First Quantum suspends ore processing at Cobre Panamá

Minera Panamá, a subsidiary of Canada's First Quantum Minerals, suspended processing on Thursday at its Cobre Panamá mine.

“This interruption to operations is the result of the Panamá Maritime Authority’s (AMP) refusal to permit copper concentrate loading operations at the mine’s port, Punta Rincón,” a press release said, adding that if AMP allowed it, Minera Panamá concentrate shipping and operations could resume swiftly.

“The company believes that all AMP’s requirements under the resolution have been duly met and exceeded. However, AMP has continued to block [Minera Panamá’s] export operations,” the miner said. 

Concentrate loading operations were suspended on February 6, following an order from AMP to halt activity until it is shown that the accredited firm began to certify the calibration of the scales.

Minera Panamá said in a letter to AMP that it would be forced to close the Cobre Panamá copper mine if concentrate was not shipped before reaching storage capacity by midnight on Thursday.

In a statement, the trade and industries ministry said the government is focused on the talks under the Canada-Panama FTA to reach a new contract agreement.

The ministry urged the miner to “comply with the regulations before the pertinent institutions and processes necessary for the safe operation of the mine,” and refrain from “creating unrest and uncertainty about the stability for the thousands of workers and suppliers that depend on the mine.”

It added that “using pressure mechanisms does not contribute to improving the levels of understanding that both the State and Minera Panamá require.” With such an agreement, the company would “end the uncertainty in which the company, its workers, suppliers, and Panamanians are currently finding themselves in.”

WORKFORCE DEMOBILIZATION

Minera Panamá will begin a partial demobilization of its over 8,000 employees and contractors, with “the impact being expected to increase significantly in the coming weeks if concentrate shipments do not resume.”

In addition, the miner ceased purchasing supplies and services equivalent to US$20mn in weekly revenues for more than 2,000 local companies. 

Cobre Panamá contributes some 5% of GDP, makes up 75% of the country’s exports and has created at least 40,000 direct and indirect jobs, according to First Quantum.

The company reported record copper output of 350,000t at open-pit Cobre Panamá last year, up from 331,000t in 2021.

According to a study by analysis firm Indesa Capital in January, if Cobre Panamá stopped operations for one year, up to US$4.67bn in revenue would be lost.

Indesa said Panama risks stopping production worth US$3.07bn related to the mine, the power plant, and the companies associated with its production, translating into 4.8% of 2021 GDP.

“Minera Panamá is taking a systematic approach to reducing operations to ensure the safety of its workforce, prevent damage and degradation of equipment, and preserve the integrity of the mine,” the miner said in a statement.

In the short term, some maintenance will be brought forward, along with commissioning work on the CP100 Expansion and waste stripping in the mine.

“Essential safety and environmental work will continue, including care of the tailings management facility. Excess power generated by the power plant will be offered for dispatch to the national grid,” First Quantum said, adding that these actions may vary in magnitude depending on the duration of the stoppage. 

“Should permission from AMP allow it, [Minera Panamá] could begin shipping concentrate and resume operations at the mine within hours,” the miner said. 

Negotiations on a new contract are continuing, First Quantum said. 

“The company remains committed to achieving an outcome that will be to the benefit of all stakeholders and support the long-term operations of the Cobre Panamá mine. The company considers that the suspension of ore processing operations as a consequence of the government’s actions is unnecessary, given ongoing progress in this regard,” the miner added. 

The government and Minera Panamá resumed talks around Christmas after the company missed a deadline on December 14 to sign a new operating contract due to disagreements over the payment of royalties and taxes. However, a date has not yet been defined for the signing of the contract or for the implementation of a care and maintenance plan demanded by the authorities.

Talks on a new operating contract began after the supreme court ruled in 2018 that a law dating from the 1990s, under which the concession was granted, was unconstitutional.