Panama’s government claimed an early victory in efforts to bolster mining, with a planned investment of US$480mn.
Panama – which aims to establish mining as a key economic driver – said it secured a commitment by privately owned Canadian firm Broadway Minerals to fund a restart of the suspended Molejón gold mine and construct a refinery.
The announcement, by trade and industry minister Ramón Martínez, follows a government push to strengthen mining institutions and deliver growth in the sector and job creation.
The Central American nation is looking to rebound strongly from the pandemic-related economic slump, with real GDP dropping 17.9% in 2020, according to IMF data.
Growth is forecast at 12.0% this year.
But a weak pipeline of mining projects could limit the sector’s economic role in the country.
NEW INVESTMENTS
Martínez said the proposal would see Broadway invest US$200mn in the reconstruction of Molejón.
Mining was halted in 2015 and concessions cancelled due to violations by its previous operator, according to a trade and industry ministry (MICI) release, which said the closure was not handled correctly.
The mine was previously run by Petaquilla Gold.
The proposal would see Broadway pay US$30mn to cover the benefits and social security payments for Molejón’s 600 former workers that were not paid by the previous owner.
Broadway also offered to double mining royalty payments as well as paying corporate taxes, from which the previous operator was exempt.
The proposed restart would deliver US$25mn/y to the Panamanian government and create about 1,000 jobs, the release said.
“As well as this, the national government continues working with all sectors linked to mining to strengthen mining institutions and create a new mining code, which is also positive for the country, as this would not only secure the investment, but also the regulation of the activity and its environmental responsibility,” Martínez said.
Broadway also plans to invest US$250mn in the construction of a new refinery, in which the Panamanian state would hold a 50% interest.
The refinery would serve various gold and silver mining concessions in the region, and represents a historic step in securing a stake for the state in the mining industry, according to Martínez.
GOVERNMENT STRATEGY
While the current status of the Broadway proposal is unclear – and the company did not immediately respond to a request for comment – it is a positive sign for President Laurentino Cortizo’s administration.
Strengthening mining and establishing a regulatory framework for the sector are among the priorities in the government’s 2019-24 strategic plan, which aims to support economic growth and generate employment opportunities for the country’s 4mn people.
One priority is to strengthen mining institutions after the country’s mineral resources department was found to be unprepared to adequately control and monitor large-scale metallic mining operations, according to the MICI release.
The efforts are backed by the Inter-American Development Bank (IDB), and supported by industry chamber Camipa, which said the aim is to advance an open dialogue to identify the ideal framework for sustainable mining development.
As part of this process, staff are being trained to manage royalties and supervise mines with the backing of major mining jurisdictions Canada and Chile, the MICI release said.
The government has also secured support from a number of international programs to help develop the mining industry, including the G7-funded CONNEX, which offers help in the negotiation of complex commercial contracts.
In addition, Panama has secured the services of US law firm Hogan Lovells to assist in negotiating a new contract with First Quantum Minerals’ subsidiary and Cobre Panamá copper-gold mine operator Minera Panamá, the release said.
Authorities have also checked the mining registry and cancelled 11 metallic mining projects for a number of reasons, it added, without giving further details.
PANAMA MINING PROJECTS
While Panama’s government is seeking to expand mining, the success of these efforts could be hampered by a lack of projects and very limited exploration.
The sector is dominated by Cobre Panamá, which at US$6.5bn is one of the country’s biggest ever investments, with production capacity of 350,000t/y copper.
Vancouver-based First Quantum began commercial operations at the mine in 2019.
The company is advancing the US$327mn Cobre Panamá expansion, which aims to lift throughput to 100Mt/y from 85Mt/y, and is due for completion in 2023.
Molejón is an open pit mine with production capacity of 100,000oz/y gold, although Broadway has yet to release information on its plans for the mine.
Finally, Orla Mining has the Cerro Quema gold project, which is expected to produce 78,500oz/y gold following a US$117mn investment.
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