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Panama’s government is in talks with Canada-based miner First Quantum Minerals over the conditions under which it operates its flagship copper mine, the government’s Chief Revenue Officer Publio De Gracia said on Friday.
The official from the country’s economy and finance ministry said Panama was looking for a “fair” deal in which the company complies with the obligations its large operations demand.
“These activities are receiving important benefits and it is only fair that they comply with the obligations,” he said, adding it was “more unfair” in view of the company’s “very low” tax liability, exemptions and credits.
Panama’s government on Monday ordered First Quantum to pause operations at the Cobre Panama mine after the company missed a deadline to finalize a deal that would have increased annual tax and royalties payments to the government to at least $375 million.
A key asset for both parties, Cobre Panama accounts for roughly 3.5% of the country’s gross domestic product according to government figures, and according to a financial analyst generates around half of First Quantum’s core earnings.
Canada’s trade minister has been in contact with her counterpart in Panama in an effort to resolve the dispute, a Canadian government source said on Friday.
“Obviously, we have a keen interest in seeing resolution to this, and are optimistic that both parties are negotiating in good faith,” said the source, who is familiar with the discussions.
First Quantum has disbursed more than $10 billion in the mine, according to its web page.
Zorel Morales, the director of Panama’s mining chamber, said the dispute with First Quantum could have a dramatic fallout for the country, which has three other similar copper deposits that could generate up to $30 billion in future investments.
Some interested mining firms had categorically said that if the talks do not end well or end up in international courts they would not invest, added Morales, saying solving the dispute was “a matter of life or death” for the sector.
(By Valentine Hilaire, Steve Scherer and Elida Moreno; Editing by Alistair Bell and Diane Craft)
Comments
BOB HALL
This is a silly move on the part of Panama because it could seriously backfire on them.
CANADA! Just watch your home front. NOW is the time to get the mining house in order. So much happening with the move to alternate base energy and accompanying infrastructure that you should be speeding your moves quickly. Get mines approved, get mills and refineries approved, get anode and cathode production underway.If you do not act quickly you will miss out! Semiconductor expansion has already passed you by!