Quantum Resources is dealing with a major obstacle with its Cobre Panama project as the government has now ruled the original contract to be unconstitutional. According to the High Court, the contract between Quantum Resources and the Panamanian government was awarded before the government’s constitutional reforms in 2008 that stipulate any negotiation for the exploitation of natural resources must be conducted in open competitive bidding.
This ruling places a major financial burden on Quantum Resources, who had invested more than $4 billion into the project already. This ruling could also force Quantum Resources to renegotiate the original contract in order to continue mining activities. Quantum Resources is set to begin production of copper, gold, and molybdenum by the end of 2019, but as of now, that possibility is now in question.
The Panamanian government is also looking into its contribution in this mishap, claiming that the $4 billion investments made by Quantum Resources were too good to be true. The government now needs to evaluate the legality of the subsidies and concessions given to the company, and if found legal, Quantum Resources will still be seemingly operating at a major loss.
The maintenance of the Cobre Panama mining project is central to Panama’s economy and growth, with an expected production of 220,000 tons of copper each year. Although this ruling on the contract’s illegality may have caused a major financial and operational disruption for Quantum Resources, it is also an undeniable victory for the Panamanian people as their government is now taking the necessary steps to ensure that the public does not suffer from the legality of the contract.