Cortizo announces the intervention of the government in the commercial operations of Minera Panama, stopping production without a timetable to resume sales

PANAMA - In Brief 16 Dec 2022 by Marco Fernandez

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The Cabinet approved yesterday Resolution 144 that instructed three Ministers (Labor, Environment, and Commerce) to intervene in the operations and commercialization of copper mining in northern Panama after the failed renegotiation of the existing contract between Minera Panama (a subsidiary of First Quantum Minerals Ltd. Of Canada) and the government. The content of Cortizo's announcement was a surprise. However, during the day, several local and international analysts anticipated the outcome, even suggesting that the government was seeking partners to replace Minera Panama. The Cabinet resolution resulted from the anticipation of the failure of negotiations between the company and the Administration. The legal antecedents of the Cabinet resolution were straightforward, according to experts. In 2017, the Supreme Court declared that the initial contract between the company and the Republic (signed in 1997) violated the Constitution. After many legal challenges, the Court reiterated its position, and in December 2021, the legal existence of the Contract Law ceased. The parties initiated the negotiation of a new contract. In January 2022, Cortizo declared that the bases of the new agreement were accepted, including a minimum payment of US 375 MM to the Central Government, more than seven times the previous amount. However, after several rounds of discussions, the December 14 deadline for signing the new contract lapsed, and yesterday the Administration took a hard line not seen in the country's recent history: de facto stoppage of operations and state control over the administration of the mine. First Quantum released today a communique arguing that the contract law was...