The global copper market faces additional strain as a massive mudslide at Indonesia's Grasberg mine resulted in two employee fatalities and five missing persons, prompting Freeport-McMoRan Inc. to declare force majeure regarding the incident. Demand for this essential metal in electronic products has surged, driven by the energy transition and artificial intelligence boom. However, copper mines from South America to Central Africa have encountered a series of accidents and disruptions, leading to supply constraints.
Grasberg represents the world's second-largest copper mine, accounting for 3% of global production. Arizona-based Freeport warned on Wednesday that it may be unable to fulfill supply contracts from this mine, while also reducing its copper and gold production forecasts for the current quarter. This development surprised many market participants and drove London Metal Exchange copper prices above $10,300 per ton, approaching the record high of $11,104.50 set in May 2024.
"The scale is very significant," said BMO Capital Markets analyst Helen Amos. "This occurs at a time when copper supply is already quite tight. All else being equal, this will put us in a higher price regime than before."
Freeport shares declined nearly 17% on Wednesday, marking the largest drop in five years. UBS released a research report stating that fundamental factors including limited copper supply growth, constrained refined output, and recovering traditional demand drivers will continue supporting prices in 2026 and 2027. The bank raised its copper price forecasts for this year and next by 3% each, from $4.24 and $4.68 per pound to $4.37 and $4.80 respectively.
On Wednesday, US copper mining stocks collectively advanced, with Ero Copper (ERO.US) and Southern Copper (SCCO.US) rising over 8%, Taseko Mines (TGB.US) gaining nearly 8%, and Hudbay Minerals (HBM.US) climbing over 6%.
Related copper mining sector supply chain Hong Kong stocks include: CMOC (03993), Zijin Mining Group (02899), China Nonferrous Metal Mining (01258), MMG (01208), Jiangxi Copper (00358), China Railway Group (00390), and others.