The Pleno of Panama's Supreme Court of Justice unanimously declared Law 406 of 20 October 2023 — which ratified the renewed mining-concession contract between the Panamanian State and Minera Panamá S.A. (a subsidiary of Canada's First Quantum Minerals) — unconstitutional in its entirety. The ruling, delivered 27 November 2023 and published in Gaceta Oficial No. 29922 on 2 December 2023, found violations of 25 constitutional articles and ordered the orderly closure of the Cobre Panamá open-pit copper mine, which had produced ~350,000 t/yr of copper (~1% of global mined supply) and accounted for ~5% of Panama's GDP. The decision triggered a de-facto Panama-wide moratorium on new large-scale metals concessions and pending ICSID arbitration claims by First Quantum and Korea Resources / KORES (COFINPRO).

Analyst notesShow

Mechanism

Ley 406 of 20 October 2023 was the Panamanian Parliament's attempt to re-ratify the mining-concession contract between the State and Minera Panamá S.A. after the Supreme Court had previously voided the original 1997 contract (Law 9 of 1997) on constitutional grounds. The renewed contract granted Minera Panamá (a wholly-owned subsidiary of First Quantum Minerals, with a minority economic interest held by Korea Resources Corporation through the COFINPRO consortium) a 20-year concession (extendable by another 20 years) over the ~13,600-hectare Donoso copper deposit, in exchange for a guaranteed USD 375 million annual minimum payment to the State.

Passage of Ley 406 triggered the largest popular protest movement in Panamanian post-canal history — more than a month of nationwide road closures, blockades of the Pan-American Highway, and a referendum initiative. Five separate unconstitutionality challenges were consolidated by the Pleno of the Corte Suprema. On 27 November 2023 the full court, by unanimous vote, declared Law 406 unconstitutional on the basis that it violated 25 constitutional articles — including the right to a healthy environment (Art. 118), the right to life and health, the rights of indigenous peoples in surrounding comarcas, and the constitutional regime governing State concessions over the public domain. The ruling was published in Gaceta Oficial No. 29922 on 2 December 2023, the moment from which it became operationally effective (erga omnes binding under Panamanian constitutional doctrine).

The substantive effect of the ruling was not merely to void the new contract but to extinguish the legal basis for ongoing operation of the Cobre Panamá mine — by November-end the mine had ceased active extraction, and the Mariano Arosemena government instructed Minera Panamá to enter a Plan de Cierre Seguro y Ordenado (Safe and Orderly Closure Plan). Subsequent administration (Mulino government, from July 2024) has continued the closure trajectory while negotiating "preservation and safe management" status with First Quantum, but no restart of commercial production has been authorised as of May 2026.

Downstream implications

Copper supply shock. Cobre Panamá produced ~350,000 t of refined

copper in 2023, representing ~1% of global mined supply. The closure was one of the largest single contributors to the 2024-2025 copper market tightening, and LME copper rallied through 2024 in part on this loss of supply. Watch as a structural template for "judicial veto-as-trade-policy" — i.e., supply withdrawal driven not by export control but by constitutional/environmental ruling.

First Quantum (FM.TO) financial impact. Cobre Panamá accounted for

~40% of FM's revenue and ~50% of EBITDA pre-closure. The forced shutdown wiped out a ~USD 10 bn book asset, led to covenant breaches, and triggered a 2024 refinancing / asset-sale programme (Zambian copper interests, RTC's stake). Korea Resources / COFINPRO holds the minority equity that is also stranded.

ICSID arbitration pipeline. First Quantum filed for arbitration

under the Panama-Canada FIPA in February 2024; KORES/COFINPRO filed separately under the Panama-Korea BIT. Pending awards (multi-billion USD claimed) create a contingent fiscal liability for the Panamanian State that constrains its sovereign credit trajectory.

De-facto moratorium on Panama large-scale metals mining. Although

the ruling addresses only the specific Ley 406, the political settlement that followed effectively halted issuance of new large-scale metals concessions; Panama has not approved a new metals concession of >100 ha since the ruling. First IPTM Panama entry — structural inflection from pre-2023 mining-friendly framework to post-2023 de-facto exclusion of large-scale metals extraction.

Investor-state signal across Latin America. Combined with the

Argentina glacier-law reform debate, Chile lithium nationalisation, and the Colombia ANM strategic-minerals reservation, the Panama ruling marks Latin America as the highest-risk region for greenfield base-metals investment under judicial-environmental veto risk.