Translation provided by JIGGSLAW®. Panamanian government and Panama Mining have reached an agreement on the final language of the Panama concession agreement for the Copper Panama project. First Quantum Minerals, the Canadian mining company that owns the Panama Mning, announced yesterday that its Panamanian subsidiary for the Copper Panama Mining has agreed and concluded the draft of a concession agreement with the Panama Government for the Panama Copper Mining. Following the Panamenian administration’s decision not to renew the concession agreement in December 2022, the mining has notified Panamaof the initiation of of two arbitrations.
According to the Canadian statement, the proposed agreement meets the government’s aims for public income, environmental protection and labour regulations in January 2022, and it provides legal safeguards to both parties to ensure the agreement’s long-term viability and stability.
The document is subject to a 30-day public consultation period and approval by the Panamanian Cabinet, an independent non-ministerial public body in charge of the stewardship of Panama’s public sector finances, and the Panama legislative body. It will have a 20-year initial term with an option to extend it for another 20 years, and some additional extensions throughout the mining useful life.
Likewise, the Panama Maritime Authority will have issued a decision yesterday allowing Panama Mining to resume concentrated cargo loading operations in Ricon port after prohibiting it since early February.
According to a joint statement issued by First Quantum and the Panamanian government, “under this contract, Panama expects to receive approximately ten times more than it did under the 1997 collective agreement. At the same time, the concession agreement ensures that Panama Mining receives profit for its investment in Panama.”
The following terms are included in the proposed Collective Agreement:
Panama Mining will pay up to 375 million dollars in addition to 20 million dollars in taxes and royalties until the end of 2022.
Payment of MPSA of a minimum yearly contribution of 375 million dollars for public revenues, including corporation tax, tax retentions and a mining levy depending on benefits ranging from 12% and 16 % with downside protections from the beginning of 2023.
Under the following conditions downside protections from the yearly minimum contribution:
The copper price would be under $3.25 per pound until the end of 2025.
From 2026, the overall tax contribution for that year will be below $300 million.
The source of the conflict
The Panamanian government issued a statement on December 16, 2022, announcing the end of the commercial activities for the Panama Copper Project because “Panama Mining has not fulfilled the January 2022 commitments after 11 months.”
On December 24, the Panama Business and Trade Ministry issued a statement confirming the Canadian company First Quantum Minerals and its subsidiary Panama Mining’s intention to file for arbitration against Panama as a result of the unconstitutional decision relating to the 1997 Panama Copper mining agreement.
