Breakthrough in Panama Copper Mine Relieves Global Copper Supply

Breakthrough in Panama Copper Mine Relieves Global Copper Supply

The breakthrough in contract negotiations for a copper mine in Panama is the latest good news for global copper supply. Previously, a large copper mine in Indonesia had resumed production, and tensions in Peru had also eased.

Lawyer Ebrahim Asvat, who served as a consultant for the government in the negotiations, stated that Panamanian officials were "very close" to reaching an agreement with First Quantum Mining on a new contract for Cobre's Panama mine. He stated that the two sides may reach an agreement within two weeks.

This will end months of dispute, ultimately leading to a halt in the export and processing of the copper mine, which accounts for about 1.5% of global copper production. This clear breakthrough will also avoid dire consequences for First Quantum's profits and Panama's reputation as an investor friendly jurisdiction.

Just a few days ago, Richard Adkerson, the owner of Freeport-McMoRan Inc., said at an industry event that the company had resumed operations after a landslide destroyed the Grasberg copper and gold plant in Indonesia. The company's mines in Peru have resumed normal production, after anti government protests led to a 10% to 15% slowdown in factory operations.

Chile also breathed a sigh of relief on Tuesday. After experiencing a series of operational setbacks and disappointments, the largest copper producing country announced a year-on-year increase in monthly production.

Just as these disruptions have supported copper prices in the recent decline caused by demand concerns, there is reason to believe that the resumption of normal production in some of the world's largest copper mines will offset some of the bullish sentiment generated by positive signs from China.