digging Deeper

How does this project compare to others with which you have been involved?

One of the great things about the mining industry is how different the projects are. The last project I worked on was the Oyu Tolgoi mine in Mongolia for Rio Tinto. It was a copper mine of about the same scale as this one, but in the South Gobi desert, which regularly reaches 30 degrees below freezing. A lot of the infrastructure had to be built up to eight feet underground because water will freeze at anything above that. I worked before that at the Ok Tedi mine in Papua New Guinea, in one of the most remote parts of the world. Panama is warm and humid, and as a rapidly developing country it is a great place to start building a mine of this scale. There have been a few smaller mines that failed and made a negative impression on the community, the investors, and the government because they closed shop and walked away, leaving behind unpaid workers and environmental degradation. Panama is, therefore, somewhat cautious regarding mining. The operational challenges here are different from the challenges in Mongolia; in Mongolia there is no rain, whereas the location of the mine here receives 4-6m of rain every year. The area is set within a rainforest, so environmental management is critical. Environmental sensitivity is a major point of focus when operating in challenging climates. The mine in Papua New Guinea saw 10m of rain a year and was the second wettest place in the world.

Do you find price fluctuations a challenge with these projects?

That is a definite challenge. This is a 40-year investment, and to invest billions of dollars years before seeing any return with no control of the selling price gives a sense of the courage that it takes to make these types of investments. The project is designed to withstand the fluctuations of copper prices, as it will be a relatively low-cost producer. As the price of copper fluctuates, Minera Panama can, should, and will be near the bottom of the cost curve, while more expensive mining operation will feel the heat first. Our contribution to Panama’s exports will change depending on the copper price, but it should be about $2 billion overall. Panama’s exports in 2015 were $800 million; therefore, the project alone more than triples Panama’s exports. We will be Panama’s largest single exporter by a factor of close to 10.

What is the importance of the Minera Panama project for the country?

The project will directly contribute about 4% to GDP, triple the country’s exports, and directly employ 2,500 people, while indirectly employing up to 5,000 more. Having another plank of industry provides stability and diversity to the Panamanian economy. As we develop the mine, we will get a better understanding of the geology and the exact potential of the mine. The estimated 34-year lifespan is based on what we know now, but it is common for these lifespans to expand. That said, we are in the process of planning for closure, even if it takes 50 years. Our philosophy to date has been to rehabilitate areas if we are not going to use them anymore. The more detailed planning of what will happen to workers and the communities develops alongside the rest of the project. This is an endeavor that for the next 30 to 40 years will be the biggest employer in the Coclé region and will drive the economy. A young person coming out of university or high school today could start at our project and work there until they retire. This is a story not just for Panama, but for the whole region as well. It will provide this part of the world with huge economic growth for 40 years of generational growth, which is the real opportunity for Panama.