Shares of Freeport-McMoran are down 10.5% after detailing a fatal mudrush incident at its massive Grasberg mine. As a result, copper prices are up 2.6% in a shift that could ultimately tighten the industrial metals market further.
About 800,000 tonnes of wet material surged through multiple levels of the mine on September 8 – an unprecedented event in Grasberg’s decades of block cave operations. Work has been halted across the Grasberg district since the incident with two workers dead and five still missing.
The overall Grasburg mine in Indonesia is the second-largest in the world and represents 6-7% of global copper output. The block mine portion where this occurred represents 70% of the mine's production. The block also links to other production areas and Freeport detailed spillover effects.
"PTFI is evaluating the impact of the incident on future production plans. Production forecasts will be revised to incorporate scheduling of required repairs and a phased restart and ramp-up of production.
Sufficient information is not currently available to forecast future production estimates. Preliminary assessments indicate that the impacts are likely to result in the deferral of significant production in the near-term (fourth quarter of 2025 and the year 2026) as repairs are completed and a phased restart and ramp-up of operations commences. A return to pre-incident operating rates could potentially be achieved in 2027."
Freeport is guiding that Q3 sales will come in 4% lower for copper and 6% lower for gold. But the bigger hit is forward-looking:
Q4 2025: Sales of copper and gold “insignificant” vs. prior forecast of 445M lbs Cu and 345k oz Au.
2026: Production could be down 35% vs. pre-incident estimates.
2027: Earliest target for return to pre-incident output.
For 2026, that could mean 270,000 tonnes of copper lost or about 1.2% of global supply. That's enough to move the entire market into a deficit position as the International Copper Study Group had previously forecast a surplus of 209,000 Mt and there are also problems at the QB2 ramp up in Chile.
I've been highlighting the potential for a copper squeeze in the back half of the decade for years and this really underscores that copper is the simplest investment theses anywhere.
