Panama Seeks to Export Stored Copper from First Quantum Mine

Panama’s government aims to export the copper stockpiled at First Quantum Minerals Ltd’s mine. Finance Minister Felipe Chapman sees no valid reason to keep the large volume of copper in storage.

The government has partnered with a third party to assess the environmental impact and quantity of stored copper concentrate. Chapman believes the copper cannot remain at the mine indefinitely.

He suggests exporting it as the best course of action. The government plans to conduct due diligence before making a final decision.

Even the most radical environmentalists in Panama have not opposed exporting the already-extracted copper. The mine has been inactive for nearly a year following a Supreme Court ruling.

The court declared the company’s operating contract unconstitutional. This closure has impacted economic growth and government revenue, leading to a credit rating downgrade by Fitch Ratings.

The mine accounted for about 1.5% of global copper production and 4% of Panama’s gross domestic product. First Quantum has filed for arbitration against Panama in response to the closure.

Navigating Social Security and Mining Reforms

The government prioritizes social security reform before addressing the mine’s future next year. Chapman stated that First Quantum must withdraw its arbitration claim before discussions can begin.

The government is willing to negotiate if the company drops its intention to sue. Chapman, a former business consultant, had advised the mine during contract negotiations with the previous administration.

He warned the company that the revised contract would likely fail due to insufficient government revenue. The mine closure followed months of violent protests that blocked major roads and highways in Panama.

Public sentiment has shifted in recent months as the government works to regain trust. The government is exploring alternatives for the mine’s future.

These include shorter operating periods, improved environmental oversight, and reinterpreting public sentiment. Chapman believes the current high level of political capital will benefit the Panamanian people.

Panama’s government aims to avoid further credit rating downgrades in the short term. They hope to improve their rating in the medium term.

Chapman acknowledges that this year will be challenging fiscally but expects improvement next year. The government targets a fiscal deficit between 3% and 3.5% of GDP for 2025.

Short-term measures to control the deficit include a “spending freeze.” Chapman embraces his role as the “bad cop” in implementing these measures. Panama plans to reduce its deficit gradually to achieve a “soft landing.”

Chapman emphasizes that Panama is not in a financial crisis and does not require shock therapy. The country’s economy is projected to grow by 2.5% this year and accelerate to 4% in 2025.