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Pre-Columbian Tumbaga figurine made of a gold-copper alloy unearthed during archeological rescue work around Cobre Panama. Image: First Quantum Minerals
With so much happening in copper – from all-time highs mixed with price collapses – it’s easy to lose sight of the giant hole that exists in the industry where dynamite meets bedrock.
Cobre Panama has now been sitting idle for 18 months, ordered to shut down by a supreme court ruling following months of protests that rocked the Central American nation.
The massive First Quantum Minerals mine, which entered production in 2019 is an increasingly rare phenomenon in copper mining. The mine’s global porphyry peers in terms of output have histories often dating back to the 19th century.
One of the largest copper mines to come on line in decades, it contributed 1.5% of the world’s output. To put that in perspective that’s considerably more than Venezuela’s total share of global oil production.
Brass monkey
One of my more otherworldly experiences as a veteran of the occasional mine tour was walking Cobre Panama.
I could describe the scene at the complex 120 km west of Panama City as frozen in time, but even after a couple of minutes in the jungle of central America, freezing seems the remotest of possibilities.
The quiet of the place after the helicopter blades stop whirring catches you first.
Especially considering you’re surrounded by the heaviest of heavy industry and primed, through so many safety debriefs, to listen out for a blasting siren or enjoy the mood music of giant beeping trucks.
Instead of a deafening din from a safe distance, I was able to peer into the bowels of a giant mill with steel balls lying idly at the bottom as if on a brass monkey.
Instead of sucking power equivalent to a fifth of the country’s electricity from the onsite power plant, the steel frame of the processing plant was beginning to show signs of rust in the damp jungle and the salty Caribbean sea air.
Nearby, a day and a half’s ore was heaped high, baking in the sun at the end of a conveyor belt that hasn’t carried any rock from the more than three billion tonne deposit since October 2023.
$10 billion, 100 million
The orebody is also rich in gold, silver and molybdenum – all trading near historic highs. Franco Nevada, which stumped up $1.4 billion for a precious metal stream with 80% at fixed prices, must’ve been the only bullion boardroom watching the cross to $3,000 with mixed emotions.
Cobre Panama would’ve become a 100 million tonnes a year operation in 2024, placing it near the top of the world’s copper throughput ranking. With more than a hint of bitterness (but also pride in the work done), the mine manager explains the mine had just hit record production numbers the month before the shutdown.
Looking out over the main pit, already well below sea level after mountains of saprolite were stripped (the worst kind of stripping I’m told), a lonely shovel sits idle next to a large pool of the bluest water – a striking reminder of the riches that are not being tapped.
Minutes drive away from the processing plant row upon row of dozers, shovels and trucks are lined up seemingly ready to fall in behind our tour bus as if to join a funeral procession or like a defeated team leaving a championship stadium.
A quip that the rock-strewn boneyard would make the perfect location for the next sci-fi blockbuster – or the ultimate paintball course – is met with a wry smile.
A handful of employees are working on a truck doing what can be done to prepare for a restart – a prospect that still seems far away, yet so close.
FQM is spending around $15 million a month on care and maintenance or in FQM’s terms Preservation and Safe Management of its $10 billion investment. I decide to never use the word mothballing to describe these situations again.
Black mirrors
Less than a third of the workforce remains on site and according to mine management another set of “difficult decisions” are drawing closer as the months continue to flip over.
A year and half is a long time for a skilled copper miner to stand back and stand by when activity surrounding the metal has reached fever pitch. Recruiting thousands of workers to the site would be one of the trickier aspects of a reopening, according to Cobre.
A forlorn parking lot, floors filled with black mirror workstations and gloomy meeting rooms (but thankfully working aircon) in the main office building surrounded by a teeming forest is further testimony to that.
Looking out through the thick green from the boardroom window I fully expect a mantled howler could swing by, something we’re told is not that an uncommon sight.
If there was a ‘do not feed the animals’ sign I missed it. Slipping out the sleek modernist building for a smoke, an idea for Severance: Jungle Edition comes to mind, but that’s probably just the addling heat talking.
A backlog of thousands of contract orders worth in the tens of millions is another pile Cobre’s management needs to process – best case from green light to red metal is now six months but every inactive month stretches out the ramp up period further.
Gravity falls
The 25km road along the slurry pipe to the power station and port (blockaded for weeks during sometimes violent clashes which at one point forced Cobre to helicopter in bottled water) crisscrossed by wildlife corridors is mostly quiet except for another tour bus.
We catch up with them next to a stream near the tailings facility with a poster board helpfully explaining to visitors that, no, Cobre Panama does not drain water from the canal (60km as the harpy eagle flies), one of the more risible accusations leveled at the mine by activists.
Nor does it use mercury, sulphuric acid or cyanide, popular scare words thrown around by the environment NGOs, labour unions and student protestors that exploited growing anger among Panamanians about the country’s rulers. The mine’s flotation circuits simply do not require these chemicals to produce concentrate, just gravity and billions of dollars.
Cause celeb
Science was, surprise, not sufficient to prevent Greta Thunberg and Leonardo Dicaprio from entering the fray with slick Instagram posts produced by outfits like Re:Wild (latest campaign: re:wild your fridge!) in the final months before the shutdown.
Perhaps a quick helicopter ride from Panama City these climate crusaders would’ve seen for themselves how the canopy noticeably thickens the closer you get to the mine as clear cutting for cattle grazing – some of it clearly fresh – turns to jungle.
Perhaps that would’ve allowed celebrities following events from thousands of kilometres away to have a more balanced view of the issues surrounding the mine like how it provides alternatives to subsistence farming and small scale fishing in Panama’s poorer hinterland. Perhaps not.
The tailings facility was also said to be a mortal danger to both man and beast in an interim report rushed out by yet another NGO eager to ride the coattails of Thunberg and Dicaprio (they have long moved on of course: Gaza and bauxite mining in Western Australia respectively).
The NGO’s December 2024 “preliminary comments” are based on Cobre’s semi-annual submission to Panama’s environment minister. The report opens with complaints about the reams of data, and the too many tables and appendices provided by the mine and concludes that collapse is imminent. No site visit was conducted.
Totally understandable, this NGO’s team is mostly based in Oregon and I personally do not recommend boarding red-eyes with zone 5 tickets and 3am layovers in airport terminals under construction if you have to get to the Panama City from the Pacific Northwest on a budget. Pro tip: do avoid George Bush Intercontinental.
Cobre Panama did not drown me in paperwork before visiting the ponds and my own preliminary comments are that the tailings wall is not in imminent danger of collapse.
FQM is conducting a trial to make bricks and is considering exporting the pulverized rock as building or beach sand. Having run my hand through the fine powder and seeing the state of Panama City’s beaches I suggest the latter.
Shovel ready
At the port 120,000 tonnes of ready-to-go copper concentrate still awaits shipping. Cobre Panama’s environment officer says he could find no studies to help with monitoring and preserving the mounds for this long – it is simply a situation no other mine has had to face (and must pray it never does). The 37% copper remains unmarred.
While the future of the mine remains uncertain, desperate local communities are increasingly resorting to informal mining. I got to see this first hand during a visit to a small tourism operator impacted by the closure (water buffalo rides, canoe trips, fishing – all quiet).
While talking to the owner, who indeed looks as Panamanian as a picture from a tourism brochure, not far from the mine a family appears on the river bank carrying shovels.
The makeup of the group, weary after what looked like a day’s work, surprised even the local public relations coordinator and appeared to comprise three generations of women with the youngest barely school age (and clearly not learning that day). Later, while admiring a buffalo’s late arrival, two more families trundle by.
They do not have the looks of people who struck gold that day. But perhaps they are luckier than others in the surrounding villages – organized crime groups from Russia and China have stepped into the breach and infiltrated unauthorized mining in the area.
Perhaps the irony won’t be lost on the Panamanian powers that be much longer.
Face value
Thousands of Panamanians have now seen the project up close and thousands more have been exposed to Cobre Panama through the #CobreConnecta program.
The outreach runs the gamut from meetings with lower-level government and trade union officials to student encounters and mobile exhibits in glitzy Panama City malls complete with VR headsets and cartoon AI Avatars that can answer children’s questions.
In late March FQM was forced to stop all tours of the mine because the Panamanian government believes “public visits may affect the impartiality of any analysis of the Cobre site”.
It’s a stunning admission that in person exposure may leave citizens with different assessments than politicians.
Concrete jungle
Back in Panama City, in a meeting with several members of the country’s business chamber more than once the passion, red and hot-bloodedness of the Panamanian people and its politics are evoked.
The facts of the economic impact presented by the National Council of Private Companies, however, are cold and hard.
Some 54,000 direct and indirect jobs lost, 75% of export earnings gone, credit rating downgrades (junk as of last month according to Fitch) and ballooning budget deficits.
At full tilt the mine contributed more to state finances than the canal, itself under stress due to drought. According to the IMF, Cobre’s fiscal contribution totalled $1.8 billion in 2023 through wages, social security payments, taxes, and domestic procurement.
The fact that the mine contributed 5% of Panama’s GDP is well known by now, but perhaps does not convey how a shuttered Cobre Panama has a greater effect on the nation as halting all building would have on the US (the industry represents 4% of US GDP).
Long covid
Irrational economic decisions by nation-states is not an infrequent global phenomenon.
Germany strangling its proud industries due to high energy costs while at the same time closing down nuclear power plants comes to mind. Canada suddenly rediscovering pipelines faced with Trump tariffs after cancelling or suspending oil and gas projects worth an eye-watering $570 billion in the last decade is another. And indeed, those Trump tariffs.
But the closure of Cobre Panama must rank near the top of policy failures and political self-harm, particularly in a country that can so ill afford it.
Cobre Panama was the lightning rod for discontented citizens in a country that to this day is feeling the effects of the Panama Papers leak that severely damaged its banking sector followed not long after by the pandemic. Panama’s economy contracted by 18% in 2020, one of the world’s worst hit countries.
The protests also happened in the early days of an election cycle that handed the dominant force in Panamanian politics for the last 40 years a defeat unprecedented in scale and José Raúl Mulino, a veteran politician and lawyer, the presidency.
Still, how did Panama get to such a ruinous impasse? To an outsider the region’s politics remain inscrutable. Even the journalists who live and work there I asked for answers could only drill down so far.
Concentrating minds
Things are finally starting to move.
Panama has now authorized the shipment of the copper concentrate worth some $400 million at today’s prices. The cargo is legally owned by FQM, but the government expects “compensation” once the metal moves.
At the end of March, FQM said it is dropping one of its arbitration cases against Panama and suspending another. Franco Nevada maintains its preferred route is talks with the government ahead of its own hearings set for October 2026.
Mulino’s has maintained all along that his controversial social security reforms (made more urgent by the worsening fiscal situation) are a prerequisite for reopening discussions over the mine. That legislation, which has also brought Panamanians out on the streets, has now been passed.
Law 407 of 2023, a de facto ban on all metal mining and exploration in the country, must still be repealed but given the speed with which Law 406 was overturned under political pressure, it may present less of a constitutional obstacle.
FQM representatives quietly admit that the $375 million guaranteed annual royalty agreement signed into law in October 2023 – Law 406 – and tossed out barely a month later is probably just the floor in future negotiations.
That figure was arrived at during protracted negotiations that included mandated months-long work stoppages at the mine so FQM would be under no illusions about what hardball tactics they will be up against. And that may include playing off investors against each other in an industry with no lack of opportunists.
The earth moves
The stormy seas of world trade and the shifting sands of global mining may well be the decisive factor that brings this strange chapter for the copper industry to a close.
The Trump administration has moved quickly to bring Panama fully back under the US sphere of control, strong arming the country to replace the Chinese company running the ports with US investment firm BlackRock.
The US Defense Secretary was in Panama this week for a security summit and the country’s comptroller took the opportunity to accuse CK Hutchison of financial irregularities and demand $1.2 billion for the state coffers even as the Hong Kong company’s exit is being negotiated.
What’s more, critical minerals have now entered the popular consciousness, and as was on clear display with Ukraine, Trump will go to any lengths to procure them.
In November, copper was officially designated as critical with the passing of the US Critical Mineral Consistency Act of 2024.
Not that Trump has given any indication that he needs Congress to knock heads together when there is a deal to be done.
Transfer from Panama City to Cobre Panama was provided by First Quantum Minerals
