Cobre Panamá operator warns of US$100bn arbitration claim

Panama could face a US$100bn arbitration claim if it fails to uphold a contract allowing development of First Quantum Minerals Cobre Panamá project.

Breaching the contract would have "serious consequences" for the country, Carlos González, lawyer for First Quantum subsidiary Minera Panamá, told local television station TVN.

His comments follow a recent court ruling which raised doubts about the future of the US$6.3bn copper-gold project, where production is scheduled to begin next year.

Panama's supreme court declared unconstitutional the country's law 9 of 1997, which approved a contract between the government and Cobre Panamá concessions owner Minera Petaquilla (now Minera Panamá).

ARBITRATION WARNING

The contract between Panama and Minera Panamá is protected under international investment rules between Panama and Canada, and any breach could result in an arbitration claim against Panama's government, González said.

"In the case of the mine and its expected production and level of investment we could be talking in the area of US$100bn," he added.

The ruling has not impacted development at Cobre Panamá, with First Quantum and Panama's trade ministry MICI saying concessions remain valid, while local NGO center of environmental advocacy (CIAM) said they should be annulled.

Minera Panamá last week launched legal proceedings aimed at overturning the ruling.

Cobre Panamá employs more than 12,000 people in Panama and is the country's biggest ever single investment.