The exchange approved the location, the main point of entry to the southeastern United States for copper from top producer Chile, last month.

The LME approves and licenses a network of warehouses and storage facilities around the world. They are normally located in areas of net consumption and logistical hubs for the transportation of the material.

Panama City is close to leading North American wire and cable maker Southwire's plant in Georgia.

Sources familiar with the matter said the Scale Distribution warehouse would be an alternative to New Orleans, where around 40 percent of total LME stocks of copper and 60 percent of more than 1 million tonnes of zinc are stored in LME-registered warehouses.

Around half of the zinc and more than a third of the copper stocks are waiting to be delivered out of warehouses there, and the wait time for metal can be months, dealers have said.

Panama City "could be a good source of supply for us and other users", said a big U.S. copper end-user.

Macquarie bought a stake in Scale Distribution, a small British warehousing company, in February, in part to sidestep the queues plaguing the LME's warehousing system.

Orion Mine Finance, a mining equity fund spun off from metals hedge fund Red Kite in September, has a 40 percent stake in Scale Distribution, according to trade publication Metal Bulletin, citing LME documents.

The problems in New Orleans, one of the biggest delivery locations measured by number of storage facilities, highlights how other base metals are increasingly experiencing the big stockpiles and long wait times that have plagued the aluminium market.

The situation over congestion at certain LME warehouses has drawn scrutiny from British and U.S. regulators and led to class-action lawsuits by end-users.

Mindful of increasing criticism and scrutiny, the LME last week announced a plan to slash maximum wait times, crack down on market abuses and review its agreement with warehousing firms.

The LME has also listed Owensboro, Kentucky in the United States as a good delivery point for primary aluminium, the exchange said on Wednesday.

(Reporting by Susan Thomas in London and Josephine Mason in Miami; Editing by Anthony Barker)