Panama Congress decides fate of First Quantum mine contract
Vote on bill revoking the 20-year contract with First Quantum and halting all future mining concessions in Panama happening today.
Panama legislators gathered for a third time this week on Thursday to vote on a bill that would revoke the contract between the government and First Quantum Minerals (TSX: FM), allowing the Canadian miner to keep operating its giant copper mine.
Bill 1110 passed a second debate late on Wednesday and faces a final vote Thursday, with minimum to no changes allowed at this point.
After 10 months of negotiations between the parties, the country inked in October a multi-billion dollar deal with the miner, letting it operate its flagship Cobre Panama copper mine in the country for the next 20 years.
The decision ending years of legal uncertainty was signed into law last week. But it immediately triggered a series of violent protests that have almost paralyzed Panama City, the capital.
President Laurentino Cortizo announced over the weekend that the country would hold a referendum on whether to revoke the controversial contract. He also announced a halt on new mining projects.
Parliament has already buried Cortizo’s bill 1109, which called for a nation-wide plebiscite on December 17. Lawmakers are now debating bill 1110, which revokes the law that granted First Quantum a contract extension. It also bans all future mining concessions and contract renewals in Panama.
If passed, the proposed referendum on the contract would be unnecessary, the country’s National Assembly said in a statement on Thursday.
Legal experts consulted by MINING.COM say that using a new law to revoke the previous law backing the contract (Law 406), could give First Quantum the right to take Panama’s government to international arbitration.
Shares in First Quantum fell more than 50% this week between Monday and Wednesday’s close in Toronto, but were trading 5.6% higher to C$11.3 by mid-afternoon Thursday.
The company is one of the world’s top copper miners and Canada’s largest producer of the coveted metal. It churned out 816,000 tonnes of copper in 2021, its highest ever, thanks mainly to record output at Cobre Panamá.
The mine complex, located about 120 km west of Panama City and 20 km from the Atlantic coast, contributes 3.5% of the Central American country’s gross domestic product, according to government figures.
The asset, which accounts for about 1.5% of the world’s copper production, began production in 2019.
Cobre Panamá is estimated to hold 3.1 billion tonnes in proven and probable reserves and at full capacity can produce more than 300,000 tonnes of copper per year, or about 1.5% of global production of the metal.
Currently, the complex includes two open pit mines, a processing plant, two 150MW power stations and a port.