Canada’s First Quantum Minerals (TSX: FM) said on Thursday it had halted ore processing operations at its giant Cobre Panama copper mine, in the latest escalation of a dispute with Panama’s government over tax and royalty payments.
Negotiations between the Toronto-based miner and the country’s government over a new contract for the mine turned sour in December, when the President announced a plan to halt the operation.
The move, unusual among Latin American countries, came after the First Quantum missed a deadline to sign the new contract because it didn’t agree with the some of its terms.
Talks have continued since and, at times, they seemed to progress. Earlier this month, Panama’s maritime authority ordered First Quantum’s local unit Minera Panama to suspend loading operations at a major port, effectively blocking all exports from the mine.
The company was then asked to produce a third-party assessment confirming its scales have been properly balanced.
The miner, which said it submitted the proof on February 3, warned it would have to shut down the massive operation by mid-February because of limited storage capacity.
First Quantum has now begun a partial demobilization of its workforce of over 8,000 employees and contractors, it said on Thursday. It noted it expects the impact to increase significantly in the coming weeks if concentrate shipments do not resume.
In addition to workforce reductions, the mine has ceased purchasing supplies and services that are equivalent to $20 million in weekly revenues to more than 2,000 Panamanian companies.
“Panama has continuously demonstrated its commitment to hold talks based on good faith and trust,” the country’s Ministry of Commerce and Industries said in an emailed statement. “However, Minera Panama has demonstrated the opposite, as they have not honored their word and refuse to sign the agreement with the previously accepted terms, instead engaging in delay tactics that have lengthened the process for more than a year.”
The Cobre Panama mine’s union had called its members on Wednesday to strike against the halting of operations, arguing it would negatively impact workers.
First Quantum is one of the world’s top copper miners and Canada’s largest producer of the metal. It churned out 816,000 tonnes of copper in 2021, its highest ever, thanks mainly to record output at Cobre Panama.
The Cobre Panama mine complex, located about 120 km west of Panama City and 20 km from the Atlantic coast, contributes 3.5% of the Central American country’s gross domestic product, according to government figures.
The asset is estimated to hold 3.1 billion tonnes in proven and probable reserves and at full capacity can produce more than 300,000 tonnes of copper per year, or about 1.5% of global production of the metal.
Energy News Beat