Lofty rhetoric, followed by explosions that blew off parts of a hillside, marked the beginning of a multibillion-dollar expansion of the Panama Canal.

The US$5.25 billion expansion will accommodate a new class of huge ships capable of carrying more than twice the number of containers as the vessels that currently transit the waterway. Completion is set for 2014 to coincide with the 100th anniversary of the inauguration of the original canal.

Overwhelmingly approved by voters in October, the expansion is Panama's bid to capture a bigger share of the booming global container trade, much of which bypasses the waterway because the super-sized cargo ships can't fit in the canal's locks.

US President Jimmy Carter, who authorised the transfer of the canal to Panama in a treaty he signed in 1977 with Panamanian strongman Omar Torrijos, attended the ceremony.

After a two-decade transition, the canal was finally turned over to Panama on December 31, 1999, as was the canal zone, a corridor 10 miles wide and 50 miles long. The Panama Canal Administration has drawn praise from international observers on its management of the canal since the turnover.

Joining Carter at the event were regional presidents, including Colombia's Alvaro Uribe, Honduras' Manuel Zelaya, Nicaragua's Daniel Ortega and El Salvador's Elias Antonio Saca. Jose Miguel Inzulsa, secretary-general of the Organisation of American States, also was among an estimated 40,000 people at the ceremony.

When complete, the expanded canal will accommodate ships capable of carrying 12,000 containers, up from a maximum 5,000 containers.

A five-mile bypass on the Pacific side of the current canal is a central part of the expansion. So are two new sets of locks that will measure 1,400 ft long and 180 ft wide. The current locks are nearly 1,000 ft long and 110 ft wide. The new locks will also have a 50-ft draft, compared with the current 39 ft.

One of the technical innovations of the new design is that 60 percent of the water used to fill the locks will be recycled using special catch basins to be built with German technology. All the Gatun Lake water used to fill canal locks now is flushed out to sea.

The project would generate 8,000 direct jobs and an additional 35,000 indirect jobs among related supply and service firms. Unlike the original canal project a century ago, when thousands of workers were imported from neighboring countries, Panama will supply all the required labour.

The Port of Long Beach, which with the Port of Los Angeles handles two-thirds of all West Coast trade, does not foresee the expanded canal as a threat to its business.