Yahoo Finance Panama ups the pressure on Canada's First Quantum as it moves to 'block' copper exports
First Quantum Minerals Ltd. says the Panama government has been obstructing its efforts to export copper from its Cobre Panama mine since late January, the latest development in a protracted dispute over control of one of the world’s most lucrative copper deposits.
The Vancouver-based miner said Feb. 6 that Panama’s maritime authority took “several actions to obstruct operations” at the company’s Punta Rincon shipping terminal, including “conducting extraordinary and unusual” inspections and instructing maritime pilots “not to provide service to vessels.”
First Quantum, which has been negotiating a new contract for the rights to Cobre Panama for about a year, said it could be forced to shut down the mine by mid-February due to limited storage capacity on site.
The company’s shares dropped almost eight per cent to their lowest since November.
First Quantum appears to be most concerned about an order that forces the company to suspend the loading of copper concentrates until it produces a third-party assessment confirming its scales have been properly balanced.
The company said it submitted the proof on Feb. 3, and said that the regulator’s demand “deviates” from the prior practice.
“The resolution is part of a series of escalating attempts by the government to pressure the company into accepting a refreshed concession contract on the government’s terms,” First Quantum said in a statement, adding that the steps were “untimely and unnecessary” considering the recent progress made with regards to a new deal between the two parties.
The Panama government wasn’t immediately available for comment.
First Quantum said it has “expressed its earnest desire to resolve all outstanding issues and continues to engage with the government with a view to concluding a reasonable and durable arrangement regarding the long-term future of Cobre Panama.”
Talks between First Quantum and Panama broke down temporarily in mid-December after a deadline to sign a new contract was missed and the Panama government ordered the miner to make plans to temporarily suspend operations.
The company’s chief executive Tristan Pascall had said on a Jan. 10 conference call that First Quantum and Panama weren’t “far away” from a new agreement. First Quantum had agreed to pay Panama’s government US$375 million per year through taxes and royalties.
But Panama’s industry minister, Frederico Alfaro Boyd, told The Financial Post just days later that there was still a “significant gap” between the two sides on certain terms of the contract, including the amount of money the government would pay First Quantum if the contract was terminated and tax provisions.
Cobre Panama represents one of the most significant deposits of copper on the planet. The mine continues to operate, though First Quantum, in accordance with the government’s order, has been asked to submit a plan to put the mine under care and maintenance.
First Quantum’s previous contract to run the mine was annulled by Panama’s Supreme Court in 2017 and according to Panama’s industry minister, the miner has been running the mine without a contract ever since.
Pascall said the Panama government had previously assured the company that the contract remained valid despite the court’s decision.
At midday in Toronto, shares of First Quantum were trading at $25.76, down $2.14 or 7.67 per cent, in Toronto, within a 52-week trading range of $18.67 and $45.38. The company has a market cap of $17.8 billion.
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