First Quantum has suspended operations at the copper mine amid violent protests and a port blockade.

According to a statement released by First Quantum Minerals (FQM), the Canadian miner hopes to avoid arbitration with Panama’s government relating to its Cobre Panama copper operation. The company instead hopes to resolve disagreements during a 90-day period for talks between the two sides. It comes after the Panamanian government confirmed that FQM had recently issued a legal notification of intent to commence arbitration proceedings with the country under an existing trade pact between Panama and Canada.  

On 20 November, FQM announced that its subsidiary, Minera Panamá S.A (MPSA), had further ramped down operations at Cobre Panama to one remaining processing train. Recent protests and blockades prevented the delivery of coal supplies at the Punta Rincon port, a move which FQM stated would result in the operation imminently running out of supplies for on-site power generation.

Recent protests relate to the Panama government’s approval on 20 October of a new contract with the Cobre Panama mine. This triggered a string of lawsuits alleging the unconstitutionality of the recently enacted Law 406, which approved MPSA’s revised concession contract. Such protests have reportedly escalated into an anti-government movement, in addition to demonstrations against the environmental impact of the operation.

Cobre contributes ~3.5% of Panama’s GDP, while the operation employs over 8,000 workers and contractors and sources goods and services from over 2,000 Panamanian companies. Meanwhile, the mine boasts over 2.8Bnt of proven and probable reserves and last year produced 350,438t, more than 1% of global copper supply. As at the end of December 2022, the mine life was 32 years.

Panama is the latest copper-producing country to be impacted by protests following unrest in Chile and Peru over the past few years. Protests in Chile and Peru largely involved the blocking of transport routes and related to environmental and indigenous concerns. Any prolonged disruption at the Cobre Panama operation could have significant knock-on implications for Panama and the global copper market as well as production of associated by-products including gold, molybdenum and silver.