Freeport-McMoRan Inc. (FCX) Earnings Call Transcript & Summary

Good afternoon. My name is Neil Hume, and I am the Natural Resources Editor of the Financial Times. Over the next 45 minutes, we're going to be debating perhaps the biggest question in the world of commodities at the moment. Are we at the first leg of a new commodity super cycle driven by the greening of the global economy or this is just a business upswing post-COVID that could run out of steam if and when China withdraws its stimulus? And just to be clear, I'm defining a super cycle as a prolonged period where commodity prices are above their long run average. Now to debate this question, we have an incredible lineup of speakers, who, from their vantage point, at the top of -- some of the world's biggest mining companies will be able to offer us an insider's view, and they are: Ivan Glasenberg, CEO of Glencore; Steele Li, Chairman of China Molybdenum; and Kathleen Quirk, President and CFO of Freeport-McMoRan, which is the world's biggest publicly listed copper company. Ivan, can I start with you? Commodity prices, they've stormed higher in the past year. Copper's above $10,000. Iron ore is above $200 a tonne today. Does this mark the beginning of a new super cycle?

Yes. I think so, Neil, I think we're in the -- in the commodity sector, I think we're in for a good time. Still can talk more about China. But China remains strong, continues to remain strong demand for commodities. We've seen it since 2002, when everyone doubted it in 2002 and between 2002. We had a few hiccups along the way, not much and everyone down to China, and everyone said, China is not going to keep growing, but it continues to grow. It still has the demand for these commodities. We all know China consumes approximately 50% of the world's commodities today, but less in oil. But in copper, in zinc, in iron ore, et cetera, it's consuming 50% of the commodities. And we've seen China pull the world out of the commodity dump when, in 2009, after the financial crisis, they came in the market again with big infrastructure spending. They did the same in 2015, where we had a bit of a down swing. It came again. And they've been strong during that period -- since then anyway. The good thing about it this time, we've gone through the COVID. China quickly recovered as we saw. Infrastructure spending then continued, and it helped the commodity prices get to where they are today. But what we have now, we have the big infrastructure spend in the West, which we expect happening. President Biden is pushing it on both the green side and generally to upgrade the infrastructure in America. So we got that coming. So on the demand side, it's clear, it's there, and it's looking very strong. We -- us in the mining industry and where people lose faith in us and they think it's not the super cycle because we're going to overproduce again. And the markets are good, as you say, copper at $10,000, zinc close to $3,000, iron ore at $200, even coal today going above $100 thermal coal. So it's strong all over. Is the mining industry once again going to go and increase production as rapidly as they possibly can and oversupply the market, and we'll have this nice cycle for 1 or 2 years and then we'll kill it and it will go down again. The good thing why I believe we're in for a super cycle is this time around, we don't have many shovel-ready projects. There's a few new copper projects coming into the market. We know about them, Kalaba, QB2, Kamoa in the DRC, those are the ones we know. We got Panama up and ramping. Kathleen will talk later. She's got Grasberg increasing tonnages late in the year. But that's about all that is there. There aren't shovel-ready projects and the new projects that people -- if they want to develop is in more difficult regions, it's lower grades, and that's why they've been left to [Audio Gap] in 2013 and '15, where we had a big boom in 2017. 2007, we're spending about $200 billion on CapEx, we're down to the entire mining industry to less than $50 billion. So I don't see the projects coming. So yes, if you look demand-supply, I'm pretty positive for a long-term future. Certain commodities may be a bit different, I know. How long it's going to stay at $200, I don't know, but we do know the monster's coming. And what is the monster? Guinea, the Chinese are developing iron ore and Guinea. How big Simandou, what and who it's going to be eventually, would wear both Chinese consortiums on either side and the rail line and the port being built. How many tonnes they're going to put out there, 200, 300 million, we don't know. But in iron ore, there is something on the horizon. In copper, in zinc, in cobalt, in nick, we don't see it. Nickel, maybe NPI in Indonesia is growing. We see how big it is getting. It will potentially get up to 800,000 tonnes in the next year. So it is there. But in the other -- in the green commodities, all copper -- nickel is a green. But in copper, in cobalt, extremely difficult.

Okay. Thank you, Ivan. We will revisit some of those things a bit later on, on the supply front and on those sort of green metals. But Steele, if I could just come to you now. Can we get a view from China? Obviously, China Moly, you're a Chinese-based company. You're a big producer of cobalt as well as molybdenum, sort of gold as well, [ potassium ] phosphates. What's your view on the super cycle? Are we in one? Or is this just a post-COVID recovery?

I'm personally believing in that super cycle. I think it's a perfect time to talk about this topic when we see copper price hit $10,000, right? But -- so maybe just looking at the long run and from a more macro perspective, I think when we talk about super cycle, I think we need to think about what's the engine, what's the driver behind this, right? And if you think about early 2000, China is the driver, right? Ad Ivan point out, right? And -- but what about now, right? And people have question about China before. I think you're talking about first half and the second half, what about the second half. And originally, it's investment driven but now changed to the consumption driven, and the whole structure of GDP is evolving, right? And there may be -- have some negative impact to the consumption of all the commodities. That may be true. And also, I think that's a natural progress of an evolution of the GDP for a country like China. But here, I think this time, if we look at the key driver behind this we call a super cycle is the transition, the energy transition. I think that's very critical to this topic. And also, again, here, in China, I would like to remind everyone that our public commitment from the central government into this decarbonization, right? So if you think about our government is announcing that this emission going to peak in 2030, right? And thinking about this carbon neutrality by 2060, it's a long run, and it's not easy. But here is our commitment and the commitment to that energy transition. So that means a lot of opportunity to all those commodities. Of course, commodity is going to be different. But if you're thinking about copper, for example, right, and that's critical to that journey. And so again, this time, not only [Audio Gap] it's a structural change. And when we talk about structural change, it's not something that just a couple of months or year, 1 year or 2 years. Here, we're talking about at least a 10-year period of time. So I'm a personal believer of the super cycle.

Okay. Thank you, Steele. I think -- can we come to you? I'm obviously based in the U.S., Biden's passed one stimulus program, another couple potentially in the pipeline. I mean, do you see this big structural demand driver there to meet this sort of super cycle thesis?

Well, I think we're seeing it all over. And I agree with what Steele was saying, this is not just a China story for copper. Back in the early 2000s, it started with China. And China made up most of the growth, if not all the growth, over the years in terms of copper consumption. And now we're seeing not only construction and infrastructure and stimulus impacts of copper consumption. But we're entering a whole new era for copper in its role in the decarbonization. So when you're asking about super cycle, really speaking for copper, really, we do believe there is a -- there has been a structural shift in copper. Historically, it's been tied mainly to GDP, and we will benefit as GDP growth -- continuing to see the numbers being posted, not just in China, but all over. And some of that is a pandemic recovery, and some of it is stimulus activities that are going on. But the world is serious about this transition to clean energy. And there's no decarbonization without copper, and that's going to introduce a whole new level of demand that we, as an industry, really aren't prepared for from a supply standpoint. I haven't talked about the prior cycles and that producers would increase production to meet new sources of demand. And now for the industry, we really don't have that pipeline that we've had in the past. The projects are much more challenging and they take multiple years to get to production. They're in challenging places, as Ivan mentioned. So I believe we're in a new era for copper, and it's combination of factors, both the surge in demand coming from the economies rebounding and also this new element of demand, which can be massive, from what's going on in all of the areas around decarbonization. So I would -- this isn't much of a debate because all 3 of us agree on this topic, but I think we're in a different space for copper at the moment.

Okay. Well, look, as you said, there is some consensus here that we are in a super cycle, at least for metals exposed to battery electric vehicles, renewable energy, et cetera. And you all produce copper. So let's focus on copper for a moment then. I mean, is there going to be enough of this metal to meet the projected demand from the energy transition? Ivan, if I could just come back to you on that. Do you think the industry will step up to the plate and deliver enough?

Neil, it's hard to say, but personally, the numbers and the projections and as Kathleen and Steele said, demand that is coming in the whole world and the green energy demand and copper is a big part of that, especially in electric vehicles, charging points and more copper used in the vehicle, et cetera. The numbers people are [ preempt ] with the decarbonization and the amount we've got to reduce the fossil fuels, the amount of coal, oil has to decrease. Gas over the years. It's got to be replaced with other forms of green energy. And the estimations are, today, the world consumes round about 29 million tonnes of copper. If you take by 2050, it has to grow to 60 million tonnes of copper consumption per year. That is 2x. So to give you an idea, that means we've got to have annual growth of about 1 million tonnes of copper per year. Between 2010 to 2019, when we were talking about we all had pipeline projects and the world oversupplied it, we could still only add 0.5 million tonnes of copper to the world per year. So we've got to double that today. And as Kathleen said, and she's correct, we don't have a pipeline of projects. And where are these projects going to be? They're going to be in the more difficult regions. We all operate in the DRC. Freeport used to be there, they're not anymore. But ourselves and Steele are there today with both Tenke and Katanga, 2 very big operations. Kamoa is coming. But this is a tough part of the world in which to operate. It doesn't have the same infrastructure like developing countries, developed countries. So it is more difficult. The other deposits are sitting in Russia, and you're going to have to go develop those projects. They're in more difficult parts of the region in Russia, more towards the Arctic, towards the north. It's difficult. They've got to come from those kind of regions or you've got to go for the lower grades of copper in different areas of the world, you will need higher prices. And that's what we're seeing. So you will need the so-called $15,000 copper price to encourage a lot of this more difficult investment. People are not going to those parts of the world, unless you're certain, and you've got to be sure it's there for a while. As Kathleen said, to develop a new project doesn't take 1, 2, 3 years. You only can bring it into production by 7, 8 years. So to go develop those projects, the -- I think we've all learned to our lesson, don't go develop them thinking that the copper price -- you've got to be sure the copper price is going to be at that level in 7, 8 years' time when you get into production. So I think people are going to be a little bit more cautious this time around before they go and develop those projects. But to get another 1 million tonnes of copper per year with the demand that we see, it's going to be extremely difficult.

Yes. Okay. So $15,000 is the incentive price that might be needed then to...

I'm just throwing a number out there, but I would say, I have looked at all those new projects, but I would say, for us to go develop a new mine in the more difficult parts of the world, you've got to have really good rates of return. You've got to be sure the market is going to be there. At a decent number in the future, we'd have to look at those projects. But the ROIs your company is going to need has to be pretty high. And you also know, you've got to be careful when you do go into these new -- these regions, that you -- you do need big profits, but then again, our industry, we all know it, as soon as you make big money, those governments want to want more of it. You see the debates going on in the world today. You see this early. You see it [ in the rules ]. We saw it previously, and Steele knows in the DRC, when the cobalt price picked up suddenly, we had a new mining code. They increased taxes and royalties. You saw Kevin Rudd the other day, the ex-Australian Prime Minister, talking about increasing royalty as [ super protection ] on iron ore.

Yes, iron ore. Yes.

Which he tried once before. So all of us got to be cautious before we go build a new mine because we know what happens when the mine is up and running, and we are making these big profits, which we needed to give the returns of going into these new investments. We've all learned a bit of a lesson. When that happens and you do start making the profits you need to give you those returns, thus the governments in those regions come and jump on you. So I think a lot of lessons have been learned and all of us are going to be very cautious and certain that we're going to get those returns. So is it a $15,000 number that encourages us to go do something? Most probably yes, that could potentially be the number.

Okay. Steele, can I just come to you? I mean, where do you think this copper is going to come from? Maybe can scrap play a part, substitution? Or will it be new mines or?

Maybe you start within quick [ coopetition ] because EV is so hot right now, and we don't need to argue for that trend because it's already on the road, right? So if you're thinking about those projections, right, talking about 30% penetration by 2030, it's not that aggressive, right? So that's about 30 million units EV car, right? And you're thinking about average consumption of copper, say, 70 to 80, Ivan, per car kilogram?

Yes.

So that means at least 2.4 roughly, million tonnes in the EV sector only, right? So that means what based on Glencore's existing production, that means we need another 2 Glencores. And Freeport production, right, we need another one Freeport to supply that consumption, maybe 2 Escondida, right? So that's the scale we're talking about. And if you look at the existing market size, Ivan pointed out, it's almost 30 million already, right, for the total copper market. And if you're thinking about just the 1%, right, that's 300,000 tonnes. That's a so big project in the copper world. But thinking about how hard we can bring it from an exploration project to the production, right? Kathleen point out, at least the 6, 8 years, and we don't need to say how much CapEx we need to put into that big project. But only that, it's just the 1% of the total consumption of the copper world right now. So this is the scale. We come up to that level already. And now there is a new driver, this energy transition, behind this. So that will be a big incremental part. And so put all this together, people are talking about the big gap if you forecast into the 10-year period. And then thinking about how to fit into that gap. I don't know where we're going to find enough copper to fill that gap.

Okay. Well, can I just come to Kathleen. I mean, where are we going to find -- I mean, one of your big mines is Grasberg, which is, I mean, an incredible engineering feat, very high up in sort of mountains in Indonesia. But now you've gone underground there. I mean, where are we going to find more of these -- more Grasbergs from?

What everyone has been looking for a number of years is striking. If you look at the discoveries in copper, of all the mines that are operational now, most of the mines were discovered 100 years ago. Grasberg is one of the more recent discoveries. But it's not like the oil industry where you have a constant flow of new discoveries. So most of the mines are -- have been identified that are available around the world. But for one reason or another, they haven't been developed over time. So it's a very mature industry. And you ask where the copper is going to come from. I think we're going to have to save more copper coming -- the price incentivizing more scrap. Because scrap today is probably 1/3 of the market or so, 1/3 of consumption. And so there'll have to be some way to incentivize more scrap coming to the market, but there's a limit on that. There's a limit on substitution. I think we'll -- everybody will be testing, is there a way to substitute. But copper's basic properties of conducting electricity really can't be replicated. So it's going to have to come from a combination of things, and we always say that necessity is the mother of invention. But in copper, it's not like the oil industry where there was a new source of supply coming from shale production that got introduced to help solve that problem of supply. So there's not that in copper, but everyone, you must understand that everyone, every company around -- every mining company is trying to unlock additional copper production, looking at different ways, looking at technologies, looking at niche production. It's going to take all of the above for the industry really to meet what we expect will be rising demand. And if Ivan's numbers are right, about 1 million tonnes a year, that's really, really hard. I mean, the brownfield projects that we had at Freeport are really good projects and they're actionable. But they're not going to move the needle towards that number that Ivan pointed out. Just talking about the time frame that it takes at Grasberg. [Audio Gap] and we immediately began to develop that mine initially as a surface mine. And so we had planned, since the late 1990s, that at some point, the economics would point us to mining from the underground. Because the size of the surface line was just too large to continue mining from the surface, and it was more economic to take the extracted ore from underground. So we had plans in place since the late 1990s. We actually started investing in the underground workings in 2003. So think about that, that's more than we...

Long lead times, yes.

15 years ago, we've been investing and we're just now starting to build pretty significant production from the underground. We had a transition period where we completed mining in the open pit in late 2019 and started ramping up the underground in 2020. And we're about 75% on the way there towards our ultimate metal targets. But it's multibillion dollars of investments that we have to date. Many, many years of investments, many years of planning. You have to understand the whole resource, you have to understand the ground conditions and put the long-range plan together. So this is not an overnight type of exercise to build production on a scale that Ivan was talking about. Everybody in the industry has the want to build supplies in a sustainable fashion. And -- but we, as an industry, need to be disciplined. And back to Ivan's points, we need to be disciplined as an industry to go into projects with eyes wide open so that we can generate returns, provide a good business for all the stakeholders and generate returns to our shareholders. And the industry has become much more thoughtful about allocating capital. And so I think it's going to -- it's not something that can be fixed overnight, but we do have an industry that is very good, technically, will continue to work. So how can we build supplies. But it's not something that's easy. The easy projects in our industry have been done.

Okay. Well, thanks, Kathleen. Ivan, I want to come back to you. I mean, let's suppose your figures are right. Not only copper, but cobalt, nickel, there's going to be a lot of demand for these metals. Do you think some of the big end consumers, the car companies, the renewable energy companies are sufficiently sort of worried enough about their supply chains, where exactly this stuff is going to come from? Because I mean you look at the DRC, and I'll come to Steele in this in a moment, china has locked up a lot of their supply. You're even seeing Chinese battery makers come in and investing in DRC mines. So do you think, I don't know, a GM, Ford, a VW, those sort of companies are sufficiently worried about the fragility of their supply chains, given we could be facing a big shortage here?

Yes, that's an interesting question. We look at it all the time. And we know the numbers. As we've been talking about copper, and they're going to need copper. Cobalt is even worse. The amount of -- I can't remember -- cobalt, you can't go produce cobalt, it's a by-product of another commodity, of copper mainly, in the DRC, where most of it comes from. We get a bit from nickel in Australia, a bit from nickel in Canada, but it's not large. The bulk of it comes from DRC. Nickel, yes, maybe they will keep getting supply because nickel, as I said, there's a nickel ore in Indonesia. And the Chinese are doing great job in producing nickel ore but who's producing the nickel ore -- the nickel pig iron in Indonesia? It's the Chinese. It's -- close to 100% of the NPI being produced in Indonesia is from China. If you look at the DRC, who's in the DRC? Mainly the Chinese. Besides us, it's the Chinese. You've just seen when Freeport sold their recent reserve, and Steele can talk about it, the Chinese grabbed it. Not only Steele's company, but he sold part of it off to a battery maker. So I think the Chinese are seeing it. The Western, they've reacted to it. And as I say, they've gone into the DRC in a big way. Copper. We sold one of our assets in Peru to the Chinese a while back. So I think they're getting it, and they're seeing it. The Western car companies are not as -- are not seeing it in the same manner. A lot of our cobalt supply is being tied up with long-term contracts. And we've done -- it's no secret, we've done a contract with Tesla, some with BMW, et cetera, but mainly to Chinese battery makers. The Western world -- the Western car companies haven't picked up as fast, and they are not scrambling to us to tie up supply, long-term supply contracts. They haven't done what the Chinese have done. They haven't even gone upstream and started buying mines in these countries, doing what the Chinese companies have done. So they're sitting a bit on the fence thinking we will always get supply. And I've looked at that carefully and thought, why are the car companies not in panic mode? And looking here recently, I remember the car industry, they called it the Lopez factor. So I think, Carlos Lopez, when he started squeezing the suppliers, the supply chain in the motor car industry, so he could produce [Audio Gap] have a shortage of aluminum, steel, et cetera, which they needed in the car industry. This is just my guess, I'm thinking. And they've never seen no supply. So they're saying sitting back and saying, why should we worry? We know the supply will come. It has always come. We know we'll find a way where there is cobalt, we may engineer it out if need be. That's the one thought they may be thinking. Well, I think these suppliers, these grade supply, whether they're the mines, et cetera, they'll find a way to give us supply. So that's what I'm guessing. I think -- and that's why we haven't seen the panic here. We haven't seen any of them come push for new long-term supply contracts as much as we see in the Chinese battery makers. So either that is the case as maybe this recent situation in the chip supply is a bit of a wakeup call. And for the first time, they look in and say, we cannot get chips. So we have to slow down production. However, the chip supply is not what it is in mining because chip supply, people will find ways to make more chips [Audio Gap] et cetera. And as we've been debating on copper, cobalt's, I believe, even a bit worse. It's going to take years to get it. And some -- I don't think we can get the monster supply that they need. So I have no idea why they haven't been alerted to the problem that exists. Is it -- I believe it will come, but maybe it will only come when they just can't get it. They're not looking 1 year or 2 years ahead, which it seems like the Chinese battery makers are looking 5, 10 years ahead.

So Tesla should come in and buy Glencore then with Elon Musk's [ IP and ] market capital?

Well, if we could get it, it will. If you see the multiples he trades at and you see the multiples as poor guys in the mining industry trade at, you look at EBITDA multiples of the mining industry, you wrote an article, I think, today, and you look at us, we trade at 3 -- 3.5x multiples. The big -- all blokes of the mining companies, besides the pure copper plays, Kathleen can talk about it, she trades at -- they trade at a much higher multiple being a pure copper play than the rest of the multi-commodity mining companies. We are trading at a 3.5x EBITDA multiple. The S&P, I think, trades at a 16x multiple. Tesla, I think, trades at a 61x EBITDA multiple. So yes, I think he could get us rather cheaply.

Okay. Steele, can I just come to you, just on this concept of copper and cobalt as strategic sort of metals. I mean Ivan referenced there that he recently sold a stake in one of the mines in the DRC to CATL, which is the world's biggest battery maker. I mean, tell us a bit more about that deal. I mean, are the Chinese battery makers, car companies trying to secure supply? Should the West be worried about this?

Talking about this partnership, I think, I think not only because of this is a great project, and thanks, Kathleen and Freeport. No doubt about that. And also, I think this is a demonstration of their trust in CMOC as an international mining company, and we always hold our highest standard for ESG and all this compliance issue. And so we are a very good operator. But put all of this aside, I think to me, the interpretation is not only secure the supply of cobalt but more importantly, I think it's a clean and responsible cobalt. I think that, that matters, and that matters is a lot in the future. And I think if I put myself in CATL's shoes, and they are looking for the trend and where those cobalt coming from. And they want to make sure this is the clean and the responsible cobalt with the highest ESG standard that they can prove to the end user in the future that this is coming from where CMOC operate in DRC and coming from our production. And so this is very important. I think that this is also -- the real panic should be into those battery manufacturing or the OEMs, because at the end of the day, I think talking about this hot topic, ESG. And in the future, everyone will care more about where it is coming from. Not only do we have enough, but also enough and stable, reliable, but also clean and responsible. And Ivan and CMOC, Glencore and some other leading players there, we are working on some project we call the -- we're using blockchain technology. And the objective is to make our cobalt production 100% traceable down to the entire supply chain. So the objective for that project is to not only supply to the world enough cobalt, but also a responsible and clean cobalt. So I think that's the way I interpret that partnership. But of course, that's -- I think they're quite normal if I look at the industry, right, back to 20, 30 years ago, when you were thinking about those Japanese player, they're putting minority stake into the copper mine because they're a smelter, right? And also minority [indiscernible] steel manufacturing. So yes, but for us, I think this is like running a competition. You want to partner with the leading players, right? And CATL is the leading player in this industry. But I can tell you that this is not the first time or we've been sending this message around. And I'd just say that maybe Chinese player compared with other western player, they act very quickly. And they maybe have a longer vision and more strategic planning for the future. So that's the way I look at this kind of the difference compared with other Western players.

Yes. Kathleen, can I just come to you on this? I mean, do you think big OEMs, car companies in the west should be starting to panic about their supply chains and where these materials are going to come from?

Not panic, but I do think that Ivan just makes a good point that copper has always been available. And so they haven't been as afraid about copper as they have some other commodities like cobalt, that's a much smaller market and coming from a place that's principally in the DRC, where some of the consumers were concerned about. But it's striking the amount of new awareness to this issue that we're seeing not just from OEMs and consumers, but also governments. And understanding now that in order to achieve this transition, we really do need a good supply of long-term copper in the future. So the awareness...

In the U.S.? The U.S. government is sort of realizing that?

I think all governments, particularly, I think the U.S. is becoming more aware of the role that copper plays in this decarbonization. And all the things that as we electrify vehicles, as the government's infrastructure plans are being rolled out, I think they're getting more knowledgeable about the role and the strategic role that copper plays in all this. So I think you'll start to see people in OEMs and governments getting more involved in understanding the supply and demand factors to make sure that the supply chain is resilient and reliable with respect to copper. But in the past, as Ivan was pointing out, there's really always ample supplies. But there's been a structural shift here. And I think the future may be different. You may be hearing copper being characterized more as a strategic metal from around the world. I'll also point out what Steele was saying about the cobalt industry and blockchain and responsible production. The copper industry is doing something similar, not necessarily blockchain, but we've got a responsible production assurance program that's administered by a third-party where you apply your operation, and it has to meet a series of robust ESG standards, in line with the United Nations Sustainability Goals to be designated under what is referred to as The Copper Mark. And so Freeport has been a leader in that in getting its sites certified, and we've got several sites already certified and are going to work to get all of our sites certified. But I think the OEMs will be differentiating responsible producers, and that's very much front and center on their mind because it's on their consumers' minds. So -- but it's a changing situation, Neil, and I think people are becoming more aware of copper and the limited supplies.

Okay. So before we just cut some questions from the audience, just very quickly, just Kathleen, on the point I have picked up about the valuations of the mines. Isn't it slightly frustrating that, as a company that is going to help the energy transition, you don't get sort of stock market rating of a Tesla or some of these hydrogen companies that are out? Is that a source of frustration? What more can be done with that?

No. I mean we just -- the market's the market. And we have to execute our plan, show investors the cash flow opportunities, delivering on our results, doing things safely, doing things responsibly. And I think the ratings will come. But we are poised, I believe, to rerate. As coppers -- the awareness of copper is being critical to this sustainability goals around the world, I think you will see copper valuations rerate, and we're seeing that starting to occur. And that's likely to continue. But we, as miners, we can't focus on what Tesla is trading at, where we're trading at. We just got to produce the numbers and book the numbers and let the markets value us.

Okay. Well, we've got a few questions now coming in from the audience. Ivan, one for you from [ Grant McGillan ]. He asks, if you're so positive on copper, why are you withdrawing from Zambia?

Yes, that's a good question. It was a difficult mine. It's a hard country in which to operate. We're having certain issues there. And we felt this was the best solution for our company. It was taking a lot of management time. Even with $10,000 copper, it's still difficult. Maybe the Zambian government can -- don't face the same issues we were facing, various issues around in the country, and they can make it work easier than we could make it work. But even at $10,000 copper, we felt this was the best way to go. You remember, we are -- they did buy it from us. We do get the offtake. They did take on the $1.5 billion of debt, and that will be repaid as they produce the copper. So we felt this was a fair solution for both sides and work better for us. We do a bit outside of Zambia, we do produce 1.25 million tonnes of copper. Zambia would have produced up to 110,000, 125,000 tonnes. So we just felt management time, it just wasn't worth the time and effort and let's focus on our other assets around the world.

Okay. Thank you. Steele. I've got a question from [ Tom Quinn ], and it's on this theme about copper being a strategic commodity. He asks, is the mining industry headed for the same geopolitical battles that affected oil in the past couple of decades?

Well, that's a big question.

Yes. You haven't got long to answer it, but you can say something about it.

But I think a geographic challenging is the -- one of the most biggest challenge here, I think the mining world, mining industry are facing. And -- but that's the -- I should say that's the world we are living, right? I mean this is -- mining business is not like new economy, right? We're not creating something new, right? But we are just doing this very hard job and try to dig things from underground and then make it a product, and then supply as raw material to the world, and changing the world and improve the quality of the life. So I think back to this business model, I think we always need to bear in mind that, that's a balance of different stakeholders. And also you have to take care of all the interest of the different stakeholders. I think that's the -- one of the principles that all of the mining company can live in the world.

Ivan, do you think oil is going to be heading for the same geopolitical battles -- copper the same geopolitical battles as oil?

Yes, we're going to have issues in the various countries in which we operate, for sure. Yes, yes, definitely in various countries, we're going to have the same thing. You've got to remember, we can't move the asset. It's in the asset -- the country in which we produce. You can't pick it up. We don't have a Nike factory we can move to another part of the world. So yes, we're going to have issues in the countries in which we operate. No question. As I say, you're going to have the tax grab. As we start making super profits, we're going to have those issues in those countries.

Just on the tax grab, Kathleen, what do you make of the proposal in Chile at the moment? That's another question from one of the audience.

Well, the whole industry is following the situation very closely. And as we've been talking about, as these investments are enormous. The project that we have in Chile, El Abra, could be a $5 billion, $6 billion project. And so making that investment requires that we understand what the rules are. And we've got technical risks and all kinds of things in our industry that we need to manage. But generally, we want to know that what the economics of the project will be under the regime of the country. So we're watching it closely. I think it will affect investment over time if countries continue to change the rules as they go. It's human nature, though. I mean, I think what governments do when prices rise. But really, our philosophy in terms of going into a mine is that there needs to be a fair allocation. The government in the host country and all the stakeholders and communities need to participate in a significant way in these operations. That's the only way they're going to be sustainable long term is if there's a fair allocation of the economics between the investors, the host countries and the communities. And finding that balance is critical to the long-term stability of an operation. And so as an industry, we're very accustomed to these things, and we'll work our way through it. But it's a very generous industry in terms of how it approaches, communities, how it really, really fosters development around the places where these operations are. And I think it will be worthwhile in Chile. Neil?

Well, sadly, we're out of time. We could have gone on for a bit longer. Just one final thing. I mean, Ivan, you retire at the end of June. I mean, is there a bit of regret there that you're not going to see this super cycle come to fruition?

Yes, Neil. I'm fortunate to say we've got the company in the right position. It's in a very good stable state. We've got the right commodities. We all talk about the green energy. We got cobalt, copper, nickel, zinc. So we're in a pretty good position. My successor is taking over at the end of June, he's been in the company a long time, and I think he will do a great job. And I'm fortunate to still hold a large investment in the company. So I'm not leaving. I'm leaving the operations of the company, but I'm still a major shareholder. And I'll be very happy to see the company perform well and hopefully get the share price back to its IPO price, and sitting on the sidelines and watching it perform well. So no, no regrets. I'm happy that I'm leaving it in such a strong state. And if I listen to my colleagues in the industry, they believe what I believe on the future of these commodities. It's going to have a great future, and I'll be watching with the excitement from the sideline.

Okay. I have to bring this chat to a close. But listen, I'd like to thank you all for what's been a really sort of fascinating debate about, yes, the importance of commodities, which can sometimes be overlooked. And with that, I'll hand back to the studio. Thanks very much.

Well, thank you very much, Neil. We'll forgive you for going a little bit over there because that was a very good question. And I have to say some cracking questions from FT readers as well. Do keep them coming. This is your chance to grill the big wigs. And some dizzying statistics there about copper, in particular, in that session. I mean based on Biden's numbers yesterday, demand for an extra 1 million tonnes of copper a year. How on earth are they going to fulfill that? And something that investors, I know, will be watching very closely. And I did have a chuckle at the comments about the valuations of Tesla versus the valuation of Glencore. But anyway, lots to digest there. Next, we will be shifting our focus to the future of work and particularly how the pandemic has transformed what we used to call the office. Join us shortly.