Kathleen L. Quirk
President at Freeport-McMoRan
Great and thank you, Richard and a special thank you to you for your outstanding and visionary leadership during your long tender as our -- tenure as our CEO. As I prepare to [Phonetic] become CEO in June I'm focused on our copper-leading strategy, centered on reliable execution of our plans, disciplined cost and capital management and continuing our drive for profitable growth. Our seasoned team knows this business. Has a proven ability to navigate challenges and a passion for finding value in our assets.
I look forward to building on our past success and to leading our company to new highs in the future. Starting on page 3, slide 3 we have a new Annual Report out with this year's theme being The Value of Copper. The report is available on our website. It highlights our performance, our copper-focused strategy and our strength as a premier copper producer. We'll also be publishing our Annual Sustainability Report, which will be available on our website later this week. This report which we've been doing for some time now details our environmental and social performance, which we take very seriously as part of our commitment to responsible production.
On slide 4, we present our key focus areas for 2024. These are the same items we discussed in our January call, and we thought it would be good to show these again for reference so you can track our progress against these areas as we go through the year. On slide 5, turning to the first quarter highlights. We're off to a really good start so far in 2024. As summarized we exceeded our guidance for first quarter copper sales. Gold sales were in line with our estimates. And consolidated unit net cash costs were better than forecast. We generated strong margins and cash flows during the quarter with $2.5 billion in adjusted EBITDA and $1.9 billion in operating cash flows and that was at an average copper price of $3.94 per pound.
Capital expenditures excluding $0.5 billion for the Indonesian smelter project totaled $800 million in the quarter, and we reduced our net debt. We made great progress on several important initiatives including on the Indonesian smelter, which is scheduled to start up in June, building momentum in our innovative copper leach initiative and continuing to build optionality in organic growth pipeline. Market conditions are increasingly positive, their growing recognition of factors driving favorable fundamentals in copper, and we've also seen a rise in gold price this year-to-date.
Recall that Grasberg is one of the world's largest mines in terms of both copper and gold production. Moving to capital markets, starting on slide 6, the growing intensity of use of copper in the global economy is supported by secular trends, particularly in electrification. Copper is a foundational essential metal when it comes to electrification. And the world is becoming more and more focused on copper-intensive energy applications. New massive investment in the power grid, renewable generation, technology infrastructure, and transportation are driving increased demand for copper. And forecast call for above trend growth in demand for the foreseeable future.
This is occurring at a time when there are constraints on existing supplies and absence of major new copper development projects and extended multiyear lead times for supply development, pointing to tight market conditions for an extended period of time. Copper producers, including us at Freeport have been citing physical market tightness for some time, and in the last several weeks, the copper price has risen to reflect the reality of the market situation. Based on historical periods of above trend growth in demand, we may be in the early stages of a repricing for long-term copper prices.
We illustrate this on slide 7, where we show how copper prices responded 20 years ago when China emerged as a major consumer of copper. You can see on this chart that within 12 months the copper price increased by 40% and was up nearly 4 times within a 3-year period. During 2023, the secular drivers for copper demand provided growth in demand, despite weakness in some of the more cyclical drivers of copper demand. In the fourth quarter of last year industry announcements of sizable supply disruptions tightened the market significantly.
This is clearly evident when you look at the physical concentrate markets where smelters drop, TC -- treatment charges sharply as a result of the shortage of concentrate supply. Notably, recent manufacturing data points also indicate that the global economy is recovering. The recently improved macroeconomic sentiment combined with physical market conditions have driven prices higher, copper prices higher year-to-date, and many analysts are now projecting significantly higher copper prices in the future.
At Freeport our financial performance is highly levered to copper prices, as you'll see from our sensitivities we'll review later in the presentation. We're not predicting where prices will go from here and recognize there will be volatility. But clearly the fundamentals point to an extended period of deficits. And significantly higher copper prices over the long-term. That's very positive for a company like ours with large scale, long lives producing assets and organic development opportunities. Now we'll cover the operating highlights from the quarter.
This is presented on slide 8. We're summarizing the key operating highlights by geographic region. In the U.S., we continue to work to mitigate the impact of lower ore grades by focusing on initiatives to improve efficiency and reliability of our equipment, the productivity of our workforce and sharpening our focus on cost reduction. We're making progress in these areas, but we still have work to do to regain our goal of being at the top of the industry in terms of efficiency and productivity. Our innovative leach initiative is providing incremental volumes and has helped us mitigate the impact of lower ore grades. As we previously reported, we reached over our $200 million pound per annum run rate.
We've got several initiatives in progress to scale this to the $300 million to $400 million pound per annum range over the next two years. We're also continuing to take advantage of new technologies in automation across the portfolio, which we believe have a lot of potential to move the needle as we go forward. In South America our ore milled was slightly below 400,000 metric tons of ore per day at Cerro Verde. Team worked through several challenges during the quarter associated with material types, which required optimizing mill throughput to address recoveries, and the team was successful in achieving copper volume targets by increasing mine rates and accessing higher than planned grades.
Our moly byproduct volumes were impacted, however, by low recoveries associated with the material types and progress is being made to address this. At our El Abra in Chile we had a good quarter and we met expectations. We're also pleased to report that Cerro Verde recently finalized an agreement for a new 4-year labor agreement with its workforce. In Indonesia, we had another exceptional quarter of performance. Both copper and gold production exceeded our forecast with higher mill rates, higher ore grades and recoveries. Our net unit cash cost for the quarter in Indonesia was a net credit of $0.12 per pound.
That means our gold byproduct credits more than offset all of the cash production costs. Our underground ore mined, which is the largest Block Cave mine district in the world, averaged 220,000 tons per day. That was above the fourth quarter of 2023 and significantly above last year's first quarter. The Grasberg Block Cave mine is our largest in the district and it continues to achieve strong performance. We've also increased rates at the extra high-grade smaller mine at Big Gossan by nearly 30%. Our new SAG mill, which we installed at the end of last year is performing very well. We're nearing completion of a mill recovery project and that will enable higher mill recoveries in the future. And our team there is just doing outstanding work in sustaining and optimizing value from this large resource position.
Topping it off, the PT-FI team recently finalized a new 2-year labor agreement with our workforce. Give a report on slide 9 of where we stand with our smelter project and completion of this new smelter in Indonesia is a very important catalyst for us as we work to secure an extension of our long-term operating rights in Indonesia. We made substantial progress in the first quarter, and now we're focused on the remaining critical path in transitioning to commissioning and startup activities. We're on track to begin heating the furnaces during June, followed by concentrate process in August and first cathode in October.
We're working closely with the Indonesian government to continue to export concentrates and anode slimes until the smelter and precious metals are finally -- fully operational. And we expect that by year-end when we will become a PT-FI, a fully integrated metals producer. Discussions with the government to-date are positive and that's supported by the project status and the startup plans. In terms of our startup, we have a very talented local team who will be supported by a large team of Freeporters from around the globe, including from our Spanish operations and our U.S. smelting operations to support an efficient startup.
We're very focused on our growth and optionality in our growth pipeline and we've got a summary on slide 10 where we go through -- where we stand on the various projects. We have dedicated teams working on advancing opportunities to grow production in the future. And here you'll see the update for each of the major initiatives underway, starting with the innovative leach initiative where our team has several work streams in progress to take our initial success and build substantial scale.
This project has the highest net present value potential of any project we have seen historically because of low capital intensity, low incremental operating cost and at Freeport we're uniquely positioned to capture this value with our sizable existing footprint, technical knowhow and new technologies available to us. At our Bagdad operation in Northwest Arizona we talked about it on our last call and now we're continuing to take steps to derisk the Brownfield expansion project by converting the existing haul truck fleet to fully autonomous, expanding housing infrastructure at the site and expanding our tailings facilities.
We're also continuing to monitor labor market conditions in Arizona and hope to be in a position to make an investment decision by the end of next year. From there, the project would take about three to four years to construct. At our Lone Star/Safford Brownfield project in Eastern Arizona we're commencing a prefeasibility study this year to define and frame a major expansion. As we've been talking about over many quarters we have a sizable resource here and expect this district will become a major cornerstone asset for us in Arizona during the next decade. At El Abra in Chile, we have a large resource that can support a new concentrator of scale.
And we're looking at a concentrator similar to the size of the Cerro Verde concentrator expansion we installed nearly 10 years ago. We've done substantial work to define the project, and we're currently in the process of retesting the economics and taking a hard look at capital costs in light of the recent industry experience in Chile. We're working to be in a position to file an Environmental Impact Statement by the end of next year. And this project would require seven to eight years of lead time because of permitting requirements. In Indonesia we're continuing to advance our large-scale Kucing Liar development to commence production by 2030.
We also have several additional exploration targets in the district and expect to have additional long-term development options that would become available with an extension of our operating rights beyond 2041. We're going to continue to be disciplined in our approach, targeting opportunities that can be executed efficiently and profitably, and where we think we can create value for shareholders. We wanted to take you through a little bit of our leach history on slide 11 that provides history of what we've achieved to-date on this innovative project.
We started on this journey two years ago with data analytics and new operating practices to tap into our large stockpiles to recover copper from material that was previously mined. Through a combination of actions to achieve greater heat retention in the stockpiles, gaining access to areas of the stockpiles that had not been optimally leached historically. And through the use of better identification of trap [Phonetic] potential, we've been successful in adding incremental copper previously thought to be unrecoverable.
This initiative has grown now to be a major value driver for our Americas business, particularly for our largest U.S. mine in Morenci. As we mentioned, we achieved our initial target for an annual run rate of 200 million pounds per annum. Now focused on doubling this through scaling what we've learned to-date. To-date the success has largely been operationally driven, complemented by new data and technology. At the same time in parallel, we're advancing studies on new additives that could boost recoveries, and we're exploring options for adding heat to existing stockpiles to generate incremental copper.
In the aggregate, these initiatives have the potential to reach 800 million pounds per annum, and that's the equivalent of a large-scale copper mine with low capital intensity, low cost, and a low carbon footprint. About half of this can be achieved through further scaling, as we mentioned. And the other half relates to technology under development. The value potential is very attractive, particularly for Freeport, given our large quantities of suitable material that we previously mined. In terms of our timing of all this on slide 12, we summarize potential growth and then we frame it in near-term, medium-term, and longer term horizons.
We've outlined identified projects in the Americas totaling 1.7 billion pounds and the Kucing Liar project, currently in development in Indonesia. And that's expected to continue to support long-term production profiles in the Grasberg district. In the two- to three-year category, we set our focus on incremental production, on scaling our leach initiatives and operational improvement projects. Together the potential from these opportunities total 400 million pounds and do not require significant investment or long lead times. In three- to five-year category we've got the Bagdad expansion opportunity and the additional potential from our leach initiatives.
El Abra is reflected in the seven- to eight-year category. And Lone Star is not on here but it's also a major opportunity, which we're currently defining. It's likely a bit further out, but we feel it will be a major new opportunity for us as we go forward. The KL development in Indonesia is proceeding on schedule. We expect to commence production before 2030 and ramp up to over 500 million pounds of copper and 500,000 ounces of gold, which is a meaningful operation. In Indonesia an extension of our rights beyond 2041 would open substantial opportunity for reserve and resource expansion and continuation of large scale mining in one of the world's largest and highest grade copper and gold mining districts. We're in a strong position, as you see here, to continue our leadership role in supplying copper to a world with growing requirements.
On slide 13, as we usually do we show our three-year outlook for sales volume of copper, gold and molybdenum. We've increased our 2024 copper sales by about 1.4% reflecting the first quarter outperformance. The rest of the guidance is similar to our outlook at the start of the year. We're also estimating consolidated net unit cash costs to approximate $1.57 per pound on a consolidated basis. That's slightly below our previous guidance of a dollar $1.60 per pound. We've got some details of the makeup of this average presented on slide 25 in the reference materials.
We're strong cash flow generator as you can see on slide 14, where we show modeled results for EBITDA and cash flows at various copper prices ranging from $4 per pound to $5 per pound for the average of '25 and '26. We're using our current volume estimates for '25 and '26, our cost estimates, and we're holding gold flat here at $2,300 per ounce and molybdenum at $20 an ounce for illustration. Under this scenario annual EBITDA would range from almost $11 billion per annum at $4 copper to in excess of $15 billion per annum at $5 copper and our operating cash flows would range from over $7.5 billion per year at $4 copper and over $11 billion per year at $5 per pound copper.
We've got sensitivities to the various commodities on the right, with long life reserves, large scale production. We're extremely well-positioned to benefit from improved pricing, providing substantial cash flow for investments in our organic growth and cash returns to shareholders under our performance-based payout framework. On slide 15, we show our current estimates for capital expenditures for '24 and '25. Not much has changed since our last update. $3.6 billion is projected for 2024 which is consistent with our prior guidance.
And in 2025, we estimate capex will total about $3.9 billion. That's about $100 million higher than the January estimate and reflects timing changes for our Kucing Liar project spend for 2025. During this period -- during this two-year period, discretionary projects total $2.5 billion. This category reflects the capital investments we're making in new projects that under our financial policy are funded with the half of available cash that is not distributed, and these projects are all value-enhancing initiatives, and we've got some details in the back in the reference materials.
Finally, getting to financial policy on slide 16, we reiterate the policy priorities centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing growth projects. Balance sheet continues to be very strong. We've got great metrics for credit metrics and significant flexibility within our debt targets to execute on our projects. As indicated here, we've distributed about $4 billion to shareholders through dividends and share purchases since starting this new financial policy. And we've got a very attractive future long-term portfolio that will enable us to continue to build long-term value for shareholders.
A sustained higher price for copper will drive higher cash returns to shareholders while allowing us to invest in future value-oriented growth. We're going to continue to actively monitor the market conditions. We'll carefully manage the timing of our projects and make sure that our financial flexibility remains strong. In closing, our global team is driven by value, and we continue to focus on what matters in our business by executing our plans responsibly, safely and efficiently, and maximizing the value of our vast resources.
But thank you all for your attention, and we'll now open up the call for questions.
