Panama on Thursday gave Canadian miner First Quantum an ultimatum to agree to pay more taxes or lose its right to extract copper in the Central American country.
A First Quantum subsidiary, Minera Panama, is negotiating a new contract with the Panamanian government to continue extracting copper at an open air mine.
“We still don’t have an agreement… we’ve told the company that we must have a response by Monday at the latest,” said Ramon Martinez, the minister for commerce and industries.
The government is demanding the company increase its annual royalties payments on gross profits from copper extracted in Panama from two to 16 percent.
It is also requesting the company pay income tax, and wants to eliminate other tax benefits agreed in the previous contract.
With these measures, the government hopes to generate annual income of more than $400 million.
Martinez said Panama must receive “fair economic benefits for the exploitation and loss of its mineral resources.”
“We cannot accept anything less than what we have presented.”
Minera Panama extracts copper from a 13,000 hectare area in Donoso, some 220 kilometers (135 miles) north of Panama City.
Both the government and the company say the mining project represents the “largest private investment in Panama’s history.”
The government says it contributes 3.5 percent of the country’s GDP.
Last year, the Supreme Court ratified a lower court’s ruling that the concession of mining rights for the project until 2037 was unconstitutional.
Since then, the government and the company have been locked in negotiations over a new contract.
First Quantum is one of the largest copper miners in the world.
