Uncertainty over Grasberg Mine’s production restart after a 2025 mudflow has lifted global copper prices amid fears of tighter supply.
The Grasberg copper and gold mine in Indonesia, the world's second-largest copper mine and largest gold mine, has been at the center of recent market attention due to uncertainties surrounding its full production resumption timeline following a significant incident. In September of last year (2025), a massive mud flow struck the mine, leading to the deaths of seven workers and a nearly month-long shutdown of operations.
Initially, Freeport-McMoRan, the Phoenix-based company managing Grasberg's operations, projected a full return to production by the end of 2027. However, in late April, Freeport acknowledged that recovery efforts were more protracted than anticipated, revising down its forecast for production restoration by the second half of this year from 85% to 65%. Further complicating the situation, the Indonesian head of PT Freeport Indonesia, Tony Wenas, indicated that full production might be delayed until early 2028. This revised outlook was attributed to the need for additional work on logistics and ore handling infrastructure within the underground mine, as well as wetter-than-expected material conditions, including groundwater infiltration, which necessitated modifications to the ore transportation system.
Despite these statements from Indonesia, Freeport-McMoRan's headquarters in Phoenix reiterated its commitment to the end-of-2027 timeline for full production, asserting that this information had been publicly disclosed weeks prior and refuting reports of a 2028 delay. The company clarified its specific plan involves restarting the Grasberg Block Cave (GBC) production block 1S in the second quarter of 2027, followed by block 1C before the end of the same year. Partial operations in unaffected sections of the GBC underground mine reportedly resumed in April 2026.
The fluctuating reports on Grasberg's recovery have had notable economic and industry-specific impacts. News of potential delays sent copper prices soaring to a three-month high, reflecting market concerns over a fresh supply shock amid robust demand for the red metal. Both LME copper and SHFE copper closed sharply higher, with LME copper gaining 2.84% to $13,920/mt and SHFE copper increasing by 2.35% to 106,770 yuan/mt. This disruption at Grasberg, which also holds the world's second-biggest copper reserves, was estimated to result in a loss of 591,000 tonnes of copper output until the end of 2026. Freeport's shares also saw a 5% increase, reaching $64.75, coinciding with the rise in copper prices. The uncertainty also led to a narrowing of the inter-month Contango price spread for futures contracts and a weakening of suppliers' willingness to ship to delivery warehouses. Additionally, the high copper prices, alongside other factors, contributed to a decline in the enamelled wire industry's operating rate in April. The ongoing discrepancies in statements between the US-based Freeport-McMoRan and the Indonesian-majority-controlled PT Freeport Indonesia highlight a geopolitical dimension to the operational challenges.
