MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Panama

Key Data

Population:3,657,024 people Area:75,420 km2 Density:48 people / km2 Demographics:Mestizo - 65%
Mulatto - 6.8%
Black - 9.2%
White - 6.7%
Indigenous - 12.3% (Ngabe 7.6%, Kuna 2.4%, Embera .9%, Bugle .8%, other .4%, unspecified .2%)
Mineral Resources:copper, gold GDP:$47.5 billion GDP per capita:$12,980 GINI:51.9

History

Gaining independence from Spain in 1821, Panama joined into a union of countries to create the Republic of Gran Colombia. This republic broke apart in 1830 but Panama retained its ties to Colombia and did not separate until 1903 with backing from the US. Upon independence the Panama Canal (and the Canal Zone) was created, with construction being completed in 1914. The US controlled the canal until the 1977 agreement that began to transfer power.

Mining Characteristics

Despite a history of mining during the colonial period, Panama has not had a large reliance on mining in the modern economy. The chairman of the Mining Chamber of Panama in 2014, Zorel Morales was quoted as saying ““So far we have identified 50 billion pounds of copper reserves, 12 million ounces of gold, 25,000 ounces of silver and 250 tons of molybdenum (…) Of this total, 53% must stay in the country in the form of taxes on income and dividends.” Despite this analysis of the multitude of possible reserves of the country, the country only has one operating mine in the country (Molejon Gold run by Canadian company Petaquilla Gold).

 

The constitution of Panama states that the state controls all mineral assets. All mining legislation in the country must be passed through the National Assembly, but The Code of Mineral Resources (CMR) is the main legal body in practice. The Ministry of Commerce and Industries and the Directorate General of Mineral Resources (DGMR) oversee the granting of concessions and ensures the implementation of regulations. Local municipal governments have little impact on mining.

Economic Context

The current government under President Varela has stated that the mining industry is to become one of four key sectors in the strategic plan for the Panamanian economy in the coming years.

Political Context

Concessions can be granted either through special legislation, or through general CMR created guidelines; the latter being more common. Since the creation of the CMR in 1963 the Panamanian government expects a fixed annual duty along with royalties on extracted products. Law 13 of 2012 changed the royalty expectations, but they still range based upon the mineral.

 

In February 2011, the Ricardo Martinelli government passed Law 8 (Ley Minera) that gave the power of direct investment for concessions to foreign companies. Panama ratified UNDRIP in 2007, yet Law 8 was in direct conflict with the declarations outlined in the agreement concerning indigenous consultation for free, prior, and informed consent.

 

The Panamanian constitution protects the comarca structure of political organization in article 127. This means that indigenous authorities have the power to decide upon the creation of projects that involve environmental exploitation through the process of a referendum.

Social Context

The Ngäbe Buglé indigenous, who saw Law 8 as a violation of their rights as outlined to them in Panamanian law, protested. On February 5, 2011 the protestors clashed with police resulting in 150 arrests, 40 people injured, and 3 deaths. On February 7th the San Lorenzo treaty was signed which created grounds for increased participation of the Ngäbe Buglé on the Ley Minera on the condition that blockades would be halted.

 

Martinelli repealed Law 8 on the 3rd of March 2012. Special Law 415 was created which banned mining on the comarca. This law, along with Law 11 resulted in the refusal of 25 pending concessions on Ngäbe Buglé territory.

 

At the start of 2015 Meliton Arroca of the DGMR froze all mining concessions in the country pending audits of their permits issued by previous administrations. At the same time the mining law is being amended for transparency. The review of applications began in early 2016. The administration has not yet begun to process any applications for metallic mining concessions as of spring 2016, only focusing on non-metallic projects.

Bibliography

Durling, Roy C. “Mining 2015 – Panama.” Latin Lawyer. N.p., 12 June 2015. Web. 24 May 2016.

 

Jamasmie, Cecilia. “Panama Holds $200bn in Mineral Resources Waiting to Be Mined – Government | MINING.com.” MININGcom Panama Holds 200bn in Mineral Resources Waiting to Be Mined Government Comments. N.p., 20 Jan. 2014. Web. 24 May 2016.