First Quantum avoids strike at key Panama mine

First Quantum Minerals Ltd. (FM-TSX) has avoided a strike at its key copper mining operation in Panama after striking a deal with the mine workers’ union.

“The Panamanian unit of Canada’s First Quantum Minerals and a workers union at the company’s key copper mine in Panama have reached an agreement,” according to a Reuters report that was posted by Scotiabank.  The deal avoids a planned strike over profit sharing and wage increases.

The workers union, Utramipa, had threatened last Thursday to stop work on September 9, 2023, alleging an impasse in negotiation with the directors of Minera Panama, the miner’s local unit. This came as First Quantum indicated that it was negotiating with the workers.

Union leader Michael Camacho said negotiations had been stuck on two points: a salary raise and a bonus for workers based on mineral production. The union proposed raising salaries by an additional $8.00 per hour.

On September 8, 2023, First Quantum shares were unchanged at $33.83. The shares are currently trading in a 52-week range of $39.13 and $20.11.

First Quantum is a diversified mining company that is engaged in the production of copper, nickel, gold and zinc. It has operating mines in Zambia, Finland, Turkey, Spain and Mauritania. The company’s portfolio of assets includes the Kansanshi mine in Zambia, which ranks as the largest copper mine in Africa.

Cobre Panama is First Quantum’s flagship operation. It is a huge open-pit copper project located in the Panama jungle, about 120 kilometres west of Panama City and ranks as First Quantum’s key asset.

On March 8, 2023, First Quantum and the government of Panama reached an agreement covering terms and conditions for a refreshed concession contract at Cobre Panama. Under the agreement, payments to cover taxes and royalties up to year-end 2022 of approximately US$395 million were expected to be made within 30 days of the refreshed concession contract being enacted into law.

In addition, past due amounts payable for 2023 corporate tax instalments, withholding taxes and quarterly royalty payments were also due 30 days after the refreshed concession contract was enacted into law without penalty or interest.

The company recently said production at its three major copper operations is expected to be higher in the second half of the 2023 following a challenging start to the year.

Guidance for copper, gold and nickel production remains unchanged; however, full year production for each metal is expected to be towards the lower end of guidance to reflect year to date production.

The company also said full year cash and all-in-sustaining costs for copper and nickel are expected to be toward the upper end of its forecasts.

The company posted net earnings of US$93 million (13 cents per share) in the second quarter ended June 30, 2023, and adjusted earnings of US$85 million (12 cents per share).