Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Following the publication, in the December 2 Official Gazette, of a Supreme Court ruling regarding the unconstitutionality of First Quantum Minerals’ (TSX: FM) contract for its Cobre Panamá copper mine in the Central American country, the miner issued a statement informing employees that it is uncertain how many people will be able to continue working at the operation.
“Until the government sets up a clear roadmap, we cannot determine how many of our collaborators will continue working at the company in care and maintenance tasks (non-operational), a key factor to avoid future environmental disasters,” it said in the statement.
First Quantum also asked the Ministry of Labour and Job Development (MITRADEL) to quickly issue a directive to tend to the uncertainty that workers and their families are experiencing due to the lack of information regarding what will happen to their jobs.
The miner pointed out that this is particularly the case of 7,000 workers whose jobs were suspended by MITRADEL due to the blockades performed by protesters on small boats at the Punta Rincón port. These actions prevented the arrival of supplies such as coal to the mine and forced an operational stoppage.
“At Cobre Panamá, we reiterate our willingness to engage in an open and constructive dialogue to address these and other concerns,” the statement reads.
Earlier this week, the Vancouver-based miner also asked the government to clarify how it plans to fund the future of Cobre Panama’s rehabilitation, reforestation and species conservation programs, as well as the preservation of almost 20% of the country’s total protected areas, which are all currently funded by its copper mine.
Cobre Panama, in production since 2019, generated 112,734 tonnes of copper in the third quarter of 2023, contributing $930 million to First Quantum’s overall third-quarter revenue of $2.02 billion. The mine is also responsible for about 1.5% of the global copper supply, accounts for about 5% of Panama’s GDP and makes up 75% of its export goods.
First Quantum initiated international arbitration procedures over the cancellation of its 20-year contract.
In detail, the company’s subsidiary is asking a Miami-based International Court of Arbitration to protect its rights under the 2023 concession agreement that the government of Panama agreed to earlier this year, as well as the Canada-Panama Free Trade Agreement.
The contested contract, inked in October, followed 10 months of negotiations between the parties and was supposed to end years of legal uncertainty around First Quantum’s rights to mine the asset.
