# Grasberg mudflow kills seven and forces Freeport to cut 2026 copper guidance by 300 million pounds; the $2bn smelter advances despite reduced feed
> A September 2025 ore pass mud rush placed the block cave under force majeure; Freeport revised full-year copper to 3.1bn pounds and gold to 650,000 oz; Morgan Stanley downgraded on recovery uncertainty

**Meta:** type: event · date: 2026-04-24 · heads: What Broke, Whose Money · 5 takes · 3 lenses · 3 regions

## Summary

A mud rush in the underground Grasberg Block Cave in September 2025 killed seven workers, placed the mine under force majeure, and permanently altered Freeport-McMoRan's 2026 production profile. Grasberg, in the Sudirman Mountains of Papua, Indonesia, is the world's highest-grade copper-gold deposit. Freeport revised full-year 2026 copper sales guidance to approximately 3.1 billion pounds, down from 3.4 billion, and gold to 650,000 oz from 800,000 oz. H2 2026 operations are expected at roughly 65% of normal block-cave capacity as engineers work to restore access to the affected levels. Morgan Stanley downgraded [Freeport-McMoRan](/en/entity/freeport) to Equal Weight in April 2026 and cut its price target to $66, questioning the copper super-cycle thesis when the flagship asset is operating well below nameplate. In parallel, Freeport's $2 billion PTFI copper [smelter](/en/entity/smelting) in Indonesia continued advancing toward completion, independent of the mine setback, targeting cost reductions of approximately $0.50/lb on Indonesian concentrate.

## The split

Freeport management emphasises the smelter as a structural cost-reduction and Indonesia-relationship asset that proceeds regardless of Grasberg's near-term throughput. US-focused analysts, including the Morgan Stanley team, focus on the guidance cut's implications for free cash flow and the timeline for full Grasberg recovery, which remains uncertain. Indonesian government officials have not publicly commented on force majeure status but the PTFI operating licence and domestic-smelting obligation are unaffected by the underground incident. The proposed 25% US copper import tariff, which the Trump administration has signalled, could partially offset the production shortfall: Freeport's seven domestic US mines would benefit directly, without any Grasberg dependency.

## By the numbers

- Seven, workers killed in the September 2025 Grasberg Block Cave mud rush.
- 3.1 billion pounds, revised 2026 copper sales guidance (from 3.4 billion, a 300 million pound cut).
- 650,000 oz, revised 2026 gold guidance (from 800,000 oz).
- ~65%, estimated H2 2026 Grasberg Block Cave capacity utilisation.
- $2 billion, capital cost of the new PTFI copper smelter in Indonesia.
- ~$0.50/lb, targeted cost reduction when the smelter is at full capacity.
- $66, Morgan Stanley's revised Freeport price target after the downgrade.
- 25%, proposed US copper import tariff under active lobbying.

## Why it matters

Grasberg produces roughly 3% of global mined copper and a larger share of high-grade concentrate, making disruptions there a direct input to the [Copper](/en/entity/copper) concentrate market, which is already tightened by [zero or negative TC/RCs](/en/n/copper-tcrc-zero) globally. The force majeure reduces available concentrate exactly when Chinese smelters were already operating on near-zero refining margins. The $2 billion smelter, when complete, locks in domestic Indonesian [copper processing](/en/entity/smelting) and fulfils Indonesia's value-added export policy, but its economics depend on receiving Grasberg feed at scale. The proposed US copper tariff introduces an asymmetric upside for Freeport's domestic mines but does not compensate for the Grasberg volume shortfall on aggregate global supply.

## What to watch

- Grasberg Block Cave recovery timeline: whether access is restored to achieve 80-90% capacity in 2027 or the disruption extends further.
- PTFI smelter commissioning: whether reduced Grasberg feed delays or affects the cost economics of the facility.
- US copper tariff: if the 25% levy is implemented, how much incremental cash flow it delivers from Freeport's seven domestic US operations.
- Indonesian regulatory response to force majeure status and any renegotiation of domestic-processing obligations.

## Regional takes (batched by bias / lens)

### unlabelled
- **Freeport-McMoRan Inc. (Investor Relations)** (United States, en) — Primary Q1 2026 earnings release: Freeport revised full-year 2026 copper sales to approximately 3.1 billion pounds (from 3.4 billion) and gold to 650,000 oz (from 800,000 oz) following the September 2025 Grasberg Block Cave mud rush. H2 2026 is expected to run at approximately 65% of normal capacity. The new $2 billion PTFI copper smelter is advancing independently.
  Source: https://investors.fcx.com/news-releases/news-release-details/freeport-mcmoran-reports-first-quarter-2026-results
- **Fastmarkets** (Global, en) — 
  Source: https://www.fastmarkets.com/commodities/metals/copper/freeport-grasberg-force-majeure-copper-production-2026/
- **Investing News Network** (Canada, en) — 
  Source: https://investingnews.com/freeport-mcmoran-grasberg-copper-guidance-cut-2026/

### equity-market analytical
- **247 Wall St.** (United States, en) — Reports Morgan Stanley's downgrade to Equal Weight and a price target cut to $66 following the Grasberg guidance revision. Analyst frames the question as whether the copper super-cycle thesis still holds when the world's highest-grade copper-gold mine is running at 65% and the recovery timeline is uncertain.
  > "Morgan Stanley downgrades Freeport-McMoRan as Grasberg runs at 65% capacity, questioning whether the copper super-cycle thesis survives the mine delay."
  Source: https://247wallst.com/investing/2026/04/24/morgan-stanley-downgrades-freeport-mcmoran-is-the-copper-story-breaking-down-at-grasberg/

### strategic-business
- **Ainvest** (United States, en) — Analyses the dual dynamics facing Freeport: the Grasberg production shortfall versus the potential upside from a proposed 25% US copper import tariff, which could lift EBITDA by 9-15% on its seven domestic US mines. The company is lobbying for domestic copper industrial policy as part of the broader US critical minerals agenda.
  > "A proposed 25% US copper tariff could lift Freeport's EBITDA by 9-15% on its seven American mines, partially offsetting the Grasberg shortfall."
  Source: https://www.ainvest.com/news/copper-conundrum-freeport-mcmoran-tariff-gamble-trade-war-world-2506/

## Across the graph
- Related: [[copper-tcrc-zero]]
- Entities: Freeport, Copper, Smelting

---
Canonical: https://rbtfl.xyz/en/n/freeport-grasberg-mudflow-2026