First Quantum Minerals Ltd. hasn’t given up all hope of brokering an eleventh-hour deal with Panama to continue running a giant copper mine even after authorities ordered the suspension of operations.

The Vancouver-based firm said in a Friday statement that it “came very close to an agreement” over a new tax arrangement before the government pulled the plug on talks.

 

“We have significant plans for the future of Cobre Panama that will benefit all Panamanians, and our goal remains to find a ‘win-win’ resolution with the government that will safeguard 40,000 jobs and protect our investment,” First Quantum said.

In a rare development in the normally investor-friendly nation, President Laurentino Cortizo instructed the commerce ministry to preserve the mine and take charge of maintenance. First Quantum vowed to do everything possible to defend stakeholders from the actions, “including through all available legal means.”

The intervention could have implications for the global copper market and Panama’s economy, and comes as other countries look to raise revenue for social spending while boosting investments in the raw materials crucial to weaning the world off fossil fuels.

Meanwhile, Canadian resource royalty company Franco-Nevada Corp. has a streaming deal for gold and silver produced from the Cobre mine. The Toronto-based company said in a Friday statement that it has been in communication with First Quantum.

Shares of First Quantum plunged as much as 15 per cent to $23.38 in Toronto. Franco-Nevada fell as much as 6.7 per cent.

Read more: Dispute at Panama mine may lead to more talks or bidding war

The Central American government is working with a financial adviser to identify potential partners for the Cobre Panama copper mine, Bloomberg reported earlier. The government has a few names in mind and they’re likely to be large mining companies, according to people familiar with the matter who asked not to be named because the information is private.

In 2017, First Quantum boosted its interest in the Panamanian company that holds the mine’s concession to 90 per cent. Last year, Panama’s Supreme Court ratified a lower court’s ruling that the current concession was unconstitutional.

One of the sticking points between the government and the company appears to have been over a minimum US$375 million annual contribution, with First Quantum pushing for an exception in the case of much lower metal prices and profit, according to a letter First Quantum sent to employees at the Cobre mine seen by Bloomberg.

FOREIGN INVESTMENT

Panama’s move may also impact its economy given the copper mine has been the biggest foreign investment for the country. It cost more to build than an expansion of the country’s famed canal and supports 40,000 jobs.

Policies that hint of nationalization of natural-resource operations have been rare in Latin America’s recent past.

One of the last major asset seizures was in 2012 when then-Argentina President Cristina Fernandez de Kirchner’s government expropriated 51 per cent of oil driller YPF SA from Repsol SA. Venezuela’s former leader, the late Hugo Chavez, seized energy, farming and mineral assets including the Las Cristinas gold reserve in 2011. Codelco, Chile’s copper mining giant, was formed by the nationalization of US-owned mines in the 1970s.

More recently, Mexican President Andres Manuel Lopez Obrador declared lithium as property of the state, raising questions for Chinese firm Ganfeng Lithium Group Co.’s efforts to build Mexico’s first lithium mine. In the past year, politicians in both Peru and Chile have debated a bigger role for the state as rising prices and heightened scrutiny of social and environment issues fanned resource nationalism.