COPPER prices have surged above $10,300 per ton on the London Metal Exchange following Freeport-McMoRan’s declaration of force majeure at its Grasberg mine in Indonesia, said Bloomberg News.
Two workers died and five remain missing after a devastating mud flow at the mine on Wednesday, the newswire said.
The Arizona-based mining company warned it might fail to meet supply contracts from the facility, which ranks as the world’s second-largest copper source, accounting for three per cent of global output. Freeport subsequently reduced its copper and gold production guidance for the current quarter.
The development has struck an already strained market experiencing mounting supply constraints amid soaring demand driven by the clean energy transition and artificial intelligence expansion. Current copper prices approach the all-time high of $11,104.50 reached in May 2024.
“It’s very significant in scale,” Helen Amos, a BMO Capital Markets analyst told the newswire. “This is happening when copper’s already fairly tight. All else equal it brings us to a new, higher-price regime.”
The Grasberg disruption compounds a series of mining setbacks throughout 2024.
Seismic activity caused flooding at an Ivanhoe Mines operation in Democratic Republic of Congo during May, whilst port and mill disruptions affected two Teck Resources facilities in Chile during June. A fatal accident at a Chilean Codelco mine halted operations for over a week in July.
Amos estimates the global refined copper market faces a deficit of approximately 300,000 tons this year. “Depending on how long this lasts, the deficit gets larger,” said Bart Melek of TD Securities.
The supply constraints highlight chronic underinvestment in copper mining over the past decade, as companies maintained financial discipline following aggressive expansion strategies. saod Bloomberg News.
