First Quantum could seek arbitration over Cobre Panamá

First Quantum Minerals (TSX: FM) may want to send its on-again off-again battle with the Panama government over Cobre Panamá to international arbitration. 

That was the consensus from legal experts consulted by The Northern Miner as legislators in Panama meet for a third time this week to vote on a bill that would revoke the copper mine’s contract. Its passage into a law last week triggered mass protests and backpedaling by President Laurentino Cortizo. He said all new mining projects are to be halted.

First Quantum’s shares plummeted by half this week from $27.96 apiece before recovering a bit on Wednesday and 5% on Thursday to $15.51. They’re still the lowest in three years, valuing the company at $10.7 billion. They were as low as $13.76 on Wednesday. 

The proposed law, Bill 1110, which also bans all future mining concessions and contract renewals in Panama, passed a second debate late on Wednesday and faces a final vote on Thursday. Cortizo wants to hold a referendum on allowing the giant mine to continue, but the law granting the contract has to be rescinded first. 

If the law passes, the proposed referendum would be unnecessary, the country’s National Assembly said in a statement on Thursday.

The country signed a multi-billion-dollar deal in October with First Quantum after 10 months of negotiations. It lets Cobre Panama operate for the next 20 years. It started operation in 2019 after US$6.8 billion in construction. 

 

 

First Quantum 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. It accounts for about 1.5% of global copper production,   

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.

The complex includes two open pit mines, a processing plant, two 150MW power stations and a port.