Panama orders First Quantum’s Cobre Panama mine to stop business operations after failing to achieve new profit-sharing settlement

Panama has ordered First Quantum Minerals Ltd.’s FM-T Cobre Panama mine to stop business operations, after the Central American nation clashed with the massive Canadian copper miner over a profit-sharing settlement.

Panama’s President Laurentino Cortizo made the announcement late Thursday in a dramatic televised tackle to the nation.

Cobre Panama is First Quantum’s greatest mine, and accounts for greater than half of its web asset worth. Vancouver-based First Quantum is Canada’s greatest copper producer.

First Quantum and Panama had been in talks for greater than a 12 months to attempt to hammer out a brand new profit-sharing settlement to interchange the present pact that sees the corporate pay a royalty primarily based on a share of its income. First Quantum confronted a deadline of midnight Wednesday to strike a brand new pact, however on Thursday morning the 2 sides introduced they have been at an deadlock.

Panama had wished First Quantum to pay a minimal of US$375-million a 12 months, no matter how the mine performs and whatever the worth of copper. That situation may put the massive Canadian miner underneath vital monetary pressure if the commodity crashes. First Quantum tried to get Panama to comply with sure situations in case steel costs fall and its profitability drops considerably. First Quantum stated in a launch that “authorized protections on termination, stability and transition preparations” have been the sticking factors.

Whereas the transfer by Panama’s President to close down the mine is drastic, it’s removed from the worst-case situation for First Quantum, as a result of it leaves the door open for the 2 to achieve an settlement at a later date. Different Canadian miners have seen their mines nationalized after clashing with international governments. Centerra Gold Inc.’s flagship Kumtor mine was seized by the Kyrgyz Republic and finally the gold miner was pressured to promote it at a fraction of its price to the federal government.

Within the Thursday night tackle, Mr. Cortizo stated he’ll search the perfect end result for the folks of Panama who personal the mineral riches within the floor.

The Mining Chamber of Panama earlier this week urged the federal government to achieve an settlement with First Quantum, saying in a launch that Pamana wants to draw worldwide funding to spice up the financial system, and create jobs. First Quantum is the largest personal sector investor in Panama and together with its predecessor firm, it has invested in extra of US$10-billion into the nation.

The event as soon as once more reveals the dangers Canadian mining firms face once they function overseas.

Kinross Gold Corp. earlier this 12 months offered its Russian mines for a fraction of their price after the invasion of Ukraine.

First Quantum shares fell by 14.7 per cent on Thursday on the Toronto Inventory Trade, the largest single-day drop in additional than 2½ years.

Lots of Canada’s largest mining firms are already forking out considerably increased royalties than beforehand. Over the previous 5 years, as base and treasured metals costs have raced to document ranges, many abroad international locations, together with Tanzania and Papua New Guinea, have efficiently pushed again on miners to demand an even bigger slice of the spoils.

Cobre Panama went into manufacturing in 2019 and First Quantum incurred a large debt load from its development. The corporate’s different main mines are Sentinel and Kansanshi, each in Zambia.