Kathleen Quirk
President and Chief Executive Officer at Freeport-McMoRan
Thank you, Richard. And thanks everyone for being on the call. I'm pleased to report on our 4th-quarter results, review our 2024 performance and update you on our projects and outlook for the future. We look-back on our performance in 2024, and I'm on Slide 3 here, our team executed our plans in solid fashion. We enhanced our strong foundation to support a positive long-term future centered on value-creation. We show on Slide 3 the annual information on our copper sales, unit costs and financial metrics for the year 2024 compared to 2023.
Our team delivered on our plan. We essentially met our sales targets -- targets developed at the start of 2024, and we slightly improved our net unit cash costs compared with 2023 and our plan going into the year. We're proud of Freeport's long track-record for successful execution and we don't take this as a given. It requires that we stay disciplined each day-on managing the many underlying metrics, which drive our results requires that we manage risk and stay on-top of what matters, both for the short-term and the long-term. It also requires that we find solutions to overcome unforeseen challenges, which as we all know are inevitable given the nature of our business. Strong operational execution combined with improved pricing allowed us to achieve $10 billion in EBITDA for the year 2024 that was 14% above 2023 EBITDA.
And our operating cash flows in 2024 of over $7 billion or 35% improved from the prior year. This was on an average copper realization during 2024 of $4.21 per pound and our realization for gold was slightly above $2,400 per ounce. As we go-forward, our team is focused on opportunities to continuously improve and drive value in our existing operations and through our organic growth portfolio. We look at our priorities for 2025, our team is very focused on a number of initiatives, and I'm going to outline the key ones here. The first one, and this is a theme at Freeport every day, it's execution.
Our team is committed to strong execution of our plans again this year, doing what we say, delivering on our plan volumes, cost targets and capital projects safely and efficiently while seeking opportunities to capture upside. A second focus area is scaling our leach opportunity. We've set a target to reach a run-rate of 300 million pounds by the end of 2025 and to build-on that with additional scale in 2026 on our path to 800 million pounds of incremental copper per annum by 2030. A third focus area is the PTFI smelter. Our team has executed this complex project well and has stepped-up to respond to the recent fire incident. We have a plan, a solid recovery plan that we're executing on and that will enable us to deliver this project during 2025.
This -- it's important for us not only to be fully-integrated and get the smelter up and running, but also important as we seek to extend our operating rights beyond 2041 in Indonesia. You'll see us talking more about innovation. Innovation is a major priority as we go-forward. Our work to date indicates a significant untapped potential value in this area, and we've got a team working on it to drive that value. Equally important, we're continuing to build optionality in our growth portfolio. We have a number of key milestones identified in 2025, and we've got three major projects that we're currently working on for future growth. I'm going to review markets on Slide 5 and you can see where copper prices have been, they traded in a broad range during the year 2024 between $3.67 per pound and $4.92 per pound, averaging $4.15 per pound on the LME.
On the US Comex exchange, prices were slightly higher than the LME. And year-to-date the differential has grown and is now -- is averaged about $0.17 per pound through the first part of 2025. During 2024, copper prices mostly followed macro sentiment, which weighed favorable -- favorable US economic data, rate cuts in the US and the potential for economic stimulus in China against ongoing economic pressures in China, a strong US dollar and uncertainties on US tariff and trade policies that the markets have been focused on from late last year.
At a micro-level, demand continues to grow and that's supported by secular demand trends associated with electrification, which has offset -- offset some of the impact of weakness that we've seen in certain more cyclical sectors. In the US, our customers are reporting solid demand for power cable and building wire associated with substantial investment in electrical infrastructure and AI data centers. The growth in the power sector is offsetting weakness in traditional demand sectors currently coming from residential construction weakness and the auto sector.
Turning to China, demand from China continues to be supported by significant investments in the electrical grid and continued growth in China's production of electric vehicles. We've seen a highly publicized reports of weakness in China's property sector and that's influenced sentiment. But the reality is China's demand for copper continues to grow, albeit it had modest growth in-demand in 2024. We're seeing recent data points out of China that indicate a number of sectors are poised for better growth in 2025 and together with potential stimulus actions to support economic growth targets, their support for potentially higher-growth in-demand from China as we move through 2025.
We want to highlight copper's superior conductivity and that makes it the metal when it comes to electrification. New massive investment in the power grid, renewable generation, technology infrastructure and transportation are driving increased demand for copper and forecast call for above tent trend growth in-demand for the foreseeable future. And as we match this up with supply, we continue to see a balanced market near-term and significant deficit conditions longer run. This is going to require significant investment by the industry as well as innovative technologies to build supplies longer-term. And at Freeport, we're driven to supply copper reliably and responsibly to this growing market.
We'll move into the 4th-quarter results on Slide 6, where we provide a summary of the results. Our operating performance in the 4th-quarter was solid. Our sales and net unit costs were slightly better than our guidance going into the quarter. We've made a lot of progress since our last update call-in October at our Indonesian smelter refinery project. The smelter recovery activities are in-progress. Long-lead items are expected to arrive in the March-April time-frame, and we expect to recommence production by middle of this year.
The precious metals refinery, which was designed to refine precious metals from our existing smelter in Indonesia as well as the new smelter wasn't -- was not impacted by the fire and we produced our first gold bar in late 2024. Brought up operations at the refinery have gone very well and following completion of the smelter ramp-up, our Indonesian mining and smelting operations will be fully-integrated. In parallel, with working on the smelter recovery, we've made great progress with the Indonesian government to allow us exports during the period of the smelter repairs.
We did receive approval in late 2024 to update our quota for the year 2024 and that allowed us to make some additional shipments in December. We're currently working with the government on 2025 exports and we expect to receive approval in the first-quarter. We're also working very hard to progress initiatives to build value from organic growth. We benefited Freeport from a large reserve and resource position with near-term, medium-term and long-term embedded growth options. We're challenging ourselves to take advantage of innovation to improve efficiencies, reduce cost and capital intensity and shorten lead times for our projects. The high-potential innovative leach initiative is a great example of this.
We achieved an approximate 50% in copper production from this initiative in 2024 at a very low-cost and our projects in motion to target an annual run-rate of GBP300 million by the end of this year, and that's 40% higher than what we achieved in 2024 with opportunity for further gains in the future. We're also advancing our brownfield expansion opportunities to position the business for longer-term growth to supply a market with increased requirements for copper. We ended the quarter in a strong position financially. As we look-forward, we see great value in our business, supported by our leadership role in copper, a market with highly-attractive fundamental outlook, matched up with our portfolio of high-quality assets and future prospects for strong cash-flow generation to support investments in value-enhancing projects and returns to shareholders.
I'll go through on Slide 7, our operations update across our geographic regions. And I'll start with the US, where we're making good progress with our initiatives to improve efficiencies and cost performance despite a decline in ore grades in recent history. Data we monitor regularly regarding our asset efficiencies and other key indicators have trended more favorably over the last several months. As we look-forward, we expect production in the US to increase by 8% in 2025 with opportunities for further increases in 2026 and 2027. Absent changes in commodity-based input costs, we're targeting unit costs to trend lower each year over this three-year period. With 2024 behind us, our goal is to make 2024 the low watermark year for our US business.
Structurally, we deal with low ore grades in the US and hauls are getting longer. The autonomous haul truck conversion being deployed in 2025 at Baghdad will allow us to test the potential for this application on a broader scale at other operations. The incremental leach pounds at-scale will also benefit our cost position as we go-forward. We also initiated a new project during 2024 centered on integrating new technology and automation to optimize performance in our basic mining functions. We believe there is significant opportunity here for value-creation through meaningful cost-reduction would -- which would enhance margins and also expand reserves from known mineralization, which is currently economically limited under our current reserve pricing.
Many of you have been following this, we're following it very closely. US legislation, considering copper as a critical mineral for integrated producers, if this is enacted, this will give us a further benefit of potentially being eligible for a tax credit of 10% of our operating costs in the US. In South America, the team in our Cerro Verde operation posted another solid quarter with strong operating rates and no recoveries. The team is doing a really good job with cost management as evidenced by a 13% improvement in South America cost -- unit costs over the year-ago 4th-quarter.
As you'll see in our guidance, vertic rates are expected to be slightly lower in 2025 compared with 2024, we expect long-term averages to recover to the 900 million pound per annum range at. At, we're positive about the opportunity to test an initiative to add heat to our leach process and that has a lot of promise to provide incremental near-term production there. Turning to Indonesia with another solid quarter and the team achieved multiple new operating records again in 2024. Our team is consistently delivering strong volumes of both copper and gold from our large-scale underground ore bodies and has demonstrated this consistently over the last several years.
During late 2024, we successfully completed construction of a project $500 million range project to install a copper cleaner circuit to enhance mill performance at Grasberg. And as you'll see in the reference slide on Slide 26, the outlook for Grasberg is positive with a strong multiyear outlook for significant copper and gold production. For 2025, our guidance of -- at Grasberg reflects downtime associated with two major mill repair projects scheduled during the year. This is expected to result in lower volumes in the first-quarter compared with the balance of 2025. We also wanted to comment, we've received some questions about recent press reports coming out of Indonesia regarding the potential change in requirements for retention of export proceeds.
There were new regulations issued in 2023 and that required PTFI to deposit 30% of its US dollar export proceeds in a domestic cash-bearing account for 90 days. The government is currently considering potential changes to this regulation, which would increase the requirement, but also allow withdrawals from the balances to fund business requirements. The details of the potential modifications have not been finalized and Freeport and other companies in Indonesia are discussing the proposals with the government in an effort to avoid requirements that could have a negative impact on our business. I'll move to our -- to our growth and innovative leach opportunity where we continue to be encouraged by the significant value potential from this initiative. The chart on the left-side of Slide 8 shows our progress over the last few years.
We've been successful in deploying a new series of operating practices to recover incremental copper previously thought to be waste. Our recent gains have been in the areas of adding scale to our targeted solution injection wells, innovative approaches to areas in the leaf stockpile previously inaccessible and expanding thermal covers of -- on-top of the stockpiles and optimizing our solution chemistry. We have several additional projects underway in 2025 and we're targeting reaching the annual run-rate of GBP300 million by the end of this year with the potential to produce 300 million to 400 million pounds during 2026 from these initiatives. We're really excited about projects being planned to add heat to the stockpiles and field testing of additives.
Ultimately, our goal is to achieve GBP800 million per annum from this value-enhancing growth initiative, the size of a major new mine that's got very low capital investment required, very low incremental operating costs, which will significantly enhance the value and competitive position of our Americas production. Just to comment on the cost of this innovative leach, to date, it's been well below $1 incrementally per pound. And what's so exciting about it is we're bringing on production of a product that was considered waste in the past. We've already incurred the mining costs. So we're spending incremental dollars to get more copper and it's really a lot of value potential and that's why we're pursuing it so aggressively. We've got an extensive inventory of substantial residual copper as a materiality mine and we've got industry-leading technical expertise and a strong multidisciplined innovation team dedicated to the initiative.
On Slide nine is a brief update on our -- on our organic growth projects of all of which are brownfield opportunities where we can leverage existing assets and established operations. We talked about the leach opportunity. In addition, we also have opportunities for expansion at Baghdad and our Lone star operations in the US. At Baghdad, we're continuing to make investments in-site infrastructure and tailings expansion to position us to execute the project more efficiently when the time is right. We expect to have the majority or most of the autonomous trucks deployed in the field this year. That will provide the ability to be more efficient with labor at this remote location.
In parallel, we're also continuing to pursue opportunities to reduce the capital intensity of the project. We're monitoring markets and site-specific factors and hope to be in a position to make a decision on the path forward by the year end. In the Lonestar district where we already have existing operations, it's our newest mine in the US we're engaged in studies to define a major brownfield expansion. We're targeting opportunities there that could double the current production levels of 300 million pounds per annum. We've got a very large resource at this location and expect this district will become a significant asset for Freeport and Arizona in the next decade. And El Abra in Chile, we've talked about this in the past.
We're preparing an environmental impact statement. We expect to be complete and submitted by the end of this year. The project involves investment in a new concentrator of scale similar to the size of the concentrator we installed 10 years ago. We've got plans for investments in a desalinization of plant and also a pipeline system to support our water requirements. The opportunity from the project is to provide 750 million pounds of annual copper production. It's very large-scale and 9 million pounds of molybdenum per annum. It's got a long-lead time to it. It requires seven to eight years of lead-time, but we're currently advancing it to provide options for the future and value-driven options to boost our production in the future as the world needs more copper.
In Indonesia, we're continuing to develop the Liar ore body within the Grasberg District. That development continues towards a targeted commencement of production by 2030. We're also very excited about additional exploration opportunities below the deep MLZ ore body and expansion of our operating rights will set us up for additional long-term development options in this highly-attractive and valuable district. Our overall objective is this to move quickly to define the opportunities across the portfolio, rank them on value potential and allocate capital on a risk-reward basis to provide profitable growth options for the future.
We're going to be disciplined in our approach, targeting opportunities that enhance long-term value and where we believe we can create that value at a manageable risk. We're moving to our outlook on Slide 10, where we show a three-year outlook for sales volumes of copper, gold and molybdenum. Our copper guidance for 2025, as you'll note, has been adjusted by approximately 5%. That incorporates updated estimates for the mill maintenance projects planned in 2025 in Indonesia. Our gold estimates for 2025 are about 7% higher than the prior estimates and that's benefiting from inventory drawdowns during 2025 and also slightly higher ore grades for gold.
We provide quarterly estimates on Slide 25 of the reference materials. The first-quarter of volumes are expected to be the lowest of the year because of mill maintenance and timing associated with the expected export approvals, but you'll see we get back to large-scale production as we move through the year. Our 2026 guidance is for copper is unchanged and our goal for 2026 is up about 100,000 ounces compared with our prior guidance. We've added 2027 to our outlook, which is similar to the outlook for 2026. Six. For Slide 11, we show our cost estimates for 2025 and we show the geographic mix, which has an impact on the overall average. When you look at our cash cost estimate currently for 2025 of $1.60 per pound, that compares to $1.56 per pound in 2024.
The two results are similar, but the weighting of volumes between the regions results in a slight increase. The important point we want to get across on this slide is that we expect US costs to be lower in 2025, and we're focused on driving these costs lower as we go-forward. You can see that the cost by region presented on Slide 24 in the reference material, which will show you the makeup of the cost. I'll now turn the call over to Marie, who is going to review our cash-flow outlook and then we'll come back and take your questions. Turn it to you, Maury.
