Panama’s President Laurentino Cortizo has cleared the first hurdle to fast-track a bill that would allow the country to hold a referendum on the controversial 20-year contract with Canadian miner First Quantum Minerals (TSX: FM).
After 10 months of negotiations between the parties, the country inked in October a multi-billion dollar deal with the miner, letting it operate its flagship Cobre Panama copper mine for the next 20 years.
The decision, which ended years of legal uncertainty was signed into a law last week, triggering a series of violent protests across Panama City, the capital.
Shares in the company have fallen a shocking 50% this week as uncertainty over the future of its key asset prompts investors to reduce their exposure. The stock closed at C$16.07 on Tuesday and was last changing hands at C$13.89 on Wednesday morning in Toronto.
Protestors claim the new contract was fast-tracked with little public input or transparency and want its immediate cancellation. They have also made corruption allegations against lawmakers.
In response, Cortizo announced the country would hold a referendum on whether to revoke the controversial contract on December 17. The President’s move was stopped in its tracks, with Panama’s electoral court saying it was unable to hold a nation-wide vote on the issue, because that would require congress to first pass a law.
A legislative committee approved the bill late on Tuesday, clearing the first hurdle for the proposal to become a law. Bill 1110 revokes the controversial Law 406 and also bans the granting of future mining concessions in Panama.
The bill has now been sent to the plenary for general debate, where it will require a majority vote in two separate sessions for definitive approval.
In the first on those two sessions, lawmakers approved by 63-0 vote a provision to rescind the contract for the Cobre Panama mine. If that repeal bill is approved on Thursday, the proposed referendum on the contract would be unnecessary.
In its first public statement since Cortizo’s referendum announcement, First Quantum said that “unconstitutionality challenges” have been brought against Law 406, which approves the revised mining concession contract for the Cobre Panama mine.
The Toronto-based company noted that the Supreme Court of Justice agreed to hear two of such challenges.
“First Quantum has always been an advocate of Panama and its people and is committed to the rule of law with the objective to achieve benefits the country,” it said in the statement.
The company said its giant copper mine contributes almost 5% of Panama’s GDP, makes up 75% of the country’s export of goods and has created at least 40,000 jobs, directly and indirectly.
“We believe in this project and its potential and welcome the opportunity to have constructive dialogue with the people of Panama about its future,” First Quantum said.
Panama’s Congress has convened special sessions for today and Thursday, ahead of a public holiday in the Central American country on Friday.