Several months ago I posted about Panama having one of the world largest copper deposits. I was a bit skeptical about such a grandiose claim but, after reading this report from Inmet mining it seems that indeed it is true and they are preparing to go after it. I know many people are justifiably concerned about the environmental impact of such an operation. After all, these are open pit mines and one would think they will leave great scars on the countryside along with the pollutants that typically accompany mining. Many people are dismayed at a recent law that allows the government to circumvent certain environmental studies if it is deemed of strategic importance. On the surface it looks like the government just wants to rush in and start laying waste in their efforts to profit from such a find.
But, after reading the report in its entirety, I find that the issue of environmental impact studies have already been completed to the tune of $15 million. What the government appears to be doing with the new law is mitigating the possibility of lawsuits being filed that could tie up the project in court for many years.
When you look at the benefits to the people of Panama to be able to exploit such a natural resource I believe it is well worth the risks to the environment. When I fly over Panama between Chiriqui and Panama city see a land that has been stripped of just about every tree for cattle ranching. Only the inaccessible land is left with forests. Even the national parks have been encroached upon in the effort to supply one hectare of crazing for each steer. We hear little from the environmentalists about this even though the cattle are always eating and the jungle doesn't get a chance reclaim it. The reclamation of a mine when done properly should leave the land looking like it did when they began. In fact if you just let the jungle here do its thing it will quickly do its own reclamation.
The tailing's and potential pollution of the water table are another issue, but from what I read in the report they are taking significant steps to control this and the kind of technologies used in mining today are significantly more advance than those used in the past. I don't profess to know much about the industry, but I have seen reclaimed open pit mines and from reports of reclaimed land, ground water was not affected adversely.
What's in it for Panama?
First is the over $5 billion dollars in investment going into getting the mine operational over the next five years. This money will be spent on labor and a lot of materials that will be supplied by Panama. I would not doubt that at least 50% of that money stays in Panama and there is a significant multiplier effect that will boost the economy significantly. Then there is 2% that Panama gets of the gross which may represent a very significant portion of the net. It will certainly be in the billions of dollars which if used wisely can really benefit the people of Panama.
Remember that Panama is on an infrastructure spending spree and they are going to need income to repay the debts. I would rather they take out of the ground rather than my pocket in the form of higher taxes. I have not calculated the total expected return, but the company is using rather conservative estimates for the expected prices of metals such a $750 an ounce for gold which is currently trading at over $1250 an ounce.
I am sure this post will get a lot of comments regarding the environment and the potential for the lack of wise uses of funds received, but I would first ask you to read the complete report and do a little google research to see how mining is done today. Here is the report in its entirety.
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