Panama’s Supreme Court has ruled that a 20-year concession for a Canadian copper mine is unconstitutional. The concession to run the Canadian Cobre Panamá copper mine was initially granted through Law 406 of October 20, 2023, to Minera Panama, a Panamanian subsidiary of Canadian First Quantum Minerals. However, the court ultimately found the law unconstitutional, causing it to be entirely struck down.
The judgement arrived amidst a contentious climate, as the contract was subject to significant uncertainty after Panama’s President Laurentino Cortizo announced last month that he would initiate a referendum to decide the fate of contentious mining contracts and implement a moratorium on new contracts. Following this announcement, First Quantum Minerals acknowledged the Supreme Court’s judgment.
The aforementioned Law 406 was designed to replace Law 9 of February 26, 1997, which had previously governed Panama’s interactions with mining companies operating at Cobre Panamá. Law 9 offered mining companies unrestricted mineral exploitation rights with royalty payments set to 2 percent, but was declared unconstitutional by Panama’s Supreme Court in 2017, with the announcement delayed until 2021, amid concerns over societal welfare and public good.
However, even Law 406 has faced significant controversy. Environmentalist groups argue it is environmentally unsound, citing both existing clashes leading to injuries and deaths, and protests that have resulted in road closures and blockages. They have further attributed their concerns to the Escazú Agreement for environmental justice that Panama signed in 2018, which necessitates binding public participation sessions before approval of potentially environmentally damaging projects.
Despite the controversy, the Cobre Panamá mine is critical to the Panamanian economy. As per figures from First Quantum, the mine, located 120 kilometers west of Panama City, accounts for approximately 2 percent of all Panamanian jobs and contributes to nearly 5 percent of the country’s Gross Domestic Product (GDP). Having become operational in 2019 at a cost of $6.8 billion, the company is exploring legal measures that could lead to arbitration proceedings.
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