February 11, 2011 / 1:41 AM / 7 years ago

Panama reforms mine law, opens up to Canada's Inmet

PANAMA CITY (Reuters) - Panamanian lawmakers repealed on Thursday a law preventing foreign government investment in mining, clearing the way for Canada’s Inmet Mining to build the largest copper mine in Central America.

Despite angry cries from indigenous groups against mining who broke into the Congress building during the session, lawmakers approved the overhaul with 42 votes in favor, 15 against and no abstentions.

“What we’re trying to do is develop regions, create jobs and reduce poverty,” said National Assembly leader Jose Munoz of President Ricardo Martinelli’s Democratic Change party.

Martinelli, who proposed overhauling the 1960s-era mining law last year, is now expected to sign the changes into law, in a boost for Inmet’s Panama mine site near the Caribbean coast.

The mine, expected to require $5 billion in investment, is seen producing 250,000 metric tons of copper a year, as well as significant quantities of gold, silver and molybdenum over a 30-year life span. Commercial production is seen by late 2016.

(Graphic of Panama mine: link.reuters.com/qus74p)

The changes to the law were partly motivated by Inmet’s plans for financing from two foreign government sources prohibited by Panamanian legislation.

Inmet is seeking a $500 million partnership with Ellington Investments Pte Ltd, an indirect but wholly owned subsidiary of Singapore state investor Temasek.

Inmet last year entered into an option agreement giving South Korea’s LS-Nikko Copper the right to acquire a 20 percent interest in the project and the option involves financing from the state-run Korea Resources Corporation (KORES).

Martinelli’s government hopes the mining reform will open the door to the development of potentially large copper deposits buried in western Panama, which have drawn the attention of several international companies.

But the drive to attract mining investment is facing some resistance from environmental activists and indigenous groups who fear large mines will damage their farmlands and water supplies. Dozens of people camped outside Congress this week to protest the changes to the mining law, many with signs saying: “Mining equals death. Panama mine-free!” Indigenous leader Rogelio Moreno called on Panamanians to continue their fight.

“If they want to shoot us, they can, but we are against this reform,” he said.

Editing by Gary Hill

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