PANAMA Law and Practice Contributed by: Roy C Durling, Arias, Fábrega & Fábrega
Assembly (the legislative body of the govern - ment of Panama), sanctioned by the President and published in the Official Gazette. The Code of Mineral Resources of Panama (adopted by means of Law Decree No 23 of 1963, as amended) (CMR) is the legal body governing most activities relating to Panama’s mineral deposits (other than hydrocarbons). The CMR sets up a regime for the granting of con - cessions to private individuals for the explora - tion and/or extraction of mineral deposits. In the case of minerals used in the construction indus - try (sand, gravel, clay, etc), the CMR has been supplemented by Laws 55 and 109 of 1973, and Law 32 of 1996, to create a separate regime for the granting of concessions relating to those minerals. Panama has resorted to enacting legislation cre - ating a special legal regime for large-scale pro - jects such as Cerro Petaquilla, depending on the particularities of the project and the investment required. For example, in 1997, the original con - cession contract between Minera Panama, S.A. (formerly known as Minera Petaquilla, S.A.) and the Republic of Panama, represented by the Min - ister of Commerce and Industries, was approved by the National Assembly of Panama by means of Law No 9 of 1997 (the “Original Petaquilla Law”). In December 2017, the Supreme Court of Panama declared the Original Petaquilla Law to be unconstitutional. A new concession contract for Cerro Petaquilla was entered into in 2023 (approved by Law 406 of 2023) to replace the Original Petaquilla Law, however, the Supreme Court of Panama, in a unanimous decision, held the law enacting such contract to be also uncon - stitutional. (See 6.1 Two-Year Forecast for the Mining Sector ).
The special regimes described above may include exceptions to the CMR and benefits that are supplementary to those included in the gen - eral law. However, the granting of mining con - cessions by means of special legislation is rare. 1.3 Ownership of Mineral Resources Article 257 of the Political Constitution of Pan - ama declares that all mineral deposits belong to the state. The CMR further develops and regulates the constitutional provision, and pro - vides for the granting of concessions to private individuals for the purposes of exploring and/ or extracting minerals. Before being extracted, such minerals belong to the state, but the con - cession holder will own them upon their extrac - tion, subject to the terms of the concession. Surface rights (ie, ownership of land) may be owned by private individuals or the state. How - ever, the mineral riches underneath such lands belong to the state regardless of the ownership of the lands. In practice, the government awards concessions to explore or extract minerals from deposits located underneath lands owned by parties other than the concession holder. The law grants holders of concessions reasona - ble rights of access to, and use of, water, timber and soil within the areas covered by their con - cessions, subject to permission from the owner of the surface lands and/or the Ministry of the Environment. Holders of concessions will have unimpeded access to state lands, provided they are free from possessory claims. In the case of titled lands or lands that are subject to possessory rights, if the owner and the holder of the concession fail to come to an agreement, the CMR establishes a procedure for the expropriation of all lands nec - essary for mining or the creation of appropriate
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