First Quantum Minerals Ltd., a major Canadian mining company, is seeking compensation from the Panamanian government for a large stockpile of semi-processed copper ore stuck at its flagship mine, Cobre Panama. The dispute is part of a broader arbitration process regarding the closure of the mine, which has been a source of conflict between the company and the government.
The copper ore, estimated to be worth between $225 million and $340 million based on current market prices, has been sitting idle for several months. The reason for this delay is a pending decision by Panamanian authorities on whether the ore was mined before or after the government ordered the shutdown of Cobre Panama last year. The mine’s closure followed intense public protests and marked a significant blow to First Quantum’s operations.
The company is concerned that the copper stockpile could lose value over time and pose environmental risks if it remains at the site without proper management. First Quantum is pushing for a swift resolution, arguing that Panama must either allow the shipment of the 120,000 metric tons of copper or compensate the company based on the current market value of the metal. This demand is part of two ongoing arbitration cases that First Quantum has filed against Panama, seeking damages over the mine’s closure.
The legal actions initiated by First Quantum include a case with the International Chamber of Commerce (ICC) and another under the Canada-Panama Free Trade Agreement. Together, these cases represent a significant effort by the company to recover at least $20 billion from Panama in lost revenue and other costs associated with the shutdown of the $10 billion mine.
The stockpile of copper is crucial for First Quantum, as the company has faced considerable financial strain following the closure. If the arbitration leads to compensation for the stranded ore, it would provide a much-needed boost to the company’s balance sheet. The ongoing legal battle highlights the challenges mining companies face in foreign jurisdictions, especially when political and social pressures lead to abrupt changes in operating conditions.
The situation at Cobre Panama remains tense. The Panamanian government has not yet issued a public response to First Quantum’s demands for compensation or allowed the company to ship the copper ore. This lack of action has prompted frustration from the mining firm, which had hoped to move the material earlier this year. As months have passed with the ore sitting idle, the company’s position has hardened, demanding either immediate compensation or the right to ship the ore.
First Quantum’s arbitration cases are advancing, with the ICC’s International Court of Arbitration case being the most developed. A final hearing is scheduled for September 2025, indicating that the dispute could drag on for several more years unless a settlement is reached sooner. This protracted timeline adds to the uncertainty facing First Quantum as it navigates the legal complexities and strives to protect its financial interests.
The closure of Cobre Panama has also affected other companies. Franco-Nevada Corp., a Canadian mining royalty firm, and Liebherr-International AG, a German equipment manufacturer, have both announced separate arbitration claims related to the mine’s shutdown. These claims underscore the wide-reaching impact of the mine’s closure on various stakeholders who had invested in or partnered with First Quantum on the project.
Panama’s decision to shut down Cobre Panama came after a series of protests and political pressures, reflecting broader concerns about the environmental and social impacts of large-scale mining operations in the country. The government has faced criticism from various quarters, balancing economic interests with public sentiment and environmental considerations. The outcome of the arbitration cases will not only impact First Quantum and its partners but could also set a precedent for how Panama handles similar disputes in the future.
