en.Wedoany.com Reported - Panama is considering restarting its flagship Cobre Panama copper mine in partnership with Canada's First Quantum Minerals by forming a state-owned mining company, two sources familiar with the matter told Reuters.
The Cobre Panama mine, one of the world's largest copper mines, was closed in 2023 after Panama's Supreme Court ruled that First Quantum's 20-year mining contract was unconstitutional, following widespread opposition over environmental and governance issues. According to the International Monetary Fund (IMF), the mine's closure reduced Panama's gross domestic product (GDP) by 4.5%, cut global copper production by over 1%, and decreased First Quantum's revenue by 40%. First Quantum's shares on the Toronto Stock Exchange fell by 1.6%.
Panamanian President Jose Mulino was elected in 2024 after the mine sparked severe public unrest. In his inaugural address, Mulino pledged to complete the mine's closure following an environmental audit. He stated, "The law, the Supreme Court's ruling, and the people's demands must be respected," adding, "For a final, safe, and nationally beneficial closure, the reopening plan will depend on the results of environmental studies." Two years later, with unemployment around 10% and copper prices near historic highs, reopening may become more attractive.
The Panamanian government has allowed First Quantum to sell the last batch of copper concentrate mined before closure, restart the mine's power plant, and complete an environmental audit that gave the mine a compliance score of 88%. "It's clear the government wants to reopen the mine with First Quantum," said a person who advised the government on the mine issue, "but it still fears social unrest." First Quantum declined to comment, and the office of Panama's Minister of Commerce did not respond to Reuters' emails and phone inquiries. Analysts at the Royal Bank of Canada said in a research note on Wednesday that regaining operational control of the Cobre Panama mine would be transformative for First Quantum, as it was the company's largest mine.
Sources said that a public-private partnership between a Panamanian state entity and First Quantum, with First Quantum responsible for operational control of the facility, is one of several options under consideration. One source said that under the partnership model, First Quantum would hold a 60% to 65% stake in the mine, while Panama would hold 35% to 40%. The source spoke on condition of anonymity as they were not authorized to speak to the media. Another source said First Quantum would receive a higher share due to its investment in the mine. Restarting the mine would help First Quantum on its path to debt recovery while bringing a new source of copper supply to a market facing a fundamental supply shortage. A state entity could circumvent a law passed by Panama in 2023 banning new mining concessions. A person familiar with Panama's legal framework said the law's provisions on concessions granted to state entities are vague, adding that under Panamanian law, a state entity can be established for public-private partnerships. The underlying mining concession would be held by Panama.
Public-private partnerships are becoming increasingly common in resource-rich countries seeking to strengthen control over resources and secure social licenses for mining projects, with countries like Chile and Zambia adopting such models. Another option being weighed is leasing the mine to First Quantum, with the government collecting royalties and taxing revenue. It remains unclear which option the government might choose. In July, Panama's Minister of Commerce and Industry, Julio Molto, said the government would make a decision by the end of this year and that Panama would have "full sovereignty" over the mine issue. Meanwhile, First Quantum has suspended its arbitration against Panama over the mine, which sought $20 billion in compensation from the country.
