Key Macroeconomic Indicators for Base Metal Prices (2017-2-9)

Freeport-McMoRan reported third-quarter 2026 consolidated copper production of approximately 830 million lb, equivalent to about 376,500 mt, broadly in line with expectations as the company continued the phased recovery of operations at the Grasberg minerals district in Indonesia.​ Freeport said slightly stronger results from its international operations offset somewhat lower production from its U.S. mines. Third-quarter copper sales are expected to approximate the company’s July estimate of 750 million lb.​ At Grasberg, mill throughput averaged approximately 140,000 mt of ore per day during the quarter, equivalent to around 67% of normalized operating rates before the September 2025 incident. About 70,000 mt/day of the total throughput came from the Grasberg Block Cave underground mine.​ Upgrades to the Block Cave material-handling system remain on track for completion in early 2027, while preparations continue for the targeted restart of Production Block 1S by mid-2027. Freeport continues to expect Grasberg to reach approximately 80% of capacity by mid-2027 and approach full capacity by the end of 2027.​ PT Freeport Indonesia’s Eastern Java smelter, which had been temporarily suspended following the September 2025 Grasberg incident, restarted operations in late August 2026. Freeport said the smelter ramp-up is progressing in line with expectations. PTFI’s combined smelting capacity, including PT Smelting, is capable of producing up to approximately 800,000 mt/year of copper cathode.​ Freeport also said its U.S. operations experienced lower-than-planned operating rates during the third quarter due to localized flooding, power outages and strong winds, while unusually dry conditions in Indonesia created some milling challenges with limited impact to date.​ Freeport’s third-quarter production performance indicates that the Grasberg recovery is progressing broadly in line with the company’s expectations, although the operation remains below pre-incident throughput levels. The gradual ramp-up at both the Grasberg Block Cave and the Eastern Java smelter should support improving copper output and downstream processing capacity over the coming quarters. Attention will remain on completion of the material-handling upgrades, the planned restart of Production Block 1S and Freeport’s ability to reach 80% of Grasberg capacity by mid-2027.

China’s antitrust regulator has asked Anglo American to provide assurances that the combined company resulting from its proposed merger with Teck Resources would maintain a steady supply of copper concentrate to China, according to Reuters, citing three people familiar with the matter.​ The request forms part of China’s regulatory review of the proposed US$54 billion Anglo–Teck merger. Reuters reported that the supply assurances are being sought as a condition for Chinese approval of the transaction, although the precise terms of any undertaking have not been publicly disclosed.​ The discussions come as Chinese copper smelters face severe constraints in concentrate availability. China accounts for around 60% of global refined copper cathode production, making its smelting industry heavily dependent on reliable supplies of copper concentrate.​ Rapid growth in global smelting capacity has outpaced growth in mined copper supply, contributing to a prolonged tightening in the concentrate market. Reuters reported that China’s current feedstock shortage is among the most severe experienced by its copper smelting sector in decades.​ Anglo American said it is working constructively with China’s State Administration for Market Regulation as the review progresses. No fixed concentrate volumes or binding supply arrangement have been publicly confirmed.​ The proposed merger would combine significant copper assets held by Anglo American and Teck, increasing the enlarged group’s importance in global mined copper supply. Reuters estimates that the combined company would account for approximately 5% of global copper supply.​ China’s reported request for copper concentrate supply assurances highlights the importance of feedstock availability to the country’s smelting industry amid a prolonged concentrate shortage. The request indicates that copper concentrate supply security has become an important consideration in China’s review of the Anglo–Teck merger. Attention will now turn to whether the parties agree to any formal supply commitments and whether those conditions affect the timing or structure of the merger approval process.

The Zambian government has issued an Environmental Restoration Order to Konkola Copper Mines (KCM) following a pollution incident affecting the Kafue River and its tributaries in Chingola District, while the mining company has disputed claims that its operations caused the pollution.​ The incident occurred on September 28, when the Zambia Environmental Management Agency (ZEMA) received notification from KCM's Nchanga Mine of discolouration in the Kafue River. According to the Ministry of Green Economy and Environment, KCM initially attributed the discharge to an infrastructure failure involving a pipe leak at the Tailings Leach Plant and an overflow from a Pollution Control Dam.​ A joint inspection involving ZEMA, Mulonga Water Supply and Sanitation Company and KCM personnel subsequently confirmed the presence of a discharge affecting the Chingola Stream, Mushishima Stream and Kafue River. By the time inspectors arrived, the leaking pipe had been repaired and the Pollution Control Dam overflow had been contained.​ Preliminary laboratory results showed elevated turbidity and conductivity at the confluence of the Mushishima Stream and Kafue River, while pH levels remained within acceptable limits. Further testing is being conducted to determine heavy-metal levels and other water-quality parameters.​ The government has directed KCM to stop discharging effluent from the Tailings Leach Plant into the environment, remove visible tailings material from affected areas, assess the integrity of its Pollution Control Dams and tailings pipelines, and undertake clean-up and remediation of the affected water bodies. A Cost Order has also been issued requiring KCM to meet laboratory analysis and related monitoring costs, while weekly water-quality monitoring is expected to continue.​ KCM has rejected allegations that its operations were responsible for the pollution and has called for an evidence-based investigation to determine the source and root cause. The company said it was the first to observe discolouration near the Hippo Pool area and reported the matter to ZEMA. KCM also said its operations had not recorded abnormal pollution levels warranting reporting and that operations were continuing normally.​ The incident adds environmental and regulatory scrutiny for KCM at a time when the company is working to rebuild output across its Nchanga and Konkola operations. However, no production disruption has been reported and KCM says operations are continuing normally. Attention will now turn to the outstanding laboratory results, the implementation of the Environmental Restoration Order and whether further regulatory or operational measures follow once the investigation into the source and extent of the pollution is completed.