Indonesia halts Grasberg operations to search for trapped workers

Indonesia’s government has reached an agreement with Freeport Indonesia to halt operations at the Grasberg mine to prioritize the search for workers trapped after a recent accident, Reuters reported, citing the country’s mining minister.

Two workers have died and five remain missing following a large mudflow earlier this month at the Grasberg Block Cave underground mine.

Production at Freeport Indonesia has not resumed since the incident, with the suspension impacting both output and revenue, Minister Bahlil Lahadalia told reporters. Asked when operations would restart, he said the government and Freeport-McMoRan (NYSE: FCX) would discuss the matter. Freeport did not immediately respond to a request for comment.

Lahadalia added that Indonesia and Freeport have also held talks on extending the company’s mining permit beyond 2041.

On Wednesday, Freeport declared force majeure at the mine, which holds half of Freeport Indonesia’s reserves and is expected to supply about 70% of its copper and gold output through 2029.

Freeport also issued updated third-quarter guidance, lowering consolidated sales expectations by about 4% for copper and 6% for gold compared to its July forecast.

The announcement pushed copper prices to their highest level in more than 15 months on concerns over tighter supply.

BMO Capital Markets said the announcement was broadly in line with expectations for a weaker second half of 2025 but noted that the preliminary 35% cut to 2026 production guidance is an incremental negative, with Grasberg output not expected to return to pre-incident levels until 2027.

Read More: Goldman lowers copper supply forecast on Grasberg disruption, sees deficit in 2025

BMO analysts described Freeport’s suspension as a “negative near-term development that will likely put Freeport in the penalty box.”

Adding to the disruption to the copper industry, Hudbay Minerals (TSE: HBM) said late Tuesday it was shutting operations at a mill at its Constancia mine site in Peru due to ongoing political protests.

“The copper market has been, and continues to be, jolted by supply-side issues this year,” said Olga Savina, a commodities analyst at BMI, a Fitch Solutions company. “We expect any prolonged supply setbacks to further strengthen the bullish narrative for copper throughout the remainder of this year and possibly into 2026.”

On Friday morning, three-month futures were trading down 0.75% at $10,496 per tonne ($4.7225 per lb.) on the CME.

(With files from Bloomberg)