Panama will demand that any new deal to reopen the US$10 billion Cobre Panama copper mine explicitly recognizes the state’s ownership of the land and its mineral resources, Finance Minister Felipe Chapman said according to a Bloomberg report.
“For us, it’s important to have an agreement that states very clearly that resources belong to the Republic of Panama,” Chapman told Bloomberg during the International Monetary Fund (IMF) and World Bank annual meetings in Washington.
Operated by Canada’s First Quantum Minerals (TSX:FM,OTC Pink:FQVLF), the Cobre Panama mine was ordered shut in late 2023 following a Supreme Court ruling that voided its 20-year operating contract as unconstitutional.
The decision came after weeks of mass protests over environmental concerns and what many Panamanians saw as an unfair deal for the state.
The closure and the subsequent government-imposed moratorium on new mining concessions sent shockwaves through Panama’s economy, which had relied on the mine for roughly 5 percent of its GDP and 1 percent of global copper supply.
President José Raúl Mulino’s new administration has since been laying the groundwork to reopen talks with First Quantum, which agreed earlier this year to suspend its arbitration proceedings against Panama.
Franco-Nevada (TSX:FNV,NYSE:FNV), a metals streaming partner with an interest in the mine, also paused its own arbitration case last June as the company attempted to clear the way for renewed dialogue.
Despite lingering divisions over mining, Chapman said public sentiment toward Cobre Panama has softened. Recent polls show that about 50 percent of Panamanians now view the mine negatively, down from over 80 percent a year earlier, while a sizable “agnostic” group remains open to supporting a deal under fair conditions.
Chapman also emphasized fiscal discipline amid the country’s economic challenges, calling Panama’s deficit targets of 4 percent for 2025 and 3.5 percent for 2026 “non-negotiable.”
He said the government would wait for global interest rates to decline further before returning to the bond market.
Cobre Panama was one of the largest industrial operations in Central America and represented decades of investment. First Quantum spent more than two decades and about US$10 billion to bring it into production, which began in 2019.
Its closure in November 2023 not only halted thousands of direct and indirect jobs but also triggered a broader freeze in the mining sector.
The economic fallout was swift: credit agency Fitch Ratings downgraded Panama’s sovereign rating in March 2024 from BBB– to BB+, citing governance risks and fiscal strain after the mine’s closure.
The IMF predicted Panama’s GDP growth to slow down to 2.9 percent in 2024 from 7.4 percent the previous year, before rebounding to 4.5 percent in 2025 as other sectors pick up.
Earlier this year, the government also approved the removal of approximately 120,000 metric tons of copper concentrate that has been stranded at the site since the mine was shuttered.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
