Copper prices climbed after Freeport-McMoRan warned it cannot meet some customer commitments following a fatal accident at its Grasberg complex in Papua, Indonesia, the world’s second-biggest copper mine.
The company said a sudden flow of wet material swept through underground workings on Sept. 8, killing two workers and leaving five missing, and has now notified counterparties of force majeure while rescue and recovery efforts continue.
The supply shock rippled quickly through metals markets, london Metal Exchange copper rose nearly 4 percent on Sept. 24 to trade above 10,350 dollars a metric ton, while U.S. copper futures pushed higher as investors priced in a longer outage.
Freeport shares fell by double digits after the update, freeport trimmed its near-term sales guidance, citing suspended operations at the Grasberg Block Cave.
The company told investors that third-quarter copper sales will come in below July estimates and that the incident has curtailed gold volumes as well.
Management emphasized safety and said assessments are ongoing, with timing for a broader ramp-up still uncertain.
The force majeure lands at a fragile moment for global supply, weather and operational setbacks have already hampered output elsewhere this year, including recent disruptions in Chile and the Democratic Republic of Congo.
Analysts say the Grasberg stoppage risks flipping what looked like a modest 2025 surplus into a deficit if the shutdown drags, a scenario that supports higher prices into next year.
Investors are watching two clocks at once, the first is the humanitarian timeline as teams work through massive volumes of debris underground.
The second is the production timeline, company statements indicate the damage is concentrated in underground areas where development work was underway when roughly 800,000 metric tons of wet material rushed through multiple levels.
Early estimates point to a staggered restart that prioritizes unaffected zones, with full normalization potentially taking far longer.
Force majeure clauses typically suspend obligations when events outside a company’s control disrupt operations.
Fabricators with limited inventories may need to source on the spot market or substitute scrap, a shift that often widens premiums and tightens nearby spreads.
The impact will vary by region and by the mix of cathode, concentrates, and intermediates in each supply chain.
Copper is a core input for power grids, electric vehicles, and data centers, so even short interruptions can echo across industrial demand.
If the outage at Grasberg persists, smelters will compete more aggressively for concentrates and may lean harder on scrap to fill gaps.
That dynamic tends to benefit producers with steady mines outside the affected region and traders holding prompt material, while lifting volatility for manufacturers downstream.
Price sensitivity also feeds back into inflation gauges and rate expectations, which can influence risk assets more broadly.
For now, the market is responding the way commodity markets usually do when a major source goes offline.
Prices are moving up, curves are tightening, and attention is fixed on official updates from the operator and Indonesian authorities.
Until there is clarity on the status of the missing workers and the stability of the underground sections, the risk premium is likely to stay embedded in copper.
