Freeport-McMoRan Downgraded, Bernstein Sees Worst Over

Freeport-McMoRan's stock fell 6.4% on Thursday, down 22% in two days, after the company warned of substantial near-term production deferrals following a deadly mud rush at its Grasberg Block Cave mine in Indonesia. However, Bernstein upgraded the stock, saying the worst is over. Scotiabank downgraded the stock, citing reduced visibility and increased risks.

Freeport-McMoRan Inc.'s (FCX) stock fell by 6.4% on Thursday, down 22% in two days, following the company's announcement of significant near-term production deferrals at its Grasberg Block Cave mine in Indonesia. The company declared force majeure at the mine, citing a deadly mud rush incident that resulted in the suspension of operations. Freeport-McMoRan expects third-quarter consolidated sales to be lower by about 4% for copper and 6% for gold compared to prior forecasts Freeport declares force majeure at Grasberg, expects lower copper, gold sales^[1].

The Grasberg mine, one of the world's largest gold and copper mines, will not resume operations until the first half of 2026. This delay is expected to lead to a potential 35% reduction in 2026 production compared to previous estimates. The company had been building a smelter in Indonesia, which was damaged by a fire last year and was subsequently shut down Freeport declares force majeure at Grasberg, expects lower copper, gold sales^[1].

Copper prices on the London Metal Exchange jumped by more than 3% to their highest level in over 15 months following the announcement. UBS has noted that mine disruptions, including the Grasberg incident, are squeezing copper supply, and the company has adjusted its 2026 global mine supply growth forecast to ~1% (250kt) UBS Says Force Majeure at Freeport's Grasberg Mine to Tighten Copper Supply Into 2026^[2].

Analysts have responded to the news with mixed sentiments. Bernstein upgraded the stock, stating that the worst is over, while Scotiabank downgraded the stock, citing reduced visibility and increased risks. Scotiabank lowered its price target to $45.00 from $55.00, noting significant operational impacts and a decline in EBITDA estimates by an average of 27% annually Scotiabank downgrades Freeport-McMoRan stock rating after Grasberg incident^[3]. Other analysts, such as BofA Securities, Jefferies, BMO Capital, and RBC Capital, have also adjusted their price targets and ratings in response to the incident Scotiabank downgrades Freeport-McMoRan stock rating after Grasberg incident^[3].

The incident at Grasberg highlights the substantial operational and financial hurdles Freeport-McMoRan is currently navigating. Despite these challenges, the company maintains strong fundamentals with an overall "GOOD" Financial Health Score according to InvestingPro analysis.