Exclusive-Panama to ban First Quantum from mining copper during the closing process

By Valentine Hilaire and Elida Moreno

PANAMA CITY (Reuters) – Panama will ban First Quantum from extracting copper during the closure of the mine it was banned from operating last year, Trade Minister Jorge Rivera Staff told Reuters, adding that new ways must be found found to finance the mine. the closure of mine.

Miners around the world tend to continue mining during shutdown processes because they use those profits to finance shutdowns, but such a move is off the table in the case of Cobre Panama, Rivera Staff said in an interview Thursday.

The decision to strip Canada’s First Quantum of its contract, which accounted for about 40% of sales last year, came amid nationwide protests that also led to authorities banning all metal mining operations.

“There are two alternatives to finance the closing process. One is that the company will pay for it if it continues to handle the shutdown, and another is that the government will have to pay for it. Where should the funds come from? That’s part of the discussions we’re having,” Rivera Staff said.

Panamanians will go to the polls to elect a new president on May 5, meaning the next government will likely decide who will pay the estimated $800 million to close the mine.

Panama last year ordered the closure of the Cobre Panama mine, which accounted for about 1% of global copper production, after a Supreme Court ruling that declared the contract unconstitutional.

Traders and investors are closely watching the election results to see if a new government can bring mining back, but Rivera Staff said it could be months or even years before there would be any change in Panamanians’ current strong opposition to mining.

The trade minister invited all eight of the country’s presidential candidates to talks on the Cobre Panama mine closure plan, but only the teams of three participated. The others argued there wasn’t enough room in their schedules, Rivera Staff said.

Panama and the Canadian miner are working together to draw up a plan – to be made public in the next two weeks – to put the mine into ‘care and maintenance mode’ while details of its final closure are ironed out, said Rivera Staff.

Current plans call for First Quantum to handle the closure process, but the country could choose an alternative if better terms are offered, the minister said, adding that the closure is expected to last at least eight years.

Another sticking point between Panama and First Quantum centers on the owner of the 121,000 tons of copper concentrate stored at the mine.

First Quantum said last week it believed it could win after the election, but Rivera Staff said the government had yet to decide who owns it.

Panama is trying to determine whether the copper concentrate, worth about $200 million, was mined before or after the ruling invalidating the contract, Staff said.

First Quantum has opened one commercial arbitration proceeding against Panama over the void contract, but another four arbitrations, focusing on investments, are in the first phase.

Mandatory pre-arbitration discussions have ended in at least two of the cases, Rivera Staff said, although First Quantum has yet to go further.

“I imagine they are waiting to see what happens in Sunday’s election,” he said.

Rating agencies have warned that the Panamanian economy could be seriously hit if the country loses one or more of the arbitrations and has to pay hefty fines.

(Reporting by Valentine Hilaire and Elida Moreno; Editing by Christian Plumb and Deepa Babington)