PANAMA Trends and Developments Contributed by: Roy C Durling, Arias, Fábrega & Fábrega
would be paid to Panama. It was expected that, under certain circumstances (eg, the low price of copper in international markets), MPSA might be exempted from having to pay the Minimum Guaranteed Payment. In the case of labour matters, the percentage of foreign labour was reduced from 25% (as pro - vided in Law 9) to between 15% and 10% of the total labour force, aligning with the limits set by general legislation. With respect to environmental issues, MPSA agreed to comply with general environmental laws and regulations, including those applicable to the eventual closure of the mine, in accord - ance with the environmental impact study and modern mining practices. MPSA also agreed to replace its power genera - tion plant based on carbon with an ecologically friendlier plant. It also undertook to strive to use renewable energy sources throughout the pro - ject. New contract approved by the National Assembly On 3 August 2023, the Minister of Commerce and Industries submitted to the National Assem - bly the draft bill, which called for the approval of the new contract-law. The first reading of the draft bill started at the Commerce Committee of the National Assembly on 21 August 2023. At the Committee, mem - bers heard opinions and comments from the public. On 28 September 2023, the first read - ing was suspended, and the Committee, in an unusual move, resolved to return the draft bill to the executive branch with their comments and recommendations.
As a result of the comments of the Commerce Committee, the executive branch and MPSA had to renegotiate some of the terms of the contract- law. The new contract-law was presented to the National Assembly on 16 October 2023. On 20 October 2023, the National Assembly approved the contract-law by means of Law No 406 of 20 October 2023 (“Law 406”). On the same day, the President of the Republic signed the law that approved the contract, which was subsequently published in the Official Gazette. The second Cobre Panama concession is declared unconstitutional and a general ban on metal mining concessions is enacted into law Whilst the contract-law was under review at the National Assembly, the country was shaken by demonstrations against the proposed contract- law. There were several reasons for these pro - tests, including: • the general perception that the negotiation and approval of Law 406 had been possibly tainted by corruption; • concerns regarding the effects of mining on the environment, coupled with an unusual and harsh drought that was affecting the Panama Canal operations and other sources of drinking water for the country; • general frustration with the government; and • the perception that Law 406 established a semi-colonial enclave in the area of the con - cession. In addition, several complaints were filed with the Supreme Court challenging the constitution - ality of Law 406. The severity of the protests and the public clamour prompted the executive branch on 30
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