Analysis-Canada mining deal emerges as flashpoint in Panama 2024 election

  • World
  • Wednesday, 29 Nov 2023

People participate in a protest against a new mining contract signed into law by Panama's government, providing Canadian mining firm First Quantum a 20-year mining right, with an option to extend for another 20 years, in Panama City November 9, 2023. REUTERS/Tarina Rodriguez/File Photo

PANAMA CITY (Reuters) - Fierce opposition to a mining deal with a Canadian firm has become a burning issue in Panama's May 2024 presidential election, with candidates pushing for more state control of the lucrative mine and the country's top court striking down the contract.

Panamanians have held the biggest protests in decades to have the contract signed on Oct. 20 by Canada's First Quantum scrapped, and have pressed candidates for a tougher stance on a mine worth about 5% of national GDP and 1.5% of global copper output.

Demonstrators earlier on Tuesday got their wish as Panama's Supreme Court ruled the contract unconstitutional, piling pressure on the government and leaving the mine's future in doubt as voters gear up for the election.

The current government had let First Quantum keep operating the mine even though the court in 2017 ruled that a previous contract was unconstitutional.

"The healthy moment of rebellion against the mining firm is definitely going to have an impact on the 2024 elections," said Carlos Lee, a political scientist at Santa Maria la Antigua University, speaking before the court's decision.

It is not yet clear what the ruling means for First Quantum, but a bill passed this month by Panama's Congress that bans all new mining concessions and extensions will make it harder to continue as before.

Former President, millionaire businessman and leading presidential candidate Ricardo Martinelli last week proposed that Panama renegotiate the contract with the Canadian firm to secure higher royalties and a stake in the project.

Martin Torrijos, another former president also running for the job again, wants the mine closed.

"Panama said no to metal mining," he said recently.

Just prior to the court ruling, a company spokesperson told Reuters that First Quantum respected the democratic process and the rule of law and would continue to work with Panama "to find solutions that are acceptable to a broad range of stakeholders."

The dispute over the mining deal, which has raged on for months, has become a litmus test of the Central American isthmus' ability to reconcile its longstanding openness to business with the need to address yawning inequality.

The future of the Cobre Panama mine is also being closely eyed across the rest of Latin America, where many major mining concessions are held by foreign companies.

The Canadian company said it plans to start arbitration proceedings against Panama over the mine. The government has said it will defend the national interest.

Last weekend, anger boiled over into attacks against workers at the mine, according to First Quantum and a local union.

Some polls make Martinelli the front-runner for the presidency, though a money-laundering conviction that he has appealed might stop him. His lawyer Carlos Carrillo told Reuters that it should not interfere with his bid.

Three presidential hopefuls have privately told Reuters that tensions are so high that the wrong remark could cost them victory, and fear protesters arriving on their doorsteps.

"Today, Panama needs this mine," one of the presidential challengers said. "What we are doing is utter stupidity.

"Talking about a total shutdown of the mine is preaching to the choir," the contender added. "To say what I just said in public is to ruin one's chances of winning the election, but one also cannot overlook that a large part of the population - less organized and less vocal - understands the mine is necessary."

Politicians have taken a hit as discontent mounts: official data show political parties lost over 15,000 members between Oct. 19 and Nov. 23, with the ruling party worst affected.

The tougher line on the mine taken by Torrijos and independent hopeful Ricardo Lombana could help them electorally, lawyer and former Panamanian diplomat Roberto Ruiz said.

Protesters have held a vigil outside Panama's top court for weeks urging the contract be declared unconstitutional, and hundreds took to the streets to celebrate the ruling on Tuesday.

"Our country is not for sale," one of the protesters, 22-year-old student Edgar Diaz, said last week. "We all know this mine is not good for the nation."

The most important question surrounding the election should be how and when politicians will end mining in Panama, said Samantha Claus, another protester.

(Reporting by Valentine Hilaire and Elida Moreno; Editing by Dave Graham and Mark Porter)

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