The people have spoken. And unfortunately for First Quantum Minerals (TSX: FM), that means that a recent agreement it entered into regarding the future of its flagship Cobre Panama Mine will now be going to a referendum vote in Panama, despite that agreement having previously been signed into law.
The agreement was originally passed under Bill 1100 on October 20, with 47 of 55 votes in favor of the bill passing. The bill was then endorsed by President Cortizo on the same day, transforming it into Law 406, and thereby concluding the revision of the legal structure of the Cobre Panama mine.
The new terms of the agreement guaranteed Panama an annual sum of at least $375 million from Minera Panama, the subsidiary of First Quantum that owns the mine, which is more than ten times the amount of the previous agreement. The mine itself accounts for 3% of Panama’s GDP, and 80% of its total exports. The mine itself accounts for an estimated 1.5% of global copper production.
Despite the economic impact of the mine, protestors took to the street demanding that the government revoke the contract that allows copper mining to occur in a biodiverse region. Led by teaching and construction unions in collaboration with environmentalists, the demonstrators contend that ongoing development poses a severe threat to the lush forested landscapes and vital groundwater sources located just 120 kilometers to the west of Panama’s capital city in the state of Colon.
Throughout Panama City, demonstrators conducted peaceful protests, distributing informative flyers to raise awareness about their cause. However, on the outskirts of the capital, in some areas, the police encountered protesters with the use of tear gas. Both the Department of Education and the University of Panama made the decision to cancel classes as a result of the protests.
The referendum as a result was called as the government attempts to calm mass unrest, with the vote slated to be held on December 17. And on Friday, President Cortizo signed a new decree that bans all new metal mining contracts. At the same time, the Supreme Court is said to be considering two lawsuits filed in relation to the new contract signed with First Quantum.
First Quantum last traded at $20.25 on the TSX, down 27% as investors tire of dealing with politics of the mine.
Information for this briefing was found via Sedar, Bloomberg, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
