Panama backs First Quantum mega copper mine
Following a period of uncertainty, it has been announced that the Panamanian government will continue to back the First Quantum mega copper mine project, Cobre Panama.
This news comes despite a ruling that took place on Monday deeming the law used to approve the mining concession contract as unconstitutional.
While the Supreme Court of Panama ruled that Law 9 was, in fact, unconstitutional, the contact between the state and Minera which governs the new project would not be affected by that ruling. Canadian miner First Quantum Minerals Ltd. is the majority owner of Minera Panama SA.
Bloomberg quotes the Panamanian Ministry of Commerce stating that “after reviewing the court ruling, Wednesday, it believes the contract originally signed in February 1996 remains in force in all its parts.”
According to a statement on the ministry’s website the ruling declared Law 9 as unconstitutional but did not rule on the contract. Ernesto Cedeno a constitutional lawyer not related to the case explained why the ruling is not retroactive. He said, “ rulings on unconstitutionality in Panama take effect toward the future, not backward.” So despite some shade being thrown on the project, the mine will not be affected by the news, immediately anyway. There are likely a few reasons for this that go beyond the retro activeness of unconstitutional law. For one, this contact has provided significant investment in the country and has generated many jobs. This is something that the company highlighted in their re-release, speaking specifically to Cobre Panama which “employs over 12,600 people of which approximately 1,500 are from the nearby villages and towns."
“The project is the largest single private sector investment in Panama’s history.” So, it is clear why Panama would want this contract to remain intact.
Cedeno spoke of a resolution that would help clean things up a bit. It would involve a new contract that complied with today’s standards and the current rules. Meanwhile, First Quantum reported Tuesday that it was working to find legal remedies that would need to be analyzed but the Supreme Court.
While a spike in trading of First Quantum’s shares followed a 6.8 percent drop, before closing at C$15.72 in Toronto on Tuesday (the lowest since Sept. 17), by Wednesday (September 26) stocks were back up, closing at C$16.07.