Panama’s congress lets First Quantum continue copper mining contract

Panama’s congress eliminated an article in a mining bill that would have voided First Quantum Mineral’s multi-billion-dollar copper mining contract on Friday. The provision to revoke First Quantum’s controversial contract was therefore eliminated and the National Assembly referred the agreement to the country’s Supreme Court for a ruling.

First Quantum claimed that despite the protests over the contract, which included the infiltration of a port used to export copper and large masses marching in Panama City, production at the Cobre Panama copper mine had continued.

On Friday, the company said: “Production at the Cobre Panama mine remains uninterrupted at this time; however, like many businesses across Panama, protests, including blockades of key roads, have caused disruptions on site as well as shortages in certain supplies.”

After the announcement that the contract would not be revoked, First Quantum’s shares increased by more than 12% to C$17.64 ($12.93) in morning trading in Toronto and by the afternoon they were trading at C$17.13. The shares were therefore only down 27% for the week, rather than the 50% witnessed on Wednesday.

Last Tuesday, Panama’s electoral authority decided a referendum on the mining contract would not go ahead despite protestors’ demands.

Jackie Przybylowski, mining analyst at BMO, said: “We do not expect that either First Quantum or the government intends to disrupt mining operations – as it likely didn’t intend to cause a temporary mine closure in February – especially into an election when Panama is already facing drought-related disruptions to canal operations. We expect the mine will continue to operate through this period of uncertainty.”

First Quantum is the largest copper producer in Canada. Its Cobre Panama mine accounts for 75% of Panama’s goods exports.