LatinFinance - May/June 2017 - 40

ANDES
COLOMBIA

Colombia's government reckons copper and gold mining can kick-start GDP
growth. But voters are not so keen on the idea. By Lucien Chauvin

Extraction hurdles

olombia faces a common conundrum, but its frequency doesn't make it any less
painful. Like other countries rich in mineral resources, Colombia acknowledges that the process of mining is expensive and potentially destructive to the environment. But that's where
its wealth lies. Colombia's legacy of more than 50 years of internal conflicts with guerrilla
groups has left the country's mineral resources largely untapped.
Colombia ranks first in Latin America in coal and emerald resources and is a leading producer worldwide of both. It is also an important nickel producer, ranking second in the region. President Juan Manuel Santos' government wants the country to also tap into extensive
copper and gold deposits, but this is proving difficult and could become even more complicated in the near future.
"There is no doubt that Colombia has mineral wealth, but we are going through a difficult
stretch with investment because of low mineral prices and a change in the rules of the game.
It is a reality that we have to confront," says Adriana Martínez, an attorney in Córdoba and
member of Colombia's Mines and Oil bar association.
While low commodity prices have slowed investment globally, the real concern in Colombia stems from recent court decisions and legislation from June 2015 that require prior consultation in affected communities before extractive projects move ahead.
Cajamarca vote
The latest test for mining came in late March, when voters in the town of Cajamarca, in the
Tolima province, overwhelmingly rejected a mine under development by South Africa's
AngloGold Ashanti.
Only 76 of the 6,241 voters who turned out for a referendum backed development of the $2
billion La Colosa mine. Expected to contain approximately 28 million ounces of gold worth an
estimated $35 billion, the mine would be one of the largest open-pit gold mines in the world
and vastly increase Colombia's gold exports, which reached $1.52 billion in 2016, according to
the National Mining Agency (ANM). Colombia produced 1.9 million ounces of gold last year.
La Colosa is the largest of three AngloGold Ashanti projects in Colombia and has been
under exploration for a decade. The company has invested approximately $900 million
in Colombia since 2006, according to government sources. In addition to La Colosa, it also
owns 51% of the Gramalote mine and holds a 92.42% stake in the Quebradona project, both in
partnership with Canada's B2Gold.
Quebradona, in the Antioquia province, also faces local opposition. A group of farmers
blocked access to the project in mid-April. It was not the first problem the company has encountered with anti-mining groups.
"What's happening is sad. We are talking about a project [La Colosa] that could produce the
same amount it would take existing mines more than a decade to produce," says Martínez.

40 L ATINFINA NCE.COM - May/June 2017

Philipp Schönrock, director of CEPEI, a
Colombian think tank, says the Cajamarca
vote was not about gold per se, but a longterm view of development. "People know
that the gold is there, but in the end when
they weighed both sides, they decided that
they wanted to stay where they are because,
in the long run, maintaining local economic
strategies is more sustainable than letting a
company extract gold," he says.
Colombian authorities are struggling
to figure out the path forward after the
Cajamarca vote and a March 22 ruling by
the country's Constitutional Court approving a referendum in the municipality of
Marmato, in the Caldas province, allowing
voters to decide if they want a mine planned
by Canada's Gran Colombia Gold to move
ahead.
The Santos government has argued that
the vote in Cajamarca is not the final word
on mining. The government has claimed
that AngloGold already had all its permits
approved before legislation expanding
binding plebiscites was approved. It has also
pointed out that the central government
controls underground resources, including
minerals and oil and gas deposits, giving the
Santos administration final say on extractive
projects.
"The Constitutional Court has given
municipalities a more active role. It creates
a big challenge for us to show investors that
Colombia is serious about developing its
mineral resources. But I think we can work
with communities to make this happen,"
says Silvana Habib, president of the ANM.

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