First Quantum subsidiary accepts Panama's proposal that increases royalties

Photo: Courtesy Minera Panamá.
Editorial Dept. Voz de la Diaspora

Panama – The Panama Mining Company, a unit of Canada's First Quantum Minerals (FQM) accepted a proposal from the Panamanian government that will allow the country to receive a higher amount in royalties for the operation of a large copper mine located in the Atlantic province of Colón.

“Minera Panamá understands the general terms proposed by the National Government of Panama, At the same time, it considers reasonable a minimum annual contribution of 375 million balboas from the Cobre Panamá mine, the company said in a statement.

In that sense, “We accept the proposal of the National Government, At the same time, we request that the necessary protections be provided in order to safeguard the continuity of the operation during the term of the project”, added the company.

The Panamanian government and the company began negotiations last September for a new concession contract, after a previous decision of the Supreme Court of Justice that declared the original agreement unconstitutional.

The Panamanian authorities explained that after four months of negotiations, Panama wanted the fiscal economic scheme that will govern the new concession to be similar to the best international practices of large producers such as Chile and Peru., said the Minister of Commerce and Industries, Ramón Martínez in a statement.

The Panamanian government's proposal included charging a royalty on the gross profit between the 12 and the 16 percent, collection of income tax from the first year, and withholding tax for bank interest payments and withholding for payment of dividends.

Before assuming the government in 2019, the current president Laurentino Cortizo said that reviewing the concession contract granted to Toronto-based FQM to operate Cobre Panamá, which began commercial operations in 2019.

The mine, that around the 3.5 percent of Panama's Gross Domestic Product, is considered by the government as the largest private investment in the country, exceeding 6 billion.