Cobre panama deadlock: $3.5 billion lost, no restart in sight despite ongoing talks

First Quantum Minerals has publicly stated that Panama has lost an estimated $3.5 billion in direct and indirect revenue since the government-ordered shutdown of Cobre Panama in November 2023. The figure encompasses lost tax revenue, royalty payments, employment income, and local contractor spending that evaporated when the mine went into care and maintenance. (Source: MINING.COM, First Quantum)

Cobre Panama is one of the world's largest copper mines, capable of producing approximately 380,000 tonnes of copper annually — roughly 1.7% of global mine supply. Its closure has been the single largest individual supply shock in the copper market since the pandemic-era disruptions of 2020. To put the scale in perspective: the total ICSG-projected 2026 deficit of 150,000 tonnes would be more than eliminated if Cobre Panama were operating at even half capacity.

The legal and political situation remains deeply entrenched. The Panamanian government ordered the mine closed after the Supreme Court ruled First Quantum's contract concession unconstitutional, following widespread public protests. The company has pursued international arbitration while simultaneously engaging in talks with the administration of President José Raúl Mulino, who took office in July 2024. Despite periodic reports of progress, no restart agreement has materialized.

The stakes for the global copper market are enormous. Cobre Panama's 380,000 tonnes of annual capacity represents more than double the entire 2026 ICSG deficit forecast. A restart would fundamentally alter the supply-demand balance for 2027 and beyond, potentially capping the upward trajectory of copper prices. Conversely, continued deadlock means the supply deficit narrative remains intact, supporting elevated prices.

For First Quantum, the financial toll has been severe. The company has written down billions in asset value, shed employees, and watched its market capitalisation shrink. Maintenance costs for the idle mine continue to accumulate. The company has signalled that any restart would require a new, mutually acceptable legal framework with the Panamanian government, including revised revenue-sharing terms that satisfy both the government's fiscal demands and First Quantum's investment return requirements.

The ICSG's 2026 deficit forecast of 150,000 tonnes explicitly factors in the continued closure of Cobre Panama. If a restart were announced tomorrow, it would take at least 6-9 months to ramp production back to meaningful levels given the care-and-maintenance status of the asset. This means that even a rapid resolution would not impact physical supply until mid-2027 at the earliest. (Source: ICSG, Reuters)

Meanwhile, the broader copper deficit narrative continues to drive prices. LME copper settled at $13,545/t on May 22, and the market remains acutely sensitive to any news flow from Panama. Each round of talks is closely watched by traders, and even unconfirmed reports of progress have historically triggered sharp price moves. The deadlock is arguably the single most important variable in the medium-term copper price outlook.