(April 22, 2022) The company's 2021 Annual Report titled “Electrifying the Future” is now available online. The report highlights the company’s role in supplying responsibly produced copper to support the global economy and transition to clean energy.
In the following letter to shareholders, Richard C. Adkerson, Chairman and Chief Executive Officer, introduces the report and its highlights.
Dear Fellow Shareholders
I am incredibly proud of our global team’s performance during 2021. Our strong results reflect the success by our team in executing our long-term plan in an exceptional fashion. The theme of this year’s annual report, “Electrifying the Future,” highlights our key role in supplying responsibly produced copper to support the global economy and the transition to clean energy.
During 2021, our global team delivered significant growth in copper and gold volumes, effectively managed costs and capital in a challenging environment and advanced our sustainability objectives. Notably, we reached our targets of achieving our annual run rate for copper and gold production in the Grasberg minerals district in Papua, Indonesia. This major milestone, more than a decade in the making, is of great significance to our company, the global mining industry and the country of Indonesia. We are successfully managing the largest and most modern underground mining complex in the history of the global mining industry.
Our Americas team did great work restoring production curtailed in 2020 as a result of the pandemic, optimizing our new Lone Star mine in Arizona, advancing technologies and is now actively engaged in enhancing our opportunities for future organic growth.
We generated strong financial results in 2021, achieved our net debt targets, restored our investment grade credit ratings with two leading rating agencies and commenced a new performance-based payout framework to provide increasing cash returns to shareholders. Freeport was the top performing stock in our peer group for the second consecutive year and the seventh best performing stock in the S&P 500 for the two-year period ended 2021.
Looking ahead, the fundamental outlook for the copper market is increasingly positive. Copper is essential to decarbonization and is a strategic metal for the future. With the transition to clean energy accelerating on a global scale, we believe we are entering a multi-year period of growth and a new era for broad-based copper demand.
As a responsible producer of scale with a strategy focused on copper, the prospects are bright for our assets to become more highly valued in the future. We have a long-lived portfolio of mineral reserves — spanning over 25 years — and substantial options to expand our reserve base in the future from our large inventory of mineral resources beyond reported reserves.
We have multiple options for brownfield, low-risk growth across our portfolio. We are highly optimistic about our opportunities in the U.S. to invest in mine expansions and unlock value through exciting new opportunities from leach recovery technologies. We also have an attractive expansion opportunity at our El Abra mine in Chile. Following the success of our block cave development in Indonesia, we commenced development of the Kucing Liar underground deposit in the Grasberg minerals district, which will provide long-term, low-cost copper and gold volumes. These opportunities provide significant value enhancing options for the future, particularly in the context of the scarcity of future development opportunities industry wide.
Our safety performance in 2021, measured by incident rates of 0.70, was similar to the average of the last three years. Regrettably, we had two fatalities in our operations during the year. Fatality prevention is our top priority, and we are implementing programs to increase risk awareness and further embed fatal risk management in all of our processes and daily tasks.
We continue to expand resources dedicated to our sustainability objectives. During 2021, we advanced our climate strategy and our work with the International Council of Mining and Metals (ICMM). We lead the industry in achieving third-party validation of our operations using the robust criteria and process established by the Copper Mark. I am also proud of our strong partnerships with communities where we operate. I encourage you to review our annual sustainability and climate reports for details on our program and initiatives in all of these important areas.
We welcomed six new high-quality, independent directors in 2021, enhancing the skills, experience and diversity of our Board. This was an important initiative, and I could not be more pleased with the depth and breadth of our Board. I am personally grateful to each of our directors for their service and contribution to the future success of Freeport.
I want to close by recognizing and thanking our global team for their performance and commitment to our future success. We are optimistic about our business and our strategy and have the capabilities and drive to continue to meet and exceed our own expectations and those of our stakeholders.
As Foremost in Copper, Freeport is “Electrifying the Future,” and we will continue to do so responsibly, reliably and relentlessly.