A Mega-Mine Pause Fails to Lift Copper As the AI Trade Cracks

Rio Tinto Plc (NYSE:RIO) has paused underground operations at its Oyu Tolgoi copper mine in Mongolia, one of the world’s largest copper projects, after seismic activity along a fault zone injured three workers.

The halt isn’t an isolated incident. A new EY survey of 400 mining executives ranks “operational complexity” as the industry’s top risk for 2027.

“Mining has always been complex, but the degree of operational complexity is increasing as mines age and reserves are depleted,” Paul Mitchell, EY’s global mining and metals leader, said in a statement.

Still, the supply crunch has met the price ceiling, as doubts about the AI trade push investors to rethink near-term demand.

Cascading Bottlenecks

Freeport-McMoRan, Inc. (NYSE:FCX) Grasberg supplies about 3% of the world’s copper. Yet repairs after a mudslide have pushed its return to full capacity to early 2028.

It’s the second delay. The mine’s 2026 target was cut to 478,000 tons from about 700,000, leaving a gap of more than 900 million pounds, according to SunSirs.

Codelco, the world’s largest copper miner, fired an executive and referred the matter to prosecutors after an internal audit. The audit found that 26,875 tons from Chuquicamata and Ministro Hales, about 2% of 2025 output, were booked as finished product when they should have been work-in-process.

Juan Carlos Guajardo, executive director of Plusmining, told Mining.com that the discrepancy raises serious concerns about the company’s internal controls, traceability and ability to verify its operations.

Meanwhile, the Cobre Panama mine remains shuttered. The project, which supplied about 1.5% of global copper, has been in care and maintenance since the end of 2023, after the government ruled its concessions unconstitutional.

First Quantum Minerals has confirmed that a Ministerial Commission recommended opening formal negotiations, but it has yet to announce a date.

Structural Headwinds and Demand Reality Check

After regulatory delays, 29% of EY respondents named reserve-grade variability as a driver of complexity. Between 24% and 26% pointed to material handling, processing capacity, transport, or equipment reliability. Access to capital and supply chains rank as the second and third biggest risks.

To raise money, 44% of miners are turning to equipment makers, 39% to sovereign wealth funds and 39% to governments. Public financing commitments for critical minerals more than quadrupled to about $65 billion between 2023 and 2025. Meanwhile, 52% of miners are building stockpiles.

However, price is showing cracks, as the recent earnings results from Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) and Intel Corporation (NASDAQ:INTC) have shaken the AI demand story.

Three-month copper on the London Metal Exchange fell to $14,356.50, well below September’s record of $14,875.

“Sentiment has turned relatively more cautious rather than outright bearish,” JPMorgan analyst Patrick Jones said, according to Reuters.

RIO Price Action: Rio Tinto shares were down 0.53% at $82.81 during premarket trading on Friday, according to Benzinga Pro data.

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