PANAMA LEAVES DOOR OPEN TO ELEVENTH-HOUR DEAL FOR GIANT MINE
A shock announcement by Panama to intervene in a privately run copper mine may not be as definitive as first thought.
First Quantum Minerals Ltd. continues to mine the massive Cobre Panama open pit despite a government order to close commercial operations after talks for a new tax arrangement collapsed, people with knowledge of the situation said.
In addition, the administration of President Laurentino Cortizo hasn’t closed the door to a resumption of talks, they said, asking not to be named discussing private information
That’s a less black-and-white picture than earlier in the week when Cortizo declared negotiations over and instructed the Commerce Ministry to put the mine on care and maintenance. The government was also said to be seeking another operator to replace Vancouver-based First Quantum.
The wiggle room appears to be in the fact that halting the mine requires a resolution to rescind contracts, potentially giving the two sides a window of time to reach a deal.
The collapse in talks caught investors by surprise given how much is at stake for both sides if the operation is seized.
The mine, which cost at least $10 billion to build, is by far First Quantum’s biggest asset as well as an economic engine for the country. Ripping up contracts would be a hammer blow to the company and to Panama’s investor-friendly reputation, as well as potentially setting off a massive legal case.
Earlier Friday, the company signalled it hadn’t given up hope after coming “very close to an agreement” before the government pulled the plug. On the same day, Cortizo said that while everything had been suspended, “we can’t discard anything for obvious reasons.”
