After months of negotiations, Panama signed a multi-billion dollar deal with mining company First Quantum in October, granting them operational rights to the Cobre Panama copper mine for the next two decades. This landmark decision brought an end to years of legal uncertainty but has since led to violent protests that have brought Panama City to a standstill.
President Laurentino Cortizo has responded to the unrest by announcing a referendum to determine if the controversial contract should be revoked. Additionally, all new mining projects have been put on hold. This decision has sparked debates within Parliament, with bill 1109, which calls for a nation-wide plebiscite, being rejected. Lawmakers, instead, are now examining bill 1110, which aims to revoke the law granting First Quantum a contract extension and prohibits future mining concessions and contract renewals in Panama.
If bill 1110 is passed, the proposed referendum on the contract would be unnecessary, as affirmed by the country’s National Assembly in a recent statement.
Legal experts consulted by MINING.COM have highlighted that using a new law, such as bill 1110, to revoke the previous law supporting the contract (Law 406) may give First Quantum grounds to take Panama’s government to international arbitration.
First Quantum’s shares experienced a significant drop of over 50% between Monday and Wednesday in Toronto. However, by mid-afternoon Thursday, they were trading 5.6% higher at C$11.3. As one of the top copper miners globally and Canada’s largest producer of the metal, First Quantum produced a record 816,000 tonnes of copper in 2021, largely attributed to the high output from Cobre Panama.
The Cobre Panama mine complex, located about 120 km west of Panama City and 20 km from the Atlantic coast, contributes 3.5% to the country’s gross domestic product, according to government figures. With estimated proven and probable reserves of 3.1 billion tonnes, the mine has the capacity to produce over 300,000 tonnes of copper annually, representing approximately 1.5% of global copper production.
Currently, the complex consists of two open pit mines, a processing plant, two 150MW power stations, and a port.