A Deal’s A Deal
I have previously written articles in PII about the work I did at a copper mine in Panama, and how I ended up trapped there for three months during the first Covid lockdown. Recently, I learned that the mine has been closed as a result of a campaign by international green campaigners and local trades unions. Panama is apparently willing to forgo the 5% of the GDP which the mine was generating, based in large part on what I consider to be false claims.
Before I get into this, just to be clear, I am not, and have never been an employee of the mine’s owner Minera Panama, nor of its Canadian parent company First Quantum Minerals Ltd (FQML). My company was engaged by FQML in 2019-20 to undertake a survey of water treatment at the site, and design and implement upgrades to effluent treatment plant to handle a movement of staff across the site, but neither I nor my own company have any ongoing business relationship with the mine or its owners. I have not sought permission from FQML to write this article, which uses information in the public domain, as well as my own personal knowledge to address the false claims being made.
I’m going to offer quite a bit of support for FQML’s position, though I’m sure their PR department will offer something rather less nuanced. This is not because I believe mining companies in general, or FQML specifically, are necessarily the environmental paragons which their greenwashing departments would have us believe, but it is because I think that the campaign which closed the mine is based on politically motivated propaganda. In my opinion these companies are no more evil exploiters than they are environmental paragons. Neither the company nor the campaigners are in my view saints or founts of truth; both have their agendas, but in my view, the science is with the company.
To start in my area of expertise, one of the claims being made by campaigners is that the water used by the mine affects the Panama Canal, but this is nonsense. The mine is sixty kilometers from the canal, in a completely different watershed. Having visited the mine to advise on this precise issue, I know that most of the water which falls on the site (which is a lot, they don’t call them rainforests for nothing) is impounded, used for various purposes and that a high proportion of it is recycled. Prior to discharge to environment, it is treated to very high standards. The Panama Canal is indeed short of water, as I discussed in a previous article, but that is nothing to do with the mine.
A related claim is that the mine is going to pollute water and land in such a way as to damage the environment, and agricultural land. The claim is usually made in the future tense, but the mine has been there for quite a while now. It is not in the mine’s interests to cause such pollution, as the owners were contractually obliged to clean up the site at the end of the mining operation, or they would face penalties. There is no evidence that any such damage has occurred, despite the extensive programme of monitoring, overseen by the Panamanian environmental regulator. (The site’s environmental responsibilities were taken so seriously that I was not allowed to go fishing, on my day off, within the part of the forest owned by the mine, which was something of a disappointment. A completely unfished part of the Caribbean probably had some monster fish in it.)
The issue of “agricultural land” is a tricky one. Before I went to Panama, I was under the impression that the exploitation of the rainforest for beef production – which we often hear about from environmental pressure groups – was some kind of slick multinational operation. Only by flying over to the site by helicopter did I see the little tin roofs and mud paths of subsistence farms and villages cut and burned from the jungle. From the air, there seemed to be little virgin rainforest, but this was not as a result of mining activity. The only environmental damage I saw within the mine’s perimeter was as a result of these farms, which were apparently “invasions” from surrounding populations. The communities which had once been within the mine’s site perimeter had been previously relocated, at the mining company’s expense, as part of the creation of an environmental protection zone. Outsiders entered the environmental protection zone and proceeded to damage it, then environmental pressure groups described these people as an oppressed “indigenous population”.
I could go on, but I’m going to leave it at that for false claims – I don’t want to start sounding like FQML’s PR department.
In summary, I think the counterarguments to the mine’s continuing operation are almost entirely emotive. This is now heading towards becoming the biggest international arbitration case ever, (worth perhaps $50B), so the rights and wrongs are going to be settled by arguments between lawyers. Panama is potentially going to find itself with a bill for tens of billions of dollars, because their courts and politicians buckled to a few street protests. The protestors are going to find themselves amongst those paying the bill for this foolish own-goal.
In my view, the “green” thing to do was let the mine continue, as long as it maintained its various legal and corporate social responsibility promises. Panama needs the money, and the world needs the copper to achieve the massive electrification which underlies the energy transition. Panama’s decision to cease all mineral extraction, and terminate FQML’s contract, also means that FQML will presumably be relieved of their duty to remediate the site, as required by that contract, so there will be a massive local environmental disbenefit, in addition to the loss of revenues, and legal bills.
To my mind, this example is one small corner of a bigger problem. Green terms like “net zero” are being hijacked by people whose real aim is the destruction of capitalism. It doesn’t matter anymore that the Panamanian government signed a contract giving FQML mining rights, on the strength of which FQML spent $6.2B setting up the mine. The rhetoric takes the lines that the contract had to have been unfair, simply because Panama is a poor country, so Panama should be allowed to back out of the contract retrospectively, having benefitted from billions of dollars of investment. But where does this reasoning lead? By extension, no poor country can be held to anything which they agree to. Pricing in the risk of this happening in future will surely only result in less favorable terms for poor countries. They will stay poor, and the minerals which we need to move away from fossil fuels will stay in the ground.
The only people who benefit from this decision are those who wish to bring an end to civilization. Mining companies are not staffed by saints, but surely a deal is still a deal even if they were staffed with devils, otherwise international trade is going to come to an end. And if we end up getting our copper and lithium from Cornwall – well, that’s not going to do their tourist industry any good.
