Contributed by: Don WinnerBy DON WINNER for Panama-Guide.com - The following was received this morning as a comment to an earlier article - but I though it was worth hauling out to "prime time" as an opportunity to address some of the more salient points regarding mining and hydroelectric projects in Panama. "Why should the Indigenous want mining or hydroelectric in Panama? Why should anyone except of course those politicos and foreign corporation who benefit? How much electricity is sent up to Mexico and the US. Why should those who live here suffer the environmental degradation with little benefit and much harm? The Ngobe live on dirt floors, cook inside on wood campfires, and walk almost everywhere they go because they have little infrastructure. I do not see any offers of electrification of their homes or help with community water systems, much less roads, or telephone - television signals. I do not see the Environmentalists as exploiting the Indigenous, but instead, I see them supporting them and every other Panamanian citizen not in the very richest strata of the country. Please explain how these projects would benefit the Panamanian citizenry?"
Editor's Comment: OK, I'll take these points one at a time:
How Does Mining Benefit Panama? One word - money. Mining generates a whole lot of new economic activity and all of it is excellent, wonderful news for Panama. There are several primary revenue streams;
Initial Infrastructure Build: It will cost about $4.3 billion dollars just to build the mine. Let me state that another way. The mining company will be investing more than $4.3 billion dollars in Panama before they make a dime. Much of this money will be spent right here in Panama in the form of manpower and labor, contracts, services, fuel, logistics, etc. Some of the money will be spent elsewhere because Panama does not produce the heavy industrial machinery necessary to run a massive open pit copper mine. But no mater - the "build up" will generate a whole lot of new spending of the best kind of money for any country - Foreign Direct Investment. Other companies will be spending their money to build a new industry in Panama. Excellent, wonderful news.
Money Generate By The Operation Of The Mine: Once the mine is built and running, the mining companies will have to spend money to keep it running. A whole lot of money - like more than $500 million per year. And again, much of that will be spent on worker's salaries, fuel, logistics, contracting, support, services, etc. So now the mine is producing and selling the minerals. They spend a percentage of the money from the international sales of those minerals as operating expenses. A large percentage of the money stays right here in the local Panamanian economy.
Billions In Royalties: The Inmet copper mine project will be generating literally billions of dollars for the Republic of Panama in the form of royalties that will be paid directly to the treasury in the form of royalties generated from the international sale of minerals. Four primary minerals will be extracted from the Inmet mine - copper, gold, silver, and molybdenum. But for now I'm only going to talk about the copper. About 26 billion pounds of copper will be extracted from the mine in total. At today's copper prices, the copper will be worth about $100 billion dollars on the market. The Republic of Panama will receive 7% royalties on every pound of copper sold - so there's $7 billion dollars just for starters, in royalties alone, and only on the copper. There will also be some 6.3 million ounces of gold, as well as a whole lot of silver and molybdenum, which will also generate royalty payments when mined and sold. This mine is going to be generating a whole lot of new revenue for the government of Panama. The government of Panama - whoever happens to be in charge at the time - will be able to spend that money as they see fit - on new roads, electrification, expansion of the potable water distribution system, schools, hospitals, health clinics, or whatever other kind of infrastructure upgrades or improvements they deem necessary.
Environmental Impacts and Mitigation: Many people are knee-jerk anti mining, mostly on environmental issues. Personally I tend to be in favor of the further development of the mining industry in Panama as long as it's done in a responsible manner, with proper oversight and with applications of techniques to mitigate the environmental impact. The anti-mining environmentalists tend to point to the worst examples of poor management and mines done badly. And, while I personally am in favor of mining on the money side of the equation, I most certainly do not support blatant criminal destruction of the environment. However there are many industries that are "ugly" on the surface. There's no such thing as a "pretty" open face copper mine. But have you ever seen the inside of a refinery? Taken a tour of a meat processing plant? You are protected from all kinds of "ugly" things every day, and most of the people who oppose mining do so using their laptop computers - which contain lots of copper - so therefore they are hypocrites. Anyway, my own personal bottom line revolves around the word "mitigation" - meaning you can find a way to do the mining while reducing or mitigating the environmental damage as much as possible. And, it's not impossible to do with modern techniques and practices.
The Value of Hydroelectric Projects: Panama has the lowest rates for electricity in all of Central America. Opposition politicians scream and complain about "higher costs of electricity" but in reality those costs would be much, much higher if it were not for the many hydroelectric projects in Panama. Panama does not export electricity, and in fact the expansion of the production capability is just barely keeping pace with local (Panama) demand as the national economy continues to grow and expand.
Environmentalists Hurting The Ngobe People: There is a global environmental movement that does not want any mining, anywhere on the planet. The Ngobe are sitting on a massive copper deposit at Cerro Colorado - worth billions upon billions of dollars. They are quite literally sitting on a gold mine, however they simply do not have the ability to take advantage of that resource. Imagine if you had gold under the ground behind your house and you owned the mineral rights - but you're broke and starving. Does it make sense that some foreigner should come to your house and tell you that you should not take advantage of those resources - to protect the environment? Of course not. I would like to see the Ngobe people basically "get their shit together" and negotiate a separate deal that would benefit them for many generations. That would not only lift them out of poverty but make them relatively rich. Consider this - the Bedouins were extremely poor desert dwelling camel jockeys for thousands of years until the industrial revolution drove a need for oil - which they happened to be sitting on in the Arabian peninsula - and now they are billionaires. Go figure. Good thing the environmentalists care more about jungles than deserts, eh?
So, The Bottom Line: It all comes down to the money. If the government of Panama has more money from taxes on industrial activities and royalties then they can spend it to do good things for the Panamanian people. The operation of the mines will help to further expand the economy, and create more jobs and business opportunities. Sitting on a gold (or copper) mine and not taking advantage of those mineral resources is just plain stupid. Sure, protect the environment, mitigate the damage, but damn man, don't be dumb. "No, you might need oil, but we like our desert sands the way they are. Oil wells are "ugly." We've been living like this for eight thousand years, and we're happy being this poor. Go away, and don't let the camel bite you on the ass on the way out..." Yeah, good call.
Copyright 2012 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.