The Grasberg Mine accident reduces the global copper supply estimates

Metals analysts have cut their estimates for global copper supply for this year and the next after an incident at the giant Grasberg Mine has dramatically tightened the market outlook.

Last week, copper prices reached a 15-month-high of $10 485 per metric ton after Freeport McMoRan declared Grasberg mine in force majeure and cut the sales forecast for Indonesian unit this year and by 2026.

Freeport's Grasberg operations in Indonesia were suspended on the 8th of September after a fatal mudslide.

While the search continues for missing workers, Escondida Copper Mine in Chile is still the world's second largest copper mine.

Albert Mackenzie is a copper analyst with Benchmark Mineral Intelligence.

Benchmark's analyses suggest that the disruption could result in 591,000 metric tons of copper production lost between September 2025 to the end of 2026.

Analysts estimate that the global mine production in 2024 will be around 23 million tonnes.

Benchmark Minerals estimates that the global copper market will face a deficit of approximately 400,000 tons by 2025 due to supply losses at Grasberg.

Goldman Sachs has now revised its copper market balance for 2025 from a surplus of 105,000 to 55,500 tonnes. It anticipates a modest surplus in 2026.

According to Societe Generale, Monday's report shows that the copper market is facing its largest deficit since 2004 due to the loss of Grasberg production between September and December.

Grasberg is the latest mine to be affected by a large-scale disruption, following Kamoa Kakula in Democratic Republic of Congo as well as El Teniente in Chile.

The Bank of America analyst Michael Widmer wrote in a report that this year's mine production was expected to be below all forecasts over the last 15 years. Unexpected supply disruptions have now made it worse, he said.

BofA increased its estimate of 2026 copper market shortage to 350,000 tonnes from 162,000 tons previously and upgraded its forecast for 2026 and 2027, increasing it by 11% and 12,5% respectively to $11,313 per ton and $14,500.

Copper's highest price ever was $11,104.50 per ton in May 2024.

(source: Reuters)