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Panama to Close Canadian-Owned Copper Mine Following Judicial Ruling

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Sakchi Khandelwal
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Panama to Close Canadian-Owned Copper Mine Following Judicial Ruling

In a move that is set to reverberate through the global copper market and Panama's economy, the President of Panama has pledged to cease operations of the Canadian-owned Cobre Panama copper mine. The decisive action came hours after the nation's Supreme Court deemed the mine's contract unconstitutional. The lucrative mine, owned by Canadian miner First Quantum, contributes to approximately 1% of the world's copper production and makes up about 5% of Panama's Gross Domestic Product (GDP).

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Legal Ruling and Widespread Protests

The contract, entered into by a subsidiary of TSX-listed and Vancouver-based First Quantum in October, has been the cause of widespread protests across Panama for several weeks. The Supreme Court's ruling has not only validated the public's opposition but has also intensified the dispute over foreign mining concessions in Panama. The issue has become a crucial point in Panama's forthcoming May 2024 presidential election, with candidates advocating for increased state control over such lucrative mines.

Implications for Panama and First Quantum

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The closure of the mine, as declared by President Laurentino Cortizo, will initiate the transition process towards an orderly and safe termination of the mine's operations. This decision will deprive the Panamanian government of one of its largest revenue sources, leading to potential economic implications for the Central American nation. It also raises the probability of a legal battle in international arbitration between First Quantum and Panama.

Unconstitutional Concession and Environmental Concerns

The Supreme Court of Panama unanimously ruled on Tuesday that the 20-year concession granted to the Canadian copper mine was unconstitutional. The mine, which has been the focus of extensive environmental protests, employs thousands and accounts for 3% of Panama's GDP. The court's decision underscores the ongoing concerns about the environmental impact of such large-scale mining operations, particularly those controlled by foreign entities.

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