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Panama will demand that any new deal to reopen the US$10 billion Cobre Panama copper mine explicitly acknowledges the state’s possession of the land and its mineral assets, Finance Minister Felipe Chapman mentioned in response to a Bloomberg report.
“For us, it’s essential to have an settlement that states very clearly that assets belong to the Republic of Panama,” Chapman instructed Bloomberg in the course of the Worldwide Financial Fund (IMF) and World Financial institution annual conferences in Washington.
Operated by Canada’s First Quantum Minerals (TSX:FM,OTC Pink:FQVLF), the Cobre Panama mine was ordered shut in late 2023 following a Supreme Courtroom ruling that voided its 20-year working contract as unconstitutional.
The choice got here after weeks of mass protests over environmental considerations and what many Panamanians noticed as an unfair deal for the state.
The closure and the following government-imposed moratorium on new mining concessions despatched shockwaves by means of Panama’s financial system, which had relied on the mine for roughly 5 p.c of its GDP and 1 p.c of worldwide copper provide.
President José Raúl Mulino’s new administration has since been laying the groundwork to reopen talks with First Quantum, which agreed earlier this yr to droop its arbitration proceedings towards Panama.
Franco-Nevada (TSX:FNV,NYSE:FNV), a metals streaming companion with an curiosity within the mine, additionally paused its personal arbitration case final June as the corporate tried to clear the way in which for renewed dialogue.
Regardless of lingering divisions over mining, Chapman mentioned public sentiment towards Cobre Panama has softened. Current polls present that about 50 p.c of Panamanians now view the mine negatively, down from over 80 p.c a yr earlier, whereas a large “agnostic” group stays open to supporting a deal below honest situations.
Chapman additionally emphasised fiscal self-discipline amid the nation’s financial challenges, calling Panama’s deficit targets of 4 p.c for 2025 and three.5 p.c for 2026 “non-negotiable.”
He mentioned the federal government would look forward to international rates of interest to say no additional earlier than returning to the bond market.
Cobre Panama was one of many largest industrial operations in Central America and represented many years of funding. First Quantum spent greater than 20 years and about US$10 billion to convey it into manufacturing, which started in 2019.
Its closure in November 2023 not solely halted 1000’s of direct and oblique jobs but additionally triggered a broader freeze within the mining sector.
The financial fallout was swift: credit score company Fitch Scores downgraded Panama’s sovereign score in March 2024 from BBB– to BB+, citing governance dangers and monetary pressure after the mine’s closure.
The IMF predicted Panama’s GDP progress to decelerate to 2.9 p.c in 2024 from 7.4 p.c the earlier yr, earlier than rebounding to 4.5 p.c in 2025 as different sectors choose up.
Earlier this yr, the federal government additionally authorised the elimination of roughly 120,000 metric tons of copper focus that has been stranded on the web site because the mine was shuttered.
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Securities Disclosure: I, Giann Liguid, maintain no direct funding curiosity in any firm talked about on this article.
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