https://www.reuters.com/article/copper-panama-ahome-idUSKBN3291CChttps://www.reuters.com/world/americas/panama-court-likely-revoke-first-quantum-copper-mine-contract-2023-11-13/
This is an $11 billion (Canadian dollars) market cap company and 5.2% weight towards the WIRE ETF alongside BHP, Teck, Antofagasta, etc. and the world's other copper majors. Its share price has been smashed because of uncertainty over the future of its project in Panama.
First Quantum's troubles in Panama are a cautionary tale for miners trying to: 1) mine in unpredictable jurisdictions; 2) work projects in environmentally sensitive areas; 3) deal with a local population which is not on side; and 4) operate a mine with doubts about the legality of permits in place.
The people there seemingly don't care that the project counts for 5% of GDP. You wonder how they expect to fund their hospitals, schools, roads and new infrastructure. Sell more bananas and encourage more inbound tourism, I suppose. Yeah, good luck with that... In fairness, First Quantum's deal with the government does look extremely generous though. $375m a year in royalties for 20 years. Nice work if you can get it.
A mate of mine in China is heavily invested in Jiangxi Copper through the Shanghai exchange. He's obsessed with copper after hearing me rave on about the thematic and future demand. He's a man after our
arsenic's heart
Jiangxi Copper holds a bit less than 20% of First Quantum.
We are talking about 1% of the world's copper supply with this Panama mine.
Why should we care about this?
It makes me wonder, and not just about the potential sudden drop of 1% of the world's copper supply, but what this will do for the willingness of investors and the world's copper majors to fund future projects in 2nd tier jurisdictions? In contrast, Rex's Hillside project is in South Australia, it's fully permitted, the population seems either ambivalent or positive, all the permitting is in place. You wouldn't expect court challenges at this stage. The land has been cleared for 100 years for farming and thus there are no environmental sensitivities (it's not in a rainforest or national park).
South America is having nationalisation issues. Africa has its own challenges with government stability. I wonder if this First Quantum issue will potentially move Hillside up the list in terms of favoured projects, and make our project more desirable now? The articles I've read talk about Panama banning future mines -- making itself uninvestable, and surely creating uncertainty that could possibly spill over into other countries with mining projects pending. I'd argue this is a positive for Rex as it works its way towards final funding commitments.
(20min delay)