Protests cast doubt on approval of First Quantum’s contract in Panama

Panamanian social and environmentalist organizations called for a national march on Tuesday afternoon towards the Parliament to demand legislators reject a deal between First Quantum Minerals (TSX: FM) and the government over the giant Cobre Panama copper mine.

The demonstration, organized by the Alianza Pueblo Unido por la Vida (People United for Life Alliance), follows Monday’s protests and street clashes as Panama’s national assembly began debating the contract prior to discussion in the full session of congress. 

The assembly can approve or reject the contract which opponents say it did not involve enough citizen participation and, as such, it should be suspended until the matter is resolved. 

The Panamanian government did launch a 30-day non-binding public consultation process related to the contract signed in March.

The document allows Cobre Panama to remain in operations or 20 years, with the possibility of extending the period for another 20 years. It also establishes a minimum payment from First Quantum to the state of US$375 million a year.

Environmentalists and neighbouring communities to the copper mine also say the contract involves concessions to a foreign company that will affect not only the area where Cobre Panama is located, but almost half of the national territory.

Negotiations between the parties were triggered after First Quantum missed a December deadline to ink a new royalty deal, which had been in the works since September 2021.

The government and First Quantum were at odds mainly over taxes and royalty payments.

Panama ordered the Canadian miner to halt operations, which ended up happening in February. During the weeks the mine remained shut, the company said it lost US$8 million a day in terms of costs that would never recovered.

After reaching the deal with authorities, mining operations and shipments ramped up to full production levels within days.

The contract has since faced growing opposition politicians from the centre-right as well as from communities close to the copper mine. The document has the support of Laurentino Cortizo’s  government and the business community, including the national mining chamber.

Cobre Panama began producing and shipping copper concentrates in June 2019. Last year, it produced of 350,438 tonnes of the metal, consolidating it as one of the top copper mines in Latin America.

The operation contributes about 5% of Panama’s GDP and is responsible fort about half of First Quantum’s total production.