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Freeport-McMoRan Inc has cut its first-quarter copper sales forecast after heavy rains and landslides shuttered operations at its flagship Grasberg mine in Indonesia over the weekend, with the mine not expected to be back online until the end of the month.
The temporary shutdown is the latest in a string of extreme weather-related disruptions to rock the mining industry amid the changing global climate.
While there were no casualties, Freeport said late Sunday it had to free 14 employees trapped in an office building because of “significant rainfall and landslides” at Grasberg, the world’s largest gold mine and second-largest copper mine.
Mudflow damaged Grasberg’s concentrate processing plant as well as part of the road leading to the mine, Freeport said.
Freeport now expects its first-quarter sales to be lower than the previous outlook provided in January for 900 million pounds of copper and 300,000 ounces of gold, but it did not provide updated figures. The mine typically produces nearly 5 million pounds of copper and 5,000 ounces of gold daily.
Grasberg, which is located on the island of Papua’s Sudirman mountain range, is majority controlled by the Indonesian government but Freeport is the mine’s operator.
Freeport likely will miss at least four weeks of production at Grasberg because of the floods, said Jefferies analyst Chris LaFemina, who cut his first-quarter earnings estimate for the company by 9% to 40 cents per share.
“This does not materially impact the Freeport investment case, but it does highlight that there are many operating risks in mining, and even the best operators are not immune,” LaFemina said in a note to clients.
Shares of Phoenix-based Freeport fell about 0.3% to $42.22 in Monday afternoon trading in New York.
(By Bernadette Christina, Ernest Scheyder and Gokul Pisharody; Editing by William Mallard, Clarence Fernandez, Jamie Freed, Shounak Dasgupta and Marguerita Choy)
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