Panama shuts down First Quantum copper mine after talks fail

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Panama will shut business operations of an enormous copper mine operated by Canadian firm First Quantum Minerals Ltd. after tax talks broke down, in a uncommon transfer amongst Latin American international locations.

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“The federal government will search the perfect choices to ensure the sustainable functioning of the mine beneath a good contract,” President Laurentino Cortizo mentioned throughout an handle to the nation late Thursday. He’s instructed the commerce ministry to protect the Cobre Panamá copper mine and take cost of upkeep.

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Cortizo’s transfer comes after his administration and First Quantum failed to achieve a deal on new tax preparations by Wednesday night time’s deadline. It may have implications for the worldwide copper market and Panama’s financial system, and comes as different international locations look to boost income for social spending whereas boosting investments within the uncooked supplies essential to weaning the world off fossil fuels.

The Central American authorities is working with a monetary adviser to establish potential companions for the Cobre Panamá copper mine, Bloomberg reported earlier. The federal government has a number of names in thoughts they usually’re prone to be massive mining firms, mentioned individuals conversant in the matter, who requested to not be named as a result of the knowledge is non-public.

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In 2017, First Quantum boosted its curiosity within the Panamanian firm that holds the mine’s concession to 90 per cent. Final yr, Panama’s Supreme Court docket ratified a decrease court docket’s ruling that the present concession was unconstitutional.

First Quantum’s shares plunged 15 per cent in Toronto on Thursday, the most important decline since March 2020.

One of many sticking factors between the federal government and the corporate seems to have been over a minimal US$375 million contribution, with First Quantum pushing for an exception within the case of a lot decrease steel costs and revenue, based on a letter First Quantum despatched to workers on the Cobre mine seen by Bloomberg.

Cortizo mentioned on Thursday he had ordered the atmosphere minister to maintain environmental oversight of the mine and the labour ministry to ensure the roles of mine employees.

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Shutting the mine might assist copper costs at a time when issues about slower financial progress hitting demand have pressured the market. The Cobre mine can produce 300,000 metric tons a yr at full capability, accounting for about 1.5 per cent of worldwide manufacturing of the steel that’s more and more getting used for renewable-energy tasks.

International Funding

The transfer might also influence the Panamanian financial system given the copper mine has been the most important international funding for the nation. It price extra to construct than an growth of the nation’s famed canal and helps 40,000 jobs.

Insurance policies that trace of nationalization of natural-resource operations have been pretty uncommon in Latin America’s current previous.

One of many final main asset seizures was in 2012 when then-Argentina President Cristina Fernandez de Kirchner’s authorities expropriated 51 per cent of oil driller YPF SA from Repsol SA. Venezuela’s former chief, the late Hugo Chavez, seized vitality, farming and mineral property together with the Las Cristinas gold reserve in 2011. Codelco, Chile’s copper mining large, was shaped by the nationalization of U.S.-owned mines within the Nineteen Seventies.

Extra just lately, Mexican President Andres Manuel Lopez Obrador declared lithium as property of the state, elevating questions for Chinese language agency Ganfeng Lithium Group Co.’s efforts to construct Mexico’s first lithium mine. Previously yr, politicians in each Peru and Chile have debated an even bigger function for the state as rising costs and heightened scrutiny of social and atmosphere points fanned useful resource nationalism.

With help from Andrew Janes

Bloomberg.com