I wrote about the Indonesian copper mine disaster yesterday and outlined how it was a potential game-changer in the industrial metals space. It took the market some time to figure out the impacts but ultimately led to a crushing decline in Freeport-McMoran shares (FCX) and a jump in other miners due to the reduced supply.

Shares of Freeport fell nearly 20% yesterday and are down another 4.5% today while other miners climbed strongly yesterday. It comes after Freeport detailed at 800,000 tonne mudslide at the second-largest copper mine in the world. Most of the mine is currently shut down and the company said that 2026 production could be down 35% compared to pre-indident estimates, with potential impacts stretching into 2027. Two miners are dead and five remain missing.

In the macro picture, the production drop means 1.2% less copper next year.

“Overall, we view the update as very negative for FCX shares,” wrote Scotiabank as they downgraded shares to sector perform from outperform. “Our revised 2025E-26E EBITDA estimates of $8.4B and $9.0B
declined by an average of 27% pa as Grasberg was the company’s lowest cost output by far
(due to very strong Au credits). Our updated 8% NAVPS estimate of $19.15 declined by 10%.
We now forecast markedly weaker 2025E-27E FCF of $0.3B, ($0.9B), and $3.2B. We forecast
12% lower consolidated 2025E-26E Cu production of 3.5M lbs and 3.8M lbs.”