Colombia is one of the world’s most enigmatic mining jurisdictions. There is no denying that the country’s lost “cocaine” years have left behind lots of unrivalled, prospective ground that is ripe for modern exploration. There have also been years of pro-business governance and improved security. But despite these positives, the country’s mining sector has failed to live up to its potential, owing to a range of issues in need of resolution.
The status of Eco Oro Minerals’ (EOM-T) pre-eminent Angostura gold project in the country is up in the air because of environmental permitting issues. The government is also trying to deal with artisanal miners, environmental degradation and illegal groups like the Revolutionary Armed Forces of Colombia (FARC).
Government agencies are further tasked with a confluence of bureaucratic infrastructure stressed by years of underfunding, and a massive inflow of foreign capital that needs proper management.
This year, Colombia is crafting a new mining code and looking to complete its first national geological mapping program to reopen its concession claims process and the database it’s built on, and devise a new way of distributing claims.
With so much on the table and so much at stake, The Northern Miner sat down with National Mining Agency president Maria Constanza Garcia Botero and vice-president of promotion and development Juan Castro in Toronto during the Prospectors & Developers Association of Canada convention to discuss how the government is tackling such issues.
The National Mining Agency is the governmental body responsible for implementing much of the policies handed down from the Ministry of Mines — one of two national mining agencies in the country, with the other focusing on geological issues.
The Northern Miner: What is the status of the new mining code?
Maria Constanza: The current mining code is going to die on May 11. We knew it would happen. We took most of the articles from the old code and put them into a national planning law, which gets renewed every four years.
At this point we have proposals that need to be consulted with the minority groups. We have tried to attain a resolution with them more than 10 times. Now the court has acknowledged that we tried and were not successful, so it has allowed us to move forward with the law.
TNM: The plan to auction off claims held by the government is causing concern for some, as they fear that the lot sizes will be so large that it will be prohibitive for junior miners to bid on them. Can you comment?
MC: We are working on the size, and it will depend on information from our geophysical and geochemical tests.
The information we get from those studies will guide us. Right now we have a lot of good information, but how big and for whom the auction will be, whether it’s juniors, majors or nationals . . . will depend on the information we get.
Juan Castro: We are not making a differentiation between juniors and majors. The process will be open to junior exploration.
The government hasn’t specified the size of the blocks, the number of claims or the regions. Companies don’t really know what the process will be, so they can’t say it is closed to juniors.
Also, we are not going to do the auction in one step. There will be further steps over 10 years that will depend on the level of knowledge that comes out of our emerging geological information.
(The necessary geological information required to begin the auctioning process is expected by this September, and the auction process is expected to get underway in the beginning of next year.)
TNM: It has been said the government wasn’t pleased that AngloGold Ashanti secured so much land before foreign direct capital poured into Colombia. Can you talk about AngloGold Ashanti’s impact on government policy?
MC: We want to prevent that, and things are changing.
Our agency used to have very few people and not a lot of money, now we have a budget of almost US$200 million and two auditing companies working with us, each with more than 700 people.
They are reviewing all titles and making sure that companies are paying royalties and leases, and that they are compliant with the law and their contracts.
So far, out of 1,700 reviews, 60% are not compliant. Some of those may be missing a paper or something.
Companies are not used to such auditing, and now that we are doing it, they don’t have an incentive to ask for a lot of land, because they have to pay — they have to prove that they have everything in place, and they have to show that they are exploring.
There are also restrictions so that companies don’t apply for a lot of land they are not going to use. They have to show that they have the financial, legal and technical capability to work the land, otherwise they have to return it to the government.
TNM: Some industry watchers have expressed concern that the government’s national airborne geophysical testing is being flown with an airplane rather than a helicopter. They believe this is a mistake, given the country’s intense topography. Are you concerned that the test may not be as accurate as investors would like?
MC: There are cost-benefit reasons to do it by plane, and it will be complemented by walking studies on the ground. We are looking to get a complete picture: the geology in general, geophysics and geochemical.
We already have some information, as the entity that is now the geological agency has been in place for 100 years. The new information will be complementary, and in the end we will have good information.
TNM: The issue of artisanals is an important one in Colombia, with the government long stating its desire to improve the lot of the country’s illegal miners. How is that going?
MC: The policy is to try to make them legal — that is the first step. Then we want to go with them all the way, so they can ask for loans and do mining the right way, complying with environmental and security regulations.
We are working on setting up a pool of capital that will be available for loans. We are trying to implement something similar to our coffee system, which was implemented 40 years ago to help small- and medium-sized coffee growers, and was very successful at the time.
TNM: Can you discuss what led to the mining-concession process being closed? How is it being dealt with?
MC: The complete system is closed. Why? Because the backlog was so huge. The government found 19,400 proposals for concession that it couldn’t get to. One was from 1968.
But by March 1 we had resolved more than 11,000 of them, and we’re still working on solving the rest. We are putting together a bulletproof platform that recognizes the past corruption. It will be a transparent process. You submit your request and the government will protect your rights. The first in-line is the first in law.
You have to realize it is not just the database that needs to be completed. If I invite you to the party everything has to be ready: the drinks, the food, the decorations — not just the table.
(Constanza expects that it will reopen by July 3.)
TNM: The issue of security is always on the minds of investors when they think of Colombia. Recently we have learned that many artisanal miners are threatened by the FARC and other groups to make payments to them from their mining proceeds. How will the government ensure the security of foreign investors?
MC: We are working on putting all the issues together: security and the environment. On
the security side we will try to measure and give information about the risk, so that companies can give it a value.
So we will say: ‘OK, this area we are putting in the market, and there used to be a guerrilla group here. They went away and the probability of their returning is 10–80%,’ or whatever it may be.
The idea is to put everything in place so that people can measure risk, and at same time, the government and minister of defence are working with the Canadian government to increase security.
TNM: For all of Colombia’s potential, there has been little in the way of modern mine construction and production. What has held up the process, and how serious is the government about getting a modern mine into production?
MC: The biggest obstacle has been environmental issues and consultation with natives and minorities. But nothing is preventing companies from getting to production, from the government’s point of view.
We are working every single week, project by project [mining and hydrocarbon], to try to find ways to solve these obstacles.
(Constanza says that the much-publicized delays at EcoOro’s Angostura project result from defining the limits of a National Park in the area, as well as defining the limits of the protected, high-altitude páramo ecological zone. She said that the government wants to see the project go forward into production.)
TNM: Can you describe the local communities’ general attitude towards mining companies, and where some friction exists?
MC: Overall, local communities are close to the sector and are willing to work with companies.
There are some regions in Antioquia where they have framed the issue as mining against agriculture and mining against the environment. We are working to change that mindset to one of mining and agriculture, and mining and the environment.
There is a mayor in Antioquia who is trying to forbid mining in their municipality, but that, according to us, is against the law.
We are addressing that by teaching them about mining. We are working with them through the state governor, who is closer to them. The governor is doing a good job, and everyone is working to find a way.
TNM: Would you consider legal action?
MC: We prefer to negotiate with them. We don’t want to take it to court. The legal process would take forever.
TNM: For the rest of the year, what are some of the milestones you would like to see the mining industry reach in Colombia?
MC: We hope we will get most of the environmental permits issued. We may get all the approaches to the minority groups done. We have the census on all the outstanding land titles, and we will know if they are all compliant or not.
After we complete the picture on the titles, the law and commitments, we will move forward to correct issues and problems. And also we will have some land that will come back to the government, as a result of having to cancel the contracts that don’t comply.
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