A decision the country has postponed for two years
There are assets a country can neither operate nor fully close, and Cobre Panamá is the perfect example. Central America’s largest open-pit copper mine has been paralyzed since November 2023, when the Supreme Court declared its concession contract unconstitutional. Since then, it neither reopens nor shuts down: it stays in a 10-billion-dollar limbo the country cannot resolve. This week the government took one more step toward that resolution, but the underlying dilemma remains intact.
The most recent move was institutional. President José Raúl Mulino created an inter-institutional working group to assess the future of First Quantum Minerals’ closed copper mine, led by the Ministry of Commerce and including the finance and environment ministers, which will analyze the technical, legal, economic and environmental aspects before formulating recommendations. It is the prelude to a decision the president himself promised for this month. Mulino said he is confident his government will announce the decision on the mine in June.
The reason for so much caution lies in the nature of the problem: any decision has an enormous cost and an enormous benefit, and both are measurable. Reopening means jobs and revenue but collides with a constitutional ruling and deep social rejection. Closing definitively means respecting that ruling but giving up one of the country’s largest sources of foreign currency and exposing it to multibillion-dollar arbitration. There is no cost-free exit, which is why the country has spent two years looking for one that does not exist.
The numbers pushing toward reopening
Let us start with the numbers that make it so hard to simply close the mine. The first is employment. The operation represented 7,000 direct jobs and close to 30,000 indirect ones, according to figures from the Panamanian government and the company. Thirty-seven thousand families depended on that operation, and its paralysis left a labor void no other industry has filled in two years. First Quantum implemented a voluntary retirement scheme for workers amid the uncertainty over its activities.
The second number is the mine’s weight in the economy and in the world. In 2022, Cobre Panamá produced 2 percent of the world’s copper. It is not a marginal mine: it is a relevant player in the global market for a metal whose demand grows with the energy transition and electrification. For a small country, controlling 2 percent of world production of a strategic mineral is a geopolitical as well as an economic asset.
The third, and the one that weighs most in the fiscal calculation, is what the mine contributes to the state. As documented, analysts estimate a reactivation under new terms could add at least 500 million dollars a year to public coffers, a significant fraction of the deficit the government strives to reduce. Bank of America identified the possible reopening of the mine as the main positive risk event of 2026 for the Panamanian economy, alongside the strength of the Canal. For the markets, the idle mine is money left on the table.
The numbers pushing toward closure
Against those numbers, there are others just as forceful that explain why reopening is not simple. The first is legal and is the origin of everything. The concession contract was declared unconstitutional in November 2023 by the Supreme Court because it violated 25 constitutional articles, amid the largest public protests in Panama in decades. It was not a technical closure nor a reversible administrative decision: it was a ruling by the highest court that struck down the contract for violating the Constitution on two dozen points. Reopening requires building an entirely new legal framework that does not repeat those flaws.
The second is the social rejection, which was massive and remains alive. As recorded, a majority of the population opposed mining at the time, and the 2023 protests mixed rejection of the contract with rejection of the government of the day. Environmentalists and sectors of organized civil society insist the project is harmful and must stay closed, while former workers and economic sectors demand its reactivation. Panamanian society is split, and any government decision will face a significant portion of the country.
The third is environmental, and it is the one the government itself acknowledges as a priority. The inactive mineral in the mine generates environmental risks, such as acid rock drainage, associated with the prolonged stockpiling of material. The idle mine is not environmentally neutral: the accumulated material can contaminate if not managed. That is, paradoxically, one of the reasons the government uses to justify limited activity at the site, which opens slippery terrain between environmental management and disguised reactivation.
The authorization that opened the back door
In April 2026, the government took an intermediate decision that illustrates the ambiguity of the whole situation. The government authorized First Quantum to extract, process and export material previously stored at the site — about 38 million tons of ore with a recovery potential of some 70,000 tons of copper — in a measure that, without implying formal reopening, shifted the course of the discussion. Officially, the authorization has an environmental, not extractive, purpose. The Executive emphasized it is a limited action, with an environmental focus and without reactivation of extractive activities.
But the measure has an undeniable fiscal component. The government expects to channel about 29 million dollars from that operation toward public projects. The authorization solves two problems at once: it mitigates the environmental risk of the accumulated material and generates revenue. The problem is that it also sets a precedent: if copper can be processed and exported “for environmental reasons,” the line between managing the closure and partial reactivation becomes blurry. What is presented as cleanup has the economic shape of a reduced mining operation.
That ambiguity feeds the distrust of those who oppose it. For environmentalists, the April authorization is proof that the “safe” closure is the entry door to reopening. For the government, it is responsible management of a liability that cannot be ignored. The dispute over when that copper was extracted — before or after the unconstitutionality ruling — sums up the underlying legal tension: even the already-extracted mineral is in legal dispute over who owns it and under what rules it can be sold.
The factor that changes the whole negotiation
There is a change of position that reordered the board and explains why reopening returned to the table. For months, the sword hanging over Panama was the international arbitrations. Four international arbitrations were filed against Panama totaling 29 billion dollars; three of them, summing 27 billion, were suspended, and one, for 2 billion, was definitively withdrawn. That figure — 29 billion, several times the state’s annual budget — was an existential threat to public finances.
The suspension of the arbitrations was not free: it was the price of sitting down to negotiate. First Quantum and Franco Nevada suspended the international arbitrations filed after the mine’s closure, a condition demanded by Mulino to advance the talks. First Quantum withdrew one arbitration and suspended another to facilitate the conversations, and accepted state ownership of mineral resources as the basis for the negotiations. That recognition — that the land and minerals belong to the state — is the key concession that unlocked the dialogue, because it disarms the argument that the company has a permanent right over the deposit.
The arbitration’s final hearing, meanwhile, was left on hold. The final hearing of the international arbitration process over Cobre Panamá was rescheduled at the government’s request. The implicit message is that both parties prefer a negotiated settlement to an uncertain arbitral ruling: Panama avoids the risk of a multibillion-dollar condemnation, and First Quantum avoids losing everything. The negotiation is, at bottom, an exchange of risks: each side cedes certainty in exchange for not being exposed to the worst scenario.
The anatomy of a closure: how Panama got here
To understand the current dilemma, it helps to reconstruct how it was reached, because the 2023 closure was no accident but the climax of a political crisis. The mine was disabled after its contract was declared unconstitutional in November 2023, amid a rejection that mixed opposition to mining with rejection of the government of then-president Laurentino Cortizo. That year’s protests were the largest in decades, and they blocked the country for weeks. The Court’s ruling did not arise in a vacuum: it responded to a social pressure that had turned the mine into the symbol of a questioned development model.
The government of the day went so far as to contemplate an unprecedented way out to settle the conflict. The Executive announced it would ask the Electoral Tribunal for a “popular consultation” so citizens could decide whether to repeal the concession renewal, after a week of intense demonstrations. That proposal — submitting the future of a mining contract to a referendum — showed how far the conflict overflowed normal institutional channels. That a government considered handing the decision to a direct vote is the measure of the dead end it had reached.
It is also worth specifying who owns the operation, because it adds a diplomatic layer to the dilemma. Minera Panamá is a joint venture between First Quantum Minerals, which owns 90 percent, and the South Korean state corporation KOMIR, with 10 percent. The presence of a South Korean state partner turns any decision on the mine into a matter that transcends the relationship between Panama and a Canadian company: it also involves the interests of an Asian state with diplomatic weight. Closing or reopening is not only an internal matter; it has recipients in Toronto and in Seoul.
The fiscal adjustment the mine could accelerate or stall
The decision on Cobre Panamá does not happen in a fiscal vacuum, but amid the consolidation effort the government displays as its greatest achievement. According to Bank of America, Panama reduced the non-financial public sector deficit from 6.2 percent of GDP in 2024 to 3.7 percent in 2025, and in the first quarter of 2026 the indicator fell to 3.5 percent, aligning with the fiscal target. The bank stressed that the fiscal adjustment underway in Panama is considerable. In that context, the 500 million a year the mine could contribute is not a luxury, but a piece that would fit right into the path of deficit reduction.
The markets’ reading, however, is more cautious than the enthusiasm suggests. Bank of America kept its “Marketweight” recommendation on Panama’s external debt, considering that markets already reflect much of the positive outlook tied to mining, fiscal discipline and the Canal. In other words: the price of Panamanian debt already incorporates the expectation that the mine reopens. If that reopening materializes, the surprise effect will be limited; but if the decision is closure, the market could react negatively, because it would have priced in a scenario that does not occur. The expectation itself has become a factor conditioning the decision.
There is also a global-opportunity component rarely mentioned. Copper is one of the central metals of the energy transition: electric vehicles, grids and renewables consume it in growing quantities. A mine that produces 2 percent of the world’s copper, idle for years, is, in global-market terms, supply withdrawn at a moment of rising demand. That conjuncture plays in favor of reopening from pure economic logic, and it is one of the arguments wielded by the sectors demanding reactivation. The metal is worth more today than when the mine closed, which makes the opportunity cost of keeping it idle even more visible. That pressure from the international price adds urgency to a decision the government can no longer postpone indefinitely without a growing cost.
What June’s decision really decides
When Mulino announces his decision, he will not be solving a technical problem but choosing which cost he is willing to pay. If he opts for reopening, he will have to build a contract that gets around the 25 constitutional flaws that struck down the previous one, face the sectors that reject mining and prove that the conditions — environmental, fiscal, ownership — are substantially different from 2023’s. The prize would be recovering jobs, foreign currency and the 500 million a year that ease the deficit.
If he opts for definitive closure, he will respect the ruling and the will expressed in the protests, but he will have to manage the environmental closure of a huge deposit, give up a major source of revenue and, perhaps, reactivate the arbitrations now suspended. The cost of closing is not zero: it is the lost revenue plus the arbitral risk plus the environmental liability that must be addressed anyway.
The environmental audit will probably be the technical arbiter of the decision. The announcement could be backed by the results of the environmental audit conducted on the mining project. That audit serves a political as well as a technical function: it offers the government an “objective” basis to justify whatever it decides, whether to reopen under strict conditions or to close due to risk. Whoever controls the environmental diagnosis controls, in large part, the framing of the decision.
That centrality of the audit explains why its content will be disputed with the same intensity as the decision itself. If the diagnosis concludes the operation can be environmentally viable under certain conditions, the government will have the technical cover to reopen; if it concludes otherwise, it will have it to close. That is why the opposing sectors do not passively await the result: they question in advance the methodology, the independence of those conducting it and the scope of what it measures. The battle over the mine’s future is being fought, in part, on the seemingly neutral terrain of a technical report, because both sides understand that document will be the basis on which the coming political decision is justified.
The balance of the dilemma
Cobre Panamá is the textbook case of a dilemma with no clean solution. The numbers in favor of reopening — 37,000 jobs, 2 percent of the world’s copper, 500 million a year for the treasury, the main positive risk according to the banks — are as real as those pushing toward closure: a ruling that found 25 constitutional violations, a majority social rejection, an active environmental liability and the shadow of 29 billion in arbitration. It is not a case of good versus bad, but of costs versus costs, which is why it has gone two years unresolved.
The verdict June’s decision will leave is not the end of the story, but the beginning of a new phase of dispute. If Mulino reopens, the environmentalists and the sectors that protested in 2023 will return to the streets and the courts; if he closes, former workers and the markets will react, and the arbitrations could reactivate. The only certainty is that, whatever he decides, a significant part of the country will be against it. The 10-billion-dollar mine is not just an idle economic asset: it is a mirror of Panama’s tensions between development and environment, between sovereignty and international commitments, between the figure that enters the coffers and the cost that appears on no balance sheet. June will tell which cost the government chose; none of them will be free.