Industry Trend Analysis - Corruption, Weak Prices To Remain Key Challenges - MAY 2016
BMI View: Panama ' s mining sector will experience slow production growth, as corruption and weak prices deter investment and delay projects. Nonetheless, the country ' s gold sector will experience modest production growth, supported by low operating costs and a strong project pipeline.
Panama's corruption scandals and globally depressed mineral prices, particularly gold, will continue to dampen the country's mining sector growth outlook. While President Juan Carlos Varela will make progress on his anti-corruption campaign, our Country Risk team expects structural obstacles and declining political capital to slow the pace of change ( see: ' Slow Progress Ahead On Anti-Corruption Drive ' , February 29).
This atmosphere will deter mining investment, accounting for the country's position slightly below Latin American Mining Risk/Reward Index average of 45.5. For instance, on March 30, Dominion Minerals filed a USD268mn lawsuit against the Republic of Panama for revoking the firm's rights to mine the Cerro Chorcha deposit in 2009. On February 5, the government sent an arrest request to Interpol for Richard Fifer Carles, CEO of Petaquilla Minerals and former governor of the Cocle province, for fraud. Petaquilla Minerals operates the country's largest gold mine, Molejon, which has been idled since 2013.
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