In a landmark ruling, Panama’s Supreme Court declared that a 20-year contract with a Canadian mining company was unconstitutional, forcing the closure of one of the world’s largest and newest copper projects.
The decision sparked celebrations among thousands of activists who had protested against the mine for damaging a forested coastal area and threatening water supplies. But it also raised questions about the future of Panama’s economy, environment, and society.
The Economic Impact of The Mine Closure
The Cobre Panama mine, operated by Minera Panama, a subsidiary of Canada’s First Quantum Minerals, was a major source of revenue and employment for the country. It produced over 86,000 tons of copper in 2021, accounting for about 1% of the world’s total production and 5% of Panama’s GDP. It employed more than 2% of the country’s workforce and purchased around $20 million in supplies from local businesses every week, according to the company.
The closure of the mine will have a significant impact on Panama’s economy, which was already struggling due to the COVID-19 pandemic. According to the World Bank, Panama’s GDP contracted by 17.9% in 2020, the largest decline in Latin America and the Caribbean. The mining sector was one of the few bright spots, growing by 25.6% in 2020 and 14.7% in the first quarter of 2021.
The government had renegotiated a contract with Minera Panama in October 2021, increasing the mining royalties for the country to at least $375 million annually. In 2021, the company paid only $61 million in royalties.
According to a report by Mining.com, the contract also extended the mining concession for another 20 years, sparking the protests that led to the court ruling.
The Environmental Impact of The Mine Closure
The Cobre Panama mine, located in the Donoso district of Colon province, was the largest open-pit copper mine in Central America. It covered an area of about 13,600 hectares, of which 5,900 hectares were deforested, according to the company. The mine also used large amounts of water and energy, and generated waste and emissions that could harm the surrounding ecosystems and communities.
The mine was the target of widespread environmental protests, led by Indigenous groups, environmentalists, and civil society organizations. They argued that the mine violated the rights of the Indigenous and rural communities that depend on the land and water resources for their livelihoods and culture.
The closure of the mine offers an opportunity to restore and protect the natural environment of the area, but it also poses some risks and challenges. The most urgent issue is the management of the mine’s water treatment plant, which processes about 1,000 liters of water per second. If the plant is shut down abruptly, it could affect the water quality and quantity of the nearby rivers and streams, affecting the health and safety of the people and wildlife downstream.
The government and the mining company have to agree on a plan for the orderly and safe closure of the mine, including the decommissioning and rehabilitation of the site, the monitoring and mitigation of the environmental impacts, and the consultation and participation of the affected stakeholders.
The closure of the Cobre Panama mine marks a turning point in the history of mining in Panama, which has been a controversial and contentious issue for decades.
The government and the society have to decide whether they want to continue pursuing large-scale mining projects, or whether they want to explore other alternatives that are more compatible with the environmental and social realities and aspirations of the country.
