Analytic-Panama, First Quantum strengthens the front lines on important copper mine According to Reuters

© Reuters. FILE PHOTO: A general view of the Cobre Panama mine owned by Canada’s First Quantum Minerals in Donoso, Panama December 6, 2022. REUTERS/Aris Martinez

By Valentine Hilaire

PANAMA CITY (Reuters) – Panama and First Quantum Minerals (OTC:) are strengthening the front lines in a dispute over how much taxes the Canadian miner must pay as the Central American nation’s only major mining franchise This is an important asset for both parties.

Tristan Pascall, CEO of First Quantum (NASDAQ:) flew to Panama for Christmas and met with government officials for negotiations. However, no agreement was reached, prompting the two sides to increase their contributions to protect their interests in the mine, known as Cobre Panama.

The dispute, which begins in late 2021, has become a test of Panama’s ability to maintain its business attractiveness even as the government seeks to reduce inequality by looking at long-term agreements without Many analysts consider it too generous for the business.

“Cobre Panama is the only metal mine operating in the country and many foreign companies have already started operating in Panama when they arrive. What happens will have a huge impact that neither side seems to have considered carefully. thoughtful,” said Zorel Morales, director of Cobre Panama. Mining Chamber of Panama.

Morales said a failure to reach a deal could spook foreign investors at a time when Panama is looking to develop three other copper mines that could yield similar investments as Cobre Panama.

Panama’s demand that the company pay at least $375 million in taxes annually is at the heart of the dispute, and in negotiations last week, First Quantum laid out the points it wanted to include in the contract after The deadline for reaching an agreement on December 14 has expired, according to a government-linked source.

The source said exclusive rights to exploit other minerals, expansion of the franchise area, a $1 billion tax credit for the investment, and the requirement that no legislation be enacted after the new contract affects The impact on the company’s operations is one of the issues raised.

The company declined to comment on details of the negotiations. A government spokesman did not respond to a request for comment.

Panamanian President Laurentino Cortizo on Monday said the government had made a final contract offer to the company.

On Tuesday, lawmakers voted to summon the country’s trade and industry and environment ministers to answer questions about the company, including its operating licenses, royalties, sanctions for environmental violations and progress in negotiations on new contracts.

The company did not immediately respond to a request for comment.

Company data shows that First Quantum paid $61 million in royalties to the Panamanian government in 2021, while the Cobre Panama mine posted $3.2 billion in sales for the year.

Meanwhile, other businesses surrounding the mine have begun production in 2019. Government records show at least two requests are under consideration to explore for gold and other metals near the concession. First Quantum.

Both sides have publicly said they want to strike a deal, but their failure to do so before the latest government deadline expires prompted Panama to order the mine’s shutdown and the company to begin proceedings. arbitration proceedings.


In 2021, Cobre Panama represents more than half of First Quantum’s earnings before interest, tax amortization and amortization (EBITDA). It also accounts for about 3.5% of Panama’s gross domestic product.

According to company data, the company invested more than $10 billion in the mine and paid only nominal dividends to shareholders in its first years.

Cobre Panama represents about 40,000 direct and indirect jobs, interacts with about 1,800 suppliers and is the country’s largest private investment, according to business advisor Rene Quevedo, from consulting firm GS&S Consultants.

Mining is the country’s most dynamic sector in 2021, with output more than doubling. Fitch Ratings has revised its credit outlook for Panama from negative in February to stable, highlighting booming copper exports.

Mining could thwart government plans as Cortizo wants to inject about $190 million from miners’ annual payments into Panama’s national pension scheme, at risk of running out of funds by the end of the year. 2024, according to the International Labor Organization.

“Without a deal, the damage will be severe,” Quevedo said.

The company said the cost of the shutdown remains “uncertain”. Cortizo’s government has not released any assessment of how the dispute might affect Panama.

The Panamanian government says it is ready to face any legal situation to protect the national interest.

“It’s a kind of negotiation on the Panama Canal,” said Hernan Arboleda, public policy director at the ministry of economy and finance, citing the country’s experience in negotiating with the United States to secure control. control its famous waterway.

“Panama can prove to the international authorities that this is not a fair contract,” he told Reuters.

Source by [author_name]


News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button