Exclusive-First Quantum plans maintenance for Panama copper mine amid protests -sources

© Reuters. FILE PHOTO: View of the Cobre Panama mine, of Canadian First Quantum Minerals, in Donoso, Panama, December 6, 2022. REUTERS/Aris Martínez/File Photo

By Divya Rajagopal and Julian Luk

TORONTO/LONDON (Reuters) -Canada's First Quantum Minerals (OTC:FQVLF) will carry out maintenance at its Panama mine from Nov. 23 due to coal supplies being blocked by protestors opposing the government's contract with one of the world's biggest and newest copper mines, two sources familiar with the discussions said on Monday.

This move would effectively suspend production at the Cobre Panama mine until coal supplies resume as the mine cannot operate without power, one of the sources said. The sources declined to be identified as the information is not public.

Copper prices hit a two-month high while the company's stock fell as much as 5.7% after Reuters reported the mine suspension. The stock ended down 3.5%, while the benchmark Canada index rose 0.4%.

Protests have escalated since the government and First Quantum (NASDAQ:QMCO) signed a new contract on Oct. 20 for the Cobre Panama concession, which contributes 1% to global copper production and 5% to Panama's gross domestic product.

A ship with supplies for the mine was unable to dock as local boats blocked off access to the key port, the company said on Friday.

An FQM spokesman on Monday declined to comment specifically on the Nov. 23 suspension.

"In terms of production we are talking about a temporary halt because of the illegal blockade. As soon as the port reopens, we will be able to ramp production back up quickly," the company said in a statement to Reuters.

Earlier on Monday, First Quantum said it had further ramped down operations at Cobre Panama to one remaining ore processing train, adding that it expects to run out of supplies for the on-site power plant during the week commencing Nov. 20.

"The focus will be to maintain the tailings pond 24/7," one of the sources said about the maintenance.

Tailings ponds are created to store waste generated from mining, which requires proper maintenance.

Panama's top court will hear the legality of the contract awarded to First Quantum from Nov. 24, the company said in the statement.

The contract has faced numerous legal challenges due to protests that claim it favors the miner too much and allege corrupt practices in its approval. Such protests have escalated into an anti-government movement, as well as demonstrations against the environmental impact of the giant operation.

Last weekend, the protests against the mine received an endorsement from Hollywood actor Leonardo Di Caprio who shared a video from an environmental group that called for the Supreme Court to cancel the contract given to First Quantum.

Cobre Panama produced 112,734 tonnes of copper in the third quarter, according to First Quantum's financial statements. It contributed $930 million to the overall third quarter revenue of $2.02 billion.

($1 = 1.3718 Canadian dollars)