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First Quantum starts international arbitration on Cobre Panama mine

Published 12/01/2023, 07:03 AM
Updated 12/01/2023, 10:33 AM
© Reuters. FILE PHOTO: View of the Cobre Panama mine, of Canadian First Quantum Minerals, in Donoso, Panama, December 6, 2022. REUTERS/Aris Martínez/File Photo
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(Reuters) -Canadian miner First Quantum Minerals (OTC:FQVLF) has initiated international arbitration over a contested contract related to its flagship Cobre Panama mine.

The contract, called unconstitutional by Panama's Supreme Court, was agreed between the company and the country's government in October, giving First Quantum (NASDAQ:QMCO) a 20-year mining right with an option to extend for another 20 years in return for $375 million in annual revenue to Panama.

Cobre Panama accounts for about 1% of global copper production and contributes to about 5% of Panama's gross domestic product.

Here's a look at the events since December last year as the ruling puts the company on the long and unpredictable road of international arbitration:

2022

Dec. 15: Panama orders First Quantum to pause operations at Cobre Panama after missing a deadline to finalize a deal that would have increased payments to the government.

Dec. 24: First Quantum starts arbitration process against Panama.

2023

Feb 23: First Quantum suspends ore processing at the mine.

March 8: Panama and First Quantum agree on the final text for a contract to operate the mine.

March 15: First Quantum resumes operations at Cobre Panama.

Sept. 9: First Quantum reaches a deal over wages with the workers union at Cobre Panama.

Oct. 3: Panama's government authorizes the withdrawal of the proposed contract to regulate operations of First Quantum's local unit.

Oct 10: Panama's cabinet approves a modified version of the government's contract.

Oct 20: Panama's President Laurentino Cortizo gives final approval of a law authorizing a new long-term contract for the mine.

Oct 24: Police arrest nearly 50 protesters in confrontations over the new contract.

Oct 27: Cortizo says the country will reject all new mining projects after widespread protests against the deal.

Oct 29: Cortizo says Panama will hold a referendum to decide whether to scrap the contract with the Canadian miner.

Oct 30: Panama's electoral court says currently there are not "conditions" to hold a referendum on the disputed mining contract.

Nov 2: Panama's lawmakers scratch provisions to cancel the contract with First Quantum from a proposed bill banning new mining concessions in the country.

Nov. 7: Two people taking part in an anti-government protest in Panama are shot dead by an assailant.

Nov. 13: First Quantum says reduced ore processing at mine as protesters block access to ports.

Nov. 16: The company and workers at the mine reach an agreement guaranteeing salaries as protests continue.

Nov. 24: Panama's top court starts deliberations to rule on several constitutional challenges to the contract.

Nov. 27: The company says it hopes to avoid arbitration with Panama's government by resolving disagreements during a 90-day period for talks.

Nov. 28: Panama Supreme Court rules First Quantum's contract to operate the copper mine as "unconstitutional". Cortizo government to proceed with the shutdown of the mine. First Quantum says it is suspending commercial production at the mine amid protests.

Nov. 29: First Quantum announces the suspension of contracts of 7,000 employees at its Panama mine due to what it described as force majeure.

© Reuters. FILE PHOTO: View of the Cobre Panama mine, of Canadian First Quantum Minerals, in Donoso, Panama, December 6, 2022. REUTERS/Aris Martínez/File Photo

Nov. 30: Panama's trade minister Federico Alfaro resigns days after the Supreme Court ruling. First Quantum CEO Tristan Pascall arrives in Panama, in a first visit to the country since protests began.

Dec. 1: First Quantum suspends its 2023 production outlook for Panama mine and says it initiated international arbitration over the contract with Panama's government on Nov. 29.

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