Freeport McMoRan delays Indonesian Copper sales to Q2 2025 due to smelter fire incident

Freeport McMoRan, a prominent U.S. copper mining company, has announced that it will be postponing its sales of refined copper originating from its operations in Indonesia until the second quarter of 2025. This decision comes in the wake of a fire incident that has caused significant delays in the production process at the company’s new smelter, according to the several media reports. Located in Manyar, this smelter is designed to have a substantial output capacity of 480,000 metric tons of copper cathode per year.

The delays in production at the Manyar facility have been prolonged, and as a result, they are likely to diminish the projected surplus of copper that was anticipated for 2025. This reduction in available supply could have an upward influence on copper prices, helping to stabilize the market during a period of expected oversupply, as several media reported. As Freeport navigates these production challenges, the implications for both the company and the broader copper market could be significant, with potential impacts on pricing and availability in the coming years.

On Tuesday, Freeport McMoRan revealed that it is looking into the cause of a fire that broke out at a sulfuric acid unit at its Manyar site in East Java province. The fire was extinguished late on Monday. A spokesperson for the company stated that its subsidiary, PT Freeport Indonesia (PTFI), is actively conducting damage assessments and evaluating the root cause of the incident to understand what led to this disruption in operations. This investigation is crucial for ensuring the safety and efficiency of the facility moving forward.

The company mentioned that it will assess the repercussions of this incident on its planned timeline for reaching full production capacity. The Manyar copper smelter, which represents a $3.7 billion investment, was completed in June and commenced output in September. However, production was delayed until November because of complications related to water and steam leaks that occurred during the initial testing phase, as reported by the News agency earlier this month. This latest fire incident adds further uncertainty to the smelter's operational timeline and output expectations.

Those with insight into the situation also revealed that Freeport has been engaged in negotiations with the Indonesian government to extend its export license for copper concentrates. This license is currently set to expire at the end of 2024, and the discussions aim to push the expiration date into the first quarter of the following year. This extension would be crucial for Freeport to maintain its export activities and mitigate any disruptions that could arise from the upcoming expiration.

A slow ramp-up at the Manyar facility could lead to reduced consumption of copper concentrate feedstock, which might allow for additional output from Freeport's flagship Grasberg mine—recognized as the second largest copper-gold mine in the world—to be released into an undersupplied market.

Simultaneously, the Indonesian government is taking measures to discourage the export of copper ores and concentrates. Their strategy aims to promote local smelting operations, which would enhance the value of the metal and increase revenues for the state. This push for local processing reflects the government’s broader goals of maximizing the economic benefits derived from its rich mineral resources.