Resolving the dispute over Panama’s largest copper mine is increasingly seen as strategic to US national security interests, according to security experts, as the US seeks to reduce dependence on Chinese mineral processing.
The Cobre Panamá mine, developed and operated by Canadian firm First Quantum Minerals (TSX: FM) until its shutdown in November 2023, represented Panama’s largest private investment at $10 billion, roughly 12% of the country’s GDP.
A recent CSIS report argues that Panama’s mining dispute illustrates the far-reaching consequences of resource governance beyond the minerals sector.
Operations at the mine, which once employed 40,800 people and contributed nearly 5% of Panama’s GDP, ceased when Panama’s Supreme Court declared the mine’s operating contract unconstitutional in November 2023. The ruling followed months of protests over concerns about royalty provisions, national sovereignty issues, and environmental regulations.
First Quantum subsequently initiated international arbitration proceedings but paused them in March 2025 following signals from Panama’s President José Mulino about possible resolution through renewed negotiations.
“Credit rating agencies have lowered Panama to junk status, with possible arbitration costs estimated at up to one-fifth of the nation’s GDP,” according to the CSIS analysis.
Copper demand is projected to increase by 70% by 2050, driven by artificial intelligence, clean energy technologies, and defense applications. Ranked tenth globally in output until its closure, Cobre Panamá represented approximately 1.5% of global copper supply.
US security concerns are heightened by market concentration. Executive Order 14220, issued by President Trump, addresses vulnerabilities in the supply chain, noting that a single foreign nation controls over half of global copper smelting capacity.
The US currently sources most of its refined copper from Chile, Canada, Peru, and Mexico, but their output is forecast to grow by only 6% through 2035.
Panama’s location offers logistics advantages, as only three major copper operations exist in North or Central America. This proximity makes Panamanian copper commercially viable for US processing, provided domestic midstream infrastructure expands.
In March 2025, President Mulino authorized First Quantum to export 120,000 metric tons of copper concentrate stored in warehouses and restart a power plant essential for port operations. The CSIS analysis notes that the arbitration pause potentially signals an opening for diplomatic solutions after months of legal conflict.
For the US, supporting negotiations should be a strategic priority, according to security experts. The mine’s potential restart offers an opportunity to strengthen ties with a key regional ally, reduce China’s advantage in mineral processing, and secure copper supplies essential for national security and the energy transition.
The US could support the creation of off-take agreements directing Panamanian copper to processing facilities in allied nations like Japan, Chile, or India instead of China, which received 96% of Panama’s copper exports in 2023.
Panamanian officials emphasize that any resolution must include transparent, constitutional arrangements with clear regulatory frameworks to rebuild investor confidence in the country’s mining sector.
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