Canada鈥檚 First Quantum Minerals (TSX: FM) it had halted ore processing operations at its giant Cobre Panama copper mine, in the latest escalation of a dispute with Panama鈥檚 government over tax and royalty payments.
Negotiations between the Toronto-based miner and the country鈥檚 government over a new contract for the mine turned sour in December, when the President announced a plan to halt the operation.
The move, unusual among Latin American countries, came聽after the First Quantum missed a deadline to sign the new contract because it didn鈥檛 agree with the some of its terms.
Talks have continued since and, at times, they seemed to progress. Earlier this month, Panama鈥檚 maritime authority ordered First Quantum鈥檚 local unit Minera Panama to suspend loading operations at a major port, effectively blocking all exports from the mine.
The company was then asked to produce a third-party assessment confirming its scales have been properly balanced.
The miner, which said it submitted the proof on February 3, warned it would have to shut down the massive operation by mid-February because of limited storage capacity.
First Quantum has now begun a partial demobilization of its workforce of over 8,000 employees and contractors, it said on Thursday. It noted it expects the impact to increase significantly in the coming weeks if concentrate shipments do not resume.
In addition to workforce reductions, the mine has ceased purchasing supplies and services that are equivalent to $20 million in weekly revenues to more than 2,000 Panamanian companies.
鈥淧anama has continuously demonstrated its commitment to hold talks based on good faith and trust,鈥� the country鈥檚 Ministry of Commerce and Industries said in an emailed statement. 鈥淗owever, Minera Panama has demonstrated the opposite, as they have not honored their word and refuse to sign the agreement with the previously accepted terms, instead engaging in delay tactics that have lengthened the process for more than a year.鈥� 聽
The Cobre Panama mine鈥檚 union had called its members on Wednesday to strike against the halting of operations, arguing it would negatively impact workers.
Top copper mine聽
First Quantum is one of the world鈥檚 top copper miners and Canada鈥檚 largest producer of the metal. It churned out 816,000 tonnes of copper in 2021, its聽, thanks mainly to record output at Cobre Panama.
The Cobre Panama mine complex,聽located about 120 km west of Panama City and 20 km from the Atlantic coast, contributes 3.5% of the Central American country鈥檚 gross domestic product, according to government figures.
The asset is聽estimated to hold聽3.1 billion tonnes in proven and probable reserves聽and at full capacity can produce more than 300,000 tonnes of copper per year, or about 1.5% of global production of the metal.