First Quantum Minerals, a Canadian mining company, is facing significant challenges as uncertainty mounts over the future of its flagship Cobre Panama copper mine. Shares of the company plunged by 26% to 20.75 Canadian dollars in Monday’s trading, bringing the total decline for the year to 27%.
Panama’s President, Laurentino Cortizo, who has been criticized for his approval of continued mining at Cobre Panama, announced that a national vote would be held on December 17th to determine whether the company’s license should be revoked, as reported by Bloomberg.
The Panamanian government has been confronted with widespread protests since Cortizo signed an agreement with First Quantum in October, which extended the concession contract for the Cobre Panama operation for an additional 20 years with options for further extensions. The mine had previously temporarily ceased operations when negotiations between First Quantum and the government stalled due to disagreements over payments.
According to the Associated Press, protesters have taken to the streets across Panama demanding that the government revoke the contract, arguing that it poses a threat to forested areas and vital groundwater. Multiple lawsuits have been filed with Panama’s supreme court seeking to overturn the agreement between First Quantum and the government.
Given the increased uncertainty surrounding the mine, analysts at the National Bank of Canada downgraded their rating on First Quantum’s shares from outperform to sector perform. Additionally, they adjusted their target price from C$36 to C$32 per share. The analysts highlighted the significance of Cobre Panama to both First Quantum and Panama, emphasizing the complexity of any potential legal changes to the contract that has already been ratified into law.
Cobre Panama, one of the largest copper mines opened globally in the last decade, achieved a production volume of 350,438 metric tons of copper last year, in addition to gold and silver. Situated west of Panama City, the operation comprises two open pits, a processing plant, two power stations, and a port.