The battle over Panama’s copper

Balancing economic growth and environmental concerns.

Panama is currently at a crossroads, facing a pivotal decision regarding the future of its largest copper mine Minera Panama operated by First Quantum Minerals (“FQM”). The proposed contract between the Panamanian government and FQM has sparked widespread protests, drawing attention to concerns about national sovereignty, environmental sustainability and the integrity of the Panama Canal. What are the challenges and potential solutions Panama must consider? 

The Panamanian government, eager to boost its revenue, has negotiated a contract with FQM that promises a substantial increase in income from the copper mine. However, a Panamanian economist on the mining contract stated that it “is detrimental to the interests of Panama” and “violates our Constitution.” Critics, including environmentalists, students, labour unions, politicians and indigenous communities, argue that the deal compromises environmental integrity, cedes excessive power to the company and poses threats to water resources and the crucial Panama Canal. “Rejection of the contract between the government and the mining company FQM has been increasing, to the point that some pro-government deputies and ministers have suggested that the project be withdrawn from the Assembly,” retorted the director of the International Centre for Political and Social Studies (“CIEPS”). 

Many express concerns about the environmental impact of the mining operation, fearing pollution and damage to water resources. The renown economist in Panama acknowledged “the experience that Panama has had with the mining industry has been negative.” The history of failed mining projects in Panama has heightened apprehensions, especially regarding open-pit mining practices. For example, “the mining project of the company Petaquilla Gold that closed its operations amid scandals but also left a trail of pollution and environmental damage.”

“The experience that Panama has had with the mining industry has been negative.”

An economist in Panama

The economist in Panama also recognised “how a multinational company exploits and takes away our natural wealth offering minimal royalties that do not compensate for the effect and environmental impacts caused by the open-pit mining industry.” Under this circumstances, FQM must adopt more inclusive and responsible practices. Engaging with local communities, implementing sustainable mining methods and ensuring environmental protections can help build trust and mitigate opposition.  

Labor unions, particularly SUNTRACS, vehemently oppose the contract due to concerns about environmental damage and the lack of benefits for local communities. Indigenous groups, historically marginalised, fear the destruction of their ancestral lands and water sources. “The construction union is the most powerful union in the country,” retorted the sociologist and director of the CIEPS on the mining contract. “They call for the rejection of the project and question the mining industry, which they blame for environmental damage.” It is no secret that “the relations between the company and the trade union organisation are not good.” Panama Canal officials present conflicting views on the potential impact on the canal’s water supply. “While some officials express concerns that mining may reduce available water for the canal, others maintain that the mine does not interact with the canal’s water supply,” reported the sociologist.  

“The government is keen to secure a twenty-year deal which will increase revenues from the project to a minimum of USD 375 million per year, a large mark up from the USD 57 million received in 2022,” the sociologist explained. However, “Presidential candidates Martín Torrijos, Zulay Rodríguez and Ricardo Lombano have all criticised the contract, but Ricardo Martinelli is supportive.” To enhance the re-election prospects of the Democratic Revolutionary Party, the Cortizo administration is eager to secure a more lucrative agreement, but the outcome remains “uncertain” at this juncture. 

“Presidential candidates Martín Torrijos, Zulay Rodríguez and Ricardo Lombano have all criticised the contract.”

Sociologist and director of the CIEPS

The political arena is not only split, but the resolution process is also complicated by criticisms of potential constitutional violations concerning the contract. “It violates our Constitution, as it allows the Canadian company to have third states as shareholders, such as South Korea, Singapore and even China, as well as granting it advantages and privileges that were only seen in Panama when the United States controlled the canal,” declared the mining contract economist. To address this, legal experts and lawmakers must carefully evaluate the contract’s legality and constitutionality. “The contract as it is written and as it was negotiated is illegal and in conflict with the Constitution of the Republic of Panama,” the economist continued, “therefore the only way out for the deputies is to reject it and send it back to the Executive so that it can renegotiate it with the mining company.” 

“The contract as it is written and as it was negotiated is illegal and in conflict with the Constitution of the Republic of Panama.”

Mining contract economist, Panama

On September 28, the Commerce Commission of the National Assembly voted in favour of a resolution urging the Executive Branch to withdraw Bill No. 1043, which establishes the contract with Minera Panama. The committee, with a vote of five in favour and four against, cited the need for in-depth analysis of various aspects before proceeding. The resolution emphasised the necessity of withdrawal, based on observations made by the Committee on Trade and Economic Affairs of the National Assembly. Citizens also expressed disagreements with certain clauses in the contract law, causing anxiety among residents fearing potential land loss. This resolution reflects the deputies’ response to public concerns and their commitment to thorough examination before any legislative decisions are made. 

Panama’s struggle over the FQM contract encapsulates a broader dilemma faced by many developing nations: balancing economic growth with environmental and social responsibility. To navigate these challenges successfully, Panama must prioritise transparency, inclusivity and sustainable practices. By engaging in an open dialogue (although “this has not been enough to quell demonstrations”), considering the concerns of all stakeholders and exploring long-term, diversified economic strategies, Panama can emerge stronger, economically stable and environmentally responsible. Only through careful consideration and collaborative efforts can Panama chart a path that ensures both progress and environmental preservation. 

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