(Reuters) -First Quantum Minerals has suspended its current-year production outlook for the Cobre mine in Panama and has initiated international arbitration over a contested contract with the country’s government, the miner said on Friday.
The Canadian company said its local unit had started arbitration before the International Court of Arbitration to protect its rights under the 2023 concession. It provides for arbitration in Miami, Florida.
The contract, agreed in October, provided First Quantum a 20-year mining right to the lucrative Cobre Panama copper mine with an option to extend for another 20 years, in return for $375 million in annual payment to Panama.
On Tuesday, President Laurentino Cortizo said the Cobre Panama mine would be shut down, hours after Panama’s Supreme Court declared the contract unconstitutional.
For First Quantum, the developments in Panama would be a repeat of its experience in the Democratic Republic Of Congo. The miner exited the African nation in 2012 after filing an arbitration procedure for cancelling its mining contract.
The latest contract had sparked public anger in the country, starting as small, environmental protests that have morphed into bigger demonstrations against the government on charges that it was too generous. The company has denied all allegations.
First Quantum has lost more than half of its in market capitalization since the protests erupted in late October.
On Thursday, CEO Tristan Pascall arrived in Panama on his first visit since the agitation against the contract first started.
($1 = 1.3526 Canadian dollars)
(Reporting by Tanay Dhumal in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila)
