Panama’s president, Laurentino Cortizo Cohen, announced that his government has ordered Canada's First Quantum Minerals to pause operations at its flagship copper mine in the country after missing a deadline to finalize a deal that would have increased payments to the government from the mine.

First Quantum Minerals was given a deadline of Dec. 14 to sign an agreement from January to pay $375 million per year in royalties to the government. The January agreement called for the company to give Panama between 12 and 16 percent of its gross profit, which would replace the previous 2 percent revenue royalty.

Reuters reported that First Quantum estimates the Cobre Mine to produce 340,000 to 350,000 tonnes of copper in 2022, accounting for more than 40 percent of its overall copper output. The company has invested $6 billion in the openpit mine, where operations began in 2019.
It is considered the largest private investment in the Central American country and accounts for roughly 3.5 percent of Panama's gross domestic product.

Months of talks between the miner and the government continued until early Thursday morning, the commerce and industry ministry said. It added that the miner then sent a new proposal that “fundamentally” changed the deal’s economics.

The miner said earlier Thursday the deal was not finalized because "necessary legal protections on termination, stability and transition arrangements could not be agreed."

Authorities and the company began negotiating a new concession contract late last year after Panamanian President Laurentino Cortizo promised to extract better benefits for the country from the copper mine.

The Panamanian government has hired financial advisers to explore alternatives with other companies within the last months, according to sources familiar with the matter.

During a live television address to the nation on Thursday night, Cortizo said his government had put “all the necessary patience, good faith and the best of wills to get the mining company to ratify what was agreed, and that is why we expected reciprocity from the company, which did not happen.”

“This is not acceptable for me as president, nor for the government, nor for the people of Panama,” Cortizo said in the televised speech.
The President also said his administration will seek the best options to ensure the sustained operation of the mine, noting he had ordered the environment minister to oversee the site and the labor ministry to guarantee the jobs of workers.

Photo: President Laurentino Cortizo, courtesy of Government of Panama