Copper’s strong reaction to Grasberg mine disaster shows its sensitivity to supply disruptions

The copper price has marched to a two month high following a deadly “mud rush” into the bowels of the block cave mining operation at the world’s second biggest copper mine – Freeport’s Grasberg in the remote Sudirman mountain range in central Papua, Indonesia.

Two workers are confirmed dead and another five remain missing after they were swamped by an estimated 800,000t of mud that came rushing into the block cave, making its way to multiple mine levels.

The mine in the clouds as Grasberg gets called because of its high-altitude accounts for about 3% of world copper supply and makes up more than 70% of Freeport’s total copper production.

The Phoenix-based Freeport, which once counted Rio Tinto as a partner at Grasberg, has been forced to declare force majeure on contracted supplies as a result of what stands as a human tragedy.

It estimates that 2026 production could potentially be 35% lower than pre-incident estimates (1.7 billion pounds of copper and 1.6 million ounces of gold) due to the time it will take to restore safe production.

While the tragedy continues to unfold, the declaration of force majeure has pushed the copper price as high as $US10,491/t in the US market. That compares with an average of $US9,432/t in the first half of CY2025, and $US9,148/t in CY2024.

As noted by ANZ’s senior commodity strategist Daniel Hynes, the Grasberg situation highlights the copper market’s sensitivity to supply disruptions.

“It also raises concerns about future growth in supply,” he said. “As a share of overall production, unplanned supply disruptions have increased from just under 5% of world production in 2014 to 5.7% last year. We expect it to exceed 6% this year.

“Over the longer term, this will constrain supply growth, supporting ongoing tightness in the copper market.”

Mammoth:

The likelihood of copper supply disruptions blowing out to more than 6% of global capacity comes on top of the emerging long-term demand challenge.

BHP believes the world needs around 10 million annual tonnes of new mine supply over the next 10 years to meet growing demand from traditional sectors in developing countries, as well as the emerging needs of the digitalisation and energy transition megatrends.

It means that copper prices look set to be well supported in coming years, particularly around the end of the decade when demand becomes overwhelming. That’s good news for junior ASX copper players.

If the junior also has exposure to booming gold prices, all the better.

That is the case with today’s interest, Mammoth (M79), mentioned here back on September 5 when it was a 10c stock for a market of $50m. It has since moved on to 13c for a market cap of $64 million.

It is very much a high-grade US gold story at the moment, with MD Glen Poole last week confirming at the Resources Rising Stars Gold Coast conference that a maiden resource for the Buster trend at its Excelsior Springs project in Nevada gold country was planned for late in December quarter.

The maiden estimate is likely to fire up interest in the stock which also comes with a high-grade gold play in South Dakota, the Skyline copper project in Canada’s Newfoundland province and the Picha copper project in Peru.

Picha is the one that attracted the attention of BHP under its Xplor program which gives selected juniors access to $US500,000 in non-equity cash and access to its in-house expertise in finding big deposits.

BHP is close to announcing the next cohort of juniors to join the Xplor program and Mammoth will learn in mid-October whether BHP wants to provide follow up funding to continue to advance exploration at Picha.

It doesn’t really matter if BHP does or doesn’t as Picha is located in a region in which a half a dozen or so major companies are either producing copper in the Andes location or on the hunt for the next big porphyry copper deposit. So if it is not BHP, there will be a replacement major.

Based on results to date at Picha, finding a new partner with deep pockets is unlikely to be an issue. That is particularly so after results from a whizz-bang geophysics program conducted at Picha with BHP funding landed this week.

The results showed a porphyry-style architecture from the previously mapped Antas Q’ilqa and Ichucollo alternation zones at surface to a depth of more than 5km. The thing is …err, mammoth.

Previous work has yielded plenty of copper smoke at Picha.

The hope now is that the vertically extensive large intrusive is the fire source of the copper smoke across the Picha project area which is now being moved into the target definition phase, with drilling to follow at some point.

Venari:

Reading the foreign wires in recent days and you would think Nevada is the place to be, both for gold and lithium.

Barrick reckons its Fourmile gold discovery is the best thing since sliced bread, putting a rocket under its share price which could well do with a catch-up to the other gold heavyweights.

Then there was the Reuters report that the Trump administration is angling to take a 10% stake in Lithium Americas, which is developing the giant Thacker Pass lithium clay project, as part of a loan deal, putting a rocket under its share price as well.

ASX juniors are well represented in Nevada which has remained in the Top 3 preferred global mining investment destinations according to the assessment of Canada’s Fraser Institute.

Apart from Mammoth’s presence, ASX junior Venari Minerals (VMS from mid-October and formerly Astute Minerals, ASX:ASE) has made Nevada its happy hunting ground (Venari is Latin for “to hunt”).

And in keeping with the gold and lithium headlines in recent days coming out of Nevada, it can be said that Venari is active in both the yellow metal and the battery material.

Speaking at the RRS conference, Venari boss Matt Healy highlighted a strong newsflow from the junior in coming months.

Drilling of six high-grade epithermal-style gold-silver targets at the Needles project is underway, with the rig to then make its way to Red Mountain lithium clay where the plan is to drill out a high-grade zone.

A recent $5.5m capital raise is funding the twin focus exploration programs. No surprise in Thursday’s 18.7 per cent share price gain to 1.9c a share under the ASE Code for Venari given its market cap remains modest at $12.8m.

Needless to say there is lots of leverage to the dual exploration programs. So it won’t take much to move the needle on the company’s market cap in meaningful way.