Panama growth hinges on Cobre Panama restart: report

[Ben Graham]

Panama’s economy grew 4% in 2025, and business leaders say reopening First Quantum’s (TSX: FM) Cobre Panama copper mine is critical to lifting growth to as much as 6% by 2027.

The Sindicato de Industriales de Panama (SIP), one of the country’s leading business groups, reported that last year’s expansion was driven mainly by services such as transportation and hospitality, while manufacturing lagged with growth of just 0.46%. The group warned that without new growth engines, momentum could fade.

SIP projects GDP could climb to 6% in 2027 if the Cobre Panama mine reopens and major projects tied to the Panama Canal move forward. Under a negative scenario in which the mine remains closed, growth would slow to 3.7% in 2027, nearly 40% lower than in the upside case.

The mine’s shutdown weighed on economic growth, employment and efforts to reduce labour informality, the group said. Labour market gains recorded earlier in 2024 partially reversed as activity contracted following the shutdown. The loss of copper exports also left Panama more reliant on primary goods such as shrimp, fish and bananas, weakening diversification. Limited labour data has made it harder to fully measure the impact, SIP said.

The business group described a potential restart as a cornerstone of Panama’s medium-term growth strategy, complementing Canal investments, infrastructure development and efforts to attract foreign direct investment. Resuming operations would help revive the labour market and strengthen domestic demand, it said.

Looming decision

President José Raúl Mulino said in January he plans to announce by June whether the government will permit the mine to restart, a looming decision that has injected uncertainty into the global copper market.

A restart would boost both Panama’s economy and First Quantum while easing pressure in a tightening copper market. The large open-pit mine accounts for nearly 2% of global copper supply.

The government and First Quantum have agreed on a starting framework for negotiations after the Canadian miner accepted state ownership of copper resources as a condition, though how that would apply to Cobre Panama remains unclear. The company has said it could produce about 70,000 tonnes of copper over a year if authorities approve the processing of a large ore stockpile at the site.