The future of one of the world’s biggest and newest copper mines has been cast into doubt after Panama’s government said it will hold a referendum on the project as it attempts to quell mass unrest.
The Cobre Panama mine, built and operated by Canada’s First Quantum Minerals Ltd., has become a political flashpoint in the Central American country. President Laurentino Cortizo, seeking to appease opponents of the mine, said Oct. 29 that a national vote would be held on Dec 17. on whether to revoke the company’s licence.
Shares of First Quantum fell 20 per cent as of 9:39 a.m. in Toronto, its biggest intraday drop since March 2020.
The latest uncertainty around what lies ahead for the mine comes as the future supply of copper has become a hot topic among global policymakers and business executives. The long-term supply of the metal is constrained, with demand forecast to surge as the global economy decarbonizes.
A new contract awarding a 20-year extension to First Quantum’s mining licence was signed into law by Cortizo this month, sparking fury in the country and leading protesters to block highways and clash with police, demanding a referendum.
Last week, Cortizo also banned building new mines in the country.
First Quantum spent years and billions of dollars building the mine and has caught the attention of rivals who are also looking to grow their exposure to the metal, used in everything from electrical wiring to water pipes.
It’s also seen as a future flashpoint between the West and China, with U.S. President Joe Biden’s administration pushing to diversify the United States’ sources of important materials and to reduce dependency on Beijing.
Many Panamanians say the revised operating contract is overly generous to the Canadian miner, and violates the nation’s sovereignty over its mineral resources. The contract gives First Quantum the right to produce copper at its site for 20 years, with the option to extend that for a further 20 years after that.
The country’s Supreme Court has also said it will consider two lawsuits filed against the renewed contract with the company.
First Quantum has faced multiple hurdles for its flagship mine. The company was forced to halt processing copper earlier this year after it failed to settle a tax dispute with the government.
The mine is First Quantum’s biggest asset, an economic engine for Panama and accounts for about 1.5 per cent of global copper production.
The company didn’t immediately reply to a request for comment sent outside normal business hours.
