The Panamanian government launched a 30-day non-binding public consultation process related to the contract it signed with First Quantum Minerals (TSX: FM), the operator of the Cobre Panama mine.
Following a year of bitter negotiations, which included an order for Cobre Panama to cease operations and the launching of international arbitration mechanisms, the new contract was finally agreed upon on Mar. 8.
The deal guarantees a minimum annual income of $375 million for the Central American country, sets royalty payments between 12% and 16% (up from the current 2%) depending on gross margins, limits the Canadian firm's tax credits to a maximum of US$35 million per year from a previous request of $1.2 billion, involves the payment of previously exempt taxes, among other considerations.
Once the public consultation process is done, the contract will be submitted to the Ministers' Council and then it will be taken for review and endorsement by the Comptroller General. Next, the document will be presented before Parliament for its approval, after which it can be enacted by the Executive.
"Anyone interested in participating and knowing the specific terms of the contract may send their comments through the mailbox on the consultation page available on the Ministry of Commerce and Industries website," the government said in a media statement. "The deadline to submit comments is April 22, 2023."
The webpage presents a copy of the contract, a summary of the contract terms, comparative tables on the economic terms of the contract, and juxtapositions between the draft contract and the contract entered into between Panama and Minera Petaquilla, S.A., (now Minera Panam??, S.A.) and approved by Law 9 of Feb. 26, 1997.
Both the page and communiqu?(C) point out that the new contract aims to preserve the thousands of direct and indirect jobs generated by Cobre Panama, ensure the growth of the national gross domestic product, help with the economic reactivation of the country, guarantee appropriate conditions for the State regarding the exploitation of natural resources, which involves upholding the highest environmental and social standards, and honour the legal security of investments in the country.
Data from Deutsche Bank show that Cobre Panama supports over 5,000 direct and 40,000 indirect jobs. Its operation also represents 50% of First Quantum's global production and 3.5% of the Panamanian GDP.