© Reuters. FILE PHOTO: View of the Cobre Panama mine, of Canadian First Quantum Minerals, in Donoso, Panama, December 6, 2022. REUTERS/Aris Mart?nez/File Photograph
By Elida Moreno
PANAMA CITY (Reuters) – Panama is eyeing a pointy lower to its forecast for 2024 financial progress after a court docket ruling prompted the federal government to order the closure of Canadian miner First Quantum (NASDAQ:)’s profitable mine, a authorities official informed Reuters.
Gross home product (GDP) progress is perhaps 1-2% subsequent yr, down from a earlier estimate of 5%, Hernan Arboleda, director of public insurance policies on the financial system and finance ministry, mentioned in an interview on Friday.
President Laurentino Cortizo introduced final week the federal government will transfer to close First Quantum’s Cobre Panama mine, which accounts for some 5% of the nation’s GDP, after the supreme court docket dominated that the contract was unconstitutional.
Panamanians have protested vehemently in opposition to the mine since October, arguing the contract was too beneficiant and First Quantum has since misplaced over half of its market capitalization.
First Quantum mentioned on Friday it has initiated worldwide arbitration in opposition to Panama. Some specialists calculate Panama must pay not less than $50 billion if it loses the case, equal to just about 70% of GDP.
Cortizo’s administration is reaching out to worldwide score businesses to guarantee them that Panama nonetheless has a sound authorized framework that enables traders to do enterprise.
Forward of the supreme court docket ruling, S&P revised Panama’s outlook to detrimental from secure on potential dangers to investor confidence and financial progress if the contract was discovered invalid. JPMorgan additionally warned the percentages of Panama dropping its investment-grade score would improve considerably.
Panama lately enacted a regulation banning all new mining concessions and expansions. Arboleda mentioned the nation nonetheless has different engaging funding alternatives however didn’t give particular examples.
For First Quantum, the developments in Panama may very well be a repeat of its expertise within the Democratic Republic Of Congo. The miner exited the African nation in 2012 after its mining contract was cancelled.
