First Quantum Minerals Ltd. (TSX:FM) is set to incur approximately $20 million in monthly costs to maintain its idled Cobre Panamá copper mine, one of the largest copper operations in the Americas. The figure, confirmed by the Panamanian Mining Chamber, reflects the financial burden of a new care and maintenance plan recently approved by the Panamanian government.

The mine, a $10 billion open-pit project located in the Colón province of Panama, has remained inactive since late 2023, when a presidential decree ordered its shutdown amid legal and environmental controversies. The plan to maintain the site in a stable, non-operational state is expected to take between six and twelve months to fully implement, depending on the condition of existing infrastructure and machinery.

According to Roderick Gutiérrez, president of the Panamanian Mining Chamber, First Quantum will attempt to finance the monthly maintenance costs through the sale of copper concentrate that remains stored at the mine site. The company has stockpiled approximately 121,000 tonnes of concentrate, though Gutiérrez noted that a portion of this material has deteriorated over time due to prolonged exposure and lack of movement.

Some of the stockpiled copper concentrate has been sitting idle for nearly two years. Gutiérrez told local media that while a portion of it may still be sellable, the reprocessing of degraded material may prove to be economically unviable. The quality of the material, storage conditions, and reprocessing costs will determine the extent to which it can be used to offset the ongoing expenses of the care and maintenance program.

Multilateral Oversight and Environmental Protocols

The implementation of the maintenance plan involves coordination with ten Panamanian government agencies, including the Ministry of the Environment. Officials have emphasized the importance of strict environmental compliance during the care period, particularly due to the mine’s proximity to sensitive ecosystems and protected areas.

As part of the maintenance effort, updated legal and environmental protocols are being enforced to ensure that the mine remains in a condition suitable for potential future operations or long-term closure, depending on future policy decisions. These protocols include water treatment, tailings management, erosion control, and environmental monitoring.

While specific technical details of the updated care plan have not been disclosed, government officials have stated that regular inspections and compliance checks will be conducted throughout the duration of the maintenance phase.

Economic and Political Context

Cobre Panamá’s closure has had significant economic consequences, both for First Quantum and for Panama. Prior to its shutdown, the mine accounted for an estimated 5% of the country’s gross domestic product (GDP) and generated roughly 40% of First Quantum’s annual revenue.

The mine’s abrupt closure also affected thousands of direct and indirect jobs in the region. It disrupted local economies that had become heavily reliant on mining-related employment, services, and infrastructure.

The decision to shut down the operation was made by former President Laurentino Cortizo following widespread national protests and a Supreme Court ruling that declared the company’s mining contract unconstitutional. The ruling came amid growing public concern over environmental damage, lack of transparency in the concession process, and broader debates about resource sovereignty.

New Administration Signals Potential Shift

Since taking office, Panama’s current president, José Raúl Mulino, has indicated a potential policy shift regarding the mine’s long-term future. In public remarks made in May, Mulino said he would support renegotiating the mine’s role under a model that better reflects national ownership and public benefit.

“Let’s be smart and get the most benefit as Panamanians from a mine we already have,” Mulino said. While he did not provide a detailed roadmap, he acknowledged the economic importance of the site and cautioned that a full closure could take up to 15 years due to the mine’s scale and complexity.

Mulino’s remarks signal possible openness to renegotiating the terms of the mine’s operation or seeking a new structure that ensures greater returns for Panama. However, no formal negotiations or new contracts have yet been announced.

Former Production and Strategic Importance

Before operations were halted, Cobre Panamá was among the world’s leading copper-producing mines. It produced more than 330,000 tonnes of copper annually and was expected to reach a throughput capacity of 100 million tonnes per year by the end of 2024, placing it among the top global copper operations by processing volume.

The mine was regarded as a cornerstone of Panama’s industrial development and a significant player in the global copper supply chain, which has become increasingly critical due to rising demand linked to renewable energy infrastructure and electric vehicles.

The interruption of such a major supply source has had wider implications for the global copper market. Analysts have cited Cobre Panamá’s absence as a factor in tightening global copper inventories and upward pressure on prices, though its long-term influence will depend on the outcome of legal, political, and operational developments over the coming year.

As of early June, the situation remains fluid. First Quantum has not publicly released an updated forecast on when or if full operations might resume. The company is expected to continue engaging with Panamanian authorities as it manages the complex process of maintaining the mine in a non-operational state while preserving the possibility of eventual reactivation.

For now, the monthly care costs and legal oversight underscore the high financial and regulatory stakes of operating — or idling — a megaproject of this scale. Whether Cobre Panamá returns to production, is restructured under new ownership terms, or gradually winds down, will depend on decisions made in the months ahead by both the Panamanian government and First Quantum.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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