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Panama’s critical Cobre copper mine is set to be shut down following the Supreme Court’s decision to void First Quantum’s contract to operate the project. Cobre, responsible for 300,000 tonnes of annual copper output, will be idled indefinitely as negotiations on mining commissions and extensions have recently been suspended by the Panamanian government. Copper producing powerhouses throughout Latin America have been slammed by a wave of protests, political instability, and rising costs, which threaten the growth of the metal’s global supply. Chile and Peru, the world’s top copper-producing nations, have faced their own headwinds in regard to output throughout 2023.

Related ETF: Global X Copper Miners ETF (COPX)

The latest strike to the growth of the world’s critical copper supply was struck yesterday, as Panama’s Supreme Court struck down Canadian miner First Quantum’s agreement to continue operations at the massive Cobre Panama copper mine. Panamanian President Laurentino Cortizo said that “the orderly and safe closure of the mine” would begin immediately, shutting down at least 1.0% of the world’s total copper production – equivalent to roughly 300,000 tonnes per year. Copper futures have jumped out a two-month high in late November, likely anticipating the Cobre ruling and its implications for the world’s supply of the red metal.

First Quantum, which originally secured ownership of Cobre in 2013 via its subsidiary Minera Panama, and brought commercial production online in 2019, had secured rights to continue tapping the mine for an additional 20 years in October, with an option for an additional 20 years of operation embedded in the contract. This agreement sparked sizeable environmentalist protests near the mine and throughout the country. Some of these protests disrupted work at the mine, blocking key roads and waterways – effectively blockading the mine’s power and ports facilities. The environmentalist faction broadly opposes all operations at the mine, which is responsible for roughly 3.0% of Panama’s GDP and 75% of its exports.

The Supreme Court’s decision is a huge blow to First Quantum, which derived about 46% of its overall Q3 revenues from Cobre Panama, and has exacerbated a halving of its share price in 2023. The miner could…

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