copper Prices Surge as Indonesian Mine Flooding Disrupts Global Supply
LONDON – Copper prices jumped 3.6 percent on the London Metal Exchange following severe flooding at the Grasberg Mine in indonesia, the world’s second-largest copper mine. The mine, operated by Freeport-McMoran, reported that approximately 800,000 tons of mud inundated several levels of the operation two weeks ago, resulting in the deaths of two workers after a five-day search.
“The accident of such a scope is unprecedented in the history of Freeport,” stated Bernard Dahdah, an analyst at Natixis.
The disruption comes alongside operational issues at the Constantia Mine in Peru, where Musbay Minerals has halted processing of copper ore due to ongoing political unrest. These combined setbacks highlight the market’s vulnerability to mining disruptions, according to Ole Hansen, head of commodity strategies at Saxo bank. “The merchants first buy before they ask,” Hansen said.
Grasberg Mine accounts for 30 percent of Freeport-McMoran’s total copper mining and 70 percent of its gold mining, and was expected to contribute 3.2 percent of global copper production this year. Freeport-McMoran estimates that mining in the flooded section will be suspended untill the first half of next year, with full operational recovery not anticipated until 2027. Two of the mine’s three sections remain unaffected and are expected to resume operations in the fourth quarter.
freeport-McMoran holds a 49 percent stake in the Grasberg Mine, with the remaining ownership held by the Indonesian state. Shares of Freeport-McMoran fell 15 percent following the announcement, while shares of competing mining companies, including Glencore and Anglo American, increased in value.
