What consequences will the sudden closure of Cobre Panama mine have?

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By LatAm Reports Editor

Unplanned closure would entail serious environmental problems such as water pollution, infrastructure collapse and degradation of the area.

The Panamanian mine that has been the epicenter of the recent protests is paralyzed: the copper that Minera Panama, the subsidiary of the Canadian First Quantum Minerals, has no longer been exploited, exported or marketed for years. The company says the abrupt closure of the project is an environmental disaster.

“We’re not operating. Everything is stopped, but we cannot leave here until this is environmentally safe,” the superintendent of Biodiversity of Minera Panama, Panamanian Blanca Araúz, tells EFE from the quarry of the largest open-air copper mine in Central America.

The mining company is now under a “care and maintenance” plan with the minimum staff, after receiving a notification on December 6 from the Ministry of Commerce and Industries of Panama urging it to “end the operations of extraction, processing, profit, transport, export and marketing.”

The consequences of a abrupt closure
“We are in a phase of care and maintenance (…) to avoid any environmental catastrophe because this is not completely closed,” explains Araúz.

Located in the mountainous area of Donoso, about 120 kilometers from Panama City, the mine occupies 13,600 hectares of concession surrounded by Panamanian forest, a landscape that contrasts with the gray quarry and sandy area of the “relave,” as the waste of the mining process composed of ground rock, water and other minerals are known.

An unplanned closure would pose serious environmental problems such as water pollution, the collapse of infrastructure and the degradation of the area due to the country’s geography and rainy climate, the mining company has warned.

“Physical and chemical stability of the main components of the mine must be achieved. We are talking about the relave dam, the cut (cash) and, mainly, of the surplus fillings of rock of the cut ,” the Peruvian Alejandro Chambi, the Peruvian Alejandro Chambi, tells EFE from the mine.

Chambi acknowledges that not “all the consequences and variability that can have” an “overwhelmed” closure of the mine has not been studied. Even, he adds, there is “no precedent in the history of engineering that a company the size of Panama leaves without obviously making clear the responsibilities of what it may mean.”

The mining company has also warned that the land blockade on a route of entry to the mine and another maritime in the international port of Punta Rincón, located in the Panamanian Caribbean through which the company received fuel, is preventing the delivery of equipment and inputs necessary to maintain the “environmental stability of the site.”

“They have us blocked by both the sea and land. We need fuel and food for the staff who are at this stage. There are few of us who are left taking care of and maintaining as much stability as possible so that no environmental problem occurs,” says Araúz.

These blockades are the only ones to be maintained, after last month’s massive protests against the mining contract almost immediately ceased after the announcement of unconstitutionality.

The disorderly closure of Cobre Panama, an investment of $10 billion, would also have economic consequences, mainly with its workers, according to the mine, which has already begun to process the dismissal of 4,000 workers.

Copper Panama, which provided more than 40,000 direct and indirect jobs throughout the country and has more than 7,300 collaborators, is the only exploitation of this mineral in the Central American country.

An orderly closure: 15 years and a million-dollar cost
Closing that project safely and orderly, according to international standards, would take between 10 and 15 years at a million-dollar cost, according to Chambi.

“We are talking about the already definitive closing period that is dismantling all operations the plant and dessert is the last stage where there is monitoring, not only of the physical stability of the components but above all of chemical stability and monitoring and giving guarantees,” adds the expert.

Once closed, the road inside the mine and the international port of Punta Rincón, which also served for the export of copper concentrate from the Caribbean where there is also a large power plant, would be the two infrastructures that would remain.

Some experts have pointed out that the closure of the mine, the world’s 14th largest copper in production in 2022, would also increase the country’s risk with the eventual loss of investment, lower Panamanian bonds and the deterioration of public finances.

In the first 9 months of 2023, this mine produced about 268,000 tons of copper contained in concentrates, representing 2 % of world production, according to data provided to EFE by the International Copper Study Group (ICSG).

Now, the dispute between the mining company and the Panamanian state appears to have moved to the international stage, where they will face arbitration over a multimillion-dollar lawsuit after the contract is terminated.

This article has been translated from the original which first appeared in Panamerica