Franco-Nevada Enters New Arbitration Stage with Panama over Cobre Panama Mine
Panama City, Wednesday, 11 December 2024.
Franco-Nevada enters arbitration with Panama, seeking $5 billion in damages over the Cobre Panama mine’s closure, impacting global copper supply and international investment dynamics.
Formation of the Arbitration Tribunal
The dispute between Franco-Nevada and Panama has entered a critical new phase with the establishment of a dedicated tribunal this week [1]. The arbitration panel consists of distinguished experts Luca Radicati, Klaus Sachs, and José Antonio Rivas [2], with Klaus Sachs bringing significant experience from 19 previous ICSID procedures [2]. This development marks a crucial step in addressing the substantial financial implications of the Cobre Panama mine’s closure, which led Franco-Nevada to take a $1 billion charge in 2023 [1].
Multiple Claims and Financial Impact
The case represents part of a larger wave of legal challenges facing Panama, with multiple mining companies seeking substantial compensation. First Quantum Minerals, the mine’s primary operator, is pursuing damages of at least $20 billion, while Orla Mining has filed a separate claim for $400 million [1]. The closure of Cobre Panama has had significant global implications, removing approximately 1% of the world’s copper supply from the market [1].
Economic Implications for Panama
The ongoing litigation poses substantial risks to Panama’s economic stability. Moody’s recent decision to downgrade Panama’s outlook to negative in November 2024 reflects these concerns [1]. The rating agency has specifically warned that without measures to address this risk, including potential reopening of negotiations with mine operators, Panama’s government credit profile could face severe financial consequences in the event of an adverse ruling [1].
Looking Ahead
The resolution of this dispute now rests with Panama’s President Jose Raul Mulino, who is expected to make a decision on the mine’s future in early 2025 [1]. This comes as part of a broader pattern of investment disputes in Panama, with other cases such as Petaquilla Minerals also proceeding through international arbitration channels [2]. The outcome of these proceedings could set important precedents for international mining investments and state relationships with foreign investors [GPT].