First Quantum slows production at Panama Mine

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By LatAm Reports Editor

First Quantum Minerals Ltd., a Canadian mining company, has scaled back operations at its major copper project in Panama due to escalating local opposition. This reduction in activity follows an obstruction at its port by small boats, which has significantly impacted the delivery of essential supplies.

On Monday, First Quantum reported an “illegal blockade” at Punta Rincon, which has adversely affected supply deliveries to the mine. Consequently, the company has decided to reduce the operation of its ore-processing trains, with only two out of three remaining functional. Additionally, the blockade is causing issues in the loading of copper concentrate at the port.

This disruption has led to a noticeable decline in First Quantum’s stock value, with a drop of up to 3.9% in Toronto on Monday. The situation places the company in a delicate position amidst a growing political controversy in Panama. The conflict intensified following mass protests against the extension of the company’s mining license, prompting President Laurentino Cortizo to announce a referendum on the project’s future at the end of last month.

Since then, both the referendum and legislative efforts to repeal the contract have been paused. The government is now waiting to see if the Supreme Court will annul the agreement. This ongoing dispute raises serious concerns about the future of the Cobre Panama mine, a project with an investment exceeding $10 billion.

The Supreme Court is expected to make a public announcement concerning the first two court cases about the Cobre Panama contract next week, with a ruling possible anytime thereafter. Since President Cortizo’s opposition to the agreement in late October, First Quantum’s market value has plummeted by over 40%.

Earlier in March, First Quantum and the Panamanian government had reached a seemingly beneficial agreement, granting the company a 20-year extension on its most valuable asset. In return, the government secured a larger share of revenues to enhance pensions before the May 5 elections. However, despite initial optimism, discontent with the deal has been brewing.

Outrage over the agreement escalated in October, with environmentalists and student groups disrupting highways and clashing with police, leading to skyrocketing food prices in the capital as transportation from farms was blocked. In an attempt to quell the unrest, on October 29, President Cortizo called for a referendum on the mine contract.

The Cobre Panama project stands as one of the world’s largest and newest copper mines. The current uncertainty surrounding the mine coincides with a heightened global focus on copper supply, essential for the decarbonization of the global economy. As the long-term availability of copper remains limited, its demand is expected to increase substantially.