Panama and Canada’s First Quantum agree details for copper mine contract

7:03 pm Wednesday, March 08th, 2023

By Valentine Hilaire and Milagro Vallecillos

PANAMA CITY (Reuters) -Panama’s government and Canada’s First Quantum Minerals agreed on the final text for a contract to operate a key copper mine, according to a statement signed by both parties Wednesday.

The new contract guarantees a minimum annual income of $375 million to the Central American government, and will be effective for 20 years with the option to renew for 20 more.

“With this contract, Panama expects to receive about ten times more than what it was getting” under the previous contract, the statement added.

The Canadian firm’s Chief Executive Officer Tristan Pascall told Reuters he met with the Panamanian president after finalizing the text and ensured it guarantees “stable and durable” operations.

First Quantum paid $61 million in royalties to Panama’s government in 2021, while the Cobre Panama mine posted sales revenues of $3.2 billion for the year, company data showed.

Both parties agreed on all new economic terms, Pascall said in an interview.

The proposed concession contract is subject to a 30-day public consultation process and approvals by the Panamanian Cabinet, Comptroller General of the Republic and the National Assembly.

First Quantum suspended ore processing operations at the mine on February 23 after a government order halted its loading permissions at the port, limiting its capacity to store copper.

Panamanian authorities issued a resolution on Wednesday for First Quantum’ local subsidiary, Minera Panama, to resume concentrate loading operations, Pascall said, adding a ship will start loading within hours.

In 2021, Cobre Panama represented more than half of First Quantum’s earnings before interest, tax depreciation and amortization (EBITDA). It also accounts for about 3.5% of Panama’s gross domestic product.

First Quantum is working on bringing back the estimated 1,000 workers that were sent on leave while works were paused and expects to resume ore processing operations in the next few days.

(Reporting by Valentine Hilaire and Milagro Vallecillo; Editing by Brendan O’Boyle, Chizu Nomiyama and Lincoln Feast.)