TLDR
- Fatal mud rush at Grasberg mine killed two workers, five still missing
- FCX stock crashed 17% in single session following incident report
- Production suspended until 2026, potentially impacting global copper supply
- Copper prices rose 0.4% as Grasberg produces 3% of world output
- Analysts estimate $3.5 billion EBITDA loss for 2026
Freeport-McMoRan stock suffered its worst day in months after the company disclosed a tragic accident at its Indonesian operations. FCX shares plunged 17% on Wednesday following news of the September 8 incident.
The mud rush at the Grasberg mine resulted in two confirmed deaths. Five workers remain missing as search operations continue.
The company suspended all mining operations at the facility. An investigation is underway to determine what caused approximately 800,000 metric tons of mud and debris to rush through the mine.
Production Shutdown Threatens 2026 Output
Freeport expects the disruption to last well into 2026. The company plans a phased restart beginning that year, but full production may not resume until 2027.
The Grasberg mine represents a critical piece of global copper supply. Citi analyst Alexander Hacking noted the facility produces roughly 3% of worldwide copper output.
That equals about 770,000 metric tons annually out of global production of 25 million metric tons. The extended shutdown will tighten copper markets and support higher prices.
Benchmark copper futures responded immediately to the news. Prices climbed 0.4% Wednesday to above $4.80 per pound and gained another 1.2% Thursday morning.
Copper has gained 8% over the past year despite a sharp July selloff. President Trump’s tariff policies triggered volatility in copper markets during the summer.
The financial impact on Freeport could be substantial. Hacking estimates losing one-third of Grasberg’s production would eliminate $3.5 billion in 2026 EBITDA.
Wall Street currently forecasts $12.5 billion in total EBITDA for Freeport next year. The mine disruption would represent nearly 30% of expected earnings.
Analyst Downgrades Follow Stock Decline
Several investment firms adjusted their FCX ratings after the Wednesday update. Scotiabank and Bank of America both downgraded shares to Hold from Buy.
Hacking maintains his Hold rating with a $48 price target. He calculated the long-term market value impact at only 3%, suggesting the stock decline was overdone.
FCX shares showed signs of recovery Thursday morning, rising 2.3% in premarket trading to $38.53. The stock remains down 15% for September.
Overall analyst sentiment stays cautiously optimistic despite recent events. About 57% of analysts rate FCX shares a Buy, slightly above the S&P 500 average.
The average price target of $50 suggests upside potential from current levels. However, production uncertainty will likely weigh on near-term performance.
This marks the second major accident at Grasberg in recent years. A 2013 tunnel collapse at the facility killed 28 people and injured 10 others.
Freeport continues working with Indonesian authorities on the investigation. The company plans to seek insurance recovery for losses related to the incident.
