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Freeport Calls Force Majeure at Grasberg Mine

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Freeport-McMoRan Copper & Gold Inc. (FCX - Free Report) has announced a force majeure on shipments from PT Freeport Indonesia’s (PT-FI) Grasberg mine in Papua, Indonesia, after an accident occurred due to the collapse of a tunnel at the mine that took 28 lives.  

While the accident occurred outside the area of mining operations, Freeport temporarily suspended mining and processing activities at the Grasberg complex as a part of the rescue and recovery operation.

Investigation is being carried on by PT-FI, international experts, the Indonesian Department of Energy and Mineral Resources (DEMR) and other government authorities. Freeport will resume operations in phases, starting with open pit followed by a ramp-up in underground operations after it receives approval by the DEMR.

Due to the closure of operations at the world’s second largest copper mine, production is expected to be affected. It is apprehended that on a daily basis the mine would lose about 3 million pounds of copper and 3,000 ounces of gold. The Indonesian operation lost about 80 million pounds of copper and 80,000 ounces of gold in the period between May 15 to June 11, 2013.

Freeport’s Indonesian operation recorded copper sales of 198 million pounds in first-quarter 2013, higher than copper sales of 134 million pounds a year ago. Gold sales declined roughly 28% year over year to 191,000 ounces due to lower ore grades from mine sequencing.

Freeport currently holds a short-term Zacks Rank #3 (Hold).

Claude Resources, Inc. , Lake Shore Gold Corp. and NovaGold Resources Inc. (NG - Free Report) also belong to the mining industry. All of them retain a Zacks Rank #2 (Buy).

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