A contract dispute between the Panama government and the company running one of the world’s largest copper mines is over. First Quantum has agreed to a new contract, ending a squabble that was making international headlines.
Panama says the new royalty and tax payments are more “in line with other countries in the region.” The contract covers 20 years, with an option for another 20, providing stability for the market and an essential economic driver for the country’s growth. “This also positions Panama “as a major producer of copper, a critical mineral needed in clean energy technologies to decarbonize the global economy and address climate change,” El Capital Financiero noted.
The new deal will provide a major boost to Panama’s economy. According to coverage in El Capital Financiero, the mining operation is expected to generate a minimum income of $375 million a year.
“Under this contract, Panama expects to receive approximately 10 times what it received under the 1997 contract law,” Minister of Commerce and Industry Federico Alfaro Boyd told the media. “At the same time, the concession contract guarantees that Minera Panama will receive a commercial return for its investment in Panama.”
First Quantum paid $61 million in royalties to Panama’s government in 2021, while the Cobre Panama mine posted sales revenues of $3.2 billion for the year, Reuters reported.
In addition to royalties, the new deal addressed labor and environmental protections, anti-corruption provisions, transparency, and cleaner energy sources.
“The most important thing is that this contract is beneficial for Panama and Panamanians while creating the necessary conditions for Minera Panama to continue its operations under a fair and equitable investment environment,” Boyd said.
First Quantum was also conciliatory. “After a long and arduous process of talks, the proposed concession contract outlines the bases for the future of Cobre Panamá,” said First Quantum CEO Tristan Pascall. “We look forward to a long and constructive association with Panama for years.”