BMI View: Though Panama's mining output is unlikely to grow substantially in the short-term, we forecast strong growth in Panamanian mineral output through to 2016. We expect metal prices to remain elevated by historical standards and thus Panama's central government will benefit from developing Panamanian metals production. This is particularly the case for gold and copper.
Panama possesses untapped reserves of copper and gold, both of which could transform Panama's mineral industry as prices remain high and as mining firms move into underdeveloped frontier markets. Inmet Mining Corporation, a Canadian mining company, maintains an 80% stake in Minera Panama, a Panamanian subsidiary that is currently developing a copper mine in the Colon region. The Cobre Panama open-pit copper project has the potential to be one of the largest copper mines in the world. The mine will be far larger than the Molejon gold mine, operated by Petaquilla Minerals, a firm for which Inmet recently made a US$112mn takeover offer.
|Gold Mine For Investment|
|Panama - Gold & Copper Projects|
Bullish Outlook, But Potential Delays On The Horizon
The US$6.2bn Cobre Panama project remains in development phase, with various environmental hurdles slowing development of such deposits. Both mines are located in the Mesoamerican Biological Corridor (MBC), an environmentally sensitive region stretching from Mexico through much of Central America. Indigenous peoples, including Panama's largest - the Ngobe people - and peasant farmers have objected to the development of such mines, supported by various national environmental coalitions that have cited damage to rain forests; depletion and contamination of water supplies; and displacement of traditional communities. In response, Panama's President Ricardo Martinelli enacted a law in May 2012 to prohibit mining on indigenous lands and require local authorities to be consulted before undertaking infrastructure projects.
These hurdles to development of Panama's mining sector are in line with the trend we have seen across Latin America, where local opposition poses one of the largest stumbling blocks to mine development. However, the government has given the go-ahead for an environmental and social impact assessment required to develop the mine, port facility, and coal-fired power plant. The government's emphasis on economic development and desire to maintain strong growth, along with its desire to transform Panama into a regional financial and logistics hub, should further encourage a mining-friendly investment and business environment over the coming years.
|Source: Bloomberg, BMI|
|Molejon Gold Mine||Petaquilla Minerals Ltd||Operational|
|Remance Gold Mine||Pacific Rim Mining Corp||Operational|
|Cobre Panama Copper/Gold Deposit||Inmet Mining Corp||Planned/Announced|
|Cerro Chorcha Copper Deposit||Dominion Minerals Corp||Planned/Announced|
|Rio Liri Gold Deposit||Bellhaven Copper & Gold Inc||Planned/Announced|
|Pitaloza Gold Project||Bellhaven Copper & Gold Inc||Planned/Announced|
|Cerro Quema Gold Mine||Bellhaven Copper & Gold Inc||Planned/Announced|
|Cerro Colorado Copper Deposit||Republic of Panama||Planned/Announced|