The miner said on Friday it was doing everything possible to support its operations in Panama, “including through all available legal means.” It also expressed disappointment at what it considers “unnecessary actions” by the government.
According to Ebrahim Asvat, lawyer and part of Panama’s negotiating team, the mine closure is not immediate.
“What the national government decided was to order each ministry to take the necessary steps to maintain the copper mine with adequate care and maintenance,” he told Eco TV.
An agreement was reached in January, with the company committing to up its royalty payments for the mine. It also agreed to give Panama between 12% and 16% of its gross profit, which would replace the previous 2% revenue royalty.
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.
Sealing the deal dragged on for months, until President Laurentino Cortizo’s administration set a Wednesday night deadline for First Quantum to ink the new contract.
The miner then sent a new proposal that “fundamentally” changed the deal’s economics, the Ministry of Commerce and Industries said on Thursday morning.
The point of contention seems to be a clause that would make the Vancouver-based miner pay a minimum of $375 million in royalties to the state.
According to Bloomberg, First Quantum had been pushing for an exception in the case of much lower metal prices and profit.
“We expected reciprocity”
During a live television address to the nation on Thursday night, Cortizo said his government had put “all the necessary patience, good faith and the best of wills to get the mining company to ratify what was agreed, and that is why we expected reciprocity from the company, which did not happen.”
“This is not acceptable for me as president, nor for the government, nor for the people of Panama,” Cortizo said in the televised speech.
The President also said his administration will seek the best options to ensure the sustained operation of the mine, noting he had ordered the environment minister to oversee the site and the labour ministry to guarantee the jobs of workers.
He concluded by noting that the action taken sought to guarantee the principle established in the country’s Constitution, stating that Panama’s mineral resources belong to the Panamanian people.
The nation is reportedly working with a financial advisor to identify new potential partners for Cobre Panama, which raises concerns about the country nationalizing the asset or removing First Quantum’s license to operate, experts at BMO say.
Cobre Panama is the biggest foreign investment in the Central American nation, supporting 40,000 jobs. (Image courtesy of Minera Panama.)
“Our base-case expectation is that the government’s position is part of a broader negotiation; however, the recent escalation does raise uncertainty about First Quantum’s ability to operate in the country long term, and the risk that investors will see in Panama going forward,” BMO Metals and Mining analyst, Jackie Przybylowski, wrote.
“We have significant plans for the future of Cobre Panamá that will benefit all Panamanians, and our goal remains to find a ‘win-win’ resolution with the government,” the miner said on Friday.
First Quatum’s Cobre Panama achieved commercial production in September 2019. The asset is estimated to hold 3.1 billion tonnes in proven and probable reserves and at full capacity can produce more than 300,000 tonnes of copper per year, or about 1.5% of global production of the metal.
The company says it has invested around $10 billion in Cobre Panama, the largest private investment ever in the country, and was contemplating expanding the processing capacity of the mine from 85 million tonnes per year to 100 million tpy in 2023. This would have allowed it to boost production to nearly 360,000 tonnes of copper by the end of this year and to 350,000-380,000 tonnes in 2023.
First Quantum is one of the world’s top copper miners and Canada’s largest producer of the metal. It produced 816,000 tonnes of copper in 2021, its highest ever, thanks mainly to record output at Cobre Panama.
The company is expected to reach its 2022 target of between 790,000 and 855,000 tonnes of copper by year-end.
The Cobre Panama mine complex, located about 120 km west of Panama City and 20 km from the Atlantic coast, contributes 3.5% of the Central American country’s gross domestic product, according to government figures.
The miner first ran into trouble in 2018 when Panama’s Supreme Court, acting on a suit filed by environmental groups, ruled the mining code at the time of allowing the operation was unconstitutional. This forced the parties to begin renegotiating the contract.
Fairly uncommon move
Panama’s decision is a major blow to chief executive Tristan Pascall, who succeeded his father, Phillip, in May.
Latin America is the jurisdiction where risks of asset seizures and taxes hikes have increased the most in the past two years, risk consultancy Verisk Maplecroft estimates.
The practice, however, has been rare in Latin America’s recent past. One of the last major expropriations was in 2012, when then-Argentina President Cristina Fernandez de Kirchner’s government seized a 51% stake in the country’s largest oil and gas producer, YPF SA, from Repsol SA.
Almost ten years later, in April 2022, Mexican President Andres Manuel Lopez Obrador declared lithium a “strategic mineral” whose exploration, exploitation, and use are the exclusive right of the country, through a new state-run company called Litio para Mexico, or Lithium for Mexico.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
