Why Having a Huge Copper Mine Is Great For Panama
The pandemic has changed many things around the globe–some easily predictable while other changes have materiaized in surprisingly different ways. Once employees began fleeing traditional work spaces and people starting dialing in from home, it became apparent many of those changes were not going to revert back to pre-pandemic models.
At Empresas Bern we have been working with the Panamanian government and other local leaders to manage and redesign current offerings in an effort to meet the needs of Panaman’s business sector. We began thinking traditionally about how we could provide tax abatments and other incentives. In other words, how could we make it possible for people to return to offices and cubicles around Panama resulting in an economic restart. Then, we learned Panama would be on the cutting edge of meeting newly anticipated business needs globally. Win. Win!
The Importance Of Crude Oil Pricing
The first, and one of the more surprising indicators we found was how difficult it had become to refit crude oil into the post pandemic culture. For decades, crude oil has served as a vital metric of economic health for countries and industries worldwide. Oil was, and still is in some ways the center of the global commodities markets, especially for many countries in Central and South America where their eoncomies are actually tied to the price of a barrel of crude.
Just as the world began attempting to recover from the pandemic as well as address the ramifications of the climate crisis, metals like copper and lithium began leading economic recovery, as reported recently in CNN Business. That is a very good thing for Panama and it’s huge Cobre Mine, owned and operated by First Quantum Minerals out of Canada.
According to First Quantum’s 2020 Annual Copper Report, the company enjoyed “record-breaking production…particularly at the Corbe Panama plant…even while dealing with the significant challenges brought on by COVID-19.”
Having the Panama plant delivering at record breaking levels is vital locally and the world. “The critical role copper will play in achieving the Paris climate goals cannot be overstated,” said an analyst for Goldman Saches during an address about economies after the pandemic. “Copper is the new oil,” he concluded
Copper Market Already Tight
While the huge First Quantum copper mine in Panama has been churning out copper st record levels, the market already looks tight. According to the Goldman Sachs analyst, “copper prices have rallied 80% over the past 12 months and supply is constrained as demand skyrockets. It takes two to three years to extend an existing mine and as many as eight years to establish a new project,” the analysts continued, while pointing out the Cobre Mine in Panama is already functioning at a high level.
The Love Affair Of Tesla and Copper
Copper is an essential component of systems that allow wind, solar and geothermal energy to be tapped and transmitted for applications like heating homes. There are roughly 180 pounds of copper in every fully electric vehicle; Tesla alone needed 45,000 tons in 2020. Copper is the only high demand/low supply component or Tesla including lithium. According to The World Bank, that demand could set up the price of copper to move from the current price of $9,000 per ton to $15,000 per ton by 2025.
With the First Quantum Cobre Mine functioning around the clock and the pandemic crisis under strict control in Panama, the amount of direct contribution of copper to Panama’s economy is predicted to be more than the actual realization from the Panama Canal.
Looking At The GDP
Panama is not reliant on oil driven business sectors, but rather 75% of the Gross Domestic Product (GDP) is from the robust services sector including banking, flagship registry, insurance, container ports, Colon Free Trade Zone and medical tourism. That may change slightly with copper’s contribution, but it will never make Panama oil dependent..
It is vital that before you invest in real estate or and any business highly tied to the government’s policies including taxation and infrastructure, you should know the country is on solid ground for future growth. A 22% annual growth rate for one year, followed by 15 years of negative growth is not a recipe for success. Solid year-on-year sustainable growth and positive Return On Investment (ROI) is what is needed for investors.
I admit I did not anticipate this type of projected growth and demand for copper. I thought it would be good and I thought the impact on Panama’s bottom line would be solid, but I did not anticipate this incredible growth. Don’t get me wrong, I’m thrilled, just a little surprised.
With all-electric vehicles in high demand world wide, a drastic reduction of fossil fuel needs and a re-committment for facing the challenges of climate change, Panama is well positioned to capitalize on current growth opportunities. Investment solutions for the more middle-class investor come in many forms including commercial and residential real estate, sustained revenue streams from rental properties, catering to the small business entrepreneur and capitalizing on the great new internet.
We at Empresas Bern would love to chat with you about some of the amazing offerings we have available including properties with excellent developer financing, pre-construction pricing, tax abatements and rapid residency components. Contact us via email at [email protected] or call 507.214.2376 for more information. Visit our website for contact information as well as project details at https://empresasbern.com/contacto/?lang=en.
We’d love to hear from you.