Panama Protests Intensify Over Controversial Mining Contract

A demonstrator protests outside the National Assembly in Panama City. Source: AP Photos/ Arnulfo Franco

Amidst the ongoing protests against a controversial mining contract gripping Panama, demonstrators oppose the deal and advocate for alternative development paths. They beg the government to prioritize more sustainable industries such as agriculture, fishing, and tourism, rather than investing in resource-intensive mining operations.

First Quantum Minerals grappled with uncertainty as protests in Panama intensified over the fate of its contract to operate one of the world's largest copper mines. After the onset of protests, the Panamanian government demonstrated an inclination toward revoking the contract. However, in a late-evening debate at the National Assembly on Nov. 2, the government backtracked, leaving the public and the company perplexed.

The government's decision to backtrack follows widespread protests expressing concerns about the contract being too favorable to First Quantum, allegations of corruption, and environmental apprehensions surrounding the mine. The uncertainty surrounding the contract's status has led to significant market volatility, with First Quantum shares experiencing a substantial decline.

Despite the challenges, First Quantum reiterated its commitment to the rule of law with the aim of benefiting Panama. The ultimate outcome remains ambiguous, as the government struggles to balance economic interests, environmental concerns, and public sentiment. 

In March, Panama's legislature reached a contentious agreement with the Canadian mining company First Quantum, which allowed the company's local subsidiary, Minera Panama, to resume operations at an open-pit copper mine in central Panama. This specific site had been temporarily closed due to stalled negotiations between the government and First Quantum over payment terms. The agreement granted the enterprise permission to explore the site for another 20 years. 

This set the precedent for the contract that was signed in October. Minera Panama contends that the mine, the largest private investment in Panama's history, contributes significantly to the nation's economy, constituting 3% of the gross domestic product. The mining operations employ thousands of Panamanians, and the shipments from the mine make up 80% of the country's total exports. The mine accounts for 1% of global copper production, representing a crucial variable for the global energy transition. Insofar as copper is an essential material for the construction of electric vehicle batteries, the 20-year span of the agreement entails an unimaginable amount of revenue for First Quantum..

The new contract promises a substantial share of these economic benefits for Panama. It secures a minimum of $375 million annual contribution from Minera Panama, a significant increase compared to the previous deal. The contract represents one of the largest national mining agreements, and it juxtaposes neighboring countries' reluctance towards such massive projects. Costa Rica has a strong reputation of imposing stringent regulations, El Salvador outright banned metal mining in 2017.

Demonstrators take part in a protest against a mining contract between the Panamanian government and the Canadian mining company First Quantum in Panama City. Source: AP Photo/Arnulfo Franco 

The protests against the contract have brought together a coalition of environmentalists, indigenous groups, teachers' and construction unions. These activists emphasize the already-existing challenges Panamanians endure, including water scarcity, droughts in central provinces, animal deaths, and failed harvests. They contend that the government is selling off the nation's natural resources at a time when citizens are wrestling with economic obstacles and climate-related issues.

The weeks-long protests, marked by roadblocks and disruptions, have paralyzed the country, bringing about an $80 million loss for local businesses. Celebrations for Panama's independence were widely canceled, reflecting the widespread impact of the unrest.

In an era marked by the urgent need for sustainable practices and responsible resource management, Panama's struggle over the mining contract echoes a broader international conversation. The pushback against perceived exploitation of natural resources by foreign entities and the demand for equitable economic practices resonate with global movements advocating for environmental justice. The fallout from this crisis poses a potential challenge to Panama's reputation as a stable economic force, impacting its relations with the international community. Countries and corporations engaged in similar ventures are likely watching closely, considering the potential consequences of overlooking public sentiment and environmental impact in resource-driven projects.