(Bloomberg) -- Panamanian lawmakers voted to repeal a new contract with First Quantum Minerals Ltd. Wednesday in the second of three required votes, adding to uncertainties over the future of a giant copper mine.
Authorities in Panama are grappling to contain weeks of demonstrations against a renegotiated contract that President Laurentino Cortizo’s administration signed with First Quantum for the Cobre Panama mine. The backlash underscores the challenges for mining to gain widespread acceptance at a time of heightened social and environmental scrutiny and resource nationalism.
Panama’s Congress has been convened to a special session Thursday for a third, definitive vote on the mine. On Wednesday, the bill was voted on by article and a provision to rescind a contract for the mine passing in a 63-0 vote. Final approval to repeal would make a proposed referendum of the contract unnecessary and send the arrangement to extend the Canadian firm’s mining license by 20 years into arbitration.
Shares of the Canadian miner rose as much as 8.3% Thursday in Toronto trading, after a three-day slide that wiped out almost half the company’s market value.
The bill also establishes an indefinite moratorium on metal mining nationwide and orders the government to reject all current and future requests for metal mining permits and renewals.
First Quantum has lost almost half its market value in the past week given the mine in Panama is its biggest money maker and accounts for about 1.5% of the world’s mined copper.
Protests continued in Panama City Wednesday night, with demonstrators blocking highways and demanding the supreme court declare the contract unconstitutional.
The court has accepted for consideration six suits against the contract in cases that claim it violates mineral sovereignty and international environmental treaties and fails to follow public bidding procedures.
The contractual uncertainties at Cobre Panama were spawned by a 2018 court ruling that preceded a prolonged renegotiation process as Panama sought more favorable terms. Congress finally signed off on a new contract on Oct. 20, with First Quantum agreeing to pay the state a minimum of $375 million a year. Those funds were earmarked for pension payments.