Panama’s Supreme Court unanimously held Tuesday that the 20-year concession for the Canadian Cobre Panamá copper mine was unconstitutional.
In its judgement, the courts found that Law 406 of October 20, 2023, which granted the mining concession to Minera Panama, the Panamanian subsidiary of Canadian First Quantum Minerals, was unconstitutional and struck down the entire law. The law would have created a new 20-year contract for First Quantum’s Cobre Panamá mine. Canadian First Quantum acknowledged the judgement. This comes after the contract was thrown into jeopardy when Panama’s President Laurentino Cortizo announced last month that he would referendum to determine the fate of a contentious mining contract and placed a moratorium on new contracts.
Law 406 replaced Law 9 of February 26, 1997, which had previously governed Panama’s interactions with mining companies operating at Cobre Panamá. Law 9, which had granted unrestricted mineral exploitation rights with royalty payments pegged at 2 percent, was declared unconstitutional by Panama’s Supreme Court in 2017. The announcement was delayed until 2021, on the basis that it did not align with the nation’s best interests and lacked a clear commitment to social welfare and the public good. Law 406 aimed to alleviate some of the concerns with Law 9 and introduced increased royalty payments of 12 to 16 percent alongside minimum contributions of $375 million.
Environmentalist groups have argued that Law 406 was environmentally unsound and cited concerns with the rapid passage of Law 406. Clashes had been ongoing, leading to injuries and deaths alongside road closures and blockages. They have also pointed to the Escazú Agreement for environmental justice, which Panama signed in September 2018, requiring states to hold binding public participation sessions before approving projects that have the potential to be environmentally damaging.
The mine is located 120 kilometres west of Panama City and is crucial to the Panamanian economy. According to First Quantum, the mine accounted for around 2 percent of all Panamanian jobs, and accounts for about 5 percent of the country’s gross domestic product. The Cobre Panama mine began production in 2019 and cost the company $6.8 billion to build. The company has said that it has informed the Panamanian Ministry of Industry and Commerce that it had taken legal step that could lead arbitration proceedings.
