“Quantum Faltering: Government Ruling Halts Controversial Cobre Panama Contract

The Panama government has officially ruled that the current contract between First Quantum Mining and the Panama-owned Cobre Panama project is unlawful and unconstitutional. The Canadian company, First Quantum Mining and its joint venture partners have been the target of an investigation into allegations of bribery and corruption, which comes shortly after a tribunal ruled the contract was illegal. The Panama government had previously granted First Quantum Minerals a 50-year lease of the Cobre Panama project, which is currently one of the largest copper mines in the world with an estimated 8.5 billion pounds of copper. The contract was based on a supposed investment of some $6.2 billion, which the government believed was needed to develop the project. However, the Panama government soon launched an investigation into the deal, due to media reports of improper payments and other questionable dealings. The investigation led to the Panama government ruling that the contract was unconstitutional, making First Quantum liable to pay compensation for damages, and penalties for breaching the contract. The ruling has had a significant impact on First Quantum’s share price, as investors have reacted negatively to the news. The company is now facing a prolonged endurance test to re-establish its presence in the region in light of the corruption allegations, putting more pressure on the company’s balance sheets. The ruling is the latest in a string of challenges that First Quantum Mining has faced, as it seeks to develop the Cobre Panama project in partnerships with various other companies. With the Panama government now declaring the contract unconstitutional, First Quantum’s struggle to build and maintain its foothold in the project is at risk of being extinguished.