A series of protests began in Panama on 20 October 2023 following the immediate passing of a 20-to-40-year mining contract between the government of Panama and First Quantum Minerals, the operator of Cobre Panamá, the largest open-pit copper mine in Central America, placed 20 minutes away from the western coast of Colon Province and within a protected area of the Mesoamerican Biological Corridor.
Demonstrations started in Panama City shortly after Laurentino Cortizo, the president of Panama, signed into law the mining contract approved by the National Assembly in a 43–5 vote, in less than 12 hours. The protests and road closures expanded nationwide as soon as the public learned of the undisclosed details of the negotiation and approval process of the mining contract. Demonstration hotspots included Panama City, Colón, La Chorrera, Penonomé, Santiago and David, with massive demonstrations for many days, and multiple road closures throughout the Pan-American Highway and minor roads.
President Laurentino Cortizo and his administration appeared multiple times on national media discussing protests and the economic impact of the road closures, justifying their support of the mining contract, without significant progress being made in reducing demonstrations. Eventually, the president proposed a national referendum on whether to preserve the mining contract, which was initially approved by the National Assembly even though it faced strong opposition of the public and the Electoral Tribunal (the electoral commission of the country), but was later dismissed due to numerous concerns. An initiative of repelling the mining contract with a new law was also initially approved by the National Assembly, but it was dismissed by consensus as well, as numerous lawyers suggested that the unconstitutionality would be the most appropriate way to shut down Cobre Panamá and ensuring better defense in an eventual international arbitration process.
First Quantum reported that its subsidiary MPSA made a tax and royalty payment on November 16, 2023 of $567 million for the period from December 2021 to October 2023.https://www.laestrella.com.pa/panama/nacional/minera-panama-informa-pago-567-millones-pide-dialogo-abordar-tema-generar-manifestaciones-KMLE502338 Following weeks of protests, the president signed Executive Decree (executive order) 23 as a mining moratorium in the country, and later the National Assembly approved a bill suspending the approval of new mining concessions in Panamanian territory on 3 November 2023, which was immediately signed into law by President Laurentino Cortizo as Law 407. Meanwhile, First Quantum Minerals was forced to reduce their operations in Cobre Panamá due to the road and sea blockades near the mine and the Punta Rincón port, their export area, by fishermen of the Donoso District. This caused the mine to not receive coal for its power plant which caused the mine to reduce operations on November 14 and later stop operations on November 23. First Quantum's stock fell by 50%.
On 28 November 2023, the Supreme Court of Justice unanimously ruled the mining contract as unconstitutional, indicating that it infringed numerous articles of the Constitution. The Supreme Court ruling was widely supported by the people, and celebrations erupted around the country. On the same day, President Cortizo told the public that his administration will ensure the safe and orderly closure of the mine, in compliance with the ruling. Federico Alfaro, minister of Commerce and Industries and a vocal supporter of the mining contract, resigned from office on 30 November 2023 amid increasing calls from the public following his involvement in the controversy.
Four people died in the protests: two in traffic incidents while attempting to close roads, while the remaining two (a teacher and another's husband) were fatally shot in a road closure in Chame District by an elderly man with Panamanian and American citizenship. The protests were reported to have caused economic losses of around $2000 million, close to First Quantum's 2022 income from the mine which was 2959 million dollars. 2022 was the year before law 406 was enacted which proposed a minimum $375 million dollar payment in royalties to the government annually depending on the mine's income. With the mine's closure it has been reported that the country has seen a reduction in GDP equivalent to 2514 million dollars or 4.5% of GDP, close to the mine's income in 2022. The mine's top export destinations and main customers were located in China and Japan. The mine had no significant Panamanian or Latin American customers so almost all production was exported. Many protesters were charged with crimes. According to a non public study by Indesa, the mine paid 443 million dollars in salaries annually, and gave 200 million annually to Panama's social security program, enough for one month of its operation.
Background
Prior to 2021 Ever since the 1960s, there has been a gradual push by several panamanian governments usually in succession, to introduce mining and extractive industries to Panama and position them as the main drivers of economic growth and activity in the country, particularly in the country's interior and transitioning Panama away from a transit-based economy or economic model (transitismo in Spanish) which is based on the Panama Canal and Panama's key location in the Americas, into an extractivist economy which would allow the government to take on more debt and prevent tax reforms which could be avoided with a larger GDP number provided by mining.
This push has also been driven by a perceived lack of alternative revenue and economic growth sources which are seen as specially lacking outside the surroundings of the Panama Canal. This extractivist economy or economic model includes not only the mine but also other activities of the primary sector of the economy such as agriculture. Several mining concessions for extraction were granted starting in 1997: Petaquilla and Cerro Quema that same year, Santa Rosa/Cañazas in 2013, and Remance in 2013, which was revoked afterwards and approved again in 2021. With this, mining had become the new source of growth for Panama's GDP. Three mines in Panama have been abandoned and closed improperly: Remance in 1999, Santa Rosa, and Petaquilla Gold, causing distrust among many panamanians towards the mining sector. Remance for example was the subject of a study by the Technological University of Panama which determined that the site was heavily polluted and posed a risk to human health including the risk of causing cancer.
Cobre Panamá is the largest open-pit copper mine in Central America. The exploration process for the mine was started in 1991 during the presidency of Guillermo Endara, who assumed office on 20 December 1989 as the first elected president of Panama since Arnulfo Arias in 1968. The original mining contract for the mine site was given to Petaquilla Gold, S.A. through the Law 9, approved on 26 February 1997 by the National Assembly during the presidency of Ernesto Pérez Balladares.
Richard Fifer, CEO of Petaquilla, sold the concession rights for the mine to First Quantum Minerals (a Canadian-based mining company) for $60 million, with the Panamanian law firm Morgan & Morgan acting as intermediary of the process; however, this action was not allowed by the mining contract of 1997. Juan Carlos Varela, who served as president of Panama from 2014 to 2019, extended the concession for an additional 20 years in 2016. It is reported that all presidents of Panama in the post-intervention era (starting from 1989) have been involved in expanding or supporting the operations of the copper mine, including Mireya Moscoso, Martín Torrijos and Ricardo Martinelli, all of whom served from 1999 to 2014. Former president Juan Carlos Varela praised the mine calling it largest ever foreign investment by a private-sector company in Panama.
Lawyer Juan Ramón Sevillano filed a claim for the unconstitutionality of Law 9 in 1998, which was done again by lawyer Susana Serracín in 2009 but it was not ruled until 2017 and was notified to the parties by the Supreme Court of Justice on 25 September 2018, 21 years later. First Quantum's local subsidiary, Minera Panama, doing business as Cobre Panama, argued that this did not invalidate the mining contracthttps://elcapitalfinanciero.com/fallo-de-la-csj-no-afecta-el-contrato-asegura-minera-panama/https://www.laestrella.com.pa/panama/nacional/fallo-corte-afecta-concesion-KCLE19149https://www.laestrella.com.pa/economia/fallo-corte-minera-panama-afecta-IOLE36846 and thus posed no danger to mine development.https://www.panamaamerica.com.pa/economia/minera-panama-fallo-de-la-corte-suprema-no-pone-en-peligro-desarrollo-de-proyecto-de-cobre/amphttps://www.prensa.com/impresa/economia/Gobierno-intenta-inversion-Minera-Panama_0_5273472673.html The panamanian government defended the mining companyhttps://www.eleconomista.net/economia/El-Gobierno-de-Panama-sale-en-defensa-de-inversion-de-minera-canadiense-20180926-0016.html and the MICI stated the concession was still valid.https://www.midiario.com/panama/nacionales/el-mici-asegura-que-contrato-con-minera-panama-sigue-vigente/https://www.telemetro.com/nacionales/2018/09/26/mici-minera-panama-mantiene-corte/1107167.htmlhttps://revistaconcolon.com/el-dato/mici-desobedece-fallo-de-la-corte-el-contrato-con-minera-panama-s-a-esta-vigente/ The ruling was formally published in the government gazette on 2021, three years after the Supreme Court's decision due to legal measures by First Quantum's law firm Morgan & Morgan to delay its publication, even though the ruling was in effect without being published. Despite this the mine's construction continued in 2019 and the mine went into operation that same year and the governments of Juan Carlos Varela and Laurentino Cortizo made efforts to justify these actions. First Quantum Minerals was forced to renegotiate the concession with the government of Panama under President Laurentino Cortizo, while they were illegally exploiting the mine and doing unlawful activities in the area.
Negotiations and contract draft
Following the publication of the Supreme Court ruling on early 2021, First Quantum Minerals started negotiations with the administration of Laurentino Cortizo to write a new mining contract. As reported by the government, the initial negotiations resulted in expanding the revenue for the Panamanian government to a minimum of $375 million annually given copper prices did not decrease significantly and royalty payments from 12-to-16%; an increase over the 2% laid out in now unconstitutional Law 9. additionally, it was agreed that Cobre Panamá must pay numerous taxes they were exempted of by the 1997 contract. It was reported that these payments would be used for numerous social programs that were underfunded. During the negotiation process doubts against the mine and its contract were raised with some alleging that they represented the absence of the rule of law in Panama. During negotiations with First Quantum, there were disputes over the amount of royalties that would be paid to Panama and this led to a brief mine shutdown in December 2022 and February 2023.https://www.mining.com/first-quantum-halts-copper-processing-in-panama-as-dispute-spirals/https://www.mining.com/subscribe-login/?id=1106792https://www.reuters.com/markets/commodities/panama-first-quantum-harden-battle-lines-over-key-copper-mine-2023-01-03/