Panama weighs creation of state-owned miner to pave way for Cobre Panama re-opening

• Under a proposed public-private partnership, First Quantum would hold 60-65% stake with operational control, while Panama would own 35-40%, providing a potential workaround to a 2023 law banning new mining concessions
• The mine's 2023 shutdown wiped out 4.5% of Panama's GDP, more than 1% of global copper production, and 40% of First Quantum's revenues, while the company has suspended its $20 billion compensation claim against Panama
• Alternative lease option being considered would have First Quantum pay royalties and taxes to Panama, with the government expected to make a final decision by end of 2025

Summary: Panama Considers State-Owned Miner to Reopen Cobre Panama Copper Mine

Panama is evaluating the creation of a state-owned mining company to partner with Canada's First Quantum Minerals and reopen the shuttered Cobre Panama copper mine, according to sources familiar with the matter.

Background: The mine, one of the world's largest copper operations, closed in 2023 after Panama's Supreme Court ruled First Quantum's 20-year mining contract unconstitutional amid environmental and governance protests. The closure eliminated 4.5% of Panama's GDP, over 1% of global copper production, and 40% of First Quantum's revenues.

Key Proposals Under Consideration:

• Public-Private Partnership: First Quantum would hold 60-65% stake with operational control, while Panama owns 35-40%
• Lease Option: First Quantum would lease the mine, paying royalties and taxes to Panama
• A state entity could circumvent Panama's 2023 law banning new mining concessions

Current Context: President Jose Mulino, elected in 2024 on promises to finalize the shutdown, now faces approximately 10% unemployment and near-record copper prices, making reopening more economically attractive. The government has permitted First Quantum to sell remaining copper concentrate, restart its power plant, and complete an environmental audit.

Market Implications: Reopening would help address the fundamental copper supply shortage while assisting First Quantum's debt recovery efforts. First Quantum has withdrawn its $20 billion compensation arbitration against Panama. However, officials remain concerned about potential social unrest.

Timeline: Commerce Minister Julio Molto indicated a decision will be made by year-end 2025, emphasizing Panama will maintain "complete sovereignty" over the mine.