The world’s second largest copper mine halts production due to a “major accident.” Wall Street: Black swan! “Traders buy first, then ask questions.”
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A major mining accident is forcing the world’s second-largest copper mine to halt production, triggering a strong shock in the global metals market.
On September 24, American mining giant Freeport-McMoRan (FCX) issued a statement announcing that its supply contracts had entered a state of “force majeure.” This sudden event was quickly labeled by Wall Street as a “black swan event,” igniting concerns about a long-term shortage of copper supply and driving copper prices to surge sharply.
According to Wallstreetcn, the core of the event is Freeport’s Grasberg mine in Indonesia. The company confirmed that a large mudslide on September 8 had killed two workers and left five others missing. In response, the company has completely suspended production at the mine and invoked the force majeure clause, which allows producers to suspend fulfilling supply contracts in the event of unforeseen disasters.
The market reacted instantly. After the news broke, copper futures on the New York Commodity Exchange (COMEX) rose nearly 4% to $4.825 per pound. Freeport's stock price plunged in premarket trading, while the stock prices of copper competitors like Glencore and Boliden jumped in response.
Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, commented: “Traders buy first and ask questions later”, accurately describing the instinctive response of the market in a supply panic.
Goldman Sachs: “Black Swan” Strikes, Supply Gap May Reach Hundreds of Thousands of Tons
Goldman Sachs’ commodities team called the Grasberg mine shutdown a "black swan event."
The bank’s analyst James McGeoch pointed out that the impact of this shutdown is massive, expecting Grasberg’s sales in the affected part to be "negligible" in the fourth quarter, with a full recovery possibly not until 2027.
He estimates that over the next 12 to 15 months, the market will lose 500,000 tons of copper supply as a result, and a further loss of 1 to 2 million tons is possible. He described the shock as equivalent to “the simultaneous shutdown of three major copper mines: Cobre, Komao, and Los Bronces.”
“Copper prices must rise as a result. Changes in demand are linear, but changes in supply are exponential.”
James McGeoch also emphasized that while Grasberg is the world’s second-largest copper mine, it is also the world’s largest gold mine. Even though the company holds only a 48.76% stake in the mine, which can partially offset its financial hit, the impact on the global market is significant.
According to Grant Sporre, Global Head of Metals & Mining at Bloomberg Intelligence, prior to the interruption, Grasberg’s production this year accounted for about 3.2% of global copper mine supply. For Freeport itself, the mine is even more crucial, contributing nearly 30% of its copper production and 70% of its gold production.
Chain Reaction of Supply Shocks
Another Goldman Sachs analyst, Adam Gillard, further revealed the chain reaction. He thinks that even though the actual production loss this year might be around 150,000 tons—less than initial headline numbers—it will have a “disproportionately significant effect” on the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME).
The reasoning is that, due to tariff-related factors, the global copper market’s surplus inventory is currently mainly “trapped” in the United States. This means that when Indonesia’s supply is suddenly interrupted, buyers in London and Shanghai will find it harder to secure alternative sources. Gillard expects LME stocks in Asia to decrease and LME price spreads to remain tight as a result.
The Grasberg shutdown further magnifies the vulnerability of the global copper market. Just before this accident, Hudbay Minerals also disclosed that due to ongoing political protests, a concentrator plant at its Constancia mine in Peru had suspended operations.
Problems at two top copper mines at the same time have heightened market tensions.
Copper and Gold Output May Plunge 35% in 2026
The impact of the shutdown is far from short-term. Freeport’s preliminary assessment shows that the company has cut its third-quarter copper and gold sales guidance by 4% and 6%, respectively, from the July 2025 forecast.
At the same time, the company expects that copper and gold production in 2026 may plunge by about 35% from prior estimates.
More importantly, the company expects production to return to pre-accident levels no earlier than 2027, casting a shadow over industries worldwide that rely on copper, such as electric vehicles and renewable energy.
A Long Road to Recovery
According to Freeport’s disclosures, around 800,000 metric tons of wet material suddenly surged into Grasberg’s underground mine—a scale described as “unprecedented in decades of the company’s mining history.”
The accident not only happened in the “PB1C” production block of the GBC mining area but also damaged essential infrastructure for supporting other production zones, including railways, ore chutes, and power systems.
The company has developed a detailed recovery schedule, but the outlook is not optimistic.
Freeport expects even the unaffected mine areas can’t restart until the middle of the fourth quarter of 2025 at the earliest, while Grasberg will begin a phased recovery from the first half of 2026.
Natixis bank analyst Bernard Dahdah said, “An accident of this scale is unheard of in Freeport’s history,” highlighting the severity of the event. Based on this timeline, the company expects copper and gold sales in the fourth quarter of 2025 to be "minimal."
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