Panama renegotiation of retrench

Dec 19, 2022 Editorial

Kaieteur News – For four long weeks the Government of Panama engaged in discussions with a foreign company involved in mining operations in that country. The Panamanian Government’s good faith efforts to renegotiate and finalise a deal first agreed to by the parties in January 2022 all went to naught. There is a lesson for the PPP/C Government, Guyanese Parliamentarians, and every Guyanese Politician with any self-respect left on the action that the Panamanian Government felt was the only dignified and patriotic option left to it.

In January 2022, there was what appeared to be an agreement in principle between the Government of Panama and Minera Panama relative to its operations in the Cobre Panama mines. Minera Panama is 80% owned by Toronto based First Quantum, and was engaged in copper and gold mining operations in Panama. The January agreement included a minimum of US$375M in annual royalties to be paid to Panama, improved conditions for Panamanian workers, and tangible protections for the Panamanian environment.

When the time came in November for Minera Panama (First Quantum) to honor what was agreed to in January, the company dug in its heels with endless stonewalling to buy time, and what was clearly bad faith conduct. According to official Panamanian sources, Minera Panama ‘countered with unreasonable demands, and went the other way.’ Instead of closing in and finalising what was agreed to in January in respect of royalties, employment, and such, Minera Panama distanced itself from the original agreement. Even when the Panamanian Government extended the time in the hope of a successful conclusion of what was a renegotiation of the mining contract, the company would not budge, did worse still.

Minera Panama’s response was to send out a new draft agreement/contract that changed fundamental economic aspects of what was agreed to in January. One of the crucial areas that Minera Panama altered was the annual royalty minimum payable to Panama. In brief, Minera Panama reneged on what was agreed to before. This inflicted some deep wounds on Panama’s national leadership, which did not have the luxury of much operating room.

The Panamanian Constitution is very pointed in what it states unequivocally about the country’s natural resources. “Concessions for the exploitation of the land and sub-soil…are inspired by social well-being and the public interest.”
For the Government and leadership of Panama to save face, to manifest any degree of persuasive patriotism, perhaps even honesty, strong action had to follow, and it did.

President Laurentino Cortizo called an extraordinary session of the Cabinet Council, and within hours a decision was announced. The decision was to close down Minera Panama’s (First Quantum) mining operations in Panama. It surely had to be a most difficult decision, but one that the Cabinet Council of Panama felt was unavoidable, since Minera Panama backed it against a wall. The fact that the Government of Panama could have resorted to this hardest of actions (halting operations) is something that the Guyana Government should seriously consider in its one-sided dealings with ExxonMobil.

The PPP/C Government is on record for repeatedly cursing the 2016 oil contract that Guyana (the Coalition APNU+AFC) signed with ExxonMobil as a terrible crime. Now its Leaders should have the spine and the testicular fortitude to correct that crime of a contract. It would be the principled thing to do, making good on the public postures of its leaders, and the party’s elections manifesto. At the core, better contract management translates to a better deal. With a fifth project nearing approval, the time is ripe for Guyana to wring material concessions out of ExxonMobil.

The issue is whether the PPP/C Government has what it takes to extract concessions for royalties and taxes, expenses and proper environmental protection from ExxonMobil. To date, it is clear that Leaders in the PPP/C Government are all talk (criminal contract) and no walk (no renegotiation). When courage is called for, Guyanese are left to marvel at a cowardly government. When Guyanese need a PPP/C Government with spine, it gets one made of elastic. When Guyanese need Politicians of steeliness, they are forced to settle for those constructed of rubber. Will we ever get anything from ExxonMobil with a Government and Politicians like these? Most likely no!

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