(music playing) - Welcome to the Aaron Harber Show my guest today Richard Adkerson of Freeport-McMoRan.

The chairman of the entire company and long serving CEO as well.

Thanks for joining me Richard.

- Good to be here Aaron.

- Great to have you on the show, I want to start off by you've been honored by the mining industry, in the Hall of Fame, people have respected you for decades, I'd really be interested in your take on how the mining industry has changed over the time that you have been observing it and been in it?

- It's changed in many ways and continues to change you know particularly with changing economy towards clean energy and the need for metals and particularly copper to support that.

But there's been many changes, you know the history of the mining industry particularly in the West was tough.

Years passed, there weren't government regulations, people did not realize some cases didn't care about environmental consequences, and now that's at the forefront of each company, how you affect the environment, how you deal with communities how you deal with workforces, it's business of scale technical business, but those issues have risen to be as important as the issues relating to mining, engineer, geology, energy and that sort of thing.

Freeport is involved not just with copper but also with gold, with molybdenum as well, what roles do those other minerals play in the company's operation?

- Our gold production comes from our very large mine in Papua, in Indonesia.

It's today, the largest underground mining operation ever done in the mining industry and world second largest copper producer and even though gold is a byproduct, it's the largest single gold mine in the world.

It's that, it's a copper mine you have gold in the or and recover it and sell it.

The pure gold companies in that respect, molybdenum is also a byproduct in our copper mines but in your state of Colorado we have two molybdenum mines that go back in history a long ways the Climax Mine near Leadville and in Henderson across I 70.

Molybdenum is a strategic metal, we are in it because we have it as a byproduct we are the world's largest producer, not a huge part of our revenues but a strategic metal, it has a lot of uses.

It's good to be in.

- All right tell me about copper if you are projecting copper prices put on your prognostication hat and you are projecting copper prices five years out, what is your five or 10 years out, what's your guess that's gonna happen to copper?

- It's gonna go higher, I have some catastrophic geopolitical or economic event in the world, two thirds or more of copper goes into producing transmitting or using electricity.

Just think about that, today's world in in many respects is becoming more and more electrified.

The easy thing to point to in green energy any investment in carbon reduction requires a significant amount of copper.

But it's beyond that, is connectivity around the world we certainly see that in rural areas of the United States as artificial intelligence and the major data centers are required in everyday life, you see where electricity is becoming more and more prominent.

Copper physical characteristics are such, that it makes it very difficult to replace it with some other metal.

When that happens it's taking advantage of, but it's basic uses are projected by its physical qualities and ability to conduct electricity.

So that's really the story about copper it's about electricity.

- And I want to talk about EVs and related topics in climate change, speaking of climate change it has had an impact on shipping through the Panama Canal, how has that impacted your company, how has it impacted copper?

- That in the situation in the mid-80s with the Red Sea are disrupting shipping lanes, over and over again, there's some current issue that comes into play.

For a while he had the big back up in shipping into the West Coast, United States, and then to Asia.

So there's always these factors that are occurring that make it challenging to simply supply targets.

- But they are temporary.

- Temporary but not that event but other events occur.

So it's a feature of our business that you have supply disruptions, and another thing about the resource for copper is that copper has been used for eons.

And the easy copper deposits, high-grade deposits have generally been found and developed.

So today newposits are much lower quality than historical.

They are often located in remote locations, sometimes troublesome political jurisdictions.

And more and more underground which is more expensive.

So going along with this bright outlook for copper from a demand standpoint, because electricity, this supply challenges are what makes it so attractive, and 20 years ago when I became CEO we made a commitment strategically to copper, as the fundamental of our business and we are focused on it and feel good about that decision and excited about where we stand now and what the future holds.

- Yes you've done well.

So what about the competitiveness of copper operations in the United States, versus Africa, South America, how do you juxtapose those?

- That's something that's been a key feature of our business.

Earlier in my career I remember when it was called the Southwest copper district.

Arizona, New Mexico, and into the country of Mexico, it was considered to be dead because prices were low.

Then China emerged, it was about 20 years ago about the time that I became CEO.

China had been a small part of the global market, came in today it's 50 to 60% of copper consumption goes into China.

What's happened in the US is it made the older low-grade minds much more economic.

And so today, we operate nine mines in the US, we produce well over half of the mined copper supply about one third of the copper downstream used in US economy from our mines in the US.

And the future is great.

Offsetting low grades, are tax situations can change, but we as a company have been able to gain community support for our business worker support, supports by Native Americans, and all of that helps us to be profitable in the United States and we have great plans for growing the business and investing significant capital there.

- So in terms of growing the business for example, talk about the role of copper in the electronic vehicle.

Future, the transformation where obviously from a public policy perspective, there's a huge effort to expand the sale and use of EV's, at the same time it seems like a lot of Americans are not as enthusiastic about electric vehicles, as folks who are seeking that expansion, talk about those two things and have you been surprised at the public's reaction where they are saying you know, we are not that excited about EVs as you want us to be.

- This is one example and a poor example of where the aspirations for carbon reduction, have to meet the realities of trying to accomplish those aspirations.

And the challenges with EVs are simply the battery life.

And you know particularly seeing that in cold weather, the practicalities of keeping the battery charged, and keeping the vehicles moving.

As automakers who were making the push supportive about policymakers and so forth, is one of those cases of reality meeting aspirations.

I was just in Indian Wells for the tennis tournament last week and there are electric cars in California a lot more than other places, and China is producing these electric vehicles very economically, so it's part of the future but that's going to have to be dealt with.

And beyond that we are trying to develop these enormous haul trucks that we have in our mines, to make them electric working with Caterpillar and Komatsu to try to come up with that type of vehicle, these are huge, 300,000 - 400,000 tons of material carried in them.

Trying to keep those batteries charged and working is a real challenge.

So the movement is there, it's not going to occur smoothly, it's going to require technology advancements to support these things.

But the world needs to deal with carbon emissions.

- Speaking of that transformation, so Toyota for example is a solid-state battery that's going to not only greatly increase miles or miles you can get, but go way past internal combustion engines, and they are less prone to any kind of fire or explosion, it's much lighter, and in that vein, I think a lot of people when they buy an electric vehicle they know it runs on battery you think well if I need to replace the battery, I replace my car battery all the time and it's a whole different story, 100 times the cost, and they don't always know that, but when you see a company like Toyota with those goals with a solid-state battery, what's the implication for the internal combustion engine and what's the implication for copper?

- Toyota was initially looking at hydrogen for fuel for their vehicles.

Other carmakers were going to traditional batteries, the course of history as such, that the world needs to find ways of reducing carbon's automobiles big source of that, and how that technology develops, you cannot sit here today and say this is what's going to happen, because a lot of smart people are working to solve these problems, just think about where we were with handheld computers, you and I were there and we didn't have those, and that began to emerge and then all of a sudden the trajectory went up like that.

So my feeling is that we are going to see technology advances that we cannot sit here and predict.

But people all over the world are working on these and the goal is one that has tremendous popular support despite all the things in the US it's gotta be a political issue but around the world wherever I go people are talking about climate change in talking about the need to address it, and so there will be ways of doing it, but they will have to be practical.

- What policies will you talk about climate change and the transformation that's necessary what policies hurt that transformation?

- I am a believer in free markets.

- Join the club.

- I'm afraid our club is shrinking.

Part of that is due to a lack of education, but that's another discussion you and I can have.

- In the US, to develop a new copper mine, our new minds are expansions of our existing mind, brownfield expansions and even a brownfield expansion takes 6 to 10 years, 6 to 10 years of planning, permitting, that's the point I want to make.

Where government could help in a lot of ways is to put more resources and get a more informed permitting process, that does not lower standards, not arguing for lower standards but trying to avoid duplication of state standards and trying to make the process more efficient and more timely so projects can go forward quickly.

And government regulations are needed, but they need to be developed on a good basis on a timely basis and realistically.

My experience has been you cannot look to government to solve problems for what works right is to facilitate private sectors solving those issues.

- So one of the proposals when I had US Sen Dan Sullivan on the show years ago, one of his concepts that I thought made sense, was to broker kind of a compromise between folks who are very concerned, understandably about the environment and environmental implications and ramifications of mining or any type of activity.

And what Dan said was why don't we kind of divide the problem in two and if you are going to create a new mine, or Newbridge or whatever the case may be, that has environmental impacts, you know there should be a full-fledged analysis of that.

On the other hand, if you already have something in place, if you already have of mine in place if you already have a bridge you want to replace or expand, then that permitting process should be accelerated.

That should be of a much much more simple process and not take five or 10 years to do.

So I thought that was an interesting approach, but-- - Well I have a lot of respect for the senator, known him for some time, and I just simply say I have a lot of respect for him, and what he says is true, that's my point about making the process more sophisticated or effective by putting good people on it and spending the money to do that, and doing it in a fair way.

In our case, sometimes the expansion of a mine that's there because of the nature of the expansion cannot be as complicated as a new mine.

So we cannot put a cookie-cutter around something that's as significant as our minds.

You know our mine [indiscernible] is the largest in Southwest Arizona and largest in North America, and we are moving 800,000 tons of rock out there it's just enormous, and we've got several expansion projects, but we have to take into account what impact it has on the environment and on the community, and going back to your original question I think mining companies today are more aware of their responsibilities and recognize how important it is to do things in the right way and to work to support people and communities and government.

- You are kind of in an interesting position when you think about it so on the one hand there are a lot of folks on the environmental side politically who are really against almost any kind of significant project.

On the other hand, many of those same people are very supportive of the electronic vehicle transformation.

And you play, your company and your colleagues in the industry play an absolutely key role in providing the critical materials needed for the revolution, and I'm just curious have you ever had those kinds of discussions?

The real contradiction as far as I'm concerned.

- You want us to produce EV's but you don't want us to produce the materials that make EVs.

- So one approach and I've seen it happen with people in the industry as you get exasperated with critics, who are driven often by really good aspirational goals, but don't have the knowledge and the wherewithal to really evaluate it.

One of the things I really had to learn because I'm not a particularly patient person but to learn patience and recognize that not just to get frustrated because of the things you're saying, that people want to have clean air, and want to have their iPhones, they want to have their electric vehicles, and so forth and yet they opposed you gotta recognize going in that that's good to be their position not get put off by too much, but try to sit down and work with them.

And do the right thing yourself.

That's the real key to it, you gotta understand what those goals are and how you can fulfill the mission to all your stakeholders and your shareholders you gotta make money for's shareholders which you end up hurting shareholders if you cut corners and don't do things the right way.

So it's really been a huge part of my life because I've had protesters at my home sat down with them, and taken a lot of heat, and I love the outdoors, outside of work, my life is built around the natural world, and I consider myself an environmentalist, I know I am, because I do things to protect nature.

- One of the things that interests me, I would like your take on, is the fact that here in the United States we take electricity and energy for granted, I mean we fill up our cars of gasoline anytime we want, we flip a switch and get light and heat, power, we can cook, yet over a billion people in the world have no access to energy at all, unless they are burning sticks or something like that, and another roughly billion have 1-2 billion have very limited access, housing you look at that and how do you reconcile that, with not only the transformation but the idea that most people in the United States and I think people who are honestly and sincerely concerned about the environment are not aware or I don't want to say don't care, but when it comes to policy-setting, setting those policies or aren't promoting policies which address the needs of people who simply are not as fortunate as we are, and I mean not as fortunate with an extraordinary gap with what we have, and what a few billion people do not have.

- So I believe that firsthand, I mentioned our big mine was in Papua, Indonesia it's one of the most remote places in the world when I first went there, 35 years ago, the most primitive people you can imagine you know.

We operate in Peru, we had a large mine in the Democratic Republic of the Congo because I see firsthand and I tell you one of the fulfilling things in my work, has been the ability to go into community life and give people jobs and improve their health situation, improve education, and give them opportunities, I came from [indiscernible] family my grandparents were small farmers in West Tennessee, and you know worked small farmers with mules, and raised what they ate, so I keep thinking about that, about the transformation in my lifetime for where my family was, Scottish-Irish people who were you know were living that sort of life, and God knows I have the opportunities that I had and I can relate to people like that particularly when I went to Africa, I grew up in the South, during the 60s and I saw the terrible effects of racism, and to go there and help people who ended up settling and had ties to new ones, in Mississippi and to see people whose heritage came from there, and to be able to help them in such a poor country health was bad, it's a good part of our job.

Hard part of our job.

Like I said, I keep trying to find opportunity from that, and not just frustration from having to deal with it.

Because it's a great market for copper by the way, you know we will have trouble getting electricity in the United States for all of our needs for electricity and get it transferred from where it's generated and where it's used then you go outside the United States, and that's just part of the opportunity for industry going forward.

- So speaking of the United States, it seems like the grid has become even more vulnerable than it has in the past, that does not make a lot of sense to me why is that, what has happened?

- Because of our need for electricity just the demand and increase.

- And also the aspirations to not have the electricity generated by hydrocarbons.

So you gotta change the ways being generated, and then you will have to have more and then it will be located in different places, you write around this country and you can see new power lines going up all over the country and all of the world, China which has had its economic problems actually saw an increase in copper demand last year, because of its investments in its grid, its investments in electric vehicles, and things like that that offset the problems in the next property sector.

So it's a feature of the world I mean it's so easy to talk about electric vehicles and wind power, and solar power and things like that for copper.

But it's beyond that, it's expanding of the grids around the world, to the more remote places and people in lower economic situations and eating more, and see what's happening in Indonesia the time I've been going there, it's going to be a much more modern nation Jakarta today is you know it's better than Houston when I first went there that was not the case, 35 years ago so it's you can see it firsthand when you've had opportunities and blessings that I've had going to places and seeing development occur.

- We only have a couple minutes left I want to do one last question you mentioned China, it looks like we are going to have a flood of vehicles and you referenced low cost vehicles how do American companies compete with what's coming from China there will be vehicles that are high quality and half the price of what we are selling vehicles for for EV's.

- Hendrick Kissinger was on our board and I got to be very close and personal friends with him, and listen to him a lot about international relations, the same way John McCain in our home state of Arizona I got to be very close with him and he had a different perspective about protecting democracy and so forth, but today is such a bipartisan situation to be anti-China, but you go other places in the world in people don't want to pick sides they want to be friends with China friends with United States, and that's where I think we need to have diplomacy to help find common ground when we can.

There are things about the political system in their country that they disagree with, we can look in the mirror and there's things about our country that you could criticize.

But at the end of the day, because of China's population and role in the world, it's going to be a force that we need to find ways of working with while sticking up for our position with strength, having a strong military, to bolster that strength, and to find a way to find common ground so we can make the world a better place.

- All right last topic, last question a couple questions, what does it take to be a great leader today?

- Self-confidence and self-reliance, first of all you have to be capable.

You know you got to have competency to do what you said about doing, but when you've got to be willing to make tough decisions, I think the best thing I've done is I built a group of people around me that we call it the Freeport family and we have a culture of working as a team together and a enjoy in my life, certainly being trained as an accountant couldn't go in and handle the technical side of the mining so you gotta have good technical people.

So I think that is a personal thing but then it works so much better when you have a sense of teamwork, and respect for people and ability to listen to people, but then there comes a time when you have to make the decision and you have to be self-confident enough to step up and make it.

- All right last question if you thought who you feel you were in the past or even today, if you had any examples of great leaders, who would be a couple examples and why?

- Different people like Kissinger, and John McCain.

They were great leaders.

In their own different ways, I can name many others but since I mentioned those I was close to them, they were, they had the ability to have confidence in an area and passion and straightforwardness, and ability to gain people's respect and that's really what it takes.

- Richard thanks so much for joining me.

- All right that was Richard Adkerson the chairman of Freeport-McMoran and the long-term serving CEO of the company recognized by the mining industry put into its Hall of Fame for his leadership for many many years.

I am Aaron Harber thanks for watching we'll see you next time.

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