- First Quantum Minerals stock (TSX:FM) is down sharply after announcing the reduction of ore processing at its flagship Cobre Panama mine because of an illegal blockade
- The mine accounts for 5 per cent of Panama’s GDP and represents 75 per cent of the country’s exported goods
- First Quantum is a global copper producer
- First Quantum Minerals stock (TSX:FM) has lost approximately 50 per cent year-over-year, but remains up by 25 per cent over the past five years
First Quantum Minerals stock (TSX:FM) is down sharply after announcing the reduction of ore processing at its flagship Cobre Panama mine because of an illegal blockade.
The mine will take one ore-processing train offline, with two remaining operational, while a group of small boats impedes passage through the mine’s Punta Rincón port.
The blockade has affected the loading of copper concentrate onto ships and the delivery of supplies for Cobre Panama‘s on-site power generation plant, which enables full operations, including operation and maintenance of the tailings management facility, as well as safe environmental stewardship.
The blockade follows protests across Panama over the past three weeks in opposition to First Quantum receiving a 20-year license extension for Cobre Panama, which operates in a highly biodiverse jungle, but contributes approximately 5 per cent of Panama’s GDP and represents 75 per cent of the country’s exported goods. The Chamber of Commerce, Industries and Agriculture of Panama estimates that protests are costing between US$60 and US$90 million per day.
First Quantum, for its part, estimates that the ramp down at Cobre Panama will directly affect “over 7,000 employees and contractors, as well as an additional 40,000 people whose livelihood is directly associated in providing services to the mine,” according to today’s announcement. “This is estimated to represent more than 2 per cent of the Panamanian national workforce,” the announcement goes on to state. The mine would also need to reduce supply and service purchases to the tune of US$20 million across more than 2,000 Panamanian companies.
In response to the protests, which began late last month, President Laurentino Cortizo initially proposed a referendum to determine the future of the US$10 billion mine, while the Panamanian congress sought to repeal the license extension. These two efforts have since been abandoned in anticipation of the Supreme Court ruling on the issue.
Public arguments for the first two cases concerning the license extension will be finalized by next week, with a Supreme Court ruling potentially issued anytime thereafter.
While Cobre Panama is a key source of jobs for Panamanians, and a meaningful player in global electrification with 2022 copper production enough to build over 6 million electric vehicles, the demonstrations have resulted in multiple deaths, as well as negative credit actions for the country from S&P, Moody’s and Fitch.
Panama police have stated that they intend to disperse road barricades imminently using force if needed.
First Quantum is a global copper producer in the form of concentrate, cathode and anode, with additional inventories of nickel, gold and cobalt. The company has been active in Panama for the past decade.
First Quantum Minerals stock (TSX:FM) is down by 3.38 per cent trading at C$15.73 per share. The stock has lost approximately 50 per cent year-over-year, but remains up by 25 per cent over the past five years.
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