The Threat of Mining within Panamá
Author: Chloe Blackburn
PANAMA
“We have unanimously decided to declare the entire Law 406 unconditional,” said the Supreme Court president Maria Eugenia Lopez. After months of endless protest, Central America’s Largest open-pit copper mine has finally closed. How did Panamá get here? There is a complex and politically draining history regarding mining in Panamá. Operated by First Quantum Minerals, a Canadian-owned mining company contracted at the Cobre Panamá Mine had established roots in the Spring of 2013. Establishing itself in the Colón Province, the Canadian 34,000-acre project (bigger than the city of Manhattan) progressed in 2017 and was soon deemed unconstitutional by Panama’s Supreme Court. It is important to note that despite the ruling made in 2017, the company continued to export copper in 2019. To uphold this ruling a fresh draft was made and passed through the Panamanian government as Law 406 on October 20th, 2023 marking the final step in revising the legal structure for the Cobre Panamá Mine. Last year, the Cobre Panama Mine produced 86,000 tons of copper, about 1% of the world's total production. The mine employs about 2% of the country's workforce, about 8,000 people directly, and tens of thousands more in forms of indirect employment. The open-pit mine brought in a hefty $375 million in mining royalties yet Quantum Minerals only paid about $61 million. The production of jobs and minerals has made the presence of “Minería Panamá” undeniable in the small Central American country. However, Panamanians are not taking this deal at face value. Multiple economic, environmental, and political irregularities have caused Panamá to erupt into social unrest, some go beyond the mine.
Environmental Concern
The open pit is located in the province of Colón, a Donoso Protected Area within the Golfo de los Mosquitos Forest. This is a haven for more than 1,000 species of flora and fauna for which the Panamanian government is bound, by law, to safeguard. This includes the Panamanian national bird, The harpy eagle, the critically endangered Gemini dart frog (whose only habitat is the Donoso Protected Area), and more. Indigenous communities have highlighted the importance of planetary health, "When all this nature is contaminated, we all die" said Rengifo Navas Revilla, leader in Panamá's Guna Indigenous Community. Additionally, a public health concern arises as the mine is located at the convergence of several rivers that supply the region with fresh drinking water. Reports from 2021, by the Ministry of the Environment explain the release of wastewater without federal permission and a spill of liquids from the mine lasting 15 minutes. Environmentalists say the mine could contaminate drinking water as communities have reported changes in the clear water, to a dark, white, and milky color. All of which has affected the local communities' agricultural and consumption systems. Furthermore, unauthorized deforestation of more than 870 hectares by the mine has taken place and despite Minería Panamá agreeing to reforest 1,3000 hectares of land, they have yet to do so. This is extremely important considering that Panamá is only one of three carbon-negative countries due to its heavy forest population. The destruction of these natural resources means the removal of natural carbon sinks causing the release of carbon dioxide.
Increased Economic Concern
The established economic systems including the Panamá Canal are already suffering from water scarcity, and mining will only further exacerbate this issue. It has been reported that this continuous crisis has forced officials to slash the number of vessels they have allowed through the canal. About 5% of seaborne trade is operated through the canal and environmental disruptions have halted significant global trade. Exporters are even paying up to $2 million to move their ships up in the queue. With this large economic concern, many assume that the operations of Minería Panamá would live up to representing 5% of the country's GDP as calculated. However, critics argue that the mine has contributed little to the country fiscally as Minería Panamá has made over $3.5 billion yet refrains from paying income tax to Panamá. Economist Felipe Argote states, “Yet it hasn’t paid a penny on income taxes. Had it paid what it does in Africa, it would have been over $500 million.” Aware of these discrepancies many ask: Why are some government officials eager to keep the mine afloat?
Energy
A possible answer: to lead the global energy transition. It is clear that copper is a necessity for the energy transition as it is fundamental to renewable energy infrastructure. This includes, but is not limited to, solar panels, wind turbines, and electric vehicles. Smart cities are on the rise as the energy grids and upgraded transportation include advanced technologies such as 5G networks, all at the expense of copper. Furthermore, there is an expected increase in annual copper demands, McKinsey and Company reports that up to 36.6 million metric tons are to be demanded by 2031. Seeing these projections accompanied by Panamá’s Canal issues and slow recovery in tourism post-global pandemic, Minería Panamá looks like a “miracle”. However, many Panamaians ask, at what cost? Do citizens feel as though their nation is being sold at the cost of their environment, health, and well-being?
The Protest
The public response has made it very clear, “Panamá Vale Más Sin Minería!” (Panamá is Worth More Without Mining!) Citizens have taken to streets all over the country from the capital, Panamá City, to the mining site in the Colón Province since October 23. The protest included a mix of rural indigenous communities, foreigners concerned about the mine's effects and other concerned citizens. Unfortunately, Panamanians have taken a big hit. The country lost a total of $1.7 billion ($80 million daily) as local businesses and organizations have been affected by protesters taking over major roads. Furthermore, citizens endure local product shortages in supermarkets and the violent deployment of security forces including the use of tear gas to disperse protesters. There have been reports of the tear gas used being expired yet this has not been confirmed. The violence hit its peak when two demonstrators died three weeks into the consistent protest. The unusual unrest in Panamá makes some wonder, is the mine the only factor fueling this shift? Some argue that the mining is the straw that broke the camel's back. Panamanians have been dealing with a growing mistrust of their government as this deal and others prior failed to meet transparency standards leading to opponents filing multiple legal charges. There are even suspicions of governmental corruption embedded in clientelismas citizens suffer from a rise in the cost of living starting fromAugust of 2022. Additionally, Panamanians often feel excluded from decisions concerning the country’s extractive industry and overwhelmed as families are facing inflation, the impacts of climate change, and dangerous mining. With the May 2024 elections right around the corner, candidates are careful not to make a "mistake in speech”causing protesters to show up at their doors. Political parties have lost a total of 15,000 members between October 19th and November 23rd, the ruling party (PartidoRevolucionario Democrático) was most affected.
Unconditional
Declared by the Panamanian Supreme Court, the open-pit mining was deemed unconstitutional on November 28th, 2023, a couple of months after the protests and strong objections arose. The open pit will cease operations as the contract violated 25 articles of the Panamanian constitution including “the right to live in a pollution-free environment, the obligation of the state to protect the health of minors and its commitment to promote the economic and political engagement of Indigenous and rural communities.” The Canadian-owned company seeks to avoid an international arbitration court case at The World Bank (a contract-based form of binding dispute resolution) and instead wants to resolve the issue during a 90-day period. Suspicions of lawsuits filed by Quantum Minerals against the Panamanian government have arisen but have not been confirmed. The Panamanian people have made their voices and presence known, and in the eyes of many, Panamaians return victorious.
