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Canada’s First Quantum intends to start arbitration against Panama, the Central American nation’s trade ministry and the company said on Sunday, as Panama’s top court considers annulling a copper contract that opponents call unfair.
On Oct. 20, Panama’s government approved a contract for First Quantum to operate the copper Cobre Panama mine. It included a 20-year mining right with an option to extend for another 20 years. In return the miner agreed to pay Panama $375 million a year.
Opponents claim the contract favors the miner too much as the mine represents about 5% of the country’s GDP and some 1% of global copper output. Protesters have demonstrated over the mine’s environmental and economic impacts and allege corrupt practices in its approval.
A spokesperson for First Quantum confirmed to Reuters the company sent one notification of intent to start arbitration proceedings.
Panama’s trade ministry said in a statement that First Quantum, the miner’s local unit Minera Panama and Franco-Nevada Corp sent two notifications to an international arbitration center, adding it was ready to defend the country’s interests. Arbitration is a way of resolving disputes by an impartial person or panel deciding the outcome.
Challenges against the contract’s validity have piled up in Panama’s top court, which on Friday started deliberations to rule on several constitutional challenges to it and is expected to issue a ruling in the coming days.
“People seem to think that the supreme court decision will be the end of the matter, but it won’t… Panama’s exposure in international arbitration is massive,” Damien Nyer, expert in international arbitrations, said in a statement to BNamericas this week.
Panama’s actions will be subject to review and scrutiny, he added.
The country’s mining chamber head Zorel Morales set at a minimum $50 billion what the country would pay if it loses arbitration, and said uncertainty around First Quantum’s project could also spook investors.
J.P Morgan warned this month that the odds of Panama losing its investment-grade rating would rise significantly if the contract is revoked.
First Quantum was forced to shut down commercial production this week, following blockades by protesters at a key port that prevented the miner from receiving shipments of essential supplies.
Tensions have been rising around the mine and eight Panama workers of Canadian miner First Quantum were injured when protesters hurled rocks at a bus transporting them, a union leader said earlier on Sunday.
Reuters was not immediately able to contact the protesters.
(Reporting by Valentine Hilaire and Elida Moreno; Editing by Josie Kao and David Gregorio)
Read More: Panama copper miners attacked by protesters, union boss says
3 Comments
Victor Vasquez- Lacayo
We cant allow that a mining company to create a Corporate Enclave in our country, just like this corporation is looking for self preservation, we are looking as well for self preservation, you guys dont give a dime for enviromental regulations and your mere presence in Panama is illegal, FQM go Home!
Humphrey muluka
Zambian let’s wake up
IRENE C DE VENGOECHEA
Why doesn’t FQM use same mining procederes in Panama as used in Canada.❓️ They think we are ignorant and disregard our concerns with their tactics in destroying our country’s biodiversity. They promised that their being in the country would help develope sorruoundings for indigenous groups and that has not been the case. They were aware that the mine’s status was inconstitucional before signing new contract and have been extracting minerales, not only copper. but gold and silver which isn’t even accountable for❗️They did this for years without pay Panamá $0.00 for these minerals. Someone is really doing well with the mine working under these circumstances??. And they use intimidating tactics saying they will demand the country thru arbitration enable for Panamanains to not pursue our wish that we don’t want to be a mining country. Our “mines are green”. We are a Canal country not a mining one. And proud of our biodiversity.