Key Takeaways:
Panama is considering creating a state-owned mining company to partner with First Quantum Minerals Ltd. on reopening the Cobre Panama copper mine, one of the world's largest, two people familiar with the matter said.
"It is clear that the government wants to open the mine with First Quantum, but it still fears social unrest," said a person who previously advised the Panamanian government on the mine, speaking on condition of anonymity.
The mine's 2023 shutdown after Panama's Supreme Court ruled First Quantum's 20-year contract unconstitutional wiped out 4.5% of the country's gross domestic product, according to International Monetary Fund data, removed more than 1% of global copper production and cut 40% of First Quantum's revenue. President Jose Mulino, elected in 2024 after public unrest over the mine, now faces unemployment near 10% and copper prices near record levels, making reopening more attractive.
Under one proposal, First Quantum would hold a 60% to 65% stake in the mine, with Panama owning 35% to 40%, one of the sources said. The Canadian miner would receive a larger share reflecting its prior investment. A state-owned entity could circumvent a 2023 Panamanian law banning new mining concessions, as the law is ambiguous regarding concessions granted to a state entity, according to a person familiar with Panama's legal framework. A separate leasing option would see First Quantum pay royalties and taxes to the government.
Supply-Side Impact of a Cobre Panama Restart
Cobre Panama produced approximately 350,000 tonnes of copper annually before its closure, equivalent to more than 1% of global mined supply. A restart would add meaningful tonnage to a market the International Copper Study Group has described as structurally undersupplied, with deficits projected through the decade. The mine's potential return compares to other major supply additions such as Ivanhoe Mines' Kamoa-Kakula complex in the Democratic Republic of Congo, which produced 394,000 tonnes in 2024.
Public-private mining ventures are becoming more common in resource-rich nations seeking greater control over strategic minerals. Chile, the world's largest copper producer, has pursued similar models through Codelco partnerships, while Zambia has explored state participation in its copper sector.
Decision Timeline and Arbitration Suspension
Commerce and Industry Minister Julio Molto said in July the government will decide by the end of 2026 and that Panama will maintain "complete sovereignty" over the mine. First Quantum has suspended a $20 billion arbitration claim against Panama over the mine's closure, signaling a thaw in relations. The government has already allowed the company to sell remaining copper concentrate, restart the mine's power plant and complete an environmental audit that scored 88% compliance.
This article is for informational purposes only and does not constitute investment advice.
