Need to Know

May 02, 2024

Mining Discontent

Panama

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Canadian mining company First Quantum Minerals is waiting for the results of Panama’s presidential election on May 5 before deciding what to do with the shuttered Cobre Panama copper mine.

As the Canadian Press reported, First Quantum Minerals closed the mine in November after Panamanians took to the streets to protest the Toronto-based company’s operating agreement with the government and a court ruled that the deal was unconstitutional. The company is now seeking $20 billion from Panama in an arbitration case under a Canada-Panama free trade treaty, noted Bloomberg. First Quantum Materials is also considering selling the mine to Jiangxi Copper, a Chinese company, added Reuters.

The closed mine is only one of the serious economic challenges awaiting whoever wins the vote in the Central American country, wrote the Financial Times.

Panama’s other problems include its low credit rating and high debt, skyrocketing costs for energy and other necessities, the fallout from the coronavirus pandemic, the environmental toll of the government’s pro-business policies and rampant corruption. As the Panama Papers showed, rogue finance is a huge industry in the country. A prolonged drought has also hurt traffic on the Panama Canal, added the PBS News Hour, impacting global trade.

Discontent is simmering in the country. President Laurentino Cortizo, who won office in 2019 but is ineligible according to law to serve another five-year term, failed in his pledge to stamp out corruption. He also has yet to reach a new constitutionally acceptable agreement with First Quantum Materials, a major employer that represents around four percent of the country’s gross domestic product.

“Panamanians generally believe that their country is headed in the wrong direction and are skeptical of the major political parties’ ability to deliver a positive change,” explained World Politics Review.

The current frontrunner in polls is José Raúl Mulino, a former foreign minister and security minister who leads the Realizing Goals party. Originally, he was supposed to serve as vice president to former President Ricardo Martinelli, who served from 2009 to 2014 and was earlier leading the race. However, a court last year sentenced Martinelli to prison for 11 years on a money laundering conviction and invalidated his candidacy, wrote the Americas Society/Council of the Americas.

Martinelli has been campaigning for Mulino from the Nicaraguan embassy in the capital of Panama City, where the ex-president sought asylum to avoid justice, reported America Quarterly. In social media posts featuring his dog, Bruno, Martinelli has been spreading the message that Mulino will bring prosperity back to the country.

Whoever wins, say analysts, needs to square the circle of welcoming investment, sharing the wealth, and protecting the land.

This story originally appeared in the May 02, 2024 newsletter, Mining Discontent.