First Quantum close to securing new deal for Panama copper mine

Article content Canadian miner First Quantum Minerals Ltd. said it isn’t “very far away” from striking a deal with the Panama government to ensure that it can keep its flagship copper mine alive. Article content The company has been negotiating a new contract for the rights of the Cobre Panama mine, situated about 120 kilometres west of Panama City, for about a year, stopping briefly on Dec. 16 after the Panama government halted discussions and announced plans to suspend Quantum’s operations. Article content First Quantum chief executive Tristan Pascall said the company had agreed to pay Panama’s government US$375 million per year through taxes and royalties, a commitment that he described as “unique” in the world of taxation. “We want to reach an agreement on the outstanding items without further delays, but it must be a mutually beneficial outcome that provides legal certainty,” Pascall said during a conference call on Jan. 10. Article content Obstacles remain. Pascall said the two sides were still negotiating over security of surface rights, a stable tax and royalty regime and protections against expropriation and early terminations. Since these issues remain unresolved, First Quantum continues to work on a plan to bring the mine under care and maintenance and stop production, as ordered by the Panama government in December. Pascall called Panama’s decision to put the mine under care and maintenance as “drastic” and “unnecessary.” He added that if the mine does suspend its operations, the company would be forced to cut a significant section of its local workforce. “This is not something that we want to do,” Pascall said. “We are doing everything possible to avoid the outcome, we asked for a reconsideration of the decision, which the ministry of commerce and industries has rejected. As a next step we are submitting an appeal to the minister.” Article content “You see the same concern in other major copper producing countries such as Peru and Chile,” said Patricia Mohr, an independent analyst who follows battery metals. “The demand for critical minerals of which copper is one is going to be very strong … governments around the world realize this and they want to ensure that their take is what they think adequate,” added Mohr. Canada itself announced its first critical minerals strategy last month with an aim to boost the production of critical minerals needed to build electric vehicles. With three billion tonnes of reserves, Cobre Panama is one of the largest new copper mines that opened globally in the past decade, according to First Quantum. The mine is expected to account for more than 40 per cent of the copper produced by the company in 2022. First Quantum shares were trading at $30.50 in Toronto on the afternoon of Jan. 10, down 1.5 per cent and within a 52-week trading range of $18.60 and $45.38. The company has a market cap of $21.1 billion. • Email: nkarim@postmedia.com | Twitter: naimonthefield

This article was published by: Naimul Karim

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