Key facts
- Panama is considering creating a state-owned mining firm.
- This firm could partner with First Quantum to reopen the Cobre Panama copper mine.
- The mine was shut down in 2023 following a Supreme Court ruling and public opposition.
- The closure had a significant economic impact on Panama and global copper supply.
- A public-private partnership with First Quantum holding a majority stake is one proposal.
- Leasing the mine to First Quantum is another option under consideration.
Panama is contemplating the establishment of a state-owned mining company as a potential pathway to reopening the Cobre Panama copper mine, which was shuttered in 2023. This move would involve a partnership with Canada's First Quantum Minerals Ltd., the mine's previous operator.
The Cobre Panama mine, one of the world's largest, was closed after the country's Supreme Court declared First Quantum's contract unconstitutional amid widespread environmental and governance concerns. The closure had a substantial economic impact, wiping out 4.5% of Panama's GDP and affecting over 1% of global copper production, while significantly impacting First Quantum's revenues.
Facing high unemployment and near-record copper prices, the Panamanian government, led by President Jose Mulino, is reportedly exploring options to revive the mine. Proposals include a public-private partnership where First Quantum would hold a 60% to 65% stake and the Panamanian entity 35% to 40%. Such a structure could circumvent a 2023 law that prohibits new mining concessions, as the concession would remain under state ownership.
Another possibility being considered is leasing the mine to First Quantum, with the government receiving royalties and taxes. The government is expected to make a decision by the end of the year. First Quantum has suspended a $20 billion arbitration case it had initiated against Panama over the mine closure.