Colombia miners seek to invest US$7.6bn through 2022

Miners in Colombia, where the industry is largely centered around coal, want to invest US$7.6bn in projects over the next five years but face numerous hurdles.

The local mining industry plans to invest US$1.5bn this year in response to a rebound in metals prices, according to Colombian mining association ACM. But social conflicts and adverse legal rulings may derail investment plans unless the government comes up with a long-term mining plan, ACM president Santiago Ángel warned.

"This money isn't guaranteed if we don't see an agenda to solve the problems we have today," Ángel told newspaper El Tiempo. "The market sends us one signal, but the current environment sends another. A one-year regulatory agenda is no good for the industry because the money will go to other countries instead."

Copper prices rose 26% on the Comex through the first quarter, while silver and gold were up 17% and 3%, respectively.

Companies including AngloGold Ashanti, Eco Oro Minerals, Red Eagle Mining and Continental Gold, and coal miners Drummond, Cerrejón and Prodeco met last month with Colombia's President Juan Manuel Santos, energy and mines minister Germán Arce and the head of the national mining agency (ANM), Silvana Habib, to discuss the future of mining in the country.

The meeting took place after AngloGold suspended its US$2bn La Colosa gold project after a local community voted to ban mining in the area due to environmental concerns. The March 26 referendum was made possible by a constitutional court ruling that overturned the central government's authority on mining projects.

The government last year also banned mining operations in high altitude neo-tropical ecosystems known as páramos, spurring litigation by Canada's Eco Oro, whose Angostura gold-silver project was affected by the ruling.

The legal setbacks add to frequent strikes and violent attacks against mining operations. Last year there were 338 incidents in Colombia, mostly attacks on railway lines used for transporting minerals, according to ACM. Attacks have cost the mining industry 1tn pesos (US$340mn) in lost production over the past three years.

Miners also need the government to implement a tax reform including a rebate system known as Certs and a tax swap scheme for infrastructure projects, according to the industry group. Prior consultation processes are also causing difficulties and delays for the industry.

PROJECTS

Other projects, however, are progressing.

Red Eagle is ramping up output at its US$55mn San Ramón gold mine in Antioquia department, while nickel producer Cerro Matoso, controlled by BHP Billiton spin-off South32, is working on starting up its La Esmeralda mine.

Toronto-based Continental, which is developing the US$389mn Buriticá gold-silver project, announced this month that Newmont Mining paid US$109mn for a 19.9% stake in the company and investment fund Red Kite paid US$25mn for a 4.6% share of the firm.

The JV with Denver-based Newmont will enable Continental to start construction at the project this year, with production scheduled to begin in early 2020, CEO Ari Sussman said in a statement. The project in Antioquia is expected to produce 282,000oz/y gold and 494,000oz/y silver over the first five years at average costs of US$387/oz gold equivalent.

Colombia produced 90.5Mt coal, 1.99Moz gold, 29,481oz platinum, 81.78Mlb nickel, 335,248oz silver, 2.03mn carats in emeralds and 715,692t iron ore last year, according to ANM.

(Pictured: Sumapaz Páramo)