Panama president slams previous government's handling of copper mine crisis

Panama’s President José Raúl Mulino criticized the previous government for its poor handling of the crisis that led the supreme court to declare the concession contract with Minera Panamá unconstitutional, resulting in the closure of the US$6.5bn Cobre Panamá copper mine one year ago.

“The mine paid the price for the accumulated national discontent, with a government with 25% popularity and hated by the vast majority of Panamanians, as demonstrated at the polls… they couldn’t carry out such a thing and even less so in the way they tried,” Mulino told Telemetro.com within the framework of the comprehensive reform of the health and social security system proposed by his administration.

“Now they have left us, among other negative and disastrous legacies, the problem of the mine, which will be seen later, but it’s not the same time, this is a government that has credibility, national acceptance,” he added.

Former president Laurentino Cortizo ordered the mine’s closure after the supreme court ruling amid protests. The court had previously ruled in 2017 that the original contract was also unconstitutional.

Mulino said his administration could take a different approach to the situation facing the copper mine, which came to represent almost 5% of GDP, by personally having what he called “political capital.”

The president has indicated that his government intends to address the issue of Cobre Panamá at the beginning of 2025, as reiterated by Minera Panamá’s parent company First Quantum Minerals in its third quarter results report.

Mulino also announced that a complete audit of Cobre Panamá will be carried out with international experts to establish a factual basis to help make decisions about the future of the mine, a measure that the Canadian company welcomed, although there is still no clear timeline.

Meanwhile, Cobre Panamá remains in a preservation and safe management phase with production halted. First Quantum reported that during the third quarter, costs for the program were approximately US$13mn per month, which included labor, maintenance spares, contractor services, electricity and other general expenses.

For the remainder of the year, the miner expects these costs to range between US$11mn and US$13mn a month, “depending on the level of environmental stability and asset integrity programs.” As of the end of October, approximately 121,000t of copper concentrate remained on site.

“Steps towards two arbitration proceedings have been taken by the company, one under the Canada-Panama Free Trade Agreement and the other under the International Chamber of Commerce pursuant to the arbitration clause of the refreshed concession contract,” the company said. 

A hearing for the first, to take place in Miami, is scheduled for next September. Regarding the second, the company reported that it has the right to file its arbitration claim under the FTA within three years following what it says was Panama's breach of the treaty.

Despite the legal action, First Quantum reiterated that arbitration is not the preferred option and remains committed to dialogue and being part of a solution for the country and its people.

Cobre Panamá produced 330,863t of copper in 2023, down 5.6% on 2022, in addition to some gold.