Panama says it rejects First Quantum's legal bid to avoid halting operations

FILE PHOTO: Canadian miner First Quantum starts arbitration against Panama

By Valentine Hilaire

PANAMA CITY (Reuters) - The Panamanian government has rejected Canada-based miner First Quantum's legal proceedings to avoid halting operations at the Cobre Panama mine, the Commerce and Industry Ministry said in a statement on Friday.

First Quantum was notified on Dec. 21 of a government order for it to create a plan to halt operations within 10 working days, after it missed a deadline for an agreement on increasing its payments to the Panamanian government.

First Quantum had notified the country about two arbitration proceedings days after the order to halt operations.

A company spokesperson told Reuters that Minera Panama, the firm's local subsidiary, "is working through steps to respond to the ministry's resolution, whose impact and timing remain uncertain and in order to address the complex practicalities of reducing operations of the size and scale of Cobre Panama."

The two parties are at odds over issues such as contract stability, terminations and the government's plan to raise annual royalties to $375 million, which has been at the forefront of discussions. "The government is prepared to face all potential legal scenarios that may arise and will continue to ensure that workers' labor rights are maintained and protected," the ministry statement said. Panamanian government and First Quantum representatives have been meeting in the last days to reach an agreement.

(Reporting by Valentine Hilaire; Editing by Sarah Morland and Leslie Adler)