First Quantum to halt Panama mine this week if blockade goes on

First Quantum Minerals (TSX: FM) warned on Monday it would have to suspend operations at its controversial Cobre Panama copper mine, if an ongoing port blockade continues to impede the delivery of crucial supplies.

The Canadian miner said that without shipments arriving at the copper mine’s Punta Rincon port, it will run out of supplies for the on-site power plant this week.

First Quantum began slowing down operations last week, after protests against the company spread to the port, with boats blocking the delivery of supplies to the mine. 

The miner noted it had further reduced production over the weekend and is now down to one ore processing train.

The Vancouver-based firm and the government of Panama reached in October a multi-billion dollar agreement that ended months of negotiations between the parties over the contract ruling the copper mine. The deal, enacted into law by Parliament, triggered a series of violent protests that have almost paralyzed Panama City, the capital.

Demonstrators claim the new contract was fast-tracked with little public input or transparency and also made corruption allegations against lawmakers. 

Locals also worry about the mine’s effects on drinking water and the Panama Canal, already driven by El Niño to its driest October since 1950, even though First Quantum has repeatedly said the operation is far from any drinking water sources.

President Laurentino Cortizo proposed to hold a referendum on whether to revoke the controversial contract, but Parliament buried that bill, moving directly to repeal the contract. It later backtracked, leaving the final decision in hands of Panama’s Supreme Court, which is expected to rule on the issue, as soon as mid-December.

Hollywood actor Leonardo DiCaprio joined Panamanian activists over the weekend, sharing a video calling for the “mega mine” to be shut down on his Instagram account.

“First Quantum wishes to reiterate its willingness to open new forums of dialogue to address the concerns of diverse sectors of society,” it said Monday. 

The company is Canada’s largest copper producer and its Cobre Panama mine, in production since 2019, contributes almost 5% of the country’s GDP. It also makes up 75% of Panama’s export of goods and has created at least 40,000 jobs, directly and indirectly.

Canadian miner Franco-Nevada (TSX: FNV), which has a streaming deal with First Quantum’s local unit Minera Panama, lowered on Monday its production outlook for the current year, due to reduced operations.

It now expects to produce between 480,000 and 500,000 precious metal gold-equivalent oz. and 620,000 to 640,000 total gold-equivalent ounces in 2023. The previous guidance was of 490,000 to 530,000 and 640,000 to 700,000 oz., respectively.

The Toronto-based firm said earlier this year it had contributed a total of $1.36 billion to the construction of the giant copper mine in Panama. The operation accounted for 18% of the company’s revenue in 2021. 

Shares in the royalty and streaming firm fell 1.7% in early trading in Toronto and it was last changing hands at $162.45.