Authorities will begin “the transition procedure for the ordering and closure of the mine,” President Laurentino Cortizo said in a message released Tuesday, after the country’s Supreme Court ruled against the miner.
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The move will deprive the government of one of its biggest revenue resources and increase the chances of a legal war between the Canadian miner and Panama in foreign arbitration. Cortizo did not specify how long the procedure will take.
On Tuesday, the court opposed a law approving a contract, sealing the bankruptcy of a deal that produces more than 1% of the world’s copper production.
Earlier, the company’s shares fell as much as 8. 3 percent in Toronto before offsetting most of its losses as prices rose on the London Metal Exchange. Panama’s dollar bonds have plummeted because the government risks squandering a source of revenue.
The company declined to comment on Cortizo’s statement.
The implications of the mine closure on Panama’s monetary outlook are “terrible,” said Ricardo Penfold, chief executive of Seaport Global.
“The country has a budget deficit of five percent of GDP and this will increase by about 0. 6 percent,” Penfold said in a written answer to questions. “And then the trial. “
Mass protests broke out last month after Panama’s Congress approved a new contract with First Quantum, which has since been forced into production due to blockades imposed by protesters.
Environmentalists, labor unions and others have staged protests since Oct. 20, when Congress approved a contract giving First Quantum the right to produce copper for 20 years, with the possibility of an additional 20-year extension.
Protesters claim the contract violates national sovereignty and has not been sufficiently debated publicly before its approval in parliament.
First Quantum began shutting down its operations last week when small boats blocked the mine’s port, preventing the company from shipping materials to the mine, as protesters and the mine clashed along the road leading to the site’s entrance.
Bloomberg. com
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