Key Takeaways
- Freeport-McMoRan (FCX) declared force majeure at its Grasberg mine in Indonesia following a fatal accident on September 8, leading to a significant cut in Q3 copper and gold sales guidance.
- The disruption at Grasberg, which accounts for approximately 3.2% of global mined copper, caused copper prices to surge by over 3% on the London Metal Exchange, reaching a 15-month high.
- The incident involved a mud flow that resulted in two confirmed fatalities and five workers still missing, prompting a halt in operations and a projected 35% reduction in Grasberg's 2026 production compared to previous estimates.
Copper prices experienced a sharp rally on Wednesday after Freeport-McMoRan (FCX) announced it had declared force majeure on contracted supplies from its Grasberg mine in Indonesia. The declaration follows a severe accident at the mine on September 8, which led to a halt in operations and a subsequent reduction in the company's third-quarter copper and gold sales guidance.
The global mining giant now expects consolidated Q3 copper sales to be approximately 4% lower and gold sales 6% lower than its prior forecasts of 1 billion pounds of copper and 350 thousand ounces of gold. This downward revision immediately impacted the market, sending copper futures on the London Metal Exchange up by more than 3% to their highest level in over 15 months, trading above $10,172 per ton. CME futures also traded above $10,496 per ton, up 2.74% for the day.
The incident at Grasberg, one of the world's largest copper and gold deposits, involved a large flow of wet material that blocked access to parts of its underground mine. While two workers have been confirmed fatally injured, the search continues for five others who remain missing. The mine, which produces a significant 3.2% of global mined copper, has been fully shut for nearly two weeks, underscoring the vulnerability of global commodity supply chains to operational disruptions.
Analysts from BMO Capital Markets noted that while a downward revision was anticipated, the preliminary 35% cut to Grasberg's 2026 production outlook is an incremental negative, with output not expected to return to pre-incident levels until 2027. The Grasberg Block Cave ore body alone represents 50% of PT Freeport Indonesia's estimated proven and probable reserves and approximately 70% of its previously forecast copper and gold production through 2029.
Shares of Freeport-McMoRan (FCX) reacted sharply to the news, falling as much as 10.4% in New York trading. Conversely, shares of rival mining companies like Glencore PLC (GLEN), Teck Resources (TECK), and Antofagasta (ANTO) saw gains, benefiting from the prospect of a tighter copper market. The disruption at Grasberg is further compounded by other supply-side issues, including Hudbay Minerals (HBM) halting operations at its Constancia mine in Peru due to ongoing political protests.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.