Stoppage of the Panama copper mine plummets the shares of First Quantum Minerals

Isbel Lázaro.

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cobre Panamá

Inspenet, November 1, 2023.

The future of First Quantum Minerals has been questioned due to the Panamanian government’s decision to hold a referendum on the Panama copper mine project with the aim of calming mass protests. This move resulted in a decline in the company’s stock value of up to 20%, marking its biggest drop since March 2020.

The Cobre Panamá mine, operated by the Canadian company First Quantum Minerals, has become a focal point of attention in the country’s political landscape. In an attempt to placate those opposed to the mining operation, President Laurentino Cortizo announced last Sunday that a national vote will be held on December 17 to consider revoking the company’s license.

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Importantly, the long-term supply of this metal is limited and an increase in demand is anticipated as the global economy moves towards decarbonization .

This month, President Cortizo approved a 20-year extension for First Quantum’s mining license, generating strong opposition in the country and sparking demonstrations in which protesters blocked roads and clashed with police, demanding the annulment of the new contract that supports the operation. Last week, Cortizo also banned the construction of new mines in the country.

Additionally, Panamanian dollar-denominated bonds saw a decline on Monday, leading losses in emerging markets.

Fitch Ratings had already given a negative outlook on the debt in late September, citing fiscal pressures, from subsidies to more costly debt service, and expressing uncertainty about the government’s ability to address these issues. The debate surrounding the First Quantum mine and a massive drought that forced the government to restrict traffic through the Panama Canal have further raised concerns.

First Quantum Minerals and the Panama copper mine

First Quantum has invested a great deal of time and billions of dollars in building the mine. This project has attracted the attention of competitors who are also seeking to increase their participation in copper production.

For many Panamanians, the modified exploitation contract is perceived as excessively favorable to the Canadian mining company and as a violation of the country’s sovereignty in relation to its mineral resources. The contract gives First Quantum the right to mine copper at its facilities for 20 years, with the option to extend it for an additional 20 years .

The country’s Supreme Court has announced that it will examine two lawsuits filed against the renewal of the contract with the company.

Importantly, the mine is First Quantum’s largest asset and represents a significant economic driver for Panama, contributing approximately 1.5% of global copper production.

So far, the Vancouver-based company has not provided comment in response to a request in this regard.

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