Panama copper port loading halted as tax dispute escalates
A tax dispute at a giant copper mine in Panama is starting to disrupt operations, with authorities in the Central American nation ordering port loading to halt over a certification issue.
In a statement Monday, operator First Quantum Minerals said Panama’s maritime authority suspended loading in a move that forces it to stockpile semi-processed copper at the mine site. The Canadian firm said the order — over certification of the calibration of scales — deviates from prior practices. Its shares fell the most in seven weeks.
It’s the latest twist in a feud that erupted after government and company negotiators failed to reach a tax agreement for a mine that is by far First Quantum’s biggest asset and an economic engine for the country. Called Cobre Panama, it is responsible for about 1.5% of the world’s copper production.
If the government forces it to shut the mine — “which may become necessary if concentrate is not shipped by mid-February due to limited storage capacity on site” — it will hurt employees and the country, the company said Monday.
Panama launched an ad campaign against First Quantum last week, saying the company reneged on a deal agreed to last year. First Quantum has filed for arbitration and the government said it’s prepared to face the claims.
In 2017, First Quantum boosted its interest in the Panamanian company that holds the mine’s concession to 90%. But Panama’s Supreme Court deemed the law governing the current concession as unconstitutional. One of the sticking points between the government and the Vancouver-based company is over a minimum $375 million annual contribution, with First Quantum pushing for protections in the case of much lower metal prices.
First Quantum shares were down 7.7% at 11:51 a.m. in Toronto after earlier falling as much as 10%.
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