First Quantum mine closure sucks $1.7B from Panama

According to First Quantum, the company has paid over $1.2 billion of direct government contributions in taxes, royalties and other payments since bringing Cobre Panama online.

First Quantum Minerals (TSX: FM) says its shuttered copper mine in Panama would have contributed more than $1.7 billion (C$2.38 billion) to the Latin American nation’s economy had it remained running.

In its annual tax transparency disclosure filed this week, the Canadian miner estimates that its Cobre Panama operation, which the government ordered to close in November 2023, would have contributed $500 million in government revenue, over $250 million in salary and wages and nearly $1 billion in local procurement last year under the tax regime in force before the suspension.

Instead, the mine — which First Quantum would like to reopen — contributed just a total of $378 million in 2024, a significant decline on the $1.83 billion from the previous year, when it was mostly in full operation.

Joint venture? 

President José Raúl Mulino has expressed interest in reopening the mine but has ruled out introducing a new mining contract law. Instead, he is considering alternative frameworks, such as forming a joint venture between the government and First Quantum, to resume operations without requiring new legislation. 

Shares in First Quantum Minerals have gained 5.8% this year to $20.03 apiece in Toronto on Thursday, valuing the company at $16.7 billion. 

The company has withdrawn its $20-billion arbitration claim against Panama, signaling a willingness to negotiate. Additionally, First Quantum has engaged in public outreach efforts to garner support for the mine’s reopening.

While some local communities and suppliers support reopening due to economic benefits, significant opposition remains from environmental groups and indigenous communities concerned about ecological impacts.

Big employer

Cobre Panama used to be a major driver of socio-economic prosperity for Panama, contributing around 5% of its GDP and employing, directly and indirectly, more than 40,000 people, roughly 2% of the nation’s workforce, the company says.

After achieving commercial production in September 2019, the mine ramped up its copper output, culminating in an annual record of 350,000 tonnes in 2022. In October 2023, the month prior to its shutdown, Cobre Panama also recorded its highest-ever monthly throughput and copper output.

According to First Quantum, the company has paid over $1.2 billion of direct government contributions in taxes, royalties and other payments since bringing Cobre Panama online.