Richard Adkerson: Well, we’re working on it right now, and we’re structuring, so that we have the alternative of going forward with our current operations and maximizing those or undertaking a large-scale investment and new concentrator there. So, we’re approaching it to give ourselves the alternatives of going in either of those directions. But we wanted to get started with that because it was going to be required one way or the other.
Kathleen Quirk: Yes. And so, we’ve got to go through a permitting process on that as well. So, it’s unlikely we’ll have any material spending on it until a few years out.
Richard Adkerson: It takes time to do it. But as I said, we — in the past, we’ve been delaying that so — we made the decision on the concentrator expansion. And in recent months, we’ve decided we need to go ahead with the permitting for the water, desalt plant, so that — because we’re going to need it one way or the other.
Operator: Your next question will come from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.
John Tumazos: Good morning. Congratulations on all the progress in the tough business. Thinking of the slide 11 with the five projects, I realize it takes a lot of engineering resources for each of these projects. Is five sort of the maximum number or do you have time for a little more? You’re engineering El Abra but the constitution and taxes and all that stuff is up in the air. So, that’s a big investment in time. You don’t have the Sierrita mill, Chino mill or an additional Morenci mill projects there. I know you can’t do anything — everything. But a $30-plus molys Sierrita new mill must be very attractive, you’re budgeting 20 and maybe lower for the long term at 15 for your reserves. Is there too much Indonesia in your CapEx and not enough Americas since you’re the biggest U.S. copper producer? And with politics, the U.S. looks better every day. I know that’s a lot of thoughts, but how you fix the projects?
Richard Adkerson: Well, no. And you know it’s a good new story to have this large pipeline of future projects, and I personally believe the world is going to need that copper. Going to your last question first, there is no relationship between Kucing Liar and projects in the U.S. It doesn’t bump out projects. It doesn’t prioritize anything. It’s something that fits right in. It will be financed by PT-FI out of cash flows from PT-FI. And it will support our volumes there through our current operating rights to 2041. We’re talking with the government about extending those. There’s opportunities for Kucing Liar beyond that. And we believe, although we haven’t been engaged in drilling exercises in the Grasberg Block Cave and Deep MLZ and who knows what else is down there because we really haven’t drilled to explore future opportunities.
Now, John, you know the thing about Grasberg, ever since we discovered it, it keeps getting bigger and bigger and bigger. But that’s on its own, there is no effect on what we’re doing at Kucing Liar with what we do in the United States. So, we have the financial resources to do — in the Americas, the United States and South America. So, the ones we’ve listed are the ones we believe are the largest, most significant executable projects initially. The Bagdad expansion is a straightforward doubling of mill capacity, and we’ve dealt with water issues and so forth and…
Kathleen Quirk: That will add moly as well, John — Bagdad.
John Tumazos: It has moly, Bagdad. And the biggest problem, quite frankly, at Bagdad is getting workers. It’s just a challenge getting mine workers in today’s world who live in these remote communities where our mines are. But that’s a very executable project, it’s not that complicated. But — and as we deal with the workers’ situation in housing, as markets clear up, that’s one that would be ready to go. As I said, El Abra is depending on the direction of the government there. Lone Star, which really looks like it can be another base level high-profile operation for Freeport in the future, we’re going to maximize it through the oxide, ore and continue to understand how we attack the big sulfide resource that we’ve identified in.
Then beyond that, you mentioned Morenci, Sierrita, and there’s other older mines that we have. Chino has a growth opportunity. All those are in stages of evaluation and understanding what we have. Obviously, when you sit down on top and look at this organization, you want to be focused. You don’t want to just have a scattergun approach. But all of those things provide us growth opportunities from inside our company, which makes it very unlikely that we’ll be acquiring smaller operations to pursue externally. You can just see what’s going in the world when you have to pay a big price, you get a resource and then you put the capital on top of it. And that ends up with a very large investment to try to recover. It’s much better because we get no value today from these future resources that we have within our own portfolio.
And with success in developing those, all of the incremental value goes to our shareholders and not somebody else’s shareholders.
Kathleen Quirk: John, on your question about — sorry, Richard.
Richard Adkerson: Go ahead. No, go ahead.
Kathleen Quirk: I was just going to say your question about the molybdenum situation. We do have excess milling capacity at our Climax mine. And we’ve been operating at below capacity in recent years because of market conditions, but we have started to do a stripping campaign there that will allow us to expand production from Climax. Over time, it doesn’t require a new concentrator or anything like that. So that’s our first one — and the incremental costs are attractive. So, we are doing that. And as Richard said, we’ve got — we got a lot of projects in the background. But these are the ones that are strategic and that we’re focused on. The leach technology is a near-term project. And Bagdad long term — I mean, medium term and the Lone Star major expansion longer term.
El Abra, we believe, will get done. It’s a project that it’s attractive and it will get done. It’s a question of when. So, we don’t have a good view yet on when that will go forward. But this investment in some infrastructure and water is going to give us some optionality to support an expansion. So, we’ve got all our people focused on these things and we have an enormous resource base like we were saying in the U.S. where we already have established operations and community support. So, we’re in a really good position as we look forward as to what this world is going to need in terms of new copper supply. None of this can go quickly as you well know.
