Key facts
- A Panamanian government commission recommended reopening the Cobre Panama mine.
- The mine was one of the world's largest open-pit copper deposits.
- The commission proposed a new agreement to end arbitration claims and fund an "orderly closure" over time.
- The mine was responsible for 1% of global copper production before being shuttered in 2023.
- First Quantum shares closed down 15% in Toronto trading.
A Panamanian government commission on Wednesday recommended opening formal negotiations with First Quantum Minerals to set conditions for reopening the shuttered Cobre Panama mine, one of the world's largest open-pit copper deposits. The commission's report suggests evaluating a new agreement that would end pending international arbitration claims and allow the project to operate under conditions designed to finance an "orderly closure" of the mine over time, at no cost to the state.
The panel argued that closing a site of this scale would take decades and impose a heavy fiscal burden if the site could not fund its own closure. The Cobre Panama mine was responsible for 1% of global copper production until the government shuttered it in 2023 following protests from local residents over tax contributions and its environmental impact.
The report did not specify the scope, timing, or legal structure for any restart. President Jose Raul Mulino stated he would study the report carefully before deciding on the mine's future. Panama's commerce minister and commission member Julio Molto emphasized that an operation of this scale is not closed in a year or five.
The report indicated the mine should not expand its footprint and should move toward progressive closure, with operating activity helping pay for rehabilitation, long-term monitoring, and a closure reserve. First Quantum stated it would engage "constructively and in good faith" with the Panamanian government to establish a legal framework for Cobre Panama that is "fair, transparent, durable, and aligned with Panama's Constitution and laws."
First Quantum shares initially slumped as much as 31% in Toronto trading during the government announcement, where ministers stressed the mine's "orderly closure." The report detailing a reopening was made public later, and the miner's shares closed down 15%. Analysts at Scotiabank described the market reaction as an overly negative reading, calling the government update "confusing" and suggesting the ministers were authorizing talks to restart the operation under renegotiated terms, with "orderly closure" referring to the mine's eventual end-of-life rather than a near-term shutdown. J.P. Morgan analysts noted the document implied a multi-decade operating framework followed by monitoring and closure, but cautioned that the scale, timing, and economics of any restart remain undefined. Any eventual agreement must not recreate the previous contract structure, must provide greater transparency and public benefit, and must require the final settlement of all arbitration claims before implementation.