Rio Tinto Plc (RIO) has temporarily halted underground operations at its massive Oyu Tolgoi copper mine in Mongolia following seismic activity that injured three workers. This disruption comes amid growing operational challenges in the mining sector, as highlighted by a recent EY survey identifying "operational complexity" as the top risk for 2027. Paul Mitchell, EY’s global mining and metals leader, noted that aging mines and depleted reserves are intensifying these challenges.
The supply constraints have not translated into higher prices, however, as investor skepticism about the AI-driven demand story has capped copper’s upside. Freeport-McMoRan, Inc. (FCX) has faced its own setbacks, with repairs from a mudslide delaying full capacity at its Grasberg mine until early 2028. The mine’s 2026 production target was already reduced from about 700,000 tons to 478,000 tons, leaving a significant supply gap.
Meanwhile, Codelco, the world’s largest copper producer, is under scrutiny after an internal audit revealed discrepancies in its reporting. About 26,875 tons of copper were incorrectly classified as finished product, raising concerns about the company’s internal controls. The Cobre Panama mine remains closed since late 2023 due to regulatory issues, further tightening supply.
Despite these challenges, copper prices have softened, with three-month copper on the London Metal Exchange falling to $14,356.50, down from September’s record high of $14,875. JPMorgan analyst Patrick Jones described the shift as a move toward caution rather than outright bearishness. Rio Tinto shares were down 0.53% at $82.81 during premarket trading on Friday.