The Canadian company blames Panama for closing the copper mine

PANAMA CITY (AP) — A Canadian company claimed Friday that the Panamanian government broke off talks with it, prompting the closure of a massive copper mine.

Canada’s First Quantum Minerals Ltd. said in a statement that it was negotiating with the Panamanian government, which wants greatly increased royalty payments of $375 million a year from the company.

Analysts say the dispute threatens to have a huge economic impact on Panama, where the Cobre Panamá mine accounts for 3% of Panama’s gross domestic product and poses a major challenge to the government, which will still have to manage the open-pit mine.

First Quantum said in a statement on Friday that it had agreed to those payments and “came very close to an agreement to secure the long-term future of the Cobre Panamá mine before the government halted discussions.”

The company said it wanted a protection clause in the event of a fall in metal prices or profitability at the mine, possibly to reduce royalty payments in that case.

Panama’s president announced Thursday that the government has ordered local subsidiary Frist Quantum to stop operations at the mine, the largest private investment in Panama’s history. The company says it has invested about $10 billion in the project since 1997.

But it won’t be easy to simply shut down such a huge operation, with a workforce of 40,000 and mines to monitor and maintain.

Environmental law expert Rodrigo Noriega said the government may need to take several steps.

“There are different options, they could authorize the mine to continue operating while the talks continue, which would be a well-intentioned plan, or you could look for a third party company to manage it while the case with the mining company is resolved,” Noriega. he said.

President Laurentino Cortizo’s cabinet voted Thursday to order the mine to cease operations and instructed the Ministry of Labor to take measures that would guarantee employment and job protection for the mine’s workers.

The government blamed subsidiary Minera Panama, saying it had failed to meet commitments agreed in January for a new contract that was “reasonable and satisfactory” to the Panamanian people.

The government said that on January 17, Minera Panama agreed to a settlement with the government that included a minimum annual payment of $375 million. Despite the negotiations, the company did not sign the new contract by the December 14 deadline set by the government.

First Quantum said the agreed amount “will make Cobre Panama one of the highest royalty and tax payers among major copper producing mines in the Americas.”

The company said “necessary legal protections regarding termination, stability and transitional arrangements cannot be agreed”.

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