Cobre Panama calls for fostering dialogue and finding a solution

Panama, November 29, 2023 – In view of the statements made by the Government of Panama regarding the ruling of the Supreme Court of Justice (CSJ) on the unconstitutionality of Law 406 of 2023, announced on Tuesday, November 28, 2023 (the Ruling), Cobre Panama reiterates that transparency and compliance with the law have always been fundamental for the development of its operations and reiterates its interest in promoting dialogue to find solutions.

The Court’s decision does not take into account a planned closure scenario, in which rehabilitation measures would normally begin to be implemented at least five to ten years prior to final closure. Generally, this would involve the development of infrastructure designed to continue to manage the environmental aspects of the area to avoid a disaster. To ensure environmental protection in the face of an unplanned closure, similar schedules and actions must be contemplated with environmental, economic, labor, social, and legal considerations.

In response to this, the company believes there are some key questions that need to be answered:

● Cobre Panama discharges over 100 million m3 of water per year. All mine impacted water from the landfills and tailings pit is treated at the process plant before being discharged into the Tailings Management Facility (TMF). Treatment not only addresses the quality of the process effluent and mine impacted water, but more importantly, provides buffering to the existing tailings material that has already been deposited. Stopping the process plant and associated treatment is likely to result in a fairly rapid deterioration of discharge water quality, including a drop in pH and an increase in metals in solution. How will the effluent be treated to ensure that there is no further impact on aquatic fauna downstream of the IMR?

The IMR was designed to meet the highest international safety standards. It is not a water retaining structure and therefore requires ongoing maintenance to ensure that it performs in accordance with design criteria. Failure to manage water or maintain the integrity of the embankment drainage systems can have catastrophic consequences. What resources will be available in the long term to ensure the safety of the facility and prevent catastrophic failure?

● How does the government plan to prevent the arrival of illegal miners?

● How can the Cobre Panama site be managed to minimize the risk of harm to people and the environment?

● Should the more than 200,000 hectares of protected and managed biodiversity areas currently financially supported by Cobre Panama be taken over by the Government of Panama? These areas in Donoso, Santa Fe and Omar Torrijos National Parks represent almost 20% of Panama’s total protected areas.

● How will the species conservation programs currently funded by Cobre Panama be supported in the future? These include endangered species such as the hawksbill turtle and harpy eagle, as well as endemic flora and fauna.

● How can the rehabilitation and reforestation commitments set out in the concession contract for 11,175 hectares, approximately double the mining footprint and of which more than 4,200 hectares have already been taken over, a process that will take several years, continue to be effectively fulfilled?

● What are the plans of the Ministry of Labor (MITRADEL) for the support, training and continuous development of the 40,000 people employed directly and indirectly by Cobre Panama in the future?

● The revised concession agreement provided for significant financial contributions to social security and pensions by the Government of Panama for Panamanians. What are the Government of Panama’s plans to address this shortfall in public finances?

● How will the Government of Panama support the approximately 2,000 companies that currently depend on Cobre Panama?

● Should the Punta Rincon power plant support baseload requirements in Panama while the shortage of power from renewable sources continues?

● Given the enormous economic challenges facing Panama in the near future, what are the Government of Panama’s plans with respect to the legal and financial implications following the court ruling?

● The approval process carried out in connection with the Cobre Panama concession was subject to a detailed review by several Panamanian Government entities with the participation of external experts. Does the Court’s ruling create a precedent, putting at risk all commercial contractual agreements currently in place and under consideration in Panama?

● Cobre Panama invested $10 billion in the country in good faith. This is the largest investment made by a foreign company to date. The Court’s decision expresses the unconstitutionality of Law 406 but does not consider the catastrophic financial, social and environmental damage this will cause.

The Court’s ruling and subsequent comments by the President of the Republic of Panama, Laurentino Cortizo, disregard the rights of thousands of Panamanians who depend on the Cobre Panama mine and mining for their livelihoods. Cobre Panama has more than 7,000 direct employees and 33,000 contractors and suppliers, who have the right to a prosperous future.

Understanding that the Court’s ruling reflects the social discontent regarding mining in Panama, and despite the President’s announcement of the suspension of Cobre Panama’s operations, the company remains open to constructive dialogue. In the meantime, in light of this suspension, it will seek clarification, as well as an understanding of the legal situation with respect to the associated environmental obligations. Cobre Panama reserves all legal rights to protect its investment, prioritizes the safety and well-being of its employees, and remains open to constructive and transparent dialogue.