Posted on 26 Sep 2025
Phoenix-based Freeport-McMoRan on Wednesday declared force majeure on contracts from its Indonesian operations after a fatal mudslide at its Grasberg copper and gold mine.
The company reported that on 8 September, a sudden rush of around 800,000 tonnes of wet material entered its Grasberg Block Cave (GBC) mine and travelled rapidly to multiple mine levels. It reached the service level of the mine, trapping seven workers, of whom two are confirmed casualties and five remain missing.
The incident was described as “unprecedented” in the company’s multi-decade history of block cave mining operations. While an investigation is ongoing, Freeport says the search has been prioritised and operations remain suspended, Kallanish notes.
Although the company cannot currently forecast future production estimates, it anticipates “significant” production impact in the near-term – Q4 2025 and 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,” the company says in a statement. “PTFI [Freeport Indonesia] production in 2026 could potentially be approximately 35% lower than pre-incident estimates (previous production estimates for 2026 approximated 1.7 billion pounds of copper and 1.6 million ounces of gold).”
According to Jefferies analysts, Grasberg is one of the largest and lowest-cost mines in the world, accounting for roughly 3% of global mined copper supply. This disruption, coupled with other recent incidents that have taken production offline, should lead to a tighter copper market and a higher copper price.
“In light of a series of significant recent downgrades to expected copper production (Grasberg, Codelco, Hudbay, Ivanhoe, and others), it is very difficult to be bearish copper, especially when we have entered a Fed rate cut cycle,” says Jefferies equity analyst Christopher LaFemina. “Copper is again heading to >$5/lb imminently, in our view.”
Following the news, copper prices gained nearly 4% in London to trade at $10,350/t. COMEX copper futures also rose 4% to $4.77/lb. Meanwhile, Freeport’s share price sank by 16%, while copper producers’ stocks increased.
“We would expect a basket of copper miners to outperform the market between now and year-end. Freeport should outperform as well, after the initial selloff related to this news,” LaFemina says. “Glencore, Lundin Mining and First Quantum will be the clear beneficiaries… Anglo American, Antofagasta and Teck should significantly benefit as well.”
Freeport says it will seek recovery of damages under its insurance policies, which cover up to $1 billion in losses, subject to a limit of $0.7 billion on underground incidents, after a $0.5 billion deductible.
The company forecasts its Q3 consolidated sales to be around 4% lower for copper than the July 2025 estimates. For Freeport Indonesia, Q4 sales of copper “would be insignificant” compared to previous estimates of 445 million pounds of copper. Yet, roughly 60% of Freeport’s copper production comes from North and South America.
Source:Kallanish
