to operate.Our relationships with the communities and/or Indigenous Peoples where we operate or that are adjacent to or near our operations are critical to the long-term success of our existing operations and the development of any future projects. There is ongoing and increasing stakeholder and other third-party concern relating to a company's social license to operate and the actual, potential and perceived effects of mining activities on the environment and on communities impacted by such activities. We may engage in activities, such as exploration, production, construction or expansion of our operations that have or are perceived to have adverse impacts on the local communities and their relevant stakeholders, society as a whole, Indigenous Peoples, cultural heritage, human rights and the environment, including land management and associated biodiversity, among other things. For example, our operations may take place on or adjacent to Indigenous Peoples' ancestral lands, and such Indigenous Peoples may assert rights to such lands. Further, we may be required or expected by our stakeholders and other third parties to consult with and/or obtain consent from Indigenous Peoples for potential impacts. We also may be required to demonstrate our capacity to protect ecosystems through improved practices and technological solutions to maintain our social license to operate, or to obtain such social license to operate for future development projects or expansions.
In addition, our assets are generally long-lived and stakeholders' perceptions and expectations can change over the life of the mine. Changes in the aspirations and expectations of local communities and/or Indigenous Peoples where we operate, with respect to our employee health and safety performance and our contributions to infrastructure, community development, environmental management, including land management and associated biodiversity, and other factors could affect our social license to operate and reputation, and could lead to delays and/or increased costs if expansions or new projects are blocked either temporarily or for extended periods. Failure to effectively engage with communities on an ongoing basis, including the withdrawal of consent or support of Indigenous Peoples, other stakeholders or other third parties, could adversely impact our business, damage our reputation and/or result in loss of rights to explore, operate or develop our projects.
Costs4 | 13.3%
Costs - Risk 1
The costs of compliance with environmental, health and safety laws and regulations applicable to our operations may constrain existing operations or expansion opportunities. Related permit and other approval requirements may delay or result in a suspension of our operations.Costs - Risk 2
We incur significant costs for remediating environmental conditions on or related to properties that have not been operated in many years.FMC and its subsidiaries, and many of their affiliates and predecessor companies, have been involved in exploration, mining, milling, smelting and manufacturing in the U.S. for more than a century. Activities that occurred in the late 19th century and the 20th century prior to the advent of modern environmental laws generally were not subject to environmental regulation and were conducted before U.S. industrial companies fully understood the long-term effects of their operations on the surrounding environment.
Companies like FMC are now legally responsible for remediating hazardous substances released into the environment on or from properties owned or operated by them as well as properties where they arranged for disposal of such substances, irrespective of when the release into the environment occurred or who caused it. That liability is often asserted on a joint and several basis with other prior and subsequent owners, operators and arrangers, meaning that each owner or operator of the property is, and each arranger may be, held fully responsible for the remediation, although in many cases some or all of the other responsible parties no longer exist, do not have the financial ability to respond or cannot be found. As a result, because of our acquisition of FMC, many of the subsidiary companies we now own are potentially responsible for a wide variety of environmental remediation projects throughout the U.S., and we expect to spend substantial sums annually for many years to address those remediation issues. We are also subject to claims where the release of hazardous substances is alleged to have resulted in injury, destruction or loss of natural resources.
At December 31, 2024, we had more than 80 active remediation projects in 20 U.S. states. In addition, FMC and certain affiliates and predecessor companies were parties to agreements relating to the transfer of businesses or properties that contained indemnification provisions relating to environmental matters, and from time to time these provisions become the source of claims against us.
Our environmental obligation estimates are primarily based upon our current knowledge and understanding of:
- Complex scientific and historical facts and circumstances that in many cases occurred many decades ago;- Assumptions regarding the nature, extent and duration of remediation activities that we will be required to undertake and the estimated costs of those remediation activities, which are subject to varying interpretations; and - Interpretation of the requirements that are imposed on us by existing laws and regulations and, in some cases, the clarification of uncertain regulatory requirements that could materially affect our environmental obligation estimates.
Significant adjustments to these estimates are likely to occur in the future as additional information becomes available. The actual environmental costs may exceed our current and future accruals for these costs, and any such changes could be material.
In addition, remediation standards imposed by the U.S. Environmental Protection Agency (EPA) and state environmental agencies have generally become more stringent over time and may become even more stringent in the future. Imposition of more stringent remediation standards, particularly for arsenic and lead in soils, poses a risk that additional remediation work could be required at our active remediation sites and at sites that we have already remediated to the satisfaction of the responsible governmental agencies, and may increase the risk of toxic tort litigation. In January 2024, the EPA released guidance lowering the recommended screening levels for investigating lead-contaminated soils and in January 2025, EPA published its final toxicological assessment for inorganic arsenic. This guidance and assessment can be used to establish cleanup levels by some agencies at state and federal remediation sites and may lead to additional regulatory guidance, rulemaking and other regulatory activities. More stringent cleanup levels often lead to higher costs through exponential volume increases due to resulting expanded project footprints.
Refer to Items 1. and 2. "Business and Properties" and Note 10 for further discussion of our environmental obligations.
Costs - Risk 3
Fluctuations in the price and availability of consumables and components for key machines and equipment we purchase, and constraints on supply and logistics could affect our profitability and operating plans. Further, significant delays or increases in costs affecting transportation services may affect our business.Consumables and components for key machines and equipment we purchase are subject to price volatility caused by global economic factors that are beyond our control, including, but not limited to, supply chain disruptions, labor shortages, wage pressures, inflation and economic slowdown or recession, as well as fuel and energy costs (for example, the price of diesel), the impact of interruption by fire, power shortages, industrial accidents, hostile acts, cybersecurity attacks, natural disasters or extreme weather events, major public health crises, geopolitical tensions or conflicts (including trade policies such as tariffs and other controls on exports and imports), and foreign currency exchange rate fluctuations.
Prices of consumables used in our operations, such as natural gas, diesel, coal, other sources of energy, ammonium nitrate, chemical reagents (including sulfuric acid), and steel-related products, and components impact the costs of production at our operations and the costs of development projects. These prices fluctuate and can be volatile. Since 2022, we have experienced price volatility for certain consumables, including diesel fuel, ammonium nitrate and sulfuric acid, and certain components, which has impacted our operating results, and we may experience volatility in the price and availability of other consumables in the future. We also experienced increased costs for equipment, parts and other operating supplies and services. Significant volatility or further increases could have a material adverse effect on our results of operations and could result in material changes to our operating plans or development projects.
Ensuring continuity of supply of such consumables to our operations is critical to our business. We also rely on the availability of components from suppliers for key machines and equipment, which may be impacted by competition demands as well as the availability of input materials in the creation of such equipment. A supplier's failure to supply consumables or components in a timely manner or to meet our quality, quantity, cost requirements or our technical specifications, or our inability to obtain alternative sources of consumables or components on a timely basis or on terms acceptable to us, could adversely affect our operations. We have also experienced longer lead times on delivery of certain consumables, including fuel, lubricants, ammonium nitrate and sulfuric acid. While these delays did not significantly impact our results for the three years ended December 31, 2024, these delays may continue and could become material. Further, delays and logistical constraints may occur as a result of weather-related impacts or violence, civil and religious strife, and activism at or near our operations or those of our suppliers, as described in the related risk factor below.
Following any interruption to our business, we can require substantial recovery time, experience significant expenditures to resume operations, and lose significant revenues, which could have a material adverse effect on our results of operations. Because we may rely on limited sources and long-lead times for consumables and components for key machines and equipment, a business interruption affecting or requiring such sources would exacerbate any negative consequences to us.
Our business depends on timely inbound transportation of consumables and components we use and outbound transportation of the commodities we produce such as by truck, rail and ocean freight. Any significant increase in the cost of or significant delays in the transportation of consumables or components used in our operations or the commodities we produce, as a result of increases in fuel or labor costs, higher demand for logistics services, weather-related impacts (such as low water levels along shipping routes) or otherwise, could adversely affect our results of operations. Additionally, if transportation service providers fail to deliver consumables or components used in our operations to us or the commodities we produce to our customers in a timely manner or at all, such failure could adversely impact our ability to meet our production schedules, delay our projects and capital initiatives, negatively affect our customer relationships and have a material adverse effect on our financial position and results of operations.
Costs - Risk 4
Our Indonesia mining operations are susceptible to difficult and costly environmental challenges, and future changes in Indonesia environmental laws could increase our costs.Mining operations on the scale of our Indonesia operations involve significant environmental risks and challenges. Given the unique site-specific topographical, hydrological and geotechnical conditions of the project area, our primary challenge is to dispose of the large volume of tailings we produce. In 2024, PT-FI produced approximately 73 million metric tons of tailings. Our tailings management plan, which has been approved by the Indonesia government, uses an unnavigable part of a river in the highlands to transport the tailings and natural sediments from the mill in the highlands to an engineered tailings management area in the lowlands. Levees have been constructed along both sides of the lowlands tailings management area to act as containment structures to laterally contain the depositional footprint of the tailings and natural sediment within the approved tailings management area.
Another major environmental challenge at PT-FI is managing overburden stockpiles and other waste rock and conditions in the open pit. Overburden is rock that was previously moved aside in the Grasberg open pit mining process to reach the ore. In the presence of air, water and naturally occurring bacteria, some of this material can generate acid rock drainage (acidic water containing dissolved metals) that, if not properly managed, can adversely affect the environment or be costly to manage. There is no guarantee our actions to prevent and manage the quality of any discharge of impacted water will be successful. PT-FI may modify its re-sloping, erosion control and water management plans in the future, which could lead to material increases in costs.
In addition, in the past, certain Grasberg overburden stockpiles experienced erosion over time that caused mineralized overburden material to enter into the lowlands tailings management area. This erosion affected the volume as well as the physical and chemical characteristics of the sediment material deposited in the lowlands tailings management area, which, if not properly managed, could result in environmental impacts. The underlying overburden erosion and run-off are being managed and controlled through an extensive re-sloping and water management project which is ongoing, and PT-FI has not experienced similar erosion issues since 2018.
PT-FI maintains a tailings deposition management plan and environmental monitoring program which consider the presence of this potentially acid-forming overburden in the lowlands tailings management area. PT-FI has expanded the scope of its environmental monitoring program which assesses potential environmental and human health impacts from overburden and tailings. As part of the expanded scope, in 2022 and 2023, PT-FI assisted the Mimika local health authority (LHA) with broad-based community health surveys, which provided further data on an extensive range of community health issues. There were no impacts attributable to PT-FI's operations (inclusive of tailings and overburden) that were determined to be a priority focus of the LHA following the results of these assessments. In response to the health survey results, PT-FI and the LHA have agreed to collaborate on public health challenges moving forward. During 2024, PT-FI continued its routine assessments of surface waters, groundwaters, sediments and soils, dust and terrestrial and aquatic tissues.
In the past, the Indonesia government, stakeholders and other third parties have raised questions with respect to PT-FI's tailings management systems and plans. We continue to revisit studies for alternative tailings management options. Our Indonesia mining operations are remotely located in steep mountainous terrain and in an active seismic area, which also experiences extreme weather events. Independent environmental management expert audits have reaffirmed conclusions from previous studies that PT-FI's controlled riverine tailings management system represents the best alternative for tailings management given the volume of tailings produced and the site-specific conditions of the area.
Overtopping or failure of any of the PT-FI tailings containment structures (levees or protection structures) induced by extreme weather events such as floods, a major seismic event or naturally occurring weak ground under the structures, are potential risks. The potential impacts from any such occurrence could vary significantly depending upon the specific location of the failure. Unanticipated structural failure of these structures in certain areas in the future could result in flooding of the nearby communities and related loss of lives and/or severe personal, property and environmental damages. Under certain conditions, a failure may necessitate evacuation or relocation of communities or other emergency action, financial assistance to the communities impacted, and remediation costs to repair and compensate for the social, cultural and economic impacts associated with such failure.
In addition, in the southern (estuary) portion of the approved tailings management area, mathematical modeling of certain sediment transport scenarios indicates that tailings have the potential to be deposited outside of the approved lateral levees in adjacent mangroves. PT-FI has proposed additional extensions to the existing levees to the Indonesia regulators and is further evaluating the potential benefits and impacts. Indonesia regulators have further proposed a different strategy involving efforts to increase sediment retention through various methods as well as increase beneficial use of tailings. If the additional retention efforts are not successful, or if the permitting for these proposed protection structures is not reconsidered, any such depositional impacts outside of our existing approved footprint could impact the environment and communities. Refer to Items 1. and 2. "Business and Properties" for further discussion of our environmental obligations in Indonesia.
Managing these environmental challenges at our Indonesia operations could result in reputational harm and increased costs that could be significant.
There can be no assurance that future environmental changes affecting the mining industry in Indonesia will not be introduced or unexpectedly altered or repealed, or that new interpretations of existing Indonesia environmental laws and regulations will not be issued, which could have a significant impact on PT-FI.
Legal & Regulatory
Total Risks: 6/30 (20%)Above Sector Average
Regulation3 | 10.0%
Regulation - Risk 1
Changes in or the failure to comply with the requirements of mine closure and reclamation regulations could have a material adverse effect on our business.Regulation - Risk 2
PT-FI will not mine all of the ore reserves in the Grasberg minerals district before the initial term of its IUPK expires in 2031. PT-FI's IUPK may not be extended through 2041 if PT-FI fails to abide by its terms and conditions and applicable laws and regulations.Under the terms of PT-FI's IUPK, PT-FI has been granted mining rights through 2031, with rights to extend its mining rights through 2041, subject to certain terms and conditions. Refer to Note 11 for a summary of the IUPK's key fiscal terms.
Our proven and probable mineral reserves in Indonesia reflect estimates of minerals that can be recovered through the end of 2041, and PT-FI's current long-term mine plan and planned operations are based on the assumption that PT-FI will abide by the terms and conditions of the IUPK and will be granted the 10-year extension from 2031 through 2041. As a result, PT-FI will not mine all of these mineral reserves during the initial term of the IUPK. Prior to the end of 2031, we expect to mine 40% of aggregate proven and probable recoverable mineral reserves at December 31, 2024, representing 45% of FCX's net equity share of recoverable copper reserves in Indonesia and 44% of FCX's net equity share of recoverable gold reserves in Indonesia.
If PT-FI does not achieve full ramp-up at the new downstream processing facilities, or fulfill its defined fiscal obligations to the Indonesia government as set forth in the IUPK, the IUPK may not be extended from 2031 through 2041, and PT-FI would be unable to mine all of its proven and probable mineral reserves in the Grasberg minerals district, which could adversely affect our business, results of operations and financial position.
PT-FI and the Indonesia government continue to engage in discussions regarding the extension of PT-FI's IUPK beyond 2041. While PT-FI expects to apply for an extension during 2025, pending agreement with MIND ID on a purchase and sale agreement for the transfer in 2041 of an additional 10% interest in PT-FI, we cannot predict whether the application will be successful in extending PT-FI's IUPK beyond 2041.
Regulation - Risk 3
We face increasing, complex and changing regulatory and stakeholder and other third-party expectations relating to our climate and energy transition plans, which may adversely affect our business. Further, we may not be able to timely or successfully transition from fossil fuel sources for our significant energy needs, which may result in reputational damage.Our operations require significant energy, much of which is currently from fossil fuel sources and is obtained from third parties under long-term contracts. Energy represented 16% of our copper mine site operating costs in 2024, and based on currently available information and projected operations, is expected to approximate 16% in 2025. The principal sources of energy consumption at our mining operations are: diesel fuel, which powers mine trucks and other transportation equipment; purchased electricity, which powers core facilities and certain on-site metal processing operations; and coal and natural gas, which provide electricity at certain operations.
Existing and proposed governmental conventions, laws, rules, regulations, policies and standards as well as existing and proposed voluntary disclosure standards and frameworks (both in the U.S. and internationally), including those related to climate change, carbon taxes, carbon markets or greenhouse gas (GHG) emissions, may in the future add significantly to our operating costs, limit or modify our operations, impact the competitiveness of the commodities we produce, and require more resources to comply and remediate in response. For additional information on climate change conventions, laws, regulations and standards applicable or that may in the future be applicable to FCX or its subsidiaries, refer to Items 1. and 2. "Business and Properties."
In response to climate change and societal or stakeholder demands for action, we are advancing 2030 GHG emissions reduction targets and a 2050 net zero aspiration, each of which will result in additional costs to us, the totality of which we cannot currently estimate with accuracy, and we cannot guarantee that we will be able to achieve any current or future GHG emissions targets or aspirations.
While we strive to transition to more renewable power sources for our mining operations, as a commercial consumer of power, our ability to reduce our GHG emissions associated with our power consumption demand is largely dependent upon the mix of our suppliers and locally available renewable energy resources at our various sites, including our ability to successfully develop renewable energy projects and negotiate power purchase agreements. The transition to renewable and other energy sources could, among other things, increase our capital expenditures, and operating and energy costs, depending on the scope, magnitude and timing of increased regulation of fossil-fuel based energy production, including GHG emissions, as well as the availability of alternative energy sources.
In certain aspects of our operations, our ability to reduce our GHG emissions is directly dependent on the actions of third parties and technological solutions and innovation, and our ability to make significant, rapid changes in our GHG emissions in response to potential future regulations may be limited. For example, our diesel-fueled haul trucks are a significant contributor to GHG emissions at our North America and South America operations. We are evaluating options for the electrification of our haul trucks, but reduction of emissions from such haul trucks will depend upon the development and availability of commercially viable alternative-fueled mining equipment by our third-party suppliers. At our remote mining operations in Indonesia, PT-FI owns and operates a coal-fired power plant and continues to advance plans to transition its existing energy source from coal to natural gas. Once complete, PT-FI's dual-fuel power plant and the new gas-fired combined cycle facility will be fueled by natural gas, supplied by a floating liquefied natural gas storage and regassification unit. Our ability to transition to commercially viable alternative sources of energy across our operations globally will depend on, among other things, additional studies, technological considerations, or permit or other approvals. Even if we do implement new technologies, our stakeholders and other third parties may not be satisfied with our approach to reducing our GHG emissions. For further information, see the risk factor below relating to the increasing scrutiny and evolving expectations from stakeholders and other third parties, including creditors, with respect to our environmental and social practices, performance and disclosures.
Litigation & Legal Liabilities1 | 3.3%
Litigation & Legal Liabilities - Risk 1
Unanticipated legal proceedings or negative developments in pending legal proceedings or other contingencies could have a material adverse effect on our financial condition.Changed
Taxation & Government Incentives1 | 3.3%
Taxation & Government Incentives - Risk 1
Changes in tax laws and regulations could have a material adverse effect on our financial condition.Environmental / Social1 | 3.3%
Environmental / Social - Risk 1
Increasing scrutiny, action and evolving expectations from stakeholders and other third parties with respect to our ESG practices, performance, commitments and disclosures may impact our reputation, increase our costs and impact our access to capital or business strategy.Macro & Political
Total Risks: 6/30 (20%)Above Sector Average
Economy & Political Environment2 | 6.7%
Economy & Political Environment - Risk 1
Our operations are subject to evolving geopolitical, economic, regulatory and social risks.Changed
Economy & Political Environment - Risk 2
Because our operations in Indonesia are material to our business, our business may be adversely affected by political, economic, regulatory and social uncertainties in Indonesia.Changed
Maintaining a good working relationship with the Indonesia government, PT Mineral Industri Indonesia (Persero) (MIND ID), an Indonesia state-owned enterprise and shareholder in PT-FI, and the local population, is important because of the significance of our Indonesia operations to our business, and because our operations there are among Indonesia's most significant business enterprises. Partially because of the Grasberg minerals district's significance to Indonesia's economy, the environmentally sensitive area where it is located, and the number of local people employed, our Indonesia operations have been the subject of political debates and criticism in the Indonesia press and have been the target of protests and occasional violence. Improper management of our working relationship with the Indonesia government, MIND ID or the local population could lead to a disruption of operations and/or impact our reputation in Indonesia and in the region where we operate, which could adversely affect our business.
The mining industry is subject to extensive regulation within Indonesia, and there have been major developments in laws and regulations applicable to mining concession holders, some of which have conflicted with PT-FI's contractual rights and may conflict with PT-FI's contractual rights in the future.
For example, in 2009, the Indonesia government enacted a mining law that sought to modify PT-FI's former contract of work, certain provisions of which were not required under or conflicted with PT-FI's former contract of work. In December 2018, PT-FI was granted an IUPK to replace its former contract of work, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041, subject to certain requirements. Refer to Note 11 for a summary of the IUPK's key fiscal terms and requirement to develop additional smelting and refining capacity. Pursuant to regulations issued during 2024, PT-FI is eligible to apply for an extension of its mining rights beyond 2041, provided certain conditions are met. Refer to Note 10 for a summary of such conditions. Application for extension may be submitted at any time up to one year prior to the expiration of PT-FI's IUPK. PT-FI expects to apply for an extension during 2025, pending agreement with MIND ID on a purchase and sale agreement for the transfer in 2041 of an additional 10% interest in PT-FI. We cannot guarantee that PT-FI will receive an extension of mining rights beyond 2041.
Since 2019, the Indonesia government has enacted various laws and regulations related to downstream processing of various products. Refer to "Operations – Indonesia" in MD&A and Notes 10 and 11 for a discussion of Indonesia regulatory matters, including those related to export licenses, export duties, export proceeds, smelter assurance bonds and PT-FI's new smelter and PMR (collectively, PT-FI's new downstream processing facilities) in Eastern Java, Indonesia.
In October 2024, a fire occurred during commissioning of PT-FI's new smelter in Eastern Java, Indonesia, requiring a temporary suspension of smelting operations to complete repairs. Procurement of long-lead items is advanced, and repairs are scheduled to be completed by mid-2025. Current regulations in Indonesia prohibit exports of copper concentrate as of January 1, 2025. Pursuant to the terms of its IUPK regarding force majeure events, PT-FI has requested approval from the Indonesia government to permit the export of copper concentrates in 2025 until the required repairs of its new smelter following the October 2024 fire incident and full ramp-up are complete. Based on discussions with the Indonesia government, PT-FI expects to re-commence exports of copper concentrate during first-quarter 2025, and pursuant to current regulations, would be required to pay a 7.5% export duty on all copper concentrate exports during 2025. If PT-FI does not receive a timely export license or if any limitations on exports or additional export duties resulting from Indonesia regulations were to be implemented prior to PT-FI's new downstream processing facilities becoming operational, PT-FI could be required to reduce production levels or be subject to increased costs, which could adversely impact our revenues and operations.
There can be no assurance that future regulatory changes affecting the mining industry in Indonesia will not be introduced or unexpectedly repealed, or that new interpretations of existing laws and regulations will not be issued, any of which may conflict with PT-FI's contractual rights, which could adversely affect our business, financial condition and results of operations.
Beginning in 2022, the Indonesia government divided the Indonesia portion of the island of New Guinea from two provinces into a total of six provinces, which has resulted in public protest and civil unrest. For further discussion of violence, civil and religious strife, and activism affecting our operations in Indonesia, see the related risk factor below. Further, we cannot predict the impact of splitting provinces on local and regional regulations, permits and other governmental administrative functions, which could have an adverse impact on our business.
In 2024, Indonesia held national legislative elections, including the presidential election. Political considerations and administrative changes resulting from these elections or future elections could affect, among other things, national and local policies pertaining to foreign investment, permitting and export restrictions, which could adversely affect our Indonesia operations.
In accordance with a regulation issued by the Indonesia government in 2023, 30% of PT-FI's gross export proceeds are being temporarily deposited into Indonesia banks for a period of 90 days before withdrawal. The Indonesia government is considering changes to this regulation, which could increase the amount and length of the requirement, but also allow withdrawals from the balances to fund business requirements. The details of the modifications have not been finalized.
Natural and Human Disruptions3 | 10.0%
Natural and Human Disruptions - Risk 1
Violence, civil and religious strife, and activism could result in loss of life and disrupt our operations.Natural and Human Disruptions - Risk 2
Major public health crises may have an adverse impact on our business.Pandemics, epidemics, widespread illness or other major public health crises could negatively impact the global economy and adversely affect our operations and business, including our ability to conduct business, demand for the commodities we produce and our profit margins. Actions taken by governmental authorities and third parties to contain and mitigate the risk of spread of any major public health crisis may negatively impact our business, including a disruption of or change to our operating plans. For example, in March 2020, we had to temporarily transition our Cerro Verde mine to care and maintenance status and adjust operations to prioritize critical activities in response to a decree issued by the Peru government relating to COVID-19.
Our business and results of operations could be adversely affected if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions or other restrictions, or if workplace entry and travel are restricted resulting in the delay of key personnel or external consultants accessing our sites. A major health crisis at any of our operating sites, and particularly at PT-FI's remote operating site, could disrupt or change our operating plans, which may have a material adverse effect on our business and results of operations.
Natural and Human Disruptions - Risk 3
The physical impacts of climate change may adversely affect our mining operations, workforce, communities, biodiversity and ecosystems, supply chains and customers, which may result in increased costs.We recognize that as the climate changes, our operations, workforce, communities, biodiversity and ecosystems, supply chains and customers may be exposed to changes in the frequency, intensity and/or duration of intense storms, drought, flooding (including from sea level rise at our coastal operations), wildfire, and other extreme weather events and patterns (such as extreme heat). For example, we experienced severe flooding, debris flow from heavy rain and landslides in early 2023 at our remote mining operations in Indonesia, which temporarily halted mining and processing work and damaged infrastructure near the milling complex. Such potential physical impacts of climate change on our operations are highly uncertain and would vary by operation based on particular geographic circumstances. For example, at many of our mine sites, climate change is projected to impact local precipitation regimes, resulting in shorter-duration, higher-intensity storm events, and the potential for less precipitation overall. We could face increased operational costs associated with managing additional volumes of storm water during more intense future events, including supply disruption, delays, damage to or inaccessibility of our facilities and increased pricing of consumables and components we purchase. In addition, the potential for overall decreases in precipitation could affect the availability of water needed for our operations, leading to increased operating costs, or in extreme cases, disruptions to our mining operations. For additional information regarding risks relating to availability of water and operational risks inherent in mining, see related risk factors above.
Capital Markets1 | 3.3%
Capital Markets - Risk 1
Fluctuations in the market prices of the commodities we produce have caused and may continue to cause significant volatility in our financial performance and in the trading prices of our common stock. Extended material declines in the market prices of such commodities could adversely affect our financial condition and operating plans.Finance & Corporate
Total Risks: 5/30 (17%)Below Sector Average
Share Price & Shareholder Rights1 | 3.3%
Share Price & Shareholder Rights - Risk 1
Anti-takeover provisions in our charter documents and Delaware law may make an acquisition of us more difficult.Accounting & Financial Operations2 | 6.7%
Accounting & Financial Operations - Risk 1
Our holding company structure may impact our ability to service our debt, declare dividends, and repurchase shares and debt.Accounting & Financial Operations - Risk 2
Estimates of mineral reserves and mineral resources are uncertain and the volume and grade of ore actually recovered may vary from our estimates.Our estimates of mineral reserves and mineral resources have been prepared in accordance with the disclosure requirements of Subpart 1300 of SEC Regulation S-K. There are numerous uncertainties inherent in mineral estimates. Such estimates are, to a large extent, based on assumed long-term prices for the commodities we produce, primarily copper, gold and molybdenum, and interpretations of geologic data obtained from drill holes and other exploration techniques, which may not necessarily be indicative of future results. Our mineral estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our ore bodies to evaluate economic values and to manage risk. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Geological assumptions about our mineral resources that are valid at the time of estimation may change significantly when new information becomes available.
Estimates of mineral reserves, or the cost at which we anticipate the mineral reserves will be recovered, are based on assumptions, such as metal prices and other economic inputs. Changes to such assumptions may require revisions to mineral reserve estimates which could affect our asset carrying values and may also negatively impact our future financial condition and results. Until mineral reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only.
In addition, if the market prices for the commodities we produce decline from assumed levels, if production costs increase or recovery rates decrease, or if applicable laws and regulations are adversely changed, there can be no assurance that the indicated level of recovery will be realized or that mineral reserves can be mined or processed profitably. If we determine that certain of our estimated recoverable proven and probable mineral reserves have become uneconomic, this may ultimately lead to a reduction in our aggregate reported mineral reserves, which could have a material adverse effect on our business, financial condition and results of operations.
Additionally, the term "mineral resources" does not indicate recoverable proven and probable mineral reserves as defined by the SEC. Estimates of mineral resources are subject to further exploration and evaluation of development and operating costs, grades, recoveries and other material factors, and, therefore, are subject to considerable uncertainty. Mineral resources do not meet the threshold for mineral reserve modifying factors, such as engineering, legal and/or economic feasibility, that would allow for the conversion to mineral reserves. Accordingly, there can be no assurance that the estimated mineral resources not included in mineral reserves will become recoverable proven and probable mineral reserves.
Debt & Financing1 | 3.3%
Debt & Financing - Risk 1
Our debt and other financial commitments may limit our financial and operating flexibility.Corporate Activity and Growth1 | 3.3%
Corporate Activity and Growth - Risk 1
Development projects are inherently risky and may require more capital and have lower economic returns than anticipated, and the development of our underground mines are also subject to other unique risks.Tech & Innovation
Total Risks: 2/30 (7%)Below Sector Average
Cyber Security1 | 3.3%
Cyber Security - Risk 1
Our information and operational technology systems have been and in the future may be adversely affected by cybersecurity events, disruptions, damage, failure and risks associated with implementation and integration.Changed
Technology1 | 3.3%
Technology - Risk 1
Failure to successfully implement or develop new technology systems and increased exposure to risks associated with the use of these systems may adversely affect our business.Added
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.