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Panama Supreme Court caves to environmentalists, closes copper mine, nixes thousands of jobs in Latin America

The Cobre Panamá mine began producing copper provided an estimated 1% of the world’s copper supply, contributed for 3.5% of Panama's GDP in 2021, provided 8,000 “direct” jobs and tens of thousands of indirect jobs

Cobre Panama mine in Panama
Cobre Panama mine in Panama | First Quantum Minerals

November 30, 2023 8:55am

Updated: December 1, 2023 8:44am

The Panamanian government is closing one of the country’s copper mines amid pressure from environmentalist activists who argued it threatened water supplies and complained it was being operated by foreigners.   

The government’s decision comes after the country’s Supreme Court issued a ruling that barred a Canadian company from continuing to operate the mine. The company, First Quantum Minerals, was initially granted a 20-year concession.

Initially, the government’s 20-year concession with the Canadian company sparked a hostile reaction from the environmentalist community, resulting in protests attended by activists, indigenous groups and students.

Those groups are now celebrating the government’s turnaround however, marking a victory for their movement in the Latin American region and the Panamanian jungle along the Atlantic coastline.

While the activists were opposed to the environmental impact that could be caused by the Cobre Panamá” mine, a protectionist streak also surged through their ranks as many expressed outrage that their government was allowing a foreign company to extract resources from their country.

As part of their effort to change political policy, environmental activists caused food and gasoline shortages throughout the country by obstructing supply shipments on both land and sea.

“Protesters blocked the Pan-American highway and other key roads, causing fuel and food shortages in some regions,” reportedBBC. “They also used boats to create a sea blockade, preventing crucial supplies from reaching the mine, eventually forcing First Quantum, Canada's largest copper producer, to suspend its operations last week.”

One activist, Raisa Banfield, told the British news outlet that the court caved after environmentalists throughout Panama came together to protest the mine.

Everyone did their part, those of us who knew about the environmental issue contributed, the lawyers, the farmers, our boatmen from Colon, our youth, she said.

Cobre Panamá was fully operational with a processing plant, a port, and two open pits, was regarded as one of the region’s largest copper mines.

It began producing copper four years ago, providing an estimated 1% of the world’s copper supply, contributed, for 3.5% of Panama's GDP in 2021, provided 8,000 “direct” jobs and will potentially result in the termination of tens of thousands of “indirect” jobs.

Since its opening in 2019, activists declared war on the mine, arguing it was harming the Panamanian jungle and its water supply.

Much of the Panamanian landscape is covered by rainforests and jungle areas. Forty percent of the country’s landscape is covered by jungle area, according to a report published by the BBC.

Some environmental and pro-indigenous organizations such as Rainforest Foundation US project even higher numbers, saying that 63.4% of the country’s landscape is covered by jungle and rainforests.

That report suggests Panama has the highest forest cover of any country in Central America.

“Its forests sequester on average some 160 tons of carbon per hectare and include extensive mangrove and cloud forest ecosystems,” the organization insists.

“As the singular land bridge (Darien Gap) connecting Central and South America, Panama is a key biological corridor for migratory birds and numerous other species. It is home to 1,500 known animal species and 10,000 known plant species, including emblematic species such as the jaguar, peccary, and harpy eagle.”

The Darien Gap connects Panama to Colombia, joining Central America to South America with one of the thickest and densest jungles in the world.

Environmentalists sounded the alarm in in October when the Panamanian Congress passed a law approving First Quantum’s new concession.

But after several weeks of intense pressure, the Supreme Court declared it unconstitutional. 

President Laurentino Cortizo tweeted that he would "abide by the decision of the Supreme Court,” and made a televised address declaring the beginning of a “transition process” to shut down the mine in an “orderly and safe” process. 

“Today it was clear that the administration of justice is the backbone of democracy,” he wrote.

First Quantum said it would abide by the court’s decision, but insisted the contract between the Canadian company and Panamanian company was fair and would have benefitted the Latin American country.

The company also said it respected the nation’s environmental needs and had taken steps to ensure it would not be causing the damage environmentalists raised concerns over.

The company added that its contract with the Panamanian government had been the result of a long and transparent negotiation process whose aim had been to mutually benefit both sides as well as guarantee the protection of the environment.

The original concession for the mine was granted 33 years ago in 1990 but was contested because there was not an open bidding process. First Quantum Minerals took a majority stake in the mine in 2013 and is reportedly responsible for half the company’s annual copper output.

Panama’s Supreme Court declared the original law that underpinned the concession unconstitutional in 2017, and negotiations did not resume until the appellate process was exhausted.

The same day the decision was announced, copper prices spiked by 2% amid news that workers at another mine operated by China, the Las Bambas mine in Peru, were going on strike over a profit-sharing dispute.