China’s Landbridge Group Purchases Largest Panamanian Port; Intends to Make it a ‘‘‘Deep-Water‘۝ Port

On May 25, 2016, China‘s Landbridge Group acquired Panama‘s largest port, Margarita Island, for an estimated $900 million.   The port lies on the Atlantic entrance to the Panama Canal and within the Colon Free Trade Zone.  Colon is the largest free trade zone in the Western Hemisphere and is a major hub for the distribution of goods and materials to the Americas. 

Landbridge plans to conduct a major overhaul of the port in order to allow the new generation of megaships to access its facilities.  The Panama Canal is being expanded to double its cargo capacity and ensure it can accommodate such ships.  China Communications Construction Corporation (CCCC) ‘‘‘ a company that is also active in China‘s island-building/militarization in the South China Sea — will be responsible for dredging the port and the construction of four container berths that will have an annual capacity of 300 million containers per year.  Initial investment has been estimated at $500 million, with an additional $400 million for the creation of a logistics park that will be attached to the port facilities.

China‘s purchase of Margarita Island is intended to improve the efficiency and quantity of its trade with the U.S., specifically on the Atlantic coast and in South America.  The strategic location of the port positions China to take full advantage of the Panama Canal expansion from an economic perspective, but it also raises questions about the dual-use, military utility of the port, as China expands its blue water navy.  The recent delays regarding China‘s HKND canal project through Nicaragua, makes the relative importance of Margarita Island more significant in this important transportation corridor.

Margarita Island is Landbridge‘s second port acquisition within the past twelve months, the first being its 99-year lease of the Port of Darwin (in Australia).  For its part, CCCC has been a major player in port facilities globally over the past number of years.  Beyond its work as a PLA contractor in the South China Sea, CCCC has also been involved in projects in Kuwait, Sri Lanka, Kenya, Canada, Nicaragua and many other countries.