Cobre Panamá registers big losses due to suspension of processing

Minera Panamá, a subsidiary of Canada’s First Quantum Minerals, is losing up to US$8mn per day due to the suspension of processing, starting February 23, at its US$10bn Cobre Panamá mine.

The suspension results from an order by maritime authority AMP, which prevents the company from carrying out port cargo operations and the consequent exhaustion of storage capacities.

In a letter sent to AMP, and seen by BNamericas, Minera Panamá CEO Alan Delaney said the decision to restrict cargo operations for copper concentrate at the mine’s Punta Rincón port “has caused and will continue to cause exponential and irreparable damage to the company and stakeholders, including the workforce.”

He added, “the company reserves the right to claim and eliminate the effects of this damage.”

Minera Panamá suspended mineral processing last week and copper concentrate loading operations on February 6. AMP ordered the halting of port operations until the company demonstrated that an accredited firm started certifying the calibration of scales. The company claimed it has already complied with this procedure.

The miner wants AMP to review the decision and allow it to resume cargo operations.

For context, Minera Panamá is negotiating a new operating contract with the government. Talks resumed around Christmas after the company missed a December 14 deadline to sign a new operating contract over differences over payment of royalties and taxes. However, a date for contract signing and the implementation of the care and maintenance plan required by authorities has not been revealed.

Negotiations started after the supreme court ruled in 2018 that a 1990s law under which the concession was granted was unconstitutional.

Workers

Although Minera Panamá planned the partial demobilization of its 8,000 employees and contractors due to the suspension of processing, the labor ministry rejected a request to suspend the contracts of 4,050 workers, which the company filed claiming force majeure.

"To avoid continuing to cause irreparable damage to the company and further disastrous consequences for the country's economy, for the 40,000 jobs that our activity directly and indirectly generates, and for the more than 2,000 Panamanian companies that offer their goods and services to the mine, we appeal to you for an urgent response that is conducive to resolving the suspension of cargo operations imposed by AMP," Delaney said in the letter.

Meanwhile, media reported on Wednesday that company workers were protesting the suspension in front of AMP’s headquarters.

"The weights are calibrated, but right now [AMP] does not give a resolution date for the company to start exporting," the general secretary of Utramipa union, Francisco Díaz, told Infobae.

And workers’ representative, Isabel Marrero, told Panamá América that they are "ping-pong balls" because the government “lied to their faces” by telling them AMP would provide a solution. Marrero said that AMP representatives told the workers the industries and trade ministry and the national accreditation council were responsible.

Cobre Panamá started producing for export in June 2019. It contributes around 5% to GDP, represents close to half of First Quantum's total production and constitutes 75% of exports of goods, according to company data.