The Panamanian government announced its intention to enter discussions with First Quantum Minerals (TSX: FM) in the coming months regarding the environmental impact of its closed Cobre Panamá copper mine. This announcement follows the recent inauguration of Panama’s new president, who has indicated that the mine might need to be temporarily reopened to ensure a responsible and permanent closure.
Foreign Affairs Minister Javier Martinez-Acha Vasquez highlighted the government’s commitment to addressing environmental issues related to the mine.
“From the environmental standpoint, it has to be dealt with in the coming months,” Martinez-Acha Vasquez said during an interview at a Council of the Americas event in Washington. “I can’t say how many months, but we will be responsible and hold a dialogue with the Canadians.”
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The $10 billion mine was abruptly shuttered last year after Panama’s Supreme Court ruled that its operating contract was unconstitutional. The sudden closure has had significant economic implications for the country.
Panamanian President Jose Raul Mulino has ordered an environmental audit of the mine to evaluate whether it can be reopened temporarily. This step is seen as crucial for determining the best course of action for the site.
“Whatever the decision, in order to close it, it has to be opened and operated for environmental reasons,” Martinez-Acha Vasquez explained. “You can’t leave an open-pit mine in those conditions. We are a responsible country and we will talk with the Canadian investors when the time comes.”
The mine’s closure has contributed to a slowdown in Panama’s economic growth, though the national economy still expanded by approximately 3% in the first half of this year. Martinez-Acha Vasquez expressed optimism about maintaining this growth rate despite the challenges. “We are optimistic that we can maintain that percentage,” he said.
The new administration is currently prioritizing other critical issues, such as managing the water supply for the Panama Canal, implementing social security reforms, and addressing the fiscal deficit to maintain the country’s investment-grade credit rating. Panama was downgraded to junk status by Fitch Ratings in March but still holds investment-grade ratings from S&P Global Ratings and Moody’s.
First Quantum Minerals last traded at $16.38 on the TSX.
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