Copper prices rose on Wednesday (September 24) after Freeport-McMoRan (NYSE:FCX) announced that operations will remain halted at its Grasberg copper-gold mine in Indonesia.
The mine was shut down on September 8 following the ingress of 800,000 metric tons of wet material, which trapped seven workers. The bodies of two workers have since been recovered, and the search for the remaining five is ongoing.
In Wednesday’s release, Freeport-McMoRan stated that it is investigating the cause of the incident, noting that it is unprecedented in the history of operations at Grasberg’s block cave operations.
It is expected that the investigation will be completed by the end of 2025.
Due to the mine’s closure, Freeport has adjusted its guidance, reporting that third quarter consolidated sales will be 4 percent lower for copper and 6 percent lower for gold compared to its July estimates.
Furthermore, Grasberg’s closure means sales from the mine during the fourth quarter will be insignificant; the company previously forecast the sale of 445 million pounds of copper and 345,000 ounces of gold.
According to Freeport-McMoRan, a preliminary assessment indicates a delayed restart of operations at Grasberg, resulting in the deferral of significant production in the near term. The expectation is that the unaffected Big Gossan and Deep MLZ mines could restart midway through the fourth quarter. However, a ramp-up at the Grasberg Bloc Cave is not expected to begin until the first half of 2026, with the mine potentially returning to full production in 2027.
Grasberg is one of the world’s largest copper and gold mines, producing 1.7 billion pounds of copper and 1.4 million ounces of gold annually. Freeport holds a 49 percent interest in the mine, with the Indonesian government owning the rest.
The announcement caused copper prices to spike nearly 5 percent in trading on Wednesday, climbing to US$4.84 per pound on the COMEX and US$9,900 per metric ton on the London Metal Exchange.
Freeport’s share price tumbled 16.95 percent in trading, closing the session at US$37.67 after opening the day at US$41.66.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
