This quarter's results missed expectations, primarily due to an unexpected deterioration in the wet ore ratio at Grasberg's underground mine, which created production bottlenecks and forced a downward revision of production guidance for the next two years, though a long-term solution has been identified.

The proportion of wet ore draw points rose from 30% to 45%, causing 10 panels to be unable to maintain a 1:1 dry-to-wet ratio; an additional capital expenditure of $60–70 million was allocated for installing "spillminator" equipment; the North American leaching target remains at 800 million pounds of incremental output, mainly from additives and thermal technologies.

On the operational front, Grasberg is accelerating the installation of new hydraulic gates (spillminators) to handle wet ore—the first batch of equipment has already arrived at the mine, with phased completion planned. Leaching technology has made notable progress: the first additive has been deployed at Morenci, two next-generation additives have entered laboratory validation, and pilot programs for natural gas and geothermal heating have been launched. Political uncertainty in Peru has not affected operational stability.

Management lowered Grasberg's production guidance for 2026–2027 but reaffirmed that the long-term solution (equipment upgrades) is viable. The North American unit cost target of $2.50 requires reassessment due to rising input costs such as diesel, though the downward cost trend remains intact.

Positive signals: strong confidence in leaching technology (combined additives + thermal), which is believed to fundamentally transform North American operations. Negative signals: the wet ore issue at Grasberg exceeded expectations, and management acknowledged that early models underestimated this risk, introducing uncertainty into near-term execution pace.