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| Grasberg Block Cave mine |
Force majeure at Indonesia’s Grasberg mine tightens global copper supply
Copper prices surged following Freeport-McMoRan’s force majeure declaration at the Grasberg Block Cave mine in Indonesia. This move, prompted by a fatal underground incident, disrupted output from the world's second-largest copper mine and triggered sharp reactions across global markets.
Grasberg shutdown triggers multi-market ripple effect
Freeport’s announcement drove CME copper futures up 2.74%, closing above $10,496 per ton, their highest in over a year. Simultaneously, the London Metal Exchange (LME) saw three-month copper climb to $10,172 per ton, marking a 15-month peak. The immediate reaction highlights Grasberg's central role in global copper supply chains.
In contrast, Freeport’s shares fell 10.4%, reflecting investor concern over extended production halts. Meanwhile, competitors like Glencore (+3%), Teck Resources (+5%), and Antofagasta (+7.4%) gained, likely on anticipated price tailwinds. Despite the blow, Freeport retains 60% of its copper production base in the Americas, softening the overall operational impact.
Supply cut extends into 2026 amid mine infrastructure damage
The accident on September 8 caused an estimated 800,000 metric tons of wet material to inundate the PB1C block, killing two workers and leaving five missing. The incident halted all production at Grasberg and damaged infrastructure critical to adjacent blocks, affecting future output potential.
Freeport’s revised guidance projects a 4% reduction in Q3 copper sales and a 6% cut in gold output versus July forecasts. More notably, 2026 production could be slashed by 35%, with recovery to pre-incident levels delayed until 2027. The Grasberg Block Cave accounts for 70% of Freeport Indonesia’s copper and gold production outlook through 2029.
Wider copper market under additional pressure from Peru unrest
In a separate disruption, Hudbay Minerals halted operations at its Constancia mill in Peru due to escalating political protests. Peru is the world’s second-largest copper producer, and unrest there compounds the tightening supply outlook.
As a result, the dual disruption from Indonesia and Peru may create short-term price volatility. Supply-side constraints could boost investor sentiment toward copper equities and drive speculative interest across trading desks.
ScrapInsight Commentary
Grasberg’s force majeure deepens near-term supply risks in an already tight copper market. If disruptions persist into 2026, we may see sustained upward pressure on copper prices, particularly as green energy and EV demand accelerates. Market participants should monitor regulatory responses in Indonesia and protest dynamics in Peru closely, as both pose structural supply threats amid the global push toward critical mineral security.
