Africa-Press – Zambia. FORMER higher education minister Brian Mushimba has tweeted that if Zambia can’t negotiate better like Panama, it is better to agree to leave copper to leave the copper in the ground for future generations to come and negotiate. Mr Mushimba was reacting to reports that Panama’s government had negotiated a better deal with Canada’s First Quantum Minerals for their minerals.
The former minister said that if Zambia can’t negotiate like Panama, despite the high demand for copper, with prices projected to soar through the roof over the next 30 to 40 yrs, the country should agree to leave the copper in the ground for the future generations to come and negotiate, before adding that instead, the country should just continue asking for hand-outs, IMF bailouts, donor funds, aid, etc.
According to the deal reached by the Panana government and First Quantum, which has still not been signed by both parties because of protection issues raised by First Quantum, Panana is expected to receive increased royalty payments for the copper mine amounting to $375 million a year. As part of that deal, First Quantum also accepted to give the government between 12% and 16% of its gross profit, which would replace the previous 2% revenue royalty. Additionally, First Quantum agreed as well to start paying 25% corporation tax, from which it was previously exempted until its investments at the mine were recovered.
However, First Quantum Minerals failed to sign the agreement with Panama’s government over its operation of the Cobre Panama mine, after the deadline of midnight on Wednesday, saying that the necessary legal protections on termination, stability and transition arrangements could not be agreed upon, prompting the Panama government to announce the closure of the mine.
President Laurentino Cortizo announced that the government ordered Frist Quantum’s local subsidiary to cease operations at the mine, the largest private investment in the history of Panama. The company says it has invested about $10 billion in the project since 1997.
President Cortizo’s Cabinet voted Thursday to order the mine to halt operations and instructed the Labor Ministry to take steps that would guarantee employment and labor protections for the mine’s workers.
The government blamed the subsidiary, Minera Panama, saying it failed to meet commitments agreed to in January for a new contract that was “reasonable and satisfactory” for the Panamanian people.
First Quantum Minerals claimed Friday that the government of Panama had cut off talks with it, resulting in the closure of a huge copper mine in a statement saying it had been negotiating with the government of Panama, which wants vastly increased royalty payments of $375 million per year from the company.
The government has said that on January 17, Minera Panama agreed in a letter to a deal with the government that included the minimum annual payment of $375 million. Despite negotiations, the company did not sign the new contract by the December 14 deadline set by the government.
First Quantum said it had agreed to those payments and the agreed-on figure would make Cobre Panama one of the highest payers of royalties and taxes amongst the large copper-producing mines in the Americas, adding that it “came very close to an agreement to secure the long-term future of the Cobre Panamá mine before the Government halted discussions.”
The company said it wanted a protection clause in case metals prices or profitability at the mine drop, presumably to reduce royalty payments in that case.
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