Freeport-McMoRan declared force majeure on 24 September on copper and gold shipments from PT Freeport Indonesia, three weeks after 800,000 tonnes of wet material entered the Grasberg Block Cave. LME copper rose above $10,100 a tonne on the news, and Indonesia's two Grasberg-fed smelters now face a feed shortage in a concentrate market where spot treatment charges are already negative.
Freeport-McMoRan declared force majeure on 24 September on contracted copper and gold shipments from PT Freeport Indonesia, formally releasing the company from delivery obligations at the world's second-largest copper mine and confirming that the loss of output at Grasberg will run well beyond this year.
The declaration follows the mud rush of 8 September, when roughly 800,000 tonnes of wet material entered the Grasberg Block Cave from the ground above and travelled through the underground workings to a service level where a crew was working. Two workers' bodies were recovered on 20 September and five men remain missing. Mining has been suspended since the incident while the search continues.
Freeport told the market that third-quarter consolidated copper sales will be about 4 percent below the guidance it issued in July and gold sales about 6 percent below, and that it does not expect significant production from Grasberg in the fourth quarter. The heavier number is for next year: output from the Indonesian unit is now expected to run roughly 35 percent below the company's previous 2026 plan, with a return to pre-incident rates not anticipated until 2027. The force majeure covers contracted shipments from PT Freeport Indonesia, in which the Indonesian state holds the majority stake.
The market reaction was immediate. London Metal Exchange three-month copper rose above $10,100 a tonne on 24 September, the highest in more than 15 months, and settled above $10,300 later in the week, a level last seen in May 2024. Freeport shares fell as much as 10 percent in New York while Glencore, Teck Resources and Antofagasta rose between 3 and 7 percent, the market moving toward producers whose tonnes are unaffected. Goldman Sachs cut its copper supply forecast after the announcement, putting the total loss of mine supply from the disruption at about 525,000 tonnes.
Grasberg supplied roughly 3 percent of world mine output this year, and the district accounts for about half of Freeport's proven and probable reserves. A single mine at that share of supply would move prices in any market. What makes this one harder to absorb is the state of the concentrate market the tonnes are being withdrawn from.
Treatment and refining charges - the fee a miner pays a smelter to turn concentrate into metal, and the clearest read on whether feed is scarce - have been negative in the spot market for months, meaning smelters have effectively been paying miners for material. The 2025 annual benchmark was settled at $21.25 a tonne, and a mid-year settlement covering some 2026 supply was agreed at zero. That is the position smelters were already in before several hundred thousand tonnes of Indonesian concentrate stopped arriving.
The most immediate industrial consequence is inside Indonesia. Both PT Smelting's plant at Gresik and Freeport's new $3.7 billion Manyar smelter in East Java were built around Grasberg concentrate, and neither has an alternative source at anything like the required scale. Indonesian refined output falls as their stockpiles run down, and the concentrate that had been moving from Papua to Asian smelters this year stops moving with it. The country's downstreaming policy built processing capacity on the assumption that the mine feeding it would run; the accident has tested that assumption in the plants' first full year of operation.
For buyers of cathode the arithmetic is simpler and less forgiving. Refined copper demand from grid and electrical equipment manufacturers has been the firmest part of the market all year, and there is no near-term substitute for the units Grasberg will not produce: no idle mine of comparable size can be started this quarter, and the projects that could replace the volume are years from first production.
The next test is commercial rather than technical. Annual treatment charge negotiations for 2026 supply run through the autumn, and they will now be conducted with a large block of concentrate absent from the table and smelters already accepting terms at or below zero. Freeport's restart sequencing at Grasberg, which the company has not yet detailed beyond its 2026 guidance, will set how long that hole stays open.