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Legal Risk Rating
Score: 28
Critical Risk
Unfortunately, the Panamanian mining code does not reflect the apparent attitude of Panama towards development. Unlike Nicaragua and Mexico, Panama has yet to update its mining code, which dates back to a time of substantial government control over its minerals industry. With innumerable obligations placed on a concession holder, it is not at all surprisingly that the country's largest mine under construction (First Quantum's Cobre Panama project) was developed only after the passage of a specific law that conferred greater security of tenure than offered under the country's general mining code.

Regulatory Corruption Risk

Extremely High Corruption Potential

Corruption Exposure Risk

Moderate Corruption Risk

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Environmental Overview Commentary plus sign



Panama, officially the Republic of Panama, forms a relatively narrow (at times 50-mile) land bridge that connects North and Central America with South America. It is bordered by Costa Rica to the northwest and Colombia to the southeast. It has long shorelines on both the Atlantic and Pacific Oceans, as well as mountains that reach heights in excess of 3,000 metres. In fact, from Panama’s higher peaks one can see both oceans. As a tropical country with abundant rainfall, Panama supports a high level of biodiversity and as a bridge between north and south, its tropical jungles and forests feature animal and plant species from both continents.

Panama is home to over 200 mammal species, more than 200 reptile species and in excess of 150 amphibious species. There are almost 1,000 indigenous bird species plus hundreds of different migrating birds, earning Panama its reputation as one of the best countries in the world for bird watching. It has 9,000 species of flowering plants, including the Holy Ghost Orchid, which is the national flower. Panama’s swamps on the Pacific coast offer brackish water that supports vast mangrove forests reaching heights of 40 metres. These swamps support the Mexican and pygmy anteater, mantled howler monkey, boa constrictor and the black iguana. Other notable species found in the country include sloths, jaguars, tapirs, hummingbirds and porcupines.

Whilst Panama has designated nearly 25% of its landmass as a protected area, deforestation continues to be a challenge. This is mostly due to agriculture and fisheries (particularly shrimp ponds), but road construction, timber operations and industrial growth are also factors. Farmers and cattle ranchers face little opposition to clearance activities. Panama’s attitude to development is quite different from other countries in the region, such as El Salvador and Costa Rica. Its attitude is reflected in the approval of First Quantum’s massive Minera Cobre (copper-gold) project, as well as its recent discovery of potential oil reserves.


The National Environmental Authority (ANAM), through the Environmental Assessment Department (DEA), is responsible for monitoring and implementing the environmental impact assessment (EIA) process. The General Environmental Law (41/1998) (GEL) and the Decree 123/2009 (EIA Regulation) are the main sources of environmental regulation in Panama.


The GEL recognises the concept of sustainable development in respect of natural resources (Art. 62) and requires all projects, works and activities that are anticipated to have an environmental impact be made the subject of an EIA process (Art. 23). Pursuant to Article 16 of the EIA Regulation, an EIA is required for:

  • Exploration: Metallic mineral exploration work involving mechanical drilling, dredging, major trenches, opening of roads and / or construction of camps; and
  • Mining: Extraction of metallic and non-metallic minerals, including quarries.

The mining operator shall present before the ANAM an affidavit in the case of projects falling under Category I (low impact) or an Environmental Impact Study (EIS) in the case of Categories II and III. Category II projects include those that have a significant negative environmental impact, which can be eliminated or mitigated with known and easily applicable measures, in accordance with current environmental regulations. Category III projects are those having potentially negative environmental impacts of indirect, cumulative and / or synergistic significance that merit substantive evaluation and consideration of appropriate mitigation measures. The EIA Regulation sets out in some detail the contents of the required information for all categories. As well as an EIS, where required, a mining operator must also submit an Environmental Plan.

In preparing the EIS, the proponent must engage in community consultation, which must be outlined in the EIS. In addition, the community must be permitted to provide further feedback within a period of 15 or 20 days depending on whether the project is a Category II or Category III project, respectively (Art. 33, EIA Regulation). For Category III projects a public forum during the evaluation stage is mandatory, while it may be requested by ANAM or members of the community representing not less than 2% of said community for Category II projects (Art. 37, EIA Regulation).

The DEA, and the Municipal and Sector Environmental Units, if required, must assess EIAs and decide within 35 days in the case of Category II and 55 days in the case of Category III if the project meets all of the requirements to justify an Environmental Licence (Art. 41, EIA Regulation). The EIA Regulation is extremely helpful in directing the DEA to consider the following five criteria in this regard (Art. 23, EIA Regulation):

  • Criterion 1: Any risk to the health of people, wildlife and the environment in general. Factors to be considered should include: the generation, collection, storage, transport or disposal of industrial waste, particularly any flammable, toxic, corrosive or radioactive materials; the generation of liquid effluents, gaseous emissions, solid waste or combinations whose concentrations exceed the limits set in the environmental quality standards; and the levels, frequency and duration of noise, vibration and / or radiation.


  • Criterion 2: Any alteration to quantity and quality of natural resources, with special attention to the impact on biodiversity and territories or resources with environmental value. Factors to be considered include: the alteration of the state of soil conservation; the disruption of fragile soils; the generation or increase in soil erosion; the loss of fertility in soils adjacent to the proposed action; the induction of land degradation causes such as desertification, generation or advancement of dunes or acidification; the accumulation of salts and / or discharge of pollutants; the alteration of flora and vulnerable, threatened, endemic, data deficient or endangered wildlife; the introduction of exotic species of flora and fauna not previously in existence in the territory involved; the promotion of mining activities and the exploitation or management of wildlife, flora and other natural resources; the potential to generate any adverse effect on indigenous species; the introduction of logging of native forests; the alteration of the physical, chemical and biological parameters of water; any modification of existing water uses; and alteration to courses, quality or quantity of water.


  • Criterion 3: Any alteration to areas that are protected or having aesthetic or tourism value. Factors to be considered include: the involvement, intervention or exploitation of natural resources in protected areas; the creation of new protected areas; impacts on the oldest of protected areas; the loss of representative environments; any obstruction to such areas; and any change in the landscape of such areas.


  • Criterion 4: Any resettlement, displacement or relocation of human communities, and significant alterations of life systems and customs of communities, including urban areas. Factors to be considered include: the requirement that communities in the direct area of influence of the project resettle or relocate temporarily or permanently; the transformation of economic, social and cultural activities of a community; obstruction of access to natural resources as used for any economic or subsistence activity of neighbouring human communities; changes that would result in local demographic structure; altering livelihoods of ethnic groups with high cultural value; and the creation of new conditions for groups or human communities.


  • Criterion 5: When the project generates or presents alterations on sites of anthropological, archaeological, and historical significance, sites relevant to cultural heritage and monuments. In order to evaluate this criterion, the following would be considered: any alteration, modification or deterioration of a historical monument, architectural or archaeological monument or other cultural impact, such as buildings with cultural value.


The decision must indicate the technical considerations that were taken into account, the opinion of the Environmental Unit for the mining sector, the views of the public and any conditions that attach to the approval. Any denial may be appealed to the administrative courts (Art. 55, EIA Regulation). If issued, an Environmental Licence is valid for up to two years for project implementation to begin; failure to start the implementation of the project within the two years will result in the need to apply for a new permit (Art. 49, EIA Regulation). The decision from the DEA may be appealed within five days from the date of determination.

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Mining Overview Commentary plus sign



Panama, officially the Republic of Panama, forms a relatively narrow (at times 50-mile) land bridge that connects North and Central America with South America. It is bordered by Costa Rica to the northwest, Colombia to the southeast and has the Pacific and Atlantic Oceans on its two sides. Panama is a middle-income country in terms of GDP that has experienced substantial GDP growth in recent years and preferential treatment as a beneficiary of American FDI for decades. America views the country of strategic importance given its Panama Canal, which handles a substantial portion of the global shipping trade.

According to the 2013 United States Geological Survey, gold production was limited to the Molejon mine, which was the only operating gold mine in Panama in 2013. The mine closed, however, after facing severe financial difficulties, which culminated in early 2014 with the delisting of its owner from the Toronto Stock Exchange. Nevertheless, Panama is expected to become a major copper-gold-molybdenum-silver exporter when First Quantum’s Cobre Panama project begins commercial production. The US$6.4 billion project is expected to produce, on average, over 300,000 tonnes of copper, 100,000 ounces of gold, 1.8 million ounces of silver and 3,500 tonnes of molybdenum on an annual basis. Manganese is also known to be present in potentially economic quantities in the country.


Pursuant to Article 257 of the Panama Constitution, all minerals belong to the state. The Code of Mineral Resources of Panama (Code), Law Decree No. 23 of 1963, is the main mining regulation. It was amended as late as 2012 and is currently under review. The Ministry of Commerce and Industries (Ministerio de Comercio e Industrias (Ministry)), and its National Department of Mineral Resources (Dirección Nacional de Recursos Minerales (DNRM))), are responsible for overseeing the mining industry and awarding mining concessions.


All individuals and entities, national or foreign with legal representation in Panama, are entitled to apply for exploration and mining concessions. In both cases, however, the applicant will need to demonstrate its technical and financial capacity to the Ministry ensuring considerable uncertainty until the grant of a mining concession. The Code does not provide for exclusivity in the search for minerals during the reconnaissance or exploration phases, but does confer exclusivity once a mining concession is obtained (Arts. 11 and 12, Code).

  • Exploration Concessions: These confer the right to explore for specifically named minerals and have a duration of up to two years. They may be renewed at the discretion of the government, provided the titleholder meets the legal requirements and at least 15% of the land area has been relinquished (Law 13-2012, Art. 15) (Art. 44, Code).


  • Mining Concessions: These are granted for a period of up to 20 years and may be renewed at the discretion of the government (Law 13-2012, Art. 15). Once an activity has been undertaken in respect of exploration and exploitation, it must be continued with due diligence (Art. 69, Code). When a discovery is found in commercial quantities, mining operations must commence and continue, subject to economic conditions (Art. 70, Code). The Executive Branch may cancel any concession on the areas where mining has ceased and has not resumed within a period of two (2) years from the date on which mining operations were executed last, except in the case of prevailing technological, economic or operating conditions preventing the resumption of mining operations (Art. 71, Code). The law requires annual reports, reports on operations, reports on royalties, expense reports, tax reports, and reports on employment and training (Art. 100, Code).


Mining concessions may be transferred, with the prior consent of the Ministry. The transferee must prove its technical and financial capability to the Ministry to continue with the relevant activities (Art. 105, Code). Something that should interest public companies contemplating an investment in Panama is the prohibition on the production or printing of any material that promotes a project in Panama without the consent of the government (Art. 100-A, Code).



Panamanian authorities require environmental impact studies (EIS) for the grant of mineral concessions. The environmental law is exceptionally well developed and detailed in terms of the factors to be weighed and the timelines that govern the various steps of the process. Concession holders have access to lands owned by the state (Art. 126, Code), but in the case of private lands the consent of the owner is required (Art. 121, Code). If refused, the mine developer will need to persuade the government to expropriate the land (Arts. 122 et seq., Code). It should be noted that the appointment of a mine contractor also requires the approval of the government (Art. 111, Code). The meaning of “contractor” is open to some interpretation. Finally, surface fees and royalty payments will be required of any developer.


See Panama – Environmental Overview Commentary.

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