The Cobre Panama copper mine owned by First Quantum Minerals in Panama on March 21. Relationships with government have improved since Panama ordered the mine closed in 2023.Matias Delacroix/The Associated Press
Canadian copper miner First Quantum Minerals Ltd. FM-T has agreed to drop or suspend its arbitration claims against Panama, opening the door to a resolution that could see its giant operations in the country eventually reopen.
Vancouver-based First Quantum in late 2023 filed international arbitration proceedings against Panama around the time then-president Laurentino Cortizo ordered the shutdown of its Cobre Panama mine. Mr. Cortizo took the drastic step after Panama’s Supreme Court ruled that its mining contract was unconstitutional, and during massive public protests against the mine.
First Quantum now says that, after discussions with the government, it is dropping the case brought with the International Chamber of Commerce’s International Court of Arbitration and suspending its Canada-Panama Free Trade Agreement proceeding.
The company in a statement on Monday evening said it remains committed to engaging with the Panama government and “being part of a solution for the country and the Panamanian people.”
Shares in First Quantum rose by 4.9 per cent in trading on the Toronto Stock Exchange on Tuesday to close at $20.30 apiece, the second-best performer of the TSX Materials Capped Index.
Last summer, José Raúl Mulino succeeded Mr. Cortizo as Panama’s President. Mr. Mulino, regarded as more sympathetic to business than his predecessor, nevertheless had been careful about not rushing into a quick resolution with First Quantum, despite its importance to the Panamanian economy.
At one point, Cobre Panama – situated in the Colon Province, 120 kilometres west of Panama City – accounted for about 5 per cent of the country’s GDP. But Mr. Mulino has played some hardball, making it clear that negotiating with First Quantum while arbitration proceedings were continuing was a non-starter.
People protest in Panama City on March 23, after President Jose Raul Mulino authorized First Quantum to sell copper concentrate from Cobre Panama. The miner has drawn protests in the country over its environmental impacts.Enea Lebrun/Reuters
But in recent weeks, there had been signs that relations between the company and the government were improving. Mr. Mulino recently authorized the company to export stockpiled copper that had been stranded at the site since the mine was shut down. In addition, the company’s local subsidiary in a memo said that it instructed its lawyers to work with the government to potentially suspend the arbitration proceedings.
It is unclear if the mine can reopen without the blessing of the Supreme Court, even if the Panama government eventually reaches a new agreement with First Quantum.
Demonstrations against Cobre Panama in 2023 attracted thousands, and huge international media attention, with movie star Leonardo DiCaprio among those voicing his support for the protesters. The mine is located in a rain forest in the Mesoamerican Biological Corridor, with deforestation and the management of torrential rainfall at the site worrying environmentalists.
“We definitely consider metal mining to be impossible in Panama,” said Joana Abrego, environmental lawyer and the legal manager at environmental advocacy centre CIAM, which is opposed to the resumption of mining at Cobre Panama.
“It’s starting to be recognized internationally that there are just some places on Earth where you need to protect biodiversity, you need to protect your sources of water, you need to protect the ecosystems that allow you to be climate-resilient and you cannot just exploit the critical minerals that are in these places.”
First Quantum counters that it has taken great care to protect the environment and that its contribution to the economy has been monumental.
While the company has cleared about 3,000 hectares of forest, it aims to replant two trees for each one cut down for the mine. Regarding concerns over heavy rains potentially causing leakage from its tailings dam, the company said it has passed all government water tests and monitors chemical levels in water discharge around the clock. It has also sampled all rivers and creeks surrounding the mine, and says that aquatic ecosystems have been unaffected.
But even just the suggestion that the mine might reopen again has caused new protests in Panama. Mining watchdog MiningWatch Canada recently reported that hundreds of Panamanians had once again hit the streets, voicing their concerns.
When Cobre Panama was fully operational, it directly and indirectly supported about 40,000 jobs in Panama. It started production in 2019, and cost the company US$6.8-billion to build. The complex includes two open pits, a processing plant, a power station and an international port.