Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Canada’s First Quantum Minerals on Monday said it was stepping back from a multi-billion-dollar arbitration demand against Panama’s government over the closing of one of the world’s largest copper mines.
The company suspended one case and dropped another, in a signal that there could soon be a resolution to one of the largest investor-state disputes in history.
First Quantum’s local subsidiary had been seeking damages of more than $20bn.
The news will give some breathing room to Panama’s President José Raúl Mulino, who has faced mounting challenges since he took office last year.
Panama faces a precarious fiscal situation, partly because of uncertainty over future revenues from the mine, and is contending with US threats to take back the Panama Canal over alleged Chinese influence in the waterway.
First Quantum had invested about $10bn in the Cobre Panamá copper mine — the Central American nation’s largest foreign direct investment — when it was abruptly closed down following protests in 2023 over allegations of corruption and environmental concerns.
The closure was a blow to Panama’s business-friendly reputation. The mine generated more than 3 per cent of GDP and hundreds of millions of dollars in government revenue.
Panama’s government has long said that for talks to restart the company had to drop its arbitration cases. “Panama is not going to sit with a gun to its head and fix the problem,” Mulino said last year.
First Quantum said on Monday it suspended an arbitration notice it had filed under a Canada-Panama bilateral free trade deal, and dropped another case filed with the Paris-based International Chamber of Commerce’s International Court of Arbitration.
It said that it was “committed to dialogue with the Government of Panama and to being part of a solution for the country and the Panamanian people”.
The future of the mine is a delicate economic and political question, with the country’s leaders keen to avoid a repeat of the social upheaval that led to its closure.
Environmentalists are pushing for a responsible closure of the site, while some in the private sector hope it can be renegotiated with the company or tendered again.
How Panama handles the mine is being closely watched as the country grapples with US pressure over the Panama Canal, where another foreign investor — Hong Kong-based conglomerate CK Hutchison — holds a concession for two ports.
Chinese authorities are reviewing a preliminary deal reached by CK Hutchison to sell its ports business to a group led by US investor BlackRock. Panama’s government comptroller is also auditing the local subsidiary that runs the ports.
