Indonesian Developments Shake Global Copper and Nickel Markets as Environmental Concerns Rise
International copper and nickel markets are feeling the impact from a number of significant developments in Indonesia.
Copper prices have surged after the Grasberg mine, one of the world’s largest producers of the base metal, was hit by a tragic mudslide that has already claimed a number of lives.
The mine accounts for approximately 3% of world copper supply and the operator Freeport-McMoRan has now declared force majeure on contracted supplies.
Output to Fall Dramatically
The company has also cut its expected output for Q3 by four per cent from previous estimates, while there are suggestions its 2026 output may be 35% lower than pre-incident estimates.
The mine’s operators announced the incident came after a sudden rush of approximately 800,000 metric tons of wet material entered the mine and travelled rapidly to multiple mine levels, including the service level of the mine where a number of missing team members were conducting development activities.
An investigation is now underway to identify the cause of this incident, which the company said is unprecedented in its multi-decade history of block cave mining operations.
The investigation team includes external experts and will address root cause analysis and recommendations to safeguard against future occurrences.
ESDM Nickel Sanctions
Elsewhere, global nickel markets reacted strongly to an Indonesian Ministry of Energy & Mineral Resources’ (ESDM) decision to shut down a large number of projects.
Indonesia sanctioned 25 nickel mining companies in southeast Sulawesi province due to issues related to site reclamation and post-mining guarantees.
The nickel miners were among a clampdown that saw the ESDM suspend 190 general mining licences, with sanctions potentially lasting up to 60 days.
Prior Warnings Issued
The ESDM imposed the sanctions after the companies failed to act on a series of warning letters issued in December 2024 and August 2025.
Earlier this month, the government seized lands from miners at Weda Bay Nickel and Tonia Mitra Sejahtera for lacking forestry permits.
Indonesia, the world’s leading nickel producer, has received strong criticism from countries like Australia in the past for the lack of environmental oversight as it ramped up production on the back of global nickel demand.