Mud and rock that tore through Freeport-McMoRan’s Grasberg mine on Sept. 8 halted the world’s second-largest copper operation, killed two miners and triggered force majeure on concentrate deliveries. The Indonesian shutdown removes a large, low-cost source of metal just as traders were counting on new supply to balance the market, and September’s price rally to US$10,358 a tonne underscores how little slack remains.
Force majeure shaves supply outlook
Freeport estimates that the landslide will erase 250,000–260,000 tonnes of copper this year and about 270,000 tonnes in 2026, roughly 2 percent of global mine output.
“Grasberg’s fourth quarter production will be very low,” Freeport said after declaring force majeure, citing the slow restart of block-cave areas.
Goldman Sachs has already cut its 2025 mine-supply growth forecast from 0.8 percent to 0.2 percent, flipping next year’s refined balance from a modest surplus to a 55,000-tonne deficit. Spot premiums across Southeast Asia jumped and London Metal Exchange inventories slipped below 150,000 tonnes, a six-month low, signalling tighter physical conditions. Some relief could come from new Chilean and Peruvian projects, yet most will not reach nameplate capacity until late 2027, leaving consumers exposed to any further disruptions.
Deficit forecast firming for 2026
The International Copper Study Group crystallised those concerns in early October, warning that “the global refined copper market is expected to swing to a deficit of 150,000 metric tons in 2026,” the ICSG wrote. The projection assumes a gradual recovery at Grasberg and no major setbacks elsewhere, a heroic assumption after recent hiccups at Kamoa-Kakula and Cobre Panamá.
Copper’s demand story is also broadening. Grid upgrades for data-centre power, larger battery packs in electric trucks and a rebound in Chinese property completions have lifted CRU’s 2026 use growth estimate to 3.1 percent.
With scrap supply constrained by tighter import rules in Asia, refined inventories now cover barely three weeks of demand, half the buffer available before the pandemic. If any of the ramp-ups slip, analysts fear a price shock similar to the nickel squeeze of 2022.
Canadian control under merger lens
Against that backdrop, Ottawa faces an awkward question: should Canada be ceding strategic copper assets just as a supply gap looms? The C$71-billion all-share combination of Teck Resources and Anglo American, announced in September, hands majority ownership of the country’s largest base-metal miner to London investors and dilutes domestic influence over Quebrada Blanca II and Galore Creek.
The deal promises US$800 million in annual synergies and a future listing in Toronto, yet Teck shareholders will hold only 37.6 per cent of the merged Anglo-Teck vehicle, according to the joint release. Critics note that the merger comes as Canada-U.S. trade relations strain over softwood lumber and electric-vehicle content rules, raising the prospect that refined copper from British Columbia could flow south under less favourable terms.
Ottawa has blunt new powers under the updated Investment Canada Act to review critical-minerals takeovers, but chose not to invoke them, arguing the transaction preserves Canadian head-office functions. With the United States scrambling to on-shore battery metals and Indonesia tightening export quotas, relinquishing control now could leave Canada short of leverage when the deficit bites. Provincial governments that rely on resource royalties must weigh the near-term cash premium against long-term strategic flexibility.
Strategic rethink in North America
Washington’s Critical Minerals Act already lets the federal government take equity stakes in U.S. projects, and it is courting Northern Dynasty’s Pebble and Trilogy’s Arctic deposits. Ottawa prefers tax credits and stream contracts, a lighter touch that may not secure downstream supply in a tightening market.
If Grasberg’s outage is a dress rehearsal for 2026, policymakers may need to move beyond passive incentives and consider offtake reservations or a sovereign copper reserve. Short of that, keeping flagship producers under domestic control could prove Canada’s most effective hedge against the coming squeeze.