Oct 27, 2026 earnings call — Grasberg ramp-up and leach technology focus
Grasberg ramp-up reached 67% and company trimmed 2026 copper sales by approximately 2%.
Revenue $7.5B (est $7.4B) · EPS $0.88 (est $0.81)
Key quotes
"We continue to target overall rates reaching 80% by mid-2027 and approach full capacity by the end of next year."
"The next generation additive is now being manufactured on a fast-track schedule and will start receiving commercial quantities for field deployment as we go into 2027."
"our estimate now on a go-forward basis is still at that $4.5 billion level."
Analyst Q&A 12
Grasberg production timing
Q (Richard Garchitorena · Barclays): How will copper and gold production ramp through 2027 and into 2028? How should we think about first half versus second half of 2027?
A: Management said the first half of 2027 should start to ramp and the second half will be higher. PB1 South is small for 2027 but will add through the year; first quarter will likely be the lowest.
"I think as you look at where we are for 2027, you should see first half starting to ramp up." — Maree Robertson (CFO)
Grasberg idle cost accounting
Q (Chris LaFemina · Jefferies): How much of the idle and recovery costs at Grasberg will go away once full ramp is reached versus remain as fixed costs?
A: They said the idle costs are an accounting classification and largely fixed costs that won't disappear. Beginning in 2027 those costs will be included in unit costs rather than shown separately, and rising volumes will lower unit costs.
"The accounting rules require us to charge costs that are not attributable to production directly to production costs rather than going through cost of sales." — Maree Robertson (CFO)
Leach additives and ramp speed
Q (Katja Jancic · BMO): Why is leach ramp-up slower than expected and what is driving performance of the new additives?
A: They said the current additive is performing at or a bit better than lab expectations, but the next-generation additive has not yet been field-tested. That next additive, combined with efforts to raise stockpile temperature, could enable much larger scale if field trials succeed.
"We have always been, as I mentioned over the last couple of years, we've always been testing multiple additives." — Kathleen Quirk (CEO)
Higher 2027 CapEx details
Q (Orest Wowkodaw · Scotiabank): Why did 2027 CapEx guidance rise by $400 million versus Q2? Is it inflation or new projects?
A: They said roughly half the increase is additional mining equipment, including more ultra class haul trucks, with the rest from inflation and completing the Atlantic Copper CirCular project. Cost of equipment and capital inflation also contributed to the rise.
"So that was about half or so of the increase." — Kathleen Quirk (CEO)
Bagdad project scope and timing
Q (Lawson Winder · BofA): Will the $4.5 billion Bagdad estimate change? What permits remain, and when could commissioning and run rate start?
A: They said they have the permits needed and the $4.5 billion estimate remains their current circle in today's dollars. From final decision they expect about 3.5 years to delivery, and incremental production is expected to be a doubling, about GBP 200 million-GBP 250 million a year plus GBP 10 million-GBP 12 million of molybdenum.
"In terms of the incremental production, the Bagdad, we are looking at a doubling." — Kathleen Quirk (CEO)
Additive upside and M&A
Q (Timna Tanners · Wells Fargo): Is the new additive included in your numbers and could it add upside? Also, do you consider M&A if cash flow increases?
A: They said their model includes GBP 300 million for 2027 and 2028 but does not yet include potential upside from a successful Gen 2 additive in the field. On M&A, they said they always monitor opportunities but their base case is organic growth; they would pursue M&A if it added value.
"We have GBP 300 million in our numbers for 2027 and 2028." — Kathleen Quirk (CEO)
Cost drivers and project capital intensity
Q (Bill Peterson · JPMorgan): Can you break down the $500 million higher energy cost and comment on capital intensity like Bagdad's dollars per ton?
A: They said the $500 million higher energy cost is primarily diesel with rising electricity also a factor; diesel more than doubled for the year and they consume about 275 million gallons of diesel per year. On Bagdad capital intensity, including moly credits it is around 35,000 a ton on a copper equivalent basis.
"With the Bagdad one, when you consider the molybdenum credits, on a copper equivalent basis, it's around 35,000 a ton." — Kathleen Quirk (CEO)
Grasberg medium-term plan changes
Q (Daniel Major · UBS): Why has longer-dated Grasberg production guidance moved slightly and are PB1C and PB1N restarts needed for medium-term production?
A: They said the five-year plan is largely unchanged with only a small 2030 change, and they continue to include PB1 South restart. PB1C remains under evaluation and is a small contributor in earlier years but could be 3%-6% of 2030 production figures; they are also adjusting plans for KL timing and development.
"In terms of the overall five years at Grasberg, it's very similar to the prior guidance." — Kathleen Quirk (CEO)
Mud removal projects at Grasberg
Q (Bob Brackett · Bernstein): Should we view the slip of one mud initiative from 2027 to 2028 as a concern or a result of other initiatives working?
A: They said the in-pit pumping and drift development are both going well, with some geology challenges now resolved; these initiatives are complementary tools and having them in parallel gives options for the PB1 restart. Drier El Niño conditions have reduced water inflows and helped some efforts.
"Just as we got into the two projects that you mentioned, the in-pit pumping and the drift that we're developing, those are both going well." — Mark Johnson
U.S. unit cost outlook
Q (Nick Cash · Goldman Sachs): How much of the U.S. cost increase will reverse with normal weather and higher operating rates versus remain from structural inflation?
A: They said their financials already assume the current energy market and that the best way to lower U.S. unit costs is to increase copper volumes and productivity. Structural input cost pressures exist, but raising mining rates, leach improvements, technology and productivity are the main levers to reduce unit cost.
"The thing that we can bring down the unit cost for in the U.S., the thing that has the biggest potential is getting copper volumes up." — Kathleen Quirk (CEO)
Leach upside versus volume growth
Q (Brian MacArthur · Raymond James): Is the GBP 300 million-GBP 800 million range driven by recovery improvement or volume growth? Could amounts be higher or lower? Also, questions on molybdenum capacity and sales changes.
A: They said it ultimately depends on recoveries and ore types; some sites could see large uplift while others may not reach mill levels, so outcomes vary by deposit. On moly, production will vary by primary versus byproduct mines and they are positive on moly outlook while prioritizing copper growth.
"When you look at the residual copper that's in our stockpiles, it depends on the ore types." — Kathleen Quirk (CEO)
2027 CapEx and buyback cadence
Q (Liam Fitzpatrick · Deutsche Bank): Does 2027 CapEx include Bagdad spend and how often do you decide buyback amounts under your 50% cash return policy?
A: They said there is nothing for the $4.5 billion Bagdad project in 2027 at this point. For buybacks, they monitor quarterly and aim to allocate 50% of available cash flows between growth investments and shareholder returns, using dividends plus buybacks to meet the policy.
"We monitor it quarterly, and look at our, make sure that we're being consistent with the overall distribution policy." — Kathleen Quirk (CEO)