Panama’s tax dispute with First Quantum Minerals over a giant copper mine underscores increasing political risks mining companies face in some regions, according to fellow Canadian metals producer Alamos Gold.
“There are too many difficulties in emerging markets right now,” CEO John McCluskey said in a Monday interview. “Something goes wrong, and suddenly the government decides it wants to jack up your tax rate, or just make an accusation that you suddenly owe them $200-million. What are you going to do about it?”
McCluskey, 63, has firsthand experience with such political risks. Back in 2019, Turkey’s government declined to renew Alamos Gold’s permits for a project in the country, leading the CEO to shutter the company’s Turkish operations and then sue the government for “unfair and inequitable treatment.” Four years later, McCluskey said he’s still pursuing a $1 billion claim in an international court.
The fallout in Turkey helped shape the Toronto-based company’s decision to hold only North American assets. Alamos owns two gold mines in Canada and one in Mexico, where “you can actually go to sleep at night knowing your assets are secure,” McCluskey said.
Panama’s feud with First Quantum has escalated in recent weeks, with the Central American government starting a negative ad campaign against the Vancouver-based company on Twitter and suspending its access to shipping on Monday.