Panama counts cost of First Quantum’s mine closure

Panama’s economy and labour market have taken a significant hit following the 2023 shutdown of First Quantum Minerals’ (TSX: FM) Cobre Panama copper mine, with new analysis detailing lost growth, jobs and billions in fiscal revenue.

A report by Panama’s private sector group CONEP estimates the closure wiped out roughly 5% of GDP and 7% of export earnings, abruptly halting one of the country’s most productive industrial engines. 

The impact has extended well beyond the mine, which supported more than 40,000 direct and indirect jobs and anchored activity across contractors, logistics and services.

National growth slowed from 7.4% in 2023 to 2.9% in 2024, while export losses reached roughly $2 billion. Government revenue tied to corporate taxes, royalties and related payments has also fallen sharply, straining public finances and limiting spending on infrastructure and social programs.

Communities that depended on mining-related income have seen consumption and commercial activity decline, with contractors and small businesses reporting steep revenue losses. 

CONEP said the loss of mining has reduced household purchasing power and weakened regional economies through supply-chain effects.

Structural gaps

The shutdown has exposed structural vulnerabilities in Panama’s revenue base, including reliance on a small number of high-impact sectors.

Copper had become one of the country’s top exports, and its sudden absence has reduced external earnings and widened trade imbalances. Replacing that scale of revenue in the near term will be difficult given the capital intensity and long timelines required to develop alternative industries, the report warns.

 

A restart would lift both Panama’s economy and First Quantum while easing pressure in a tightening global copper market. Before operations were shut, the open-pit mine accounted for nearly 2% of global supply, highlighting its strategic importance.

The company expects to produce about 70,000 tonnes of copper over a year by processing a large ore stockpile at the site, a plan recently approved by the government.

While forecasts point to stabilization driven by services, logistics and construction, CONEP warned that headline growth could mask deeper structural losses. The absence of mining output has lowered the country’s long-term growth trajectory and reduced exposure to rising global demand for critical minerals.

The report also flagged risks to investment sentiment, noting that large-scale projects like Cobre Panamá typically anchor foreign direct investment, support infrastructure and build technical expertise. Without a comparable project, Panama risks losing momentum in industrial diversification and workforce development, the report concludes.