Mining chamber raises concerns about opposition to Cobre Panamá contract

Panama’s mining chamber (Camipa) expressed concern about how issues related to the contract First Quantum Minerals subsidiary Minera Panamá and the government agreed have been addressed, which, according to the chamber, raised doubts about the importance of the mining industry for the sustainable development of the country.

“We see with concern how some sectors of society, radicalized interest groups, and a few media outlets have wanted to bring the topic of the discussion of the MPSA (Minera Panamá) contract to the level of whether or not to develop the mining industry in our country,” Camipa said in a statement.

“Clearly for the purposes of MPSA operations and the mining sector, after years of work, a multimillion-dollar investment and significant contributions to sustainable development, using arguments like ‘No to Mining’ and opposing the contract is completely untimely,” it added.

The Cobre Panamá mine began producing copper concentrates in June 2019. Last year, it reported production of 350,438t of copper. The company contributes about 5% to GDP, represents about half of Canada's First Quantum's total production and 75% of the country's goods exports, according to company data.

Likewise, the chamber warned that publications that suggest Panama would have every chance of winning an arbitration if the contract was rejected and the mine’s operation would not continue are “delicate and dangerous” for the nation.

“Before considering getting involved as a country in a legal confrontation in international arbitration for tens of billions of dollars, we must clarify that arbitration is a right of the investor, and investors may resort to arbitration whenever they consider their interests violated,” said Camipa.

“It is an error loaded with bias and subjectivity to describe arbitration as a tool to threaten the government. What we Panamanians must be clear about is that, whatever the result of an arbitration, both the company and the country would be seriously affected by the temporary or definitive suspension (however it turns out), of the mine's operations,” it added.

Investor reputation

On September 28, the legislative body suspended discussion of the bill to approve or reject the new contract agreed with the mining company in March and returned it to the government, a few hours after resuming the first debate and amid protests by civil society groups, academics and environmentalists.

That same night, the industries and trade ministry said in a statement that the resolution issued by the national assembly would be evaluated and new recommendations would be presented to the cabinet council with proposals that resolve the concerns raised by the legislators, in conjunction with the First Quantum subsidiary.

“We consider that it is very appropriate and we value very positively that after the broad and exhaustive consultation process carried out by the Executive and then in the assembly, the door has been opened to make changes on specific issues that have been requested by citizens, repeatedly and responsibly,” Camipa said in the statement.

The chamber highlighted the relevance of Minera Panamá and the Executive evaluating the suggested change proposal in a collaborative manner, and achieving the desired result of mutual benefit for all parties involved, and the country in general.

“It is important that the contract be returned and continue its due process within the assembly until its approval and corresponding ratification, to ensure a positive reputation of Panama as a country that respects legal stability, the protection of free enterprise, and thousands of jobs and contractor companies that depend on it, and avoid a greater impact on the investment risk rating in Panama,” the statement said.

“The world takes note of these negative signals that Panama sends regarding the certainty that the terms and assumptions under which the investment was made are respected,” it added.

After a series of intense conversations, First Quantum and Panamanian authorities agreed on March 8 that the new contract for Cobre Panamá, one of the largest copper mines in Latin America, would be valid for 20 years, with the possibility of extension for another 20 years, and that the mining company would pay the State at least US$375mn annually.

New negotiations were necessary because the supreme court declared the original 1997 contract unconstitutional in 2017, following an appeal filed by environmental non-governmental organization CIAM, which filed a new appeal with the court in July to prevent the government from negotiating the agreement.

Arguments

Camipa recalled that the Cobre Panamá mine is just one known deposit in the country, and that it “has shown that mining well done, as done in developed countries, contributes significantly to sustainable development in its various dimensions.”

In the economic sphere, the chamber highlighted that the mine is, together with the Panama Canal, “the engine of the national economy, as is widely recognized by international organizations and international risk rating agencies.”

As an example, the chamber said that, for the first time in the country's history, the highest average salaries are occurring in an inland area, "reliable proof that mining is an effective mechanism to combat inequality."

In the social sphere, Camipa emphasized that the company “generates programs through which more than 250 families in the Donoso and Coclesito region have abandoned subsistence agricultural practices (which perpetuate inter-generational poverty) and now, using sustainable practices and without agrochemicals, they are small business owners brought together by the DONLAP association and sell more than 60t of products to the mine, and to the national market.”

Finally, regarding the environmental dimension, the chamber said that the Donoso/biological corridor protected area became the one with the largest number of biodiversity conservation programs in the country. “There are more than 45 surface water quality monitoring stations, apart from those now carried out by government institutions and community members trained for this purpose,” it said in the statement.