First Quantum Minerals (OTCPK:FQVLF) -9.2% in Wednesday’s trading after Panama’s government said it will shut the Cobre Panama copper mine, ending hopes for now that the company might reach a new deal to maintain operations following a supreme court ruling against it.
Panama President Laurentino Cortizo said on social media that once the decision was published in the official gazette, he instructed the start of an orderly and secure closure of the mine.
First Quantum (OTCPK:FQVLF) said it suspended commercial production at Cobre Panama – which accounts for roughly half the company’s annual production – and is putting the mine into care and maintenance.
The ruling will have consequences for the copper market, as Cobre Panama accounts for 1% of global copper production, and analysts say reduced copper supply from Panama and Peru could wipe out an expected global surplus in 2024.
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The mine also is a significant business for Panama, contributing ~5% of the country’s GDP, and J.P. Morgan has warned the move raises the likelihood that Panama will lose its investment grade rating.