Negotiations over Cobre Panama mine contract near end

Panama’s government said on January 5 that negotiations with the local unit of First Quantum (TSX: FM), aimed at obtaining more in royalty payments from the Canadian miner and improve environmental conditions at the giant Cobre Panama copper mine, are nearing the end.

President Laurentino Cortizo pledged just before taking office in 2019 that a new contract for the open pit copper mine should provide more public benefit.

When kicking off negotiations in September, the country’s Minister of Commerce and Industry, Ramón Martínez, said the new contract would have to set “fairer conditions” for the country. Otherwise, “a different company will have to come”. 

While Martínez did not provide details on the status of the talks on Wednesday, he said that the renegotiation of the mine contract should be completed by the end of January at the latest. 

Cobre Panama is estimated to hold 3.1 billion tonnes in proven and probable reserves. It has generated some US$6.7 billion in private investment, and includes two open pits, a processing facility, two power plants and a port.

The mine contributes 3.5% of the Central American country’s gross domestic product, according to government figures, and at full capacity can produce more than 300,000 tonnes of copper per year.

Minera Panama’s concession was approved in 1997 and initially granted to Canada’s Inmet Mining Corporation, which was acquired by First Quantum in 2013.

First Quantum produced 600,000 tonnes of the metal in the first nine months of 2021 and was expected to achieve its annual target of between 800,000 and 835,000 tonnes.

The company, which is the world’s sixth largest copper miner, is hosting a virtual Capital Markets Day on Jan. 18, during which it will outline the company’s strategy for the next three years including guidance and growth opportunities.