Canadian owned Panama mine boosts sales 138%
Minera Panama a subsidiary of Canadian First Quantum, generated sales of $3.16 billion dollars during 2021, an increase of 138% compared to 2020.
Despite the 8% drop in production during the fourth quarter of last year due to maintenance work at the power plant, the results report indicates that Cobre Panamá was consolidated as the most profitable project of the Canadian mining company, which in January, accepted the economic proposal of the Panamanian Government to increase royalties received by the State.
With this change, the company agrees to pay at least $375 million in the event that the price of copper collapses in international markets. Additional royalties go from 2% on gross sales to a 12% or 16% contribution to the State on gross profits.
In addition to the royalty adjustment currently paid by the Canadian mining company, the new economic scheme includes the payment of 25% income tax (ISR), which would be similar to what companies pay in countries like Chile, the world’s largest copper producer.
In its financial statements, First Quantum indicated that they are in the process of finalizing the details of a new agreement with the government. “The parties continue to finalize the details behind these principles, including the proper mechanics that would achieve this outcome, the necessary protections for the business for falling copper price and production scenarios and to ensure that the new contract and legislation are durable. and sustainable,” the company said.
The Minister of Commerce and Industries (MICI), Ramón Martínez, said that the drafting process of the new contract should conclude at the end of this month, and has taken longer than projected, in order to clearly detail the scope of the points negotiated with the mining company.
In 2021, the State received close to $48 million in royalties for the extraction of copper, gold, and silver from the mountains of Donoso of Colón.
60% of the material extracted from Donoso has ended up in China, while the remaining 40% has been distributed to refineries in Japan, South Korea, the Philippines, India, Spain, and Germany.
Projections
In a phone call with Wall Street analysts, Tristan Pascall, who will take over as CEO of First Quantum in the coming months, said that they expect to reach 90 million tons of production this year, getting closer to the goal of 100 million tons projected for 2023. The company is executing a project to expand the mine with an investment of $450 million dollars, funds that will allow the exploitation of the Colina pit, the modification of the Punta Rincón port, and the expansion of other structures within the project.
