# Cobre Panama Mine: Navigating Challenges Amidst Copper Market Turbulence
Pre-Columbian Tumbaga figurine made of a gold-copper alloy unearthed during archeological rescue work around Cobre Panama. Image: First Quantum Minerals
Amid fluctuations in copper prices, a significant gap looms in the industry where mining ceases at Cobre Panama.
Cobre Panama has been inactive for 18 months since a supreme court ruling mandated its shutdown, a move prompted by extensive protests across the Central American country.
The First Quantum Minerals mine, which commenced production in 2019, stands out in the global copper industry. Unlike its contemporaries, many of which have operated since the 19th century, it introduced an impressive output during its brief operational period.
As one of the largest new copper mines, it accounted for 1.5% of global copper production, substantially exceeding Venezuela’s share of oil output.
A Silent Endeavor
Walking through Cobre Panama was an otherworldly experience for this mine tour veteran. Although I could describe the scene as frozen in time, the jungle heat quickly dispels that notion.
First, a profound quiet envelops the area once helicopter noise fades. This tranquility is surprising given the heavy industrial backdrop, where one expects the din of safety alarms or heavy machinery.
Instead of the expected chaos, I gazed into a massive mill, where steel balls lay unused at the bottom, reminiscent of a “brass monkey.” The plant, which previously drew a significant portion of Panama’s electrical output, now shows signs of neglect, with rust forming from the humid environment.
Nearby, a mountain of ore sits baking under the sun, idle at the conveyor belt, untouched since October 2023.
$10 Billion Investment with Untapped Wealth
The orebody is also rich in gold, silver, and molybdenum, which are all trading at historic highs. Franco Nevada’s $1.4 billion investment in precious metal streaming, aimed at securing 80% of the output at fixed prices, highlights the mine’s potential.
Had it not been for the shutdown, Cobre Panama was poised to ramp up production to 100 million tonnes annually by 2024, securing its position among the world’s top copper producers. The mine manager expressed a mix of bitterness and pride, noting record production just before the closure.
A glance at the main pit reveals extensive excavation below sea level, where saprolite extraction had taken place. A solitary shovel rests next to a stunning blue water pool, starkly showcasing the untapped resources.
Close to the processing plant, rows of heavy machinery sit waiting, resembling a defeated team departing a championship venue.
A witty comment about this deserted yard being a perfect setting for a sci-fi blockbuster elicits a wry smile. A few staff members are preparing a truck for potential restart efforts, though the timeline remains uncertain.
Currently, First Quantum Minerals allocates approximately $15 million a month for maintenance, which they refer to as Preservation and Safe Management, safeguarding their $10 billion investment.
Future Uncertainty and Workforce Dissipation
With less than a third of the workforce remaining, mine management indicates that further difficult decisions loom as downtime continues.
A year and a half is a lengthy duration for skilled miners to remain inactive while the copper market experiences significant activity. Cobre estimates recruiting thousands for a restart could prove challenging.
In the main office, a somber atmosphere fills the parking lot and meeting rooms, which remain underutilized, but thankfully air-conditioned, amidst a surrounding dense forest.
As I looked out at the lush green from the boardroom, I half-expected to see local wildlife, which typically traverses the area.
A backlog of contract orders worth millions further complicates matters for Cobre’s management. Currently, the path from green light to production expansion could extend to six months, with every month of inactivity delaying progress.
Environmental Concerns and Misinformation
The road leading to the port and power station, previously blockaded during protests, is quiet, apart from the occasional tour bus.
One bus tour paused next to a stream near the tailings facility, with signs reassuring visitors that Cobre Panama does not drain water from the nearby canal, a false claim circulated by activists.
Furthermore, the mine prohibits the use of harmful chemicals such as mercury, sulphuric acid, or cyanide in its flotation circuits; instead, it relies solely on gravity and substantial financial investments for concentrate production.
Global Awareness and Local Impacts
Surprisingly, scientific facts did little to deter environmental activists from engaging with the Cobre Panama narrative. Prominent figures like Greta Thunberg and Leonardo DiCaprio made headlines with posts, contributing to the mine’s contentious discourse.
A helicopter tour could have provided these celebrities with valuable insight into how the rich canopy thickens as one approaches the mine, contrasting with the clear-cut areas used for cattle grazing.
Such observations might have offered a more nuanced understanding of the mine’s role in providing alternatives to subsistence farming for impoverished communities in Panama.
Moreover, a recent NGO report labeled the tailings facility a danger to both humans and wildlife but was based on a hasty interim evaluation. The report criticized the extensive documentation provided by Cobre regarding its environmental protocols.
# Cobre Panama: Assessing the Future of a Key Copper Mine
The Cobre Panama copper mine faces an uncertain future amid ongoing economic challenges and local unrest. No recent site visit was conducted to fully assess the situation.
Given the logistical hurdles, it’s understandable that the NGO team, primarily based in Oregon, didn’t initiate a site visit. Budget constraints can complicate travel directly to Panama from the Pacific Northwest.
In my preliminary assessment, Cobre Panama’s tailings wall does not pose an immediate collapse risk, despite various concerns.
Meanwhile, First Quantum Minerals (FQM) explores new avenues by testing trial bricks and contemplating the export of pulverized rock as building or beach sand. Observing the condition of Panama City’s beaches, I advocate for the latter option.
Immediate Challenges
At the port, 120,000 tonnes of copper concentrate remain ready for shipment. According to Cobre Panama’s environment officer, no studies exist to monitor the long-term preservation of these mounds, as it is an unprecedented scenario in mining.
Local communities’ desperation is evident as informal mining activities have surged. During a visit to an impacted tourism operator, I witnessed the quiet effects of the mine’s closure—operations like water buffalo rides and canoe trips were noticeably affected.
While discussing with the operator, I observed several generations of women along the riverbank, laboring with shovels. Their weary look suggested they had toiled long without substantial reward. Unfortunately, organized crime has infiltrated the area, complicating local mining dynamics.
Community Engagement
Thousands of locals have been introduced to the Cobre Panama project through the #CobreConnecta outreach program, which includes mobile exhibits and educational interactions in Panama City.
However, in late March, FQM halted mine tours after the government expressed concern that public visits might skew impartial assessments of the site.
Economic Impact
During discussions with Panama’s business chamber, the stark contrast between passionate local sentiment and hard economic facts was apparent. The National Council of Private Companies indicated a staggering 54,000 jobs lost and a significant 75% drop in export earnings, resulting in credit downgrades from Fitch.
At full capacity, Cobre Panama contributed more to the national economy than the Panama Canal, which is also under pressure due to drought conditions. The International Monetary Fund reported that Cobre’s fiscal contributions reached $1.8 billion in 2023, highlighting its critical role in the economy.
Political Decisions and Consequences
Irrational decisions by governments are common, as seen in Germany’s energy policies and Canada’s oil and gas project cancellations. The shutdown of Cobre Panama stands out as a significant political misstep, particularly for a nation already grappling with financial difficulties.
The mine symbolizes political unrest, exacerbated by past controversies like the Panama Papers, which damaged the financial sector. Additionally, the economic contraction of 18% in 2020 was among the worst globally.
Prospects for Restart
Finally, progress is emerging as Panama has authorized the shipment of copper concentrate valued at $400 million. Technically, this cargo belongs to FQM, but the government anticipates “compensation” post-movement.
FQM is reducing its arbitration claims against Panama and aims to foster dialogue with the government before scheduled hearings in October 2026. The newly elected president, José Raúl Mulino, has emphasized social security reforms, deemed necessary for reopening discussions about the mine.
The recent passing of Law 407, which effectively bans all metal mining, creates a significant hurdle, but the swift repeal of Law 406 suggests possible resolutions are forthcoming. FQM recognizes that recent royalty agreements may just be a starting point for future negotiations.
Shifting Global Dynamics
The global landscape of trade and mining is changing rapidly. The U.S. government is making efforts to reestablish control over Panama, including negotiations to replace a Chinese company with U.S. investment firms.
Add to this the growing importance of critical minerals; the U.S. has classified copper as critical under new legislation. Given the Trump administration’s initiatives and the pressing need for these resources, the dynamics of this situation will undoubtedly evolve.
Transfer from Panama City to Cobre Panama was provided by First Quantum Minerals.
