First Quantum to launch formal arbitration towards Panama in July

Toronto. Canadian miner First Quantum Minerals will launch formal arbitration proceedings towards Panama in July over the nation’s resolution to shut the large Cobre Panama mine final November, two folks conversant in the matter informed Reuters.

The transfer coincides with the beginning of a brand new administration within the Central American nation, which may decide the way forward for one of many world’s latest and largest copper mines, chargeable for one p.c of worldwide manufacturing earlier than its closure.

First Quantum mentioned in December it had initiated proceedings towards Panama on the Worldwide Courtroom of Arbitration in Miami, Florida, searching for $20 billion to shut the mine after Panama’s Supreme Courtroom declared its contract unconstitutional.

Within the preliminary section of the arbitration, the events concerned are negotiating for six months to keep away from transferring to the formal begin of the process. The mining firm will now transfer on to the following section of the method, the sources mentioned.

“First Quantum will meet the July 30 deadline to provoke formal arbitration towards Panama because it has a fiduciary obligation to take action,” mentioned one of many folks conversant in the developments, who requested anonymity as a result of he was not approved to talk to the media.

In response to a request from Reuters, First Quantum declined to touch upon the arbitration however referred to its Might 6 assertion during which the corporate mentioned it appeared ahead to participating with the brand new administration.

The fallout from the disaster surrounding the Cobre Panama mine hit the corporate arduous, wiping out some C$9 billion (US$6.57 billion) of its market capital and prompting a collection of capital restructuring measures to shore up its stability sheet. Within the case of Panama, the dispute is seen as having a fabric influence on financial progress.

First Quantum’s share worth has recovered to C$19 on the Toronto Inventory Trade, up from C$10 final yr.

Arbitration dispute will take a minimum of 4 years: lawyer

Panama’s President-elect Jose Raul Mulino in Might dominated out talks with First Quantum over the way forward for the closed mine until the corporate drops arbitration proceedings.

Nonetheless, in response to sources, the Canadian mining firm is continuous to press forward, as if the July deadline isn’t met it must submit a brand new arbitration try with one other six months of negotiations.

Riyaz Dattu of regulation agency Arentfox Schiff LLP mentioned it takes 4 years on common to succeed in an arbitration settlement towards a authorities.

First Quantum had additionally been negotiating with the outgoing Panamanian administration to permit it to promote 130,000 tons of copper focus at the moment caught on the mine.

The Central American nation’s new authorities is because of take workplace on July 1, and the ministers of commerce and trade and the surroundings can have a key position in figuring out the mine’s future. The outgoing commerce and trade chief didn’t reply to a query about whether or not he would search a deal.

At a separate occasion in Panama Metropolis on Thursday, his successor-to-be, Julio Moltó, mentioned the difficulty of the disputed mine was a precedence for the brand new authorities.

“What I can inform you is that no matter answer we agree on, it’s probably that this situation won’t be resolved with one other contract,” mentioned the longer term Minister of Commerce and Trade on the American Chamber of Commerce and Trade of Panama.

Mine closure will influence nation’s progress: IMF

In a brand new report launched Thursday, the Worldwide Financial Fund forecast that Panama’s gross home product (GDP) will fall 2.5 p.c in 2024, because of the closure of the Cobre Panama mine.

“Key dangers embrace lack of funding grade (credit standing), additional social unrest, the results of the tip of copper manufacturing (together with worldwide arbitration proceedings) and exterior dangers,” the IMF mentioned.