Why Colombia's mining sector can't get to work

Colombia's mining sector is concerned about the consequences of regulatory changes that have been implemented by the administration of President Gustavo Petro, while plans aimed at further reform are suggesting more problems are on the horizon.

Key concerns include a planned new mining law, the creation of state mining company EcoMinerales, and environmental measures that would allow the government to created protected areas where mining will be temporarily prohibited.

Moreover, since 2025 will be a pre-election year, mining issues could become politicized.

To gain more insights into the problems and possible solutions, BNamericas talks to Adriana Martínez Villegas, president of the bar association of mining, oil and energy lawyers, president of law firm Martínez Córdoba & Abogados y Asociados and professor of mining law at Universidad Externado.

BNamericas: How would you describe the current investment climate in the mining sector?

Martínez: I think everyone is waiting for this government to end [in August 2026] to see if there is a change in the trend and we can regain the momentum the mining industry has lost in recent years.

The government has the idea of nationalizing mining, of creating a state-owned industrial and commercial company [EcoMinerales]. It believes that private companies should not continue to be the protagonists of the sector, and even less so when it comes to strategic minerals required for the energy transition.

Authorities say that until now mining has been managed under the concept of extractivism, rather than industrialization, that is, extracting only what the industry can transform and give added value.

As an excuse, [officials] cite a 2022 ruling by the state council, which highlighted a series of shortcomings, basically in the coordination of authorities at the national level with regional and local authorities, which generated, to a certain extent, socio-environmental conflicts.

The state council said it was necessary to clarify where mining could be carried out and where not, which areas of special environmental interest could not be affected by mining, and that it was necessary to correct the procedures so that there was sufficient citizen participation. But it also warned that there should not be a mining moratorium, that the granting of mining titles could not be suspended.

Two years have passed, and no progress has been made on the definitions. The state council never said that the relevant bodies had to issue regulations.

In January, the government issued decree 044, considered by the industry as an instrument to paralyze and prevent mining in the country through temporary reserve zones established for five years and renewable for another five years.

We therefore understand that what is being sought is to freeze vast areas of the national territory and prohibit the activity.

BNamericas: Would the new mining law, if promulgated, form part of that objective?

Martínez: We see the same trend with the new mining law that will be sent to congress. However, through administrative measures, the government is managing to paralyze all sectors. They already did it with health, and we are in a deep crisis in the hydrocarbons sector and in the electric energy sector.

BNamericas: Could decree 044 also paralyze ongoing operations?

Martínez: Yes, because it prohibits the granting of licenses, permits, authorizations and concessions of an environmental nature.

For example, if a company needs to open a new extraction front and cannot modify the license, if it requires forestry exploitation permits or air emissions permits and cannot obtain them, the operation is paralyzed.

If someone needs to modify the project or operation or add something, they will not be able to do so, then there will be a freeze because neither projects nor operations are static, they are moving forward and it is necessary to modify the administrative authorizations.

BNamericas: Do you have an estimate about which areas could be affected?

Martínez: Yes, [areas] in Santander, near the Santurbán moorland. It is likely that they will also establish a reserve area in Antioquia department, in Cesar department.

BNamericas: How high is the risk that projects will be halted due to the declaration of reserve areas, but those areas then becoming targets for illegal mining?

Martínez: There are many possibilities. In Santurbán, multinationals were removed in the past, but the area has not yet been declared a moorland and illegal miners have moved in.

The companies that had every opportunity to carry out mining properly have left and there are lawsuits before the [International Centre for Settlement of Investment Disputes].

Sadly, we see that nothing happens against illegal extraction. The area is full of illegal extraction, and it is clear that it is not about artisanal miners, or people in need, but about organized crime.

The Clan del Golfo, the National Liberation Army, are involved in this.

The armed forces said it is clear that although cocaine may continue to be an interesting income source [for cartels], illegal gold, which they are taking out through Venezuela, is much more interesting.

There are billions of dollars that are being spent there. If the State controlled that, there would be no need for the new tax reform the government is thinking about.

BNamericas: Would this new tax reform also affect the mining sector?

Martínez: Yes, because there is talk of the possibility of raising the tax on coal, a very important sector for our country and the one that has been hit the hardest because there is a campaign against this mineral. It is not taken into account that Colombian coal provides support for the energy transition and support during the dry season to avoid blackouts.

BNamericas: The new mining law would also hit the coal sector due to the ban on thermal coal?

Martínez: As long as there is demand for steel in the world, Colombian coal has markets. It makes little sense to prohibit the exploration and extraction of thermal coal because, if exploration is not carried out, it is not known whether the deposit is thermal coal or metallurgical coal, and the layers may also be intercalated.

BNamericas: What are the chances that the new mining law bill passes, considering that it has stalled and that 2025 is a pre-election year?

Martínez: The draft of the new mining law is based on a state-owned company, but EcoMinerales was removed from it. Our feeling is that this was ultimately done to avoid prior consultation.

EcoMinerales has passed the first debate in the house of representatives. It requires a total of four debates.

Regarding the new law, the government says it is making great progress in the prior consultation phase in order to send it to congress.

It is very difficult to predict what will happen in the legislature with the two bills because even though there is opposition, we know that politicians compromise on various things.

BNamericas: How would the industry be affected?

Martínez: The draft of the new mining law is designed to completely repeal the current legal mining regime.

The new legal framework would have a number of impressive defects. When reading the draft, it does not seem like a mining law but rather an environmental law.

Many of the articles are principles that have to do with the environmental issue. And the most serious thing is that it states that with this bill, requests made by the high courts of Colombia are being fulfilled, and therefore a new system of planning for mining in the territory and granting of mining concessions is being created, an opinion that, of course, I do not share.

The mining and energy industries are used to facing many risks, to working in difficult environments, but I would say that the worst of all is legal uncertainty.

The main reason why a company leaves the country and does not return is the lack of legal certainty, the fact that its mining assets may be threatened, directly or indirectly, by changes in the rules of the game.

We are losing legal certainty, which has always characterized us as a country, and if we add to that the problems of political instability, public security, among others, the situation becomes even more complicated.