Copper prices soar as Grasberg mine disaster hits supply
Global copper markets were hit hard after Freeport-McMoRan Inc. declared force majeure at its Grasberg mine in Indonesia, the world’s second-largest copper operation.
A massive mud flow led to the deaths of two employees and left five missing, forcing the company to suspend deliveries.
The mine, which accounts for 3% of global copper output, has been a crucial supplier for industries dependent on the metal, from electronics to renewable energy.
With global demand already at record levels due to clean-energy projects and the AI-driven technology boom, the disruption immediately sent copper prices soaring in London trading.
Grasberg mine shutdown intensifies global supply pressure
Freeport announced on Wednesday that it may not be able to fulfil contracts from Grasberg and cut its copper and gold production guidance for the quarter.
The news pushed copper prices on the London Metal Exchange above $10,300 a ton, nearing the record high of $11,104.50 set in May 2024. The Arizona-based company’s stock plunged nearly 17% on the same day, marking its steepest fall in five years.
Smelters dependent on semi-processed copper from Grasberg are already struggling with higher feedstock costs, and this stoppage is expected to worsen the pressure across supply chains.
Disruptions spread across key copper producers
According to a Bloomberg report, he Grasberg accident is part of a wider pattern of setbacks hitting copper producers this year. In May, seismic activity caused flooding at Ivanhoe Mines Ltd.’s site in the Democratic Republic of Congo.
A month later, Teck Resources Ltd. reported separate disruptions at two of its Chilean operations. July saw a fatal accident at a Codelco mine in Chile, halting work for over a week.
These events followed the late 2023 shutdown of First Quantum Minerals Ltd.’s Cobre Panama mine, which wiped out 1.5% of global copper supply.
With multiple disruptions concentrated in a short period, market conditions have become significantly tighter.
Analysts warn of widening copper deficit
Banks including Goldman Sachs and Citigroup project copper prices could climb as high as $15,000 or $13,000 a ton, respectively, if supply shortages deepen.
Analysts estimate the refined copper market will face a deficit of around 300,000 tons this year, even before accounting for the latest setback in Indonesia.
To meet demand, global stockpiles will need to be drawn down, leaving little cushion for further disruptions.
Years of underinvestment in new copper mining projects have left the industry vulnerable, as companies stayed cautious after past expansions led to large financial losses and investor backlash.
Copper shortage reshapes global supply chains
If problems at Grasberg persist, Freeport’s competitors may gain pricing power, but smelters worldwide will face tighter access to ore.
Higher costs for semi-processed copper are likely to filter through to refined copper production, impacting prices of goods reliant on the metal.
With demand being driven by electric vehicles, renewable infrastructure, and electronics, the copper shortage highlights the growing strain between accelerating consumption and constrained mining output.
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Copper prices soar as Grasberg mine disaster hits supply
Global copper markets were hit hard after Freeport-McMoRan Inc. declared force majeure at its Grasberg mine in Indonesia, the world’s second-largest copper operation.
A massive mud flow led to the deaths of two employees and left five missing, forcing the company to suspend deliveries.
The mine, which accounts for 3% of global copper output, has been a crucial supplier for industries dependent on the metal, from electronics to renewable energy.
With global demand already at record levels due to clean-energy projects and the AI-driven technology boom, the disruption immediately sent copper prices soaring in London trading.
Grasberg mine shutdown intensifies global supply pressure
Freeport announced on Wednesday that it may not be able to fulfil contracts from Grasberg and cut its copper and gold production guidance for the quarter.
The news pushed copper prices on the London Metal Exchange above $10,300 a ton, nearing the record high of $11,104.50 set in May 2024. The Arizona-based company’s stock plunged nearly 17% on the same day, marking its steepest fall in five years.
Smelters dependent on semi-processed copper from Grasberg are already struggling with higher feedstock costs, and this stoppage is expected to worsen the pressure across supply chains.
Disruptions spread across key copper producers
According to a Bloomberg report, he Grasberg accident is part of a wider pattern of setbacks hitting copper producers this year. In May, seismic activity caused flooding at Ivanhoe Mines Ltd.’s site in the Democratic Republic of Congo.
A month later, Teck Resources Ltd. reported separate disruptions at two of its Chilean operations. July saw a fatal accident at a Codelco mine in Chile, halting work for over a week.
These events followed the late 2023 shutdown of First Quantum Minerals Ltd.’s Cobre Panama mine, which wiped out 1.5% of global copper supply.
With multiple disruptions concentrated in a short period, market conditions have become significantly tighter.
Analysts warn of widening copper deficit
Banks including Goldman Sachs and Citigroup project copper prices could climb as high as $15,000 or $13,000 a ton, respectively, if supply shortages deepen.
Analysts estimate the refined copper market will face a deficit of around 300,000 tons this year, even before accounting for the latest setback in Indonesia.
To meet demand, global stockpiles will need to be drawn down, leaving little cushion for further disruptions.
Years of underinvestment in new copper mining projects have left the industry vulnerable, as companies stayed cautious after past expansions led to large financial losses and investor backlash.
Copper shortage reshapes global supply chains
If problems at Grasberg persist, Freeport’s competitors may gain pricing power, but smelters worldwide will face tighter access to ore.
Higher costs for semi-processed copper are likely to filter through to refined copper production, impacting prices of goods reliant on the metal.
With demand being driven by electric vehicles, renewable infrastructure, and electronics, the copper shortage highlights the growing strain between accelerating consumption and constrained mining output.
The post Copper prices soar as Grasberg mine disaster hits supply appeared first on Invezz
Read More
Brazil expands “Gold DNA” program to combat illegal Amazon mining