Will the Stock Market Sink Panama's Petaquilla Mine?

Large scale gold mining has nothing to do with romantic images of people sifting through river beds, panning sediments for gold dust. It is about massive excavations, cyanide to dissolve gold residues, exploitation of workers.

Case in point is Petaquilla Mining, a Canadian/Panamanian outfit that owns a concession in the Panamanian province of Coclé. If you read their website, it’s all about building roads and helping local communities.

These local communities, however, hold different views about Petaquilla’s endeavors.

Early August last year, representatives of no less than 21 such communities filed criminal complaints against Petaquilla and Panama’s environmental authority (ANAM) for (allowing) ecological crimes.

Some of the petitioners had walked for three days to travel to the capital and be present at the filing of the complaints and a forum held at the Lawyers Association. Ironically, protesters also came from Coclesito, a village that was formerly home to a campesinos pet project during the dictatorship of Omar Torrijos. His son, President Martin Torrijos, supports the Petaquilla mine enthusiastically.

Instead of building roads, Petaquilla is chasing people away. According to activists and people living in the area, hundreds of hectares have been destroyed as Petaquilla is illegally diverting rivers, slashing down forest and contaminating the water which people depend on. That, in its turn, is causing an increased number of illnesses, lack of food and social upheaval. Without any previous warning, Petaquilla is setting off heavy explosives near the homes of local residents.

The company does not even have the required permits nor have any environmental impact studies (obligatory in Panama) been done about its activities. However, Panama's environmental authority ANAM does nothing to stop the onslaught. Those who protest are threatened, and the mining robber barons employ their own paramilitary thug squad to suppress dissent.

The only ones to benefit from its activities are (foreign) stock holders and local politicians/officials on the take. In fact, one such politician, Richard Fifer, was appointed president of Petaquilla. Fifer is a former governor of the Coclé province under indictment for embezzlement of public funds. President Martin Torrijos, a friend of Fifer, has ordered the prosecution to be stalled.

Former Cocle Governor Richard Fifer (l), Fifer's publicist Octavio Choy (r) and President Martín Torrijos (center), at a Cabinet Room meeting in 2006 in which Torrijos promoted Fifer's company to gullible investors abroad. This meeting took place despite embezzlement charges then and now pending against Fifer.

While evidently nothing much is to be be expected from Panama's authorities to protect its own citizens, market mechanisms and internet publicity may come to the rescue.

First, Canadian mining giant Teck Cominco last April pulled out of a deal with Petaquilla to develop a copper mine in Panama next to the gold mine. Its share in the project was taken over by another Canadian company, Inmet. Both Inmet and Petaquilla shares plunged when the news came out.

Subsequently Inmet, which holds 48% of the venture, has now made an offer to buy Petaquilla Copper out altogether. Although it's not being stated officially, it is widely assumed that Richard Fifer's tainted reputation is an important reason for these moves, and with elections due for May next year, investors may want to wait and see if Fifer has as much influence with the next president and his government as he has with the current one to move things ahead regardless of laws and regulations. Or human rights.

Something similar may be happening on the stock market with the gold digging department of Petaquilla. Since September last year, the Petaquilla Minerals stock price has steadily declined from $3.33 to today's closing of just $1.36, despite the stock being actively pumped on internet fora and despite gold prices being at an all-time high.

So will the stock market, for a change, come to the rescue of the indigenous population and the environment in Panama's Cocle province? It might be too early to tell, but the case certainly shows the importance for local activists against such projects to get their message out in the arena where it really hurts, that is, where the money comes from. Food for thought. And for the Yahoo Finance message boards.

See also: "Richard Fifer's blacklist", recently published in The Panama News.

Update August 4, 2008: Court Ruling Goes Against Petaquilla