Arbitration Between Franco-Nevada and Panama Advances Over Cobre Panama Mine Dispute

Arbitration proceedings between Canadian precious metals streaming company Franco-Nevada and the Panamanian government have entered a critical new phase, with a tribunal now established to hear the case, according to legal filings. The dispute centers on the shutdown of the Cobre Panama copper mine, a significant global supplier of copper, which has become a flashpoint in the mining industry.

Franco-Nevada, which had a streaming agreement with First Quantum Minerals for the Cobre Panama mine, is seeking $5 billion in damages from Panama under the Canada-Panama Free Trade Agreement. The streaming agreement allowed Franco-Nevada to purchase gold and copper from the mine in exchange for financing its operations. The closure of Cobre Panama last year, due to public unrest and political instability in Panama, led Franco-Nevada to take a $1 billion charge on its books in 2023.

Cobre Panama is operated by First Quantum Minerals, which has also launched a separate legal claim for damages, seeking at least $20 billion. Additionally, Orla Mining, which had its own mining contract canceled, is demanding $400 million from the Panamanian government. The arbitration proceedings will allow the involved parties to present their cases, marking a significant step in resolving the dispute.

The fate of the Cobre Panama mine remains uncertain as investors await a decision from Panama’s President, José Raul Mulino, who has pledged to make a ruling on the mine’s future in early 2025. The mine, which was shuttered due to local protests, represented around 1% of global copper supply, further compounding concerns over global copper markets.

The arbitration proceedings come at a time when Panama’s government is under increasing pressure to address the crisis surrounding the mine. The Cobre Panama mine remains crucial to the country’s economic stability, and any further delays or adverse rulings could exacerbate Panama’s financial and political challenges.

Both Franco-Nevada and First Quantum Minerals declined to comment on the ongoing arbitration.

Franco-Nevada Corporation is a leading Canadian-based precious metals streaming and royalty company. It primarily focuses on gold, silver, and other commodities, providing financing to mining companies in exchange for future production streams or royalties. Franco-Nevada has a diversified portfolio of assets across the Americas, Europe, and other regions, offering investors exposure to commodity prices without the operational risks associated with mining. Known for its strong financial performance and conservative business model, Franco-Nevada is one of the largest and most successful royalty companies in the mining sector.