First Quantum Clings to Hope of Last-Minute Deal over Cobre Panamá

The Vancouver-based miner hasn’t given up all hope of brokering an eleventh-hour deal with Panama to continue running the Cobre Panama mine

Cobre Panamá
By James Attwood and Yvonne Yue Li
December 16, 2022 | 12:28 PM

Bloomberg — A massive copper mine in Panama is in limbo following a breakdown in tax talks between First Quantum Minerals Ltd. and the government.

The Vancouver-based miner hasn’t given up all hope of brokering an eleventh-hour deal with Panama to continue running the Cobre Panama mine even after authorities ordered the suspension of operations. First Quantum said in a Friday statement that it “came very close to an agreement” on a new tax arrangement before the Central American government pulled the plug on talks.

In a rare development in the normally investor-friendly nation, President Laurentino Cortizo instructed the commerce ministry to preserve the mine and take charge of maintenance. First Quantum vowed to do everything possible to defend stakeholders from the actions, “including through all available legal means.”

The intervention could have a chilling effect on investment needed for the global energy transition and support copper prices that are under pressure from short-term economic headwinds. The move could also hurt Panama’s reputation and send a signal to other nations that have been looking to raise revenue for social spending while boosting investments in raw materials.

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Panama’s government is working with a financial adviser to identify potential partners for the mine, Bloomberg reported Thursday. The government has a few names in mind and they’re likely to be large mining companies, according to people familiar with the matter who asked not to be named because the information is private.

First Quantum acquired the Cobre Panama project in 2013 and it cost at least $10 billion to build the open-pit mining operation, according to the company. The facility, about 120 kilometers (75 miles) west of Panama City, began commercial production in 2019. The mine can produce more than 300,000 metric tons of copper a year at full capacity, roughly 1.5% of the global output.

In 2017, First Quantum boosted its interest in the Panamanian company that holds the mine’s concession to 90%. Last year, Panama’s Supreme Court ratified a lower court’s ruling that the current concession was unconstitutional.


Shares of First Quantum plunged as much as 15% in Toronto, before paring some losses. The stock was down 6.9% to C$25.68 at 11:37 a.m., extending its two-day decline to about 20%.

Franco-Nevada Corp., which has a streaming deal for gold and silver from Cobre Panama, fell 3.8%. The Toronto-based firm said it is in communication with First Quantum.

“Our goal remains to find a ‘win-win’ resolution with the government that will safeguard 40,000 jobs and protect our investment,” First Quantum said in its statement.

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One of the sticking points between the government and the company appears to have been over a minimum $375 million annual contribution, with First Quantum pushing for an exception in the case of much lower metal prices and profit, according to a letter First Quantum sent to employees at the mine seen by Bloomberg.


Panama’s move may also impact its economy given the mine has been the biggest foreign investment for the country. It cost more to build Cobre Panama than an expansion of the country’s famed canal and supports 40,000 jobs.

--With assistance from Jacob Lorinc