Explorers in Colombia keep spending amid Petro government’s leftist rhetoric

More than a year after Colombia’s leftist president Gustavo Petro took power, investment by public companies is rising along with their exploration activity, despite initial concerns the government would restrict mining.

Elected to office last August, Petro’s administration has considered imposing taxes on oil and mineral exports, stricter environmental licensing and prioritizing small-scale mining over that of large multinational operations.

Ari Sussman, chairman of Colombia-focused Collective Mining (TSXV: CNL) told The Northern Miner that the business community was initially nervous over Petro’s energy platform that targeted a reduction in fossil fuels and coal, two major sectors of its resource economy.

“[Petro] said we don’t want any more coal mining in the country. If you’re producing right now, you’re okay, but we’re not going to grant licences for exploration of coal anymore,” Sussman recalled. “That was interpreted as ‘we don’t want any mining’…There’s bark and there’s bite. The bite is what matters.”

As examples of that “bite,” Sussman pointed to Auxico Resources’ (CSE: AUAG; US-OTC: AUXIF) mining title certificate, granted in early October for its Minastyc rare earths project in eastern Colombia after receiving an environmental licence for small-scale open pit mining in June; and Aris Mining’s (TSX: ARIS; US-OTC: TPRFF) permit in July to develop the underground extension of its Marmato gold mine.

Collective’s flagship is the Guayabales copper-gold-silver project in the western department of Caldas. Exploration and working capital of US$21.9 million at Guayabales comprised most of this year’s US$25.9 million in first quarter spending by public, Canadian companies in Colombia, according to data from Mining Intelligence, part of The Northern Miner Group.

The total of capital raisings in the quarter was almost as much as the previous three quarters combined. When Petro took office in the third quarter of 2022, capital raisings for exploration and working cash came to US$4.4 million, then more than doubled to US$9.6 million in the year’s final quarter.

Legalizing artisanal miners

The chairman also dismissed fears over the government’s stated priority for traditional, small-scale mining over large, multinational companies. Sussman said the policy aims at formalizing artisanal miners, a process he claims was pioneered by Continental Gold, the company he founded in 2010 and led until it was sold to Zijin Mining in 2020.

“Ancestral miners should be formalized and legalized,” he said. “We worked hard with a group of mining companies to help create that law. The key… is if you formalize a small group of miners, the international mining company isn’t liable for them, the government takes the liability once they’re legal.”  

The formalization push is also not unique to the Petro government. Former president Iván Duque’s mines minister Diego Mesa Puyo, said in June 2022 that formalization was the administration’s second biggest policy, and touted the induction of 25,000 miners into the formal sector.

Sussman said Collective has faced no major challenges to its work under the new government, and in fact says that as a jurisdiction for mining he would rather work in Colombia than in the United States. In the South American country, it takes eight to 12 months to get a mine licensed, whereas it takes 10 to 12 years to get permitted in the U.S., he said.

“I personally believe Colombia is the future for transition metals and other metals in mining for the Americas because of its good regulations and its quicker permitting timeline,” he said. “I think it’s a robust place to be.”  

Max Resource (TSXV: MAX; US-OTC: MXROF), developer of the Cesar copper-silver project in the northeastern department of La Guajira, raised most of its US$20 million for exploration in 2022 before Petro took office.

CEO Brett Matich says it still has US$10 million from its 2022 financings, enough for its work until 2024, and with potentially more interest from investors.

“We’ve had the same type of activity as what we had prior to this president,” he said.

Indigenous interests get priority

Matich is blunt in his summary of the current administration’s attitude towards mining: “You don’t want to be in fossil fuels and the mandate of the government is focused on critical metals… if you’re in a gold mining area, you should have agreements with the Indigenous co-ops.”

The co-operatives, or Indigenous ownership councils have a new, prioritized status under Petro, and failure to make agreements with them will stymie exploration projects, Matich says.  

Ian Harris, CEO of Outcrop Silver & Gold (TSXV: OCG, US-OTC: OCGSF), says that in his 15 years of working in South America, where many leftist governments have held sway, some of the Petro administration’s pronouncements on mining sounds familiar. Outcrop’s flagship is its Santa Ana project in Colombia’s northern Tolima Department, for which it raised US$2.5 million last September. It raised another US$4.5 million this May.

Business beats bluster

Harris says he was in Venezuela, Bolivia and Ecuador when each of those nations elected left-wing governments. He was senior vice-president of Corriente Resources when it was developing the Mirador copper project in Ecuador, while the government of Raphael Correa suspended mining activity under a rewriting of the constitution in 2008. Chinese firms China Railway Construction and Tongling Nonferrous Metals Group bought Corriente and its Mirador and Panantza-San Carlos projects for $679 million in 2010.

“But we still went on to build the Mirador project, which was the first industrial-scale project in the history of that country,” he said. “So, I’ve seen this story before and sometimes out the gate there’s lots of rhetoric, there’s lots of rah rah rah. But at the end of the day, financial, economic pragmatism comes into play.”

In July, the government issued a draft decree on a mining reorganization plan to protect Colombia’s ecosystems, but Harris said the resolution wasn’t implemented and would take time to roll out if it had been.

In the meantime, Harris said Outcrop’s day-to-day operations haven’t been significantly affected by the policies of the government, and a 5,000-metre resource expansion drilling program continues at Santa Ana.