Panama aims to export copper stocked by First Quantum

Chapman said the Panamanian government is focused on approving a social security reform before the end of this year and will discuss the mine’s future next year. He said First Quantum should withdraw its arbitration case so talks can begin between the firm and the administration of Chairman Jose Raul Mulino, who took office in July.

“We are more than willing to sit down and talk with them as long as they drop their intention to sue the government,” Chapman said. “This is our prerequisite.”

writing on the wall

Chapman, a former operating consultant, advised the mine as First Quantum negotiated a revised operating agreement under the previous government. The revised contract gave First Quantum up to 40 years of operating the mine, a tax payment of at least $375 million and a royalty rate of 12-16% depending on operating margins.

He said he warned the company that the revised contract would likely fail because, among other reasons, it did not include enough revenue for the government.

“It was written on the wall, a huge wall, and they ignored it,” he said.

The mine was closed after the incident months of violent protests It closed Panama’s major roads and highways.

Chapman said sentiment had changed in the past two months as the government tried to regain public trust. He said the government was working on alternatives, such as opening the mine for a shorter period of time, improving environmental oversight and regulation of the mine, and rereading public sentiment to help guide decisions next year.

“You have the political capital to use this,” Chapman said. “The current level of political capital is very high and will be used in the interests of the Panamanian people.”

ugly appearance

Chapman said that the government is trying to prevent further decline in the credit rating in the short term and to improve it in the medium term.

“This year is going to look ugly financially. “This is everyone’s expectation, including us,” he said. “Next year will be quite different.”

The government is targeting a fiscal deficit of between 3% and 3.5% of gross domestic product for 2025. This year, the government had initially targeted 4% but now accepts it will be higher than that, he said.

He said that short-term measures to rein in the current account deficit include “freezing expenses”. He said he considered himself a “bad cop” and that the complaints he received gave him confidence that he was doing his job.

He said he plans to narrow the country’s budget deficit to ensure a “soft landing”.

“Panama is not in financial crisis, we don’t need shock therapy,” he said.

The country’s bonds were sold last year after the government moved to close the mine. After the shutdown, Fitch trashed the country. Investors then feared a second cut by Moody’s Ratings or S&P Global Ratings; This would cause the country to lose its investable status.

The second downgrade has not occurred yet. But the debt is already treated as junk by investors who demand a premium to hold Panama’s bonds over those of similarly rated countries.

According to the ministry’s forecasts, the economy will grow by 2.5 percent this year and reach 4 percent in 2025. He said without the mine closure, this year’s expansion would have been two percentage points higher.

(by Michael McDonald and Vinícius Andrade)