First Quantum Minerals Ltd. (TSX-FM) said its Minera Panama SA (MPSA) unit has begun to reduce ore processing operations at the company’s open pit copper mine in Panama.
The company said it has reduced its processing operations by ramping down one ore-processing train while two remain operational. It said the disruption to operations is due to an illegal blockade of small boats at the mine’s Punta Rincon port. It said the illegal actions at the port have affected the delivery of supplies for the mine’s on-site power generation plant, which is necessary for full operations and for safe environmental stewardship, including operation and maintenance of the tailings management facility. “In addition, the illegal actions have hindered the loading of copper concentrate onto vessels,” the company said.
First Quantum shares were active on the news, easing 3.7% or 61 cents to $15.67. The shares trade in a 52-week range of $39.13 and $13.66.
First Quantum is a diversified mining company that is engaged in the production of copper, nickel, gold and zinc. It has operating mines in Zambia, Finland, Turkey, Spain and Mauritania.
Cobre Panama is First Quantum’s flagship operation. It is a huge open-pit copper project located in the Panama jungle, about 120 kilometres west of Panama City and ranks as First Quantum’s key asset.
On March 8, 2023, First Quantum and the government of Panama reached an agreement covering terms and conditions for a refreshed concession contract at Cobre Panama. Panama’s government and the mining company agreed on a contract which would guarantee the Central American nation annual income of US$395 million while allowing First Quantum’s local unit to operate the Cobre Panama project, an open pit copper mine for at least 20 years.
However, protesters have criticized both the deal and the mine’s environmental costs, even after Panamanian President Laurentino Cortizo Cortizo on October 27, 2023, rejected all new mining projects.
A published report Monday said Panama’s top court is likely to rule against the Canadian miner when it decides on the fate of the copper mine contract in the coming weeks, a majority of lawyers in a Reuters survey said, citing precedent for a similar verdict. The report was published in a Scotiabank newsletter.
The court’s nine judges are weighing whether to revoke First Quantum’s contract at the Cobre Panama mine, a significant resource that contributes 5.0% of Panama’s GDP and 1.0% of global copper production.
First Quantum and Franco Nevada Mining Corp. [TSX-FNV, NYSE] recently issued statements saying they have noted an announcement by Cortizo who has said his country will hold a referendum to decide whether to scrap a contract with the Canadian miner.
Franco Nevada will be affected by any decision to scrap the contract as the Toronto based royalty and streaming company, recently garnered 15% of its revenue in a single quarter from Cobre Panama. Franco-Nevada bears no cost for the production that isn’t delivered the company has said.