Copper prices have risen by more than eleven percent this year. (Photo by Yin Chao/VCG via Getty Images)
A mine in Panama is one of the main reasons for the growing copper shortage.
Cobre Panamá, which is operated by First Quantum, has been idle since November, according to Bloomberg.
The mine supplied 1.5 percent of global copper production before it closed, and reduced supply has driven up prices.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
The closure of a huge mine in the Panamanian jungle is one of the main reasons for the global copper shortage, reports “Bloomberg.“
The spot price of the metal ore has risen by more than eleven percent so far this year. It reached a high not seen in over a year. This is a consequence of the widening imbalance between supply and demand. While industry scrambles to use the mineral for green energy projects, miners are left behind.
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“The tight supply of copper mines is increasingly limiting refined production. The much-discussed lack of mining projects is finally having an impact,” Bank of America wrote in a statement last week. In it she announced, “The copper supply crisis is here.”
Contributing to this project shortage is Cobre Panamá – a $10 billion operation that has been idle since November. Before its closure, the site produced 1.5 percent of the world‘s copper supply, according to Bloomberg.
To put it into perspective, the mine can produce enough minerals to build five million electric vehicles per year.
The reason for the closure, according to Bloomberg, is that the company was unable to appease Panama’s national government, which is seeking more favorable tax conditions.
The company is owned by First Quantum. This is a Canadian mining company known for rapid project turnarounds and an appetite for low-investment – although often profitable – markets.
With the hostile takeover of Cobre Panamá, First Quantum also inherited an outdated tax treaty that was beneficial to the producer. This agreement offered little return to the country’s government, leading to national resentment and years of negotiations and stalemate.
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Although the issue was eventually resolved, coronavirus-era economic conditions fueled Panamanian people’s anger at the mine, particularly the Suntracs construction union. Focusing on labor issues, the group led protests against Cobre Panamá and civil unrest broke out.
The spreading unrest eventually triggered a national referendum on what to do with the mine. That led to its closure in November. Since this month, First Quantum shares have fallen nearly 15 percent.
The company did not immediately respond to Business Insider’s request for comment.
Copper isn’t the only commodity that has surged due to low inventories. The market’s rise was replicated by products such as coffee and cocoa as the supply of both commodities was reduced by droughts and crop failures.
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