The company's 2024 Annual Report titled “Powering Progress” is now available online. In the following letter to shareholders, Richard Adkerson, Chairman of the Board, and Kathleen Quirk, President and Chief Executive Officer, introduce the report and its highlights.
Dear Fellow Shareholders
The theme of this year’s annual report, “Powering Progress,” highlights copper’s increasingly important role in the global economy. As a leading global copper company, Freeport is strongly positioned to provide copper to a growing market.
In 2024, Freeport achieved strong operational and financial results. We met our annual copper sales guidance, and unit net cash costs slightly exceeded our guidance at the start of the year. Financially, our revenues, adjusted EBITDA and operating cash flows exceeded 2023 levels, benefiting from strong copper and gold prices. Importantly, we advanced several value-driven initiatives to drive improved operational performance and future growth.
At Grasberg in Indonesia, our team achieved multiple new operating records and completed construction of the new smelter and precious metals refinery. The Cerro Verde team overcame operating challenges experienced early in the year, and our team in the United States (U.S.) demonstrated progress toward achieving greater efficiencies and cost performance objectives. Our innovative leach initiative provided approximately 50% more incremental copper than in 2023, and we have commenced several new projects aimed to increase scale further under this initiative in the near-term.
A fire in a gas cleaning facility at our new smelter in Gresik, Indonesia, was a setback that tested our team’s resilience. Our team responded quickly to develop plans for the required repairs. The recovery is progressing well, and we are confident in achieving a safe and efficient ramp-up during 2025.
Global demand for copper grew again in 2024. Because of its superior conductivity, copper is the metal of choice when it comes to electrification. New, massive investments in the power grid, renewable energy generation, technology/AI infrastructure and transportation are driving increased demand for copper, with forecasts predicting above-trend growth for the foreseeable future. In the near-term, macroeconomic factors including fluctuations in the U.S. dollar, tariff impacts and trade uncertainties, and slower-than-expected growth in China have resulted in price volatility.
To benefit from these long-term secular trends, we are advancing initiatives designed to build value from organic growth opportunities. Freeport benefits from a large reserve and resource position with near-term, medium-term and longer-term embedded growth options. Efforts are being advanced to leverage innovation to improve efficiencies, reduce costs and capital intensity, and shorten lead times for our projects. Our high-potential innovative leach initiative is a great example of these efforts.
We are also enhancing optionality in our brownfield growth pipeline to position the business for long-term growth. We commenced early works at Bagdad in Arizona to derisk the project, we are conducting a pre-feasibility study at Lone Star in Arizona, and we are preparing an environmental impact statement at El Abra in Chile. Collectively, these projects and our leach innovation initiatives in the Americas provide us with a pipeline for future growth totaling 1.8 billion pounds of copper per annum. In Indonesia, we continue to invest in our underground reserves to sustain Grasberg’s operations with ongoing development at Kucing Liar and remain optimistic about the opportunity to extend our mining rights in this important district to unlock additional growth options.
We ended 2024 with significant liquidity and a net debt level in the $1 billion range, excluding debt associated with PTFI’s new downstream processing facilities. Following strong execution of our plans over a multi-year period and a strong financial profile, we have now achieved investment grade ratings from all three rating agencies.
During 2024, we were disciplined in executing our performance-based shareholder payout framework, while maintaining both our base and variable dividends. Since reaching our net debt objective in mid-2021, we have distributed nearly $5 billion through dividends and share repurchases, which represents approximately 50% of our excess cash flows under our established financial policy. We also took advantage of an opportunity to repurchase shares of Cerro Verde, increasing our ownership in this high-quality asset to 55%.
Throughout 2024, we made significant strides in improving several safety metrics, achieving our lowest incident rate in over a decade. Despite these improvements, we mourn the loss of two logistics contractors who were fatally injured. We have an unwavering commitment to strive for continuous improvement when it comes to the safety of our workforce.
Sustainability remains at the core of what we do. During 2024, we advanced our climate initiatives to support our commitments in this important area and maintained the Copper Mark and Molybdenum Mark, as applicable, at all of our operations. Additionally, we are involved in industry-wide efforts aimed at enhancing the industry’s image.
We entered 2025 with a clear focus on continued strong execution of our operating plans, enhancing productivity, managing costs and capital, and advancing opportunities for long-term profitable growth. We are confident in our strategic direction focused on copper and remain committed to delivering value to our shareholders.
To our global workforce, thank you for your contributions day in and day out. And to our Board of Directors, thank you for your advice and counsel. Together, we are “Powering Progress” by supplying copper to a growing market.
We appreciate your investment in our company.