Chainge in fair value of contingent consideration

[Table of](#i43d04c9d26874e33802bdf64c458414a_7) [C](#i43d04c9d26874e33802bdf64c458414a_7)[ontents](#i43d04c9d26874e33802bdf64c458414a_7)TF Holdings Limited - Discontinued Operations.  In 2016, FCX completed the sale of its 70 percent interest in TF Holdings Limited (TFHL) to CMOC for $2.65 billion in cash (before closing adjustments) and contingent consideration of up to $120 million in cash, consisting of $60 million if the average copper price exceeded $3.50 per pound and $60 million if the average cobalt price exceeded $20 per pound, both during the 24-month period ending December 31, 2019.   
The contingent consideration was considered a derivative, and the fair value was adjusted through December 31, 2019. FCX realized and collected in January 2020 contingent consideration of $60 million because the average cobalt price exceeded $20 per pound during the 24-month period ending December 31, 2019 (no amount was realized associated with the copper price). Gains resulting from changes in the fair value of the contingent consideration derivative totaling $3 million in 2019 were included in net income from discontinued operations and primarily resulted from fluctuations in cobalt prices. In accordance with accounting guidance, FCX reported the results from TFHL as discontinued operations in the consolidated statements of operations because the disposal represented a strategic shift that had a major effect on operations.  
NOTE 3.  OWNERSHIP IN SUBSIDIARIES AND JOINT VENTUREOwnership in Subsidiaries.  FMC produces copper and molybdenum from mines in North America and South America. At December 31, 2021, FMC’s operating mines in North America were Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami located in Arizona; Tyrone and Chino located in New Mexico; and Henderson and Climax located in Colorado. FMC has a 72 percent interest in Morenci (refer to “Joint Venture - Sumitomo and SMM Morenci, Inc.”) and owns 100 percent of the other North America mines. At December 31, 2021, operating mines in South America were Cerro Verde (53.56 percent owned) located in Peru and El Abra (51 percent owned) located in Chile. At December 31, 2021, FMC’s net assets totaled $18.4 billion and its accumulated deficit totaled $12.6 billion. FCX had $111 million in loans outstanding to FMC outstanding at December 31, 2021.  
FCX owns 48.76 percent of PT-FI (refer to “PT-FI Divestment”). At December 31, 2021, PT-FI’s net assets totaled $12.7 billion and its retained earnings totaled $8.4 billion. FCX had no loans to PT-FI outstanding at December 31, 2021.  
FCX owns 100 percent of the outstanding Atlantic Copper (FCX’s wholly owned smelting and refining unit in Spain) common stock. At December 31, 2021, Atlantic Copper’s net assets totaled $167 million and its accumulated deficit totaled $379 million. FCX had $274 million in loans to Atlantic Copper outstanding at December 31, 2021.   
PT-FI Divestment. On December 21, 2018, FCX completed the transaction with the Indonesia government regarding PT-FI’s long-term mining rights and share ownership (the 2018 transaction). Pursuant to the divestment agreement and related documents, PT Indonesia Asahan Aluminium (Persero) (PT Inalum, also known as MIND ID), an Indonesia state-owned enterprise, acquired all of Rio Tinto plc's (Rio Tinto) interests associated with its joint venture with PT-FI (the former Rio Tinto Joint Venture) and 100 percent of FCX's interests in PT Indonesia Papua Metal Dan Mineral (PTI - formerly known as PT Indocopper Investama).  
In connection with the 2018 transaction, PT-FI acquired all of the common stock of PT Rio Tinto Indonesia that held the former Rio Tinto Joint Venture interest. After the transaction, PT Inalum’s (26.24 percent) and PTI’s (25.00 percent) collective share ownership of PT-FI totals 51.24 percent and FCX's share ownership totals 48.76 percent. The arrangements provide for FCX and the other pre-transaction PT-FI shareholders (i.e., PT Inalum and PTI) to retain the economics of the revenue and cost sharing arrangements under the former Rio Tinto Joint Venture. As a result, FCX’s economic interest in PT-FI is expected to approximate 81 percent through 2022 and 48.67 percent thereafter (see further discussion below).   
FCX, PT-FI, PTI and PT Inalum entered into a shareholders agreement (the PT-FI Shareholders Agreement), which includes provisions related to the governance and management of PT-FI. FCX considered the terms of the PT-FI Shareholders Agreement and related governance structure, including whether PT Inalum has substantive participating rights, and concluded that it has retained control and would continue to consolidate PT-FI in its financial statements following the 2018 transaction. Among other terms, the governance arrangements under the PT-FI Shareholders Agreement transfers control over the management of PT-FI’s mining operations to an operating committee, which is controlled by FCX. Additionally, as discussed above, the existing PT-FI shareholders will retain the economics of the revenue and cost sharing arrangements under the former Rio Tinto Joint Venture, so that FCX’s economic interest in the project through 2041 will not be significantly affected by the transaction. FCX believes its conclusion to continue to consolidate PT-FI in its financial statements is in accordance with the U.S. Securities and Exchange Commission (SEC) Regulation S-X, Rule 3A-02 (a), which provides for situations in which 125
