First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) has introduced a voluntary retirement scheme for employees at its Cobre Panama mine as it awaits government action on whether operations will be able to resume.
This comes after the mine’s closure in November 2023 due to a ruling from Panama’s Supreme Court that declared the company’s mining contract unconstitutional following months of environmental protests.
Reuters reported on Monday (September 16) that sources familiar with the matter say First Quantum has offered the voluntary retirement option as part of its efforts to manage the uncertainties surrounding the mine’s future.
Employees must decide whether to accept the retirement package, which would take effect in January 2025, or continue working reduced hours. The window for workers to make their decision is set to close at the end of September.
The closure of Cobre Panama has significantly reduced its workforce. From a high of 6,000 employees, approximately 900 workers remain at the site. While a small number of workers have already accepted the voluntary retirement offer, most are opting to work with reduced hours, according to one of the sources, who spoke on condition of anonymity.
Michael Camacho, who represents the Panama Mining Workers Union, confirmed the retirement scheme’s existence and said some workers have opted into it. He also noted that First Quantum has not yet received clear guidelines from Panama’s government on what safety measures would need to be implemented for operations to restart.
The new Panamanian administration, led by President Jose Raul Mulino, has said the mine’s future will not be addressed until early 2025, leaving First Quantum and its employees in a state of prolonged uncertainty.
Cobre Panama is a major asset for First Quantum, accounting for a substantial portion of the company’s copper output while playing a key role in its efforts to manage its debt. Financial pressures have grown as 130,000 metric tons of copper concentrate remain stockpiled at the mine, awaiting a government decision on whether it can be exported.
The company is also pursuing compensation for the suspension of operations at the site.
First Quantum has invested approximately US$10 billion in developing the mine, which has proven and probable reserves of around 3 billion metric tons, over the course of a decade.
The potential to resume operations remains crucial to the company’s long-term financial stability, as well as to Panama’s economy, as Cobre Panama has contributed an estimated 5 percent to the nation’s GDP.
The uncertainty surrounding Cobre Panama has also drawn attention from copper investors. The mine represents about 1 percent of global output of the red metal, and its closure has brought deficit concerns forward.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
