A mining company headquartered in Canada is demanding at least 20 billion through international arbitration following the closure of its copper mine in Panama.
The chief executive of First Quantum Minerals said Wednesday that arbitration is not the first choice for the company, which remains hopeful it can find a satisfactory solution with the Panama government regarding the future of the Cobre Panamá mine.
However, Tristan Pascall told analysts during a conference call discussing fourth-quarter financial results that the company had begun the arbitration process under the terms of the Canada-Panama free trade agreement as well. only through the International Court of Arbitration of the International Chamber of Commerce.
“We have provided a minimum value that we found in these proceedings of $20 billion, reflecting the estimated fair market value of the initial investments,” Pascall said.
“But in reality, with damages, it could be much higher,” he added.
First Quantum suspended production at its Cobre Panamá open-cast mine at the end of November after the Supreme Court of Panama ruled a 20-year contract authorizing its operation in the country unconstitutional.
The mine has been the subject of ongoing blockades and widespread protests from nationalists and environmentalists concerned about its impact on the fragile jungle ecosystem.
Consequences of the closure
The closure had a devastating effect on First Quantum, which explained that it could take up to a decade for the company to implement inspections, planning and environmental stability measures required by the government.
Meanwhile, the company said it would cost between $15 million and $20 million a month to safely maintain the site while it was closed.
In the fourth quarter, the blockade around the mine impacted First Quantum’s ability to ship approximately 121,000 tonnes of copper concentrate, which had been produced before the Supreme Court ruling. As a result, the company’s revenue decreased by 40% during the quarter, to 1.2 billion.
For the quarter ended December 31, 2023, First Quantum Minerals reported a net loss of US$1.45 billion and warned in its earnings release that the situation in Panama had impacted the company’s earnings potential in point that its ability to continue its activities could be threatened over the next 12 months.
Nevertheless, Mr Pascall stressed that the company was confident in a number of initiatives it has undertaken to strengthen its finances and protect itself against this risk, including the signing of a 500 million prepayment agreement for the copper. The company also plans to sell minor assets and interests in major assets, and is working with lenders to modify and expand its lending facilities.
“We have a long-standing relationship with our lending banks, and there is a high degree of alignment between the parties, and we plan to provide updates to the market as soon as possible,” he concluded .
Company in this dispatch: (TSX: FM)