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First Quantum CFO says too early to bring in partner for Panama copper project

View of the Cobre Panama mine, of Canadian First Quantum Minerals, in Donoso, Panama, December 6, 2022. REUTERS/Aris Martínez

By Divya Rajagopal and Valentine Hilaire

TORONTO (Reuters) -First Quantum Minerals said on Wednesday it is too early and challenging to bring a new partner into its flagship Panama copper project as the Canadian company declared force majeure on output from the mine.

The comments were made by First Quantum Minerals CFO Ryan MacWilliam at an annual mining conference organized by Scotiabank, according to a note prepared by the Canadian bank and reviewed by Reuters.

The future of First Quantum's Cobre Panama mine, which accounts for about 1% of global copper output, became uncertain after Panama President Laurentino Cortizo on Tuesday announced the closure of the mine. This followed the country's top court declaring First Quantum's contract to own and operate the mine unconstitutional.

MacWilliam's remarks are the first from the company on the future of the mine since the court's ruling.

First Quantum suspended the jobs of 7,000 contract staff at Cobre Panama copper mine due to force majeure, according to a separate internal memo reviewed by Reuters on Wednesday, citing disruptions at its main port by protesters as the cause of a shutdown in operations.

The head of the union that represents Cobre Panama mine workers, Michael Camacho, confirmed the content of the company document.

When asked for comment on CFO MacWilliam's remarks, First Quantum referred to the Scotiabank note. Scotiabank said it had no additional comment beyond what it had published.

Panama has seen unprecedented public protests after the government signed a new contract with First Quantum for its Cobre Panama mine. The protesters choked supplies to the mine, forcing First Quantum to suspend the mine last week.

MacWilliam told the conference that given the events in Panama, it remains unclear when Cobre Panama will be able to resume operations.

The Cobre Panama mine's workers staged protests in different parts of the country earlier on Wednesday, seeking answers on the future of their job posts.

Bringing in a new investor to help fortify First Quantum's balance sheet has been suggested as a likely solution to balance its financial risks.

The protests have wiped out about C$11 billion ($8.1 billion) from First Quantum's market value. On Wednesday, the stock was down about 10%.

First Quantum supports more than 40,000 indirect and direct job posts in Panama.

Separately, the company said in a statement on Wednesday it was interested in pursuing dialogue with the Panama government, and warned of environmental damage if the mine were not shut in an orderly manner.

China's Jiangxi Copper Co Ltd is First Quantum's biggest shareholder.

The mine closure also has consequences for the Central American nation, as Cobre Panama contributes about 5% to Panama's economy.

First Quantum, which has spent over $10 billion to develop the mine, has launched two separate tracks of international arbitration to protect its assets, the CFO said, which accounted for about 46% of its third quarter earnings.

($1 = 1.3594 Canadian dollars)

(Reporting by Divya Rajagopal, additional reporting by Elida Moreno; Writing by Denny Thomas; Editing by Nick Zieminski, Lincoln Feast and Tom Hogue)