Freeport beats profit forecasts: Grasberg slump and capex outlook for mine planners
Reviewed by Joe Ashwell
First reported on MINING.com
30 Second Briefing
Freeport-McMoRan beat second-quarter profit forecasts with adjusted earnings of $0.74 per share and net income of $984 million, helped by a realised copper price of $6.17/lb versus $4.54/lb a year earlier despite an 18.2% drop in copper production to 786 million lb. Grasberg, hit by about 800,000 t of wet material flooding in September, is running at roughly 50% of capacity, targeted to reach 65% later this year and near full capacity by end-2027, with full restart now delayed to early 2028. Freeport reaffirmed 2026 guidance of 3.1 billion lb copper and 650,000 oz gold sales, with $4.3 billion capex planned, including $3 billion for major mining projects.
Technical Brief
- About 800,000 t of wet material inundated Grasberg in September, forcing a suspension of operations.
- Grasberg is described as the world’s second-largest copper mine and largest gold mine, underscoring strategic importance.
- Complex is currently operating at roughly half of nameplate capacity, with underground block cave ramp-up driving recovery.
- Copper sales in Q2 reached 710 million recoverable lb, down from 1.0 billion lb year-on-year.
- Gold sales fell sharply to 123,000 oz in the quarter, versus 192,000 oz production and much higher prior-year sales.
- Average unit net cash costs are forecast at $1.90/lb Cu, critical for block cave cut-off economics.
- Of the $4.3 billion 2026 capex, $3 billion is allocated to major mining projects, including Grasberg recovery.
- Elevated copper and gold prices are currently offsetting revenue impacts from reduced ore hoisting and processing at Grasberg.
Our Take
The planned $4.3 billion in 2026 capital spending, with $3 billion earmarked for major mining projects, lines up with Freeport-McMoRan’s separate $7.5 billion El Abra expansion filing in Chile, signalling a multi-asset build-out that reduces reliance on the Grasberg mine’s Block Cave ramp-up alone.
Grasberg’s current 50% utilisation and expected lift to 65% later this year comes as PT Freeport Indonesia is also building one of the world’s largest fleets of Caterpillar R2900 XE LHDs underground, suggesting that productivity gains there will increasingly depend on high-availability diesel-electric fleets and associated maintenance regimes.
The assessment of an additional 120 tpa scandium oxide train positions Freeport-McMoRan alongside the “space hardware” supply chain narrative flagged in Morgan Stanley’s Space 60 framework, where copper and specialty minerals exposure is seen as strategically important for aerospace and satellite manufacturing.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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