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Fastmarkets: First Quantum’s expansion in Zambia contrasts with the difficulties you’ve faced in Panama. Is it fair to say that it’s easier to develop copper projects in Africa than in Latin America?
Tristan Pascall: [The] S3 expansion project at the Kansanshi mine in Zambia is very important for us – it represents the delivery of a promise. We committed $1.25 billion to that project [mostly in 2024, according to First Quantum’s annual report for that year], which will extend the life of Kansanshi for another 20 years and provide long-term benefits to the country.
What Zambia has offered us, and what investors need, is stability. It may not be the most competitive tax or royalty regime [in the world], but the policy environment has been consistent enough to foster investment. That’s critical at a time when the world needs more copper to drive energy security and the energy transition.
When you look at the bigger picture, developing projects is getting harder everywhere. [Mining] grades are declining, which means higher capital intensity. Projects in Chile or Peru often require enormous infrastructure, from desalination plants to new power systems. At today’s costs, we’re talking about $30,000 of capital per tonne of annualized copper production capacity. Compare that with when we built Sentinel [in Zambia starting in 2012] at $12,000 per tonne, or Cobre Panama at $18,000 [per tonne] – the trend is clear.
Then there’s the cost of capital itself. A major [entity] such as BHP might borrow at 8-10%, compared with a tech company such as Google at 4-5%. That makes mining projects compete for capital against industries with very different risk profiles.
Permitting has also become more complex. Community and environmental standards have rightly risen, but they take time. In Peru, for example, our La Granja project will take at least three or four years just to move through the permitting phase.
On top of that, governments change tax regimes, and resource nationalism remains a factor. Zambia itself went through a difficult period, but under the new UPND government, the focus has been on stability – so much so that last year’s budget drew little comment. And that’s exactly what investors want to see. As a result, Zambia is now experiencing probably the largest single wave of mining investment in its history.
Finally, people matter. The mining workforce is ageing and talent is harder to attract. But in Africa, mining is ingrained in the culture and workforce. That depth of experience has been an advantage compared with newer jurisdictions such as Panama, where building skilled capacity was more difficult.
So yes, Africa has become a place where copper projects can be developed, and Zambia in particular has shown how stability can unlock investment.
Fastmarkets: The US has been trying to push back against China’s dominance across the critical minerals sectors. Is Washington encouraging Western companies to take a bigger role in jurisdictions such as the Democratic Republic of Congo (DRC), where Chinese capital has been dominant?
Pascall: For 30 years, the West largely stood on the sidelines when it came to mining investment. That left the door open for Chinese companies, which now account for about 80% of investment in the DRC.
The key difference is the cost of capital. For a Western major such as First Quantum or BHP, it might be 8-10%. For Chinese investors, it can be closer to 1-2%. That’s a completely different playing field. If the US and Europe are serious about re-engaging in mining, they’ll need to address this disparity.
As for First Quantum, we know the DRC well. We operated there more than a decade ago, but our assets were expropriated and we had to pursue arbitration to secure a settlement. That experience set back foreign investment in the DRC for years.
The situation has shifted since then. The DRC government has been able to offer Chinese investors stability and clarity, which is why they’ve attracted so much capital. But if Western governments want to encourage their companies to invest, addressing financing conditions is the first step.
Fastmarkets: But aside from the cost of capital, don’t Western companies like First Quantum or BHP have to operate to higher and more costly levels of environmental and social responsibility?
Pascall: That’s true, but it’s also what the world increasingly demands. Consumers want to know not just the price of milk, but how it was produced. The same logic may ultimately apply to metals, which are otherwise perfectly substitutable commodities. It’s already happening in smaller markets like rare earths, and cobalt for aeronautical use. If you’re buying an [electric vehicle], especially at the premium end, you will want to know how that nickel or copper was sourced.
Cobre Panama is a good example. It was built to the highest standards – biodiversity, environmental management, community engagement. Recently, the Panamanian government appointed SGS an independent auditor. We welcome that, because we know that the mine was constructed and is managed to international best practice. That’s the standard that new projects should meet, and we’re happy to be held accountable to it.
Fastmarkets: Some argue that governments are less likely to expropriate Chinese projects, because they’re state-owned and the Chinese government has more leverage over commodity-exporting countries.
Pascall: I think risk is high for everyone. We have Chinese shareholders ourselves, but the majority of our ownership and debt is US-based. The reality is that mining investment today is deeply interconnected.
Even Chinese-owned projects face challenges – take Tenke Fungurume [in the DRC], which couldn’t export for six months last year due to disputes with the country’s government. Geology and capital intensity are the same for everyone. The only real difference is the cost of capital, and that’s where the playing field isn’t level.
Fastmarkets: If mining equities trade at such low multiples compared with tech or renewable energy companies, why should investors back miners at all?
Pascall: Valuations do shift over time. When interest rates are low, sectors that promise growth in the future, such as tech, command higher multiples. But when rates rise, the focus shifts back to real assets that generate cash flows and dividends in the near term.
First Quantum offers investors something unique: access to value uplift through project execution. We’ve shown this at Kansanshi’s S3 expansion, at Cobre Panama and at Sentinel. Over the past decade, we [have] doubled our copper production.
Our model is to identify opportunities, deploy our capabilities to build and operate projects, and deliver them on time and on budget. S3 is a good example – we produced first concentrate the same week as the inauguration with the president of Zambia. That kind of execution is hard, but when we deliver, our investors benefit from the uplift once the risks of construction are behind us.
Fastmarkets: Your share price has recovered from its lows earlier this year, and your debt position looks stronger. Has that improved your negotiating position in Panama?Pascall: Absolutely. A year ago, our net debt was around $6 billion. Today, it’s $4.6 billion. Our debt coverage ratio has improved to 2.6 from more than 5.5, and we have $2.4 billion in liquidity – half in cash and half in a revolving facility.
That financial stability gives us patience and flexibility. Twelve months ago, we were under pressure; now, we can manage the situation in Panama from a much stronger footing.
Politically, the recent election [in Panama] was a positive turning point. The new president quickly resolved issues around social security and has turned his attention to the mine. Public sentiment has also shifted: a year ago, about 90% of Panamanians opposed the mine; today, more than half support it.
We’ve had to work hard to communicate better. Engineers don’t always excel at that, but our Panamanian team, especially young professionals, have leaned in. That’s helped to rebuild perceptions but there is still a long way to go to repair trust. Transparency around the mine is key.
We suspended arbitration to create space for dialogue, and since then the preservation and safe management plan has been approved. There’s still more to do, but momentum is moving in the right direction.
Fastmarkets: What’s the most likely outcome in Panama now – arbitration, resuming operations, or selling a stake?
Pascall: Arbitration protects our rights, but it’s not our preferred path. We suspended proceedings to focus on constructive dialogue with the government. Our goal is to reach a resolution that works for Panama’s people.
Our experience shows why that matters: arbitration in the DRC damaged investor confidence for years, whereas dialogue in Zambia unlocked $1.25 billion for S3 and secured another 20 years of production. We want to replicate that constructive outcome in Panama.
Fastmarkets: Everyone talks about a looming copper deficit, so why does the price of the metal not reflect that?
Pascall: Copper is very much a six-month-outlook metal, which is why it’s often called ‘Dr Copper.’ The price reflects the next order book for global growth, rather than long-term fundamentals.
But structurally, demand is only rising. Reinforcing power grids, the buildout of EV charging infrastructure, data centers, renewable energy and everyday electrification are all copper-intensive. EVs alone could add 6 million tonnes per year of demand by 2030.
On top of that, developing countries in Africa and Latin America need 2% annual growth in copper demand just to expand access to power and telecommunications. That’s essential for education and economic development in the world’s youngest regions.
So while the market prices copper on the short-term GDP cycle, the long-term deficit is clear.Fastmarkets: Nickel markets look difficult, with Indonesia dominating supply. How competitive is your Enterprise nickel mine [in Zambia]?
Pascall: Enterprise is a sulfide operation with higher grades and lower costs than the laterite projects coming out of Indonesia. It benefits from shared infrastructure with [First Quantum’s nearby] Sentinel [mine], so the cost base is very competitive.
By contrast, we closed Ravensthorpe in Australia because it is high-cost, with labor productivity challenges. Australia has been a success story driven by iron ore, but productivity issues have caught up with parts of the mining sector. Many nickel and lithium projects there have been shuttered as a result.
Indonesia has stepped in with great success, backed by the low cost of capital from China. That has displaced Australian supply. There is a question now whether buyers will begin to differentiate. By definition, commodities are substitutable, but responsible sourcing may matter more over time. Just as in copper, informed customers will increasingly ask where their nickel came from.
Fastmarkets: Gold has also played a role in First Quantum’s recovery, particularly with your recent streaming deal.
Pascall: Gold provides important diversification for us. This year we expect 135,000-155,000 ounces from Kansanshi and similar volumes from Cobre Panama. We’ve also had promising exploration success at Kansanshi.
The streaming agreement with [financing facilitator] Royal Gold is significant – probably the largest of its type in Zambia in decades, and the largest US investment there ever. It brought in a strong partner and underlined the value of our gold production, while still leaving us fully exposed to copper prices.
Fastmarkets: Finally, what will First Quantum look like in 2030?
Pascall: Over the past 10 years, we have doubled copper production. We want to stay on that growth trajectory. Projects such as Taca Taca in Argentina and La Granja in Peru give us that optionality, subject to establishing the right platform with our balance sheet. Our net debt to EBITDA is around 2.6 currently, and we will reduce that below 2 and toward 1 times before we would look at the next project.
Our focus is also on resolving Panama constructively. That, together with a continued strengthening of our financial position, would allow us to pursue the next wave of growth.
Our target is to reach 1.5 million tpy of copper production over the next decade through responsible growth. We’ll achieve that by doing what we do best: delivering projects to a high standard, on time and on budget.
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