Freeport-McMoRan Inc. (FCX) | The Buildout — AI Infrastructure
The Verdict
Freeport-McMoRan is a copper miner. It pulls copper, gold, and molybdenum from large open-pit and underground mines and sells the copper as concentrate, cathode, and rod. Those products go into power cable, busbars, transformers, switchgear, and data-center power distribution, so the AI buildout touches FCX through electricity demand rather than compute. The company does not sell chips, servers, cooling systems, or software, and it reports no AI-specific revenue. Its role in the buildout is as a supplier of the metal that carries and steps down power.
| Market Cap | — |
| Revenue (TTM) | $25.9B |
| Revenue Growth | +0.7% |
| EBITDA Margin (TTM) | 35.0% |
| Net Debt | $6.3B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Grasberg Block Cave production doubled from an April average of 34k t/d to 69k t/d in June, and management guides H2 2026 copper sales more than 20% above H1.
- The U.S. franchise is the highest earnings contributor year to date: U.S. mining operating income was 2.4x higher in H1 2026 than H1 2025, and Morenci's Q2 mining rate ran 30% above its five-year average.
- The leach initiative is a low-capital growth path: current run rate is around 200 Mlb, with a target of 300 by end-2026 and a long-term path to 800 Mlb.
- Policy upside: the 45X production tax credit could be worth about $500 million a year if copper is included in Treasury regulations, and FCX holds just under $6 billion of U.S. net operating losses.
- Bagdad would roughly double production and, management says, become the second-largest U.S. copper mine; preliminary capital is about $4.5 billion and the project is supported at $4/lb copper.
What We’re Watching
- Grasberg: H2 2026 guidance is 60k–65k t/d even though June exited at 69k t/d. Management cites maintenance and upgrade downtime in H2, and the ramp depends on installing regulators into the ore-handling chutes.
- Costs: the March diesel surge equates to about $500 million of annualized cost, and the U.S. $2.50/lb 2027 cost target is not achievable under current markets.
- Bagdad: the final investment decision slipped from first half to H2 2026, preliminary capital is about 30% above the 2023 estimate, and concentrator capex is not yet in the forecast.
- Open items: the DOJ thread of the PT Smelting FCPA investigation remains open, and the May 20, 2026 8-K on a material agreement and new debt is unexplained in the source material.
The thesis is intact but no longer clean. Near-term earnings were hit in Q1 2026 by the Grasberg wet-ore bottleneck and a diesel cost surge, then partly recovered in Q2 2026 as sales and costs came in better than forecast. Management has revised guidance repeatedly over two quarters: Grasberg volumes down, costs up then partly down, 2027 capex raised to $4.8 billion, Bagdad capex up about 30%, and the U.S. cost target deferred. Long-run value drivers, including leach, Bagdad, El Abra, and the Indonesian license extension, keep advancing. The open question is whether the Grasberg ramp holds its guided pace and whether cost inflation is transient or structural.
Earnings Beat
In Q2 FY2026, revenue was $7,029 million and gross margin was 31.1%. Management described the quarter as "Progress" and said copper sales and unit cash costs came in better than forecast. Grasberg Block Cave production doubled from an April average of 34k t/d to 69k t/d in June. Consolidated net income rose 65% in H1 2026 versus H1 2025, and FCX returned $600 million to shareholders in H1, including about $200 million of buybacks.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $7.0B | $6.2B | $7.6B | −7.3% |
| Gross margin | 31.1% | 26.5% | 34.1% | -300bps |
| EBITDA | $2.5B | $2.7B | $3.1B | −18.5% |
| EPS | $0.68 | $0.61 | $0.53 | +27.5% |
Electricity means copper.— Richard Adkerson, 2026-07-23
Management tone: Q1 2026 was framed around an unforeseen operational problem: wet ore at Grasberg, a cut to H2 rates, raised cost guidance, and a diesel headwind. On the Q2 2026 call, management described the quarter as "Progress" and led with better-than-forecast sales and costs. The tone was confident but not promotional. Management held H2 Grasberg guidance at 60k–65k t/d despite the 69k t/d June exit, and it said plainly that the U.S. $2.50/lb 2027 cost target is not achievable under current markets.
Management Guidance
For 2026, management guides average unit net cash cost of approximately $1.90/lb, down from the April estimate of $1.95/lb, with capital expenditures consistent with the prior forecast. It guides H2 2026 copper sales more than 20% higher than H1 and gold sales more than 65% higher. For 2027, it guides copper sales up more than 20% versus 2026 and gold volumes up more than 50%, with capex of $4.8 billion, about $300 million above the April estimate. Grasberg Block Cave is guided at 60k–65k t/d in H2 2026, and the district targets about 65% of full capacity in 2026 and approaching full capacity by end-2027.
Trajectory
Revenue turned back up after a weak stretch. Q4 FY2025 revenue fell 19.2% sequentially to $5,633 million, then Q1 FY2026 rose 10.7% to $6,234 million and Q2 FY2026 rose 12.8% to $7,029 million. The recovery is volume-driven: Grasberg Block Cave production doubled into June, and the U.S. business lifted earnings. Gross margin rose to 31.1% in Q2 FY2026 from 26.5% in the prior quarter. Trailing-twelve-month revenue is $25,868 million, up 0.7% year over year.
The Model
The model projects FY+1 revenue of $29,943 million and EBITDA of $11,094 million, a 37.05% margin. For FY+2 it projects revenue of $38,186.5 million and EBITDA of $17,738 million, a 46.45% margin. The near-term anchor is the guided H2 2026 volume recovery, with copper sales more than 20% above H1 and gold sales more than 65% above H1. FY+2 leans on management's guidance for 2027 copper sales up more than 20% and gold volumes up more than 50%, plus the leach initiative's path toward 800 Mlb and additional 2028 volumes.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $25.7B | $29.9B | $38.2B |
| YoY Growth | — | +16.3% | +27.5% |
| EBITDA | $8.5B | $11.1B | $17.7B |
| EBITDA Margin | 33.2% | 37.0% | 46.5% |
Projections are the median of 4 independent model runs. The model’s revenue sits 12.2% above analyst consensus.
For 2026, management guides average unit net cash cost of approximately $1.90/lb, down from the April estimate of $1.95/lb, with capital expenditures consistent with the prior forecast. It guides H2 2026 copper sales more than 20% higher than H1 and gold sales more than 65% higher. For 2027, it guides copper sales up more than 20% versus 2026 and gold volumes up more than 50%, with capex of $4.8 billion, about $300 million above the April estimate. Grasberg Block Cave is guided at 60k–65k t/d in H2 2026, and the district targets about 65% of full capacity in 2026 and approaching full capacity by end-2027.
What Could Go Right — and Wrong
- Grasberg H2 2026 production exceeds the 60k–65k t/d guide and CG44 completes by end-2026, adding a 25k–30k t/d step change.
- The Indonesian license extension is granted in 2026 on MOU terms, unlocking reserves and exploration below Deep MLZ beyond 2041.
- Leach reaches a 300 Mlb run rate by end-2026 and 400 Mlb in 2027, validating a path to 800 Mlb and lowering U.S. unit costs.
- 45X includes copper in Treasury regulations, adding about $500 million a year of potential tax-credit value to the U.S. business.
- Bagdad is approved on supported economics, with project capex and returns disclosed.
- Grasberg wet-ore problems persist or recur, H2 2026 misses the 60k–65k t/d guide, and the ramp slips beyond 2027.
- Diesel, sulfur, acid, or construction labor costs stay elevated, keeping consolidated unit costs above guidance.
- Bagdad capex rises further or the final investment decision slips past H2 2026, delaying a project that would roughly double production.
- Copper prices fall; each $0.10/lb change is about $390 million of annual EBITDA.
- Competitor supply grows, with Vale lowering its copper cost guidance and holding a medium-term growth pipeline.
Looking Ahead
Over the next year the story turns on three things: the Grasberg ramp, the Bagdad investment decision, and the Indonesian license extension. Management guides H2 2026 copper sales more than 20% above H1 and gold sales more than 65% above H1, and it is working to complete the license extension this year. Bagdad's final investment decision is targeted for H2 2026, and the new Indonesian smelter starts taking concentrate in Q3 2026 ahead of refined sales shifting to Q4.
- Q3 2026Indonesian smelter ramp — Concentrate shipments start; refined sales timing shifts to Q4.
- H2 2026Grasberg Block Cave ramp — Guided at 60k–65k t/d; June exited at 69k t/d.
- H2 2026Bagdad investment decision — Preliminary capital ~$4.5B; final project capex still to be set.
- 2026Indonesia license extension — Formal application filed June; management targeting this year.
- End 2026CG44 completion — 9 shoots, about 25k–30k t/d; management calls it a step change.
- End 2026Leach 300 Mlb run rate — Current run rate around 200; long-term path to 800 Mlb.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $25.1B | $25.7B | $25.9B | +2.4% |
| Gross Margin | 28.5% | 26.2% | 26.8% | 235bps |
| EBITDA | $8.8B | $8.5B | $9.1B | -2.9% |
| EBITDA Margin | 35.0% | 33.2% | 35.0% | 181bps |
| Net Income | $1.9B | $2.2B | $2.9B | +17.4% |
| Free Cash Flow | $2.4B | $5.6B | $5.9B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)26.8%
- EBITDA Margin (TTM)35.0%
- Net Margin (TTM)11.4%
- ROIC20.7%
- FCF Conversion65.4%
- SBC / Revenue0.6%
The Company
Freeport-McMoRan describes itself as "a leading international metals company with the objective of being foremost in copper" and one of the world's largest publicly traded copper producers. In 2025, copper was 75% of consolidated revenues, gold 15%, and molybdenum 8%. The copper was sold as concentrate (43% of 2025 mined copper sales), cathode (33%), and rod (24%), feeding power cable, busbars, transformers, switchgear, data-center power distribution, and grid infrastructure. Gold and molybdenum are byproducts that go straight to the bottom line: each $1/lb move in molybdenum is about $85 million of annual EBITDA, and each $100/oz move in gold is about $105 million.
FCX operates large, long-lived assets and is integrated from mine through smelting and refining. In the U.S., it runs seven copper operations, Morenci (72%-owned), Bagdad, Safford (including Lone Star), Sierrita, and Miami in Arizona, plus Chino and Tyrone in New Mexico, and two Colorado molybdenum mines, Henderson and Climax. In South America it owns Cerro Verde in Peru and El Abra in Chile. In Indonesia, PTFI operates the Grasberg district, which also produces gold and silver. Downstream, PTFI owns 66% of the PT Smelting smelter and refinery with Mitsubishi Materials, FCX operates a smelter in Arizona, and it owns Atlantic Copper in Spain.
Business Segments
Competitive Landscape
Copper is a global commodity, so FCX competes on cost and asset quality rather than product differentiation. Management uses "America's Copper Champion" as a formalized identity, and the 10-K describes the company as one of the world's largest publicly traded copper producers. The source notes competitive supply growth from Vale, BHP, the Teck-Anglo merger, and Hudbay's Arizona copper hub, and the supply-chain Wiring file tags Rio Tinto as an inferred competitor; those links are inferred rather than documented.
- Vale (VALE)Noted in the source as having lowered copper cost guidance and as having a medium-term growth pipeline.
- BHPNamed as an inferred competitor; cited in the source as targeting 3–4% copper CAGR through 2035.
- Rio Tinto (RIO)Tagged in the Wiring file as "Copper supply for AI data centers" (inferred).
- Teck Resources (TECK)Named as an inferred competitor; the source notes the Teck-Anglo merger advancing.
Supply Chain
FCX sits at the base of the electrical supply chain, selling a globally traded commodity. Its downstream buyers are mostly inferred from the Wiring file, and no neighbor transcript in the source set mentions FCX by name.
More on FCX: Earnings recap