Fitch Affirms Freeport-McMoRan at 'BBB'; Outlook Stable
Friday, June 5 2026 - 06:42 AM WIB
(Fitch Ratings - Toronto - 04 Jun 2026)--Fitch Ratings has affirmed Freeport-McMoRan Inc.'s (FCX) and Freeport Minerals Corporation's (FMC) Long-Term Issuer Default Ratings (IDRs) and each entity's senior unsecured debt ratings at 'BBB'. The Rating Outlooks are Stable.
The ratings reflect Fitch's expectation that consolidated EBITDA leverage will remain below 1.5x through 2029, supported by FCX's high-quality assets, strong liquidity and conservative capital structure. The rating also reflects Fitch's view that FCX is well positioned to restore throughput at its Grasberg Block Cave (GBC) underground mine in Central Papua, Indonesia, over the near to medium term.
Key Rating Drivers
Copper Price Sensitivity: Fitch expects copper to account for approximately 75% of FCX's consolidated revenues. FCX estimates that a $0.10 per pound (lb) change in copper prices would impact average annual EBITDA by $390 million in 2027 and 2028. FCX's average realized copper price was $4.75/lb in 2025 compared to spot prices around $6.19/lb on the London Metal Exchange (LME) and $6.45/lb on the Commodity Exchange, which is higher than Fitch's assumptions of $11,500/tonne ($5.22/lb) in 2026, $11,000/t ($4.99/lb) in 2027, and $10,000/t ($4.54/lb) thereafter. Fitch forecasts average annual EBITDA, before noncontrolling distributions, to be about $11 billion.
Extension of IUPK MoU: Fitch views favorably the proposed extension of PT Freeport Indonesia's (PT-FI; BBB/Stable) mining license (IUPK) to life of resource. An extension issued under the terms outlined in the memorandum of understanding (MoU) signed on Feb. 18, 2026, would resolve renewal risk at Grasberg and provide long-term visibility around investment decisions under a stable governance framework.
The extension would require FCX to divest a 12% stake in PT-FI to the Indonesian government at no cost, other than reimbursement of FCX's pro rata costs for investments that benefit the post-2041 period. Fitch expects FCX's attributable production to remain broadly intact, with incremental output from optimized development spending largely offsetting the dilutive effect of the 2041 ownership transfer. Under the MoU, FCX would retain around a 37% stake and maintain control over the operations over the life of the project post-2041.
Grasberg Production Disruption: Fitch does not anticipate considerable delays to production recovery at the GBC mine. Operations at the GBC mine were suspended in September 2025 following a sudden rush of wet material into the mine. While FCX has restarted a portion of operations, the ramp-up has been slower than expected but not material to the rating at this stage. Fitch believes that the associated capex will remain modest and not significantly impact the company's cash flow generation.
Competitive Cost Profile: FCX's ratings reflect its large-scale, long-lived mining assets with competitive costs across North and South America and a first-quartile cost position in Indonesia. Near-term unit costs face upward pressure from ongoing production disruptions at its Indonesian operations, placing FCX in the third quartile of Wood Mackenzie's 2026 Copper Total Cost + Sustaining Capex curve. Fitch views this elevation as temporary with unit costs expected to revert toward FCX's historical cost position as Indonesian throughput recovers and operational efficiency improves.
Elevated Capex: Fitch believes FCX retains meaningful flexibility over the timing and scale of its discretionary capital spending, with $1.6 billion and $1.7 billion planned for 2026 and 2027, respectively. The largest component is the ongoing development of the Kucing Liar deposit at Grasberg, a multi-year project that commenced in 2022 and is expected to require approximately $0.5 billion annually with anticipated ramp-up in 2030 timeframe. Discretionary capex also includes tailings infrastructure development and early works related to a potential expansion of concentrator capacity at the Bagdad mine in Arizona.
Credit Conscious Financial Policies: Fitch believes FCX's financial policy supports its credit quality by aligning cash flow allocation with its strategic objectives. The policy was implemented after achieving a net debt target between $3 billion and $4 billion, excluding debt associated with Indonesian smelter projects. FCX's policy allocates 50% of available cash flows, after planned capex and distributions to noncontrolling interests but before discretionary capex, to shareholder returns and the balance to investments in growth projects.
Large Noncontrolling PT-FI Interest: Fitch expects noncontrolling interest distributions from PT-FI to average about $1.2 billion per year through 2028 based on our price assumptions. Fitch calculates EBITDA leverage and EBITDA net leverage metrics after these distributions. While FCX consolidates PT-FI debt, the PT-FI notes and revolver are non-recourse to FCX.
Peer Analysis
Southern Copper Corporation (SCC; BBB+/Stable) is FCX's closest operational peer. FCX is larger in production and earnings, but it is less profitable since SCC has very low average costs and FCX has more lower-margin smelter operations. Both companies have similar leverage metrics.
Antofagasta PLC (Antofagasta; BBB+/Stable) is smaller and less diversified than FCX but benefits from a lower jurisdiction risk with its operations concentrated in Chile compared to FCX's exposure in Indonesia, which carries moderate jurisdiction risk. FCX is less profitable than Antofagasta. Antofagasta's leverage is expected to be temporarily elevated as it may borrow externally to fund its expansion plans.
Fitch’s Key Rating-Case Assumptions
-- Sales volumes at about 3.1 billion pounds of copper and 0.7 million ounces of gold in 2026, increasing to above 4.0 billion pounds and 1.2 million ounces in 2028;
-- Copper unit site production and delivery costs of $3.18/lb in 2026, declining modestly through 2028;
-- Fitch's commodity price assumptions: LME spot copper at $11,500/tonne in 2026, $11,000/tonne in 2027 and $10,000/tonne thereafter, and gold at $4,500/oz in 2026, $3,800/oz in 2027, $3,300/oz in 2028 and $2,700/oz in 2029;
-- Capex consistent with public guidance;
-- No additional debt over the forecast;
-- Adherence to stated financial policy.
Corporate Rating Tool Inputs and Scores
Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP):
- Business and financial profile factors (assessment, relative importance): management (bbb, Lower), sector characteristics (bbb+, Lower), market and competitive positioning (bbb, Higher), diversification and asset quality (bbb, Moderate), company operational characteristics (bb+, Higher), profitability (bbb, Moderate), financial structure (a+, Moderate), and financial flexibility (a, Moderate).
- The quantitative financial subfactors are based on custom CRT financial period parameters: 10% weight for the historical year 2025, 20% for the forecast year 2026, 20% for the forecast year 2027, 20% for the forecast year 2028 and 30% for the forecast year 2029.
- The Governance assessment of 'good' has no impact.
- The Operating Environment assessment of 'a-' has no impact.
- The SCP is 'bbb'.
To derive the Long-Term IDR:
- Fitch made no adjustments to the SCP, resulting in an IDR of 'BBB'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
-- EBITDA leverage sustained above 2.0x;
-- Expectations of negative FCF on average.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
-- EBITDA leverage sustained at or below 1.3x.
Liquidity and Debt Structure
As of March 31, 2026, FCX had $2.8 billion in readily available cash. FCX has only $5 million letter of credit outstanding under its new $3.0 billion RCF which replaced the previous $3.0 billion RCF on May 14, 2026, extending the maturity to May 2031 from October 2027. The RCF includes a maximum net debt-to-EBITDA covenant of 3.75x.
As of March 31, 2026, PT-FI had $1.5 billion available under its $1.75 billion RCF maturing in November 2028. Sociedad Minera Cerro Verde S.A.A.'s $350 million unsecured RCF maturing in May 2032 was fully available.
Issuer Profile
FCX is a top-three global copper producer with world-class mines in Indonesia, Peru, Chile and the U.S. and major producer of gold and molybdenum. YE2025 copper reserves were 40% in South America, 38% in North America, and 22% in Indonesia.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
Climate Vulnerability Signals
The results of our Climate.VS screener did not indicate an elevated risk for FCX.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores. (ends)