Panama to channel $29M from First Quantum’s mine to public works

[Ben Graham]

The Panamanian government said on Wednesday the sale of more than 122,000 tonnes of copper concentrate stored at First Quantum Minerals’ (TSX: FM) idled Cobre Panama mine generated $29 million in royalties.

Commerce Minister Julio Moltó said the money will fund urgent public works across the country, including upgrades to health centres, school expansions, road repairs and improvements to water and electrical systems. The minister oted the export of concentrate already on site was allowed under the Safe Preservation and Management Plan, which requires First Quantum to cover the mine’s $15-million-a-month maintenance bill. That cost has reached about $360 million since operations stopped in 2023. 

“These funds belong to all of Panama and will be fully allocated to public works,” Moltó said. “They will not go to bureaucracy, consultancies or offices. They will go to the Panamanian people.”

Moltó underscored the royalties “belong to all of Panama” and will be directed entirely to projects in affected communities. He said the administration of President José Raúl Mulino will publish details through a national programme and extend investments to more regions.

First Quantum halted Cobre Panama in November 2023 after the Supreme Court ruled the mining contract unconstitutional. The Canadian company has said reactivating the mine would take six to nine months to restore production and longer to reach its nameplate capacity of 100 million tonnes a year. About 2,000 workers remain on site to support ongoing audits and safety work. 

Officials expect a final audit report by the end of February, which will guide decisions on the mine’s future.

Hard to predict

Analyst Albert Mackenzie of Benchmark Mineral Intelligence told MINING.COM that if the copper market is unpredictable, Panama’s politics are even harder to gauge. He said the industry expects the mine to reopen but warned that ramp-up would be slow and could face early technical problems.

Mackenzie added that First Quantum has a strong Environmental, Social and Governance (ESG) reputation, but noted that all large mines carry environmental impacts, especially in rainforest regions.

Before the shutdown, Cobre Panama was one of the world’s biggest copper operations, producing 350,000 tonnes in 2022 and accounting for about 5% of Panama’s GDP. 

First Quantum says continued operations would have delivered $1 billion to the treasury and $2 billion to local suppliers.

In a recent conversation with MINING.COM in London, CEO Tristan Pascall acknowledged the scale of the challenges and said the company was seeking a resolution that works for the government, stakeholders and the country.