FILE PHOTO: The logo of copper miner Freeport-McMoRan Inc is displayed on their offices in Phoenix, Arizona, U.S. June 30, 2022. REUTERS/Ernest Scheyder/File PhotoErnest Scheyder/Reuters
Copper is a hot commodity, but Freeport-McMoRan Inc. FCX-N has suddenly turned stone cold, raising the question of whether the copper mining stock has become a bargain hunter’s dream.
An early take: Wait a bit.
The world’s largest copper producer announced earlier this month that a mudslide at its Grasberg Block Cave mine in Indonesia, home to a large deposit of copper and gold, had trapped seven workers and forced the company to suspend operations.
In an update this week, the news turned considerably worse: The 800,000 tonnes of mud that flowed to multiple mine levels had killed two workers and left five missing.
Freeport shares tumble, copper futures rise on guidance cut after Indonesia mine accident
Based on its preliminary assessment, the company expects significant production at the mine will be deferred until later this year or 2026.
If there is a restart next year, production at the Indonesian operations – previously estimated at 1.7 billion pounds of copper and 1.6 million ounces of gold – will decline by 35 per cent in 2026.
The company suggested that a return to full operations might take until 2027.
Freeport-McMoRan’s share price, which had virtually ignored the first report of the incident on Sept. 8, slumped more than 21 per cent on Wednesday and Thursday, in what looked like sheer panic on the part of investors.
The stock is now trading at levels last seen in April, when investors were panicking about something else: the impact of U.S. tariffs on the global economy.
This week’s grim news even affected commodities markets. The price of copper rallied by more than 7 per cent on concerns that an already-tight market for the metal will turn tighter.
As well, the shift may have boosted the appeal of some of Freeport-McMoRan’s competitors.
The share price of Lundin Mining Corp., the Vancouver-based copper producer, rallied 8.6 per cent Wednesday, stretching its gains to nearly 56 per cent this year.
For investors who like downtrodden stocks, Freeport-McMoRan – which has underperformed Lundin by nearly 62 percentage points in 2025 – ticks a couple of boxes: depressed investor sentiment and the strong likelihood that the company will emerge from the current mess, even if it takes some time.
Perhaps more importantly, brave investors who buy the stock can point to the robust price for copper, which has gained more than 40 per cent over the past three years.
The metal is widely used in industrial applications and is particularly important to electric vehicles and renewable energy projects.
Solar installations and wind farms – still popular outside the United States – require as much as six times more copper than traditional energy systems, according to the International Copper Association.
But copper output is sluggish, given the time and money required to get new projects up and running, creating what some observers say is a situation in which the amount of copper being produced lags what is needed.
Max Layton, a commodities analyst at Citigroup, estimates this deficit will widen in 2026, to 400 kilotonnes from 300 kilotonnes, owing to the incident in Indonesia.
A tighter market, he believes, could send the price of copper up as much as 35 per cent within the next 12 months.
“The Grasberg developments and wider modelled deficits add fundamental conviction to our bullish 2026 copper price view,” Mr. Layton said in a note.
The trouble for Freeport-McMoRan, though, is that its suspended copper mine in Indonesia won’t be participating in the copper rally. And by the time the mine becomes operational again, in 2026 or 2027, supply and demand could be more balanced.
In the meantime, the company’s financial performance is going to be hit hard given that the Grasberg operations had delivered the company’s lowest-cost copper output by far.
Orest Wowkodaw, an analyst at Bank of Nova Scotia, cut his estimates for Freeport McMoRan’s EBITDA – or earnings before interest, taxes, depreciation and amortization – by an average of 27 per cent in 2025 and 2026, given the importance of the Indonesian mine.
“We anticipate a significant overhang on the shares until better clarity arrives on the full impact of this event,” Mr. Wowkodaw said in his note.
The case for buying the stock during the current bout of uncertainty is appealing: The share price is down while the market for copper is humming.
In waiting for clarity, which could take months, investors might miss out on buying the stock at a rock-bottom level. But at least they’ll know what they’re buying.
Editor’s note: A previous version of this article incorrectly stated that estimates for Freeport McMoRan’s EBITDA were cut in 2026 and 2027. In fact, they were cut for the years 2025 and 2026. This version has been updated.