Grasberg supply shock to plunge refined copper market into deficit in 2026, Benchmark analysis shows

Freeport-McMoRan has declared force majeure at its Grasberg copper mine in Indonesia – the world’s second largest – following a serious accident earlier this month, warning of severe supply disruption until the end of 2026.

The news triggered a sharp reaction on the London Metal Exchange with the three-month copper price hitting a high of $10,364/t on 24 September, up over 4% on the previous day. Prices had already baked in some disruption risk, but the scale of the losses had not been fully appreciated by the market.

Freeport’s statement made clear the scale of the incident, noting that 800 kt of material had flowed into the mine during the accident. The company confirmed that the bodies of two workers had been recovered at the facility, while five more workers remain missing.

Benchmark analysis suggests the disruption will amount to ~591kt of lost copper output between early September 2025, when the incident occurred, and the end of 2026. Of this, 278kt is expected to be lost in 2025 and a further 313kt in 2026. The loss next year is particularly significant as Grasberg’s output was expected to peak in Q4 25.

To contextualise this, the output lost between September 2025 and December 2026 will exceed Benchmark’s forecast 2026 production from Collahuasi in Chile, the world’s third-largest copper mine.

The Grasberg disruption is projected to shift the global refined copper balance into a steep deficit in 2026. This is compared to Benchmark’s previous forecast of a relatively balanced market next year.

The accident may ultimately have a larger impact on refined availability than the recent disruption at Kamoa-Kakula in the DRC, underscoring the sector’s dependence on a small group of major mines. In 2025, the 20 largest copper mines are expected to contribute 36% of global supply.

Due to Grasberg losing its concentrate export licence in mid-September, the supply gap will fall almost entirely on the refined market rather than the concentrate market, which remains tight.

However, the extent of the impact on refined supply is uncertain due to challenges at Freeport’s Indonesian smelting operations. A recent incident at the oxygen plant at Gresik has constrained capacity, while the company’s Manyar smelter is still in the ramp-up phase.

This analysis was drawn from a recent research note on the Grasberg disruption, provided to subscribers of the Benchmark Copper Service. To learn more about Benchmark’s copper market coverage please fill out the form below.