Exploitation or Salvation? The Impacts of Foreign Mining Involvement in Panama
After weeks of protests across Panama surrounding the renegotiation of a copper mining contract with the Canadian mining company First Quantum Minerals, the country’s supreme court ruled the contract unconstitutional. The contract granted Minera Panama, a subsidiary of First Quantum, access to the Cobre Panama mine, a 32,000-acre property in the rainforests of the Donoso district. The Supreme Court sided with the Center for Environmental Impact after it filed a lawsuit ruling the contract illegal because there was no public tender, ruling the initial contract unconstitutional in 2017. However, the mine progressed toward full production when renegotiations began in 2021. After years of arguments, the renegotiated contract passed in October.
President Laurentino Cortizo cited the 9,387 direct jobs provided by the company as incentive enough to renegotiate a more beneficial contract. However, outraged citizens saw the dealings as a corrupt government selling off land regardless of the detrimental consequences on the local populations and the environment. Protesters showed their opposition by blockading the Pan-American highway. Because the highway serves as a vital route through which goods are transported through Panama, its blockade cost the nation millions of dollars and stranded truckers for over 35 days. However, the protests turned deadly when a civilian shot two protestors, illustrating how tensions are running high between the mine’s advocates and its critics.
According to Panama’s former Vice-Minister of Finance Publio Cortés, the contract created a “colonial enclave” reminiscent of the United States’ intervention and involvement with the Panama Canal. The treaty has negative ramifications for Panama’s political and economic autonomy. The country’s history is inextricably intertwined with foreign intervention.
Indigenous gold mining existed for hundreds of years before Spain’s colonization and subsequent exploitation of Panama’s mines. Centuries later, the prime geographical location of The Isthmus drew foreign attention, including from the United States. When Panama became part of Colombia in 1831, the U.S. approached the nation to negotiate rights to the canal. Though Colombian officials refused to sign a treaty giving the United States control over The Isthmus, fearing sovereignty infraction, the U.S. responded by backing a Panamanian revolution and supporting the nation’s newfound independence. After the treaty’s ratification, Panama’s frustration over American mistreatment and discrimination of Panamanians soured relations. Panama regained control over the canal in 1999, but renewed foreign involvement in the nation’s mineral resources continues to play a crucial role in the nation’s economy.
Library of Congress: United States Construction of the Panama Canal in 1913
Panama’s dealings with First Quantum constituted five percent of its GDP over their 20-year relationship, and the contract planned to pay the government at least $375 million annually. The mine also accounted for more than two percent of the nation’s employment. However, the latest court ruling does not mark the end of the saga of foreign exploitation. First Quantum issued an arbitration request to Panama’s government before the International Court of Arbitration. This request was issued to enforce the company’s rights to mine under the Panama-Canadian Free Trade Agreement, and this ruling may have significant financial consequences for the nation.
Experts predict that a Panamanian loss in the international courts may cost the country $50 billion in damages. Even if Panama succeeds in court, the nation’s GDP growth is still expected to drop one to two percent. The revocation of the contract may revoke 40,000 direct and indirect jobs. There is still the possibility for additional renegotiations, as First Quantum said they are committed to making the project work. Additionally, the Union of Panamanian Mine Workers’ denunciation of the ruling, and subsequent public pressure, may spur the government to seek a more beneficial contract rather than suffer economically.
Other than mining, Panama’s economy relies on its service sector, which includes trade (through the canal and the Colon Free Trade Zone) and tourism. However, canal trade is decreasing due to drought, which currently reduces daily traffic through the narrow corridor by nearly 40 percent. This has resulted in monthly revenue losses of $100 million since October. These mining endeavors stand to exacerbate these problems through the increased use of an already scarce water supply. Many critics propose that, rather than expand economically through harmful foreign exploitation, the Panamanian government should focus on developing its service sectors.
Although the suspension may saddle Panama with significant economic burdens, mining’s existence wreaks environmental devastation. The rainforests in which the mine is located serve as a crucial carbon sink, absorbing 18.3 million tons of CO2 between 2016 and 2020. Furthermore, over 1,000 wildlife species live in the biodiverse Donoso Protected Area near the mines, many of which are on the International Union for Conservation of Nature Red List of Threatened Species. The mine-related deforestation poses a significant threat to the health of Panama’s ecosystems and environment.
However, First Quantum claims to observe green mining practices to counteract the environmental harm resulting from their mines. The company implemented climate change policies predicting a 30% reduction in greenhouse gasses by 2025 in the Cobre Panama mine. They also plan to enrich the mine’s surrounding community by operating a nursery for reforestation efforts. Unfortunately, reality fails to mirror what First Quantum promises. Inspections unveiled 209 instances of non-compliance with the Minera Panama mine’s actions in accordance with the 2011 Environmental Impact Assessment. Additionally, locals say they have yet to see any benefits (other than increased employment) despite their proximity to the lucrative mine. While they may be well-intentioned, First Quantum’s attempts to support the surrounding community do little to remedy the economic disparities between the mine’s vast mineral wealth and its impoverished surroundings.
Image Credit: Reuters
The Cobre Panama mine harvests copper in the rainforests of the Donso protected district.
A pivotal reason foreign powers push for the mine’s continuation stems from the stress on the vast energy capabilities of the material being harvested: copper. Because of the mineral’s electrical conductivity that can be used for decarbonization and electrification, it plays an essential role in the shift to clean energy. Demand for copper is likely to double by 2035, but there simply isn’t enough copper to meet the market’s desire. Because of this, the pressure surrounding its extraction is only increasing. Foreign developers shifted their attention to Panama’s Cerro Colorado region, one of the world’s largest undeveloped copper deposits. However, the area is located within the territory of the indigenous Ngäbe-Buglé, who continuously resist any attempts to open a mine because a prospering environment plays an integral role in their cultural traditions.
Panama is not the only nation influenced by foreign mining intervention. Countries like the Democratic Republic of the Congo are grappling with the civilian disasters of cobalt mine exploitation. However, the supreme court ruling means that Panama is at a crossroads, and now must choose whether to terminate relations with First Quantum or to restart negotiations. Will the country choose to break free from foreign involvement and further develop its domestic industries or continue its interdependence with foreign nations? And will the nation prioritize the wellbeing of its people and its environment or will it continue maximizing the economic benefits of the mine?
Image Credit: Roberto Cisneros/AFP via Getty Images
Standing outside the Supreme Court building, demonstrators protest against Canadian company First Quantum’s contract with the Panamanian government regarding the Cobre Panama mine.