Panama and Canadian company First Quantum Minerals announced Wednesday an agreement to reopen the largest mine in Central America, whose operations had been paralyzed for almost three months due to disputes over taxes and royalties.
“The national government of Panama and Minera Panama S.A., a local affiliate of First Quantum Minerals Ltd, are pleased to announce that they have agreed on the final text of the [new] concession contract that will govern the long-term operations of the Cobre Panama Project,” on the Caribbean coast, the parties said in a joint statement.
The new contract, for a 20-year concession renewable for a similar period, contemplates annual “minimum revenues” of US$375 million for the Panamanian state, 10 times more than before, the statement said.
The stoppage of activities at the mine and the Punta Rincón port threatened to put some 8,000 direct employees and contractors out of work, which had generated protests by workers in front of government buildings in the Panamanian capital.
The giant open-pit copper mine, located 240 km from the capital, is considered the largest private investment in Panama’s history: it contributes more than 4% of the national GDP and 75% of export revenues.
“Under this contract, Panama expects to receive approximately 10 times more than it received under the [previous] 1997 contract-law. At the same time, the concession contract guarantees that Minera Panama will receive a commercial return on its investment,” the statement said.
The order to suspend the mine’s operations on December 15 and the closure of its adjacent port on February 3 were part of a long-running dispute between First Quantum and the center-left government of President Laurentino Cortizo.
Negotiations for a new contract had been going on for a year between the two sides, but had stalled over the issue of revenues for the Panamanian state. Cortizo demanded a 10-fold increase in the royalties paid under the previous contract.