A ruling this week by Panama's Supreme Court has left a $6.3 billion copper and gold exploration project by Canada's First Quantum Minerals in limbo after it was deemed unconstitutional. First Quantum is hoping to mine the metals in Colon province on the Caribbean coast. "This ruling is hugely important for Panama," Sonia Montenegro, executive director at non-governmental environmental defense organization CIAM, told AFP.
In 2009, CIAM contested a contract signed between the government and Canadian company Minera Petaquilla.
CIAM claimed the deal was damaging to the state and its natural resources, saying it would result in the erosion of soil and vegetation, as well as the contamination of water and air. The Supreme Court has declared that a law originally granting a mining concession to Minera Petaquilla in 1997 was unconstitutional.
Following a series of sales, the project was acquired by Minera Panama, a subsidiary of First Quantum. Since Monday, when the court ruling was issued, First Quantum's stock has dropped about 13 percent on the Toronto Stock Exchange. "No doubt they will look for mechanisms to continue (mining) and not suspend their activities or their investment," said Montenegro. First Quantum insisted the court's ruling applied to that specific "Law 9" rather than the contract that saw Minera Panama acquire the project.
The ruling "does not affect the mining concession contract itself, which remains in effect, and therefore allows continuity of development," said the Canadian company.
"Minera Panama is in the process of formally obtaining and examining the ruling and its applicability and is working with the appropriate parties to identify suitable legal remedies." Operations at the mine had been expected to begin in the coming months, with eventual exports of 320,000 tons of copper a year.
Panamanian authorities have said it is the most important project in the country, involving 12,000 workers, including 1,500 people from nearby villages, First Quantum added. The project includes the building of a 300-megawatt power generation plant, an electric transmission line, an international port and a mineral processing plant.
Labor and Development Minister Luis Ernesto Carles said exploration would continue. "We're not worried - we're very clear that the contract is valid," Carles told Telemetro television channel.
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