Panama bans new mining contracts in response amid protests

The Panamanian parliament recently approved a suspension of new metal mining contracts, responding to extensive protests against a deal involving a Canadian copper company. These protests mark the most substantial social unrest in Panama since the 1980s when the country demonstrated against the dictatorship of Manuel Noriega. The National Assembly passed a law banning the issuance of fresh mining concessions for metal exploration or extraction, and President Laurentino Cortizo quickly endorsed the law.

Image Credit (REUTERS)

This decision follows a continuous two-week period of protests that led to road blockades and disruptions in local supply chains. The protests began on October 20, triggered by Congress’s approval of legislation permitting First Quantum Minerals, a Canadian corporation based in Vancouver, to operate Central America’s most prominent open-pit copper mine for two decades, with the option to extend for an additional twenty years. In response to this mining contract, demonstrators took to the streets in Panama, establishing blockades in the capital and other cities. Some even blocked the Pan-American highway, a crucial transportation route connecting Panama with the rest of Central America.

Originally centered around environmental concerns related to the First Quantum mine, the protesters later expanded their demands to include a suspension of all new mining contracts. It’s worth noting that the moratorium, passed on a Friday with an unspecified duration, does not affect the already-approved agreement with First Quantum. Instead, the constitutionality of this agreement is currently under examination by Panama’s Supreme Court. However, the moratorium will temporarily suspend the consideration of 103 mining concessions and the renewal of 15 other existing contracts, as per information from Panama’s CIAM environmental advocacy center, an NGO.

Activist Raisa Banfield hailed Friday’s decision as “a significant milestone for a nation that had previously embraced mining.” The government has defended the First Quantum contract, arguing that the mine is expected to generate around $375 million in annual revenue for the state. They have also cautioned that the closure of the mine could result in the loss of approximately 8,000 direct jobs and 40,000 indirect jobs. However, these explanations did not satisfy the protesters, who continued their blockades, prompting the president to propose a referendum on the contract. This idea was rejected by Panama’s electoral tribunal, the entity responsible for organizing such referendums.

Subsequently, the government and parliament have reached an agreement to let the Supreme Court have the final say on the contract’s validity. The timeline for the court’s decision remains uncertain. First Quantum, with an investment of over $10 billion in Panama, asserts that it contributes five percent to the country’s GDP. Since its launch in February 2019, the mine has been producing approximately 300,000 tons of copper concentrate annually. Lilian Guevara, director of CIAM (the environmental advocacy center), stated, “The country is not only rejecting the contract but also voicing its opposition to this harmful form of unsustainable economic development.”