Can Cobre Panama copper mine run for 25 years without growing?

A commission convened by Panama’s government to decide how to manage the country’s controversial Cobre Panama copper mine has recommended 25 years of operation but without expanding the site’s physical footprint. The mine, run by First Quantum Minerals, was closed in 2023 after it was ruled unconstitutional following protests against its operation.

The report also recommends steadily shrinking the existing footprint over this time, before eight years of “active closure” and 30 years of post-closure monitoring. Other non-negotiable criteria for reopening the site include compliance with existing Supreme Court rulings and laws around the project, ownership by the state, and the project must be financially self-sustaining. The report also calls for data transparency and supervision of the site to international standards, and priority given to concerns among affected Panamanian communities and businesses.

Currently operating pit only sufficient for five to six years

Piotr Kulas, lead copper analyst at Benchmark, said: “It will not be possible to operate the project for 25 years without physical expansion. While most analysts treat the reserve as a single number, 2,700Mt of ore at a modest 0.38% copper, the planned mining zone for achieving this number over the full period is much larger than today's disturbed area. Currently, only one pit, Botija, exists, but the full plan lists seven.”

Botija holds 551Mt of reserve, about a fifth of the project's contained copper. That is roughly five to six years at full plant capacity. Cobre Panama expanded the mills to 100 Mtpa just before the closure. Without opening new pits, however, Cobre Panama would have to cut ore throughput within a few years. The site produced 350kt copper contained in 2022, but this number could become much smaller.

The planned Colina and Medio pits together hold 37% of the mine's contained copper, more than Botija. Satellite imagery shows the access road to the Colina pit area, the next due for development, is complete. Mining Colina requires the clearance of thousands of hectares of jungle and a river diversion, increasing the mine’s footprint.

“The report is only a recommendation,” Kulas noted. “Some of its requests were arguably already met under the previous operation. The state commissioned SGS audit found 98.9% compliance across the 370 environmental commitments.”

He added: “Politics in Panama are complicated. Presidents serve a single five-year term and are rarely popular. A 25-year plan spans five administrations, and public opinion on the mine is mixed. Any restart will come with issues and protests. Perhaps the report is framing a normal operation in novel language. One thing is certain, however: Cobre Panama will not operate for 25 years without growing its footprint significantly.”

Cost requirement could be a challenge

Among the other requirements recommended by the commission, most can be worked around, Kulas suggested, though operating with zero cost to the taxpayer is perhaps the most consequential.

“This requirement covers closure and rehabilitation of a very large site,” Kulas said. “It also ties into First Quantum’s court case against Panama’s government, the end of which the report makes a mandatory condition for reopening.”

The company is claiming a minimum compensation exceeding USD $27 billion. First Quantum and its partners would drop them only if the ‘open to close’ phase generates enough revenue to pay back for the substantial capex they incurred to open the mine in the first place.”