Panama moves to unlock copper from First Quantum mine

Panama is set to authorize the removal and processing of stockpiled ore at First Quantum’s (TSX: FM) shuttered Cobre Panama copper mine, marking a key step in managing the idled operation.

Commerce and Industries Minister Julio Moltó said the government expects to issue a resolution between Monday afternoon and Tuesday at the latest allowing the company to extract and export material already mined and stored on site. The document is in its final stage within the ministry and would enable First Quantum to begin transporting the ore out of the country, La Estrella de Panamá reported.

“We are ready to take the next step,” Moltó said. “Between today and tomorrow, we should issue the resolution that will allow the company to begin removing this material so that it can be taken out of the country.”

BMO analyst Matt Murphy said a formal approval for stockpile processing would align with earlier government signals and market expectations. He said the resumption of mill operations, even on a limited basis, would mark an incremental positive step, with the mine already working to hire about 1,000 employees ahead of restarting processing.

The move advances Panama’s broader effort to manage roughly 38 million tonnes of ore mined before the operation was halted in 2023, part of a care and maintenance plan launched last year. 

The stockpile is expected to yield about 70,000 tonnes of copper, with proceeds from concentrate sales potentially offsetting preservation costs in 2026, depending on regulatory timing. Murphy noted that First Quantum previously guided that processing could begin about three months after regulatory approval and run for about a year.

Processing could begin about three months after approval and take roughly a year to complete, creating about 700 direct jobs on top of the current workforce of 1,600, along with indirect employment in logistics and services.

Almost $30M in royalties

The initiative forms part of a series of measures under President Jose Raul Mulino’s administration to extract value from the suspended mine. Authorities have already sold more than 122,000 tonnes of copper concentrate, generating nearly $30 million in royalties directed to public infrastructure projects, while restarting a 150-megawatt power unit to support site maintenance and supply the national grid.

Officials say removing and processing the stockpiled ore would reduce environmental risks tied to long-term storage, including acid rock drainage, while supporting the site’s tailings management system.

A separate comprehensive audit of the mine is also nearing completion and could further support stockpile processing as a preliminary recommendation. BMO’s Murphy said the audit, about 85% complete as of mid-March, has highlighted risks tied to acid rock drainage and suggested processing stockpiled material as a viable mitigation measure. He said the work represents a key step in reducing environmental risks while enabling the first mill production since 2023.

“We believe an amicable resolution that includes a mine reopening is possible this year and see the audit and resumption of mill operations as key de-risking steps ahead of discussions,” Murphy wrote.

The mine, which once accounted for about 1% of global copper supply and roughly 5% of Panama’s GDP, has weighed on both the national economy and First Quantum’s outlook since its closure. 

Before being shut down, it produced 350,000 tonnes of copper in 2022. The government aims to decide on the project’s long-term future by June.