Panama has asked Canadian miner First Quantum Minerals (TSX: FM) to halt its Cobre Panama copper mine following a ruling by the Supreme Court that declared the mining contract for the operation unconstitutional. President Laurentino Cortizo took to social media late on Tuesday to announce his government had started “the transition process for the orderly and safe closure of the mine. The top court’s ruling capped six weeks of protests and official announcements over a contract that gave First Quantum 20 years of mining rights over the giant copper asset, with an option to extend the deal for another 20 years in return for $375 million in annual revenue to the Central American nation. Challenges against the contract piled up in court following massive protests against the contract, which almost paralyzed the country... https://www.mining.com/panama-...
This was a myopic decision on Panama's part especially as Panama is one giant ecological disaster in the first place.
Panama's government legally agreed to the mining extension in October. Hence why First Quantum has two international arbitration submissions in the pipeline now. Note that the Panamanian copper miners are now protesting as up to 40,000 people have lost their jobs in Panama due to this decision...
Franco Nevada, the company that pioneered the gold royalty model, holds the gold royalty on Cobre Panama, hence why their share price is taking a battering but unlike First quantum, Franco will be fine...
With COP28 going on this week in Dubai, it is rather ironic that over 1% of the world's copper production has just gone offline (as the Cobre Panama mine churned out >1% of the world's copper production per annum). For a so-called net zero future we would need a lot of copper in order to transfer energy around in the form of electricity, build electric cars, wind mills and so on...where do these people think all of this copper is going to come from I wonder?
Also note that JP Morgans expects a further sovereign downgrade on Panamanian bonds (i.e. as their government de facto reneged on the mining extension that was signed in October). The canal isn't operating properly either due to water shortages, so ships are detouring thousands of miles via Suez, the Cape of Good Hope, or even through the Strait of Magellan off the tip of South America. I wonder how much extra carbon that generates...
