How a copper mine prompted mass protests in Panama

Panama has been witnessing widespread protests against the government's decision to grant a 20-year license to Canadian firm First Quantum Minerals to operate a copper mine. The Foreign Policy journal examined how these protests, which have disrupted the country, highlight concerns about environmental impacts, water contamination, and the expansion of mining in Panama. The government has responded to the unrest by banning new mining contracts and scheduling a nationwide referendum on the cancellation of the First Quantum's deal, reflecting a growing dilemma in Latin America's energy transition, where resource-rich regions grapple with balancing economic opportunities with environmental and social concerns. Caliber.Az reprints this article.

"Last week, Panama hosted a United Nations climate event for Latin American and Caribbean countries. It was meant to be a regional prep of sorts ahead of the global U.N. climate conference in Dubai that begins later this month. But environmental issues were also in the spotlight outside of formal meeting rooms, as visitors encountered a country consumed by mass protests.

Since August—and more intensely over the past two weeks—Panamanians have been demonstrating against their government’s decision to grant a new 20-year license to Canadian firm First Quantum Minerals. The government secured an increase in its royalties from First Quantum’s copper mine in Panama, which accounts for some 1.5 percent of global copper output. Copper is a key component in electric car batteries, and global demand for the mineral is expected to increase as the energy transition accelerates.

Demonstrators claim the company’s new contract was fast-tracked by legislators and that citizens were not able to properly voice concerns about the mine’s environmental impacts. Panama’s environment ministry and communities near the mine have reported multiple instances of related water contamination over the years, though First Quantum says it complies with the highest environmental standards. Many protesters also voiced opposition to the expansion of mining in Panama more broadly, citing fears about its adverse effects on biodiversity and human health.

The protests were large and disruptive, shutting down traffic across the small country. They also expanded to address other grievances, such as cost-of-living strains, corruption, and the heavy-handed police reaction to the unrest.

Panama holds general elections next May, and the demonstrations spell political danger for the party of center-left President Laurentino Cortizo, which is polling poorly. By October 27, Cortizo announced he would ban new mining contracts in the country. On Sunday, he followed up by saying he planned to schedule a nationwide referendum on whether to scrap First Quantum’s deal. The government has also promoted a bill in Congress to overrule the law that enacted the contract, and Panama’s top court has agreed to hear lawsuits that challenge the deal.

The unrest and subsequent moves by the government—which is seen as among the most pro-business in the region—have shocked commodity-watchers and investors worldwide. First Quantum’s mine not only accounts for a significant chunk of the global copper supply, but it also was slated to provide the Panamanian government with annual revenues equivalent to around half a percent of the country’s GDP.

Yet the protests in Panama underscore a looming dilemma in Latin America’s energy transition. The region is home to many of the critical minerals and rare earths needed for a low-carbon transformation, and these resources could potentially be an economic boon for the region. But if voters are not on board with extraction projects, in some cases mining could come to a jarring halt.

Writing in Foreign Policy in April, Robert Muggah and Mac Margolis discussed how this quandary is playing out in Brazil, where close to one-third of the country’s critical minerals wealth—including one of the world’s largest deposits of rare earths—is located beneath the Amazon River basin. As Brazil’s mining ministry works on a national strategic minerals plan, Muggah and Margolis called for the country to 'create productive strategies for delivering both wealth and well-being'.

These could include implementing the Escazú Agreement on Access to Information, Public Participation, and Justice in Environmental Matters in Latin America and the Caribbean, adopted in 2018 and now ratified by 15 countries in the region. Signatories to the agreement committed their government agencies to providing environmental information—such as how a mining project might affect a local community—to anyone who solicits it, taking no longer than 30 business days. Authorities must also hold public consultations on decisions that would affect the environment.

Panama has ratified the Escazú Agreement, but Brazil has not; Brazilian environmentalists including current Environment Minister Marina Silva have called for ratification. In Panama, activists claimed First Quantum’s new contract violated the treaty.

Chile, which ratified the Escazú Agreement in 2022, has built heightened environmental protection measures into its strategy to expand lithium mining and has still seen booming interest from mining firms. Though they introduce a greater burden on industry, these protection measures can also help safeguard against socio-political disruptions to production—as long as they’re followed".