Panama panel recommends First Quantum mine restart to fund phased closure

On September 30, a Panamanian government commission proposed reopening negotiations with First Quantum Minerals to restart the Cobre Panama mine, a major open-pit copper deposit that was shut down in 2023. The commission suggested that Panama evaluate a new agreement with First Quantum, which would end ongoing arbitration claims and allow the mine to operate under conditions that would fund its orderly closure over time, without imposing a financial burden on the state.

The Cobre Panama mine, which once accounted for 1% of global copper production, was closed in 2023 due to local protests over tax contributions and environmental concerns. The report did not specify the scope, timing, or legal structure for any potential restart, but it emphasized that closing such a large-scale site would take decades and require ongoing environmental management and monitoring.

President Jose Raul Mulino said he would carefully study the report before deciding on the mine's future. Julio Molto, Panama’s commerce minister and a member of the commission, stressed that the operation's scale would not allow for a swift closure. The report recommended that the mine not expand its footprint and should instead move toward progressive closure, with operating activity contributing to rehabilitation, long-term monitoring, and a closure reserve.

First Quantum expressed its intention to engage constructively with the Panamanian government to establish a fair, transparent, and legally sound framework for the mine's operation. The miner's shares initially dropped by up to 31% in Toronto trading, while closing down 15% in the subsequent market. Analysts suggested that the market reaction might have been overly pessimistic, as the government update appeared to authorize talks to restart the operation under renegotiated terms.

Instead of a near-term shutdown, the report implied a multi-decade operating framework followed by monitoring and closure, though the scale, timing, and economics of any restart remained undefined. The final agreement, as per the report, must not replicate the previous contract structure struck down by the court, provide greater transparency and public benefit, and require the final settlement of all arbitration claims before implementation.