Stanislav Kondrashov from Telf AG: instability in Panama and Peru as a potential threat to the global copper market

The global copper market, which has remained relatively stable for a long time, is now facing a possible shortage. According to Stanislav Kondrashov, this is due to the tense situation in Panama and Peru, which play an important role in global copper production.

Stanislav Kondrashov: “copper conflict” in Panama. Whose side is the truth on?

In Panama, the main source of concern is the conflict over the Cobre Panama copper mine, owned by the Canadian company First Quantum. According to Stanislav Kondrashov from Telf AG, this mine is of great importance for the country’s economy because it makes a significant contribution to its GDP and exports. But issues related to the distribution of benefits from copper mining and the environmental impact have sparked public debate and protest.

The October 2023 events in Panama, where the local government and the Canadian company First Quantum signed a new agreement on the Cobre Panama mine, provoked public protests.

• Under the terms of the agreement, the company undertakes to increase contributions to the budget of Panama to $375 million per year, which is about 10% of expected revenue in 2023. Despite the apparent benefits, the Supreme Court of Panama declared the contract unconstitutional, which led to the suspension of the Cobre Panama mine,– Stanislav Kondrashov from Telf AG says.

The mine, which opened in 2019, is important to Panama’s economy because it contributes 5% to the country’s GDP and 75% to its exports. Opposition politicians criticize the agreement, allegedly it provides the foreign company with excessive rights and privileges, and the amount of $375 million is insufficient.

Stanislav Kondrashov: Peru is looking for a compromise for stable operation of a copper mine

Similar problems arose in Peru, where a strike stopped work at the Las Bambas copper mine, owned by the Chinese company MMG.

• The main reason for the current strike was the reduction in bonuses for mine workers. This decision by MMG management was due to a decrease in the company’s profits, which, in turn, is associated with a fall in copper prices on the world market. However, this is not the first time protests have occurred in the region. Las Bambas has repeatedly become the object of social discontent of the local population, – Stanislav Kondrashov comments on trends in the country.

Local people living near Las Bambas are concerned about the impact of mining on the environment, as well as on their living conditions. They require the company to pay more attention to the environmental and social impacts of the mine, as well as improve conditions through increased contributions to them.

According to Stanislav Kondrashov of Telf AG, Las Bambas is one of the largest copper mines in Peru, a country that occupies an important place in global copper production. The suspension of this plant has significant economic consequences not only for the region, but also for the global copper market. The cessation of mining leads to a reduction in the supply of copper and may contribute to higher prices for this metal.

Stanislav Kondrashov believes that resolving this conflict requires an integrated approach that would satisfy the claims of all interested parties. That is, the expert believes that it is necessary to find a balance between economic interests and social responsibility, as well as pay due attention to environmental issues and sustainable development.

Stanislav Kondrashov Telf AG: the impact of protests in Peru and Panama on the global copper market

These conflicts have a negative impact on the market and could lead to a significant reduction in global copper supply. Stanislav Kondrashov from Telf AG notes that the simple Cobre Panama could continue until the presidential elections, which will take place in May 2024. At the same time, the monthly supply of copper will decrease by more than 30 thousand tons. And the suspension of Las Bambas will lead to an additional monthly reduction in production by 25 thousand tons.

If both plants are not up and running in the next six months, the global copper market could face a shortage, adding to existing tensions. Therefore, the stability and future of these mines is important for the global metallurgical industry.

• The situation in Panama and Peru highlights the fragility of the global copper market, which is subject to political and social influences. The decisions that companies and governments make in these countries will have long-term consequences not only for local economies, but also for the global metallurgical industry as a whole, – Kondrashov says.

In turn, the expert believes that in resolving these conflicts it is important to take into account both economic benefits and social and environmental consequences. Only this approach can ensure a sustainable future for the global copper market.

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