Back to the Drawing Board
Listen to Today's Edition
Panama’s supreme court ruled Tuesday that the government’s contract with Canadian company First Quantum Minerals is unconstitutional, a ruling that followed mass protests against the lucrative deal as the Central American country prepares for elections next year, Reuters reported.
The verdict is centered over a new contract approved last month which would grant First Quantum the right to operate the Cobre Panama mine for a 20-year period. with an option to extend for another two decades. In return, Panama will receive $375 million in annual revenue.
The government and company said the contract would provide thousands of jobs, but many Panamanians have protested the deal over environmental concerns. Mass demonstrations have taken place since the contract was reached, with observers describing them as the largest in decades.
Public outrage over the agreement has become a major issue for the country’s presidential elections in May. Some candidates have proposed renegotiating the agreement, while others demand its complete scrapping.
In an effort to quell ongoing unrest, the government enacted a bill this month banning all new mining concessions and extensions. It also tried to pass a law that would have revoked the contract with the Canadian firm, but it backtracked in a debate in the National Assembly on Nov. 2, the Associated Press noted.
First Quantum has not commented on the ruling, but financial observers cautioned that the verdict will have consequences for the copper market and Panama’s economy.
The Cobre Panama mine accounts for about one percent of global copper production and contributes about five percent of Panama’s gross domestic product.