Panama orders suspension of Cobre Panamá cargo operations

Toronto-based First Quantum Minerals suspended loading operations on Monday at Punta Rincón, the port used by its Cobre Panamá mine, on order of Panama’s maritime authority (AMP).

Authorities requested the suspension of concentrate loading operations “until evidence is provided that the process of certification of the calibration of the scales by an accredited company has been initiated,” First Quantum said in a press release.

However, subsidiary Minera Panamá said that proof was submitted on February 3.

“This resolution deviates from the prior process of internationally accepted certifications that Minera Panamá has previously provided to AMP, which has been accepted until now. As a result, Minera Panamá has suspended loading operations while it awaits a response from AMP,” the release said.

First Quantum claimed the order is part of efforts to pressure the company into accepting a concession contract on government terms. 

It added that AMP previously tried to interrupt operations at Minera Panamá’s Punta Rincón shipping terminal, by, among others, conducting unusual inspections and instructing port staff not to provide services to vessels.

According to the miner, such actions hinder good-faith negotiations and are unnecessary, given the recent progress both parties made toward resolving issues.

On December 15, President Laurentino Cortizo ordered a halt to commercial operations at the copper mine after Minera Panamá missed a deadline to sign a new contract due to disagreements over the payment of royalties and taxes. However, no date for contract signing nor for implementing a requested care and maintenance plan has been defined.

Minera Panamá has filed several appeals that remain pending with the trade and industries ministry. 

Negotiations on a new operating contract started after the supreme court declared in 2018 unconstitutional a law from the 1990s under which the mine’s concession was awarded.

The talks faltered but resumed in December.

“It will be to the detriment of Panama, the mine’s employees, suppliers and the broader Panamanian economy if the government forces Minera Panamá to shut Cobre Panamá, which may become necessary if concentrate is not shipped by mid-February due to limited storage capacity on-site,” the miner said.

First Quantum repeated that it will meet or even exceed demands the government outlined in January 2022 related to revenues, environmental protections, and labor standards, including a minimum of US$375mn per year for public coffers, comprising corporate taxes and a 12%-16% profit-based royalty. 

First Quantum reported record copper output of 350,000t at Cobre Panamá last year, up from 331,000t in 2021.