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Contingencies and Commitments (Unaudited) | 3 Months Ended
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Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | CONTINGENCIES AND COMMITMENTS Litigation. During first-quarter 2017, there were no significant updates to previously reported legal proceedings included in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016. Tax and Other Matters Cerro Verde Royalty Dispute As reported in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016, SUNAT, the Peru national tax authority, has assessed mining royalties on ore processed by the Cerro Verde concentrator, which commenced operations in late 2006, for the period December 2006 to December 2007, the years 2008, 2009 and 2010, and the period January 2011 to September 2011. SUNAT may make additional assessments for mining royalties and associated penalties and interest for the period from October 2011 through December 2013, which Cerro Verde will contest. As of March 31, 2017, FCX estimates the total exposure associated with these mining royalties for the period from December 2006 through December 2013 approximates $573 million (based on the exchange rate as of March 31, 2017), including estimated accumulated interest and penalties. No charges have been recorded for these assessments as of March 31, 2017, because Cerro Verde believes its 1998 stability agreement exempts it from these royalties and believes any payments will be recoverable. Other Peru Tax Matters There were no significant changes to other Peru tax matters during first-quarter 2017 (refer to Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016). Indonesia Tax Matters The following information includes a discussion of updates to previously reported Indonesia tax matters included in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2016. PT-FI received assessments from the local regional tax authority in Papua, Indonesia, for additional taxes and penalties related to surface water taxes for the period from January 2011 through March 2017. PT-FI has filed or will file objections to these assessments. The aggregate amount of assessments for additional taxes and penalties for the period from January 2011 through July 2015 was $380 million (based on the exchange rate as of March 31, 2017, and including $229 million in penalties). The aggregate amount of assessments received from August 2015 through March 2017 was an additional $109 million, including penalties (based on the exchange rate as of March 31, 2017). No charges have been recorded for these assessments as of March 31, 2017, because PT-FI believes its Contract of Work (COW) exempts it from these payments and that it has the right to contest these assessments in the Indonesia Tax Court and ultimately the Indonesia Supreme Court. As of May 5, 2017, PT-FI has not paid and does not intend to pay these assessments unless there is a mechanism established to secure a refund for any such payments upon the final court decision. Indonesia Mining Contract. The following information includes updates to the discussion of PT-FI’s COW included in Note 13 of FCX’s annual report on Form 10-K for the year ended December 31, 2016. In January and February 2017, the Indonesian government issued new regulations to address exports of unrefined metals, including copper concentrate and anode slimes, and other matters related to the mining sector. The new regulations permit the continuation of copper concentrate exports for a five-year period through January 2022, subject to various conditions, including conversion from a contract of work to a special operating license (known as an IUPK, which does not provide the same level of protections of a contract of work), commitment to completion of smelter construction in five years and payment of export duties to be determined by the Ministry of Finance. In addition, the new regulations enable application for extension of operating rights five years before expiration of the IUPK and require foreign IUPK holders to divest 51 percent to Indonesian interests no later than the tenth year of production. Export licenses would be valid for one-year periods, subject to review every six months, depending on smelter construction progress. Following the issuance of the January and February 2017 regulations and discussions with the government, PT-FI advised the Indonesian government that it was prepared to convert its COW to an IUPK, subject to obtaining an investment stability agreement providing equivalent rights with the same level of legal and fiscal certainty enumerated under its COW, and provided that the COW would remain in effect until it is replaced by a mutually satisfactory alternative. PT-FI also committed to commence construction of a new smelter during a five-year timeframe after approval of the extension of its long-term operating rights. In mid-February 2017, pursuant to the COW’s dispute resolution process, PT-FI provided formal notice to the Indonesian government of an impending dispute listing the government's breaches and violations of the COW. In late March 2017, the Indonesian government amended its regulations to enable PT-FI to retain its COW until replaced with an IUPK accompanied by an investment stability agreement, and to grant PT-FI a temporary IUPK through October 10, 2017, to enable concentrate exports during this period. In April 2017, PT-FI entered into a Memorandum of Understanding with the Indonesian government confirming that the COW would continue to be valid and honored until replaced by a mutually agreed IUPK and investment stability agreement. PT-FI will continue to pay a 5 percent export duty during this period. On April 21, 2017, the Indonesian government issued a permit to PT-FI to enable exports to resume for a six-month period and PT-FI began loading export shipments, PT-FI plans to ramp up its production to full rates during second-quarter 2017. As a result of the first-quarter 2017 regulatory restrictions and uncertainties regarding long-term investment stability, PT-FI has taken actions to adjust its cost structure, reduce its workforce and slow investments in its underground development projects and new smelter. PT-FI and the Indonesian government have commenced negotiations on the conversion of PT-FI's COW to an IUPK accompanied by an investment stability agreement with the objective of providing a mutually acceptable long-term investment framework. In addition to negotiating a stability agreement, the parties are also discussing requirements for the construction of a new smelter and the government’s request for divestment.

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