Panama celebrates court order to cancel mine even as business is hit

For more than a month, protests against Central America’s largest open-pit copper mine have held Panama in a state of siege. Roadblocks have caused gas and propane shortages. Many supermarket shelves have run bare. Restaurants and hotels have sat empty.

But on Tuesday, protesters in Panama got the news they were waiting for.

The country’s Supreme Court of Justice ruled that Panama’s new mining contract with the Canadian company First Quantum was unconstitutional.

Protesters danced in the streets in front of the Supreme Court. They waved the red, white and blue Panamanian flag and sang the national anthem.

The ruling, a big blow for investors and the country’s long-term credit rating, is, for the moment, a source of relief for Panama, which has been shaken by the country’s largest protest movement to plague the country in decades.

The news of the Supreme Court ruling came early on Tuesday – the day of the anniversary of Panama’s Independence from Spain.

“Today, we are celebrating two independences,” 58-year-old restaurant worker Nestor Gonzalez told Al Jazeera. “Independence from Spain and independence from the mine. And no one is going to forget it.”

People turned out to celebrate. The bistro where Gonzalez works, in the western province of Chiriqui, was packed with patrons by noon – something the restaurant had not seen since mid-October.

“We are so happy,” said Gonzalez, “because, we had been locked up in the province of Chiriqui for 35 days, without gas, without propane and with little food. I had to go look for firewood in the mountains because I had no propane to cook with. So thank God that the justices took a stand and issued this ruling.”

The mine, known as Cobre Panama, has been in production since 2019, and extracting 300,000 tonnes of copper a year. It represents roughly five percent of the country’s gross domestic product (GDP) and 75 percent of Panamanian exports. The mining sector contributes roughly seven percent of Panama’s GDP with Cobre Panama as the country’s most important mine.

But protesters said Cobre Panama was a disaster for the country’s environment and a handout to a foreign corporation.

“I’m protesting because they are stealing our country. They are just handing it over,” said Ramon Rodriguez, a protester in a yellow raincoat in a march in late October, after protests ignited against the mine. “The sovereignty of our country is in danger. That’s why I’m here.”

This question of sovereignty is particularly important for Panamanians, who fought throughout the 20th century to rid the country of the United States-controlled Panama Canal Zone. This was an area almost half the size of the US state of Rhode Island that sliced through the middle of Panama.

“This contract is bad. It never should have been made. Never. So you have to fight,” said Miriam Caballero, a middle-aged woman in a grey sweatshirt who watched the October protest pass.

Impact on foreign investment

This was not the first contract with the mine. In 2021, the Supreme Court declared the previous contract unconstitutional for not adequately benefitting the public good. The government of President Laurentino Cortizo renegotiated the contract with improved benefits for the state. This was fast-tracked through Congress on October 20. Cortizo signed it into law hours later.

The president and his cabinet had applauded the new contract, saying it would bring windfall profits for the state.

“The contract ensures a minimum payment to the state of $375m dollars a year, for the next 20 years,” Commerce Minister Federico Alfaro told Panama news outlet Telemetro. “If you can compare this with what the state was receiving before, which was $35m a year, it’s a substantial improvement to the past.”

Cortizo promised to use the funds to shore up the country’s Social Security Fund and increase pensions for more than 120,000 retirees.

After the protests spiralled out of control, he announced a moratorium on all new mining projects and promised to hold a referendum over the fate of Cobre Panama. The idea didn’t gain traction. The protesters wouldn’t budge.

Members of Panama’s business sector have blamed Cortizo for mishandling the crisis and refusing to use a heavy hand to end the roadblocks and stop the protests. Last week, they said it had cost the country $1.7bn.

Cortizo, whose approval rating was already down to 24 percent in June, responded to this week’s court ruling, stating, “All Panamanians need to respect and abide by the decisions of the Supreme Court.”

Analysts say the protests and the ruling will have an impact for foreign companies looking to do business in Panama.

“I believe this court ruling is sending a very clear message to foreign investors,” Jorge Cuellar, ​​assistant professor of Latin American studies at Dartmouth College, told Al Jazeera. “If this is the kind of foreign investment that politicians and capitalists are innovating in 2023, then Panamanians want no part of it.”

But this stance will likely come at a price.

In early November, after more than a week of protests, rating agency Moody’s downgraded Panama’s debt to the lowest investment-grade rating. It cited financial issues and noted the political turmoil. JP Morgan analysts said, at the time, that if the mining contract were revoked, it would substantially increase Panama’s risk of losing its investment-grade rating.

First Quantum also has much to lose. Its shares have lost 60 percent of their value over the last month and a half. More than 40 percent of the company’s production comes from the Panamanian mine.

Over the weekend, the company notified Panama that it planned to take the country to arbitration under the Free Trade Agreement between the two countries.

But in a statement released after the ruling, First Quantum said, “The Company wishes to express that it respects Panamanian laws and will review the content of the judgement to understand its foundations.”

‘Jobs at risk’

The announcement is also a blow for the employees of the mine. The mine employs roughly 6,600 people – 86 percent of whom are Panamanian – and a total 40,000 direct and indirect jobs.

The Union of Panamanian Mine Workers, Utramipa, announced its members would march in several cities on Wednesday against the Supreme Court decision and in defence of their jobs.

“We are not going to allow them to put our jobs at risk, which are our means for supporting our families,” the union said in a statement.

Last week, Utramipa member Michael Camacho denounced the protests on the news outlet Panama En Directo. Operations at the mine were suspended last week due to protests at its port and the highway in and out of the facility.

“What about us, the workers? We are also Panamanians. We have the right to go to our homes and return to our place of work,” said Camacho. “But at this moment, we are being held hostage by the protesters, by the anti-social, the terrorists – which is what we should call them – and the people that stop us from passing.”

For the majority of Panamanians, the Supreme Court ruling is a welcomed sign that the country is on the road to normalcy.

Protesters in some provinces have promised to stay in the streets until the Supreme Court ruling is officially published – which usually takes a few days – or until the mine is closed for good. But many roadblocks have now been cleared, highways that stood empty for weeks are now open, and gas stations are rolling back in business.

“We are in a new phase,” Harry Brown Arauz, the director of Panama’s International Center of Social and Political Studies, told Al Jazeera. “The protests, as we have seen until now, should be lifted. And the government has said that it will begin the process of closing the mine in an orderly manner. This can generate confidence in the population, which had been lost.”

Arauz says the protest movement and the ruling are a powerful sign of the strength of Panama’s democracy, which the country regained just over 30 years ago.

“This is a really important moment,” he says. “It marks a before and after for Panamanian democracy.”