Panama President Ratchets Up Nationalism Ahead of Mine Talks

Panama’s economic and political landscape is in flux as President José Raúl Mulino doubles down on resource nationalism, refusing to back down in a high-stakes dispute over the Cobre Panama copper mine. The government’s hardline stance—rooted in constitutional principles and environmental accountability—has sparked a crisis with profound implications for global investors, national sovereignty, and the future of copper supply chains.

The Cobre Panama Mine: A Symbol of Sovereignty and Strife

At the heart of the conflict is the Cobre Panama mine, a $6.3 billion venture operated by Canadian firm First Quantum Minerals. Once the largest single contributor to Panama’s GDP (5% in 2022), the mine was abruptly shut down in November 2023 after Panama’s Supreme Court ruled its original 2007 concession violated constitutional clauses requiring state ownership of mineral resources and stricter environmental safeguards.

The mine’s closure has had seismic economic effects. Panama’s GDP growth plummeted to 2.9% in 2024, down from 7.4% in 2023, as the mine’s 75% share of exports vanished. Credit rating agency Fitch downgraded Panama’s sovereign debt to junk status in March 2024, and S&P now warns that potential liabilities from First Quantum’s arbitration claims could reach 20% of GDP, pushing borrowing costs to unsustainable levels.

Legal Stalemate: Nationalism vs. Investor Rights

Panama’s refusal to negotiate a new mining contract for Cobre Panama—announced in April 2025—reflects a broader ideological shift. The government insists on a “real association” model, where the state asserts full ownership and control over mineral resources, rejecting the original concession’s terms as colonial-era relics. This position aligns with Law 407 of 2023, which banned new metal mining projects entirely.

First Quantum, meanwhile, suspended its $20 billion arbitration claim at the International Centre for Settlement of Investment Disputes (ICSID) in April 2025, signaling a possible shift toward negotiations. Yet congressional approval for any revised agreement remains uncertain. Panama’s National Assembly, dominated by Mulino’s coalition, has grown increasingly hostile to mining projects after grassroots protests exposed risks like the mine’s unstable tailings dam—a potential ecological disaster highlighted in a December 2024 report.

Environmental Activism and Economic Dilemmas

Environmental groups like the “Panama is Worth More Without Mining” coalition have amplified public opposition, leveraging concerns over water contamination and biodiversity loss. Their activism aligns with Panama’s pivot toward sustainability, but it has also deepened fiscal strain. The government now faces a Sophie’s choice: revive the mine to stabilize GDP (potentially lifting growth to 5% with full operations) or adhere to ecological principles at the cost of economic recovery.

For global investors, the stakes are existential. Cobre Panama supplied 1.5% of global copper production—a critical metal for renewable energy and electric vehicles. With demand projected to surge 70% by 2050, the mine’s stockpiled copper reserves (120,000 metric tons exported in March 2025) offer only temporary relief. First Quantum’s stock price, already down 15% year-to-date by April 2025, reflects investor anxiety over the mine’s uncertain future.

The Path Forward: Risks and Rewards

A resolution hinges on three factors:
1. Legal Compromise: Panama must reconcile its constitutional demands with investor interests. A revised agreement could see the state assume a 51% stake while retaining operational control—a model used in Chile’s copper sector.
2. Environmental Safeguards: Remediation of the tailings dam and compliance with Law 407’s ecological standards will be non-negotiable for public and international approval.
3. Global Copper Demand: With the U.S. seeking to diversify supply chains away from China, Cobre Panama’s strategic value could pressure policymakers to act.

The risks remain stark. If unresolved, Panama’s sovereign debt—already at junk status—faces further downgrades, while First Quantum’s monthly maintenance costs ($11–$13 million) and lost revenue (40% of 2023 profits) could force operational abandonment. Conversely, a deal could unlock 330,863 tons of annual copper production, revitalizing Panama’s economy and stabilizing global supply chains.

Conclusion: A Crossroads for Sovereignty and Supply Chains

Panama’s mine dispute is a microcosm of a global reckoning: how to balance resource nationalism with investor confidence, ecological preservation with economic survival. The data is unequivocal:
- A reopened Cobre Panama could add 3.5 percentage points to Panama’s GDP (from 2.9% to 6.4%).
- Global copper markets, facing a 20% deficit by 2030, rely on the mine’s output to meet renewable energy demands.
- First Quantum’s stock price—down 15% in 2025—could rebound if a deal emerges, but remains vulnerable to regulatory delays or environmental setbacks.

For investors, the lesson is clear: jurisdictions prioritizing sovereignty over contracts now demand rigorous due diligence on political stability and environmental governance. Panama’s standoff serves as a warning—and an opportunity—for those navigating the new era of resource nationalism. The clock is ticking, and the stakes could not be higher.