(Recasts with Panama's statement) By Milagro Vallecillos and Valentine Hilaire PANAMA CITY, Jan 10 (Reuters) - Panama's government onTuesday doubled down on an order that Canada-based miner FirstQuantum Minerals halt operations at its local coppermine, saying the miner had been operating without a contractsince 2017. Earlier, First Quantum said it would submit an appealagainst Panama's order by the end of the day.
The Panamanian government and the Canadian miner have beenat odds for more than a year over a new deal in which theCentral American government aims to raise annual miningroyalties from First Quantum to a minimum of $375 million. Panama's government ordered the firm last month to pauseoperations at its flagship copper mine after missing a deadlineto finalize the deal. On Tuesday, Panama's commerce and industry ministry saidFirst Quantum had been operating without a contract after theprevious one was annulled by the Supreme Court in 2017.
That court ruling was published in the government's officialgazette in December 2021, but First Quantum continued operatingas a new deal was negotiated. First Quantum's Chief Executive Tristan Pascall said in acall with investors on Tuesday morning that following theSupreme Court decision, the government of Panama issued publicstatements "reaffirming that the contract remained valid."
He cited "the government's good faith engagement" with FirstQuantum and its local subsidiary.
On the call, Pascall said First Quantum was prepared toagree to, and in part exceed, the objectives that the governmentoutlined in January 2022 concerning revenues, environmentalprotections and labor standards involved in a new contract.
But there are "more than a few disagreements" between theminer and the government, Panama's commerce and industryministry said later in its statement.
"The parties disagree on certain fundamental issues," theministry said, including royalties, depletion deductions, andinternational measures to mitigate tax evasion.
Pascall said current sticking points include legalprotections against expropriation and early termination, as wellas the long-term stability of the contract and royalties. Panama defended the terms of the proposed new deal withFirst Quantum as being "in line with international standards",adding that the miner's recent proposals "have put more distancebetween both parties." (Reporting by Milagro Vallecillos, Valentine Hilaire andBrendan O'Boyle; Editing by Isabel Woodford, Kylie Madry andHimani Sarkar)
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