ASX copper plays cash in as supply fears grow

• The suspension of one of the world’s biggest mines could bring forward the forecast deficit in the copper market
• The copper price has surged over US$10,000 per tonne off the back of the disruption
• ASX copper companies are capitalising on the higher price and investor interest

Things just got really interesting in the copper market, with a major supply disruption set to cause ripples.

On September 9, US copper major Freeport-McMoRan reported that a day earlier, there had been a mud rush incident at its Grasberg block cave mine in Indonesia.

A sudden rush of around 800,000 tonnes of wet material entered the mine and travelled rapidly to multiple mine levels, trapping seven workers.

The company initially believed they were safe but have since found two bodies and are still searching for the remaining workers.

Operations at Grasberg, the world’s second largest copper mine, have been suspended.

Mine operator PT Freeport Indonesia has declared force majeure and suggested the mine may not return to pre-incident operating rates until 2027.

The company suggested a best-case scenario, under a phased ramp-up plan, could be a 35% reduction in 2026 production from previous estimates of 1.7 billion pounds of copper and 1.6 million ounces of gold.

Copper shock

Benchmark Mineral Intelligence described the disruption of an estimated 591,000 tonnes of copper between early September and the end of 2026 as “severe”.

“To contextualise the scale of this disruption, between September 2025 and December 2026, Grasberg will lose a greater mass of mined production than Benchmark is forecasting to be produced by Collahuasi (the world’s third largest mine) in 2026,” Benchmark’s analysts said.

“The scale of this disruption carries profound global consequences. Accordingly, we have revised our refined balance, projecting a substantial deficit of 404,000t in 2025.”

Last week, the International Copper Study Group said that in the seven months to July 31, the world refined copper balance indicated a preliminary surplus of about 101,000t, down from around 401,000t in the same period of last year.

It follows earlier disruptions at Kamoa-Kakula in the Democratic Republic of Congo in May, due to seismic activity, and at El Teniente in Chile in July, due to an underground accident.

“The incident at Grasberg has the potential to far outweigh the earlier disruption at Kamoa-Kakula, underscoring the fragile equilibrium of a rapidly expanding copper market that is becoming ever more dependent on a small group of major mines to sustain production growth,” Benchmark said.

“In 2025, we expect the world’s 20 largest mines to account for 36% of global copper output, illustrating just how concentrated supply has become.

“Each of these operations faces its own complex mix of risks, challenges, and operational hurdles – factors that are often underappreciated in the broader market.”

Bank of America reportedly sees the copper deficit widening to 350,000t in 2026 and 533,000t in 2027, up from 25,000t this year.

As a result, the bank lifted its price forecast for 2026 by 11% to US$11,313/t and by 12.5% to US$13,501/t in 2027, calling a peak of US$15,000/t by the end of 2027.

Cashing in

South Australian copper producer Hillgrove Resources (ASX:HGO) took advantage of the improved market conditions, as well as recent exploration success, to raise $28 million this week in a placement to domestic and offshore institutional and sophisticated investors.

The company attracted subscriptions well above the targeted amount.

The proceeds will be used to continue exploration at the Kanmantoo copper mine’s Emily Star deposit, after it reported hits including 6.3m at 1.76% copper and 0.12 grams per tonne gold; 19.1m at 1.91% copper and 0.15g/t gold; and 5.7m at 2.12% copper and 0.36g/t gold, last week.

The proceeds will also be used to complete the $21 million Nugent development, which will boost Kanmantoo ore production by 300,000-400,000t per annum to 1.7-1.8 million tonnes per annum and reduce unit costs.

“The market’s appetite to support a junior copper producer’s ambition towards transitioning into mid-tier status, particularly in a supply-constrained copper environment, is encouraging to say the least,” Hillgrove managing director Bob Fulker said.

“This placement positions Hillgrove very well to now capitalise on that opportunity.”

New shares were issued at 3.5c per share and the stock was trading as high as 4c yesterday.

Explorers also benefitting

While gold explorers have been easily able to raise cash this year, it’s been a little harder for copper names, though that’s changed in the past few weeks.

Cobar explorer Peel Mining (ASX:PEX) has a new look, after last week welcoming the former New World Resources management team. And it’s wasted no time rattling the tin.

The company announced on Monday it had raised $16.25 million, including a $1.05 million commitment from the new board and management team.

Peel will seek a further $2.5 million via a share purchase plan.

Two weeks ago, junior explorer Belararox (ASX:BRX) raised $8.5 million to fund its copper hunt.

The company is already drilling in Botswana and is kicking off groundwork in Argentina.

The Queensland copper explorers have also gotten in on the action.

Last week, copper-gold explorer QMines (ASX:QML) attracted $7.5 million via a strongly supported placement.

“It is pleasing to see such strong demand for the placement which underscores the quality of QMines’ copper and gold projects and the company’s aggressive growth strategy,” executive chairman Andrew Sparke said.

While Cannindah Resources’ (ASX:CAE) recent $4.5 million entitlement offer was fully underwritten, the company announced last week that it had closed oversubscribed.

The company will use the funds to kick off a 6000m drilling program at its namesake project, targeting growth in the existing resource and the testing of two new targets.

Earlier this week, Orion Minerals (ASX:ORN) announced a $5 million raising, with the funds to be primarily used to continue early works at the Prieska copper-zinc mine in South Africa.

It will also provide working capital while the company works through finalising a recently announced non-binding funding and offtake deal with mining giant Glencore.

At Stockhead, we tell it like it is. While QMines, Belararox, Cannindah Resources and Hillgrove Resources are Stockhead advertisers, they did not sponsor this article.