Canadian mining company First Quantum Minerals has paused arbitration proceedings in a bid to resolve its dispute with the Panamanian government over the closure of its Cobre Panamá copper mine. This decision, announced on March 31, 2025, follows signals from Panama’s President José Mulino that alternative solutions are being considered. The move could pave the way for restarting operations at the $10 billion mine, which has been shuttered since late 2023. Cobre Panamá is one of the largest copper mines globally and a key contributor to Panama’s economy.
The mine, operational since 2019, accounted for nearly 5% of Panama’s GDP and employed approximately 40,800 people before its closure. It also represented 1.5% of global copper supply, producing over 330,000 metric tons of copper in 2023. The shutdown followed a Supreme Court ruling in November 2023 that declared First Quantum’s operating contract unconstitutional, sparking protests and political turmoil. The closure has had severe economic repercussions for Panama, including slower GDP growth and credit downgrades.
First Quantum had initiated arbitration proceedings seeking $20 billion in damages under the Canada-Panama Free Trade Agreement and the International Chamber of Commerce (ICC). However, Panama’s government insisted that negotiations could only proceed if legal actions were suspended. In response, First Quantum agreed to pause arbitration and focus on dialogue. The company emphasized its commitment to finding a solution that benefits both Panama and its stakeholders.
The reopening of Cobre Panamá is critical not only for Panama but also for global copper supply chains. Copper demand is projected to increase by 70% by 2050 due to its essential role in clean energy technologies, transmission networks, and electric vehicles. With many aging mines experiencing declining output, Cobre Panamá stands out as one of the few large-scale operations developed in the past 15 years. Its resumption could stabilize supply chains and support Panama’s economic recovery.
For the United States, Cobre Panamá represents a strategic opportunity to diversify copper supply sources amid rising geopolitical tensions. The mine’s proximity to North America offers logistical advantages for processing copper domestically or in allied countries like Japan or Chile. Strengthening bilateral ties with Panama through trade agreements could further enhance U.S. access to critical minerals while reducing dependence on Chinese refining facilities.
Resolving this dispute is equally vital for Panama’s economic stability. The mine contributed $1.8 billion domestically in wages, taxes, and procurement in 2023 alone. Its closure has triggered declines in export earnings and employment while pushing the country’s credit rating into junk status with higher borrowing costs and fiscal constraints.
First Quantum remains optimistic about reaching an agreement that ensures long-term stability for both parties. The outcome of these negotiations will likely have far-reaching implications for international mining investments and resource governance.
