The global copper market received a devastating blow on September 24, 2025, when Freeport-McMoRan declared a force majeure at its flagship Grasberg mine in Indonesia. The announcement came after a catastrophic mud rush incident that claimed two lives and left five workers missing, triggering the largest single-day drop in the company’s share price since April.
The crisis began on September 8, when approximately 800,000 metric tonnes of wet material rushed through multiple levels of the underground Grasberg Block Cave mine. Two workers were confirmed dead, while search efforts continue for five missing colleagues.
Market Carnage Unfolds
The human tragedy immediately transformed into a financial catastrophe. Freeport-McMoRan shares plummeted 16.95% on the day of the announcement, hitting a five-month low of $56 per share.
Freeport-McMoRan Inc.Share Price
Copper prices surged in the opposite direction. Three-month copper futures on the London Metal Exchange jumped 2% to $15,258 per tonne – the highest level in over 15 months. COMEX copper futures climbed to $7.25 per pound, marking a 3.7% daily gain.
The market response reflects Grasberg’s massive footprint in global supply chains. The mine accounts for approximately 3.2% of global mined copper and represents 70% of PT Freeport Indonesia’s previously forecast copper and gold production through 2029.
Production Outlook Devastated
The scale of disruption becomes clearer when examining revised production forecasts. Freeport now expects third-quarter copper sales to drop 4% and gold sales to fall 6% compared to July estimates.
The long-term impact appears even more severe:
- Fourth-quarter 2025 sales expected to be “insignificant”
- 2026 production potentially 35% lower than pre-incident estimates
- Full recovery not expected until 2027
BMO Capital Markets noted the preliminary 35% cut to 2026 production outlook as “an incremental negative,” with Grasberg output not expected to return to pre-incident levels until 2027.
Supply Chain Disruption Spreads
The timing couldn’t be worse for global copper markets. Prior to the Grasberg incident, Fastmarkets estimated that 497,000 tonnes of copper was lost in 2025 due to mine disruptions. The Freeport crisis compounds existing supply constraints across the industry.
Other major disruptions include:
- Hudbay Minerals shutting operations at Peru’s Constancia mine due to political protests
- Chile’s Codelco grappling with ongoing production issues
- Various smaller-scale disruptions across global mining operations
Winners and Losers
While Freeport shareholders endured massive losses, competing mining companies benefited from the supply shortage. Rival mining companies like Glencore (+3%), Teck Resources (+5%), and Antofagasta (+7.4%) saw gains on the prospect of a tighter copper market.
The copper sector has been volatile throughout 2025, with Australian investors particularly focused on ASX copper stocks as global demand surges.
Insurance and Financial Protection
Freeport maintains insurance coverage of up to $1.5 billion for losses, though underground incidents are capped at $1.05 billion after a $750 million deductible. This protection may partially offset the financial impact, though analysts suggest the coverage falls short of potential total losses.
Recovery Timeline Uncertain
The company anticipates a phased restart of unaffected sections by late 2025, with the Grasberg block cave beginning a gradual ramp-up in early 2026. However, full recovery isn’t targeted until 2027, making this one of the longest production disruptions in modern mining history.
The investigation into the unprecedented mud rush continues, with external experts working alongside company officials to determine the exact cause.
My prayers to the seven poor workers from Freeport Indonesia, who have been trapped for a week in the underground mine in the Grasberg Block Cave Underground area in Tembagapura, Mimika, Papua. pic.twitter.com/cETmosNEpH
— Aida Greenbury (@AidaGreenbury) September 15, 2025
Global Market Implications
Goldman Sachs analysts have already revised their 2025 copper market forecast from surplus to deficit following the Grasberg disruption. The bank expects significant annual production declines that could persist well into 2026.
BHP’s increasing focus on copper production positions Australia’s largest miner to potentially benefit from the supply shortage, though global infrastructure demands continue to outpace available supply.
The crisis highlights the fragility of global copper supply chains, particularly as the world transitions toward renewable energy and electric vehicles – both heavily dependent on the red metal.
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Looking Ahead
The Grasberg disaster represents more than a mining accident – it’s a stark reminder of how quickly global commodity markets can shift. With copper demand projected to surge throughout the energy transition, every major production loss reverberates across multiple industries.
For investors, the event underscores both the risks and opportunities in commodity markets. While Freeport shareholders face uncertain recovery timelines, companies with reliable copper production may find themselves in increasingly advantageous positions.
As search efforts continue for the five missing workers, the mining industry faces difficult questions about safety protocols and risk management in complex underground operations. The answers may reshape mining practices industry-wide.
FAQs
1.What is force majeure in mining?
Force majeure allows companies to legally suspend contractual obligations due to extraordinary circumstances beyond their control, such as natural disasters or accidents. It protects Freeport from penalties for failing to deliver copper to customers during the crisis.
2.How much copper does Grasberg produce annually?
Grasberg typically produces about 1.7 billion pounds of copper per year, making it the world’s second-largest copper mine and representing approximately 3.2% of global mined copper.
3.When will Grasberg resume full production?
Freeport expects unaffected areas to restart by late 2025, with the main Grasberg Block Cave beginning phased restart in early 2026. Full pre-incident production levels aren’t expected until 2027.
4.How has this affected copper prices?
Copper prices jumped over 3% immediately following the announcement, reaching 15-month highs above $7.25 per pound on COMEX and $15,258 per tonne on the London Metal Exchange.
5.What does this mean for other mining companies?
Competing copper producers have seen share price gains as investors anticipate tighter markets and higher copper prices. The disruption could benefit companies with reliable production capacity.
