Have a Dig


Panama's mining sector has traditionally not had the economic impact that its shipping, banking, and tourism industries have had, but that may be beginning to change.

The recently opened Cobre Panama copper mine is expected to become one of the world’s largest open-pit copper mines, and a number of other projects are currently being developed as well. All the while, the Panamanian government is working to form a mining structure that will allow for investment but ensure that the nation’s mineral resources work to the benefit of its citizens.


Access to Panama’s mineral resources is governed through the 1963 Code of Mineral Resources, which established a concessions system that remains in place to this day. Concessions are granted through the Ministry of Commerce and Industries’ Directorate General of Mineral Resources (DGMR), which oversees the industry. Most concessions are granted for 20 or 25 years depending on the metal, with the possibility of up to 25 years of extensions available through the DGMR. While there have been issues over regulations allowing mining concerns on native lands, Panama’s mining structure is largely in line with Latin American norms. A series of fixed surface and royalties taxes are levied on producers to generate revenue for the state and surrounding communities.

While the structure has been in place for decades, large-scale mining had been largely nonexistent until 15 years ago. Smaller semi-legal mining operations have been in production since colonial times, but the only commercial mine currently operational is the Canadian-owned Molejon gold mine, operated by Canadian firm Petaquilla. Production at the Molejon site, which has proven mineral reserves of over 640,000oz of gold, began in 2009 at 2,200 tons per day, growing to 3,500 tons per day by 2012 before closing in 2013 due to funding problems; a failure to pay. In 2016, however, US minerals firm Diamante Minerals formed an agreement with Canadian operator Petaquilla Gold and contractor Blendcore to restart operations at the mine. Diamante will earn a 12.5% royalty and the right to provide funding for expansion should the need arise. As of early 2017, operations on the stockpiled ore have been slow to begin, and Diamante was exploring its options to purchase the Molejon mine outright.


The centerpiece of Panama’s mining industry is the Cobre Panama open-pit copper mine, which is currently under construction 120km west of Panama City. Developed by Minera Panama and its parent organization Canadian First Quantum Minerals, the USD5.95 billion project is expected to become one of the world’s largest copper mines upon the beginning of production in early 2018. The concession site, which is 13,600ha over four separate zones, is home to the largest undeveloped copper deposit in the world, with proven and probable reserves of over 3 billion metric tons grading 0.38% copper, 0.07 oz/mt gold, and 1.43 oz/mt silver. Canadian firm Inmet began planning and construction in 2011, but First Quantum took control of the project after acquiring Inmet and has proceeded with an even more ambitious development plan. First Quantum projects that Cobre Panama will produce 328,000 tons per year of copper over the first 20 years of the life of the mine and 228,000 tons per year for the remainder of the life of the mine. This would make Cobre Panama one of the 15 largest copper-producing mines in the world and easily the largest in Central America.

First Quantum Country Manager Todd Clewett is well aware of the economic significance the mine will have and already has in Panama. “At current prices [Cobre Panama] represents a USD2 billion export value for the country,” Clewett told TBY. “The future impact of the project aside, the project also contributes a great deal to the country today; our budget is over USD1 billion for 2017, we employ over 5,500 Panamanians at the site, and our salary bill including social security amounts to about USD17 million per month. In the past 12 months, we have spent around USD170 million on purchases from Panamanian suppliers and have contracts and commercial arrangements with about 500 Panamanian companies. Therefore, on a macro level, we already have a large economic impact on the country before we even produce.”

To support the Cobre Panama project, First Quantum has embarked on two key infrastructure projects. The first is the construction of an international port 27km north of the mine, which is currently being used to transport construction materials and will eventually be the main site of mineral transport. The second is a power station, which will have two 160MW turbines to power the mine. First Quantum has signed an agreement with the Panamanian government to sell its excess electricity to the national grid. Expected to be operational by mid-2017, the power plant should become a key source of energy for the surrounding communities.

The scope of the Cobre Panama Project and First Quantum’s commitment to turning it into a global leader have given it the potential to have a massive impact on all sectors of Panamanian life. The mine’s projected export volumes would make copper Panama’s single-largest export, and the size and impact of the site has already transformed surrounding communities. While First Quantum is using an in-house construction process, more than 1,000 local Panamanians are working at the site and First Quantum is keenly aware of its social responsibility to bring economic growth to the region. “In the last 12 months, we have also made a commitment to build a training facility in La Pintada,” Clewett told TBY. “We are also looking to develop 500 new houses in that area over the next few years to provide for the operational workforce… We are spending a large amount of money, and this has had tangible changes in the area, in the growth of Penonomé and La Pintada.” First Quantum has also sought to alleviate fears about the environmental impact of the mine by initiating reforesting projects and working with local activists to protect the biodiversity of the region. These are all signs indicating that Cobre Panama should bring economic growth to the region.


Ultimately, the success of the Cobre Panama mine may well be dependent on global copper prices. The commodities boom for the mid-2000s, which sparked the resurgent interest in Panama’s mineral resources, has petered out in recent years, with copper prices falling dramatically over the past five years due to decreased demand from China and other key markets. A rise in early 2017 has industry participants optimistic about the future of the sector, but it remains to be seen whether this will be a sustained level or a one-off. Either way, First Quantum and the Panamanian government are confident that the potential of the Cobre Panama site and Panama’s excellent logistical ties to the global industry will make the nation’s mining sector a rising industry in the years to come.

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