A small sector with a long history
For most of its modern history, mining has been a minor part of Panama’s economy. As late as 2006 the mineral-mining industry accounted for only about 1% of the country’s GDP, and that figure did not include any manufacturing of mineral commodities such as cement or petroleum-refinery products [1]. Against a national income built on the canal, banking, and logistics, mining was an afterthought (present, but not material to the accounts).
Yet the activity itself is old. The province of Veraguas has attracted miners since the Spanish colonial era in the sixteenth century, when several operations were carried out for gold, and the Remance gold mine in Veraguas was exporting gold to England as early as 1897 [1]. The modern frontier, in other words, sits on top of a much older one, and the legacy of that older frontier is part of why contemporary mining is politically toxic. Panama has a documented record of mines abandoned and improperly closed: Remance (closed 1998), Santa Rosa/Cañazas (1999), and Petaquilla Gold/Molejón, and the environmental damage left behind has bred deep distrust of the sector [1].
The contamination is specific and well-documented. Remance, which opened in 1990 and used a gold-cyanidation process, was the subject of a study by the Technological University of Panama that found the site heavily polluted, with arsenic levels posing health risks including cancer and cyanide levels in the soil exceeding those in the published literature [1]. A mine that opens, extracts, and then leaves a poisoned site behind is the image many Panamanians hold of the industry, and that image is the political inheritance of every new mining proposal.
The push for an extractivist economy
Against that backdrop, a sequence of Panamanian governments, particularly since the 1960s, has pushed to introduce mining and extractive industries as a main driver of growth, especially in the country’s interior [1]. The explicit goal, as the sector’s history records it, was to transition Panama away from a transit-based economy (what Panamanians call transitismo, built on the canal and the country’s location) toward an extractivist model that would generate a larger GDP, allow the government to take on more debt, and help avoid tax reform [1]. The push was driven by a perceived lack of alternative revenue sources outside the canal corridor, and it framed mining not just as a business but as a development strategy, a way to broaden an economy that had become dangerously dependent on moving things through a single isthmus.
That framing is essential to understanding why the mining debate is so sharp. The argument for mining is not merely that a deposit is valuable; it is that Panama needs to escape the vulnerability of an economy organized around throughput, and that extracting its own minerals is the way to do it. The argument against is the abandoned-mine legacy and a conviction that the costs, environmental and distributional, fall on communities that see little of the benefit. The two positions talk past each other because they are really arguments about the country’s economic model, not about a single project.
Cobre Panamá: the mine that became the economy
The project that brought this argument to a head is Cobre Panamá, a copper mine in Colón Province. Originally the Petaquilla copper project, it was developed by Minera Panamá S.A. and owned by the Canadian firm First Quantum Minerals, with the capacity to produce on the order of 270,000 tonnes of copper per year [1]. For a time it succeeded on its own terms: in 2022 the operation accounted for some $2,514 million, or about 4.5% of Panama’s GDP, a contribution to national output close to the mine’s gross income that year, and its output was exported almost entirely, with its main customers in China and Japan and no significant Panamanian or Latin American buyers [1]. A single mine, in other words, had become a measurable slice of the entire national economy within a few years of ramping up.
That scale is exactly what made the project politically unsustainable. A mine worth 4.5% of GDP concentrates both benefit and risk in one place, and the distributional question (who gains, who bears the environmental cost, whether the state captures enough of the rent) becomes a national argument rather than a local one. The government sought to renegotiate the terms: Law 406, enacted in October 2023, proposed a minimum $375 million annual royalty payment to the government depending on the mine’s income [1]. But the Supreme Court of Panama, in its unconstitutionality ruling on Law 406, held that the arrangement did not necessarily guarantee ample economic benefits for the Panamanian state [1]. Combined with broad protests and an atmosphere of rejection in the villages near the mine, the outcome was the effective closure of the operation.
What the closure does and does not mean
The shutdown of Cobre Panamá is the defining event in the modern mining sector, and its consequences are still working through the economy. A mine that was close to 4.5% of GDP in 2022 cannot close without leaving a hole in the national accounts and in the communities and supply companies that had grown up around it; some local businesses had benefited from the operation by establishing supply services for the mine [1]. At the same time, the closure resolves none of the underlying questions (whether Panama will extract its minerals, on what terms, and with what environmental safeguards); it only answers them with a temporary “not this way.”
The episode also reclarifies the structure of the economy that remains. With the copper mine idle, the country reverts to the services-and-throughput model that mining was meant to supplement, and the vulnerability that the extractivist push was trying to address (dependence on the canal, the banks, and the free zone) is back in full view [2]. The mining debate is, in this sense, a standing argument about diversification: whether Panama can or should build a larger non-services base, and at what environmental and political cost.
Gold, copper, and the resource base
The mining debate is usually about copper, because copper is what reached national-economic scale, but the country’s resource base is broader and older. Gold is the historic commodity, the draw for the Spanish in sixteenth-century Veraguas and the product of the Remance mine a century ago, and it has left the contaminated legacy that shapes contemporary opinion [1]. The modern interest, by contrast, has been concentrated on the copper porphyry deposits of which Cobre Panamá is the largest example, developed by a major international operator and geared entirely toward export to Asian markets. The shift from gold to copper is also a shift in scale and in the kind of operation involved: a modern copper mine on the Cobre Panamá model is a very large industrial facility with a very large footprint, not the smaller workings that characterised the older gold sector.
What the resource base does not include, in any significant domestic volume, is hydrocarbons. Panama is not a producer of oil or gas in any meaningful quantity, and it covers its petroleum needs through imports, including under regional arrangements such as the San José Pact, under which it receives crude on preferential terms [1]. That absence matters for the resource debate, because it means the country’s energy and its extractive economy are separate questions: the power system runs on domestic hydro and imported fuel, while the mining question is about metals for export, not about energy security. A reader who conflates the two will misunderstand what is actually at stake in the mining argument.
The environmental and distributional argument
The reason the Cobre Panamá episode ended in closure rather than renegotiation is that the objections to large-scale mining in Panama are not primarily about the existence of the deposit or even about the royalty rate; they are about the distribution of the costs and benefits and about trust in the institutions that manage them. The abandoned-mine legacy (Remance with its arsenic and cyanide, the others left improperly closed) is the concrete evidence that drives that distrust, and a community that has watched a mine close and leave a poisoned site behind is not easily persuaded that the next operation will be different [1]. The Supreme Court’s framing of the Law 406 contract, that it did not necessarily guarantee ample benefits for the state, gave that distrust a legal channel, and the broad protest gave it political force.
That distributional argument is sharpened by the geography of large mining projects. A copper mine of the Cobre Panamá scale sits in a specific province, draws on its water and land, and affects the communities around it, while the royalties and the export revenue accrue partly to the national treasury and partly to foreign shareholders. The mismatch between where the costs fall and where the benefits accumulate is the structural source of the conflict, and no royalty rate, on its own, resolves it; the question is whether the operating and environmental safeguards, and the share of the returns that stay local, are enough to earn the affected communities’ consent. Until that question is answered in a way that survives scrutiny, the country’s mining potential will remain just that: potential, held in place by a political and environmental veto rather than developed into output.
What this means in practice
For a reader trying to understand mining and resources in Panama, the sector is best read as a contested and currently diminished part of the economy. The durable facts are a long gold-mining history, a small overall share for most of the modern era, a legacy of abandoned and contaminated sites that shapes public opinion, and a single copper project, Cobre Panamá, that briefly reached national-economic significance before being closed by court ruling and protest [1]. The country also participates in regional energy arrangements such as the San José Pact, under which it receives crude petroleum on preferential terms, reflecting that Panama refines rather than produces most of the hydrocarbons it uses [1].
A related point is that the mining question is unlikely to stay settled. The deposits remain in the ground, the global demand for copper, central to electrification and renewable-energy infrastructure, is rising rather than falling, and the fiscal temptation of a large extractive earner does not disappear because a single contract was struck down. Each future government will face the same trade the last one did, and the terms on which any eventual resumption could occur (stronger environmental safeguards, a larger and more clearly allocated state share, and a credible solution to the abandoned-mine legacy) are the conditions the closure has put on the table. Whether those conditions can be met is an open question, but the question itself is now explicit in a way it was not before Cobre Panamá reached national scale. Readers interested in the energy side of the resource question should turn to the energy-sector page, those interested in the capital flows that might follow a reopened sector to the foreign-investment page, and those placing resources in the national context to the economy-overview page. What unifies them is the same question the mining debate keeps asking: what should Panama produce, and what should it simply move through.
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