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First Quantum suspends copper concentrate loading at Panamanian port

FILE PHOTO: Cobre Panama mine owned by First Quantum Minerals in Donoso

(Reuters) -First Quantum Minerals Ltd said on Monday it has suspended loading operations at a major port in Panama, blocking the Canadian company's path to export from the Cobre Panama copper mine and sending its shares down nearly 8%.

The Panama Maritime Authority last month ordered the company's subsidiary Minera Panama to suspend copper concentrate loading at the port until it showed evidence that its scales were calibrated by an accredited company.

First Quantum and Panama's government have been locked in a longstanding dispute over how much tax the company should pay on its concession for the Central American country's only major copper mine in operation, a key asset for both parties.

Analysts at RBC Dominion Securities expect that every month of loss of production would reduce First Quantum's earnings before tax and depreciation by C$150 million, excluding other demobilization costs.

"We believe reaching a deal makes more sense for both sides," said Sam Crittenden, mining analyst with RBC, who added that any prolonged shutdown of the mine would have a negative financial impact, particularly if the workforce is de-mobilized and re-mobilized.

The British Columbia-based company added that it might become necessary to shut down Cobre Panama if the concentrate is not shipped by mid-February, due to limited storage capacity on site.

First Quantum said that its subsidiary initiated the certification process by submitting the required proof to an accredited company on Feb. 3, but has not heard back from the Panama Maritime Authority. The process deviates from Minera Panama's previous approach of providing internationally accepted certifications to the Panama Maritime Authority, the company added.

Cobre Panama represented more than half of First Quantum's earnings before interest, tax depreciation and amortization (EBITDA) in 2021. It also accounts for about 3.5% of Panama's gross domestic product.

(Reporting by Arshreet Singh and Divya Rajagopal; Editing by Rashmi Aich, Ernest Scheyder and Will Dunham)