- Mining Company rumps up as it focuses on Cobre
FQM’s intentions of ramping up its output at its Cobre Panama mine were cemented at it announced that it had commenced Copper Concentrate shipping. The company announced on June 24 2019 that first shipment of copper concentrate from Cobre Panama had left port, according to a statement issued on behalf of company President G. Clive Newall published on the company’s website.
“This shipment is the first from the operation and a significant milestone of the ongoing ramp-up,” read the statement from the company president. “Cobre Panama is the Company’s newest operation located in the district of Donoso, Colon province, in the Republic of Panama, which commenced production earlier in the year.”
Earlier in 2019, the company was reported to be planning a substantial investments in the mine. “Canadian miner First Quantum Minerals is planning a $327 million expansion of its already massive mining and processing complex in Panama, the largest copper mine coming to market over the next couple of years and the biggest single private sector investment in the nation’s history”, according to an article published by mining.com in April 2019.
The company has shown signals it is keen on ensuring the supply chain is as efficient as possible with concentrate exiting the docks as quickly as possible. “The Missy Enterprise (a Panama flagged vessel), departed the Punta Rincon port at Cobre Panama on June 19, 2019 with a total load of 31,377 wet metric tonnes of copper concentrate as per the Captain’s draft survey”. This will then be followed by on-going vessels exiting port every 2-3 weeks. “The next vessel, the Clarke Quay, has already docked at the Cobre Panama port and will be loading approximately 44,000 wet metric tonnes of copper concentrate over the next few days”.
This is a positive development for the company that has experienced its fair share of drama around the running of Cobre following a fatal accident in August 2018 with one fatality and the land spillage of January 2019.
Exogenous concerns
With the Zambian operation yet to feel the effects of the introduction of the new tax regime that has experienced protraction in implementation at fiscal level due to the arduous task of getting the minutiae parameters in place for the new General Sales Tax, FQM published the following analysis of the impact of the newly introduced taxes on the cost per tonne of their product. “Impact of the Mineral Royalty rate increase by 1.5% on 2017 All In Sustaining Cost (AISC)” according to a statement issued by the company in 2018:
- Kansanshi AISC per lb would increase from $1.54/lb to $1.58/lb
- Sentinel AISC per lb would increase from $2.19/lb to $2.23/lb
- Group AISC per lb would increase from $1.65/lb to $1.68/lb
Government and Zambia’s Chamber of Mines forecasts disparate tax revenues with the former estimating the tax benefit on the increase to be around $1.3 billion post implementation and the latter estimating approximately $800 million with a possible a rise to $840 million according to Mining.com.
The GST saga is not the only tax related issue that the mining company has had to contend with. Prior to the GTS announcement, the company had locked horns with the tax man following a tax bill the company refuted. “The Company confirms that it is in possession of a letter from the ZRA, dated March 19, 2018, noting an assessment for import duties, penalties and interest on consumables and spare parts of 76.5 billion Zambian kwacha” read the statement published on the company’s website on March 20th 2018. “The Company unequivocally refutes this assessment which does not appear to have any discernable basis of calculation and will continue working with the ZRA, as it normally does, to resolve the issue”.
