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(Singapore, October 15, 2026)--Moody's Ratings (Moody's) has affirmed Freeport Indonesia (P.T.)'s (PTFI) Baa3 issuer and senior unsecured bond ratings.
The rating outlook is stable.
"PTFI's credit metrics will remain strong, with leverage just under 1.0x over the next 12–18 months as the company continues to restart operations at the Grasberg mine," says Rachel Chua, a Moody's Ratings Vice President. "Supportive copper and gold prices will help cushion the impact of lower production in 2026, with production expected to recover in 2027 as operations ramp up."
RATINGS RATIONALE
The September 2025 mud rush at the Grasberg Block Cave (GBC) mine, which resulted in a suspension of underground operations, highlighted the sensitivity of PTFI's cash flows to disruptions at a single, technically complex asset. The company has resumed production at the unaffected Deep Mill Level Zone and Big Gossan mines, completed remediation of the affected portions of GBC in the first quarter of 2026, and started a phased restart of Production Blocks 2 and 3 from March 2026.
PTFI targets around 65% production capacity in the second half of 2026 and near full capacity by year-end 2027, although Production Block 1S remains under remediation and is expected to restart in mid-2027.
Gold and copper prices have remained elevated over the past year. As of October 2026, gold prices averaged $4,600 per ounce, while copper prices averaged $6.20 per pound year to date, supporting PTFI's earnings and cash flow generation despite the lower production volume in 2026.
Regulatory risk in Indonesia has heightened, including from announced royalty rate increases for several metals such as copper and gold. However, we do not expect PTFI to be affected because its mining license provides stability on fiscal terms, including royalties of 4% for copper and 3.75% for gold through 2041.
In 2026, the Indonesian government signed a memorandum of understanding (MOU) with Freeport-McMoRan Inc. and PTFI to extend PTFI's operating license at Grasberg beyond 2041 for as long as economically recoverable resources remain, subject to regulatory review and compliance. In exchange, FCX will divest an additional 12% stake to the Indonesian government in 2041, reducing its ownership in PTFI to around 37% from 2042.
We view the MOU as credit positive because it supports PTFI's ability to operate one of the world's largest copper and gold deposits over the long term, while preserving the existing governance and operating structure under its mining license.
PTFI's Baa3 rating continues to reflect its established track record of operations at the Grasberg mineral district, long reserve life, very low-cost operations given the significant gold content in its copper concentrate, strong EBITDA margins, and prudent financial policies and solid financial metrics.
At the same time, the rating incorporates PTFI's limited operational, commodity and geographic diversification.
LIQUIDITY
PTFI has excellent liquidity through 2027. As of 30 June 2026, the company had cash and cash equivalents of $381 million. Together with estimated operating cash flow of $6.0 billion through December 2027 and access to $4 billion of undrawn committed credit facilities, PTFI will have sufficient funds to address debt repayment, capital spending and dividends of $6.8 billion through 2027.
OUTLOOK
The stable outlook reflects our expectation that PTFI will gradually restore production in line with its mining plan, while keeping costs low and maintaining strong profitability. It also reflects our view that PTFI will manage capital spending and dividend distributions prudently while maintaining excellent liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating pressure is limited, given PTFI's limited geographic and product diversification compared with its similarly rated mining peers.
An upgrade would require an improvement in its business profile through product and geographic diversification, while adhering to conservative financial policies and maintaining a prudent approach towards further investments and shareholder distributions.
In conjunction with the qualitative factors, an upgrade would also require (1) leverage, measured by debt/EBITDA, below 1.5x and (2) EBIT margin above 50%, both on a sustained basis. The company also has to maintain an excellent liquidity position, characterized by a healthy cash balance and a well-managed debt maturity profile.
On the other hand, we could downgrade PTFI's rating if its operating performance weakens, including from a decline in production or a significant increase in cash costs.
We could also downgrade the rating if the smelter faces meaningful disruptions and the government does not allow PTFI to export concentrate during the outage; PTFI adopts a more aggressive financial or dividend policy; or its liquidity deteriorates.
Specific indicators that we would consider for a downgrade include (1) leverage exceeding 2.0x-2.25x on a sustained basis; and (2) EBIT margin below 35%. A deterioration in the credit quality of its shareholders would also lead to downward pressure on the rating.
The principal methodology used in these ratings was Mining published in February 2026 and available at https://ratings.moodys.com/rmc-documents/459824. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement.
Freeport Indonesia (P.T.) (PTFI) holds the exclusive right to mine and operate the Grasberg minerals district, one of the largest copper and gold mining deposits in the world in terms of mineral reserves and production. Its special mining license was granted by the government in 2018 and will expire in 2031. In February 2026, PTFI signed a memorandum of understanding with the Indonesian government to extend its operating rights at the Grasberg minerals district, supporting an amendment to its special mining license to provide for a life of resource extension of operating rights.
FCX owns 48.76% of PTFI and the remaining 51.24% is collectively held by Indonesian state-owned enterprise MIND ID and PT Indonesia Papua Metal Dan Mineral. (ends)